An Overview of Legal Regime Governing Multimodal Transport. Ethiopia in Focus

AN OVERVIEW OF LEGAL REGIME GOVERNING MULTIMODAL TRANSPORT: ETHIOPIA IN FOCUS

Tewachew Molla*

Abstract

The term �multimodal transport� refers carriage of goods by more than one mode of transport through single fright contract. Unfortunately, technical developments of multimodal carriage of goods are not supported by adequate legal framework. Despite various attempts that have been made in the past, there is no mandatory international convention governing multimodal carriage. The 1980 Multimodal Convention drawn by the UN has not come into force. All applicable international conventions are unimodal. Provisions contained in each of these unimodal conventions may be applicable to the relating leg of multimodal transport and governing the important issues related to the liability of the MTO differs significantly. Such important issues are: bases of MTO�s liability, limits of liability, loss of right to limit liability, liability of MTO for his agents and servants etc. Therefore, MTO cannot be certain which regime applies to his liability for the loss of goods. This problem is especially noticeable in the cases involving �non-localized loss�. Therefore, there is up to parties to create their own contractual solutions for multimodal transport of goods, taking into account mandatory provisions of unimodal conventions and applicable national laws. Some helpful contractual standard rules have been created in commercial practice. In spite of that, a large majority of industrial representatives and Governments consider the present legal framework unsatisfactory. As a result, countries are adopting their own national multimodal transport laws, in which Ethiopia is not an exception. This reflects fragmentation of rules concerning multimodal transport.

Key words: Multimodal Transport, Convention, Proclamation, MTO, Uniformity

I. INTRODUCTION

The availability of an efficient transport system in a country or region is a catalyst for its economic growth (Hayuth, 1987), and advancement of worldwide trade. Apparently the old adage �transportation is the lifeblood of commerce� still rings true.¹In the 1950�s shippers began using containers as they provided significant operational and economic advantages. The introduction of the container enabled cargo handling processes to gain a high level of standardization and helped overcome many of the technical difficulties concerning the transshipment of goods. Thus the development of the container facilitated the emergence of operators that provide smooth �door-to-door� transits.

The modern international trade demands for the same goods to be transported from the seller to the buyer as soon as possible, without unnecessary delay. Therefore, the effective transport must be �just in time� and �tailor made� (�door to door�). Historically, cargo carried from an inland location on one continent, such as a manufacturing plant, to an inland location on another continent, such as a retailer�s warehouse, would travel under three separate contracts of carriage most likely concluded with three separate carriers and thus subject to its own distinct legal regime. In such a situation mode-specific segmental approaches are no longer able to meet effectively the needs of shippers and manufacturers (OECD, 2001). At present increasing amount of the international carriage of goods is �door-to-door transport� where the goods are carried from the²consignor�s �door� to the consignee�s �door� is performed on the basis of a single carriage contract, and with utilization of more than one mode of transportation. International multimodal transport has for decades suffered from the fact that there is no uniform legal system governing it. Several attempts have been made in order to solve this problem, but none of them has been subject to success.³The European Commission identified this unpredictable situation as a barrier that deters parties from choosing this type of transport.⁴Due to that the main purpose of this paper is making analysis of the legal regimes regulating multimodal transport at international level and its implication in Ethiopia.

A. Definition and Concept of Multimodal Transport

The idea of multimodal transport is that a product is brought from the door of its origin, the manufacturer, to the door of its destination, the end user, by making use of at least two modes of transport, which is also commonly known as the door-to-door service. It is containerization in the shipping industry that has made the door-to-door transport a widespread practice in today's transport field. The multimodal transport system is �an optimization way of movement of cargo efficiently and faster from one place to another in which more than one kind of vehicle is necessary to deliver the goods from origin to destination by using trucks, trains, ships, and airplanes. In accordance withthe United Nations Convention on International Multimodal Transport of Goods, �international multimodal transport� is defined (in Article 1) as �the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country. The �Multimodal Transport� concept can be defined as the combination of various types of transport modes used in a national or international transport operation, in which provides door-to- door services, under the responsibility of one single transport operator, and a single transport contract. A multimodal transport operator is responsible for the fulfillment of the multimodal transport contract to manage and coordinate the total activities from shippers� door to buyers� door. Under one bill of lading or contract, once the product sailed in a container cannot be unpacked for verification, even the service given in different transportation modes such as a ship, road vehicles and railway (UNCTAD.ORG, 2001). The terms �multimodal transport�, �combined transport� and �intermodal transport� are often used interchangeably to describe the carriage of goods by two or more modes of transport from origin to destination. These terms have similar (although not the same) meaning, i.e. carriage of goods by more than one mode of transport through single fright contract. Thus, the main features of a multimodal transport are: the carriage of goods by two or more modes of transport, under one contract, one document and one responsible party (MTO) for the entire carriage, who might sub-contract the performance of some, or all modes, of the carriage to other carriers.

B. The Benefits of Multimodal Transport

�America Has Good Roads, Not Because America Is Rich, But America Is Rich Because It Has Good Roads.� John F. Kennedy, Former US President. �If you want to grow rich � build a road first.� (Chairman Mao).

The implication of this quote is no country or city can become economically buoyant without good infrastructure especially a good transportation network.These are key arrangements to development as no country can develop without trade, and transportation is central gravity of effective and efficient trade. The objective of multimodal arrangements is efficient and effective goods flow from one country to the other for facilitation of both national and international trade.

The United Nations convention on international multimodal transport of goods (1980), or MT convention herein after, stated that its aim was to set international standard and rule of law that member states needs to follow in facilitation of international multimodal transport of goods. The convention report states that all state parties to the convention recognize points in relation to multimodal transport of goods. These includes: international multimodal transport of goods is recognized as a way of smoothing systematic expansion of world trade, the requirement of trade for smooth, economic and efficient multimodal transport service, the attractiveness of guaranteeing logical development of international multimodal transport in the interest of all countries and the need to consider special problems of transit countries.

Multimodal transportation of goods provides efficient transitions between modes, flexibility and possibilities for door-to-door service, environmental advantage, and the possibilities of combining the advantages from separate modes are noted to be advantages of multimodal transport system. Similarly, Panayides (2002) noted that multimodal transport system is a response to customers� demand to get one-window, integrated, just-in-time, efficient and all inclusive door-to-door service atpredetermined price.Taylor claims that multimodal carriage is the key to increasing the productivity and competitiveness of the freight transport industry as a whole, whilemaintaining the environmental balance.This is because effective multimodal transport ensures the use of the most efficient mode of transport at each stage, thus reducing congestion, energy expenditure and pollution.⁵From legal point of view multimodal transportation arrangements among others avoids the difficulty of assigning responsibility/liability in case of damage which may be complex under unimodal arrangements [i.e. the case of un-localized loss].⁶In sum it is possible to conclude that the rise of international multimodal transport service is the result of its benefit over the segmented mode arrangements.

II. International Legal Regulation of Multimodal Transport

During most of the previous century the different modes of transport carried goods largely on their own terms. Although the transferal of goods from one mode of transportation to another may have been greatly facilitated by the container revolution, the developments in international transport law have not kept pace. None of the attempts to create uniform law for multimodal carriage have as yet met with success, and there have been many. Due to the absence of a truly international regime on multimodal carrier liability, regional, sub-regional and national laws have been created and become quite a task to determine which rules apply in case of a dispute stemming from this type of transport. The Andean Community, the Latin American Integration Association (ALADI), the Southern Common Market (MERCOSUR) and the Association of South-East Asian Nations (ASEAN) have resorted to these types of solutions⁷. The Middle East seems to be working on a regional solution of its own as well. Besides these regional regimes there are also national regimes on multimodal carriage in vigor in The Netherlands, Germany, China, Mexico, India, Argentina and Brazil.⁸And recently Ethiopia also has enacted its law to govern multimodal transport.⁹Of course, if none of the carriage conventions covers the situation at hand, it becomes necessary to determine which national regime applies. Unfortunately not all national systems entail specific rules on multimodal carriage, so the consequences generated by one national regime may be quite different from those generated by another. There are also multiple standard contracts like BIMCO�s COMBICONBILL, FIATA Bill of Lading (FBL) 1992 and the MULTIDOC 95 of the BIMCO.

While some of these regimes are based on the MT Convention and the International Chamber of Commerce (ICC) Rules there are significant differences between the various regimes on points such as the basis of carrier liability, time bars and limitation of liability. The result is a rather inconsistent patchwork; the liability framework thus created is fragmented and complex and causes uncertainty as to what regime is applicable in a given situation. The existing international carriage conventions focus on specific types of unimodal carriage and thus cannot, and do not, regulate typical multimodal carriage difficulties such as un-localized loss. Some of the carriage conventions have incorporated provisions dealing with multimodal carriage however and apply in certain circumstances to a claim stemming from multimodal carriage.

In the hope of clarifying the current state of affairs, which rules of law may apply to the international multimodal contract for the carriage of goods and under which circumstances they do so the author of this paper made the following discussions.

A. Unimodal Carriage Conventions

1. Carriage by Road: The CMR Convention

This convention was adopted on 19 May, 1956. Today the CMR has 21 Contracting Parties, which are countries from Central and Western Europe. Although in the strict sense the CMR is only a regional convention, it still plays a very important role in the absence of an international liability system that covers the door to door transport of goods, such as the one of the MT Convention. The CMR governs the European portion of multimodal transport when the mode of transport is road crossing a national border in Europe.

The Use of Other Modes in Conjunction with Road Carriage

The CMR Convention provides that if the vehicle containing the goods is carried over part of the journey by sea, rail, inland waterway or air and the goods are not unloaded from the vehicle, the Convention shall nevertheless apply to the whole of the carriage.¹⁰In Article 2 of the Convention, it is stated that

�... when a vehicle is transported by rail, sea, air ... on each part of the journey and is unloaded, the CMR governs that transport. Nevertheless, an exception has to be made with the last principle when damage occurs during a leg of a transport which is not road and without resulting from an act of or omission of the road carrier, it is the law of that leg of transport which should be applied.�

Therefore, if a container is carried on a vehicle which travelled by road from state A to state B, and then was carried by sea to state C without being unloaded from the vehicle used for the initial road stage, the CMR Convention applies to the entire journey.¹¹In this case the container is considered to be carried by one mode of transport. On the contrary, if there is carriage by road from state A to state B, followed by a sea stage without vehicle to state C, the CMR Conventions applies to the initial road stage between state A and B,¹²but does not apply to the sea stage, because the vehicle did not go with the goods. Therefore, unloading ends the application of the CMR if the purpose of unloading is transfer to a different mode of transport without vehicle. However, if loss, damage or delay in delivery of the goods occurs during the carriage by the other means of transport without fault on the part of the carrier by road but by an event which could occur only through use of the other mode, e.g. sea damage, the liability of the carrier will be governed by any national or international law for the carriage of goods by that means of transport, such as the Hague Rules or Visby Rules. If there is no such law applicable, the liability of the carrier by road shall be determined by the CMR Convention.

The document used in connection with CMR is a consignment note or waybill, which is a document of proof of the contract of carriage, and is non-negotiable. It is issued in three originals signed both by the shipper and the carrier. The consignment note isprima facieevidence of the conditions of the contract and of the receipt of the goods by the carrier.

2. Carriage by Rail: Multimodal Transport under the COTIF-CIM

As early as 1893, the first International Convention Concerning the Carriage of Goods by Rail came into operation, achieving uniformity in the liability regime for the transport of goods by rail. Its provisions were frequently revised and the most recent successor (1970) became effective in 1975 and is known as the CIM Convention.¹³

The COTIF Convention is largely a European convention like the CMR, as its members are mostly European countries, but also some North African States and States from the Middle East have ratified the Convention¹⁴. Another change that aspires to attain these same goals is the abrogation of the lines or services system¹⁵and the necessity of a through consignment note. The scope of application of the COTIF-CIM after implementation of the Vilnius Protocol is no longer restricted to lines or services included in a list; currently the CIM can apply to all international contracts concerning the carriage of goods by rail for reward. The result of the Vilnius Protocol pertaining to the carriage of goods can be found in the CIM appendix to the contemporary COTIF Convention. The scope of application of this CIM is determined by its first Article, of which Article 1(1) states:

�These Uniform Rules shall apply to every contract of carriage of goods by rail for reward when the place of taking over of the goods and the place designated for delivery are situated in two different Member States, irrespective of the place of business and the nationality of the parties to the contract of carriage.�

It required all territories through which the goods were transported to be members of the COTIF. Besides, the stricter geographic demands of the CIM are largely mitigated by Article 1(2) CIM. This paragraph determines that the CIM�s rules also apply if the parties to the contract of carriage by rail agree that the contract is subject to the CIM, even if only the State where the place of taking in charge of goods or the State where the designated place of delivery is situated is a Member State.

The Use of Other Modes in Conjunction with Rail Carriage

As regards the application of the CIM 1999 to parts of a multimodal contract there is no case law as yet. And in this regard the current literature on the new CIM generally restricts itself to mentioning the possibilities for application to supplemental carriage found in Article 1(3) and (4). Through Article 1(3) and (4) of CIM, the main scope of application covers certain types of carriage by other modes of transport if they are included in a contract of which the primary focus is carriage by rail. Due to these paragraphs the CIM applies to entire multimodal carriage contracts under the right circumstances.¹⁶A number of the requirements for application set by the COTIF-CIM 1990¹⁷besides the expansion of the scope of application in relation to substitute carriers, which still concerns carriage by rail, the CIM regime also �annexes� other modes of transport, albeit on a moderate scale.

The CIM Convention provides that regular road or shipping services which are complementary to railway services and on which international traffic is carried may, in addition to services on railway lines, be included in the list of designated networks of railway lines.¹⁸Therefore, road or shipping services might be subject to the CIM Convention provided that these services are considered complementary to railway services, carrying international traffic and included in the published list of lines to which the Convention applies. In such a circumstance, the CIM provision might be applicable to the carriage of the goods by road or sea because they are considered as one mode of transport despite the combination of modes.

3. Carriage by Inland Waterways: CMNI

According to Article 2 CMNI the scope of the Convention is stated to cover any contract of carriage according to which the port of loading or the place of taking over of the goods and the port of discharge or the place of delivery of the goods are located in two different States, of which at least one is party to the Convention. The extensive geographic scope of application generated by this Article is clearly derived from the CMR, which, besides the air, rail and maritime carriage conventions, served as an example during the drafting process of the CMNI. Like the CMR, the CMNI only requires one of the mentioned places to be in a member state, and due this sameness between the scope of application rules of the CMR and the CMNI it is likely that they would advocate the application of the CMNI to international inland waterway carriage, even if it is part of a multimodal contract.

[...]

* Tewachew Molla, LL.M candidate in Business and Corporate Law at BDU, pursued his LL.B at UoG, Assistant lecturer at DDU, Ethiopia.

¹ Prof.dr. H.G. Schmidt,MULTIMODAL TRANSPORT LAW:The law applicable to the multimodal contract for the carriage of goods,Kluwer Law International, The Hague, The Netherlands, 2009.

²UNCTAD,Multimodal transport; the feasibility of an international legal instrument(13 January 2003) UNCTAD/SDTE/TLB/2003/1, http://unctad.org/en/docs/sdtetlb20031-en pdf, p. 4.(consulted 11 June 2019)

³Andrew Tettenborn & Baris Soyer,Carriage of goods by sea, land and air,Informal law from Rutledge.2014, P.232.

⁴Id, p. 233.

⁵J. Taylor,Remove barriers to intermodal Transportation and Distribution, Monsanto Company, Washington, DC. America, Vol.34. No.4,MPM ,1993, p.34.

⁶Hoaks, 1990.

⁷Andean Community Decision 331 of 4 March 1993 as Modified by Decision 393 of 9 July 1996:�International Multimodal Transport�; MERCOSUR Partial Agreement for the Facilitation of Multimodal Transport of Goods, 27 April 1995; ALADI Agreement on International Multimodal Transport, 1996; ASEAN Draft Framework Agreement on Multimodal Transport (final draft, as of 19-20 March 2001). For details see at www.unctad.org

⁸Germany: �� 452-452dHandelsgezetsbuch(HGB); India: Multimodal Transportation of Goods Act, 1993 (No. 28 of 1993); Mexico: Regulation on International Multimodal Transport, 6 July 1989; The Netherlands: Civil Code, book 8, title 2, Section 2, Articles 8:40-52 BW; Argentina: Law No. 24.921: Multimodal Transport of Goods, Official Bulletin 12 January 1998; Brazil: Law No. 9.61 of 19 February 1998 on Multimodal Transport of Goods; China: Maritime Code, 1993, Chap. IV, Sec. 8: Special Provisions Regarding Multimodal Transport Contract; Regulation Governing International Multimodal Transport of Goods by Containers, 1997; Contract Law, 1999, Chap. 17, Sec. 4: Contracts for Multimodal Transportation. For details on these regimes see the comparative table (UNCTAD/SDTE/TLB/2/Add. 1) summarizing the information contained in document UNCTAD/SDTE/TLB/2 of 27 June 2001. The table can be found at www.unctad.org.

⁹Multimodal Transport of Goods Proclamation, 2007, Federal Negarit Gazette, Proc. No. 548, 13th Year, No. 59.

¹⁰Convention on the Contract for the International Carriage of Goods by Road, UN, Geneva, 19 May 1956, [Here in after referred to as CMR Convention], Art. 2.

¹¹M.A. Clerk,International Carriage of Goods by Road: CMR, Sweet & Maxwell, London, 1970, p. 66. (Here in after cited as Clerk).

¹²P.G. Fitzpetrick,Combined Transport and the CMR Convention, J.B.L. 1968, p. 311. (Here in after cited as Fitzpetrick).

¹³The acronym which comes from the French title of the Convention (re�gles Uniforms Concemant le Contract de Transport International Ferroviaire des Merchandises).

¹⁴Turkey, Tunisia, Morocco, Syria. Iraq and Iran for instance are members of the COTIF as amended by the 1999 Vilnius Protocol. In total 37 States had ratified the newest version of the COTIF in July 2009, see www.otif.org.

¹⁵CIM, Article 1(4).

¹⁶K.F. Haak & M.A.I.H. Hoeks,Intermodal transport under unimodal arrangements,2005, pp. 91-92.

¹⁷The Protocol of 20 December 1990 for the Modification of the Convention concerning International Carriage by Rail (COTIF) of 9 May 1980.

¹⁸CIM Convention, Art 2(1).