Know the law when shipping to Bermuda
Shipping to Bermuda can be confusing even without considering international shipping conventions.
I hope to provide some clarity in this piece on Bills of Lading and General Average as they relate to maritime shipping law.
Please note that I am not a lawyer and this piece does not constitute legal advice, but rather should serve as general awareness of the process and things to be aware of.
Bills of Lading
The Bill of Lading is the document by which your goods will travel into Bermuda by sea (the air equivalent is an Airway Bill, or AWB).
Whether you are booking goods directly with the containership's agent or your goods are being handled by a foreign forwarder, the same basic principles apply.
Shipping law is complex and there are courts that specialise in its intricacies. Historically, in Bermuda there is very little legal precedent upon which to rely as relates to the terms and condition by which goods transit.
Luckily, in Supreme Court cases — in Robinson vs Somers Isles Shipping Ltd in 2008 and Bermuda Forwarders Ltd vs Wales in 2015 — precedent was established clarifying how international shipping conventions and treaties as relates to Bills of Lading apply in Bermuda.
The following is excerpted verbatim from the judgments in those cases:
• A Bill of Lading will usually afford the best evidence of the terms of the contract of carriage.
• Where goods are shipped under a Bill of Lading, the consignee or ultimate recipient of the goods is bound by the pre-existing contract entered into by the shipper and the carrier.
• It is not possible for the consignee to challenge the terms of the contract for carriage based on his or her own experience or knowledge of standard terms and conditions incorporated by reference into the contract.
• The key time frame to be analysed for determining who are the parties to the original contract of carriage is before the goods are shipped when the shipping arrangements are made.
• In most cases, it is likely that the Bermudian importer will only be able to sue the local or overseas carrier who issued the relevant bill of lading and transported the goods to Bermuda, not the local delivery agent with whom they directly interfaced.
The right to sue in Bermuda will likely be excluded, while a limit on the amount of damages which can be recovered will likely be imposed.
The policy underlying these legal rules is to promote internal trade by protecting those engaged in the carriage of goods from unpredictable levels of financial risk flowing from the loss or damage of goods while in transit.
General Average and insurance
The last point is very important for local importers to understand. Shipping costs are determined by the volume or weight of your goods, not the value or potential to produce value.
Insurance is an important part of shipping and should be considered a cost of business.
The limits of liability contained within Bills of Lading are very restrictive and one cannot expect to receive replacement purchase or shipping value if entering into a claim for lost or damaged goods where there is not gross negligence.
Another reason to always insure, no matter the value of your shipment, is a little known but very scary element of international maritime law called General Average.
According to the law of General Average, first defined in the York Antwerp Rules of 1890, “all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency”.
In real world terms, if your goods comprise ten per cent of the ship's load and general average is declared, you will be responsible for ten per cent of the bill. Any Marine Cargo policy worth its salt will have a provision for General Average coverage.
If you have any questions, please visit www.bermudaforwarders.com or contact us.
• Nick Kempe is vice president of Bermuda Forwarders Ltd