The Futility of Unification and Harmonization in International ...

22value. The cap applies except when injury stems from the carrier’s knowing or recklessmisconduct. 23This limitation is not absolute, as passengers and shippers remain free to negotiate for greaterliability. But the drafters probably appreciated that a right to dicker over liability would have littlepractical effect. They easily could have expected that specialist insurance firms normally wouldprovide this protection at a lower cost than could carriers. The cartelized nature of the industry madeit likely that the shipper would bear the cost of additional coverage whether obtained from the carrieror a third party. At a minimum, the transaction costs associated with negotiating anything differentfrom the standard liability term would deter shippers from seeking a departure except in cases wherethe benefit derived from carrier (as opposed to third party) liability exceeded by some substantialamount the difference in cost between procuring insurance and sharing the burden with the carrier.Other provisions also reflect the carriers’ interests. Article IV(2)(a) provides them with ancomplete defense for all liability caused by faults in navigation, even when the ship’s captain serves24as the carrier’s employee. Article IV(2) lists other conditions, such as war, weather, and laborunrest, that would free carriers from liability and forbids the imposition of liability without fault. 25Finally, Article III(6) gives the recipients of cargo only a limited time to complain about damage afterthey take possession. Failure to complain immediately, in the case of apparent damage, or withinthree days, in all other cases, results in a legal presumption that the goods arrived in good condition.26Shippers then have a year to sue. As with Article IV(5), carriers remain free to contract for greaterobligations than those imposed by the Hague Rules, but may not contract away those duties imposedby the Rules. 27One could challenge my characterization of these provisions as pro-carrier. None may favorcarriers as much as a legal regime that allows carriers an unrestricted right to contract out of mostif not all liability. But by the end of the nineteenth century, freedom of contract with respect to seacarriage was waning and some form of industry regulation seemed inevitable. The limits on liabilityfound in the Hague Rules seem at least as hospitable, and probably better, than those that carriersmight have confronted had the international process not cut short national legislative developments.Further evidence that the Hague Rules favor sea carriers comes from subsequent efforts byshippers to overturn the regime. At the initial suggestion of Chile, a country that relies heavily on1722Hague Rules Art. IV(5).The Protocol to Amend the 1924 Convention for the Unification of Certain Rules of LawRelating to Bills of Lading, Feb. 23, 1968 [hereinafter cited as Visby Rules], increased the monetary value of Article IV(5)’slimit. Many important jurisdictions, including the United Kingdom, Canada, South Africa, France and Belgium, apply theVisby Rules, but the United States still adheres to the unamended Hague Rules.23Hague Rules Art. IV(5).24Hague Rules Art. IV(2)(a). Carrier do have an obligation to exercise care in preparing the vessel for seaworthinessand in selecting their agents and servants, including the master. Id. Art. III(1).25Id. Art. IV(2).26Id. Art III(6). The Visby rules permits owners of damaged cargo to bring actions for indemnity after the one-yearperiod has expired. Visby Rules Art. III(6bis).27Hague Rules Arts. III(8), V.