Carriage, Contract of
1. Concept, delimitation and purpose
By the contract of carriage the carrier promises to carry, in its own responsibility, passengers or goods against the remuneration agreed upon. This broad definition contains two characteristic elements: the carrier’s promise to change a location and to carry out the acts needed under its own direction and in its own responsibility. The latter requirement distinguishes the contract of carriage from various forms of forwarding contracts (forwarding contract); while the forwarder’s activity equally aims at a change of location of the goods, it merely entrusts others with the performance of the activities leading to that change. The change of location must be a principal contractual obligation. A seller who promises delivery at the buyer’s premises and calculates the price of the goods accordingly does not thereby turn into a carrier; the contract will still be a contract of sale. The requirement of a change of location refers to the object of carriage, which is either goods or passengers. This is also true for voyage charters. Only contracts that exclusively refer to the vehicle such as leases or bareboat charters are outside the domain of the contract of carriage. Time charters have a position in between.
The preceding description concerns contracts for both the carriage of passengers and the carriage of goods. Some further elements set forth in national statutes only refer to the transport of goods. This applies to the custody of the goods, see for French law Art 15 Loi No 66-420, but also for the duty to deliver the goods to the consignee, see for Germany sec 407(1) CCom. Some definitions also specify the type of transport vehicle or other indications of the particular category of transport such as carriage by road or carriage by sea. But such definitions make it difficult to handle innominate contracts which simply fix a destination, leaving the choice of the mode of transport to the carrier. The requirement of remuneration equally appears to inappropriately narrow the definition. The gratuitous transport of passengers and goods does not always occur as a mere favour; where it is a fringe benefit in the framework of another contractual relation, the application of the legal rules applying to contracts of carriage may be appropriate. Over the course of legal history, the contractual approach outlined above has prevailed over a status approach. At common law the strict liability of the common carrier as against its customer had not been based on the conclusion of the contract of carriage. That liability and other obligations were due to the fact that the common carrier held itself out to the public as offering its services in general or for certain categories of transport. Transport undertakings in England will generally exclude this status by a specific declaration to the effect that the relations between them and their customers will be determined by contract. Other approaches which define the carrier by its professional status or by its status as a merchant under the commercial codes of various countries are equally outdated. While the statutory provisions based on such approaches usually satisfy the needs of the transport industry, they do not cover contracts of carriage made by other, non-professional carriers which would then be subject to the rather abstract provisions governing contracts for work and labour or to general contract law.
The purpose of the broad definition outlined above is to subject the specific problems of carriage for others to the pertinent provisions made for their activities instead of having recourse to abstract and remote regulations. The contract of carriage contains elements of different types of contract, in particular of mandate, deposit, services (service contracts) and sometimes also of lease. In a historical and comparative perspective, this oscillating character of the contracts of carriage has rendered their classification and legal treatment a difficult task. Already in Roman law the locatio conductio was sometimes treated as a contract of services, sometimes as a contract for work. But none of these classifications takes full account of the peculiarities of the contract of carriage. From a comparative inquiry into the law of transport, three such peculiarities emerge: the very high risks of liability in both carriage of goods and passengers; the involvement of three persons in the transport of goods, raising in particular the problem of coordinating the contractual rights of the shipper and consignee in their respective relations with the carrier; and the issue of transport documents and their relation to the rights flowing from the contract.
2. Trends of legal development
Specific rules for contracts on the carriage of goods by sea, in particular on the strict liability of the carrier, had already been developed in Roman law by the so-called receptum nautarum, cauponum et stabulariorum (D 4, 9, 1). But Roman law did not consider the contract of carriage as a specific type of contract and attributed it rather, together with contracts for rent and lease, contracts for services and for works, to its widest type of contract, the locatio conductio. The practical significance of specific rules on the contract of carriage was rather insignificant throughout most periods of legal history up until modern times. Carriage for reward was an exception since merchants would usually accompany their goods, being traders and carriers in one person. It was only in mercantilist times that a specific industry of carters, coachmen and stagecoaches evolved; for carriage by sea the separation of trade and shipping did not fully take effect until the 19th century. It was only that separation which converted the law on contracts of carriage into the private law basis for a particular sector of services. The codes resulting from the era of natural law already contain specific chapters on transport services, see Allgemeines Landrecht für die Preußischen Staaten (ALR) (part 2, title 8, sections 11 and 15) and the French Code de commerce (Arts 103 ff). This was also the basis of the German Allgemeines Deutsches Handelsgesetzbuch (ADHGB) of 1861 which contained a comprehensive regulation of the contract for carriage of goods by land (Arts 390 ff) and in particular by railway (Arts 557 ff), and of the contract of carriage of goods by sea (Arts 665 ff).
a) Mandatory liability and its limitation
Steam engines, railways and steel vessels changed the relation of supply and demand in the transport industry in the 19th century. Scheduled services were established, usually by undertakings which had a monopoly on the respective transport relation or cooperated with their competitors in cartels. Ship-owners and railway companies standardized the transport relations with their customers by the use of—often biased—general conditions of contract which their customers—due to the imbalance of economic power—would have to accept on a take it or leave it basis. Thus, the need of shippers for protection through mandatory minimum standards grew throughout the 19th century; in maritime transport where goods were traded through bills of lading while afloat, a similar need was felt in wide circles of the importing and exporting community. Since the middle of the 19th century the development of the law relating to the carriage of goods has been very much impacted by the disputes between such claims of shippers and the conflicting interests of ship owners and railway companies. Mandatory provisions for transport by rail can already be found in the German Allgemeines Deutsches Handelsgesetzbuch of 1861. By virtue of the first Railway Convention of 1891 they became a European standard and finally prevailed in other European countries as well, see eg Art 3(3) of the French Code de commerce as amended in 1905 for domestic transport.
As to maritime transport the European nations were very much influenced by the interests of their merchant fleets and maintained freedom of contract for the carriage of goods by sea for a considerable time. Quite to the contrary, overseas nations whose trading interests were dependent on European vessels felt seriously affected by the one-sided contract terms and insisted on mandatory minimum standards. They were first introduced in the United States by the Harter Act of 1893. Following that law the terms of bill of lading contracts were subject to divergent appreciation by European and American courts, and efforts for an international harmonization began. After World War I the International Law Association, a private organization, approved the so-called Hague Rules which were recommended as model terms for worldwide incorporation into bills of lading. When it became apparent that ship-owners would not follow these recommendations, the Hague Rules were approved, at a diplomatic conference in Brussels 1924, as an international treaty that created mandatory liability rules for the relation between the carrier and the third party holder of a bill of lading. Ever since, mandatory liability has been established in all branches of transport for the carriage of goods and passengers although the details and the extent of such regulations differ considerably. In many of these instruments the carriers have received, as a quid pro quo, a limitation of their liability which will, however, be set aside in the case of intent or serious fault, thus giving way to unlimited liability.
b) International unification
Similar to the law of intellectual property, transport law is a domain for international uniform private law. Cross-border carriage of goods is the physical side of foreign commerce; just as in international trade, the need for uniform legal standards emerged in the law of carriage at an early stage. The method of private international law which refers a cross-border conflict to a national legal system is even less suited for the transport of goods than it is for a contract of sales. Starting with the Railway Convention of 1891, international instruments have therefore been adopted for all branches of transport, including both the carriage of goods and that of passengers (see 3 below). Many of these conventions have been ratified by a large number of countries and are of very high practical signifi- *cance. It has been estimated in the 1970s that the Hague Rules governed about 80 per cent of the carriage of goods by sea at that time. While the international conventions for the carriage by sea and air have a universal format, the instruments for the carriage by land and inland navigation are confined to Europe and neighbouring areas of Africa and Asia. What they all have in common is that they deal exclusively with cross-border transport. Their factual significance is, however, much greater: domestic transport law has been adjusted to the standards of international conventions in many countries over the course of time.
c) Intermodal harmonization
The laws applicable to the single modes of transport have partially developed from very old traditions and under the impact of specific technical and economic conditions pertaining to the production of transport services. As a consequence, considerable differences have emerged, for example, in relation to the conclusion of the contract, the sender’s/shipper’s rights of instruction of the carrier, the basis of liability, its extent and also as to the documentation of transport operations. These divergences were harmless as long as the goods carried were inspected and repacked at every transshipment. They were, however, increasingly perceived as problematic since container transport was gaining ground. Since containers are not opened during the entirety of carriage effected by several modes of transport, the consignee is generally unable to identify that part of the transit where the damage to the goods occurred, ie the applicable legal regime. This has led to considerable pressure for harmonization on national and international rule makers. Due to the predominant factual significance of the carriage of goods by road, the regime of that mode, ie the 1956 Convention on the contract for the international carriage of goods by road (CMR), became the benchmark and model for more recent instruments. The harmonization can already be perceived in the Hamburg Rules on the carriage of goods by sea of 1978, but also in more recent texts on the carriage of goods by rail. At the national level the German reform of transport law of 1998 should be mentioned which has created an almost uniform regime for carriage by road (carriage of goods by road), rail (railway transportation), air (air transportation) and inland waterway (inland waterway transport). By virtue of its rules on multimodal transport, this act even covers the carriage of goods by sea to a large extent.
3. International conventions
The first international convention on uniform law for the contract of carriage was approved for carriage by rail in 1891 (railway transportation). According to that convention, the contract for cross-border carriage by rail is conceived as a through carriage effected by the subsequent railway companies which join the initial contract of carriage concluded by the first railway company in the country of dispatch. Since the subsequent railway companies do not negotiate with the sender of the goods, a uniform regime is necessary for the whole transit. The initial convention, which only covered the carriage of goods (CIM), was later supplemented by a convention on the carriage of passengers (CIV). At present, both conventions have been integrated into a framework convention (COTIF) which is now in force as amended at Vilnius/Lithuania in 1999.
For maritime transport too (maritime transport (contracts of carriage of goods); maritime transport (contracts of carriage of persons); maritime transport (global limitation of liability)), several generations of texts have been adopted. The Hague Rules of 1924 mentioned above created a mandatory liability regime which according to the prevailing view was only applicable where a bill of lading had been issued; in that case it only protected the third party transferee of the bill of lading, not the contractual shipper. The Hague Rules have been amended in particular by the Visby Protocol of 1968. A completely new approach was taken by the 1978 United Nations Convention on the carriage of goods by sea, the ‘Hamburg Rules’. They have established a mandatory liability regime that is applicable even in the absence of a bill of lading. The Hamburg Rules have been ratified by more than 30 states. But most of these contracting states have no merchant fleet of their own and exclusively protect the cargo interests of their shippers and consignees. By contrast, most of the maritime nations which pursue their own shipping interests stick to the Hague Visby Rules. In order to harmonize the Hague Visby Rules on the one side and the Hamburg Rules on the other, UNCITRAL has been working for several years on a new convention which has recently been adopted as the 2008 United Nations Convention on contracts for the international carriage of goods wholly or partly by sea—the ‘Rotterdam Rules’, see UN Doc A/RES/63/122 of 2 February 2009. In respect of the transport of passengers and their luggage, the Athens Convention was concluded in 1974 and supplemented by several protocols, the most recent one dating from 2002.
The carriage of goods by road in Europe is completely dominated by the Convention on the contract for the international carriage of goods by road of 1956 (CMR), which has not only taken effect for all Member States of the European Union, but even beyond in parts of northern Africa and central Asia. Since it is sufficient for the application of the Convention that either the place of dispatch or the place designated for delivery is situated in a contracting state, the practical significance of the Convention extends far beyond the contracting states; parties established in non-contracting states will generally comply with the CMR for transport operations affecting a contracting state since the CMR is absolutely mandatory and permits contractual derogations only by way of exception. In comparison, the 1973 Convention on the contract for the international carriage of passengers and luggage by road has proven rather insignificant; it has only been ratified by some states in eastern and south eastern Europe.
During the pioneer phase of international civil aviation (air transportation (contractual liability); air transportation (third-party liability)) following World War I, the international community—at the time mainly European countries—adopted in 1929 the Warsaw Convention which created uniform contract law for the carriage of goods and passengers by air, the Convention subsequently receiving more than 150 ratifications worldwide. In response to widespread criticism the very low liability limits were raised in 1955 by a Hague Protocol, but they still proved to be insufficient in later years. As a consequence, unilateral and regional measures tore apart the existing uniformity. By the approval of the 1999 Montreal Convention, the international community has made another effort to restore a universal and uniform regime of mandatory minimum standards for the international transport by air; at present, the Montreal Convention has been ratified by more than 80 states.
The European nations interested in the carriage of goods by inland waterway (inland waterway transport) agreed on the Budapest CMNI Convention in 2001. It establishes for the first time a mandatory liability regime for that mode and has meanwhile taken effect for numerous countries interested in shipping on the rivers Rhine and Danube. On the other hand, the corresponding CVN Convention on the transport of passengers in inland navigation has never entered into force.
Finally, the 1980 United Nations Convention on the international multimodal transport of goods (multimodal transport) should be mentioned. It is applicable to all international transport operations which are carried out on the basis of a single contract by different modes of transport. While this convention has not taken effect either, it has served as a source of inspiration for several national regulations of multimodal transport.
4. The Europeanization of the law of contracts of carriage
From its very beginning in the 1950s, the European Community has pursued the goal of a common transport policy under Art 70 EC; in accordance with Art 91 TFEU/71 EC the Community has very broad legislative powers in this field which are not limited to specific issues of transport policy and relate to all five modes of transport under Art 100 TFEU/80 EC.
Yet, the Community has addressed the private law of transport operations only at a later stage and by rather fragmentary measures. A first step was Reg 295/91 establishing common rules for denied-boarding compensation and some other rights in scheduled air transport; it was later replaced by the more comprehensive Reg 261/ 2004. A further important step was Reg 2027/97 on air carrier liability in the event of accidents, ie a subject also covered by the Warsaw Convention and the more recent Montreal Convention which has been ratified by the Community and has thereby become an integral part of Union law, see Decision 2001/539 and ECJ Case C-344/04 – IATA  ECR I-403 paras 34, 39. Another regulation (1107/2006) concerns the rights of disabled persons when travelling by air. In other modes of transport too, the Community has connected to existing international conventions or has incorporated them, sometimes however by amending them or adding further regulations. Thus, Reg 1371/2007 declares the International Convention on the carriage of passengers by rail (CIV) as binding for the whole Community and thereby, after a transition period, also for domestic rail passenger services. A similar approach has been taken by Reg 392/2009 which essentially copies a number of provisions of the 1974 Athens Convention relating to the carriage of passengers and their luggage by sea as amended by the Protocol of 2002; some divergences and additional provisions will, however, likely raise difficult issues of international law. The most recent instrument on passenger rights is Reg 181/2011 concerning bus and coach transport.
The reception of international transport conventions into domestic law is not completely novel. Many countries have in fact applied the regimes of the Warsaw Convention to domestic air transport or those of the CMR to domestic road transport. What is new is the octroi of such reception by the European Union. While that method aims at avoiding disharmonies between the private law of the Union and regional or universal harmonizations, the Union cannot deviate from international instruments without creating new problems. Article 351 TFEU/307 EC provides a solution for only a very few of them.
Lars Gorton, The Concept of the Common Carrier in Anglo-American Law (1971); Jürgen Basedow, Der Transportvertrag (1987); Jürgen Basedow, ‘Hundert Jahre Transportrecht: Vom Scheitern der Kodifikationsidee und ihrer Renaissance’ (1997) 161 ZHR 186; David Glass, Freight Forwarding and Multimodal Transport Contracts, 2004; Krijn Haak, ‘Revision der CMR?’  TranspR 325; Hans-Georg Bollweg and Annette Schnellenbach, ‘Die Neuordnung der Luftverkehrshaftung’ (2007) 15 ZEuP 798; Ingo Koller, Transportrecht (6th edn, 2007); Rainer Freise, ‘Neue Entwicklungen im Eisenbahnrecht anlässlich des Inkrafttretens des Übereinkommens COTIF 1999’  TranspR 45; Jens Karsten, ‘Passengers, Consumers and Travellers: The Rise of Passenger Rights in EC Transport Law and its Repercussions for Community Consumer Law and Policy’ (2007) 30 J Consum Pol 117; Olaf Hartenstein, ‘Grenzüberschreitende Transporte in der Binnenschifffahrt’  TranspR 385; Nicolai Lagoni, ‘Die Haftung des Beförderers von Reisenden auf See und im Binnenschiffsverkehr und das Gemeinschaftsrecht’ (2007) 15 ZEuP 1079 with a response by Røsæg, ‘The Athens Regulation and International Law’ (2008) 16 ZEuP 599; Malcolm Clarke and David Yates, Contracts of Carriage by Land and Air, 2nd 2008.