Zhaijuangraduated from Dalian Maritime University and got the Bachelor Degree in 2001; graduated from China Politics and Law University and got the Master Degree in 2005; worked at Legal Affairs Department of Sinotrans Group since 2005; now serve as legal advisor at Board of Directors’ Administrative Office of Sinotrans Group. 

Answers and New Questions for Port Operators under the Rotterdam Rules

With sixteen countries have signed up to the United Nation Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the Rotterdam Rules) and four to go in order for the Rules to carry any weight, more and more stakeholders put their concerns on the changes the Rotterdam Rules will bring about to the shipping industry and international trade. No doubt the port operators are members of them, since the Rotterdam Rules are bound to put an end to their present troubles and bring about new puzzles.

Ⅰ. Current Troubles Confronted by the Port Operators
In liner practice, the carrier usually takes custody of the goods to be transported before they can be loaded on the vessel and keeps them in its possession after they are unloaded until delivery to the final recipient. In such circumstances, if the goods are damaged or lost while in the custody of the carrier, it will responsible for it. Since on the pier the carrier’s above duties of receiving, guarding, loading, stowing, discharging and delivery, etc. of the goods are generally transferred to the port operators and stevedores, they become the last bearer of such responsibility for the cargo interests. In this context, one question must be answered, i.e. whether the port operators can enjoy the list of exemptions and quantitative limitation of liability conceded by the national law and international convention to the carrier, while bearing the responsibility of it.
A. Legal Status of Port Operators
In order to answer the above question, we should first ascertain the legal status of port operators. Until now there are still three theories about this question, i.e. the employees or agents, the independent contractors and the actual carriers, and the theory of independent contractors prevails. Different identification might lead to different judicial decision for the port operators.
B. Limits of Temporal Liability of Carrier
As we know, under Hague Rules the period of responsibility of the carrier is strictly limited to “Rail to Rail” or “Tackle to Tackle”, and the boundary is in the contrary to the practice of liner traffic. This would leave us without a unitary answer for the question of who is liable for the goods on the pier and how. According to the strict temporal liability of carrier, it would not be liable in this period, while the liner terms say the contrary. This dilemma has direct impact on the legal status of port operators.
Just as Professor William Tetley said, under the common law a third party (e.g. a stevedore or terminal operator) may not benefit from the terms of a contract to which he is not a party unless that third party is carrying out at least part of the duties of one of the parties to the contract. The weakness of the argument that the stevedore (or terminal operator) may benefit under the bill of lading contract arises from the fact that the carrier in the bill of lading undertakes no responsibility after discharge, which is when the stevedore or terminal usually to be benefited.
C. Application of Himalaya Clause
The Himalaya Clause as the result of a decision of the English Court of Appeal in the case of Adler v. Dickson (The Himalaya), sprang on the world over 40 years ago. The validity of the Himalaya Clause is confronted with the challenge of the principle of privity of contract. The trouble is how to break through the privity of contract and find a way to permit third parties like port operators to benefit under the contract of carriage.
The major changes of the privity rule appear in international conventions, national statutes and redefinition by the courts. The Hague-Visby Rules attempted to extend “Himalaya” protection automatically to at least the carrier’s servants and agents, although apparently not to independent contractors. The provision was ambiguous, however, and there has been disagreement as to how broadly it extends. Article 7(2) of the Hamburg Rules also extends Himalaya protection automatically to the carrier’s servants and agents, and adds the independent contractors. Some jurisdictions have passed general statutes that either modify or abolish the privity rule. CMC introduces the regulation of the Hamburg Rules. The United Kingdom, in particular, adopts the Contracts (Rights of Third Parties) Act 1999.
Although there appears the tendency of unification, i.e. accepting the application of Himalaya Clause to port operators, the absolute unification is still hard to acquire and there is uncertainty to apply it in certain cases.

Ⅱ. Answers Given by the Rotterdam Rules
A. Maritime Performing Party
During the CMI process of drawing up the Rotterdam Rules, there was widespread support for the proposition that every potential defendant should have automatic “Himalaya” protection.   Although this approach would not provide completely predictable treatment on uniform terms to all actions for cargo loss or damage, it would at least ensure that some of the Instrument’s core provisions (those governing the carrier’s defenses and limits of liability) would apply to all actions. It would also reduce the incentive to sue subcontractors that might otherwise be subject to higher liability under current non-uniform laws. Thereafter the terminology of maritime performing party comes into being in the Rotterdam Rules. The maritime performing party is defined as a performing party to the extent that it performs or undertakes to perform any of the carrier’s obligations during the period between the arrival of the goods at the port of loading of a ship and their departure from the port of discharge of a ship. An inland carrier is a maritime performing party only if it performs or undertakes to perform its services exclusively within a port area. Therefore, the actions of maritime performing party are restricted to the port area. In the setting of this definition, on one hand, the maritime performing party carries out the obligations that belonging to the carrier; on the other hand, as a performing party it is an independent operator that agrees to carry out, on its own behalf, the duties of the carrier, under the carrier’s supervision or control, or at its request.   Consequently, the port operators for the first time have a potential, legal liability and corresponding interests towards goods’ owners under a maritime international convention.
B．Liability of Maritime Performing Party
Under the Rotterdam Rules, if the following two conditions were satisfied, a maritime Performing Party would be subject to the obligations and liabilities imposed on the carrier, in the meantime expressly entitled to the carrier’s defenses and limitation of liability: (a) The maritime performing party received the goods for carriage in a Contracting State, or delivered them in a Contracting State, or performed its activities with respect to the goods in a port in a Contracting State; and (b) The occurrence that caused the loss, damage or delay took place: (i) during the period between the arrival of the goods at the port of loading of the ship and their departure from the port of discharge from the ship; (ii) while the maritime performing party had custody of the goods; or (iii) at any other time to the extent that it was participating in the performance of any of the activities contemplated by the contract of carriage.   The regulations exclude the increased amount of the liability not expressly agreed to by the maritime performing party, as a consequence of increased liability amount agreed to by the carrier.
If the maritime performing party has entrusted the performance of any of the carrier’s obligations under the contract of carriage to any person, it will be liable for the breach caused by the acts or omissions of the person.  But the regulations exclude the personal liability of the maritime performing party’s employees.
C. Joint and Several Liability
If the carrier and one or more maritime performing parties are liable for the loss of, damage to, or delay in delivery of the goods, their liability is joint and several but only up to the limits provided for under this Convention. The aggregate liability of all the above persons shall not exceed the overall limits of liability entitled to by the Rotterdam Rules.  Then the innocent persons have the right of recourse.

Ⅲ. New Puzzles for the Legislators and practitioners to answer
A. Definition of “Port” and “Port Area”
There lacks a definition of “ port” and “port area” in the Rotterdam Rules, however this definition is undoubtedly the key to ascertain the maritime performing party. Even in the OTC Convention there isn’t vague definition operative.  Consequently, the "port phase" of the goods for the Rotterdam Rules, constitutes one stage of the many that can be distinguished during transport. It will only be possible to determine transport section limits by using a case by case analysis. Determining these limits depends on the port in question, its geography, the modality of the subject goods, other details of the contract, and, most importantly, the law regulating the port.
B. Special Agreements between Carrier and Cargo Interests
The Rotterdam Rules allow the parties to agree that the loading, handling, stowing or discharging of the goods is to be performed by the shipper, the controlling party or the consignee . Such clauses, typically called FIO (free in-and-out) and FIOS (free in-and-out stowed) were specifically drafted for charterparties where the shipper might expect to perform the listed operations with greater skill and care, or at a lower cost. However, in regular liner transportation it is possible for them to be abused to transfer the carrier’s obligation of care for the goods onto the shipper. There is such agreement in practice that the carrier is liable for the loading and unloading of the goods while the shipper or consignee pays for it. Under this kind of agreement, should the carrier be liable for the goods? Correspondingly the port operators actually taking custody of the goods during this period will have to identify who are the real principal and furthermore whether they are still maritime performing parities of the carrier.
C. Intervention of public authorities
An additional scenario is possible: the goods are located in the fit port area, but outside of the control of the above-mentioned parties, i.e. the carrier, the shipper, the controlling party or the consignee, which is the circumstance mentioned by Article 12.2(a): the applicable "law or regulations of the place of receipt require the goods to be handed over to an authority or to other third party," and the more likely situation at the port of delivery where control by customs officers is likely. According to the regulation of Article 12.2(a) , the period during which the goods is in the control of the public authority or other third party is not covered by the period or responsibility of the carrier. Thus does it mean that public authority or other third party taking custody of the goods during this period can not constitute maritime performing party and enjoy the corresponding interests? Should they be ruled by the OTC Convention? And how should we resolve the underlying inconsistence between the Rotterdam Rules and the OTC Convention?