2.1 Relationship with other transportation conventions—limitation of liability The Convention actually does not achieve uniform limitation in relation to other transport conventions, although the wording used is for the sake of uniformity with the limitations contained in the other transport conventions. “Because the Convention fills a gap between the existing transportation liability conventions, the liability limits of the connecting transportation conventions must be considered to ensure that the Convention fits harmoniously into the overall transportation network” (Larsen, Sweeney, Falvey, & Zawitoski, 1994). Based on this consideration, Article 6 provides,
(a) The liability of the operator for loss resulting from the loss of or damage to goods according to the provisions of Article 5 is limited to an amount not exceeding 8.33 units of account per kilogram of gross weight of the goods lost or damaged.
(b) However, if the goods are handed over to the operator immediately after carriage by sea or by inland waterways, or if the goods are handed over, or are to be handed over, by him for such carriage, the liability of the
operator for loss resulting from loss of or damage to goods according to the provision of Article 5 is limited to an amount not exceeding 2.75 units of account per kilogram of gross weight of the goods lost or damaged. For the purposes of this paragraph, carriage by sea or by inland waterways includes pick-up and delivery within a port.
There are two problems with the above provisions. On the one hand, the terminal operators’ limitation of liability should not be different with regard to the different connecting transportation, because the risk and total liability of the terminal operators do not differ as a result of the different modality of connecting
transportation. In fact, almost all the terminal operations within a port is connected to both water and land transport, and all the water transport is hardly finished without the involvement of land transport. It is unreasonable to lower the terminal operators’ limitation of liability because of the connection with water transport for the sake of the uniformity with the limitation of liability of shipowners laid down by Hague- Visby Rules and Hamburg Rules. Terminal operators as independent contractors should have their own liability regime irrespective of the connecting carriers. On the other hand, the terminal operators’ limitation of liability is not really uniform with the shipowners’ limitation of liability. The Hague-Visby Rules and Hamburg rules have adopted dual limitation: one is based on the weight as unit, the other is based on package as unit for calculation; whichever is the higher is the limit of the
shipowners’ liability. The Convention adopted only one limitation based on the weight of the shipment. In case the shipment is lighter cargo, it is more likely that the limitation based on package as accounting unit will be the shipowner's limitation of liability. The limitation of liability regimes created by the Hague-Visby Rules or Hamburg Rules and that created by the Convention are not uniform in this case. The cargo owner can get different indemnity from terminal operators compared to that from carriers.
2.2Relationship with Chinese laws
conferred to terminal operators by the Convention does not comply with the Chinese legal tradition. In Chinese law, there are two kinds of exemption and limitation, which are stipulated by statute or defined by contract respectively. The conditions of exemption and limitation are strictly limited to force majeure by the civil law. It is provided in Article 107 of the General Principles of Civil Law of the People's Republic of China, that “civil liability shall not be born for failure to perform a contract or damage to a third party if it is caused by force majeure, except as otherwise provided by law”. So the terminal operators are not entitled to limit their liability, which are not caused by force majeure if there are not other statutes saying so, which is the present actual situation in China.
The validity of exemption clauses contained in contracts is also strictly confined by the courts in practice. Normally, the validity of those clauses exempting liability caused with intention and gross negligence by the defendant is denied by the courts (Wang, 1996, p34). Article 107 of the General Principles of Civil Law of the People’s Republic of China is open to allow other statutes to give the right to some categories of persons to exempt or limit their liabilities, so the remaining problem is whether the terminal operators should be given the right to limit their liability in the form of legislation and how to define the validity of the exemption clauses contained in a terminal operation contract. The solution will be given later in this Chapter.
Article 10 of the Convention confers to the terminal operators the right of retention of the goods to secure the payment for the service they offered. This provision also does not comply with the Chinese legal tradition. In the context of the discussion in this dissertation, the contract of terminal operation is between terminal operators and carriers rather than cargo owners. The duty to pay for the terminal operation is on the part of the carriers rather than the cargo owners. The cargo owners' interests in the cargo should not be prejudiced by a dispute between terminal operators and carriers. The case may be that the cargo owner has paid all the freight to the carrier while the carrier fails to pay the terminal operator. In such a situation it is unfair to let the terminal operator exercise the right of retention on the goods. If the cargo owner fails to pay the carrier which leads the carrier to fail to pay the terminal
operator, the terminal operator still should not exercise such kind of right on the cargo for the duty of payment is owed by the carrier rather than the cargo owner. If the carrier instructs the terminal operator to retain the cargo, that is the carrier’s right on the cargo, which is a totally different matter.