CARRIAGE OF GOODS BY SEA (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Trade and Industry (Mr Yeo Cheow Tong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Carriage of Goods by Sea Act (or "COGSA") was enacted in 1972 to comply with Singapore's international obligations under the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924, as amended by the Brussels Protocol of 1968. This Convention contains what is popularly referred to in shipping circles as the "Hague-Visby Rules". The Hague-Visby Rules are the 1924 Hague Rules as amended by the Brussels Protocol of 1968. Singapore became a party to the Hague-Visby Rules in 1972 and in that same year COGSA was enacted.

The Hague-Visby Rules apply to bills of lading and other similar documents of title. The Rules were designed, first, to define the basic obligations of the carrier; and, second, to prescribe the maximum protection he could derive from the insertion of exceptions and limitation clauses in the contract of carriage. From the practical point of view, the most important aspect of the Hague-Visby Rules is that they govern the limits of liability of carriers and restricts shipowners from contracting out of these limits. The limits may be increased by mutual agreement but not reduced or avoided altogether.

Sir, this Bill will reform and amend COGSA in order to, first, provide for greater certainty and predictability to traders engaged in international cargo shipments; second, clarify that the Hague-Visby Rules have the force of law in the sense of being an over-riding mandatory law; and, third, make it clear that COGSA gives full statutory effect to our international treaty obligations under the Convention. For example, that it applies to both out-bound as well as in-bound cargo.

Mr Speaker, Sir, the existing uncertainties in the current Act are due to a combination of factors. When COGSA was drafted in 1972, it was modelled after the previous 1927 COGSA which gave effect to the 1924 "Hague Rules". The provisions of the 1927 COGSA which were appropriate for the Hague Rules were not wholly appropriate for the Hague-Visby Rules. This drafting inadequacy was compounded by subsequent decisions of the UK courts.

In Singapore, these uncertainties in COGSA did not cause practical difficulties mainly because the High Court in the Epar Case had pragmatically interpreted COGSA so as to resolve these uncertainties in a manner that gave full effect to our international obligations. But by so doing, the Singapore High Court disregarded the express wording of the Act. As a matter of legal analysis, both the Attorney-General and the Law Reform Committee agree that the reasoning in the Epar Case may be technically flawed. Moreover, a recent 1993 decision of the Singapore High Court has cast doubt on the correctness of the Epar decision. It is neither necessary nor desirable to wait for this divergence of judicial opinions to be resolved by the Court of Appeal.

Sir, the amendments proposed in this Bill have been recommended by the Law Reform Committee of the Singapore Academy of Law and is the work of its Sub-Committee on Commercial Law. There have been wide consultations on the proposed amendments. They were considered and approved by the members of the Law Reform Committee comprising Supreme Court Judges, academics, practising lawyers and judicial and legal officers. In addition, the Committee consulted other Judges and practising lawyers who are specialists in shipping law. Representatives of the TDB who participated in the work also consulted the shipping interests on the impact of the proposed amendments. Sir, all persons consulted were in support of the proposed amendments.

Let me now briefly take Members through the provisions of the Bill. The amendments are modelled after the 1971 UK Carriage of Goods by Sea Act. Modifications have been made to one of the provisions to resolve uncertainties in its interpretation which have arisen in the UK.

Clause 2 repeals and re-enacts section 3 of COGSA to remove any doubt that the Hague-Visby Rules have mandatory statutory force in Singapore. It will also remove the restriction that the Hague-Visby Rules apply only to outward bound cargo (that is, goods carried from a port in Singapore to another foreign port) but not to in-bound cargo (that is, goods carried from another foreign port to a Singapore port). This was a restriction which applied to the Hague Rules but which was subsequently removed by the Hague-Visby Rules.

The new section 3(4) will also extend the application of the Hague-Visby Rules so that they will also have mandatory statutory force in relation to, first, any bill of lading if the contract contained in or evidenced by it expressly provides that the Rules shall govern the contract; and, second, any receipt which is a non-negotiable document marked as such if the contract contained in or evidenced by it expressly provides that the Rules are to govern the contract.

The effect of these new provisions is that the Hague-Visby Rules can be extended to apply to carriage of cargo outside the scope of the Rules on an "opt-in" basis.

Clause 3 repeals section 5 of COGSA thereby removing the requirement that an outward bound bill of lading must contain an express statement incorporating the Hague-Visby Rules into the bill of lading. This express statement is known in shipping circles as a "clause paramount". This requirement is rendered unnecessary by the introduction of the new section 3(1) which declares that the Hague-Visby Rules have the force of law.

Clause 3 also repeals section 6 of COGSA which covers carriage to Malaysian ports and carriage by sailing ships. Section 6 is a replica of the equivalent 1927 provision where Malaysia and Singapore were both colonies and territories of the UK. Section 6 is unnecessary and obsolete as the Hague-Visby Rules by their own terms do not apply to contracts of carriage not covered by a bill of lading or other similar document of title. For carriage to Malaysia, bills of lading are issued and the Hague-Visby Rules apply as a matter of practice. Although there are still sailing ships calling at Singapore from Indonesia carrying traditional goods such as timber, these goods are carried as unmanifested cargo. As no bill of lading is issued in such cases, the Hague-Visby Rules will not apply in any case.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Yeo Cheow Tong].

Bill considered in Committee; reported without amendment; read a Third time and passed.