Following years of discussion and preparation, the German maritime law was amended in 2013. Nevertheless, certain questions, in particular when and to what extent German (maritime) law applies to a contract and/or a B/L, remain somewhat complicated to answer.
The reason for this are, in particular, two issues that need to be kept in mind when considering the question on the applicability of German maritime law. On the one hand the fact that the B/L contract and the contract for the carriage of goods by sea are considered to be separate contracts under German law. On the other hand Germany’s decision to remain a contracting state to the Hague Rules while, at the same time, its maritime law, which is set out in the fifth book of the German Commercial Code (Handelsgesetzbuch, in the following “HGB”), is based on the Hague Visby Rules (HVR), albeit with significant deviations (see below lit. 22.214.171.124.).
2. Applicability of German Maritime Law
One consequence of the aforementioned autonomy and independence of the B/L contract is that any rights and obligations arising out of or in connection with the contract for the carriage of goods by sea and/or the B/L contract may be subject to different legal provisions. In addition, there are particularities that have to be taken into account for Bs/L that arise due to Germany remaining a HR contracting state. Therefore, the following will first examine the question of the application of German law to the contract of carriage of goods by sea (see below lit. 2.1.) before considering its applicability with regard to Bs/L (see below lit. 2.2.).
2.1. Contract on the carriage of goods
With respect to the contract on the carriage of goods the statutory provisions of the HGB will be applicable should the parties agree on German law to apply to the contract (Art. 3 para. 1 sentence 1 Rome I Regulation).
Where there is no choice of law, German law would apply if the (contractual) carrier’s habitual residence is in Germany, provided that the place of receipt, the place of delivery or the habitual residence of the consignor is in Germany as well (Art. 5 para. 1 sentence 1 Rome I Regulation). In the absence of these cumulative conditions, the contract would be subject to German law, provided the place of delivery, as agreed by the parties, is situated in Germany (Art. 5 para. 1 sentence 2 Rome I Regulation). Moreover, where a country other than Germany follows from Art. 5 para. 1 Rome I Regulation, German law would nevertheless apply where it is clear from all the circumstances of the case that the contract, in the absence of a choice of law, is manifestly more closely connected with Germany than with this other country (Art. 5 para. 3 Rome I Regulation).
2.2. Bill of Lading
In general, as with the contract on the carriage of goods, the parties may choose the B/L to be subject to German law. In this case, the statutory provisions of the HGB would apply. In the absence of an (effective) choice of law, German case law provides for the law of the port of destination, as agreed in the B/L, to be applicable. Hence, German law and therefore the statutory provisions of the HGB would apply should the parties agree for a German port as the port of destination.
However, further aspects have to be taken into account, in particular with regard to the formal requirements of the choice of law (see below lit. 2.2.1.), but also as a result of Germany’s obligation as a contracting state of the HR (see below lit. 2.2.2.).
2.2.1. Incorporation of charter party terms
Contrary to the common practice to incorporate charter party terms into a B/L by way of reference to the charter party, a choice of law has to be made explicitly in the B/L under the new German maritime law. Ignoring the internationally widely accepted practice of incorporating terms of a Voyage-C/P into a B/L by way of reference, the German legislator has introduced this change in 2013 and the new sec. 522 para. 1 second sentence HGB provides that the terms of an agreement to which the B/L merely makes reference are not incorporated into the B/L. Therefore, if, for example, the terms of the charter party contract include a choice of law and jurisdiction clause, these terms are only validly incorporated into a B/L if they are explicitly reproduced in the B/L itself. The mere reference to the terms of the charter party contract, such as in clause 1 of the widely used CONGENBILL, is not sufficient under German maritime law and would therefore neither provide for a valid choice of law by the parties nor would it validly incorporate other terms of the charter party contract.
As a consequence of Germany continuing to be a contracting state to the HR, there are, in fact, two types of Bs/L under German maritime law. On the one hand, there is the standard B/L (in the following “S-B/L”, see below 126.96.36.199.) and on the other hand the Hague-Rules-B/L (in the following “HR-B/L”, see below 188.8.131.52.).
Provided German law applies to the S-B/L, e.g. by way of choice of law, the S-B/L is subject to the provisions of sec. 513 et. seq. HGB. Accordingly, the carrier is liable for the loss of and damage to the goods in accordance with sec. 498 et. seq. HGB. Although the German maritime law remains based on the HVR, sec. 498 HGB generally contains the liability exclusions as per the HVR, but has abolished the exclusion from liability for damages due to errors in navigation or fire. In other words, the new maritime law reflects HVR “minus two”. As a result, the carrier can no longer exclude its liability for errors in navigation and fire by way of mere reference to the law. However, while the provisions of the German maritime law are largely mandatory and require individual agreements if the parties intend to deviate from these provisions (sec. 512 para. 1 HGB), the parties may agree on an exclusion from liability in case of error in navigation and fire by way of general terms and conditions (sec. 512 para 2 HGB). While there is, as of now, no consensus among German legal practitioners as to whether or not the commonly used international standard terms that provide for a Paramount-Clause would sufficiently include an exclusion of liability of the carrier also in case of error in navigation and fire, such a clause should, in our opinion, be regarded as sufficient. However, until a German court has rendered a judgement as to whether a Paramount-Clause may be interpreted as an agreement in accordance with sec. 512 para 2 HGB it is advisable to include express language into the B/L.
The legal situation is quite different with regard to a HR-B/L. A HR-B/L is, on the one hand, a B/L that has been issued in a contracting state to the HR which is not also a contracting state to the HVR (art. 6 para. 1 and 3 of the German Introductory Act on the Commercial Code (Einführungsgesetz zum Handelsgesetzbuch, in the following “EGHGB”). On the other hand a HR-B/L is one that has been issued in Germany, if the B/L relates to a carriage of goods to or from a port in another contracting state to the HR (art. 6 para. 2 EGHGB).
Under such a HR-B/L the carrier is liable for loss of and damage to the goods also on the basis of sec. 498 et. seq. HGB, which are however significantly modified according to Art. 6 para. 1 sentence 1 no. 1 – 4 EGHGB. The terms in art. 6 para. 1 sentence 1 no. 1 – 4 EGHGB provide terms equivalent to the HR. For instance, contrary to the statutory provisions of the HGB, the carrier’s liability in case of error in navigation and fire would be excluded by law and the alternative calculation of the limit of liability based on the goods’ gross weight (2 SZR per kilogram) would not apply. Thereby, German law tries to “turn back” the position under the statutory provisions of the HGB (which reflect, in general, the position under the HVR “minus two”) to HR standards in order to honor its obligation as contracting state of the HR.
Furthermore, according to art. 6 para. 1 second sentence EGHGB these provisions of the HGB as modified according to Art. 6 para. 1 EGHGB would also apply if a different choice of law has been made under the B/L.
Consequently, German law would apply to the B/L contract either by way of (valid) choice of law or, where there is no valid choice of law, if the port of destination, as agreed by the parties, is a German port. However, provided the B/L is a HR-B/L, i.e. a B/L issued in the USA, or a B/L issued in Germany and relating to a carriage of goods to or from a port in another contracting state to the HR, the statutory provisions of the HGB would only apply as modified by art. 6 EGHGB. Moreover, as set out above, even if the B/L contract validly provides for another law, i.e. not German law, to apply, certain provisions of the HGB as modified by art. 6 EGHGB will nevertheless be applicable if the B/L is a HR-B/L, art. 6 para. 1 second sentence.
In summary, as indicated above, the peculiarities of German maritime law may result in German law being applicable to the contract of the carriage of goods but not the B/L contract and vice versa. Furthermore, even if German law is applicable to both contracts, the fact that Germany remains a contracting state to the HR may result in the application of different provisions to each contract.
As a consequence, there may be different forms of liability under the two contracts, for instance no statutory exclusion of the carrier’s liability in case of error in navigation and fire under the contract of the carriage of goods, due to the contract not providing for a respective (valid) provision but, provided the B/L is a HR-B/L, liability would be excluded under the B/L contract by law. In light of this, particular attention should be paid where there is a chain of contracts to ensure that there is no liability gap.
Source: The UK P&I Club is very grateful to Ms Miriam Blank (https://www.fleet-hamburg.com/en/team/miriam-blank/) & Dr Klaus Kostka (https://www.fleet-hamburg.com/en/team/dr-klaus-kostka/) of FLEET HAMBURG www.fleet-hamburg.com for the above article.