Multimodal Transport and Regulation - What the future holds

Trade and transaction are perceived as two inseparable concepts. Admittedly, the concept of transaction has been described as the lifeblood of commerce, and it has gone through a remarkable evolution during the last decades. Without a doubt, the use of containers has played a significant role in this progress, by introducing a new type of transaction, widely known as the multimodal transport. Simply put, a multimodal transport encompasses two or more modes of transportation (e.g. by sea, land and, air) governed by the same contract. It should be noted that previously there were separate transport contracts for each category of transportation involved in an international transaction.


Photo by By CHUTTERSNAP on Unsplash
Photo by By CHUTTERSNAP on Unsplash

In comparison to the old method of having two or more unimodal transports, the multimodal transport is cheaper and faster. It is also safer for the party (consignor or consignee) signing a contract with the carrier. However, using this method creates many complex situations, where finding legitimate provisions becomes critical. While the International multimodal transport has developed noticeably through the last 50 years, its requisite regulation has not followed the same pace. Consequently, there are serious concerns regarding the existing arrangements.


Although analysing the complexity of multimodal transport would be out of the scope of this article, the existing sources applicable to multimodal transport and their level of effectiveness will, nevertheless, be examined.


So, what are the legal sources available concerning the international multimodal transports?


Three main sources could be pointed to:


1) International documents and conventions that are directly dealing with the international multimodal transport.

2) The existing international conventions that are each related to one method of transportation, also known as international unimodal transport (by sea, land or air).

3) Pre-formulated documents dealing with international multimodal transport.


Most of the academics discuss these documents under a different classification:


1) The uniform system,

2) The networking system,

3) The modified system.


Henceforth, this article analyses the legal sources shaping international multimodal transports under the above pillars.


The Uniform system

Simplicity and transparency are the main advantages of this method. By using a uniform system which deals with all the sections of a multimodal transport, regardless of any different types of transaction, a uniform liability regime subjects the entire contract to a single body of provisions, irrespective of the mode of transport or the stage where loss, damage or delay occurs. However, none of the attempts regarding the creation of a uniform system have been successful until now.


The very first attempt started in 1930 with the Transport Combine de Merchandise (TCM) draft. This document was the result of two working groups: namely UNIDROIT (The International Institute for the Unification of Private Law) and the Comité Maritime International (CMI). Eventually, it did not become successful due to several factors; the most important being the fact that there were no binding policies in this document.


In the second endeavour, in 1980 the United Nations drafted a convention titled: Convention on International Multimodal Transport of Goods; mostly known as the MT Convention. One can point out, when comparing other conventions dealing with transportation, that this convention addresses many critical issues related to the documentation and liability. However, only eleven contracting parties have signed it, and it has not entered into force yet. Many factors led to this outcome including the instrument’s lack of transparency, its limited compensation mechanisms, as well as the bad timing that the instrument was introduced, which was met by the international community’s lack of support.


The Rotterdam Rules, which were drafted in 2008 (as the UNCITRAL Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea) can be mentioned as the last attempt to establish a uniform system. This document has not entered into force yet, and it has only been signed by five states (Republic of Congo, Spain, Togo, Cameroon and, Benin). The 2008 Rotterdam Rules cannot be regarded as a pure uniform document because although they have included possible scenarios regarding multimodal transports, they only cover those contracts that include at least one transaction by sea.


The Networking System

This system works in a way as if no multimodal transaction exists. To be more precise, according to this method, the multimodal transaction is divided into different parts based on the different modes of transportation included. Each mode of transaction is dealt with by the related unimodal transaction Convention. Conversely to the uniform system, in the networking system there is no possibility for a section of the transaction to not be covered by any kind of regulation. Also, since there is no new regulation, there is no room for any kind of conflict with the existing Conventions. Being flexible and avoiding any excessive expenses for insurance companies are the other two advantages of this method.

On the other hand, the main problematic issue of this system is that applying different regulations to different sections of the transaction may produce complex scenarios. Thus, it can be argued that this method is more attractive in theory rather than in practice.


The Modified System

By combining the best features of the other two systems, this method is known as the middle ground of the uniform and the networking systems. This is mainly achieved by using the existing Conventions. In the scenario where those instruments are not deemed practical, then the pre-formulated documents or any other kind of regulation, which the parties have agreed on becomes binding.


Most of the times the carrier provides the pre-drafted contract and the other party just signs it without any further negotiations concerning single terms in the contract. UNCTAD (United Nations Conference on Trade and Development)/ICC (International Chamber of Commerce) Rules, NSAB (General Conditions of the Nordic Association of Freight Forwarders), COMBICONBILL 1995/2016 by BIMCO (Baltic and the International Maritime Council), FIATA (Fédération Internationale des Associations de Transitaires et Assimilés) Bill of Lading, the Multidoc 1995 by BIMCO, and the multipurpose MSC (Marine Convention Society) Bill of Lading could be the main examples of such pre-drafted documents.


Consequently, using the modified method has become common in everyday international multimodal transactions. The only disadvantage of this method is the difficulty of applying its terms on certain occasions, mainly because it still needs to refer to unimodal transport conventions when pre-drafted contracts cannot solve the problem. Therefore, the disadvantages of the networking system may be applied.


Concluding Thoughts

Among the three existing systems, the modified system seems to be the more practical one and thus used in related cases. However, it is evident, that a uniform system accepted by a reasonable number of countries would function better than the modified system since a uniform system will not have complicated provisions and regulations, which sometimes create severe conflicts between existing conventions.


While some argue that creating a uniform entity that governs all of the multimodal transaction contracts is not probable, the truth is that such action is likely to happen in the future considering the extent of international trade. Achieving such a goal requires a reasonable amount of time and effort, whilst the use of unimodal transaction conventions should be put aside. Arguably, both factors are financially draining for the countries.


Undoubtedly, using a united system dealing with multimodal transaction contracts would benefit countries in many ways, but we are living in an era, where there are states that highly consider the short-term profits. Such states are not willing to lose such benefits for those that they may attain in the long run. Hence, it can be concluded that the main obstacle responsible for the lack of a uniform system dealing with international multimodal transaction contracts can be traced in the countries' policies, and not in the features of such contracts.

Bibliography


Books

Carr I and Stone P, ‘International Trade Law’ (6th edn Routledge 2018)


Hoeks M, ‘Multimodal Transport Law: The Law applicable to the Multimodal Contract for the Carriage of Goods’ (Kluwer Law International 2010)


Spanjaart M ‘Multimodal Transport Law’ (Taylor and Francis Group 2018)



Articles

Faghfouri M, ‘International Regulation of Liability for Multimodal Transport – In Search of Uniformity’ (2006) 5(1) WMU Journal of Maritime Affairs 96


Osen Osnes L, ‘Liability in multimodal transport: Liability for loss and damage to goods during an international multimodal transport’ (2018) Master Thesis University of Bergen


Websites


1) Ardelt M, 'What is a FIATA Bill of Lading' (forto, October 2020) accessed October 2020


2) Multimodal Carriage of Goods: Advantages and Disadvantages' (LawTeacher, October 2020) accessed October 2020


3) The Multimodal Legal Framework – A Real Labyrinth: Part 1 (UKP&I, October 2020) accessed October 2020

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