Regrettably the deliberations of the UNCITRAL Hamburg conference on new rules for the carriage of goods by sea have been finalised in the form of a draft convention too late to permit of more than a passing comment in this issue of the Quarterly. At first glance, however, it would not appear to have increased the liability of the sea carrier to such an extent as was originally feared by shipowning interests. The liability of the carrier under the Hamburg Rules is based on the principle of presumed fault or neglect for loss, damage or delay which occurs while the carrier is in charge of the goods at the port of loading, during the carriage and at the port of discharge, but, with respect to certain cases, as for example fire, the provisions of the convention modify that position. Equally, it has probably not favoured cargo interests to the extent that it appeared it might do. In the end we shall no doubt find that after 50 years of The Hague Rules we are soon to enter an era where the burden of liability for the carriage of goods by sea will have shifted a few points against the carrier, but hopefully not to an extent that will increase the insurance burden intolerably.

The new convention will come into force on the first day of the month following the expiration of one year from the date of deposit with the Secretary General of the United Nations of the 20th instrument of ratification, acceptance, approval or accession.

What, however, is to be regretted is the imminent possibility that soon some countries will be subject to the original Hague Rules, some to The Hague-Visby Rules, and some to the new Hamburg Rules. We have seen in the case of carriage by air the practical inconvenience caused by the creation of a series of conventions, none of which ever manages completely to supersede its predecessors. It would have been much tidier if, as under the Convention for the International Carriage of Goods By Rail (CIM), which has been steadily amended by an agreed set of procedures since 1890, the original Hague Rules could merely have been amended instead of creating a totally new convention.

Certain innovatory areas such as liability for delay and liability for goods before loading and after discharge could prove a fertile field for underwriting disputes which could lead to a steady stream of litigation over the next few decades. Equally, the attempt to simplify the concept of negligence in relation to shipowners’ liability could create uncertainty. It also remains to be seen how the average adjusters solve the inevitable problems that the new regime will create for them. Later this year the Quarterly hopes to publish the views of underwriting and legal experts on the possible effects of the Hamburg Rules on international trade law and practice.

More fortunately the long-awaited Pearson Report—that of the Royal Commission on Civil Liability and Compensation for Personal Injury—was published in mid-March in time for this number of the Quarterly. Its extreme length prevents more than a brief synopsis of its main provisions though.

The main recommendations are as follows. First, it recommends a new “no-fault” compensation scheme for motor vehicle accidents on the roads to be paid for by a levy of about one penny a gallon on petrol to be administered by the State. It would be modelled on the Industrial Injuries scheme but would cover the whole family. Secondly, it recommends an improved Industrial Injuries scheme providing higher benefits and extended to cover the self employed, commuters and additional cases of occupational diseases. Thirdly, a new benefit of £4 per week, tax free, from the age of two, as an addition to child benefit, for all severely handicapped children, whatever the cause of their handicap.

The Commission does, however, recommend that the present tort system should be retained, but that there should be a shift in emphasis away from tort towards social security, which would eventually be recognised as the principal means of compensation. The function of tort actions would be to supplement the proposed no-fault social security system. Certain changes in the tort system were also recommended. Double compensation would be eliminated by offsetting social security benefits in full against tort awards instead of 50% for up to five years as at present. There would also be provision for inflation-proofed periodical payments in the most serious cases. The method of calculating the plaintiff’s loss when expressed as a lump sum should take full account of his tax position and of inflation. There should be a three months’ “time threshold” for damages for non-pecuniary loss, thereby eliminating minor claims for pain and suffering and loss of amenity.

Strict liability should be introduced for certain special cases, namely, vaccine damage, defective products (which would cover all products including aircraft, ships and drugs), rail transport (which would cover injuries caused by the movement of rolling stock), exceptional risks such as flammable gases and liquids or dams, and finally volunteers for medical research who suffer damage from research or clinical trials. The “loss of society” award, at present paid in fatal cases under Scottish law, should be extended to the rest of the United Kingdom although with an upper limit outside Scotland of half the average annual industrial earnings.

However, from recent comments in the Press it seems clear that the present Government is in no hurry to implement the wide-ranging series of recommendations in the Report, and it may be that by the time the question of implementation does eventually arise the whole subject of compensation for personal injury will be completely reassessed yet again.

The Unfair Contract Terms Act 1977, which came into effect on Feb. 1, 1978, makes drastic inroads on the freedom of parties to settle their own terms in contracts, principally by prohibiting (or confirming earlier statutory prohibition) of certain types of exclusion clause altogether, and by making a large group of other such clauses subject to a requirement of reasonableness. Similar restrictions are applied to notices purporting to exclude liability in tort. The Act is almost completely confined to what is called “business liability,” so that little of it applies to purely private transactions; and much of its application is to consumer contracts and contracts where one party deals on the other’s written standard terms. The restrictions do not apply to international supply contracts, nor to contracts where the law of a part of the United Kingdom is chosen by the parties for a contract which would otherwise be governed by the law of a country outside the U.K.; nor in general to carriage of goods by sea, insurance contracts, the creation or transfer of interests in land, intellectual property or securities; nor to the formation, constitution and dissolution of companies, unincorporated associations and partnerships.

The Act went through Parliament as a Private Member’s Bill supported by the Government, and had, for such a substantial reform, a curious and somewhat hasty parliamentary history,1 ending with receipt of the Royal Assent on its own immediately before the prorogation of Parliament in October, 1977. It originated as an implementation of the Law Commissions’ Second Report on Exemption Clauses,2 and started life as the Avoidance of Liability (England and Wales) Bill: the present title was introduced later, and several attempts were made in Parliament to change the title again.

The Act contains separate parts for England, Wales and Northern Ireland on the one hand, and Scotland on the other, followed by a general part applicable to both. The part relating to Scotland was inserted at a late stage (one reason for the change in title). The general effect is one of extreme complexity, and it is most unfortunate that such a major consumer-oriented reform, described by Lord Denning in the House of Lords as “one of the most important reforms in our time in the civil law,”3