I  INTRODUCTION

A large percentage of international trade between Germany and Common Law jurisdictions such as Australia and New Zealand is undertaken by way of cargo carried under bills of lading. This paper provides a comparative introduction to the legal regulation of carriage of goods by sea under bills of lading in Germany, written for a Common Law audience.

It is impossible to discuss in this paper the very important primary normative question of whether different national courts should ever come to different results when interpreting international commercial treaties. The fact is that there are differences. This is significant because, in certain circumstances, Australian or New Zealand courts must apply German law and vice versa. Carriage of goods by sea between the countries is one instance when such circumstances can exist. For example, carriage of goods by sea from Germany for receipt in Australia or New Zealand will often be governed by the Hague-Visby Rules under a bill of lading the proper law of which is German law. In disputes concerning these bills litigated in Australia or New Zealand, the Australian or New Zealand courts must apply German law. The same holds for carriage of goods by sea from this part of the world to Germany, which will often be under a bill of lading governed by Australian or New Zealand law. In disputes concerning these bills litigated in Germany, the German court must equally apply the governing law. Australian and New Zealand courts will assume that German law is the same as the lex fori unless proved otherwise. The German court will discover for itself what Australian or New Zealand law is. In some cases, the German and Common Law positions on issues relating to bills of lading can lead to substantially different results. This will obviously affect the relative legal positions of the litigating parties. It is important that the parties and courts know where the laws deviate.

The broader comparative differences between the German and Common Law legal systems fall beyond the scope of this paper. It should be noted, however, that German law is a codified system. Judges in Germany are bound by the Gesetzbücher or statutory codes. They must interpret the codes and fill in the gaps where the codes are silent. This results in judge-made law. Although not bound by the doctrine of precedent, German judges tend to follow previous decisions, especially those of higher courts. Despite the fact that judge-made law cannot be seen as a true source of German law,¹ it is an important aid in understanding the meaning of the codes.² However, the dominant academic opinion (and criticisms of it)³ is often more important than the decisions themselves. The main reason for this is that judges are influenced by academic opinion. As far as German maritime law is concerned, there is an additional reason: German maritime law has only a small and haphazard library of case law, whereas the academic opinion is both more detailed and more expansive.

II  THE KONNOSSEMENT  IN THE GERMAN LEGAL SYSTEM

1 Persons Involved in the Carriage of Goods by Sea

The equivalent of the Common Law bill of lading in German law is the Konnossement.⁴ Three persons are involved in the legal framework of the carriage of goods by sea under a bill of lading in Common Law jurisdictions – shipper, carrier and receiver. German law, by contrast, knows five and is more precise:⁵ (1) the Verfrachter (carrier) and (2) the Empfänger (receiver), who cause no problems of definition; (3) the Ablader⁶ or person who delivers the goods to the carrier either directly or indirectly through some other party (the Ablader can be at the same time the receiver); (4) the Befrachter or person who contracts with the carrier⁷ (the Befrachter can be the Ablader or the receiver);⁸ and, in cases where the Ablader does not deliver the goods to the carrier directly, (5) the Drittablader, who delivers the goods to the carrier instead. There is no exact English equivalent.⁹

The Ablader and Drittablader, in so far as they are distinct persons in German law, are peculiar to German law – the rest of the world knows only the "shipper". There is no secret in the term "Befrachter": it is simply a very precise and useful way of nominating the person who contracts with the carrier.¹⁰

2 Functions of the Konnossement

As in Common Law jurisdictions, the Konnossement performs three distinct functions:¹¹ evidence of receipt of the goods by the carrier; evidence of the contract of carriage between the Befrachter and carrier;¹² and Traditionspapier (negotiable document of title).¹³

3 Negotiability and Transfer of the Contract of Carriage

Unlike Common Law jurisdictions, German law has no doctrine of privity of contract. Therefore, parties may contract for the benefit of a stranger. They cannot contract to impose obligations on a stranger. However, as soon as the goods have been delivered to the legitimate bearer of the Konnossement, §614(1) HGB provides that that person becomes liable under the contract of carriage,¹⁴ while §625 frees the Befrachter from its obligations. The carrier is then liable to the legitimate bearer of the Konnossement for lost or damaged goods.¹⁵

The rights arising out of the contract of carriage, as contained in the Konnossement, can be transferred.¹⁶ This has no effect on the rights arising out of the ownership of the goods (proprietary rights) – this is dealt with by the Traditionspapier aspect of the Konnossement.

The Konnossement is a type of Wertpapier,¹⁷ and the law relating to Wertpapiere¹⁸ applies to the transfer of the Konnossement.¹⁹ There are three types of Wertpapier: bearer, order and non-negotiable (straight).²⁰ The first two are negotiable whereas the last is not. A Konnossement can be in any of the three forms, but it is endorsable only if it is "to order".²¹ Typically, a Konnossement is issued to order with a blank endorsement.²²

A Wertpapier (and therefore a Konnossement) is transferred by endorsement and physical transfer.²³ The endorsement of the Konnossement transfers all the rights in it, including the right to delivery and any right to sue the carrier for loss or damage of the goods.²⁴ It does not transfer obligations,²⁵ or non-contractual rights,²⁶ or the property rights to the goods.²⁷

Every link in the chain of endorsement must be legitimate. If a link is not legitimate, no rights are transferred to the new holder of the Konnossement. However, the position of the bona fide third party acting in good faith without knowledge of the defect in the chain of endorsement is more secure under German maritime law than under the German Civil Code (BGB). §365(1) HGB, read with Art 16 WG, provides that such a third party can legitimately inherit the contractual rights under a Konnossement despite a defect in it.²⁸

4 Transfer of Title to the Goods

§650 HGB provides that the Konnossement is also a Traditionspapier. Therefore, the transfer of the Konnossement to the legitimate receiver (as stipulated in the Konnossement) of the goods has, as soon as the goods are in the control of the captain or other representative of the carrier, the same legal effect as the transfer of the goods themselves.²⁹ In other words, the transfer of the Konnossement transfers to the new holder all of the proprietary rights arising out of ownership of the goods.³⁰

The combined effect of endorsement of the Konnossement (in accordance with the law of Wertpapiere) and §650 HGB is that the new holder of the Konnossement receives all the contractual, tortious and proprietary rights found in the Konnossement.

III  IMPLEMENTATION - HANDELSGESETZBUCH (HGB)

The carriage of goods by sea is regulated under German law mainly by Book 5 Section 4 (§§556-663b) of the present HGB.³¹ The German Reich ratified the Hague Rules in 1939.³² These Rules were reformulated into the HGB by the Law to Amend the Sea Freight Provisions of the Commercial Code of 10 August 1937.³³ They therefore bear little resemblance to the original treaty in terms of structure, but the effect of the HGB is basically the same as the Hague Rules. Germany has not ratified the Visby Protocol.³⁴ Despite this, the Law to Amend the Commercial Code and Other Laws (Second Maritime Law Amendment Act) of 25 July 1986³⁵ worked the Visby Protocol into the HGB. As with the HGB’s version of the Hague Rules, its version of the Hague-Visby Rules bears little resemblance to the original treaty in terms of structure. To all practical intents and purposes, however, Germany is a party to the Hague-Visby Rules.³⁶

The provisions of the HGB are not incorporated into the bill of lading, but instead apply by force of law to the carriage of goods by sea under bills of lading. §662 HGB provides that, where a bill of lading has been issued,³⁷ the parties to the bill of lading cannot contract out of certain paragraphs of the HGB.³⁸ Those paragraphs are:

§559 (sea- and cargoworthiness);

§563(2) and §§606-608 (liability for loss or damage);

§§611 and 612 (written notice of damage, and time bar);

§656 (evidentiary presumption of the bill of lading);

§§658 and 659 (restitution of value for lost or damaged goods); and

§660 (limitation amount).

These provisions constitute a basic standard of obligations and rights that cannot be deviated from.³⁹ Where the HGB is silent or does not apply mandatorily, however, the contracting parties are free (within the limits of the general law) to regulate their relationship as they decide.⁴⁰

* Blake Dawson Waldron, Lawyers, Sydney. Opinions expressed in this paper do not necessarily represent the opinions of Blake Dawson Waldron. The author thanks Professor Martin Davies and Mr Murray Raff of the University of Melbourne, Professor Doctor Rainer Lagoni, Professor Doctor Marian Paschke and Frau Kade of the Institut für Seerecht und Seehandelsrecht at the Universität Hamburg, Professor Doctor Rolf Herber, the Max-Planck-Institut für Ausländisches und Internationales Privatrecht in Hamburg and Doctor Hans-Jürgen Puttfarken of the Max-Planck-Institut. This paper was submitted for publication in the MLAANZ Journal in 1998.

Unless otherwise stated, translations of German legislation and literature are the author’s, "Articles" refer to Articles of the Hague-Visby Rules, and paragraphs (§) refer to paragraphs of the Handelsgesetzbuch (HGB – Commercial Code).

1  K Larenz Methodenlehre der Rechtswissenschaft (6 ed, 1991) 432.

2  M-L Hsu Haftungsprobleme beim Containerseeverkehr im Seefrachtrecht Taiwans (=Republik China) im Vergleich mit der Bundesrepublik Deutschland (1995) 19 (hereinafter referred to as Hsu).

3  Herrschende Meinung. The dominant academic opinion and criticism is found in the leading German academic texts, which will be referred to throughout this paper.

4  Wherever necessary, "Konnossement" is used in place of "bill of lading" to make clear the distinction between the two. Otherwise, the English nomenclature is used. Note also that an Orderseefrachtbrief (sea waybill to order) is treated as exactly the same as the Konnossement. For a discussion of sea waybills under German law, see H-J Puttfarken Seehandelsrecht (manuscript, October 1996) 78-81 (hereinafter Puttfarken) and H Prüßmann & D Rabe Seehandelsrecht (3 ed, 1992) 611-2 (hereinafter Prüßmann/Rabe).

5  See Book 5 Section 4 of the HGB and Prüßmann/Rabe 284-7. See Puttfarken 20, who criticises the terminology used in the German literature and HGB and proposes his own scheme, based on the law of forwarding. According to him, German law knows four possible parties, although only three can be parties to the one bill of lading. These are: Beförderer (carrier), Versender (the party that contracts with the carrier – either shipper or receiver), Empfänger (receiver) and Ablader (shipper). The Versender is usually the shipper, but can be the receiver in some cases. The carrier and Versender are always parties to the Konnossement. The third party to the Konnossement depends on who is the Versender: if the shipper is the Versender, then the receiver is the third party; if the receiver is the Versender, then the shipper is the third party. In summary, the contracting parties are either (a) Versender (shipper), carrier and receiver or (b) shipper, carrier and Versender (receiver).

6  The Ablader is the person who English language texts generally call the "shipper". However, its definition is subtler than that.

7  Prüßmann/Rabe 282 translate this somewhat inaccurately as "charterer, freighter".

8  Befrachter is used in the rest of this paper to indicate the person who has contracted with the carrier.

9  The Ablader contracts with the Drittablader for this delivery from it to the carrier. The Drittablader in turn contracts in its own name for the carriage of the goods with the carrier. The rebuttable presumption is that the Drittablader is an independent contractor, and not an agent of the Ablader. The Drittablader is unique to the German legal system and is not the same as a freight forwarder.

10  That means that five possible combinations of persons are involved in the legal framework of the carriage of goods by sea under a Konnossement, namely: (1) Befrachter = Ablader, carrier and receiver (the shipper contracts with the carrier and delivers the goods directly to the carrier); (2) Befrachter = Ablader, Drittablader, carrier, and receiver (the shipper contracts with the carrier but delivers the goods indirectly to the carrier); (3) Drittablader, carrier, and Befrachter =receiver (the receiver contracts with the carrier but the shipper delivers the goods either directly or indirectly to the carrier); (4) Drittablader, carrier, and Ablader = Befrachter = receiver (the receiver – who is also the Ablader – contracts with the carrier but delivers the goods indirectly to the carrier); or (5) carrier, and Ablader = Befrachter = receiver (the receiver – who is also the Ablader – contracts with the carrier and delivers the goods directly to the carrier).

11  See Prüßmann/Rabe 610-11; Puttfarken 56-8; W Zöllner Wertpapierrecht (14th ed, 1987) 5 (hereinafter Zöllner).

12  The Konnossement usually contains the terms of the contract of carriage, but it is not the contract itself: see Puttfarken 22-4. The Befrachter and carrier conclude a contract of carriage according to general contract law – in Germany, the BGB (see Puttfarken 22-4 but cf Prüßmann/Rabe 295, who argue that, because of the special nature of the contract of carriage by sea, the general provisions of §§631ff BGB have little application in practice. See Prüßmann/Rabe 299-301 for factors that effect the validity of the contract of carriage.) That contract imposes obligations on the Befrachter (to pay freight) and carrier (to deliver the goods in their original condition at a certain port). The transfer of the Konnossement transfers the whole contract of carriage itself – see Puttfarken 66, 68. This is where the Konnossement plays an important evidentiary role – only those provisions of the contract that have been recorded in the Konnossement are binding between the carrier and the new holder of the Konnossement. §656(4) provides that where the Befrachter is also the receiver, the contract of carriage alone governs the relationship between receiver and carrier.

13  Traditionspapier is translated simply as "document of title" in C-E Dietl Dictionary of Legal, Commercial and Political Terms (2nd ed, 1986), but as "document of title, title deed, transferable title-conferring instrument, negotiable instrument" in D Hamblock and D Wessels Großwörterbuch Wirtschaftsenglisch (1989) (hereafter Hamblock/Wessels).

14  Before the receiver has accepted the goods, there is no contractual relationship between the carrier and receiver because it is not possible to contract so as to burden a stranger – HOLG Hamburg Hansa 65, 309.

15  See Prüßmann/Rabe 287.

16  This is on account of §870 BGB, not §650 HGB – see Prüßmann/Rabe 297.

17  Wertpapier (literally: valuable paper) has no direct English equivalent – it can be translated roughly as "instrument". Hamblock/Wessels translate it in the singular as "security, negotiable instrument, investment, paper, bond paper" and in the plural as "securities, stocks and shares, shares, stocks, investments". Also see Zöllner 15; Puttfarken 58.

18  The applicable law includes the following provisions: §§363-365 HGB, §796 BGB, and Arts 13, 14, 16, 40 Wechselgesetz (WG: Bills of Exchange Law).

19  See generally Zöllner 9-14 and 152.

20  See Puttfarken 77-8 for a summary of the non-negotiable bill of lading under German law.

21  §363 HGB. §363(2) HGB provides that bills of lading to order may be endorsed. §364 explains the effect of endorsement. §365(1) regulates the form of endorsement.

22  Prüßmann/Rabe 641. According to Puttfarken 50, this makes it, to all intents and purposes, a bearer instrument. A bearer instrument gives rise to a presumption that the bearer is entitled to bear the instrument, and the receiver must accept it.

23  §363(1)1 and (2) and §364(1) HGB.

24  BGHZ 25, 250 ("Aspirator") and see Prüßmann/Rabe 610 and 644.

25  BGH VersR 74, 776 ("Taboa") and HOLG Hamburg Hansa 65, 309.

26  BGHZ 25, 250 ("Aspirator"), BGH VersR 71, 623, HOLG Bremen Hansa 61, 977, HOLG Hamburg VersR 67, 1173 and see Prüßmann/Rabe 644.

27  This is done by the Traditionspapier aspect under §650 HGB.

28  See Puttfarken 62.

29  This is true of all three types of Konnossement. However, as far as straight bills of lading are concerned, it holds only where the receiver is the person named in the bill of lading: see Zöllner, 153.

30  See Prüßmann/Rabe 503-4, 653-5; Puttfarken 58.

31  Between 1949 and 1990, Germany existed as two nations – the German Democratic Republic (GDR) in the East and the Federal Republic of Germany (FRG) in the West. At unification in 1990, the FRG effectively subsumed the GDR and the laws of the FRG replaced those of the GDR. Therefore, the present law in the whole of Germany depends only on the history of the law of the FRG: see R Herber "Internationale Transportübereinkommen und deutsche Einheit" (1990) Transportrecht 251. The fifth book of the ADHGB (Allgemeines Deutsches Handelsgesetzbuch – General German Commercial Code) of 1861 was the first incarnation of a maritime law in Germany. According to its §607, its content was based on the "receptum nautarum". It was concerned with sailing ships. According to that law, the carrier could avoid liability only by demonstrating that an Act of God had caused the damage. It was replaced by the fourth book of the 1897 HGB, which came into force on 1 January 1900 (the maritime law section of the HGB was moved from the fourth to fifth book on 19 December 1985 by the Bilanzrichtlinien-Gesetz (Guidelines for Balancesheets Law) BGBl I, 2355). The strict liability regime was modified to allow more exemptions of the carrier’s liability.

32  RGBl II 1049 (1939). According to Art 59 II of the Grundgesetz (Basic Law), international treaties must be enacted as domestic legislation (ie transformed) to have any effect in German domestic law: Maunz, Dürig & Herzog Grundgesetz, Kommentar (1993) 11. Transformation can be effected by simply enacting a law that states that the treaty is part of domestic law – the treaty itself need not be appended to the law. Once transformed, the treaty has the same ranking as any other piece of legislation and the notion of parliamentary sovereignty applies, so that a later statute can override the treaty: Hsu 15-16.

33  Das Gesetz zur Änderung von Vorschriften des HGBs über das Seefrachtrecht RGBl I, 891. The HGB was amended again by Das Gesetz zur Änderung des HGBs und andere Gesetze (Seerechtsänderungsgesetz) (Law to Amend the Commercial Code and other Laws – Maritime Law Amendment Act) of 21 June 1972 (BGBl I, 966), but this had little ramification for bills of lading.

34  Mainly for the political reason that it hosted the conference that drew up the Hamburg Rules and does not want to be seen as supporting the old, carrier-friendly Hague-Visby Rules in preference to the new Hamburg Rules: Hsu 16. On the other hand, the German Democratic Republic did ratify the Protocol, but, as stated earlier, the GDR was subsumed by the FRG in 1990 and its legal history is for the purpose of this paper immaterial – see Herber, supra n 31, 389.

35  Das Gesetz zur Änderung des HGBs und andere Gesetze (zweites Seerechtsänderungsgesetz) BGBl I, 1120.

36  Hsu 16. See Puttfarken 91 for a summary of the history of the Hague-Visby Rules in Germany.

37  This does not apply when a bill of lading should have been, but was in fact not issued: A Hoffmann, Die Haftung des Verfrachters nach deutschem Seefrachtrecht (1996) 219 (hereinafter Hoffmann). Nor does it apply when a charterparty has been issued.

38  §662 provides that certain provisions of the HGB apply compulsorily to the bill of lading. These provisions do not apply compulsorily to the contract of carriage. Therefore, depending on which document is interpreted, two different determinations of liability can be reached. §656(1) provides that the bill of lading governs the legal relationship between the carrier and legitimate receiver independently of the contract of carriage. On the other hand, §656(4) provides that, in the relationship between Befrachter and carrier, the contract of carriage has precedence over the bill of lading. Where the bill of lading is in the hands of a bona fide third party acting in good faith, the carrier is liable to that person under the bill of lading, not the contract of carriage. The result may be that the carrier is liable to one extent to the Befrachter and to another extent to the receiver (when that party is not also the Befrachter). See Puttfarken 56-9.

39  See Puttfarken 94.

40 For examples of restrictions on parties’ freedom of contract, see Puttfarken 25-6.