Web Alert: German Commercial Code - A short advisory note

This short memorandum is intended to provide guidance and raise awareness in respect of P&I club cover for cargo liabilities which would not have arisen 'but for' the cargo having been carried on terms less favourable to those set out in the Hague or Hague-Visby Rules; unless of course additional cover has been specifically agreed with the club or  the relevant terms of the contract are of compulsory application by law.

The fifth book on Maritime Trade of the German Commercial Code (Handelsgesetzbuch (HGB), 'the Code') has been effective since 25 April 2013. The International Group’s (IG) Bills of Lading sub-committee has considered the extent to which certain provisions in that code could conflict with the common IG Pooling Agreement requirement to contract on Hague or Hague-Visby Rule terms. Germany has not ratified the Hague-Visby Rules, but they have been incorporated into the Code.

The Code does not incorporate the exclusion of liability of the carrier for damage resulting from acts or omissions in the navigation or other management of the ship, or from fire or explosion on board the ship, as found within the Hague and Hague-Visby Rules.  However the Code allows parties to a contract of carriage to restore these defences and, in order to avoid incurring liabilities that may not be fully recoverable under P&I club cover, the club advises members who are expressly agreeing contracts of carriage that will be governed by German law to expressly contract back into the error in navigation and fire or explosion defences. The lack of these defences will not prejudice P&I club cover, however, where the contract of carriage is subject to German law by compulsory application.

The Code also allows parties to agree to vary the statutory limits of liability of the contractual carrier for loss or damage to goods, with the default limit being the same as under the Hague-Visby Rules.  In such circumstances, members who are entering in to contracts of carriage which are subject to German law should not agree to higher limits than those under the Hague-Visby Rules unless these have been agreed by the club in advance. This provision does not apply to obligations which were created before 25 April 2013.

All clubs in the IG are issuing similar advisory notes.