Practice Areas

Carriage of Goods

Sativale Mathew Arun

(406) 555-0120

Carriage of Goods by Sea

In Malaysia, the legal framework governing carriage of goods by sea varies between West Malaysia and East Malaysia. West Malaysia applies the Hague-Visby Rules, whereas Sabah and Sarawak apply the Hague Rules. Both sets of rules outline the obligations of the carriers and differ in terms of their scope and the limitation of liability afforded to carriers.

The national legislations giving force to the Hague Rules and Hague Visby Rules in Malaysia are:

In Sarawak: Merchant Shipping (Implementation of Convention relating to Carriage of Goods by Sea and to Liability of Shipowners and Other) Regulation 1960.

In Sabah: The Merchant Shipping (Applied Subsidiary Legislation) Regulations 1961.

In West Malaysia: The Carriage of Goods by Sea Act 1950 (the “Principal Act”), was amended by the Carriage of Goods by Sea (Amendment) Act (2020) (the “Amendment Act”) and its supplementary Carriage of Goods by Sea (Amendment of First Schedule) Order 2021 (the “Order”) effective 15 July 2021.

The Hague Rules applies only to bills of lading. However, the Hague Rules may also apply to any other document of title – example Mate’s Receipts – provided the following attributes exist: (a) must be issued by a carrier to a shipper; (b) must contain the name of shipper, consignee and a description of the goods to which the contract of carriage relates; (c) contain an acknowledgement by the carrier of the receipt of the goods.

The Amendment Act allows the Principal Act to recognize broader types of sea carriage documents under The Hague-Visby Rules, extending to not only bills of lading but also other negotiable and non-negotiable documents that contain or evidences a contract of carriage of goods by sea. These include documents such as consignment notes, sea waybill and ship’s delivery order.

The Rules are restricted to the ‘tackle to tackle’ period, from the time when the goods are loaded on to the time they are discharged from the ship whilst carrier and cargo interests are free to contract on terms outside this period where the liabilities are determined in accordance with the general principles of contract, tort, bailor/bailee relationship. Unless specifically incorporated by the parties, this position similarly obtains for charter parties or other contracts of affreightment where the Rules do not apply.

Under the Hague Visby Rules applicable in West Malaysia, a carrier’s liability is limited to 666.77 units of account per package or unit or two units of account per kg of gross weight of the goods lost or damaged, whichever is higher. If the goods are consolidated in a container, pallet or a similar article of transport, the number of packages or units shall be the numbers of packages or units enumerated in the sea carriage document. The unit of accounts refers to Special Drawing Rights defined by the International Monetary Fund.

In East Malaysia, under the Hague Rules, the carrier’s liability is limited to £100 per package, which is converted by legislation to a fixed amount of RM850.00 by virtue of Merchant Shipping (Implementation of Convention relating to Carriage of Goods by Sea and to Liability of Shipowners and Other) Regulation 1960, regulation 7 (Sarawak) and
The Merchant Shipping (Applied Subsidiary Legislation) Regulations 1961 (Sabah), regulation 2.

Carriage of Goods by Road and Rail

There is no international regime governing carriage of goods by road or rail in Malaysia.
Road haulage is regulated through national licensing laws, the principal legislation being the Commercial Vehicles Licensing Board Act 1987 which does not address cargo liability issues between the road haulier and the cargo owner. These issues are left to agreement between the contracting parties and, in practice, dependent upon a haulier’s or its association standard terms and conditions.

Rail haulage is regulated by the Railways Act 1991 which provides for licenses, laws, duties and responsibilities and charges for the rail industry including a lien for the haulier’s freight and charges and, like road haulage, is not governed by any international convention. The principal rail haulier, Malayan Railways, is not a common carrier and contracts on its own standard terms and conditions thus one has to look to the contract provisions to deal with cargo liability issues.

Carriage of Goods by Air

Malaysia gives effect to the Convention for the unification of certain rules relating to international carriage by air (‘The Warsaw Convention” as amended at the Hague, 1955) and the Convention supplementary to the Warsaw Convention (‘The Guadalajara Convention, 1961’).

The provisions of these Conventions are given force through the Carriage of Goods by Air Act 1974 and orders made under it.

Limits of Liability under the Carriage of Goods by Air Act 1975

In the carriage of passengers, the liability of the carrier is limited to 250,000 francs equivalent to Malaysian Ringgit RM 48,000. Liability for passenger accompanied baggage is limited to 5,000 francs per passenger equivalent to Malaysian Ringgit RM960. For the carriage of registered baggage and cargo, unless a special declaration of interest has been made and additional fees paid, the liability of the carrier is limited to 250 francs per kilogram equivalent to Malaysian Ringgit RM 40 per kilogram.

The Firm regularly acts for carriers, cargo interests, multi modal operators, insurers in respect of loss and damage to cargo carried by sea, air, road or rail.

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The information herein is for general guidance only, may have been superseded, circumstances may have changed and should not be relied upon for action. This does not in any way represent or replace professional legal advice which in each and every case must be obtained.

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