Conventions, contract terms and autonomous carriage

The rapidly developing autonomous vehicle and drone technology has been embraced by the cargo and freight markets.

It presents the opportunity to substantially reduce the costs involved in providing supply chain solutions and removes some of the risks inherent in human intervention. However, it also introduces some of its own risks and problems.

The international carriage of goods is governed by a number of international conventions. The conventions which govern the carriage of goods by air (Warsaw and Montreal) were drafted at the beginning of the 20th century; the CMR - which governs road carriage - is based on rail freight conventions which predate the CMR’s introduction in 1956 (collectively, the Conventions).

Unsurprisingly, none of these documents focus on autonomous vehicles and aircraft. So how do these Conventions stand up in an increasingly autonomous world?

Road carriage

There seems to be no reason why the CMR would not apply to carriage performed by an autonomous vehicle; the convention itself does not state that there has to be a driver for it to apply.

However, there are plenty of provisions that appear to assume that a driver will be involved, such as the obligation to sign and check the particulars of the consignment note.

That said, the CMR acknowledges that the absence or irregularity of a consignment note does not invalidate the contract. The courts are reasonably used to applying a flexible approach to the CMR. The road haulage industry is (a) reasonably dynamic and (b) disinclined to follow the documentary and procedural models envisaged within the CMR.

Drones

As with the CMR, the Warsaw and Montreal Conventions do not specifically state that there has to be a human pilot on board for the provisions to apply.

The Montreal Convention does contain obligations with regard to the completion of documents but, in practice, pilots play far less of a role in the production of documents and handling of cargo than in the road haulage industry. Therefore the presence – or absence – of a pilot does not seem to make a great deal of difference to the application and operation of the Convention.

Drones are, typically, used for shorter domestic carriage. However, those delivering goods using drones may be surprised to find that they are governed by the limits of liability, time bars and documentary requirements of the Montreal Convention as it also applies to domestic carriage of goods by air by reason of the Carriage by Air Acts (Application of Provisions Order) 2004.

Document management

While the driving or the flying of the mode of transport does not offer particularly difficult challenges under the Conventions, developments in technology also impact on document management. These are not new roles or duties, but the method of performing them may be.

The documentary requirements contained in the Conventions can be performed electronically and will still be subject to the Conventions’ provisions. Security, however, will be of increasing concern. Where, previously, questions had to be asked on how hard copy documents were stored and handled, this will now have to be done in an electronic context. This will include a review of the internet and data security systems in place.

Another change is the regulations surrounding the holding of data electronically. Data generated and stored during the course of supply chain services will be subject to the relevant data protection regulations, such as the recently introduced General Data Protection Regulation. This will potentially lead to increased liability exposure of both the cargo owner and the forwarder.

The Conventions all state that the carrier is responsible for the acts and omissions of those persons of whose services they make use in the performance of the carriage. Insofar as this applies to drivers, ground handling staff, pilots and the like, it is pretty straightforward to apply. However, as we move towards autonomous transport and electronic provision of services, this may become more difficult to interpret. Will the computer running the program that controls the vehicle or aircraft be considered an ‘agent, and servant…or any other persons’? It seems unlikely.

Often, an error will have a human origin of some nature – either in the programming or the maintenance of the computer or system. This raises the question: to what extent can a programmer or an IT maintenance employee be considered to be such agent, servants or other persons for the purposes of the Conventions?

Comment

It is easy to consider developments in technology as a daunting prospect when trying to address modern day supply chain contracts in relation to conventions which have their origins in the beginning of the last century. The language used is often dated and the general concepts of how services are provided doesn’t reflect modern practices.

However, the underlying services in relation to the carriage of goods has not substantially changed. The presence or absence of a driver or pilot doesn’t change the fundamental nature of the service being provided, no matter what technological advances are being employed.

The Conventions remain as relevant to carriage performed with modern day technological advances as they were to carriage provided 50 years ago. The nature and scope of the services provided, however, is changing as technology allows forwarders to become more integrated into their customers’ businesses and the provision of these ancillary services expands. That is not something with which the Conventions can ever hope to keep pace.

Read other items in the London Market Brief - July 2018

Read other items in the Marine Brief - September 2018