WHAT PARTIES ARE INVOLVED IN A SHIPMENT?
- The shipper prepares the merchandise being sent, and handles all paperwork needed.
- The consignee orders the cargo; it’s the party to whom the shipper sends the goods.
- The freight forwarder is a transport intermediary, who “forwards” the merchandise into the care of the sea carrier for export purposes.
- The carrier is the shipping line that moves the cargo.
- The receiver takes possession of the merchandise at the place of delivery.
So, now that we know who’s who in the complex, yet fascinating world of sea freight, let’s move on to the next question.
WHAT’S A CARGO CLAIM?
WHAT ARE THE BASIC LEGAL PRINCIPLES BEHIND A CARGO CLAIM?
It’s a general rule that it’s the claimant who has the initial burden of proving a claim. This is done by providing evidence of good condition at origin, damaged condition at destination, and the amount of the damages. If the claimant succeeds in making their case, the burden of proof shifts to the carrier.
The carrier’s basic obligations are the same in most jurisdictions. It’s a carrier’s duty to:
- Load the agreed cargo at the agreed place and time.
- Provide the shipper with a receipt showing that the carrier has custody of the cargo.
- Give the shipper evidence of the contract of carriage (B/L).
- Reach the agreed place of delivery.
- Unload the cargo in the same quantity and condition as received.
- Deliver the cargo only to the party legally entitled to receive it.
However, these obligations don’t lead to the carrier being liable to compensate the cargo owner for all damage or loss that occurs while the cargo is in the former’s custody. So, you must be wondering:
WHAT DICTATES THE EXTENT OF THE CARRIER’S LIABILITY?
The answer is the applicable law. This may seem like a black and white reply, but far from it. Most countries base their domestic law on one of 4 international conventions. The underlying principle they all share is that a mandatory minimum standard is set for the carrier’s cargo liability.
Let’s delve into each one of them.
The Hague Rules.
They date back to 1924, to the good old days, when cargo transportation was very different from today. Their approach to liability is Solomonic: liability is divided between the carrier and the cargo owner.
The carrier’s basic responsibilities are:
- To ensure the ship is suitable for loading the intended cargo and carrying it safely to destination.
- To keep and care for the cargo while in his custody.
Since liability is split, both the cargo claimant and the carrier will need to secure proof to support their positions. This results in the burden of proof in cargo claims often shifting between both parties.
The Hague-Visby Rules.
As the transport industry evolved by leaps and bounds, additional rules were needed. The Hague-Visby convention came into effect in 1968, bringing about the following changes:
- A new calculation of the per package limitation, which increased the carrier’s liability.
- The particulars contained in a B/L became evidence as to the apparent condition of the goods at the time of shipment.
- The time for the carrier to file recovery claims was extended.
The Hamburg Rules.
They came into force in November 1992, leading to a significant increase in the carrier’s liability. Under the Hamburg Rules, carriers are presumed to be responsible for any loss or damage caused to cargo unless they can prove that they took “all measures that could reasonably be taken to avoid the occurrence and its consequences”.
The Rotterdam Rules.
The purpose of this convention was to modernise the existing rules relating to contracts of carriage of goods, and to achieve international uniformity. However, it isn’t in force, since it hasn’t been ratified by anywhere close to the number of states required.
When it comes to the carrier’s liability, this convention is fault-based. In other words, the carrier is liable where cargo interests can prove that the loss or damage happened during the period of the carrier’s responsibility.
HOW CAN YOU ENSURE THE OUTCOME OF YOUR CARGO CLAIMS IS SUCCESSFUL?
To the untrained eye, establishing the chain of responsibility in cargo claims may seem like an impossible mission. Understandably, as there are plenty of grey areas in the claims process, which only experts are able to successfully navigate.
At Claimar, we provide comprehensive TPA services to guarantee your peace of mind when confronted with a cargo claim. Drop us a line to find out more.