The Forwarder´s Concern

Roland Dörre

The Forwarder´s Concern

The Forwarder´s Concern

An introduction into the marine liability of forwarders, carriers and warehousemen, the claims handling and the related insurance

By Roland Dörre

Impressum

Texte: © 2021 Copyright by Roland Dörre

Umschlag: © 2021 Copyright by Roland Dörre

Verantwortlich

für den Inhalt: Roland Dörre

Kupferdamm 16

22159 Hamburg

roland.doerre@gmx.de

Druck: epubli – ein Service der Neopubli GmbH, Berlin

About the author

Roland Dörre studied law at the universities of Freiburg, Tübingen and Hamburg. He received his lawyer´s licence in Hamburg in 1992. From 1992 to 2017, he worked with different international insurance brokers on marine liability claims and on the risk analysis of logistics contracts. Since 2017, he works as a Senior Risk Consultant at Anchor Risk Services GmbH, a consulting company within the Kuehne + Nagel Group. Since 2005, he is an instructor at the Hagen Law School in the field of specialist solicitor trainings. He is responsible for the training scripts for marine liability insurance law, and air freight law.

Contents

About this book

Introduction

CHAPTER ONE: LIABILITY

1) The Forwarder

a) Definition of activity

b) Liability in general

c) Derivative liability as carrier

d) National Law

e) Forwarders Standard Terms and Conditions (STC)

2) The Carrier

a) Definition of activity

b) Liability of the carrier

i. The Carrier: Seafreight

1. International Conventions

2. National Law

3. Terms and Conditions

ii. The Carrier: Airfreight

1. International Conventions

2. National Law

3. Terms and Conditions

iii. The Carrier: Overland freight

1. International Conventions

2. National Law

3. Terms and Conditions

4. Rail freight

5. Freight by Inland Waterways

iv. The Carrier: Multimodal transport

3) The Warehouseman

a) Definition of activity

b) Liability of the warehouseman

i. National Law

ii. Terms and Conditions

CHAPTER TWO: CLAIMS HANDLING

CHAPTER THREE: MARINE LIABILITY INSURANCE

About this book

It is remarkable that after at least 100 years of contractual liability claims against the logistics industry, and their handling through a corresponding insurance industry as well as by the logistics industry itself, there seems to be no practical guide for people working on a daily basis in this field - neither on a national level, nor to mention on an international scale. The profession of risk analysis and claims handling in and for the logistics industry is still to a great extent a “learning by doing” job. As I cannot imagine a more interesting and fascinating activity, I have decided to contribute a bit to a more structured approach.

The focus of this book is on liability of the logistics industry. It is not about the remuneration of the forwarder, nor about lien, liability of the shipper or consignee, or about General Average. It is no theoretical lawbook, but a practical guideline how to analyze liabilities and apply those on specific claim cases. It further gives an introduction into the related liability insurance for the logistics industry. The view angle is international, which means I have tried an approach which can be used for the work in any country of the world. Of course this is on the background that “epicenter” of laws, conventions and terms and conditions, as a matter of fact, is in Europe.

This book is dedicated to my great colleagues at Anchor Risk Services and in the Kuehne + Nagel Group all over the world. Our daily successful and motivating teamwork contributed a lot to the decision to create this work.

Hamburg, Autumn 2021

Roland Dörre

Introduction

When we talk about liability in the logistics industry, it has to be stated first of all that this liability itself is not different from the contractual liability in other branches of the economy. Special is however the fact that the forwarder, carrier or warehouseman is entrusted with the custody of the customers´ property. The other important fact is that the remuneration for the service is always calculated on the basis of the weight, or in some cases by the volume of the goods. No wonder that the industry tended to limit its liability by the weight as well. This started a long time ago with the seafreight, where for example the Hague Rules established a liability limitation of 100 Pounds per package.

Until today, the discussion between the logistics industry and its customers about the limitation of liability goes on. Extended liability has a price for insurance, which influences the total remuneration for the logistics service.

CHAPTER ONE: LIABILITY

1) The Forwarder

a) Definition of activity

Only if you analyze correctly the legal role of the parties involved in a logistics process, you will be able to draw the correct conclusions for the liability. This is true for all kinds of logistics activities. Let us start with the forwarder.

The forwarder is the “architect of transportation”. His role is the organization of the transport. He is engaged by the customer first of all to instruct the carrier or carriers who will effect the transport. By confirming an order of the customer as a forwarder, he confirms to have this organizational role only. In general, it is crucial to understand that contractual roles are first of all defined by agreements, and not by activities. The question must always be “what is the promise of this party to the other party ?”

Besides that, the forwarder can have all kinds of obligations to care for additional tasks, most important to give necessary information received by the customer to the carrier. A good example is the correct temperature in controlled temperature transport (reefer containers and the like).

b) Liability in general

The forwarder is not responsible to effect the transport itself, i.e. his obligation is not the success of the voyage of the goods (cargo arrives from A in B). This is because his promise is only to organize (to book/to order transports), but not to effect the transport. This is very important to understand. If the forwarder is not responsible to effect the transport, he is of course not liable if the carrier does not effect the transport successfully, i.e. the forwarder is not liable for loss, damage or delay in the custody of the carrier. We will see however that there are a lot of possible circumstances which lead to a liability of the forwarder for the success of transportation, which effectively makes him a carrier.

One self-evident scenario is the forwarder effecting the carriage himself, because he has own carriage devices. Another one – and that is practically very important – is the role as contractual carrier. In that case, the forwarder leaves his organizational role, and assumes a different role to effect the transportation, though not by himself, but by subcontractors. We will have a closer look on this in the chapters concerning the carriers.

The both examples above have in common that it is the own decision of the forwarder to change his role from a forwarder to a carrier. We will see in below c) that there is another possibility where the forwarder ends up being liable as a carrier.

If the forwarder violates his tasks, he is liable for the consequences.

c) Derivative liability as carrier

Despite the clear role of the forwarder as described in above a), he can be forced by means outside his immediate own decision to assume in the end a liability as carrier. The sources consist of national laws of some countries, as well as – and this is kind of surprising – the standard terms and conditions of some national forwarders organizations. The idea behind this the following: If the forwarder does not clearly and consequently evidence his role towards the customer and / or the carrier, he is to be considered as contractual carrier.

One concept of not evidencing the role as forwarder is the “all-in” price. If the forwarder agrees with the customer on one price not evidencing what is the freight he owes to the carrier, and what is his surplus, he is considered to be a carrier. This principle is fixed in Germany´s Commercial Code. Similar concepts exist in France, Spain and Italy, where the forwarder is always liable for deficiencies in the custody of the carrier.

Rather similar is the situation in Austria. Here, § 413 UGB (Commercial Code) provides that if the forwarder agrees on an “all-in” price, he has the rights and duties of a carrier. As § 52 AÖSp ( the Austrian Forwarders Terms and Conditions) says that the forwarder is not liable for third parties, and that the liability is even in case of § 413 only governed by AÖSp, the liability of the forwarder in Austria depends on whether the basic transportation law is mandatory or not.

Another concept is the missing representation of the customer towards the carrier. § 3 C. of the NSAB 2015 (General conditions of the Nordic association of freight forwarders) says that the forwarder can only rely on his role as intermediary if the forwarder does not undertake the service in his own name or on his own account. As in most cases the forwarder will instruct the carrier in his own name, and invoice an all-in freight rate to the customer, the forwarder in Scandinavia is regularly liable as a carrier. Similarly, as per § 6 B of BIFA (British International Freight Association) Standard Trading Conditions (STC), if the forwarder cannot prove that he entered into contracts with carriers as agent for the customer, he shall be deemed to act as principal for the performance. Thus, forwarders in the UK will mostly be treated as carriers as well.

In most other countries, the forwarder´s role as intermediary, even when quoting an all-in price, is respected, especially if the STC which he uses clearly say that his role is that of an intermediary, unless he clearly has agreed to take the role as a carrier. A well known example for such is the FIATA Model Rules, see below e).

d) National Law

There are not many national laws in the world which limit the liability of the forwarder. One exception is France, where the national law provides that the forwarder has to assume the same liability as the carrier. This means that in case the carrier´s liability is limited, e.g. by national law or international conventions, so is the liability of the forwarder. Another exception is Germany, where the Commercial Code provides a limitation for loss of and damage to the goods in the custody of the forwarder.

e) Forwarders Standard Terms and Conditions

Standard Trading Conditions (STC), first of all, have to be agreed between the forwarder and his customer in order to apply to the forwarding contract. This can happen expressly by and in a forwarding contract, but as well by disclaimers / footnotes in order confirmations by the forwarder. The conditions what to do exactly to make those STC apply might vary from country to country.

There are STC in place issued by national forwarders´ associations in the vast majority of European countries. Presently, STC exist in Scandinavia, UK, Ireland, Germany, Netherlands, Belgium, Luxemburg, France, Spain, Switzerland, Austria, Poland, Czech Republic, Slovakia, Bulgaria, Greece, Russia. Outside of Europe, the number of countries with established national forwarders associations´ STC is much smaller. STC exist in Canada, the United States, South Africa, Namibia, India, Singapore, Korea, China, and Australia. Most of them limit the liability of the forwarder for loss of and damage to goods to 2 or 8,33 SDR/kg (SDR=Special Drawing Right, an artificial currency basket created by the International Monetary Fund, consisting of USD, EUR, GBP, JPY, and CNY). Some like the ones from Greece and Russia just refer to the limitation of international conventions, which is dangerous because those contain gaps, as we will see later. Sometimes there is an additional maximum liability per claim, like e.g. 20.000 SDR or EUR 25.000,-. The time bar under these conditions is mostly either 9 months or one year.

Needless to say that in order to work successfully with those STC, you should read them !

In order to support their members, especially in countries where no national forwarders STC exist, the FIATA (International Federation of Freight Forwarders Association) has issued the FIATA Model Rules for Freight Forwarding Services. As any STC, they have to be agreed with the customer to apply on the forwarding contract. The advantage of use is a complete cover of liability limitations for all kinds of claims, i.e. loss/damage, delay and other financial loss.

The FIATA Model Rules expressly clarify in their clause 7.1 that the forwarder is not responsible for the success of the transport, or for incidents in the custody of carriers etc, unless he has issued his own transport document showing him to be the carrier, or otherwise has made an express or implied undertaking to assume carrier liability. Please note that the use of these conditions will not help the forwarder to get rid of the carrier responsibility insofar as the applicable law is mandatory, like e.g. in France, Italy, Spain, Germany, or Austria.