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CASE LAW
LEGAL UPDATES
GLOBAL CONTRIBUTORS
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Freight forwarders are key actors in organising complex supply chains worldwide across various modes of transport. As the supply chain seeks to fulfil ambitious climate targets whilst navigating significant disruptions and new liability risks in the supply chain, it is crucial that freight forwarders are well-informed and prepared so that they can continue to bring value to their customers in a compliant manner.
The recent International Maritime Organization (IMO) Marine Environment Protection Committee (MEPC 82) discussed a number of significant measures aimed at reducing greenhouse gas emissions. Meanwhile, the EU’s Corporate Sustainability Reporting Directive (CSRD) will be bringing new reporting requirements, impacting companies all over the world. Implementation of such requirements and the manner of demonstrating compliance will be a key question to ensure that it can support a balanced and level playing field.
The implementation of new information requirements and processes is not limited to environmental compliance. Governments are increasingly requiring freight forwarders and supply chain actors to submit certain pre-arrival import data. The increased risks and challenges faced in the supply chain also have a significant impact on companies’ legal and compliance practices. The recent loss of cargo from a vessel enroute to New York is a Prime example. Freight forwarders, as an essential service provider providing comprehensive seamless services to their customers, must ensure that they engage in appropriate risk management practices that mitigate their risk exposure. Appropriate contractual wording and contract management practices are crucial, as well as robust insurance coverage. For further guidance on contract management please see FIATA’s dedicated best practice guide.
Nevertheless, in every challenge is an opportunity. Freight forwarders as the architects of transport have proven time and time ago their ability to adapt and evolve to meet changing market needs. Their capacity to innovate, provide cost-effective and efficient options, and align with customer and stakeholder expectations for greener logistics solutions will be important factors for their competitiveness. FIATA continues to work at the regional and international level, in collaboration with international organisations, such as the IMO, and other supply chain stakeholders to support its members to effectively anticipate and navigate the rapidly evolving context.
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Ms Andrea Tang
FIATA Legal Services Director
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Package Limitations: Mitigating Liability Risks for NVOCC
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Recently, a vessel lost multiple containers overboard while en route to New York, drawing significant attention to the liability exposure of both vessel operators and Non-Vessel Operating Common Carriers (NVOCCs). Incidents like these highlight the complexities of allocating responsibility under the US (United States) Carriage of Goods by Sea Act (COGSA). NVOCCs often find themselves in the liability spotlight.
COGSA limits a carrier’s liability for lost or damaged cargo to USD 500 per package or, where goods are not shipped in packages, per customary freight unit. However, since COGSA does not explicitly define what constitutes a "package," ambiguity remains. In practice, it is up to a federal judge to determine what qualifies as a "package." US federal courts generally treat individual units, pallets, or boxes within the pallets as separate packages, rather than considering the container itself as a single package. This approach increases the potential liability for both carriers and NVOCCs.
The case under review illustrates how this interpretation can expose an NVOCC to significant financial liability.
To mitigate such risks, NVOCCs must manage liabilities through detailed contracts and robust insurance coverage. It is essential that they secure logistics liability insurance, paying careful attention to deductibles and exclusions related to unapproved or sanctioned countries, while also ensuring compliance with Office of Foreign Assets Control (OFAC) regulations to avoid penalties.
Additionally, maintaining clear communication with customers about the importance of marine cargo insurance can help reduce liabilities.
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Mr Emanuele Tozzi
Global CCO and Legal Affairs
ECX Global Logistics (Euro Cargo Express Group)
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The impact of key regulations on decarbonisation and environmental protection for freight forwarders
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Key practical measures for reducing greenhouse gas emissions discussed at IMO MEPC 82
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During the 82nd meeting of the International Maritime Organization (IMO)’s Marine Environment Protection Committee (MEPC 82), which took place from 30 September to 4 October 2024, a range of significant measures aimed at reducing greenhouse gas (GHG) emissions from ships were proposed:
• GHG Levy: A carbon levy on marine fuels was discussed to incentivise the use of lower-carbon alternatives, with the potential to generate funding for green initiatives.
• Feebate System: The introduction of a feebate system was considered to financially reward ship operators who achieve emissions reductions, thereby encouraging better performance.
• Reward & Penalty System: This approach aims to motivate compliance with emissions targets by offering rewards for meeting goals and imposing penalties for exceeding limits.
• Cap & Trade: The feasibility of a cap-and-trade system was examined, allowing emissions allowances to be traded among shipping companies, creating a market-driven approach to emissions reductions.
• Green Balance Mechanism: Discussions included mechanisms that enable companies to offset their emissions through investments in environmental projects, supporting their pursuit of net-zero targets.
Ensuring a pragmatic and balanced implementation of any adopted measures will be crucial to ensuring that supply chain stakeholders are able to effectively comply without hindering connectivity and a level playing field, and without undue cost burden on the end consumer.
FIATA remains dedicated to collaborating with the IMO to address pressing environmental challenges and has been closely monitoring the regulatory developments within the organisation. Through these efforts, FIATA aims to support the maritime industry's transition to sustainable practices and ensure that the concerns of the freight forwarding community are effectively represented.
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Ms Leticia Cherini
FIATA International Trade and Law Officer
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IMO GHG reduction measures stall as deadlines loom
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All eyes were on the 82nd meeting of the International Maritime Organization (IMO)’s Marine Environment Protection Committee (MEPC 82) at the beginning of October where key decisions were expected to be taken on the practical measures for achieving agreed reductions in greenhouse gas emission from ships, so they could enter into force during 2027.
But to the frustration of many governments, and to the Global Shipper Forum (GSF) and FIATA seeking clarity about the means and costs of shipping’s ‘green transition’ for shippers and forwarders, progress was hampered by governments disagreeing over the scope and timing of the measures, the type of ships affected and the severity of the reductions over the next 25 years.
The biggest issue for shippers and forwarders is the proposed introduction of a fuel levy or carbon tax that would be applied to all marine fuels based on the greenhouse gases they emit. This could double the price of existing bunker fuel for ship operators. The idea is to make existing, high carbon fuels more expensive to incentivise carriers to switch to lower carbon alternatives.
Shippers and forwarders are concerned that carriers will just pass these additional costs on to them in additional surcharges, much like they have the costs of the European Union’s Emission Trading Scheme and GSF is concerned that the levy could result in a dramatic and permanent increase in shipping costs that forces many traders to reconsider the viability of their shipments, leading to a steep reduction in international trade. Furthermore, if shipping lines do dodge the carbon tax bullet, then there will be little financial incentive for them to switch fuels – they could continue burning high carbon fuels at their customer’s expense and be no worse off.
The proposed carbon tax would work in tandem with a Global Fuel Standard that forces a progressive reduction in the volumes of high-carbon fuels available globally to encourage greener alternatives to enter the market. But shippers and forwarders will bear the costs of the levy in the meantime and GSF is calling for guarantees that the two measures are synchronised to ensure there is real gain to offset the inevitable pain.
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Mr James Hookham
Secretary General, Global Shippers Forum
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Commercial parties, law and contracts need to adapt to better prepare for the future under climate change
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UNCTAD’s Review of Maritime Transport 2024 highlights the important commercial law implications of climate- and weather-related risks, as well as related considerations for industry stakeholders.
In line with recent projections, extreme weather events are likely to increase under climate change in frequency and/or severity; these and other hazards, such as changes in wave energy and direction, long-waves and swell, fog, changes to estuarine water level in cases of flash floods and droughts, can pose particular increased risks for ports and for the safety of ship-operations.
Among others, increasing climate and weather-related risks and impacts may lead to greater incidence of cargo loss/damage, heightened risks for the carriage of deck cargo, and pose particular challenges for the safety of berthing, loading and discharge operations; as well as increase the risks of delays and disruptions, maritime accidents, environmental pollution, groundings and bunker oil spills – in all cases with potential implications for contractual obligations, liability and compensation and related disputes.
Climate change impacts may also give rise to major commercial risks which need to be borne by commercial parties. Relevant risks are not new in nature, but matter more, if they are likely to materialise to a greater extent or more frequently. With climate and weather-related risks growing, the established commercial risk-allocation as between the parties under a range of contracts that work in tandem - including carriage of goods by sea under charterparties or bills of lading and international sale of goods on shipment terms - may no longer be appropriate and/or need to be adjusted.
To mitigate their exposure to potentially extensive commercial losses and avoid lengthy and costly disputes and litigation, commercial parties are urgently advised to review and adjust their contracts to accommodate future risks and provide for a balanced commercial risk allocation in the light of changing circumstances. Industry organisations can play an important role in this context, by developing suitable standard form clauses for incorporation into commercial contracts; this process should involve all affected stakeholders, so that their respective legitimate interests are appropriately taken into account.
More fundamentally, in the light of long infrastructure planning horizons and lifespans, worsening climate projections, as well as the cost of inaction, timely and effective adaptation action for ports must be an urgent priority for governments, as well as for public and private entities with a stake in international transport and trade. In this context, targeted adaptation finance and capacity-building for ports in developing countries, as well as effective policy action can play an important role in promoting and ensuring the climate-resilience of ports and reduce as well as mitigate related risks for port and ship operations and associated losses. For more information on UNCTAD’s related work, see the UNCTAD website.
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Ms Regina Asariotis
Chief, Policy and Legislation Section, Trade Logistics Branch/Division on Technology and Logistics (TLB/DTL) at United Conference on Trade and Development (UNCTAD)
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Be prepared - Corporate Sustainability Reporting Directive (CSRD) is also relevant outside of the EU
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With the financial year of 2024 nearly coming to an end, soon the first sustainability reports will arrive as prescribed by the Corporate Sustainability Reporting Directive (CSRD). CSRD was introduced as part of the commitment to help the economy of the European Union (EU) to become climate neutral by 2050 under the motto that no person and no place is left behind. The first batch of European companies required to report is already familiar with reporting on sustainability performance pursuant to a European Directive preceding CSRD, albeit with a more limited scope. CSRD covers a wide range of sustainability topics which must be included in the sustainability report if relevant to the reporting company.
As of financial year 2025, so-called large companies have to follow suit. For these companies, reporting on sustainability is new in itself. They are encouraged to start preparing as soon as possible. As of financial year 2026, listed Small and Medium-sized Enterprises (SMEs) will also have to comply with (a lighter regime of) CSRD reporting requirements. Non-listed SMEs do not have a direct reporting obligation. They will however experience the effects of CSRD indirectly, because CSRD requires reporting companies to collect information from their supply chains on specific topics. The global supply chain perspective of CSRD means that even logistics service providers outside of the EU may also experience the effects of CSRD if they are part of a supply chain of a European company with a reporting obligation. Ultimately, by 2028 large non-European companies with certain activities in the European Union will also be brought in scope of the CSRD reporting obligations.
One of the topics in which the supply chain is expressly included is disclosure of carbon footprint. Although CSRD offers companies a grace period of three years to collect actual data on CO2 emissions produced by outsourced transport – the information requests are already trickling in to carriers and freight forwarders alike. To keep business on board, logistics service providers – European and non-European - must be prepared to meet these data requests. There are national initiatives to help SMEs adjust – there is an important role to be played by branche associations to help members get ahead rather than being the ones that are left behind.
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Ms Susanna Leemhuis
Legal Counsel of The Netherlands Association for Forwarding and Logistics (FENEX)
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New legislation in Romania for the road international transport - the RO e-Transport System
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On 15 December 2023, the Government of Romania issued a reglementation that stipulates that all international road freight transports entering and leaving Romania will be monitored through the RO e-Transport System, in order to avoid tax evasion.
Starting from 1 July 2024, sanctions are applied for non-compliance with this regulation.
The following categories of companies have the obligation to declare the data related to the international transport of goods in the RO e-Transport System:
• the recipient (importer) listed in the import customs declaration;
• the sender (exporter) listed in the export customs declaration;
• the beneficiary from Romania (intra-EU purchases);
• the Romanian supplier (intra-EU deliveries);
• the warehouse keeper, in the case of goods that are the subject of intra-EU transactions in transit, both for goods unloaded on Romanian territory for storage or for the formation of a new shipment from one or more consignments of goods, as well as for goods loaded after storage or after the formation of a new transport on the national territory from one or more consignments of goods.
• and 4 other categories of customers (they are not of interest for freight forwarder).
Freight forwarding companies, if they are declared by clients as transport organisers, have the obligation to change the registration plate numbers of the trucks in the RO e-Transport System, if they are changed after the initial declaration.
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Ms Iuliana Badea
General Secretary of Freight Forwarders Association of Romania (USER)
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New Import Process in Brazil
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The Brazilian Federal Revenue/Aduana has informed taxpayers about the implementation stages of the New Import System (NPI), which is being rolled out alongside systemic integration with various agencies involved in the goods release process, such as the Ministry of Agriculture (MAPA), ANVISA, and others.
The first stage began last year with the implementation of the CCT, the initial component of the system, where airlines, freight forwarders, and road transporters input data related to flights and cargo.
This stage marked a significant shift for freight forwarders in Brazil. Under the previous system, MANTRA, all data was entered by the airline. Now, airlines submit the Master Air Waybill, and freight forwarders have up to four hours before the flight's arrival to enter all House Air Waybill data (except for Mercosur cargo).
If the agent or airline fails to input the data by the established deadline, they will be subject to a fine of R$ 5,000.00 (approximately £1,000.00) per House Air Waybill for non-compliance, effective once the implementation is complete.
This fine already exists for maritime processes and will now be applied to air freight as well. We believe this penalty is disproportionate to the activities of freight forwarders, who operate on minimal margins, and to air freight, which can involve small quantities of low-value cargo. The potential fines of £1,000.00 could jeopardise their economic viability or lead to serious issues for freight forwarders, especially in cases of failure to submit due to power outages, internet issues, or unannounced flight changes, among other challenges that can arise with the tight timelines associated with air freight.
While the Brazilian Federal Revenue/Aduana seeks to align with the modernisation of global customs as a signatory to the Trade Facilitation Agreement, it overlooks the necessity for revising not only systems but also legislation and attitudes towards trade and importation. This includes reevaluating economically unfeasible fines and bureaucratic requirements that are inconsistent with trade facilitation and the demands of the digital age.
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Ms Maria Italia Piniano
CEO at Clipper Transportes Internacionais
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Consultation on potential revisions to COTIF itself and its appendices on railway contract law
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The Intergovernmental Organisation for International Carriage by Rail (OTIF) has opened a public consultation on potential revisions to the Convention concerning International Carriage by Rail (COTIF) and its various appendices covering international railway contract law. OTIF’s goal is to assess whether updates are needed for documents governing international passenger and freight rail transport, including regulations on vehicle and infrastructure use. Feedback from industry stakeholders, including FIATA and its members, will help shape these potential revisions, aligning them with the modern requirements of international rail logistics.
FIATA is consulting with its Working Group Rail and Advisory Body on Legal Matters (ABLM) delegates and collecting input on whether revisions are necessary for the following documents:
• Appendix A ‘Uniform Rules concerning the Contract of International Carriage of Passengers by Rail’ (CIV UR),
• Appendix B ‘Uniform Rules concerning the Contract of International Carriage of Goods by Rail’ (CIM UR),
• Appendix D ‘Uniform Rules concerning Contracts of Use of Vehicles in International Rail Traffic’ (CUV UR),
• Appendix E ‘Uniform Rules concerning the Contract of Use of Infrastructure in International Rail Traffic’ (CUI UR) or the relevant common provisions of COTIF.
FIATA members interested in contributing are invited to send their feedback to legal@fiata.org by November 30, 2024, to ensure that freight forwarders’ perspectives are well-represented in this legal review.
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Ms Anastasiia Filipovska
FIATA International Trade and Transport Officer
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The advantages of arbitration for freight forwarding disputes
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The disputes in the freight forwarding industry often span multiple jurisdictions and legal systems, and involve complex cross-border legal procedures. In consequence,the parties may struggle to reach consensus on the choice of applicable law, place of jurisdiction and dispute settlement resolutions. For cross-border lawsuits, the parties have to follow the court’s strict litigation procedures, and the party residing in the country of jurisdiction may have comparative advantages over a foreign party due to its familiarity with the governing law, court procedures, language, etc. In this essence, arbitration offers the parties more autonomy on the choice over the applicable legal system, arbitration procedure, rule of evidence, etc. In addition, the arbitration institute may have a list of arbitrators with expertise in freight forwarding and transportation, which is a critical factor in ensuring fair and well-informed decisions. Overall, arbitration is a good choice of dispute settlement resolutions for the forwarders in cross-border transactions.
The Beijing Arbitration Commission/Beijing International Arbitration Center (BAC/BIAC) aligns with international arbitration standards, and offers parties flexible approach to select procedures and legal frameworks that best suit their specific needs. BAC/BIAC emphasises on cost-effective proceedings through advanced case management systems, including virtual hearings and real-time transcription. Additionally, the strong track record of BAC/BIAC awards being recognised and enforced internationally adds a layer of certainty for businesses operating across global markets, making it a good choice for forwarders seeking efficient dispute resolution without compromising on quality.
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Dr Yuntao Yang
FIATA ABLM Chair
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Interview with the Beijing International Arbitration Center (BIAC)
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Why is it beneficial for freight forwarding companies to resort to arbitration to resolve their disputes?
Freight forwarder, as a coordinator in the realm of international shipping, has emerged as a swiftly expanding and innovative sector in China. Freight forwarding companies diverge from traditional maritime, land, and air transport operators by integrating standard transportation modes with the special requirements of their clients. Disputes in freight forwarding have evolved beyond the traditional agent-principal relationships between shippers and forwarders. They now encompass a wide array of complex trade and financing issues.
For instance, Sinotrans Ltd., a top freight forwarder in China, provides comprehensive logistics solutions for online retailers, enabling products purchased online to be delivered directly to consumers in Europe. This end-to-end service chain encompasses a range of services including pick up, land and rail transport, maritime shipping, postal delivery, overseas warehousing, customs brokerage, sales support, and financial services. The legal disputes arising from this innovative approach go beyond conventional transport or freight forwarding issues typically seen in court. Instead, they involve more intricate challenges related to the evolving landscape of e-commerce logistics.
Considering the unique nature of disputes in the sector of freight forwarding, the parties have opted for commercial arbitration as the preferred method of dispute resolution, which offers numerous benefits. Firstly, arbitration places a high emphasis on party autonomy, enabling them to choose a reputable arbitration institution or arbitrator who understands their business practices and fosters innovation. Secondly, arbitration benefits from adjudication by experts, allowing for the selection of arbitrators with industry-specific knowledge. This expertise is crucial for effectively resolving complex disputes and ensuring that the outcomes meet the parties’ expectations. Thirdly, arbitration offers flexibility and efficiency; parties have the freedom to agree on various procedural elements, such as the composition of the tribunal and the language to be used in the arbitration process. Additionally, the binding nature of arbitration awards ensures that disputes are resolved comprehensively and promptly. Lastly, the enforceability of arbitral awards is generally more straightforward than that of court judgments, especially under the New York Convention. This international treaty facilitates the recognition and enforcement of arbitral awards across more than 170 signatory countries.
Why should freight forwarding companies choose BIAC to arbitrate their disputes?
The Beijing Arbitration Commission/Beijing International Arbitration Center (BAC/BIAC) is a leading arbitration institution in China. The BAC/BIAC arbitration rules are designed to align with international benchmarks, providing international users with accessible, adaptable, and efficient dispute resolution services. The BAC/BIAC rules allow the tribunals the flexibility to apply either common law or civil law procedures. They can choose the most suitable legal systems, procedural languages, evidentiary rules, and disclosure practices that align with the current business environment and the parties' customary practices.
Additionally, the BAC/BIAC panel of arbitrators includes 250 foreign arbitrators from 52 countries, featuring numerous experts familiar with freight forwarding, transportation, and related industries. The BAC/BIAC also allows parties to appoint arbitrators who are not on its official panel list. Furthermore, the BAC/BIAC boasts an advanced case management system that supports online filing, virtual hearings, and real-time transcription, reducing the costs associated with international arbitration proceedings.
The BAC/BIAC has extensive practical experience in managing freight forwarding disputes, having handled approximately 664 arbitration cases related to this sector since its establishment, with a total dispute amount around RMB 11.1 billion. Lastly, the quality of the BAC/BIAC arbitration awards is consistently high, with a history of successful recognition and enforcement across various jurisdictions, including but not limited to the United States, Singapore, Chile, and Australia.
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Mr Guo Wei
Chairperson of Beijing Arbitration Commission/Beijing International Arbitration Center
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