|
CASE LAW
LEGAL UPDATES
GLOBAL CONTRIBUTORS
|
|
|
A freight logistics services provider, commonly known as a freight forwarder, plays a vital role in facilitating the transportation of goods within the supply chain by acting as an intermediary between the shipper and different logistics and transportation service providers. When they take full responsibility for the transportation of the goods, they function as “contractual carriers”, which not only enhances the forwarder's reputation but also entails additional responsibilities.
The Bill of Lading (BL) is a crucial document issued by the forwarder for transportation operations, representing a contractual agreement between the shipper and the carrier. When a BL is negotiable, it also serves as proof of ownership for the goods - title of the goods.
Forwarders commonly provide their clients with two types of BLs in their day-to-day operations:
• A master BL issued by the physical carrier;
• Alternatively, a house BL issued by the forwarder.
It is highly recommended for freight forwarders to issue and release their own BL known as a “house BL” (HBL), given that it offers several advantages:
• Firstly, it is named after the forwarder. The BL serves as a symbol of the forwarder's identity and functions as a flag to prevent any confusion between the contracting parties. Shippers would not like to see a different name on the BL other than the one with whom they have signed the transport contract.
• The forwarder safeguards the commercial data made available to him by issuing an HBL. It is important to protect its business by keeping the name of the shipper and the consignee, as well as trade details confidential.
• Issuing an HBL enables the forwarder to safeguard its interest by exercising lien on the goods in the event of outstanding legal claims and / or payments related to the specific shipment covered by the BL.
• Additionally, by issuing an HBL, the forwarder would have complete control over the cargo, allowing for its return to the original location or rerouting as requested by the shipper or consignee.
FIATA strongly advises its individual members, who are freight forwarders, to issue their own BLs with their own identity and trading conditions. The FIATA Multimodal BL (FBL) is a highly suitable document for freight forwarders worldwide, being applicable to all types of shipments, whether they are from port to port or from door to door. The FBL is globally acknowledged and used, being recognised by banks and customs authorities. Regarding the digital version of the FBL (eFBL) it can have its authenticity verified through a QR code, ensuring its genuineness.
We highly recommend that individual freight forwarders reach out to their local freight forwarding association or contact us directly at legal@fiata.org to obtain more information and begin issuing the FBL as their HBL.
Last but not least, it is crucial to emphasise the importance of having appropriate Forwarders Liability Insurance when assuming any responsibility towards shippers, consignees, or physical carriers. Such insurance serves to safeguard forwarders’ interests.
|
|
|
Mr Turgut Erkeskin
FIATA President
|
|
|
|
On March 26, 2024, the M/V DALI collided with a bridge pier of the Francis Scott Bridge near Baltimore, causing the collapse of the bridge and the blocking of the shipping channel. Currently, a salvage operation is underway, and 120 containers have been removed.
The owners of the M/V Dali have filed a Petition in Federal Court for limitation or exoneration of liability under maritime law and have also declared a General Average. General Average is the maritime principle that says ‘that which has been sacrificed for the benefit of all shall be made good by the contribution of all.’ The General Average percentage is determined by calculating the total loss amount against the value of the voyage (the vessel value + value of saved cargo). Once this percentage is determined, every cargo owner is responsible for a share proportional to the value of their own cargo. If the cargo is insured, the cargo insurer provides the General Average guarantee, and the cargo is released. If uninsured, a cash deposit must be posted by the cargo owner to release the cargo. At this time, there is a lien on all cargo and the General Average percentage has not been determined.
Under the Limitation of Liability Act, the owners are attempting to limit their liability to the value of the vessel as it stands. According to the petition calculation, they want to be held to about $43.67 million, if found liable. To be successful, there needs to be no prior knowledge of issues. However, the ship suffered electrical failures minutes before the crash and two blackouts a day earlier. The FBI has launched an investigation and have said that they will, in part, investigate whether the crew left the port knowing the vessel had system issues. For the time being, it is unclear how the courts will rule.
In addition, several major ocean carriers have issued force majeure notices to their customers regarding containers that were inbound to the Port of Baltimore for import. Those notices essentially advise that these shipments will be rerouted to an alternate port where the carrier will consider the bill of lading terminated. The cost of rerouting and/or final delivery will be the responsibility of the shipper.
We recommend that any cargo owners consult with a maritime attorney to assist with ramifications from this incident.
|
|
|
Mr Michael Brown
President & CEO of Avalon Risk Management
|
|
|
Acting as a contractual carrier: What to consider for freight forwarders when issuing their own bill of ladings
|
|
|
Navigating the Dual Role: Freight Forwarders as Carriers
|
|
|
In the dynamic realm of global logistics, freight forwarders serve as linchpins, orchestrating the intricate dance of goods from origin to destination. Amidst their array of duties, one often overlooked aspect is their capacity to act as carriers, issuing their own Bill of Ladings (B/L). This dual role not only streamlines operations but also brings forth critical legal considerations that forwarders must heed.
Traditionally, freight forwarders acted solely as intermediaries, overseeing logistics without assuming carrier responsibilities. However, market demands have prompted many forwarders to expand their services by assuming the role of carriers themselves.
Issuing their own B/L allows freight forwarders to consolidate shipments, negotiate better rates with shipping lines, and offer more comprehensive services to their clients. By assuming the legal responsibilities of carriers, forwarders gain greater control over the shipping process, from pickup to delivery, thereby minimising delays and ensuring efficient transportation. This transition brings challenges. Paramount among these considerations is understanding the liabilities tied to carrier status.
Unlike traditional forwarding services, carriers bear stringent legal obligations, including safe delivery, proper documentation, and regulatory compliance. Forwarders turned carriers must craft meticulous contracts, delineating rights, responsibilities, and limitations of liability to mitigate legal risks.
Compliance with international conventions like the Hague-Visby Rules is paramount, setting standards for carrier liability and dispute resolution. Additionally, freight forwarders should invest in comprehensive insurance coverage to mitigate potential risks associated with their role as carriers. Cargo insurance, liability insurance, and errors and omissions (E&O) insurance can provide vital protection against unforeseen events, safeguarding the forwarder's interests and those of their clients.
Transparent communication with clients is essential, ensuring mutual understanding of the carrier forwarder relationship and B/L terms to foster trust and minimise disputes.
In conclusion, the evolution of freight forwarding to encompass the role of carriers underscores the industry's adaptability to meet evolving market demands. However, this transition necessitates a deep understanding of the legal responsibilities and obligations inherent in acting as carriers. By navigating these complexities with diligence and foresight, freight forwarders can enhance efficiency, mitigate risks, and deliver superior services to their clients in the dynamic landscape of global trade.
|
|
|
Mr John Stubbings
Main Board Director of Woodland Group Limited
Director of British International Freight Association (BIFA)
|
|
|
|
The importance of freight forwarders acting as carriers and issuing their own Bill of Lading
|
|
|
Buyers ordered larger quantities of goods and stuffed them into containers at their own facilities; thereby taking advantage of the FCL (Full Container Load) freight cost savings vs. transportation as breakbulk cargo.
Because it was not cost effective to load the remaining breakbulk cargo (LCL = Less than Container Load) into containers at the ports, shipping lines declined this cargo, enabling freight forwarders to load and consolidate LCL cargo at more cost-efficient off-port and inland warehouse facilities (or CFS = Container Freight Stations).
Thus, the freight forwarder had to issue a House Bill of Lading (HBL) for each individual LCL shipment, but didn’t assume the full responsibilities and liabilities of a shipping line yet. In fact, these HBLs usually referenced only the forwarders’ general forwarding service terms and conditions, assuming very limited liability in case of loss or damage to the cargo. The forwarders’ LCL rates were usually based on the carriers’ breakbulk tariff.
In the United States (US), the Federal Maritime Commission (FMC) Rules and Regulations prevented freight forwarders from procuring ocean rates and marking them up for retail pricing to shippers. Meeting new realities caused by the transformation from conventional breakbulk shipping to containerisation, the regulations were modified by the creation of the NVOCC (non-vessel-operating common carrier) business model, which was ultimately anchored in the US Ocean Shipping Reform Act (OSRA), 1984. Forwarders, now NVOCCs, were officially permitted to earn a profit on the ocean freight charges.
As NVOCCs were no longer classified as forwarding agents when actually taking responsibility and charge of the cargo carriage itself, the forwarders had to issue standard contracts of carriage, being the BL (and the Sea Waybill). NVOCCs had to adopt proper standard Terms of Conditions in line with National and International Laws and Conventions.
So, with the HBL converted to a proper Ocean BL, the International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits, now “UCP 600”, acknowledged that VOCC and NVOCC BLs are equals for international commerce and banking; thereby giving the official stamp of approval for the freight forwarder acting as carrier.
By acting as carriers, freight forwarders as NVOCCs gained an additional service, offering multi-ocean carrier shipping options under their own Ocean BL.
|
|
|
Mr Juerg Bandle
Global Sea Logistics Contracts and Guidelines Manager at Kuehne+Nagel
|
|
|
|
Insurance Considerations When Issuing a Bill of Lading
|
|
When you issue a Bill of Lading (BL), you’re taking on liability. The good news is that you can, and should, limit that liability.
Your terms and conditions should always be listed on the back of your (BL) and provided to your customers. The terms and conditions can be sent via email, or listed on your website and referred to on your invoices, and you should always ensure your customers agree to them in writing.
Insurance in every country can be a little different, but it is common for an insurance company to have an expectation that you have properly limited your liability. They will often want to see and approve of your terms and conditions. Some types of insurance are underwritten based on how you are limiting your liability.
Electronic BLs are becoming more and more common. There are several benefits such as reduced costs, increased efficiency, and improved security. However, such digital documents bring with them some additional insurance questions. For example, how are your terms and conditions provided to all parties involved and how do they accept those terms and conditions in an electronic environment? Has your insurance company approved of your electronic BL? Considering that the shipping industry is one of the most targeted by cyber criminals, do you have a cyber insurance policy in place to help you recover in the event of a cyberattack?
Editor's note: for more information on cyber security, please refer to the FIATA Cybersecurity Essentials Guide.
It is important to work with your insurance company in case you move from paper BLs to electronic BLs, in order to make sure that you remain in compliance with any requirements the insurer has regarding BLs under your policies. For example, there is a possibility that the insurer may have to add electronic BLs to its policy wording.
As we all work towards a new and more streamlined environment, it is important to remember to include your insurance provider in the conversation. It could make a difficult situation a little easier if everyone is working together from the start.
|
|
|
Ms Maya Mackey
Assistant Vice President of Strategic Development for Avalon Risk Management
|
|
|
Australia commences legislating to facilitate AUKUS arrangements
|
|
|
What is AUKUS?
Australia, United Kingdom (UK), and the United States (US) entered into a tripartite security partnership for the Indo – Pacific region (widely known as AUKUS) on 21 September 2021.
Implementing AUKUS
While much of the implementation of AUKUS will operate on existing secure arrangements for the sharing of information, there remained the issue of exchanges of defence goods and technology which would otherwise require licences or approvals under existing defence export controls regimes in Australia, the UK, and the US. To facilitate the exchange of such goods and technology, the parties are working towards establishing an “AUKUS licence – free environment” to pursue enhanced cooperation by removing barriers to that sharing. Some of the initiatives are:
• Australia’s national exemption under the Defence Trade Controls Amendment Act 2024
• The US Department of State's draft national exemption for military goods and technology under the International Traffic in Arms Regulations (ITAR)
• The US Department of Commerce's interim final rule (in effect) national exemption for dual-use goods and technology under the Export Administration Regulations (EAR)
• The UK’s draft national exemption for military and dual-use goods and technology under an AUKUS-specific Open General Export Licence (OGEL).
Australia’s implementation of new export controls and the AUKUS national exemption
The steps to implement the AUKUS national exemptions in Australia commenced with the passage of additional defence export controls by the Defence Trade Controls Amendment Act 2024 (Amendment Act).
The Amendment Act passed through our Federal Parliament on 27 March 2024 with its commencement anticipated to be on 27 September 2024. However, as with many legislative developments, much of the important detail is included in the relevant regulations and on 1 May 2024, Australia released an Exposure Draft of the Defence Trade Legislation Amendment Regulations (the Draft Defence Amendment Regulations) proposing amendments to the Defence Trade Controls Regulation 2013 and the Customs (Prohibited Exports) Regulation 2013 and the Customs (Prohibited Exports) Regulations 1958.
The Draft Defence Amendment Regulations are now subject to a comprehensive engagement strategy effected by the Department of Defence ending on 31 May 2024.
We look forward to the outcome of the developments with the Draft Defence Amendment Regulations and the related developments in the ITAR, the ERA and OGEL so that the terms of the AUKUS licence – free environment can be finalised and the work on AUKUS can be advanced.
|
|
|
Mr Andrew Hudson
FIATA ABLM Member and Partner
Rigby Cooke Lawyers, Customs & Trade team
|
|
|
Legal Updates on Forced Labor Prevention by Customs Authorities
|
|
|
Several jurisdictions have implemented forced labor prevention laws enforced by customs authorities, including the United States, the U.K., Germany, Canada, Australia, and Mexico. This list continues to expand, as the European Council is currently considering finalizing its own import and export prohibition for forced labor goods.
The volume of enforcement activities varies greatly across jurisdictions. For example, U.S. Customs and Border Protection (“CBP”) has detained over 8,000 shipments, worth over 3.3 billion USD, to investigate possible forced labor violations related to China’s Xinjiang province (U.S. CBP, Uyghur Forced Labor Prevention Act Statistics, (as of May 21, 2024), https://www.cbp.gov/newsroom/stats/trade/uyghur-forced-labor-prevention-act-statistics). Meanwhile, in other jurisdictions like Canada, border authorities have detained few shipments and initiated only a handful of investigations.
We expect that forced labor laws, regulation, and enforcement activities will continue to expand globally. The next expansion in jurisdictions with well-established laws may be the addition of forced labor requirements to Authorized Economic Operator (“AEO”) programs. For example, in the United States, CBP has recently updated its Customs Trade Partnership Against Terrorism (“CTPAT”) Trade Compliance program to include forced labor prevention provisions (CTPAT Trade Compliance Handbook (4th edition) (September 19, 2023), https://www.cbp.gov/sites/default/files/assets/documents/2023-Sep/Handbook%204.0%20September%202023%20%28508%29_0.pdf). In particular, since 2022, CBP has revised its guidance to program participants numerous times, continually increasing the burden on CTPAT participants related to forced labor. Currently, these include requirements to conduct risk-based supply chain assessments, maintaining a Code of Conduct that prohibits forced labor and associated policies and procedures, and providing compliance training.
We will continue to pay close attention to these changes and would be happy to answer any questions that FIATA members may have about these developments.
|
|
|
Ms Rachel Polan
Associate at Akin Gump Strauss Hauer & Feld LLP
|
|
|
|
|
