Other Carriage Modes

Aviation

In aviation, there is no direct equivalent of the bill of lading. In air transport, the contract of carriage may be made by either the buyer or seller. Many terms of the international carriage of goods by air, are fixed by the Warsaw Convention.

The Convention has the force of law in most states, including Ireland. It has been amended a number of times since first introduced. It sets out limitations on liability and specifies when the carrier will be liable.

The Warsaw Convention ceilings for carrier liability are expressed in IMF Special Drawing Rights (SDRs). It was expressed in gold under the original convention, which predated the general abandonment of the gold standard in the 1930s. The Convention is intended as a uniform international code, which is to apply without reference to the individual state’s law.

The later Montreal Convention is intended ultimately to replace the Warsaw Convention. Ireland made it law in 2004. The Convention applies to international carriage by air where the place of departure or destination are in state parties to the Convention. There have been a number of protocols amending the Conventions, which has been given effect in Ireland. Not all protocols have been given effect in each contracting state.


Air Waybill I

The airway bill acts as a document of carriage. It evidences the contract for carriage between the exporter and airliner and proves that the goods have been received by the airline of transportation.  When suitably endorsed the airway bill can prove that goods have been exported.

Unlike the sea transport equivalent bill the airway bill is not a document of title to the goods. Nevertheless, it can be significant when used along side a letter of credit.  The original copy is often used to prove that the goods covered by the letter of credit have been transported under its terms.

An air waybill is usually required to be delivered. A receipt may be substituted with the seller’s permission, provided it records the carriage.

The air waybill is a receipt for the goods and presumptive proof of acceptance of the contract of carriage and its terms, the weight, dimensions, packing of the cargo, the number of packets and their apparent condition. It is not, however, a document of title.


Air Waybill II

In air transport, the air waybill sets out the rights and obligations of the parties. The air waybill is usually the contract of carriage. Various rights and obligations of the parties are set out in the Convention.

The waybill is made out to the consignor by the carrier. There are three or more original parts. The waybill must specify the weight of the consignment, place of departure and destination and agreed stopping places.

The consignor is responsible for the correctness of the particulars he provides. The consignor must indemnify the carrier against loss or damage suffered by reason of the information being inaccurate or incomplete.

If the goods are dangerous, this must be disclosed by the sender. The sellers must provide all information required for Customs and licence purposes.

Duties of Air Carrier

There are certain irreducible duties of the air carrier, which cannot be contracted away. Equally, the carrier cannot be held liable beyond the obligations in the Convention.

The air carrier must perform its services with due diligence. This requires that the aircraft must be airworthy, free from defects, and properly managed. It is likely to be implied or expressed that the goods are to be stowed, handled and carried, safely and speedily. Carriers are liable for loss due to damage, destruction, or loss of the cargo, which occurs while it is in their custody.

The consignor can exercise the right of stoppage in transit, and the carrier must comply. Otherwise, the consignee can demand that the cargo be delivered to it, subject to payment of whatever sums are due and to the other terms of the contract. The Consignor is not liable for loss where all necessary measures to avoid damage have been taken or where it was impossible for the carrier to take such measures.


Complaint

A written complaint must be made within 14 days of receipt of the goods, where the cargo is delayed. If the cargo is damaged, a written complaint must be made by the consignee within 14 days of receipt or where it is delayed within 21 days of being entrusted. If the complaint is not made within this time, no claim can be made unless the carrier has been fraudulent.

Provided that the complaint has been made on time, there are two years in which to commence legal action. If legal action is not brought within this time limit, the claim is extinguished.


Monetary Limits

The original monetary limits were denominated in gold. After the US effectively unhinged its currency from the gold standard, the new limits were re-denominated in terms of IMF Special Drawing Rights. These are equivalent to approximately €14 per kilogram. This does not include the costs and expenses of recovering compensation.

Lower compensation limits are not permitted, except where there is an inherent defect in the cargo. The limits on damages do not apply where the carrier has been malicious, has acted intentionally or with reckless disregard, in relation to the consequences. This exception no longer applies to cargo.

The limit does not apply where the consignor makes a specific declaration of interest and value when making the consignment. This then becomes the maximum value unless the carrier proves the value is overstated. This limit does not apply where the loss is due to the carrier’s deliberate misconduct.

Noncompliance with the formalities, such as the requirement to issue a waybill, will not invalidate the availability of the liability limits to the carrier.

The rules for the liability of carriers cannot be contracted away. They override any agreement, in so far as it attempts to provide to the contrary.


Airfreight Insurance

Liability for air freight is limited in accordance with the Warsaw and Montreal Conventions. They govern the international carriage of goods by air. They define the carrier’s responsibilities, bases of liability, financial liability limits, responsibility for sub-contractors, documents requirements, consigners liabilities, special provisions regarding dangerous goods and claim time limits.

Freight forwarders and other supply chain parties usually operate under conditions of limited liability. They are unlikely to offer compensation equal to the value of the goods if they are lost or damaged.  The full replacement cost for consignment of any applicable freight costs should be protected by adequate insurance cover. Insurance cover will not cover consequent or indirect loss such as financial loss incurred as a result of delay.

It is essential to ensure that consignments are adequately insured. A broker or freight forwarder may offer  guidance. The  European Union insurance Mediation Directive regulates brokers and insurers including freight forwarders providing insurance broker service.


Security

Export consignments sent by air must comply with security requirements.  All airfreight consignments must be screened or originate from a port accredited consign before being loaded.

Once the operator is accredited, consignments subject to controls can be treated at a known cargo depot and are not ordinarily subject to a security vetting before being loaded onto the aircraft. If an unknown forwarder is used, cargo will be treated as unknown and will be screened by the airline before being loaded.


Carriage by Road

The terms of the contract are primarily those set out in the agreement between the carrier and the consignor or consignee. There are standard contracts published by the Road Haulage Association and the association of forwarding agents. Many of the contracts reflect international treaties which are part of Irish law and have the force of law in most other countries.

The Geneva Convention on the Carriage of Goods by Road (CMR) governs many terms of the contract. The Convention is part of Irish law and cannot be contracted out of. It applies to the international carriage of goods by road. Where a journey is partly by road, sea, or air, the Convention may apply to the road part of the journey.


CMR consignment Note

The consignment note is the equivalent of a bill of lading or an air waybill, to some extent. It is presumptive evidence of the terms of the contract of carriage and of the carrier’s receipt. It is not a document of title. The note should provide for the place of loading and destination, the description of the goods, packaging, weight, quantity, numbers of package, marks or numbers and customs instructions.

There should be a statement that the CMR is to govern the relationship of the parties, notwithstanding any contract otherwise. There should be three original copies signed by the sender and carrier. One is sent to the sender, one retained by the carrier, and one accompanies the goods. Carriers must check the accuracy of statements in the consignment notes about the number of packages, marks and the apparent condition.

The sender can require that the carrier checks the weight, quantity, contents, and enters the details on the note. Senders are liable for loss or damage caused by inaccurate statements in the consignment note.

If the goods are dangerous, the carrier must be informed, and the necessary precautions must be explained.

The requisite documentation for customs and other purposes must be furnished.


Duties of the Road Carrier

The carrier’s obligations are largely determined by the contract of carriage. The CMR imposes minimum duties which cannot be contracted out of.

Generally, it is implied that the goods vehicle is roadworthy and that the goods will be properly handled, stored and carried. It is implied that the carriage will proceed with due diligence. The carrier may be liable to the consignee, where goods are lost or unduly delayed.

When the goods arrive, the consignee is given a copy of the consignment note. The consignee is entitled to enforce the contract against the carrier.

Under the CMR, carriers are liable for the total or partial loss and for damage or delay en route. They are liable for the acts of their own employees and also for their subcontractors’ faults and omissions.

The liability is calculated by reference to the value of the goods at the time they are accepted. Where there are separate carriers, there are rules for allocation of liability.

The carrier must refund all customs duties, charges, et cetera paid.


Liability and Claims

The CMR convention governs the liabilities and rights of the parties. It limits the carrier’s liabilities. The limit does not apply where there has been wilful misconduct by the carrier or by someone on his behalf.

The exceptions from liability are as follows; an inherent vice in the goods, unavoidable circumstances which the carrier was not able to prevent and special risks in the circumstances.

If the claimant has himself been wrongful or negligent, this may preclude him from liability.

There is a one-year period for making a claim. This is three years in the case of misconduct. Once a written claim is made, the period is suspended, until the claim is rejected by the carrier. In the case of delay, a written note must be given to the carrier within 21 days of the goods being placed with the carrier.

There is a ceiling of damages of 8.33 units of SDR account per kilogram of gross weight. Compensation is not to exceed the carriage charges. In the case of delay, compensation is not to exceed the level of charges. Where they are damaged, the amount is not to exceed the total amount payable, if there had been a total loss. In the case of partial damage, the maximum amount is assessed as if the part had been lost.

It is not possible to contract out of that convention.


Key rail transport documents

The CIM Consignment Note confirms that the rail carrier has received the goods and that a contract of carriage exists between the trader and carrier.  The CIM Consignment Note is not a document of title.  It includes a description of the goods, the number of packages and the name and address of the sender and recipient.  The sender is liable for the accuracy of the CIAM note and is liable for any loss or damage suffered by the carrier due to inaccurate information.

The sender is responsible for the accuracy of the CIM note.  It is used to calculate compensation if goods are damaged or lost.  There are uniform rules for the international carriage of rail published by inter-governmental organisations.

Freight forwarder’s documents play an important role. The forwarder’s certificate of receipt (FCR) provides proof that a forwarder has accepted goods with irrevocable instructions to deliver them to a consignee indicated on the FCR.  Using an FCR can speed up payment.

The FCR can then be presented for payment rather than having to wait until the non-negotiable or negotiable transport document is issued which may be sometime later.  While the FCR is not negotiable another similar document, the forwarders certificate of transport is negotiable. This allows ownership to be transferred.

The risks associated with trading internationally should be insured against. Risk of loss damage and delay including detention at customs should be covered.


Dangerous Goods

The international transport of dangerous goods is subject to the European Agreement on  the International Carriage of dangerous substances by road. They also cover the transport of goods by rail.  Drivers of vehicles carrying dangerous goods must hold ADR training certificate.

Dangerous goods in transport must be marked with their main description and UN number. The UN numbers relate to various classifications of dangerous goods.

Properly qualified dangerous goods safety advisers must check that the goods are handled and packaged correctly.  They must be packaged to withstand disturbance and movement during transit. There are strict rules in respect of transit through the Channel Tunnel.

Security regulations   require businesses involved in the transport of dangerous goods to offer goods only to appropriate carriers, to make sites that temporarily store dangerous material securely, to have a security awareness training programme and to have a security plan in place.  A globally harmonised system of classification and labelling of chemicals has been introduced.


Limits on Liability and Insurance

Most modes of transport limit the liability of the carrier.  International Conventions limit the liability carriers to levels which are often much lower than the value of the goods.  Accordingly, insurance will generally be required.

General cargo insurance is available in three varieties; Clause A, Clause B and Clause C. Clause A provides the most comprehensive cover; clause C the least comprehensive. The appropriate cover will depend on the arrangements made with the counterparty.

There are four principal types of marine cargo insurance.

  • Open cover is the most select with a single annual premium plus a final adjustment based on the actual goods shipped per year.
  • Annual policies; require each consignment to be declared before it is shipped.
  • A single voyage policy has a one-off premium for a single voyage.
  • An open policy is similar to open cover but it is linked to a specific freight forwarder.

Contingency insurance may protect against the risk that a customer refuses to accept the goods because they are damaged in transit.


Airfreight Insurance

Liability for air freight is limited in accordance with the Warsaw and Montreal Conventions. They govern the international carriage of goods by air. They define the carrier’s responsibilities, bases of liability, financial liability limits, responsibility for sub-contractors, documents requirements, consigners liabilities, special provisions regarding dangerous goods and claim time limits.

Freight forwarders and other supply chain parties usually operate under conditions of limited liability. They are unlikely to offer compensation equal to the value of the goods if they are lost or damaged.  The full replacement cost for consignment of any applicable freight costs should be protected by adequate insurance cover. Insurance cover will not cover consequent or indirect loss such as financial loss incurred as a result of delay.

It is essential to ensure that consignments are adequately insured. A broker or freight forwarder may offer  guidance. The  European Union insurance Mediation Directive regulates brokers and insurers including freight forwarders providing insurance broker service.