Unpacking multi-modal carriage contracts

Unpacking multi-modal carriage contracts

Moving goods about the place can be a complicated business. Freight operators, warehousemen, road hauliers and cargo owners often scratch their heads trying to work out who owes what obligations to whom, especially where goods are not delivered, or are lost or damaged. ANDREW ROBINSON has some advice …

Following the money trail can help: who has the cargo owner paid for the goods to be moved or stored, or who has paid the haulier or storeman to carry out the carriage or the storage?

Where cargo is moved over long distances by various modes of conveyance, peeling the onion-like layers of contractual obligations really can reduce even tough truckers to tears.

Let’s take a simple example of the multi-modal bill of lading. This contract anticipates that goods will be moved by various carriers on various conveyances. In many cases, and often regardless of what the bill of lading terms are, various laws will apply to the carriage compulsorily. Where goods are moved from Brussels to Johannesburg via Rotterdam, for example, the Convention on the Contract for the International Carriage of Goods by Road (better known as the CMR convention) will apply where carriage is by rail in Europe, the Hague-Visby Rules for the sea leg, and the standard trading terms either of the bill of lading carrier or of a road haulier where that carrier is acting as an agent for the shipper or receiver. Indeed, a haulier may attract benefits (limits of liability, for example) and obligations (often statutory).

Untangling these ganglions of obligations can be incredibly frustrating and time-consuming.

For cargo interests, the idea behind a single freight operator agreement – a kind of one-stop-carrier shop – is appealing, because that agreement (whether bespoke or on a standard bill of lading) should identify who has the ultimate control over the movement of the goods from the place of delivery to the place of receipt and what the collective terms of that agreement are (including who will be liable for what when things do not go according to plan).

Subbies, such as road hauliers and warehousemen, can also find themselves in the awkward position of not knowing whether the person contracting them is acting as an agent only or as a principal who is subcontracting its obligations. The capacity of the person giving out the work must always be established, as the consequences for the road haulier or warehouseman can be significant. If the freight operator is acting as an agent, the road haulier can be bound to the terms and conditions over which it has no control, and, indeed, to liability to the person who contracted with the freight operator. Where there is a “true” subcontract, the haulier can negotiate the terms of its appointment.

What about claims that come from a cargo interest who is not contracted to the road haulier or warehouseman? These can be difficult to resolve through contract, but it’s certainly not impossible. In its simplest form, the appropriate use of indemnities and so-called “Himalaya clauses” can assist.

The Himalaya clause (named after a case where a ship of that name was involved) may, if properly constructed, allow a road haulier to rely on certain helpful provisions (time limits, financial limits, exclusions from liability etc) in an agreement between the cargo interest and the party from whom the particular service was subcontracted. In this regard, fairly standard agreements (such as bills of lading issued for the transport of goods beyond just shipments from port to port) can be extremely useful for road hauliers and warehousemen contracted in to perform part of the bill of the lading carrier’s obligations.

No one likes reading the fine print of these documents, but they remain an effective way of recording the contractual terms of the carriage. Understanding the terms not only identifies who is obliged to do what, but will also enable each party to the contract to define its risk exposure, and set off that risk as best they can.

Published by

Andrew Robinson

Andrew Robinson is the head of Transport for Africa and Practice Group Leader for Disputes, based across the Norton Rose Fulbright offices in Durban and Cape Town. Robinson is primarily a transport lawyer and specialises in both commercial and the litigation aspects of international trade, shipping, admiralty, marine insurance, transport, logistics and marine environmental law. He is head of the practice’s Admiralty and Shipping team. *This article was compiled with assistance from Abongile Swana.
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