Irina Strelnikova,
PhD in legal science, research fellow,
associate professor
Faculty of World economy and International
Affairs
School of International Regional Studies
HSE University
and
State university of management
Russia, Moscow
International Commercial
Contracts for Business
Development
Plan
• Section 1. Introduction to contract law and
International commercial contracting
• Section 2. International Sales of goods
• Section 3. Specifics of transportation contracts and
international transport corridors as key points for
business development
• Section 4. International commercial contracts during
Covid-19: how to reduce business risks.
Section 3. Specifics of transportation
contracts and international transport
corridors as key points for business
development
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Plan
Introduction: Interesting facts about transport
Modes of transport
INTERNAL TRANSPORT CONTRACTS
Main types of transport contracts in Germany and Russia and
their legal regulation in national laws
INTERNATONAL TRANSPORT CONTRACTS
International carriage of goods by sea
International carriage of goods by road
International carriage of goods and passengers by air
International carriage of goods and passengers by rail
International transport corridors and the Northern Sea
Route
Interesting facts about transport
and transportation
1. What is the longest railway in
the world?
1. The TRANS-Siberian railway is the longest railway
in the world. The great Siberian Route connecting
Moscow and Vladivostok is 9298 kilometers long,
crosses 8 time zones, passes through 87 cities and
settlements and crosses 16 rivers, including the Volga.
2. How many passengers does the
Moscow metro serve daily? And
what is the interval between
trains during rush hours?
2. The Moscow metro serves nine million passengers
daily. That's more than New York and London
combined. Trains in the Moscow metro go more often
than in any other metro in the world. During rush
hours, the interval between trains in it is 90 seconds.
3. Do you know what crazy a
game we have in Russia in the
field of air transport?
3. In Russia there is a new sport – helicopter Golf.
Two helicopters equipped with 4-meter clubs play
with two balls with a diameter of one meter. Each
team has five people. One pilots the helicopter, the
second hits the ball, the third coordinates the actions
of the first two, two more in reserve. They replace the
one with the stick when he's exhausted.
4. Do you know how many times
Russian pipelines can go around
the globe?
4. Russian pipelines, providing most of the civilized
world with oil, gas and other products, can go around
the globe as much as 6 times. After all, the
circumference of the earth is 40075 km, and the
length of pipelines belonging to Russia is 259913 km
5. When did the Charter first
appear in history as a document
and a form of transportation and
where?
• Only by the end of the XVI century there has
been a clear trend towards the allocation of
activities on the transport of cargo from Maritime
trade. At this time, the Charter appears - a
document that specifies the conditions of carriage,
rights and obligations of the parties.
• The name of the Charter comes from the
Italian Carta and Partita - "divided map
(document)" is also due to the fact that it was cut
into two parts and each of the parties (the cargo
owner and the carrier) received only half of the
document.
6. When was the first mention of
a bill of lading and where?
• In the XVI century in the French act "Le
Guidon de la Mer" for the first time was
mentioned the word "bill of lading" (from
French. connaissement - "receipt") as a document
in which the captain indicates the quantity and
quality of cargo loaded on board. This guide
clearly distinguished between a bill of lading and a
Charter, which refers to the carrier's obligation to
transport goods that do not belong to it by sea
from the port of departure to the specified port of
destination. The bill of lading was only the
captain's receipt confirming the quantity of goods
loaded on board.
Comparison of modes of transport
Modes of
transport
Aviation
Sea
River
Road
Railway
Pipeline
Speed
Cost price
Passenger
turnover
Freight
turnoverd
Environmen
tal pollution
Dependence
on weather
conditions
A roadmap to a single
European transport area
• In March 2011, the European Commission
adopted a white paper Roadmap to a
Single European Transport Area —
Towards a competitive and resource
efficient transport system (COM(2011) 144
final). This strategy contains 40 specific
initiatives to build a competitive transport
system that aims to increase mobility,
remove major barriers, and stimulate
growth and employment.
Aims of the EU transport strategy
• The overall aim of the strategy is to reduce CO2
emissions from transport by 60 % (compared with 1990
levels) by 2050 and to reduce dependence on imported
oil. To accomplish this, there are a range of different
goals, which include:
• • halving the use of conventionally-fuelled cars in
urban transport by 2030; achieving essentially CO2free city logistics in major urban centres by 2030;
• • moving to 40 % use of low-carbon sustainable fuels
in aviation; cutting EU CO2 emissions from maritime
bunker fuels by at least 40 % by 2050;
• • a majority of medium-distance inter-city passengers
travelling by rail by 2050.
EU Road transport
• In April 2015, Directive (EU) 2015/719 was
adopted, amending the existing legislation
concerning the design of lorries, with the aim
to improve environmental performance and
road safety, reduce operational costs and
reduce road damage.
Rail transport
• Adopted in 2016, the 4th railway package is a set of six
legislative texts designed to complete the single market for
rail services (single European rail area). The package
comprises two ‘pillars’:
• a ‘technical pillar’, related to the EU’s Agency for Railways
(Regulation (EU) No 2016/796), the interoperability of the
rail system within the EU (Directive (EU) No 2016/797) and
rail safety (Directive (EU) No 2016/798), adopted in 2016;
• a ‘market pillar’, dealing with the opening of the market and
the award of public service contracts for domestic passenger
transport services by rail (Regulation (EU) No 2016/2338),
the governance of railway infrastructure (Directive (EU) No
2016/2370) and the normalisation of the accounts of railway
undertakings (Regulation (EU) No 2016/2337), adopted 2016.
Air transport
• In December 2015, the European Commission adopted an
Aviation Strategy for Europe (COM(2015) 598 final) with
the aim to ensure that the European aviation sector
remains competitive and reaps the benefits of a fastchanging and developing global economy. The three
priorities are:
• • tapping into growth markets, by improving services,
market access and investment opportunities with nonmember countries, while guaranteeing a level playing field;
• • tackling limits to growth in the air and on the ground, by
reducing capacity constraints and improving efficiency and
connectivity;
• • maintaining high EU safety and security standards, by
shifting to a risk and performance based approach.
Inland waterways
• In September 2013, the European Commission adopted the
NAIADES II package, Towards quality inland waterway
transport. The package includes a set of initiatives to:
improve infrastructure;
promote green initiatives;
encourage training and professional qualifications; improve its
integration in the multimodal logistic chain.
• Significant progress was achieved in the implementation of
NAIADES II action programme through the adoption of the
European Commission proposal for a Directive 2017/2937 on
the recognition of professional qualifications in inland
navigation on 18 February 2016 and the adoption by the
Council and European Parliament of Directive (EU)
2016/1629 laying down technical requirements for inland
waterway vessels on 14 September 2016.
Maritime transport
•
The blue belt initiative introduced in 2013 (COM(2013)
510 final) aimed to develop a single transport area for
shipping, to ease customs formalities for ships, cut delays in
ports, and make the maritime sector more competitive.
•
After the establishment of the National Single Windows
for ship reporting (Directive 2010/65/EU), the Commission
presented in May 2018 a proposal for a Regulation for the
creation of a “European Maritime Single Window
environment”. The full application of the Regulation is
scheduled in 2025. It will create a fully harmonised digital
environment for ship reporting, reducing the administrative
burden for ship operators and enhancing the competitiveness
and the attractiveness of the maritime sector.
•
EU freight transport in 2019
• Road (51%)
• Sea (33%)
• Rail (12%)
• Inland waterways (4%)
• Air (0.1%)
• But, Sea transport is the most widely used mode for
transporting goods from the European Union to the rest of the
world and from the rest of the world to the European Union.
In value, 48.1% of the goods sold to countries outside the
European Union were transported by sea, as were 53.2% of
the goods sent to the European Union. Looking at the weight
of the goods transported, the importance of shipping as an
international mode of transport becomes even clearer.
Main types of transport contracts
in Germany and Russia
Sources of German сommercial
law and contracts
The
German
Commercial
(Trade)
Code
(Handelsgesetzbuch (abbreviated HGB) is the main
source of German commercial law regulating relations
between merchants.
The German Civil Code in commercial law serves only
as an additional source of commercial law, that is, its
provisions are applied in cases where there are no special
rules of commercial law.
German Freight Transport Act, adopted on 22.06.1998.
The Law on Passenger Transport – adopted in
21.03.1961, amended in 2020.
Main types of transport contracts –
section 6 of the German
Commercial Code
•
•
•
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Contract for the carriage of goods
Contract for the carriage of passengers
Freight forwarding contract
Charter-party
Contract related to persons
carriage
• The contract for the carriage of passengers is a
contract whereby the carrier undertakes to carry the
passengers to the point of destination and, where
passengers hand over their luggage to him, − to carry the
luggage to the point of destination and hand it over to
the person entitled to receive such luggage; the
passengers undertake to pay a specific charge for the
carriage and, where appropriate, for the carriage of their
luggage.
• If the passenger has luggage, it shall be carried by the
carrier either together with him and under his
supervision or separately.
Carriage of goods
• The contract for the carriage of goods is a contract
whereby the carrier undertakes to carry the goods
handed over to him by the consignor to the point of
destination and to hand them over to the person entitled
to receive such goods (the receiver), while the consignor
(the receiver) undertakes to pay a specific charge for the
carriage of the goods.
• A freight forwarding contract is a contract for the
organisation of the carriage of goods and operations related
thereto provided for in the contract of freight forwarding.
A charter-party (charter)
A charter-party (charter) is a contract
whereby one party (the owner) undertakes to
provide to the other party (the charterer), in
return for consideration, a means of transport
(means of transport) or some part thereof for
the carriage of goods, passengers or luggage.
The Russian Civil and
Transport Law
Chapter 40 of the Civil Code of the RF,
regulates the basic principles of transportation
in Russia, as well as special transportation
Сharters and Сodes, and other laws and regulations.
The following transportation
Charters and Codes are in force:
• The Railway Transport Charter of the Russian
Federation, 2003;
• The Charter of Motor and Urban Electric
Transport, 2007;
• The Merchant Shipping Code of the Russian
Federation, 1999;
• The Code of Internal Water Transport of the
Russian Federation, 2001;
• The Aviation Code of the Russian Federation,
1997.
International agreements:
• United Nations Convention on the Law of the
Sea (1982) is one of the principal conventions in
the sphere of maritime law.
• The Brussels Convention for the Unification of
Certain Rules of Law relating to Bills of Lading
("Hague Rules") (August 25, 1924);
• The Brussels Protocol to Amend the 1924
Brussels Convention (February 23, 1968,
entered into force in 1978);
• Athens Convention relating to the Carriage of
Passengers and their Luggage by Sea
(December 13, 1974).
There is no the RF Uniform
Transport Code in Russia
Russian transport legislation consists of five
separate complex branches of legislations
governing by separate Codes for each mode of
transport. Each transport Code takes into
account all specific features concerned its
mode of transport.
Types of transport agreements in
Russia
In accordance with the subject (object) of
legal regulation:
• a contract of carriage of goods (Art. 785 of
the RF Civil Code),
• a contract of carriage of passengers (Art.
786 of the RF Civil Code),
• a contract of chartering (Art. 787 of the RF
Civil Code).
• Under the contract of carriage of cargo, the carrier
undertakes the duty to deliver cargo entrusted to it by the
shipper to the place of destination, and to present it to the
person authorized to receive the shipment (the recipient).
The shipper undertakes the duty to pay the determined price
for the carriage of the cargo. The conclusion of this contract
shall be confirmed by drawing up and issuing this document
to the shipper, along with an invoice (bill of lading, or
another document for the freight provided for in the
corresponding transport charter or code).
• Under the contract of the carriage of a passenger, the
carrier undertakes the duty to carry the passenger to the
place of destination, and in case the passenger has checked
in baggage, also to deliver the baggage to the destination,
and to present it to the person authorized to receive the
baggage.
According to a mode of transport
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•
•
•
a contract for railroad carriage,
a contract for air carriage,
a contract for marine carriage,
a contract for automobile carriage,
a contract for internal water carriage,
and a contract for combined carriage.
Modes of transport and types of contracts of carriage in Russian: Maritime (Sea) transport
Maritime (Sea) transport
The merchant shipping Code, 1999
Contract of carriage of
passengers
Contract of carriage of goods
Line shipping
- regular carriage
- scheduled carriage
- carriage of small-lot
goods
- the fee is listed in a liner
tariff
- regular stable carriage
system
Carriage covered by
a bill of lading
Tramp shipping
-
no fixed schedule
no fixed ports of call
cargoes of low value
irregular shipping
nonstandard routes
no fixed tariff
Charter carriage
Voyage charter
Time сharter
Means freighting
of a ship or it’s
part for carriage of
goods by sea for a
single or several
voyage
Means leasing a
ship for a
definite period
of time with
crew
Regular public
carriage
Ticket
Modes of transport and types of contracts of carriage in Russian: Railway transport
Railway transport
The Railway
transport charter 2003
Contract of carriage of goods
Regular Public
carriage
Railway bill invoice
+ receipt of cargo
acceptance for
transportation
Contract of carriage of
passengers
Regular public
carriage
Ticket
Modes of transport and types of contracts of carriage in Russian: Air transport
Air transport
The Aviation Code, 1997
Contract of carriage of goods
Regular Public
carriage
Air waybill +
receipt of cargo
acceptance for
transportation
Contract of carriage of
passengers
Charter carriage
Regular public
carriage
Charter carriage
Charter
Ticket
Ticket
Modes of transport and types of contracts of carriage in Russian:
Inland water Transport (river)
Inland water Transport (river)
The Code of Inland water Transport, 2001
Contract of carriage of goods
Regular Public
carriage
Inland water
Bill + receipt of
cargo acceptance
for transportation
Contract of carriage of
passengers
Charter carriage
Regular public
carriage
Charter carriage
Charter
Ticket
Ticket
Modes of transport and types of contracts of carriage in Russian:
Motor (road) and Urban Transport
Motor (road) transport
Urban Transport
The Charter of Motor and Urban Electric Transport, 2007
Contract of carriage of goods
Regular Public
carriage
Charter carriage
Work-order
Road bill +
receipt of cargo
acceptance for
transportation
Contract of carriage of
passengers
Regular public
carriage
Charter carriage
Ticket
Work-order
Elements of a carriage contract
The subjects of shipment relationships are:
• a carrier and a consignor.
• A carrier can only be an entrepreneur (a
commercial organization or an individual
proprietor) having a license to transport
cargo, passengers.
• A consignor and a consignee may be all
capable persons having legal capacity. A
consignee is not a party to a carriage
contract.
Organizational-Legal Form of
Carriage by Sea
• Maritime transport is the leading transport
mode in the carriage of goods of international
trade. That is why, it is principally accepted as
foreign trade transport.
• Maritime transport applies in two major
forms, that is, two different technologies of
utilization of shipping:
• Tramp shipping;
• Line shipping.
Tramp shipping
• Tramp shipping realizes irregular carriage. That’s
why it is generally termed as non-scheduled
shipping.
• A ship engaged in the tramp trade is one which
does not have a fixed schedule or published ports
of call.
• Tramp shipping doesn’t deal with consistent
loading and unloading, nor does it specialize in a
certain type of goods.
• Another specificity of tramp shipping is that the
carriage charges are appointed by the agreement of
parties i.e. the shipowner and the goods owner.
Line shipping
• A freight liner is a cargo ship sailing on a
regular schedule, as opposed to a tramp
ship.
• The fee is listed in a liner tariff by owner
or freight conference and unchanged in a
rather long time. That is why this type of
shipping is also termed as scheduled
shipping.
Types of carriage of goods by
sea:
• charter carriage;
• carriage covered by a bill of lading.
A charter is the document form of nonscheduled carriages, while a bill of lading
legitimates scheduled shipping.
• A charter and a bill of lading are contract
documents. They are two different
agreement forms of carriage of goods.
Types of a Charter
• Two types of charter are particularly
distinguished:
• voyage-charter
• time-charter
Voyage-charter
• Voyage-charter means freighting of a ship or its
part for carriage of goods by sea for a single,
circular or several voyages. The shipowner gives
the ship to the charterer’s order. Payment of
freight is one of the charterer’s main
responsibilities. Freight can be paid before or
after loading of goods.
• The shipowner, in turn, is liable to hand over the
ship to the port of loading within the time
expressly agreed upon and deliver the goods at
the port of discharge.
Time-charter
• A time-charter means leasing a ship for a
certain period of time (several months or
years). The goods to be carried, the volume
(quantity) of the goods, and the number of the
voyages are solved by the freighter. The freighter
exploits the ship for his commercial purposes.
• A time charter is freighting (leasing) of a ship for
a definite period. The shipowner gives the ship
and its crew to the freighter’s use for a definite
period. The freighter in return pays the agreed
sum (freight) to the shipowner.
Standard Charter Forms
The charter is an agreement document legalizing
tramp (non- scheduled) shipment. It includes up to 60
provisions (the description of the ship, freighting
rules, description of the carried goods, payment of
freight, the loading process etc.).
Standardized charter forms are worked out by
international marine organizations, national unions of
shipowners, national unions in international trade and
transport, large shipping companies, goods-owners
and by the carriers themselves. Standard charter
forms worked out by international marine
organizations, Baltic and International Maritime
Council (BIMCO).
Types of standard charter forms
Worked out due to the type of the goods and the
peculiarities of the carriage of different types of
goods:
• Standard charter forms on the carriage of grain;
• Standard charter forms on the carriage of coal;
• Standard charter forms on the carriage of ore;
• Standard charter forms on the carriage of oil;
• Standard charter forms on the carriage of wood.
• Each charter form (standard charter form) has an
abbreviated name such as “Gencon”, “Barecon”,
“Baltime” etc.
Carriage covered by a Bill of
Lading
• Carriage by sea can also be realized without
chartering a ship, its part or chambers. In such a
case relations emerging between parties are
legalized by a bill of lading.
• While a charter legalizes carriage of large lot
goods (grain, coal, oil, cement, sugar, metal etc.)
by sea, a bill of lading actualizes carriage of
different types (sorts) of goods (in small lots).
A bill of lading fulfills several
functions
• bill of lading confirms the existence and
endorse of the agreement on the carriage
of goods by sea
• confirms the reception and loading of goods
by the carrier.
• a document of title, which stipulates its
recognition as a security.
Tramp ships:
• does not have a fixed schedule or published
ports of call
• irregular shipping, mainly over nonstandard
routes, with no definite schedule
• are used to transport cargoes of low value
that do not require fast delivery
• The fee isn’t listed in a liner tariff by owner
or freight conference and unchanged in a
rather long time.
Linear ships:
• base on the scheduled carriage
• involve carriage of small-lot goods, of goods
between multiple ports, and regular and quick
delivery of goods by sea
• the fee is listed in a liner tariff by owner or freight
conference and unchanged in a rather long time
• Scheduled routes provide duly and timely carriage
of goods to the destination.
• Liner shipping bases on a regular stable carriage
system.
BUSINESS CASE SCENARIO 1– “A COOL DAY
IN THE REAL WORLD!”:
FIND THE BEST ROUTE
• It’s Tuesday, 14-th of January 2019, 9:00 a.m.
• You are a specialist in the logistics department of a
global precision equipment producer. Your
colleague Tim unfortunately got sick today and
couldn’t come to the office. You get to solve his
task: to get the cargo (produced high precision
laser medical equipment) from a port in Korea, to
Europe, DAP Hamburg.
ROUTE 1 – direct shipping
• A large container vessel is departing from a port in
Korea, on the 16-th of January. They have the
capacity to take your cargo. The time en-route is
30 days. The problem is the price – as it’s a last
minute charter, you will pay a significant premium
over the scheduled ship in two weeks.
• There is a second container ship departing on the
1-st of February, and it’s considerably cheaper.
But your cargo will arrive 9 days later than set in
the contract, and your firm would pay the penalty.
• Cost of cargo storage at port in Korea: 500 USD per day
• Cost of cargo release from the port (loading and
manipulation): 4000 USD one off
• Charter rate for the ship departing 16-th of Jan:
15.000 USD per day
• Charter rate for the ship departing 1-st of Feb:
9.000 USD per day
• Delivery term under contract with customer:21-st of Feb
• Time en-route:
30 days
• Total price of the medical equipment contract:
20.000.000 USD
ROUTE 2 – combination of sea route and air
cargo
• A local lines container ship departs to Taiwan on
1-st of February at noon. They have the capacity
for your cargo.
• Then you can ship the equipment by a large cargo
plane directly to the port of destination. You will
have to charter the whole plane, but it takes it
usually only 16 hours to get to its destination (it
makes one landing for refueling).
• The planes with available capacity for your cargo
depart on the 5-th and 21-st of each month, at
22:00 local time.
• Cost of cargo storage at port in Korea: 500 USD per day
• Cost of cargo storage at port in Taiwan: 700 USD per day
• Cost of cargo release from the port (loading and
manipulation):
4000 USD one off
• Charter rate for the ship departing 1-st of Feb to Taiwan:
7.000 USD per day
• Airfreight Charter rate from Taiwan to Hamburg:
400.000 USD / flight
• Delivery term under contract with customer:
21-st of Feb
• Time en-route by ship to Taiwan: 4 days exactly (96 hours)
• Time en-route by air from Taiwan to dest.:
actual flight
time (usually 16 hrs., one landing)
• Total price of the medical equipment contract: 20.000.000
USD
Distinctive Features of International
and Internal Contracts of carriage
• The first - legal regulatory sources. International contracts of
carriage are most commonly governed by international
transport conventions. These conventions are the key sources
of international agreements on carriage of goods. Internal
agreements on carriage of goods are exercised under Civil
Code, national transport regulations and codes.
• The second - a party to an international agreement on
carriage of goods (the freight owner or the shipper) must
necessarily be a foreign person.
• Finally, international agreements on carriage of goods are
formalized by international transport (carriage) documents
whose forms are generally established by international
transport organizations.
Connection between international
trade and contract of carriage
• A buyer or seller of goods - and sometimes both enters into a contract of carriage in order to get the
goods from the seller to the buyer.
• In international trade, Incoterms are very often
used to deal with the question of which party pays
for and which party organizes the transport of the
goods.
A lot depends on Incoterms
• If there is an Ex Works clause in the contract of sale, the
buyer picks up the goods at the seller’s factory. The buyer
is the only party to the contract of sale who enters into a
contract of carriage.
• If there is a DDP clause in the contract of sale, the seller
is the only party who enters into a contract of carriage,
because under a DDP clause it is up to the seller to
deliver the goods to the buyer.
• If, for example, the FOB term is agreed upon in the
contract, both parties enter into a contract of carriage.
The seller has to transport the goods to the port of
departure and onto the ship. The buyer has to take care of
the transport from the port of departure to his factory.
General principles of
international contract of carriage
There are four main principles regarding the international
contract of carriage. The way these principles are applied can
differ from one mode of transport to another.
1.
Limitation of liability of the carrier
2.
Time limits within which claims for payment of
damages have to be filed. These time limits fall into two
categories. There is a time limit for complaints and a time limit
for legal action. In transport law, the time the claimant has to
start legal proceedings is limited.
3. The carrier has two main obligations: to deliver the goods
and deliver the goods undamaged and on time.
4. Jurisdiction
• The application of these principles is slightly different for
each mode of transport. Road transport is dealt with in the
Convention on the Contract for the International
Carriage of Goods by Road (CMR), rail transport in
Convention concerning International Carriage by Rail
(COTIF) of 9 May 1980 and its annexes A and B, which are
referred to as "Uniform Rules Concerning the Contract of
International Carriage of Passengers by Rail (CIV)" and "
Uniform Rules Concerning the Contract of International
Carriage of Goods by Rail (CIM)", sea transport in the
Hague-Visby Rules and the more recent Rotterdam Rules
and air transport in the Warsaw Convention and the more
recent Montreal Convention (MC). These treaties do not
apply to national contracts of carriage.
Difference between contractual
and non-contractual damages
The treaties that deal with contract of carriage, i.e.
CMR, MC and Rotterdam Rules, do not apply to third
party damages.
International Carriage of goods
by sea
?
What are the largest ship-owning
countries in the world?
• The top 10 of the largest ship-owning
countries is Greece, Japan, China,
Germany, Singapore, Korea, Hong Kong,
US, UK, Norway. They account for
approximately 68% of the total world fleet
(in world tonnage).
The Hague-Visby Rules
• The first important convention governing the liabilities and
obligations of carriage by sea were the Hague Rules of 1924.
The Hague Rules were amended in 1968 and 1979 and
became the Hague-Visby Rules (HVR).
• The HVR are currently the most important maritime
convention because with the notable exception of the US all
countries in the top 10 of largest ship-owning countries either
ratified the HVR or adopted in large part the HVR in their
national legislation (Germany, Korea and China).
• The HVR were criticized especially by a group of developing
countries who found the rules too much in favor of the carrier.
The one-year time limit in the HVR to bring an action before the courts is
very short and also the limitation of the liability of the carrier under the
HVR to 666,67 SDR per package or unit and 2 SDR per is advantageous
for the carrier but not so much for the shipper of the goods.
Special Drawing Rights (SDR)
• Special Drawing Rights (SDR) is an
international monetary reserve currency,
created by the International Monetary Fund
(IMF) and consists of a basket of
currencies. 1 SDR is around € 1.18 per
08/01/2020.
The Hamburg Rules
• As a result, a new convention was drawn up in 1978:
the Hamburg Rules. Under the Hamburg Rules the time
limit for claims is two years and the carrier is liable for
835 SDR per package or unit and 2.5 SDR per kilogram. A
lot of countries with big shipping companies found these
limits too high and did not sign the Hamburg Rules. As a
result the Hamburg Rules has little importance in maritime
law. All the signatory states to the Hamburg Rules together
represent only an estimated 5% of world trade by sea.
None of the countries in the top 10 of largest ship-owning
countries ratified the Hamburg Rules.
The Rotterdam Rules
• The emergence of electronic communication and the change
in shipping methods make the HVR less suitable.
• As a result the Rotterdam Rules were created in 2008. The
Rotterdam rules give a much more detailed regulation of the
carriage by sea than the Hague Visby Rules. The Hague
Visby Rules contain 10 articles whereas the Rotterdam Rules
contain 96 articles. Unlike the HVR and Hamburg Rules, the
Rotterdam Rules not only apply to the carriage of goods by
sea but also the carriage of goods by land or air (multimodal
transport) in combination with sea carriage. Under the
Rotterdam Rules the carrier is liable for 875 SDR per
package or unit and 3 SDR per kilogram. This is higher than
the Hamburg Rules. At the moment (09/01/2020) only four
countries ratified the Rotterdam Rules instead of 20 in
order to come in force.
Scope of Hague Visby Rules
• The Hague Visby Rules (HVR) apples only to
contracts of carriage covered by a bill of lading if the
carriage is from a port in a contracting State Article I
HVR. A bill of lading is a document evidencing the
receipt of goods for shipment and issued by a ship owner
engaged in the business of transporting goods over sea. A
bill of lading contains the following information:
• a. A description of the goods
• b. The leading marks necessary for identification of the
goods
• c. The number of packages or pieces, or the quantity of
goods
• d. The weight of the goods, if furnished by the shipper
• A similar provision can be found in Article 36 Rotterdam
Rules. A bill of lading is not only a receipt but also:
• - Evidence of the existence and terms of the
contract of carriage.
• - A document of title.
• Since a bill of lading is a title, it is possible to transfer the
ownership of the goods, by transferring the bill of lading.
• The HVR apply to the sea carriage of all cargo and
this includes goods, wares, merchandise, and articles
of every kind whatsoever except live animals and deck
cargo Article 1 under c HVR. The Hamburg Rules and
Rotterdam Rules apply to the carriage of all cargo
including deck cargo and live animals.
Scope of Hamburg Rules and
Rotterdam Rules
• The Hamburg Rules apply also if a bill of lading is
issued in a Contracting State, but also in case of a
contract of carriage by sea between two different
States, if the port of loading or discharge is located in a
Contracting State Art. 2 Hamburg Rules. The
Rotterdam Rules apply in case of sea carriage
between different States if any one of the following
places is located in a Contracting State Art. 5
Rotterdam Rules:
• a. The place of receipt;
• b. The port of loading;
• c. The place of delivery;
Main obligations carrier
Under HVR, Rotterdam rules, Hamburg
rules carrier is responsible for:
the loading,
handling,
stowage,
carriage,
discharge of the goods
Liability for seaworthiness and
cargo worthiness
• Under Article III of the HVR the carrier is bound before and
at the beginning of the voyage to exercise due diligence to:
• a. Make the ship seaworthy;
• b. Properly man, equip and supply the ship;
• c. Make the holds, refrigerating and cool chambers, and
all other parts of the ship in which goods are carried, fit
and safe for their reception, carriage and preservation - this is
also known as cargo worthiness.
• d. properly and carefully load, handle, stow, carry, keep,
care for, and discharge the goods carried.
• If the carrier has fulfilled these obligations the carrier is
not liable to for loss or damages Article IV under 1 HVR.
Period carrier’s responsible for the
goods
• Under the HVR the carrier is responsible for the goods
from the time the goods are loaded on to the ship
until the time the goods are discharged from the ship,
Article 1 under e HVR.
• Under the Hamburg Rules - the period during which
the carrier is in charge of the goods at the port of
loading, during the carriage and at the port of
discharge Article 4 Hamburg Rules.
• Under the Rotterdam Rules - period when the carrier
receives the goods for carriage and ends when the goods
are delivered Article 12 Rotterdam Rules.
List of force majeure circumstances
• The carrier is not liable for loss or damage arising or
resulting from:
• a. Act or default of the master or the servants of the carrier
in the navigation or in the management of the ship –
navigational error (only in HVR).
• b. Fire.
• c. Dangers and accidents of the sea or other navigable
waters.
• d. Quarantine restrictions.
• e. Act of war.
• f. Act of public enemies.
• h. Any other cause arising without the actual fault of the
carrier.
EXAMPLE
• Mr. Kidde enters into a contract of carriage to transport
monoammonium phosphate (MAP) from Morocco to
Mexico. The MAP was transported by ship, the M.S.
Hams. The M.S. Hams runs aground in the Silver Bank
area off the coast of the Dominican Republic. The M.S.
Hams could not get loose on their own and therefore
enlisted the help of Svitzer Salvage. After dumping 800
tons MAP overboard, the M.S. Hams got loose and was
pulled by a tug boat to Mexico. Mr. Kidde seeks damages
from the carrier?
• According to the carrier the damage occurred as a result of
a navigational error meaning that in this case there was a
force majeure circumstance and the carrier is therefore not
liable. The Court of Appeal wondered why the captain
deliberately chose the route through these dangerous
waters. At three locations the nautical map of the Silver
Bank area included the remark and also showed that sailing
through the Silver Bank area (due to the many rocks) is
strongly discouraged. The Court of Appeal suspects that at
the start of the trip the nautical documentation on board
was not in order and therefore the carrier did not fulfill the
duty of care with regard to seaworthiness.
EXAMPLE
• Cetac hires the Nile Dutch Africa Line BV (NDAL) to
transport by sea 398 bales of raw tobacco from
Douala in Cameroon to Amsterdam. Cetac, the
shipper, loaded the tobacco into four containers made
available by NDAL for the transport. Upon arrival of
the goods it turns out that the tobacco in two
containers is damaged by water. The cause of the
water damage was the poor condition of the two
containers. The containers had holes in them as a
result of rusting of the containers.
• Is NDAL liable in this cituation?
• The court stated that the scope of the duty of care of
the carrier in Article III HVR is the obligation to
protect the ship's cargo against the dangers of the sea,
making the ship suitable to carry the load, also
referred to as the cargo worthiness or the capability of
the ship to carry cargo. This obligation entails that the
carrier must also ensure that through him specifically
for the transport made available containers on board
the vessel are suitable to carry the load placed therein.
This duty of care means that, as applies equally to the
hold of the ship, no water can penetrate into those
containers. The carrier, NDAL, has neglected her duty
of due care.
Limitation of liability sea
carriage
Convention
HVR
Limitation liability
666.67 SDR per package or other shipping or unit
and 2 SDR per kilogram, whichever is the higher
Article 4 HVR.
835 SDR per package or other shipping unit or 2.5
Hamburg Rules
SDR per kilogram, whichever amount is the higher
Article 6 Hamburg Rules.
Rotterdam Rules
875 SDR per package or other shipping unit or 3
SDR per kilogram, whichever amount is the higher
Article 59 Rotterdam Rules.
Breaking the liability limit
• The carrier loses his right to limit his liability if the
claimant proves that:
• - the act or omission was done with the intent to
cause such loss or recklessly and with knowledge that
such loss would probably result Article 61 Rotterdam
Rules, Article 8 Hamburg Rules, 6 HVR.
Time limit for complaintsDamage or loss
• Under Art. 3 HVR, a claim for compensation for damage or
loss the notice has to be given in writing to the carrier at
the port of discharge before or at the time of the removal
of the goods. If the loss or damage be not apparent notice has
to be given within three days after delivery.
• Under Art. 19 Hamburg Rules the notice for damage or loss
has to be given not later than the working day after the
day when the goods were handed over or if the damage was
not apparent notice has to be given within fifteen days after
the goods were handed over.
• Under Art. 23 Rotterdam Rules notice of loss of or damage to
the goods has to be given before or at the time of the
delivery, or, if the loss or damage is not apparent, within
Time limit for complaintsDelay
• Under the HVR, unlike the Hamburg Rules and the
Rotterdam Rules, it is not possible to claim damages for
the delay of delivery of the goods.
• Under the Hamburg Rules no compensation is payable
for loss resulting from delay in delivery unless a notice has
been given in writing to the carrier within 60 days after the
day when the goods were handed over to the recipient of
the goods.
• Article 23 under 4 Rotterdam Rules states that if the
claimant seeks compensation for delay, notice has to be
given within 21 days after delivery of the goods.
Time limit for legal action
• Under the HVR the carrier is discharged from all liability
whatsoever in respect of the goods, unless suit is brought
within one year of their delivery or of the date when
they should have been delivered Article III under 6 HVR.
• The time limit for an action relating to carriage of goods
under the Hamburg Rules is time-barred if the
proceedings have not been instituted within a period of
two years.
• For transport of goods wholly or partly by sea, the
Rotterdam Rules also establish a time limit of two years
for claims to be filed, Article 62 Rotterdam Rules No legal
proceedings can be instituted two years after the date that
the goods should have been delivered.
Jurisdiction under HVR
• The Hague Rules and the Hague-Visby Rules do
not contain jurisdiction provisions.
• In the EU Member States this will be the Brussels I
regulation. Article 4 Brussels I regulation states as a
general rule that proceedings have to be brought
before the courts of the country where the person
being sued is domiciled. This results in carrier being
sued in the country where they are domiciled,
because it will be the shipper who is the plaintiff and
the carrier the defendant.
• However, carriers often put the choice of law and
jurisdiction in their bill of lading terms. This is
possible under Article 25 Brussels I recast regulation.
Jurisdiction under Hamburg Rules
• According to Article 21 Hamburg Rules the plaintiff, at
his option, may institute an action in a court which is
situated one of the following places:
• (a) the principal place of business or, in the absence
thereof, the habitual residence of the defendant; or
• (b) the place where the contract was made, provided that
the defendant has there a place of business, branch or
agency through which the contract was made; or
• (c) the port of loading or the port of discharge; or
• (d) any additional place designated for that purpose in the
contract of carriage by sea.
Jurisdiction under Rotterdam Rules
• Under the Rotterdam Rules the plaintiff has the right to
institute judicial proceedings against the carrier in a
competent court within the jurisdiction of which is situated
one of the following places Article 66 Rotterdam Rules:
• (i) The domicile of the carrier;
• (ii) The place of receipt agreed in the contract of carriage;
• (iii) The place of delivery agreed in the contract of carriage;
• (iv) The port where the goods are initially loaded on a ship
or the port where the goods are finally discharged from a
ship; or
• (v) In a competent court or courts designated by an
agreement between the shipper and the carrier for the
purpose of deciding claims against the carrier.
International carriage of goods
by road
Convention on the Contract for the
International Carriage of Goods by
Road
• The main UN treaty dealing with legal issues
regarding the transportation of goods by road
is the CMR (the Convention on the Contract
for the International Carriage of Goods by
Road (CMR).
• The CMR was signed in 1956 in Geneva. A
total of 55 countries, mostly European, have
signed the CMR.
Scope of the CMR
• Article 1 under 1 CMR states that the CMR only applies
to transport contracts by road the goods are taken over in
a different country from the designated place of delivery.
However, the CMR also applies to transport by sea, rail and
air in case the goods are not unloaded from the vehicle
(Article 2 CMR).
• The CMR does not apply to national transport contracts.
For example, the convention does not apply to a contract to
transport goods from Amsterdam to Rotterdam. For such
contracts national transportation law applies. Under the
CMR, the limitation of liability is 8.33 SDR (around € 10)
per kg.
Liability for road carriage
• The carrier has the obligation to make sure that
goods are delivered without damage and on time
(Article 17 under 1 CMR).
• Road congestion can cause a delay in delivery. In
principle, the carrier is liable for the damage caused by
a late delivery of goods.
• If the delivery is too late, the carrier can sometimes
invoke force majeure. In this case the carrier is not
liable for damages.
Example
• If a truck carrying flowers from Amsterdam
to Barcelona is delayed by a protest of
angry French truck drivers on the highway,
Is it liable?
• It is not liable. No one can expect a
professional carrier to anticipate such an
event.
Limitation liability road
carriage
• Article 17 under 2 CMR gives a general rule under
which circumstances the carrier is relieved of liability.
The carrier is not liable if the loss, damage or delay
was caused by the wrongful act or neglect of the
claimant, by the instructions of the claimant, by
inherent vice in the goods or through circumstances
which the carrier could not avoid and the consequences
of which he was unable to prevent e.g. the armed
hijacking of the truck or a road accident caused by a
third party.
• If the carrier states that the damage was caused by
force majeure, the carrier has to prove this, Article 18
CMR.
EXAMPLE
• In a French case decided by the Paris Court
of Appeal the court held that the damage
resulted from weather conditions later
declared a natural disaster the carrier was
not liable because offeree majeure. In this
case there were unforeseen natural events
of abnormal intensity (160 km/h gales). The
driver could not have predicted and take
precautions against the consequences of
these very strong wind.
Release from the liability
• Article 17 under 4 CMR - the carrier is not liable for
damages if the damages are a result of:
• - the use of an uncovered vehicle;
• - defective packing;
• - handling, stowage or unloading of the goods by the
sender;
• - the nature of certain kinds of goods which
particularly exposes them to total or partial loss or
damage, especially through breakage, rust, decay or
leakage (for example the transportation of eggs);
• - insufficient marking of the packages;
• - carriage of livestock.
Example
• A carrier transports shoes from Portugal to the Netherlands
in two trailers. Shortly after leaving the warehouse in
Portugal, the trailers catch fire. The client who entered into
the contract of carriage sues the carrier for damages. The
parties agree that the trailers did not catch fire by accident
and were sabotaged with incendiary devices. Although it is
not known who put the incendiary devices in the trailers, the
parties agree it was probably the warehouse staff in
Portugal who loaded the goods into the trailers. The
warehouse staff probably did not load all the cartons of the
shipment, loading a number of empty cartons in order to sell
the stolen shoes on the local market. To cover their tracks
they probably put incendiary devices in the trailers.
• Is the carrier liable or exempted of his liability based on
CMR?
• A carrier is not liable for damage to the goods if the
damage resulted from the handling or stowage of the
goods by the sender, Article 17 under 4 (c) CMR. The
damage to the goods was a result of incendiary devices.
• But it’s easier to prove that the carrier is relieved of
liability if the loss, damage or delay was caused by
circumstances which the carrier could not avoid and
the consequences of which he was unable to prevent,
Article 17 under 2 CMR.
• The court found that it was not foreseeable for the
drivers that incendiary devices would be placed in the
goods or that there was a risk of this happening.
Limitation of liability road
carriage
• Even if the carrier is liable for damage to the goods, the
liability is limited to 8.33 SDR per kg, Article 23 under 3
CMR.
• In the case of delay which the claimant can prove caused
the damage, the liability of the carrier is limited to
damage not exceeding the carriage charges.
• But Article 29 CMR states that if the damage was caused
by carrier’s willful misconduct (or behaviour equivalent
to willful misconduct), the carrier may not invoke
provisions of the CMR which limit liability.
EXAMPLE
• Van der Graaf transports cigarettes to Italy for Philip
Morris in two trucks. The drivers are under strict
instructions not to leave the trucks unattended since
cargo theft is rampant in Italy. The trucks were stolen
and the question arose as to whether the liability of the
carrier, Van der Graaf, under these circumstances is
limited or whether there was willful misconduct from
(the drivers of) Van der Graaf.
• According to the Dutch Supreme Court, the
drivers acted recklessly, but their actions
were not willful misconduct. So Philip
Morris' claim for full compensation above
the limit failed.
Time limit for complaints
• Damage or loss
• If the goods are visibly damaged when delivered,
the receiver of the goods has to inform the carrier
immediately. In case the loss or damage of the
goods is not apparent, the receiver of the goods has
to inform the carrier within seven days in writing
Article 30 under 1 CMR.
• Delay
• Compensation claims for delays in delivery of
goods have to be made within 21 days, in writing,
to the carrier, Article 30 under 3 CMR. For
complaints made after 21 days, the carrier is not
obliged to pay compensation.
Time limit for legal action
• For road freight, if the CMR is applicable, a claim
has to be filed within one year, Article 32 CMR. In
cases of willful misconduct, the claimant has three
years to start judicial proceedings.
• The period of limitation shall begin to run:
• (a) In the case of partial loss, damage or delay in
delivery, from the date of delivery;
• (b) In the case of total loss, from the thirtieth day after
the expiry of the agreed time-limit or where there is no
agreed time-limit from the sixtieth day from the date on
which the goods were taken over by the carrier;
• (c) In all other cases, on the expiry of a period of three
months after the making of the contract of carriage.
Jurisdiction under the CMR
• The CMR has its own rules governing the choice of court to
settle the conflict of an international contract of carriage.
These special jurisdiction rules supersede the general
rules found in the Brussels I recast regulation.
• In legal proceedings regarding a contract of carriage under
the CMR, the plaintiff may bring an action in any court or
tribunal of a Contracting State.
• In addition, legal proceedings can also be started in the
courts or tribunals of a country within whose territory:
• a. The defendant is ordinarily resident, or has his principal
place of business, or
• b. The place where the goods were taken over by the
carrier or the place designated for delivery is situated.
EXAMPLE
• Exel, an Italian carrier, contracts British
American Tobacco company (BAT), located in
the Netherlands, to transport cigarettes from
Italy to Germany. If the contract of carriage
mentions no choice of jurisdiction and BAT does
not pay for the transportation of the cigarettes,
where Exel can sue BAT?
• In the Netherlands (where the defendant is
ordinarily resident) or Italy (where the
goods were taken over) or Germany (where
delivery was designated). If there is an
(exclusive) choice of jurisdiction in the
contract of carriage for the French courts,
the courts in the Netherlands, Italy and
Germany have jurisdiction in addition to
the French courts.
International Carriage of goods
by air
Legal regulation
• The main treaties dealing with the liability of an air carrier
are the Convention for the Unification of Certain Rules
Relating to International Carriage by Air signed in
Warsaw in 1929 (the Warsaw Convention) and the
Convention for the Unification of Certain Rules for
International Carriage by Air signed in Montreal in 1999
(the Montreal Convention). As of June 2019, the Montreal
Convention is ratified by 107 countries. The Warsaw
Convention is becoming less and less important as more and
more countries ratify the Montreal Convention.
• Both treaties not only deal with damage to goods, delay in
delivery of goods, or the loss of goods but also with damages
from death, injury to, or lost luggage of passengers.
Scope of the Montreal
Convention
• The Montreal Convention applies to international
carriage between two States Parties to the Montreal
Convention.
• According to European Regulation No. 889/2002, the
Montreal Convention also applies to national flights.
• The Montreal Convention applies to all international
carriage of:
• - persons, baggage and cargo by aircraft
• - for a reward, or gratuitously based on a contract
e.g. an airline gives free award flight to frequent flyer.
Example
• Is carrier liable under the Montreal
Convention for the death of a stowaway?
• A carrier is not liable under the Montreal
Convention for the death of a stowaway,
since stowaways do not have a contract of
carriage with the carrier and so the
Montreal Convention does not apply.
Liability for air carriage of a
passenger
• Under the Montreal Convention, a carrier is basically
always liable for damage resulting in the death or injury of a
passenger.
• Under Article 17 Montreal Convention, the carrier is
liable up to 100,000 SDR with no possibility to exclude or
limit its liability.
• SDR stands for Special Drawing Rights, which is an
international reserve currency created by the IMF
(International Monetary Fund). 100,000 SDR is around €
100,000.
EXAMPLE
• On 17 July 2014, Malaysia Airlines flight МН 17 was
shot down by an anti-aircraft missile apparently fired
by separatists in eastern Ukraine.
• Damages up to € 100,000 per passenger had to be paid
by Malaysia Airlines whether or not the company was
to blame for the crash of flight MH17.
Limitation liability for air
carriage
• Under Article 21 Montreal Convention, for damages
above 100,000 SDR, the carrier has unlimited
liability unless it can prove that the damage was:
• - not due to negligence or wrongful act or omission of
the carrier, its servants or agents;
• - solely due to the negligence or other wrongful act or
omission of a third party.
• The burden of proof lies with the carrier. If the carrier
cannot prove it was not negligent or committed no
wrongful act or omission, then it is liable. This is why it
is important to find the black box recorder after an
aeroplane crash because.
EXAMPLE
• Can Malaysia Airlines prove that the flight MH17
crash was not a result of their negligence? Many
airlines also flew over eastern Ukraine, the pilots
assuming they were safe from anti-aircraft missile if
they flew above 10,000 meters.
• On the other hand, the International Civil Aviation
Organization (ICAO) had issued warnings in June
2014 urging airlines to avoid Ukrainian airspace.
Liability for air carriage of cargo
• If a cargo is lost, damaged or destroyed during
carriage by air, the carrier is liable, Article 18 under
Montreal Convention. The carrier is also liable for
damage caused by delay of delivery of goods, Article 19
Montreal Convention. However if there is force majeure,
the carrier is not liable. Under Article 18 under 2 Montreal
Convention, there is force majeure if the carrier can prove
that the loss, damage or destruction is a result of:
• a. inherent defect, quality or vice of the cargo;
• b. defective packing and the packing was performed by
someone other than the carrier;
• c. an act of war.
• Regarding delay, the carrier is not liable if he proves that
Liability for delay in air carriage
• Regarding delay, the carrier is not liable if he
proves that he, his servants or agents took all
measures that could reasonably be required to
avoid delay or that it was impossible for the
carrier to take such measures.
Example
• If an airplane does not get permission to
land at an airport because the authorities
closed the airport because of a terrorist
attack or the airplane cannot depart
because of a cloud of volcanic ash hanging
over Western Europe, can the sender claim
damages?
• So if an airplane does not get permission to land
at an airport because the authorities closed the
airport because of a terrorist attack or the
airplane cannot depart because of a cloud of
volcanic ash hanging over Western Europe, the
sender cannot claim damages.
• Regarding delay, the carrier is not liable if he
proves that he, his servants or agents took all
measures that could reasonably be required to
avoid delay or that it was impossible for the
carrier to take such measures.
Difference between the Warsaw
Convention and Montreal Convention
• The difference between the two Conventions relates to
the liability of carriers. The Warsaw Convention was
concluded at a time (1929) when flying still risky.
Hence, under the Warsaw Convention, the carrier is not
so readily liable in the case of death or injury of a
passenger. Under the Warsaw Convention, the carrier is
only liable if it cannot proved that all measures were
taken to avoid the damage, Article 20 Warsaw
Convention.
• Even if this cannot be proved, the carrier is only liable
up to 16,600 SDR per passenger, Article 22 Warsaw
Convention.
Limitation of liability for air carriage
• Regarding the carriage of cargo, the liability of the carrier in
the case of destruction, loss, damage or delay is limited to 17
SDR per kg.
• Unlike the CMR or the Rotterdam Rules, the Montreal
Convention has an unbreakable limit in case of
destruction, loss, damage or delay to the goods unless the
consignor makes a special declaration of interest, Article
22 under 3 Montreal Convention and Article 22 under 5.
• The limit of liability for damage caused by delay is 4.150
SDR and for damaged baggage 1000 SDR. These limits are
breakable, resulting in unlimited liability of the carrier if the
damage resulted from an act or omission of the carrier done
with intent to cause damage or recklessly and with the
knowledge that damage would probably result.
EXAMPLE
• KLM transports a consignment of diamonds from Antwerp to
Amsterdam. The diamonds are transported in security bags.
On arrival in Amsterdam the security bags are counted. There
were 40 security bags on board, but there are now only 39.
One security bag had disappeared. The insurer, Monstrey,
sues KLM for damages. Monstrey is convinced that being the
carrier KLM is liable for the damage resulting from the loss
of the consignment, which had a value of US$ 1,206,050.50.
As in this case there was intentional or deliberate recklessness
by KLM, its liability should, according to Monstrey, not be
restricted. How much should KLM pay for damage?
• The Court comes to the conclusion from witness
statements and other information that it is not apparent
when the consignment was stolen. Intentional or
deliberate recklessness by KLM is not shown, and so
the limitation of liability applies. The Court awards
compensation to Monstrey of 157.25 SDR, which
amounts to € 190.
• Unlike the CMR or the Rotterdam Rules, the Montreal
Convention has an unbreakable limit in case of
destruction, loss, damage or delay to the goods unless
the consignor makes a special declaration of interest,
Article 22 under 3 Montreal Convention and Article 22
under 5.
Time limit for complaints
• Damage or loss
• According to Article 31 MC, claims have to be made to
the carrier:
• - Regarding damaged cargo: within 14 days of
receipt of the cargo.
• - Regarding damaged baggage: within 7 days of
the receipt of the baggage.
• Delay
• According to Article 31 MC, claims regarding delayed
cargo or baggage have to be made to the carrier within
21 days from the date on which the baggage or cargo
have been placed at disposal of the recipient.
Time limit for legal action
• According to Article 35 of the Montreal Convention,
the right to claim damages ends if an action is not
brought within a period of two years, reckoned from
the date of arrival at the destination, or on which the
aircraft ought to have arrived, or on which carriage
stopped.
Jurisdiction under the Montreal
Convention
• Under the Montreal Convention, the plaintiff can choose
from the following courts, Article 33 under 1 MС:
• - court in the country where the carrier is domiciled or
where the carrier has its principal place of business;
• - court in the country where the carrier and the
plaintiff concluded the contract; or
• - court in the country at the place of destination.
• Article 33 gives the possibility to bring an action upon
the death or injury of a passenger before a court in a
country providing that both the carrier operates services
for the carriage of passengers and the passenger has his
permanent residence there.
EXAMPLE
An American from Ohio on holiday in Europe takes a
flight with Lufthansa from Frankfurt to Rome and
has an accident during the flight. He broke his leg
when a food trolley crashed into him. The flight
attendants had forgotten to secure the trolley. He
bought the ticket in Germany. In which court can he
file a lawsuit?
• Under Article 33 under 1 Montreal Convention,
the American cannot sue Lufthansa in the United
States. Lufthansa is not domiciled nor has its
principal place of business in the United States,
the place of destination was not the United States
and neither was the contract concluded there.
• But under Article 33 under 2 Montreal
Convention, the American can go to court in the
United States because this is where the plaintiff is
domiciled (Ohio) and Lufthansa operates services
to the United States (there are flights from Berlin
to New York, for example).
International Carriage of goods
by rail
Convention concerning International
Carriage by Rail (COTIF)
• In 1890, the Berne Convention on the carriage of goods
by rail (CIM) was concluded between European
countries. Subsequently, some States in Asia and North
Africa became parties to the Convention. In 1980, the
provisions of the Convention were combined with the
provisions of another Berne Convention on the carriage
of passengers and baggage by rail, adopted in 1923. As a
result, a new document appeared - the Convention
concerning International Carriage by Rail (COTIF).
38 States (European countries, as well as a number of
Asian and North African countries) participate in COTIF.
• The main text of the Convention includes General
provisions, regulation of the activities and structure of the
COTIF organization, the procedure for resolving disputes
within it, as well as the procedure for amending the
Convention.
•
As for the provisions directly related to rail
transport, they are contained in a number of Uniform
rules, which are issued in the form of annexes to the
Convention, designated by the letters (A - G). The most
important private law requirements are contained in
annexes A and B, which are referred to as "Uniform
Rules Concerning the Contract of International
Carriage of Passengers by Rail (CIV)" and " Uniform
Rules Concerning the Contract of International
Carriage of Goods by Rail (CIM)".
Scope of application of CIM
• The CIM uniform rules apply to any contract for the
carriage of goods by rail for a fee if the place of receipt
of the goods and the destination of the goods are
located in two different States parties to the
Convention.
• Also, with the consent of the Contracting parties, the
CIM rules apply if the place of departure and destination
of the goods are located in two different States, at least
one of which is a party to the Convention.
The liability of the carrier
•
The carrier's liability for non-safety and late delivery is
based on presumed fault: the railway is not liable if the
non-safety or late delivery of the goods was caused by
circumstances that the railway could not avoid and the
consequences of which could not be remedied.
•
There is a limit of liability: for non-safety of the goods
17 SDRs per 1 kg of cargo, and for delay in delivery — no
more than three times the amount of freight charges. In the
presence of intent of the carrier, the limit of liability does
not apply, and in case of gross negligence — increases.
• The total limitation period is one year.
•
The carrier is responsible for the non-safety of the
goods from the time of acceptance until delivery.
Jurisdiction under the CIM COTIF
• Legal actions may be brought in the courts of the CIM COTIF member States appointed with the General
consent of the parties, or in the court of the member state
in whose territory:
• 1) the Respondent has its permanent residence or
location, its main location or branch, or an institution
that has entered into a contract of carriage;
• 2) the place where the cargo is accepted for carriage or
delivered.
Time limit for legal action
• The limitation period is one year, but if
the loss or damage to the goods occurred
due to certain circumstances, such as
deliberate actions of the carrier, the
limitation period is increased to two years.
The uniform rules for the carriage
of passengers CIV (Annex A to
COTIF)
• Govern international carriage of passengers and
baggage.
• The CIV rules apply to any contract for the
carriage of passengers by rail if the place of
departure and destination are located in two
different COTIF member States, regardless of
the place of residence or place of work and the
nationality of the Contracting parties.
The liability of the carrier
• The carrier is liable for damage caused to the life or
health of the passenger that occurred during their stay in
the rolling stock or during boarding or disembarking.
•
The carrier is released from liability if it proves that:
the specified events occurred as a result of an accident
that is not related to the operation of the railway and the
occurrence of which the carrier could not avoid or
prevent; the accident occurred due to the fault of the
passenger; the accident is caused by actions of third
parties, the consequences of which the carrier, despite the
application of all precautions, could not avoid or prevent.
•
The maximum limit of railway liability for damage
caused to the life and health of passengers established by
Limitation of liability for rail
carriage
• The maximum limit of railway liability for damage
caused to the life and health of passengers
established by the CIV rules is 175 thousand SDR.
The carrier is also liable for damages in case of noncompliance with the schedule, namely, cancellation or
delay of the train or a failed transfer.
• The limit of liability for loss of baggage should not
exceed 80 SDR for each kilogram of gross weight or
1200 SDR for each piece of baggage. In cases where
the amount of damage is not proven, the compensation
amount is 20 SDR for each missing kilogram of gross
weight or 300 SDR for each piece of Luggage.
Jurisdiction under the CIV COTIF
• Claims may be brought to the courts of the
CIV - COTIF member States appointed with
the General consent of the parties,
• or to the court of the member state in whose
territory the Respondent has its permanent
residence or habitual residence, its principal
location or branch, or the institution that
concluded the contract of carriage.
Time limit for legal action
• The Statute of limitations in case of death or
injury of a passenger is three years, for other
claims from the passenger transportation
contract - one year.
Summary liability different
modes of transport
Liability carrier CMR
Hague Visby
Hamburg Rules Rotterdam
Rules
8.33 SDR/kg
Limits
666.67 SDR/unit 835 SDR/unit or
liability for loss
or 2 SDR/kg
2.5 SDR/kg
or damage
Delay
Carriage charges
Carriage charges
x 2.5
Article 23 under
5 CMR
Inform carrier 1. Immediately 1. Immediately 1.1 day
2.3 days
2.15 days
of loss/damage: 2.7 days
Article 30 under Article III under Article 19
1.
visible
1 CMR
6 HVR
Hamburg Rules
damage
2.
hidden/not
visible
damage
Time limit to
claim delay in
delivery
Limitation
period action
875 SDR/unit or
3 SDR/kg
Carriage charges 17 SDR/kg
x 2.5
1. Immediately 1. 14 days
2.7 days
2. 14 days
Article 23 under Article 31 MC
1 Rotterdam
Rules
21 days
60 days
Article 23 under
Article 19 under
3 Rotterdam
5 Hamburg Rules
Rules
2 years
1 year
1 year
2 years
Article 62 under
Article 32 under Article III under Article 20 under
1 Rotterdam
1CMR
6 HVR
1 Hamburg Rules
21 days
Article 30 under
3CMR
Montreal
Convention
17 SDR/kg
21 days
Article 31 MC
2 years
Article 35 MC
International transport
corridors and the NSR
The concept of international
transport corridors (ITC)
• The international economic integration of
States and the interaction of national transport
systems have led to the emergence of the ITC.
• The ITC is a transport route passing through
the territory of two or more countries, provided
with appropriate infrastructure, vehicles,
having a geopolitical basis and a legal basis
(international law, national law), through
which regular (linear) transportation of goods
(passengers) is carried out.
• The routes of the ITC are determined not only
by climatic and geographical conditions, but
also by the geopolitical and geo-economic
interests of the States concerned.
• ITC has consolidation centres (also known as
"multimodal transportation center", "logistics
terminal complexes"). This is due to the
development of combined (multi-species,
multimodal) transport.
• Consolidation centers are created at the
intersection of transport routes and provide the
interaction of several modes of transport.
The main function of the ITC
• The consolidating center is understood as a
complex of dynamically interacting systems of
various modes of transport, the components of
which are ports, stations, terminals, rolling stock
(locomotives,
cars,
ships),
controls,
transshipment, providing a comprehensive
solution to the problems of cargo movement with
the use of modern logistics technologies.
• The main function of the consolidating center is to
realize international transportation in the
shortest possible time and with lower transport
costs.
The functions of the ITC are as
follows:
• transport — providing transportation that meets
modern requirements "door-to-door" and "just in
time»;
• economic — development of transport and related
sectors of the economy;
• military-strategic — the use of the ITC for defense
purposes (not only the national sections of the
ITC, but also foreign — allied States);
• geopolitical — ensuring the integrity of the
territory of the state and/or international
integration Association.
The types of TC:
• 1) national transport corridors;
• 2) international transport corridors (ITC).
• National transport corridors have a national
legal regime established by the legislation of the
state concerned. They are domestic transport
routes that serve domestic needs and are not
relevant to the world economy.
• International transport corridors - a transport
communication, passing through the territories of
two or more States and relevant to the world
economy.
The legal regime of the ITC
• The ITC has both a national legal and an
international legal regime.
• The national legal regime of the ITC does not
mean only the absolute sovereignty of the state
over the areas of the ITC passing through its
territory. The procedure for the use of the ITC
with this regime, including the conditions of
transit, is determined exclusively by domestic
legislation. An example of the ITC with a
national legal regime is the ITC Sevmorput or
The Northern Sea Route. However, this regime
may permit the of right of transit.
The legal regime of the ITC
• The ITC has both a national legal and an
international legal regime.
• The national legal regime of the ITC does not
mean only the absolute sovereignty of the state
over the areas of the ITC passing through its
territory. The procedure for the use of the ITC
with this regime, including the conditions of
transit, is determined exclusively by domestic
legislation. An example of the ITC with a
national legal regime is the ITC Sevmorput or
The Northern Sea Route. However, this regime
may permit the of right of transit.
• The international legal regime of the ITC is
based on the principles of freedom of navigation
and freedom of transit and implies their free use
by different countries on the basis of equality.
Examples of the ITC with an international legal
regime are the ITC North — South, whose
regime was enshrined in an international
agreement in 2000, and the southern Maritime
Eurasian route through the Suez canal, which
regime is governed by customary international
legal norms.
The shortest sea route between the
European part of Russia and the Far East
General information and location
• NSR connects European and Far Eastern ports,
passing through the seas of the Arctic Ocean for a
total navigation time of three to four months,
and using icebreakers and depending on the ice
class of the vessel - up to six months.
• Its length is 5,600 km - from the Kara Gates to
the Providence Bay, which is 3,023.76 nautical
miles. In pure water the vessel can travel this
distance in 6 days, but in reality the time on this
route depends on weather and ice conditions.
• The Northern Sea Route serves the Arctic ports
such as Igarka, Dudinka, Dixon, Tiksi, Pevek,
Provideniya Bay.
The NSR includes the water space adjacent to the
Northern coast of the Russian Federation
covering internal sea waters, the territorial sea,
the adjacent zone and the exclusive economic
zone of the Russian Federation and the line of
differentiation of sea spaces limited from the
East with the United States of America and the
parallel of Cape Dezhnev in the Bering Strait,
from the West by the Meridian of Cape
Zhelaniya to the Novaya Zemlya archipelago,
Eastern coastline of Novaya Zemlya archipelago
and the Western borders of the Straits of
Matochkin Shar, Kara Gates, and Yugorsky Shar.
The NSR is currently considered as a
convenient and highly promising route for
cargo traffic by not only European but also
Asian countries, including China, Japan,
India, South Korea and Singapore, which
became observer countries of the Arctic
Council in 2013.
Alternatives of the Northern sea
route
The existing alternatives for the NSR are concerned only
to the Suez and Panama canals, but the use of these
channels for shipping as compared to the NSR leads to a
large investment of time and money. For example, the
distance from the port of Murmansk to the port of
Yokohama when ships are moving through the Suez
Canal is about 13 thousand nautical miles. The same
route when using the NSR will be only about 6 thousand
nautical miles. The distance from St. Petersburg to
Vladivostok via the Suez Canal is about 23 thousand
km, and when using the NSR - about 14 thousand.
The Suez canal
Advantages of the Northern sea
route
• the delivery time of cargo is less than in
case of using Suez Canal
• the reduced travel time of ships gives fuel
economy, reduction of transport costs
• payment for the passage of ships, the queue
(as in the Suez canal) in the NSR are absent,
only an icebreaker fee is introduced
• Somali pirates attacking ships are absent,
• no restrictions on tonnage and size of ships
Example
The use of the NSR reduces the journey from
Hamburg to Shanghai by more than 4,000
nautical miles, saves a week's journey and an
average of $ 650,000 in fuel costs for each
ship, with no risks of pirate attacks. On
average, it is calculated that the use of the
NSR for shipping compared to other
alternative routes saves up to 45-50% of the
time.
The disadvantages of NSR
• the need to be accompanied by an
icebreaker,
• the necessity of training of the crew to sail
in the Arctic,
• the short navigation period of 3-4 months
Stages of development of the
Northern sea route
• The NSR historically from the middle ages was
the main shipping passage of Russia in the
Arctic.
• It is the Pomors in the 11th century that opened
most of the Arctic lands, so we can safely say
that they began active development of the NSR.
• The Dvina Posadnik – Uleb in 1032 opened and
used the first part of NSR route, stretching from
the Kara Gate to the New Land.
The XVI century
• British navigators tried to find a way to the coast of
South and East Asia in the North. The first two
expeditions reached the island of Novaya Zemlya,
the third reached the Kara Bay, but have to return
home because of the active movement of the
glacial masses.
• In 1594 the Dutch sailors reached Yamal, and a
year later went to the Kara sea (they were forced,
like their predecessors, to return back).
• Only the third Dutch expedition managed to reach
Spitsbergen, bear island, round the island of
Novaya Zemlya and enter the Kara sea.
For the first time the practical importance of the NSR
as a transport route was announced by the Russian
diplomat and politician Dmitry Gerasimov in 1525.
Empress Anna: 1732
• Later, in 1732, Empress Anna issued a decree,
according to which Bering had to go to
Kamchatka to develop new lands (the coast of
Siberia). Organized by the researcher expedition
was called the great North, had no equal in the
history of the strategic importance of the tasks.
• So, 977 participants of a hike (the majority of
them were lost) managed not only to survey, but
also to map all Russian ocean coast.
Nordenskiöld: 1879
• For the first time the entire route of the NSR
was passed by a Swedish expedition led by
the famous Explorer Nordenskiöld in 1879.
December 17, 1932
• December 17, 1932 is considered the date of the
official opening of the NSR as an International
transport corridor.
• During the second world war, the Northern sea
route was extremely important for the Soviet Union
– it was used for warships, the fleet received coal,
and the industry of the countries – wood, nickel,
copper.
• The first foreign vessels entered the NSR only in
1991.
Statistics
In 2018, the statistics of navigation of foreign ships
in the waters of the NSR was as follows:
under the flag of the Netherlands on the Northern sea
route there are 37 vessels, Luxembourg - 22 vessels,
and Liberia - 13 vessels.
In General, permits were issued for vessels from 27
different countries.
In 2018, the administration of the NSR issued 718
permits for navigation in the waters of the Northern
sea route.
The 2018 season was the shortest in the last five
years, lasting only 124 days.
The NSR legal regime
• 1. The merchant shipping code of the Russian
Federation of 30.04.1999 N 81-FZ which fixed the
General requirements to the organization of activity
on NSR and rules of navigation in the water area of
NSR.
• 2. Federal law of 31.07.1998 N 155-FZ "On
internal sea waters, the territorial sea and the
adjacent zone of the Russian Federation", which
fixed the concept of the NSR at the legislative level,
which means the historically established national
transport communication of the Russian Federation.
• 3. Decree of the Ministry of transport of Russia of
17.01.2013 N 7 "On approval Of the rules of
navigation in the waters of the Northern sea
route", which fixes: 1) the procedure for the
organization of navigation of vessels in the waters of
the Northern sea route; 2) the rules of icebreaking of
vessels in the waters of the Northern sea route; 3) the
rules of ice pilotage of vessels in the waters of the
Northern sea route; 4) the rules of conducting vessels
along the routes in the waters of the Northern sea
route; 5) the regulations on navigation-hydrographic
and hydro-meteorological support of vessels in the
waters of the Northern sea route; 6) rules of radio
communication in the waters of the Northern sea
route.
• 4. Resolution of the Government of the
Russian Federation of 24.04.2015 N 388
“On state regulation of rates for icebreaking
wiring of vessels, ice pilotage of vessels in
the water area of the Northern sea route".
• The Northern sea route is open for shipping by
vessels of any state, but any vessel should
submit a transition application.
• Today the organization of navigation of vessels
in the water area of the Northern sea route is
carried out by administration of the Northern
sea route created in the form of Federal state
budgetary institution. The administration
ensures acceptance of applications for obtaining
permits for navigation of vessels in the
Northern sea route, consideration of such
applications and issuance of permits for
navigation of vessels in the Northern sea route.
The application for permission to
sail in the waters of the NSR
• shall be sent to the e-mail the NSR
Administration, not earlier than 120 calendar days
and not later than 15 working days before the
expected date of entry of the vessel into the waters
of the NSR.
• The administration of the NSR considers the
application within 10 working days from the date
of its adoption for consideration.
• In case of adoption of the decision on issue of
permission, it is published on the official site no
later than two working days.
• The vessel, desiring to move in the direction
of the East, must obtain permission from the
Headquarters in Dixon, while vessels bound
to the West, are allowed in the Headquarters
of Pevek. All operational aspects of
transportation,
including
schedule,
navigation support and route provision, are
coordinated from Moscow.
The fee system
• The basis for the charges levied on the Russian
Northern sea route can be found in clause 234 of
the UN Convention on the law of the sea. This
clause gives coastal States the right to develop and
apply laws and regulations that contribute to the
prevention, reduction and control of pollution
from vessels in the exclusive economic zone,
especially in areas with ice cover, harsh climatic
conditions and fragile environmental balance. The
fee system is used to Finance public services
related to Maritime operations, such as opening
the way for ships and protecting the marine
environment.
Factors affecting the fees
•
•
•
•
•
•
•
the size of the vessel,
type of cargo,
ice conditions,
ice class of the vessel,
the actual route,
the competence of the vessel's crew.
http://www.nsra.ru/en/ledokolnaya_i_ledovaya
_lotsmanskaya_provodka/raschet_stoimosti_le
dokolnoy_provodki_v_akvatorii_smp.html
http://www.nsra.ru/en/home.html
To whom belong the NSR
• Since the XVI century Russia began to officially
declare its rights to the northern lands and seas.
• In the XVI - XVII centuries the Moscow
government, exclusively according to their
political considerations, established a regime of
navigation for all merchant ships sailing in the
Kara Sea.
• Beginning with the Royal decrees of 1616 - 1620,
Russia's exclusive rights to trade and fishing for
aquatic biological resources in the Arctic region
were established.
• The Instruction of 1893 determined that “all bays
of the Russian coast of the Arctic Ocean and the
entire White Sea south of the lines connecting the
entrance capes fall under the sovereignty of
Russia.
• Finally, at the legislative level, in 1926 the legal
regime of the NSR was fixed and for many years
remained
virtually
recognized
by
the
international community after the adoption of the
Resolution of the Presidium of the Central
Executive office of the USSR of April 15, 1926
«On declaring as the territory of the USSR of the
lands and Islands located in the Arctic ocean».
But
• Territorial disputes have always been one of
the most difficult problems among states.
• In this regard, legal science has developed
two basic approaches for the delimitation of
the rights of States in the Arctic region.
The first approach
• The first approach relies on the historically
established system of five sectors of ownership
of the Arctic states (Canada, the USSR, the
USA, Denmark and Norway), based on the
actually established in the beginning of the XX
century the delimitation of rights, taking into
account mainly the norms of the national
legislations of these countries and international
law.
The second approach
• The second - the conventional approach, which is
based on the internationalization of the Arctic, by
analogy with another polar continent - the Antarctic.
This approach was born after the adoption of the UN
Convention on the Law of the Sea of 1982, to
which, along with other countries, totaling about
150, Russia joined. This Convention confirmed that
the Arctic states control the 200-mile economic zone
and their sovereign right to the north of their coasts
on exploration and extraction of natural resources is
distributed only within the specified zone, while the
rest of the Arctic natural resources remaining outside
of it is declared to be in the common human domain.
Conclusions
• Russia, despite the ratification of the UN
Convention on the Law of the Sea, absolutely
legitimately, without extending its sovereignty
to the entire water area of ​the Northern Sea
Route, legally and effectively put the ships of
foreign countries under its full control.
• These actions of Russia are seen as absolutely
legal and legitimate, and the legal regime of
the Northern Sea Route can be considered
definite for a number of reasons:
• 1) the historically established status of the
Northern Sea Route as a Russian national
transport route in the Arctic;
• 2) The NSR, in view of the particular
geographic region in which it is located,
changes from year to year due to the specifics
of melting ice, it cannot be divided into any
separate sections, some of which will invariably
affect the internal and territorial waters of the
Russian Federation, and in this regard, it is a
single federal transport route, on which Russia
has the right to exercise its authority;
3) Art. 234 of the UN Convention on the Law of the
Sea also provides that “coastal states have the right
to adopt and enforce non-discriminatory laws and
regulations for the prevention, reduction and control
of pollution of the marine environment from ships in
ice-covered areas within the exclusive economic
zone where there are especially harsh climatic
conditions and the presence of ice covering such
areas for most of the year create obstacles or an
increased danger to shipping, and marine pollution
can would cause major harm to the ecological
balance, thereby essentially providing a specific
legal rights and responsibilities of Arctic states in the
region.
BUSINESS CASE SCENARIO 2 –
“TRANSPORTING TURBINE OVERSEAS”:
FIND THE BEST ROUTE
• It’s Monday, 7-th of May 2018, 10:00 a.m.
• You are a Key Account manager in the freight forwarding agent
Spezialcargo GmbH and your customer is a Czech producer of
turbines for power plants. They were lucky to win a tender for
delivery of their turbines to a nuclear power plant in Japan.
• Now Spezialcargo GmbH has to develop the transportation project
to bring the turbines and lots of auxiliary machinery equipment
from Ostrava in Czech Republic to Niigata port in Japan.
• The delivery should take place by end of September. The turbines
and auxiliary equipment will be ready to be dispatched on the 1-st
of July.
• The specialists of Spezialcargo GmbH have developed three basic
scenarios.
• As a Key Account Manager you need to
present these scenarios to the management
of the customer, and most likely they will
ask for some professional advice.
• Please prepare the argumentation, basing on
your
knowledge
of
global
cargo
transportation and sea weather conditions.
Be ready to answer questions from the legal
department of your customer, concerning
responsibility for the cargo in all
circumstances.
ROUTE SCENARIO 1 – Railway + standard sea route
• Phase 1: from Ostrava the cargo is transported by
railway to the sea port of Hamburg.
• Phase 2: from Hamburg sea port the cargo is carried
by ship directly to Niigata port, via Suez channel.
• Cost of railway carriage of the whole cargo to
Hamburg:
200.000 EUR
• Approximate time of rail route to Hamburg: 3 days
• Cost of ship charter from Hamburg to Niigata: 45.000
EUR per day
• Approximate time of sea route via Suez channel:
40 days
• Cost of passing Suez channel for your ship: 200.000
EUR
•
• Risks on railway:
Standard business risks.
Small risk of delay.
• Risks on sea: Typhoons in August-September
period in the South-Eastern seas might bring
delays of transport. In worst case scenario, if a
ship runs in severe storm, the cargo may be
damaged and become partially unworthy, thus
bringing a considerable delay to the power plant
construction. You can order additional insurance
against adverse weather conditions at the rate of
80.000 EUR per passage.
ROUTE SCENARIO 2 – Railway through trans Siberian
rail route + local sea shipping from Eastern Russia
• Phase 1: from Ostrava the cargo is transported by
rail all the way through Russia to Vladivostok port
• Phase 2: from Vladivostok port the cargo is
carried by ship directly to Niigata
• Cost of railway carriage of the whole cargo to
Vladivostok: 1 950 000 EUR
• Approximate time of rail route to Vladivostok: 25
days.
• Cost of charter from Vladivostok to Niigata:
30.000 EUR per day
• Approximate time of sea route to Niigata: 2 days
• Risks on railway: Standard business risks.
Moderate risk of delay due to long distance.
• Risks on sea: Standard business risks. No
particular disruptions are expected on this
short route.
ROUTE SCENARIO 3 – Railway + Northern sea route
• Phase 1: from Ostrava the cargo is transported by
railway to the sea port of Hamburg.
• Phase 2: from Hamburg sea port the cargo is carried by
ship directly to Niigata port, via Northern sea route.
• Cost of railway carriage of the whole cargo to
Hamburg:
200.000 EUR
• Approximate time of rail route to Hamburg: 3 days
• Cost of ship charter from Hamburg to Niigata:
50.000 EUR per day
• Approximate time of sea route via Northern sea route:
21 days
• Additional cost of an icebreaker escort in the Northern
Sea route: 250.000 EUR
• Risks on railway: Standard business risks.
Small risk of delay.
• Risks on sea: Standard business risks. July,
August and September are the best
navigation months in Northern Sea Route,
with additional benefit of long light days
(up to 24 hours of sun during the day),that
is significantly improving the safety of
navigation.
Incoterms
The terms for any mode of
transport
•
•
•
•
•
•
•
EXW (EX Works);
FCA (Free Carrier);
CPT (Carriage Paid To);
CIP (Carriage and Insurance Paid to);
DPU (Delivered Place Unloaded);
DAP (Delivered At Place);
DDP (Delivered Duty Paid).
The terms designed for sea and
inland water transport
•
•
•
•
FAS (Free Alongside Ship);
FOB (Free On Board);
CFR (Cost And Freight);
CIF (Cost, Insurance and Freight).
Incoterms 2020
Incoterms 2020
Incoterms 2010
Incoterms 2010
EXW
• According to this term the seller’s obligation to
deliver the goods shall be performed when the seller
makes the goods available to the buyer at the agreed
point not loaded on any vehicle. The seller is in
charge of inspecting the quantity and quality of the
goods, their proper packing, and provision of
documents confirming that the goods comply with
the requirements set forth in the contract.
• All other duties (carriage of the goods, insurance,
and even receipt of documents needed to export the
goods from the seller’s country, such as a certificate
of origin, an export license, etc.) is in the buyer’s
care.
FCA
• Under this term the seller shall be deemed to have
performed his obligation to deliver the goods at the
time of handing them over to a carrier nominated by
the buyer. At the same time the risk of accidental loss
of or damage to the goods passes from the seller to the
buyer.
• The seller is obliged at his expense to obtain any
export license or other relevant documents and obtain
export customs clearance of the goods.
• At the buyer’s request, risk and expense, the seller
should assist the buyer in obtaining any documents
and information that may be needed by the buyer to
import the goods as well as for their transportation.
CPT
• Under this term the seller is obliged at his expense to
conclude a contract of carriage of the goods on usual
terms and in a customary manner. The seller’s
obligation to deliver the goods shall be deemed
performed when the goods are given to the carrier. At
the same time the risks of loss of or damage to the
goods shall pass from the seller to the buyer.
• The seller must obtain at his expense an export license
(if required) and other documents needed for export
customs clearance of the goods. He also should assist
the buyer, at the latter’s expense, in obtaining any
documents and information that may be required for
export and transportation of the goods.
CIP
• Under this term the seller’s obligation to conclude a
contract of carriage of goods as well as the time when
his obligation to deliver the goods shall be deemed
performed and also the time of passing the risks of
losses of or damage to the goods from the seller to the
buyer are similar to those under CPT. However, in
addition to that, the seller is also obligated to obtain at
his expense insurance coverage for the goods.
• The insurance coverage shall amount to the
contractual price of the goods plus 10% (110%) and
shall be in the currency of the contract. The insurance
shall cover the goods from the point of delivery to at
least the place of destination.
DPU
• First of all it should be noted that the notion “Place”
means “any place, whether covered or not, such as
warehouse, container yard or road, rail or air cargo
terminal”.
• The seller is obliged to conclude a contract of carriage
of the goods to place as defined above. He also should
unload the goods from the arriving transport vehicles
and then make them available to the buyer.
Simultaneously the risks of loss or damage to the
goods shall pass from the seller to the buyer.
• The seller has no obligation for insurance coverage for
the goods.
DAP
• The seller should at his own expense conclude a
contract of carriage of goods to the place of
destination as agreed in the sales contract. His
obligation to deliver the goods shall be deemed
performed when he makes the goods available to
the buyer at this place on the arriving transport
vehicles ready for unloading. At that very moment
the risks of loss or damage to the goods shall pass
from the seller to the buyer.
• Like under the DAT term the seller under DAP
term is not obliged to obtain insurance coverage
for the goods.
DDP
• This term means that the seller shall deliver the
goods to the buyer cleared for import, and not
discharged from the means of transport at the
named place of destination, at which time the risks
of losses of or damage to the goods shall pass from
the seller to the buyer. The seller has to bear all
costs and risk of the carrying out of customs
formalities and payment of customs duties, taxes
and other charges for importation into the country
of destination, except for insurance coverage.
Carriage of goods to the place of destination is also
to be done by the seller.
FAS
• This term may only be used in case of carriage of
goods by sea or inland waterway transport. The
seller shall be deemed to perform his obligation to
deliver the goods when they are placed alongside
the ship (e.g. on a quay or a barge) selected by the
buyer at the port of loading as agreed in the sales
contract. At that time the risks of loss of or damage
to the goods shall pass from the seller to the buyer.
• The seller is obliged at his expense to obtain any
export license and other documents and perform
export customs clearance of the goods.
FOB
• Performance of the seller’s obligation to deliver the
goods is attributed to the time when the goods are
placed on board the vessel nominated by the buyer
at the port of shipment. At this time the risks of loss
of or damage to the goods shall pass from the seller
to the buyer.
• The seller has no obligation to conclude a contract
of carriage the goods, nor is he obligated to obtain
insurance coverage for the goods.
• The seller should at his own expense obtain any
export license and other documents required for
export of the goods.
CFR
• The moments when the seller shall be deemed to
have performed his obligation to deliver goods and
when the risks of loss or damage to the goods shall
pass from the seller to the buyer are the same as
those in the FOB variation.
• However the seller is obligated at his expense to
conclude a contract of carriage of the goods aboard a
vessel on usual terms from the port of shipment to
the port of destination as provided in the sale
contract.
• The seller is not obliged to insure the goodsneeded to
obtain insurance coverage for the goods.
CIF
• This term is different from the CFR terms due to the
fact that, in addition to a contract for carriage of
goods by sea- or river-going vessel, the seller is
required to purchase cargo insurance.
• The seller’s obligation to insure the goods is a very
important one; failure to perform it is a fundamental
breach of the sale of goods contract. In such case the
buyer is entitled to refuse to accept the goods even if
they have been safely delivered to the port of
destination. Such a strict approach is quite
understandable: if the goods have no insurance
coverage, the buyer loses the possibility of receiving
compensation for accidental losses.
Thank you for your attention!
irina.a.strelnikova@mail.ru