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CHAPTER 33 RESPONSIBILITY OF FREIGHT FORWARDERS

I. II. III. Introduction Freight Forwarder - Dual Role Agent or Principal Contractor? 1) The facts in each case 2) Agent or principal contractor criteria 3) The United States 4) Which law applies? conflict of laws Responsibility When the Freight Forwarder Becomes Bankrupt Freight Forwarder Agent - Reasonable Care Freight Forwarder Agent - Specific Duties Freight Forwarder Agent Exclusionary and Limitation Clauses 1) Incorporation of standard trading conditions 2) Exemption clause 3) Limitation clauses

IV. V. VI. V11.

VIII. The Document Issued by the Freight Forwarder IX. X. XI. Responsibility of the Freight Forwarder Carrier Freight Forwarders as Bailees France 1) Commissionnaires de transport 2) Transitaires 3) NVOCCs 4) Conflict of laws Conclusion

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CHAPTER 33 RESPONSIBILITY OF FREIGHT FORWARDERS


I Introduction

Although freight forwarders have acted as respected professionals since the last century, the legal nature of their activities has only recently attracted real attention. This is because freight forwarders have become prominent links in modern transportation systems, due to the importance of containers, and multimodal transport. In times of excess vessel capacity, too, freight forwarders have increased authority because it is they who are able to provide cargoes, thereby becoming influential participants in a buyer's market. It is for this reason that on occasion freight forwarders have voyage chartered and even time chartered ships. The legal responsibility of freight forwarders often seems mysterious because freight forwarders have assumed two different legal roles - agents and principal contractors. Nor are the activities of freight forwarders directly regulated by any international convention, although their acts naturally bridge national borders. The result is that various national laws control their actions, giving rise to conflicts of law. In the light of the foregoing - the emerging importance of freight forwarders, the often puzzling national laws, and the lack of international uniformity - it is apparent that an international convention is necessary. The Multimodal Transport Convention 19801 is just such a convention. Its adoption would give certainty to the law and protection to both the public and to freight forwarders themselves. The Multimodal Transport Convention 1980 has the advantage of clarity and simplicity and is not encumbered with other maritime, albeit important, matters such as freight, liens and electronic commerce, which make the Convention less likely to be enacted.2
United Nations Convention on International Multimodal Transport of Goods, 1980, UNCTAD TD/MT/CONF/16, June 10, 1980. For texts of the Convention in English, French, Spanish, Russian, Arabic and Chinese, see [1980] ETL 487 et seq. The Convention was adopted in Geneva on May 24, 1980 but is not yet in force. See the definition of Multimodal transport operator at art. 1(2) (any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract. For the full text of the Convention, see http://www.jus.uio.no/lm/un.multimodal.transport.1980/doc.html. 2 See the far more complex Draft Instrument on Transport Law, prepared jointly by the Comit Maritime International (CMI) and the United Nations Commission on International Trade Law (UNCITRAL), on my website at http://tetley.law.mcgill.ca/maritime/uncitral.htm, and my criticism of this document, Reform of Carriage of Goods the UNCITRAL Draft and Senate COGSA 99, also on my website, at http://tetley.law.mcgill.ca/maritime/uncitralcogsamay2003.pdf, as well as the criticisms of the Draft
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II.

Freight Forwarder - Dual Role

The freight forwarder traditionally acts as an agent who arranges for the shipment of goods belonging to his client/the shipper. The freight forwarder as agent typically arranges for transportation, pays freight charges, insurance, packing, customs duties, etc., and then charges a fee, usually a percentage of the total expenses3. All the costs are (or should be) disclosed to the client. The specific scope of the forwarding agents duties, however, is determined primarily by its contract with the customer (ordinarily the shipper) who retains its services.4 At times, the freight forwarder has acted as principal contractor arranging the carriage in his own name.5. His fee, payable by the shipper, is a straight freight charge. He then arranges to pay lower freight rates to the carrier and obtains his profit from the difference between the two.6 Very often, the freight forwarder consolidates the cargoes of a number of clients into a single container, resulting in savings which benefit the freight forwarder and the clients.7 The forwarding carrier may also provide other services, such as packing, warehousing, cartage, lighterage and/or insurance.8 On these occasions the freight forwarder's responsibility to the shipper is often that of a carrier.9

Instrument formulated by the United Nations Commission for Trade and Development (UNCTAD) (http://tetley.law.mcgill.ca/maritime/unctad.htm) and the United Nations Economic Council for Europe (UNECE) (http://tetley.law.mcgill.ca/maritime/unece.htm). 3 Zima Corp. v. Roman Pazinski 493 F. Supp. 268 at p. 273, 1980 AMC 1551 at p. 1560 (S.D. N.Y. 1980). 4 John Brown Engineering, Ltd. v. Hermann Ludwig, Inc. 1991 AMC 2540 at p. 2542 (D. S.C. 1991), affd without opinion, 960 F.2d 146 (4 Cir. 1992). See also Chicago, Milwaukee & Pacific R.R. Co. v. Acme Fast Freight, Inc. 336 U.S. 465 at p. 484 (1949), referring to the freight forwarder who hold themselves out not merely to arrange with common carriers for the transportation of the goods, but rather to deliver them safely to the consignee. 5 The evolution of the freight forwarder from simply agent to contractor and carrier can be traced in the common law from Jones v. European and General Express Co. (1920) 4 Ll. L. Rep. 127, to Langley, Beldon & Gaunt v. Morley [1965] 1 Lloyd's Rep. 297 at p. 306, to Evans v. Merzario [1975] 1 Lloyd's Rep. 162 at p. 168 and [1976] 2 Lloyd's Rep. 165 at p. 168 (C.A.), to The Maheno [1977] 1 Lloyd's Rep. 81 at pp. 86 and 88, to Tetroc Ltd. v. Cross-Con [1981] 1 Lloyd's Rep. 192 at p. 198. For a brief explanation of the dual roles of the freight forwarder, see Tetley, Maritime Liens & Claims, 2 Ed., 1998 at pp. 798-802. 6 Hong Kong Hua Guang Industrial Co. v. Midway International Ltd. [2000] 2 HKC 348 (Hong Kong C.A.), citing Elektronska Industrija Oour TVA v. Transped Oour Kintinentalna Spedicna [1986] 1 Lloyds Rep. 49. See also Hoffmannn-LaRoche, Inc. v. M/V TFL Jefferson 731 F. Supp. 109 at p. 111, 1990 AMC 1393 at p. 1395 (S.D. N.Y. 1990). 7 Zima Corp., supra, 493 F. Supp. at p. 273, 1980 AMC at p. 1560. 8 Comalco Aluminum Ltd. v. Mogal Freight Services Pty. Ltd. (1993) 113 A.L.R. 677 at p. 699 (Fed. C. Aust.), where the contract of the forwarder, as carrier, included packing. See also L. DArcy, C. Murray & B. Cleave, Schmitthoffs Export Trade, 10 Ed., Sweet & Maxwell, London, 2000, para. 27-025 at p. 605. 9 This paragraph and the previous one, from the third edition of this book, were cited by Lutfy, J. in Morlines Maritime Agency Ltd. v. IKO Industries Ltd. (1999) 180 F.T.R. 12 at pp. 16-17, 2000 AMC 1042 at p. 1045 (Fed. C. Can.).

4 Whether acting as agent or principal, the freight forwarder (as is normal in commerce) usually attempts to contract out of as much responsibility as possible.10 This has often resulted in very confusing standard trading conditions, where the two contradictory roles and kinds of responsibility - of the agent and of the principal - are set out.11 The responsibility of the freight forwarder, as agent and as principal contractor, will be described in the light of the civil law, the common law and certain national laws.12 III. 1) Agent or Principal Contractor? The facts in each case

Whether the freight forwarder is an agent or a principal contractor will depend on the facts of each case and on the law in the particular jurisdiction in question.13 The court must look at all the circumstances of the arrangements between the freight forwarder and the client, the contract, the telephone calls, the correspondence, the tariff, any bill of lading issued, previous dealings, etc. 14 In Tetroc Ltd. v. Cross-Con.,15 the freight forwarder was found to be a carrier under the Carriage of Goods by Road Act, 1965,16 which is the United Kingdom statute enacting the Convention on the Contract for the International Carriage of Goods by Road (CMR).17 The Court examined the telex messages between the freight forwarder and subSee Schenker & Co. (Aust.) Pty. Ltd. v. Maplas Equipment and Services Pty. Ltd. [1990] V.R. 834 at p. 851 (Vict. Supr. Ct. App. Div.): In accepting liability as a principal a freight forwarder, not unreasonably puts forward terms which place it in the same position as if it were only an agent and, therefore, had the advantage of leaving the burden of any contract so made on the customer. 11 See for example the British International Freight Association (BIFA) Standard Trading Conditions (2000 Edition), which replaced the 1989 edition. This edition was held in Schenkers Ltd. v. Overland Shoes Ltd. [1998] 1 Lloyds Rep. 498 at p. 506 (C.A.) to form the basis of the standard trading conditions of many associations throughout the world. See also the May 1986 Standard Trading Conditions of the Canadian International Freight Forwarders Association (CIFFA), as amended in 1988 and 1998, with their long list of almost Byzantine non-responsibility clauses - a return to 19th century laissez-faire. For the text of the CIFFA Standard Trading Conditions as amended, see http://www.ciffa.com/downloads/stc/ciffatradingterms.pdf. 12 The lien benefiting the freight forwarder as agent and principal under the civil law, the common law and various national laws is set out in Tetley, Maritime Liens and Claims, 2 Ed., 1998 at pp. 803, 807-809, 812813, 815-822. 13 L. DArcy, C. Murray & B. Cleave, Scmitthoffs Export Trade, 10 Ed., Sweet & Maxwell, London, 2000, para. 27-025 at p. 606. See also Hoffmann-LaRoche, Inc. v. M/V TFL Jefferson 731 F. Supp. 109 at p. 112, 1991 AMC 1393 at p. 1396 (S.D. N.Y. 1990). 14 See generally S.G. Wood, Multimodal Transportation: an American Perspective on Carrier Liability and Bill of Lading Issues (1998) 46 Am. J. Comp. L. 403. 15 [1981] 1 Lloyd's Rep. 192, referring to Tribunal de Commerce de Bruxelles, February 12, 1977, [1978] ETL 285 and Hof Van Beroep Van Brussel, December 23, 1971, [1972] ETL 865. See also Bundesgerichtskof, [1982] ETL 716; Agenzia Marittima Ligure S.R.L. v. Acciaierie Ferriere, Genoa Court of Appeal, May 13, 1977, n. 348, [1979] LMCLQ 234. 16 U.K. 1965, c. 37. The text of the Convention is reproduced in Schedule A of the Act. 17 Signed at Geneva, May 19, 1956, and in force July 2, 1961.
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5 carriers, as well as the correspondence between the freight forwarder and its client, the consignment note and the bill of lading. In Ocean Projects Inc. Inc. v. Ultratech Pte. Ltd.,18 where the shippers engaged the freight forwarder and treated it as if it were the carrier, without reference to the voyage charterers/carriers whom the forwarder engaged under a completely separate contract, the forwarder was also found to be a carrier. Merely because a forwarder issues a document entitled bill of lading, does not necessarily mean that the forwarder is a carrier.19 In Zima Corp. v. Roman Pazinski,20 the forwarder issued a bill of lading and the ocean carrier issued an ocean bill of lading as well; the contract between the shipper and freight forwarder, however, explicitly provided that the latter acted only as agent.21 Furthermore, the forwarder was to be paid a commission from the shipper or a brokerage fee from the carrier, rather than making a profit from a difference in the freight rates.22 Under the circumstances, the freight forwarder was deemed to be an agent of the shipper. Conversely, merely because the title forwarding agent is used in the documents issued by the forwarder does not necessarily mean that the forwarder is acting as an agent, when other facts indicate that he is in fact functioning as a carrier.23 The wording and form of the bill of lading in some cases resolves the ambiguity. In James N. Kirby, Pty. Ltd. v. Norfolk Southern Railway Co.,24 for example, an Australian freight forwarder contracted with an Australian shipper that it would undertake to perform the entire transport of the goods to the U.S. in its own name. In consequence, the forwarder was held to be a carrier, rather than merely an agent of the shipper. This was confirmed by the fact that the bill of lading issued by the forwarder was an FBL bill (i.e. a FIATA Multimodal Transport Bill of Lading25), whose drafters indicate that by using this form of bill the forwarder assumes the role of carrier and

(1994) 2 SLR 369 (Singapore C.A.). J. C. Penney Co. v. The American Express Co. 102 F. Supp. 742, 1952 AMC 901 (S.D. N.Y. 1951), aff'd 201 F.2d 846, 1953 AMC 304 (2 Cir. 1953); A. Gogniere & Co. v. The Eastern Company (1921) 7 Ll. L. Rep. 188 at p. 189. See also Sucrest Corp. v. M/V Jennifer 455 F. Supp. 371 at p. 380, note 16, 1978 AMC 2520 at p. 2531, note 16. (D. Me. 1975). The forwarder who wishes to be deemed as merely an agent should not, of course, issue a document entitled bill of lading. The unfortunate practice is due to the forwarder's use of the same document for all contracts, regardless of whether he is acting as agent or as carrier. 20 493 F. Supp. 268, 1980 AMC 1552 (S.D. N.Y. 1980). See also Arkwright Mutual Ins. Co. v. M/V Sarajevo Express 1994 AMC 359 (S.D. SN.SY. 1993). 21 Ibid., 493 F. Supp. at pp. 270-271, 1980 AMC at pp. 1555-1556. 22 Ibid., 493 F. Supp. at p. 275, 1980 AMC at p. 1562. 23 Hong Kong Hua Guang Industrial Co. v. Midway International Ltd. [2000] 2 HKC 348 (Hong Kong C.A.); Sabah Shipyard Sdn Bhd. v. M/V Harbel Tapper 178 F.3d 400 at pp. 405-406, 2000 AMC 163 at pp. 167-169 (5 Cir. 1999), cert. denied 528 U.S. 1048, 2000 AMC 2999 (1999). 24 300 F.3d 1300, 2002 AMC 2113 (11 Cir. 2002), rehearing en banc denied, 52 Fed. Appx. 489 (11 Cir. 2002), cert. denied, 124 S.Ct. 981, 157 L.Ed.2d 811 (2004). 25 FIATA is the International Federation of Freight Forwarders Associations, a nongovernmental organization representing the freight forwarding industry.
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6 therefore contracts as a principal.26 The Kirby decision has been followed in analogous cases.27 The fee of the freight forwarder agent is usually a percentage of the freight quoted plus expenses. The freight forwarder is responsible if freight charges are higher than those quoted (unless, of course, the quote is qualified). If the quote is based on improper figures given by the shipper, the freight to be paid by the shipper increases as does the forwarder's agency fee.28 Even where the freight forwarder acts as agent of the shipper, it may be the reasonable custom in some places (e.g. the London freight market) that, in quickly finding space for its principal, the freight forwarder binds himself personally to the carrier. In such a case, the carrier can recover for dead freight from the freight forwarder when cargo does not arrive on time at the place of shipment.29 The freight forwarder, in turn, could recover back from his shipper/principal. It is also possible that a freight forwarder will act as a principal (carrier) in respect of one segment of a combined transport (e.g. the land leg of the voyage) and as an agent in respect of another segment (e.g. the sea leg).30 2) Agent or principal contractor - criteria

There are no hard rules for determining whether the freight forwarder is acting as agent or as principal contractor. The forwarder's role will depend on the facts of each case. There are, however, several useful criteria which can assist in making that determination:31 a) the manner in which the forwarder characterizes its obligations in the contract documents;32 b) the manner in which the parties have dealt with each other in the past;33
300 F.3d 1300 at p. 1306, 2002 AMC 2113 at p. 2119, citing Jan Ramberg, The Law of Freight Forwarding and the 1992 FIATA Multimodal Transport Bill of Lading (1993) at p. 7: [b]y use of FBL the freight forwarder progresses from the legal jungle and clearly establishes himself as a carrier with carrier liability. Ramberg chaired the FIATA committee that initially drafted the FBL. 27 Mitsui Marine & Fire Ins. Co. v. Hanjin Shipping Co., Ltd. 2004 AMC 577 (Ga. State Ct. 2004). 28 Brushfield Sargent & Co. v. Holmwright Engineering Co. [1968] 1 Lloyd's Rep. 439 at p. 442. 29 Anglo Overseas Transport Ltd. v. Titan Industrial Corp. [1959] 2 Lloyd's Rep. 152 at p. 160. 30 The Maheno [1977] 1 Lloyds Rep. 81 at pp. 86-88; Burke Motors Ltd. v. Mersey Docks & Harbour Co. [1986] 1 Lloyds Rep. 155 at pp. 161-162. 31 These criteria were approved and applied by the Federal Court of Canada in Bertex Fashions Inc. v. Cargonaut Canada Inc. (1995) 95 F.T.R. 192 (Fed. C. Can.). 32 J.C. Penney Co. v. The American Express Co. 102 F. Supp. 742, 1952 AMC 901 (S.D. N.Y. 1951), aff 'd 201 F.2d 846, 1953 AMC 304 (2 Cir. 1953). Self-description is not always determinative, however: Bernhard Ulmann Co. v. Porto Rican Express 3 FMB 771, 1952 AMC 447 (FMB 1952). In Bertex Fashions Inc., supra, F.T.R. at p. 196, the fact that the bill of lading indicated that carriage would be executed in accordance with the general conditions of carriers and/or other parties involved contributed to the decision that the forwarder was contracting with the shipper as a carrier.
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c) whether a bill of lading was issued;34 d) whether the shipper knew which carrier would actually carry the goods;35 e) the mode of payment: Did the forwarder charge an amount calculated upon the freight and other expenses and then charge a further amount or a percentage as its fee? Or did the forwarder charge an all-inclusive figure?36 A similar list of criteria which may be useful in ascertaining if the forwarder contracted as a carrier includes: a) whether the forwarder performed part of the transport using his own employees; b) whether the customer or its agent received a bill of lading issued by another party; c) whether the customer chose the carrier; d) whether the documentation given to the customer prior to his delivery of the goods for transport gave a reasonable explanation of the role played by the freight forwarder; e) whether there was a course of dealings prior to the shipment in question; and f) how the forwarder charged for his services (and, in particular, whether the charge was characterized as freight).37
Ibid., Tetroc Ltd. v. Cross-Con [1981] 1 Lloyd's Rep. 192 at p. 197. Aquascutum of London v. S.S. American Champion 426 F.2d 205 at p. 210, 1970 AMC 679 at p. 684 (2 Cir. 1970). Freight forwarders often issue house bills of lading, which are really meant as receipts. The fact that a freight forwarder issues a document entitled bill of lading is not itself determinative: A. Gagniere & Co. v. The Eaconsigneestern Company (1920) 7 Ll. L. Rep. 188 at p. 189; Strachan Shipping Co. v. Dresser Industries, Inc. 701 F.2d 483 at p. 487, 1984 AMC 237 at p. 242 (5 Cir. 1983); Carrington Slipways Pty. Ltd. v. Patrick Operations Pty. Ltd. (1991) 24 NSWLR 745 at pp. 752-753 (N.S.W. C.A.). 35 Zima Corp. v. Roman Pazinski, 493 F. Supp. 268 at p. 273, 1980 AMC 1552 at p. 1560 (S.D. N.Y. 1980). The fact that the freight forwarder does not own the carrying vessel is not determinative. Ibid. In Bertex Fashions Inc. (1995) 95 F.T.R. 192 at pp. 196-197 (Fed. C. Can.), neither the contracts of carriage concluded by the freight forwarder with the rail and ocean carriers, nor any details as to the nature of the services offered by the freight forwarder, were provided to the shipper, which assisted the Federal Court of Canada in determining that the forwarder had acted as a carrier. 36 In Tetroc Ltd. v. Cross-Con [1981] 1 Lloyd's Rep. 192 at p. 197, the Court noted that the sum charged was an all-in figure for the movement of the cargo from Denmark to its destination in the U.K., rather than the price quoted by the actual carrier plus a commission. Thus the freight forwarder was deemed to be a contractor. See also Zima Corp. v. Roman Pazinski 493 F. Supp. at p. 273, 1980 AMC at p. 1560; Bertex Fashions Inc., supra, F.T.R. at p. 196. See also Rechtbank Van Koophandel te Antwerpen, October 23, 1983, [1983] ETL 243; Cour dAppel de Paris, April 24, 1984, DMF 1986, 109. 37 Bertex Fashions Inc., supra, F.T.R. at pp. 195-196, citing Peter F.M. Jones, The Forwarder Principal or Agent, a carrier or not?, in Bankruptcy: Present Problems and Future Perspectives/Les faillites :
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The criteria applied by U.S. courts in differentiating forwarder/agents from forwarder/carriers are generally similar and have been summarized as follows:38 (1) the way the party's obligation is expressed in documents pertaining to the agreement, although the party's self-description is not always controlling; (2) the history of dealings between the parties; (3) issuance of a bill of lading, although the fact that a party issues a document entitled 'bill of lading' is not in itself determinative; (4) how the party made its profit, in particular, whether the party acted as 'agent of the shipper ... procuring the transportation by carrier and handling the details of shipment' for fees 'which the shipper paid in addition to the freight charges of the carrier utilized for the actual transportation. ' 3) The United States

There are three types of freight forwarder under United States law:39 a) The Freight Forwarder is regulated by Part B (Motor Carriers, Water Carriers, Brokers and Freight Forwarders)40 of Subtitle IV (Interstate Transportation) of 49 U.S. Code (Transportation) at 49 U.S.C. 13102(8),41 which defines a freight forwarder as: 42

problmes actuels et perspectives d'avenir, Meredith Memorial Lectures 1985, R. de Boo, Toronto, 1986 at pp. 162-163. 38 Zima Corp. v. M.V. Roman Pazinski 493 F. Supp. 268 at p. 273, 1980 AMC 1552 at pp. 1559-1560 (S.D. N.Y. 1980), cited with approval in Hoffmann-LaRoche 731 F. Supp. 109 at p. 111, 1990 AMC 1393 at p. 1395 (S.D. N.Y. 1990); and referenced with approval in Arkwright Mutual Ins. Co. v. M/V Sarajevo Express 1994 AMC 359 at p. 363 (S.D. N.Y. 1993). 39 See generally Gerald H. Ullman, The Intermodal Movement of L.C.L. Freight: The Problem Areas (1980) 12 Transp. Law Journal 95 at pp. 96-99. 40 49 U.S.C. 13101 et seq. 41 This definition virtually reproduces the definition of freight forwarder (sometimes called a domestic or Part IV freight forwarder) which prevailed before 1996 under the Interstate Commerce Act. That statute was repealed by the ICC Termination Act of 1995, Act of December 29, 1995, Public Law No. 10488, sect. 2, 109 Stat. 804, which also abolished the Interstate Commerce Commission (I.C.C.) (see Title I, sect. 101, 109 Stat. 804). The functions of the former I.C.C. have now been taken over by the Surface Transportation Board (S.T.B.) of the U.S. Department of Transportation, as of January 1, 1996 (see Title II, sect. 201(a), 109 Stat. 932, 49 U.S.C. 7091 et seq.). Freight forwarder service is now subject to the jurisdiction of the Secretary of Transportation and the Surface Transportation Board by virtue of the same Act, Title I, sect. 103, 109 Stat. 865, 49 U.S.C. 13531. 42 49 U.S. Code 13102(8). The freight forwarder must be registered with the Secretary of Transportation (49 U.S.C. 13903(a)), and this registration requires the forwarder to file security for liability claims for death, bodily injury or property damage that may result from the negligent operation, maintenance or use of motor vehicles under its direction and control when providing transfer, collection or delivery services. The Secretary may also require the freight forwarder to file security against claims for loss of, or damage to, property for which it provides service (49 U.S.C. 13906(c)(1) and (2)). Freight forwarders may provide transportation as the carrier itself only if they are registered to provide transportation as a carrier (49 U.S.C. 13903(b)).

9 a person holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and in the ordinary course of its business (A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments; (B) assumes responsibility for the transportation from the place of receipt to the place of destination; and (C) uses for any part of the transportation a carrier subject to jurisdiction under this subtitle. The term does not include a person using transportation of an air carrier subject to part A of subtitle VII. Such a freight forwarder possesses dual qualities: he is a common carrier in relation to his shipper-client, and a shipper in relation to the underlying carriers.43 b) The Ocean Freight Forwarder is regulated by the Federal Maritime Commission (F.M.C.) under authority granted by the Shipping Act 191644 and the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (codified at 46 U.S.C. Appx. 1701 et seq).45 Under that legislation, the ocean freight forwarder and the non-vessel-operating common carrier (NVOCC) are two types of ocean transportation intermediaries. The ocean freight forwarders role is defined at 46 U.S.C. Appx. 1702(17)(A):46
N. Y. Foreign Freight Forwarders & Brokers Association v. Interstate Commerce Commission 589 F.2d 696 at pp. 700-701 (D.C. Cir. 1978); Tokio Marine & Fire Ins. Group v. J.J. Phoenix Express, Ltd. 156 F. Supp.2d 889 at p. 895 ,2002 AMC 380 at p. 386 (N.D. Ill. 2001). See also Chicago, Milwaukee, St. Paul & Pacific Railroad v. Acme Fast Freight Inc. 336 U.S. 465 at pp. 484-487 (1949). 44 Act of September 7, 1916, ch. 451, 46 U.S. Code 801. See Gerald H. Ullman, The Role of The American Ocean Freight Forwarder in Intermodal, Containerized Transport ation (1970-71) 2 JMLC 625. 45 Act of March 20, 1984, Public Law 98-237, 98 Stat. 67, as amended by the Act of October 14, 1998, Public Law 105-258, Title I, sect. 102, 112 Stat. 1902, in force May 1, 1999; 46 U.S. Code Appx. 1701 et seq. See also the detailed regulations published in Title 46 of the Code of Federal Regulations (CFR), revised as of October 1, 2002. 46 46 U.S. Code Appx. 1702(17)(A); 46 CFR 515.2(o)(1). All ocean transportation intermediaries, with certain specific exceptions, must be licensed by the Federal Maritime Commission (F.M.C.) (46 US.C. Appx. 1718(a); 46 CFR 515.3 and 515.14(a)). In the case of ocean freight forwarders, the Commission must determine that the forwarder is qualified by experience and character to act as such and the forwarder must furnish security (46 U.S. Code Appx. 1718(a) and (b); 46 CFR 515.11(a) and 515.21). A shipper, however, may, without obtaining an ocean freight forwarders license from the F.M.C., perform freight forwarding services on behalf of its own shipments or those of a parent, subsidiary, affiliate or associated company (46 CFR 515.4(a)). Nor is an ocean forwarders license required by individual employees or unincorporated branch offices of a licensed ocean freight forwarder, subject to certain particular reporting and financial responsibility obligations (46 CFR 515.4(b)). Common carriers or their agents need not be licensed as ocean freight forwarders with respect to cargo carried under their own bills of lading in conformance with the carriers published tariffs (46 CFR 515.4(c)). Similarly, there is no freight
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(A) ocean freight forwarder means a person in the United States that(i) in the United States, dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers; and (ii) processes the documentation or performs related activities incident to those shipments. The ocean freight forwarder clearly acts on the shipper's behalf47 and is compensated by the shipper.48 He may also perform services for and be compensated by the carrier.49 While the carrier may properly pay brokerage fees to the licensed ocean freight forwarder,50 the Shipping Act forbids any payment which could constitute a rebate of ocean freight charges to a shipper.51 The ocean freight forwarder does not assume
forwarding license requirement for ocean freight brokers, who are parties engaged by carriers to secure cargo and/or to sell or offer for sale ocean transportation services, and who hold themselves out as negotiators between shippers or consignees and carriers for purchase, sale, conditions and terms of transportation (46 CFR 515.4(d), referring to 46 CFR 515.2(n)). There is also an exception for the transportation of federal military and civilian household goods (46 CFR 515.4(e)). 47 46 CFR 515.42(a) requires the ocean freight forwarder to identify the shipper on the bill of lading. The ocean freight forwarder's name may appear with the name of the shipper, but the ocean freight forwarder must be identified as the shipper's agent. 48 On the shipper's behalf, the ocean freight forwarder may prepare and process export declarations, book or arrange for or confirm cargo space, prepare consular documents, and arrange for warehouse storage and cargo insurance: Farrell Lines v. American Motorists Ins. Co. 572 F. Supp. 939 at p. 942, 1983 AMC 2705 at p. 2710 (S.D. N.Y. 1983), affd 728 F.2d 147 (2 Cir. 1984). See also U.S. v. Ventura 724 F.2d 305 at pp. 310-311, 1984 AMC 645 at pp. 653-654 (2 Cir. 1983). See also 46 CFR 515.2(i), defining freight forwarding services. Forwarders are prohibited from sharing their fees with shippers, consignees, sellers, purchasers or their agents, affiliates or employees, with persons advancing the purchase price of the property or guaranteeing payment of that price, or with persons having a beneficial interest in the shipment (46 CFR 515.41(a)). Nor may they render services free of charge or at a reduced rate, except in the case of relief agencies or charitable organizations which are designated as such in the common carriers tariff (46 CFR 515.41(d)), nor may they charge any compensation different from that provided for in the common carriers tariff (46 CFR 515.42(d)). 49 For the carrier, the ocean freight forwarder may undertake to coordinate the movement of the cargo to shipside, prepare and process the ocean bill of lading, prepare and process dock receipts or delivery orders, prepare and process consular documents or export declarations and pay the ocean freight charges: Farrell Lines v. American Motorists Ins. Co., ibid. See Strachan Shipping Co. v. Dresser Industries, 701 F.2d 483 at p. 487, 1984 AMC 237 at p. 242 (5 Cir. 1983). The work of the ocean freight forwarder therefore benefits both the shipper and the carrier. See Pearson v. Leif Hoegh & Co. 1992 AMC 1025 at p. 1032 (4 Cir. 1992); Hoegh Celanese Corp. v. M/V Trident Amber 1992 AMC 2769 at p. 2776 (S.D. Ga. 1992). The common carrier may pay compensation to a licensed freight forwarder only pursuant to the common carriers tariff (46 CFR 515.42(b)). In order to be compensated by the common carrier, however, the licensed freight forwarder must provide it with a written certification indicating that the forwarder has performed the required services that entitle it to compensation (46 CFR 515.42(c)). 50 Norman G. Jensen, Inc. v. FMC 497 F.2d 1053 at p. 1056, 1974 AMC 1360 at p. 1363 (8 Cir. 1974). 51 46 U.S.C. Appx. 1709(b)(7). 46 U.S. Code Appx. 1718(e)(1)(A) and (B) require the ocean transportation intermediary (i.e. the ocean freight forwarder and the non-vessel-operating common carrier) to provide the carrier with a written certification that it is entitled to be paid compensation. It must certify that it holds a valid license from the Federal Maritime Commission, that it booked space aboard a vessel and confirmed the availability of that space, and that it prepared and processed the ocean bill of lading,

11 common carrier responsibility.52 Strict regulations control the use of the license of ocean transportation intermediaries generally 53 and the particular duties of licensed freight forwarders in respect of shipments and shipping documents.54 c) The Non-Vessel-Operating Common Carrier (NVOCC) is licensed and bonded by the Federal Maritime Commission in respect of activities at the water's edge.55 The Shipping Act of 1984, as amended (46 U.S.C. Appx. 1702(17)(B)) provides a definition of the NVOCC:56 non-vessel-operating common carrier means a common carrier that does not operate the vessels by which the ocean transportation is provided, and is a shipper in its relationship with an ocean common carrier. Like the domestic freight forwarder, the NVOCC acts in a dual capacity: as a common carrier in relation to its shipper,57 and as a shipper (agent of the cargo owner) in

dock receipt, or other similar document with respect to the shipment. The ocean freight forwarder cannot receive compensation from the carrier with respect to a shipment in which the forwarder has a direct or indirect beneficial interest: 46 U.S.C. Appx. 1718(e)(3) (formerly 46 U.S. Code Appx. 1718(d)(4) before 1998) and 46 CFR 515.42(i). See Norman G. Jensen, Inc. v. FMC 497 F.2d. 1053, 1974 AMC 1360 (8 Cir. 1974). 52 New York Foreign Forwarders & Brokers Association v. Interstate Commerce Commission 589 F.2d 696 at p. 706 (D.C. Cir. 1979). The ocean freight forwarder differs from the domestic freight forwarder in that the former is not involved in the consolidation of less than a container load (LCL) shipments, or in the arrangements for their movement inland, or in the breakbulk operations at destination. The ocean freighter forwarder does not usually issue a bill of lading. See Gerald H. Ullman, Combined Transport to and from the United States [1976] LMCLQ 157 at p. 158. 53 See 46 CFR 515.31, concerning the use by an ocean transportation intermediary of its license, name and license number in carrying on business and on its stationery and billing forms, and prohibiting the use of the name and license by others, or where the license has been revoked. 54 See 46 CFR 515.32 generally. In particular, see 46 CFR 515.32(c), prohibiting a licensed freight forwarder from withholding any information concerning a forwarding transaction from its principal, and requiring the licensee to comply with U.S. laws and to exercise due diligence to assure that all information provided to its principal or provided in any export declaration, bill of lading, affidavit, or other document which the licensed freight forwarder executes in connection with a shipment is accurate. The licensee having reason to believe that its principal or shipper has not complied with U.S. laws or has made any error or misrepresentation in, or omission from, any export declaration, bill of lading, affidavit or other document which the principal or shipper executes in connection with a shipment, must so advise its principal or shipper promptly and decline to participate in any transaction involving such document until the matter is properly and lawfully resolved (46 CFR 515.32(f)). Receipts for cargo issued by licensed freight forwarders must be clearly identified as such and be readily distinguishable from bills of lading (46 CFR 515.41(b)). Detailed invoices and related documents must be provided to the principal on request (46 CFT 515. 32(d)). Licensed forwarders must also keep specified financial records of their transactions (46 CFR 515.33)). 55 See, for example, Macsteel International USA Corp. v. M/V Ming Propitious 2003 AMC 1792 at p. 1793 (E. D. N.Y. 2003). 56 46 U.S. Code Appx. 1702(17)(B). See also the definition of the NVOCC in 46 CFR 515.2(o)(2) as amended by the Federal Maritime Commission. 57 New York Foreign Freight Forwarders & Brokers Association v. Interstate Commerce Commission 589 F.2d 696 at p. 706 (D.C. Cir. 1978).

12 relation to the underlying carriers.58 Elaborating on this statutory definition, the Ninth Circuit has described the NVOCC as follows:59 An NVOCC is an intermediary between the shipper of goods and the operator of the vessel that will carry the goods. Generally, an NVOCC combines the goods of various shippers into a single shipment, contracts with a vessel for the transportation of the goods, and delivers the goods to the vessel, usually in a sealed container.NVOCCs perform a function similar to overland freight forwarders, consolidating small shipments from multiple shippers into large, standard-sized reusable containers that can be quickly loaded on and off ships and onto trucks or other types of transportation.The original shipper of the cargo receives a bill of lading from the NVOCC upon delivery of the cargo to the NVOCC. The NVOCC receives an entirely separate bill of lading from the actual carrier, on which the owner of the cargo may or may not be named. An NVOCC is subject to all laws applicable to common carriers such as U.S. COGSA and also enjoys the rights of common carriers,60 including the right to assert a maritime possessory lien on cargo for freight (a lien enforceable in rem in the U.S.).61 It issues bills of lading and is responsible for damage to goods in transit; whereas an ocean
I.N.A. v. American Argosy 732 F.2d 299 at p. 301, 1984 AMC 1547 at p. 1550 (2 Cir. 1984). See also I.N.A. v. M/V Ocean Lynx 901 F.2d 934 at p. 937, 1991 AMC 64 at p. 66, note 2 (11 Cir. 1990); Orion Ins. Co. v. M/V Humaco 851 F. Supp. 575 at p. 578, 1994 AMC 1922 at pp. 1925-1926 (S.D. N.Y. 1994); Kukje Hwajae Ins. Co. v. M/V Hyundai Liberty 294 F.3d 1171 at p. 1176, 2002 AMC 1598 at p. 1603 (9 Cir. 2000); Glyphics Media, Inc. v. M.V. Conti Singapore 2003 AMC 667 at p. 676 (S.D. N.Y. 2003); Hartford Fire Ins. Co. v. Novocargo USA Inc. 257 F.Supp.2d 665 at p. 672, 2003 AMC 851 at p. 857, [2003] ETL 480 at pp. 488-489 (S.D. N.Y. 2003). A licensee operating as an NVOCC and a freight forwarder may collect compensation only if the licensee (in addition to the certification it provides as a licensed freight forwarder pursuant to 46 CFR 515.42(c)) also certifies that it has not issued a bill of lading or otherwise undertaken common carrier responsibility for the shipment covered by the bill: 46 CFR 515.42(h). 59 7 F.3d 1427 at pp. 1429-1430 1994 AMC 365 at p. 367 (9 Cir. 1993), cert. denied sub nom. Hanjin Container Lines, Inc. v. Tokio Fire & Marine Ins. Co., Ltd. 510 U.S. 1194, 1994 AMC 2996 (1994), citing NLRB v. International Longshoremen's Ass'n 447 U.S. 490 at p. 496, 1980 AMC 2330 at p. 2333 note 8 (1980). See also National Customs Brokers & Forwarders Ass'n v. United States 883 F.2d 93 at p. 101, 1991 AMC 302 (summ.) (D.C. Cir. 1989): NVOCCs, typically, are small firms that do not own or operate transportation equipment, but instead lease facilities and services from other firms, and have a small workforce of primarily managerial and clerical employees. NVOCCs consolidate and load small shipments from multiple shippers into a single large reusable metal container obtained from a steamship company, and ship the container by vessel under a single bill of lading in the NVOCC's name; NVOCCs charge rates within the margin between the steamship line's (the vessel operator's) rates applicable to loose, break-bulk shipments, and special lower rates applicable to consolidated container loads. The Shipping Act of 1984 recognized the NVOCC as a legal entity with the status of a shipper in its relationship with an ocean common carrier but the status of a carrier in its relationship with exporter customers. 46 U.S.C.App. section 1702(17). An NVOCC assumes common carrier responsibilities for transportation even though it does not operate the vessels by which the ocean transportation is provided. Id. The NVOCC is compensated only by the shipper. See also Isabelle Corbier, La notion juridique darmateur, Presses Universitaires de France, 1998 at pp. 357-358. 60 Ins. Co. of N. America v. S/S American Argosy 732 F.2d 299 at p. 301, 1984 AMC 1547 at p. 1550 (2 Cir. 1984). 61 Logistics Management, Inc. v. One (1) Pyramid Tent Arena 86 F.3d 908 at p. 914, 1996 AMC 1826 at p. 1832 (9 Cir. 1996).
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13 freight forwarder only makes arrangements for movement of cargo and does not usually issue a bill of lading or become liable for loss or damage to the goods being shipped.62 The NVOCC and the ocean carrier with which it contracts are jointly and severally responsible towards the cargo claimant for the loss or damage sustained by the goods during carriage,63 subject, of course, to a right of indemnity by one of the jointly and severally liable co-defendants against the other who was primarily liable for the loss or damage.64 4) Which law applies? conflict of laws

The law applicable to a freight forwarding contract with a shipper is the proper law of the contract. It is this law which will be used to determine whether the forwarder is an agent or principal contractor. A Swiss forwarder sued a South African client for its forwarding fee and it was agreed by both parties and the South African Court that Swiss law was the proper law of the contract.65 The Court then stated: It is settled law that procedural matters are governed by the law of the place where the action is brought (lex fori), whereas matters of substance are governed by the proper law of the transaction (lex causae).66 It was also held that statutes of limitation merely barring the remedy are part of the law of procedure. The Court added, however, that if such statutes not only bar the remedy but extinguish altogether the right of the plaintiff they belong to the substantive law and the lex causae applies.67 In consequence the Swiss law determined the applicable prescription period in this case.68 On the question of proper jurisdiction, the Second Circuit Court of Appeals in the United States, in Aquascutum of London, Inc. v. S.S. American Champion,69 held that a British freight forwarder which contracted not merely to arrange transportation of a containerized cargo from London to New York, but also to effect the carriage, and which issued its own bill of lading to the shipper, was essentially a carrier in its relationship to the shipper. In consequence, the forwarder was an entity transacting business in New York, under that states long arm statute,70 and was therefore subject to New York jurisdiction in a claim for short delivery, just as much as was the ocean carrier with which
United States v. American Union Transport 327 U.S. 437 at pp. 442-443, 1946 AMC 197 at p. 201 (1946). For a clear explanation of the difference between ocean freight forwarders and non-vesseloperating common carriers, see Prima U.S., Inc. v. Panalpina, Inc. 223 F.3d 126 at p. 129, 2000 AMC 2897 at p. 2900 (2 Cir. 2000). 63 Hartford Fire Ins. Co. v. Novocargo USA Inc. 257 F.Supp. 2d 665 at p. 672, 2003 AMC 851 at p. 858, [2003] ETL 480 at p. 489 (S.D. N.Y. 2003). 64 Ibid., F.3d at p. 674, AMC at p. 860, ETL at p. 491. 65 Kuhne & Nagel A.G. Zurich v. A.P.A. Distributors [1981] 3 South African Law Reports 536. 66 Ibid., at p. 538 67 Ibid., at pp. 538-539. 68 There was also consideration of, but no decision taken on, the conflict rule in South Africa that where the prescription in the lex fori is shorter than the prescription in the lex causae, the shorter prescription prevails. 69 426 F.2d 205 at p. 210, 1970 AMC 679 at p. 684 (2 Cir. 1970). 70 See New Yorks Civil Practice Law and Rules, sect. 302(a)(1).provides for New York courts to have personal jurisdiction over non-domiciliaries who transact any business within the state or contract anywhere to supply goods or services in the state.
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14 the forwarder had contracted for the actual carriage of the goods. On the other hand, where the same forwarder, acting purely as an agent of the shipper in arranging transport of another shipment from London to Boston, the forwarder had not transacted business in New York and was found not to have solicited business in that state, within the meaning of the long-arm statute.71 Forum selection clauses occur in freight forwarding contracts, as well as in bills of lading, and may affect rulings as to jurisdiction. In Vogt-Nem, Inc. v. M/V Tramper,72 a Dutch shipper which had contracted with a Dutch freight forwarder/agent sued the Dutch ocean carrier whose services the forwarder had retained. The carrier then launched a third-party complaint against the freight forwarder. The frame contract between the shipper and the freight forwarder provided for Dutch law and the jurisdiction of the courts of Rotterdam. The carriers bill of lading provided for Amsterdam jurisdiction. Finding the forum selection clause in the forwarders frame contract mandatory and enforceable, the U.S. District Court for the Northern District of California dismissed the suit against the freight forwarder for improper venue. It also dismissed the plaintiffs action against the carrier sua sponte on forum non conveniens grounds, so that the entire litigation could be adjudicated in the Netherlands, as the contracts binding all three parties required. IV. Responsibility When the Freight Forwarder Becomes Bankrupt

The question whether the freight forwarder acted as principal or agent is usually best answered in misfortune,73 i.e. when the forwarder is declared bankrupt and the charges paid by the shipper/client to the forwarder have not been remitted to the actual carriers along the route. Those carriers then claim their freight directly from the shipper and the courts must decide if the original payment of freight by the shipper to the freight forwarder constituted payment to the carrier. In other words, was the freight forwarder, in receiving the freight, acting as agent of the shipper or as agent of the carrier? The legal relationship of the freight forwarder to the shipper depends on the facts of each case and so does the answer to the question whether payment of freight by the shipper to the freight forwarder is to be deemed payment to the carrier. In C.P. Ships v. Les Industries Lyon Corduroys Lte,74 Addy J. set down the law with clarity: Where a debtor [the shipper], instead of paying his creditor [the carrier], chooses to pay a third party [the freight forwarder], he does so at his peril.
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426 F.2d 205 at pp. 210-212, 1970 AMC 679 at pp. 685-687 (2 Cir. 1970). 263 F. Supp.2d 1226, 2003 AMC 21 (N.D. Cal. 2002). 73 Misfortune and bankruptcy are the occasions when the principles of commercial law are most sharply delineated. For example, maritime liens and their ranking are best understood when the shipowner is declared bankrupt 74 [1983] 1 F.C. 736 at pp. 738-739 (Fed. C. Can.).

15 Where the money is not turned over to the creditor [the carrier], the onus is then on the debtor [the shipper] to establish either: (1) that the creditor actually authorized the third party to receive the money on his behalf, or (2) that the creditor held the third party out as being so authorized, or (3) that the creditor by his conduct or otherwise induced the debtor to come to that conclusion, or (4) that a custom of the trade exists to the effect that in that particular trade and in those particular circumstances, both the creditor and the debtor normally would expect the payment to be made to the third party. In that case, Addy J. held that the shipper could not have been misled by the issuance of a freight prepaid bill of lading, because the shipper did not pay until five days after the date of the issuance of the bill. A freight prepaid bill was to be distinguished from a freight paid in advance bill. Freight prepaid did not mean that freight had actually been paid at the time of the issuing of the bill of lading but signified merely that the carrier had to look for payment to the shipper rather than to the consignee of the goods.75 Freight prepaid in effect means that the carrier waives its right to lien the cargo as security for payment of the freight.76 The decision in C.P. Ships was followed in Canada in Morlines Maritime Agency Ltd. v. IKO Industries Ltd.,77 where the Federal Court held that the conduct of the carriers agent induced the shipper to conclude that the freight forwarder was authorized to receive payments on the carriers behalf. In addition, there was evidence of a trade custom whereby the carrier, in the circumstances, expected payment to be made by the freight forwarder, rather than directly by the shipper. Accordingly, the shipper was not liable to the carrier for the unpaid freight when the forwarder declared bankruptcy. Similarly, in American President Lines, Ltd. v. Pannill Veneer Co.,78 where the shipper had always been billed by, and had always paid freight directly to, the forwarder, the Court found no evidence that the carrier expected the payment of freight directly from the shipper, no such payments having ever been requested until three cheques issued by the forwarder to the carrier had been returned by the bank.

Ibid., at p. 738, followed in Mondel Transport Inc. v. Afram Lines Ltd. (1990) 36 F.T.R. 187 at p. 190 (Fed. C. Can.). See also Ivaran Lines v. Sutex Paper 1987 AMC 670 at p. 695 (S.D. Fla. 1985), where the meaning of freight prepaid is discussed and American jurisprudence referred to. 76 Mondel Transport Inc. v. Afram Lines Ltd., supra at pp. 190 and 193. 77 (1999) 180 F.T.R. 12 at pp. 16-17, 2000 AMC 1042 at p. 1047 (Fed. C. Can.). See also American President Lines, Ltd. v. Pannill Veneer Co. (1997) 36 B.L.R. (2d) 1, 1998 AMC 2204 (Fed. C. Can.). The principles of C.P. Ships have also been applied in non-maritime transport decisions, including Algocen Transport Inc. v. Hinsberger Poly Industries Ltd. (1988) 64 O.R. (2d) 444 (Ont. Dist. Ct.), upheld (1989) 70 O.R. (2d) 799 (Ont. Div. Ct.); and Rudie Wilhelm Warehouse Co. v. Mitsubishi Canada Ltd. (1991) 3 B.L.R. (2d) 97 (B.C. S.C.). 78 American President Lines, Ltd. v. Pannill Veneer Co., supra, 36 B.L.R. (2d) at p. 4, 1998 AMC at p. 2206.

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16 In Canada, a freight forwarder who issued a cheque to pay freight to the ocean carrier, which cheque was dishonoured, has been held liable under the Bills of Exchange Act,79 jointly and severally liable for the unpaid freight together with the shippers, who were declared responsible for freight under a clause of the carriers bill of lading.80 In the United States, most courts that have considered the matter have reached similar conclusions. The general principle (at least in the Fourth, Fifth and Eleventh Circuits) is that, unless the shipper can show that the freight forwarder, in receiving the freight from the shipper, was acting as the carriers agent, the shipper is not discharged from the duty to pay the freight a second time should the forwarder fail to remit the shippers payment to the carrier. As in Canada, all the facts and circumstances of the case are considered in determining whether or not this presumption of the shippers continuing liability for freight has been rebutted. In this determination, local customs, such as the custom of issuing bills of lading marked freight prepaid, as well as the other terms of the bill of lading contract, and the acts and representations of the parties, are especially important. Often shippers and carriers enter into conference credit agreements which provide for the release of bills of lading marked prepaid, prior to the receipt of payment by the carrier. The shipper agrees to be unconditionally responsible for the payment of all freights and guarantees that they will be paid to the carrier within a certain period of time, regardless of whether or not funds for such payment have been advanced to the shipper's freight forwarder. It has been held that where the freight forwarder failed to remit the funds to the carrier, the latter's only remedy was the suspension of credit privileges; he could not require the shipper to pay a second time.81 In Strachan Shipping Co. v. Dresser Industries, Inc., however, the Fifth Circuit found that under the conference credit agreement the shipper had undertaken to be absolutely liable for its freight forwarder's failure to remit funds earmarked for the carrier.82 The real question was whether the freight forwarder was the carrier's agent, in which case the shipper's advance of funds to the freight forwarder would have satisfied the shipper's obligations under the conference credit agreement.83 The Court held that the ocean freight forwarder84 was an independent contractor,85 performing services beneficial to both the shipper and the carrier, in return for which it was paid fees by the shipper and a commission on the total freight charge from the carrier.86 Since the ocean freight forwarder was not the carrier's agent, the shipper was liable to the carrier under the conference credit agreement.87 The Court also
R.S.C. 1985, c. B-4, sect. 129. CTO International Ltd. v. Intercon Freight (1992) 56 F.T.R. 94 (Fed. C. Can.). 81 Koninklijke Nedlloyd BV v. Uniroyal Inc. 433 F. Supp. 121, 1977 AMC 1746 (S.D. N.Y. 1977). 82 701 F.2d 483 at p. 486, 1984 AMC 237 at p. 241 (5 Cir. 1983). 83 Ibid. 84 See 46 U.S. Code Appx. 1702(19), formerly 46 U.S. Code 801. 85 Strachan, supra, 701 F.2d at p. 488, 1984 AMC at p. 245. 86 See 46 U.S. Code Appx. 1718(d), formerly 46 U.S. Code 841b. See Strachan, supra, 701 F.2d at p. 487, 1984 AMC at p. 242; Farrell Lines v. American Motorists Ins. Co. 572 F. Supp. 939 at p. 942, 1983 AMC 2705 at p. 2710 (S.D. N.Y. 1983). 87 The Court stated, at 701 F.2d at p. 489, 1984 AMC at p. 245, that under the terms of the agreement, the forwarder, even if an independent contractor, is tied to the shipper.
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17 cited public policy as a ground supporting the rebuttable presumption of the shippers ongoing responsibility for freight following the forwarders default.88 The Eleventh Circuit, in Naviera Neptuno v. All International,89 held that the trial court should have allowed evidence as to the custom whereby the stamping of a forwarders bill of lading with the words freight prepaid merely constituted an extension of credit to the shipper, so that the shipper could be required to pay the freight a second time when the forwarder failed to remit funds to the carrier. The Court added that the existence of an agency relationship is a question of fact and that none of the authorities90 had held that the freight forwarder is the agent of the shipper as a matter of law.91 [Emphasis added] The Eleventh Circuit, in National Shipping Co. of Saudi Arabia v. Omni Lines,92 found no clear evidence on the facts of the case that the freight prepaid bill of lading reflected a local custom indicating that the carrier had extended credit to the shipper. There was, however, another term in the bill which rendered the shipper remained liable for the freight regardless of whether or not that sum had been paid to the forwarder.93 This, together with the presumption reaffirmed by the Fifth Circuit in Strachan Shipping and other precedents,94 which the Eleventh Circuit readily adopted,95 indicated that the shipper would probably be required to pay the freight once again. The case was, however,

The Court held at 701 F.2d at p. 490, 1984 AMC at p. 248 (5 Cir. 1983): [W]e think that our result comports with economic reality. A freight forwarder provides a service. He sells his expertise and experience in booking and preparing cargo for shipment. He depends upon the fees paid by both shipper and carrier. He has few assets, and he books amounts of cargo far exceeding his net worth. Carriers must expect payment will come from the shipper, although it may pass through the forwarder's hands. While the carrier may extend credit to the forwarder, there is no economically rational motive for the carrier to release the shipper. The more parties that are liable, the greater the assurance for the carrier that he will be paid. The shippers remedy was therefore to ensure that it was dealing with a reputable freight forwarder or to contract with the carrier to secure its release. This rationale was cited with approval by the Eleventh Circuit in National Shipping Co. of Saudi Arabia v. Omni Lines, Inc. 106 F.3d 1544 at p. 1547, 1997 AMC 1708 at p. 1712 (11 Cir. 1997). 89 709 F.2d 663, 1984 AMC 432 (11 Cir. 1983). 90 Ibid., 709 F.2d at p. 665, 1984 AMC at p. 434, citing West India v. Vance, 671 F.2d 1384, 1984 AMC 1157 (5 Cir. 1982), Wood v. Holiday Inns, Inc.,508 F.2d 167 (5 Cir. 1975), Bartlett- Collins Co. v. Surinam Navigation Co. 381 F.2d 546 at p. 550 (10 Cir. 1967). 91 Ibid., 709 F.2d at p. 665, 1984 AMC at p. 434. 92 106 F3d 1544 at pp. 1546-1547, 1997 AMC 1708 at pp. 1711-1712 (11 Cir. 1997). 93 See also Sea Land Service, Inc. v. Amstar Corp. 690 F. Supp. 246, 1990 AMC 791 (S.D. N.Y. 1988), where a specific term of the bill of lading provided that: Payment of ocean freight and charges to a freight forwarder ... shall not be deemed payment to the Carrier and shall be made at payor's sole risk. 94 Compania Anonima Venezolana De Navegacion v. A.J. Perez Export Co. 303 F.2d 692 at pp. 695-695, 1962 AMC 1710 at p. 1714 (5 Cir. 1962) cert. denied, 371 U.S. 942, 1963 AMC 281 (1962); BartlettCollins Co. v. Surinam Navigation Co. 381 F.2d 546 at p. 549 (10 Cir. 1967) (shipper liable on bill of lading "no matter how inequitable the conduct of the carriers"). 95 The Eleventh Circuit acknowledged, however, that other American courts have taken a different position on this question. In particular, it cited the Sixth Circuit, which, in Olson Distributing systems, Inc. v. Glasurit America, Inc. 850 F.2d 295 at p. 296 (6 Cir. 1988), held that an equitable estoppel doctrine barred carriers from recovering freight charges where the shippers were justified in believing that the carriers had been paid for their services.

88

18 remanded to the district court for a determination as to whether or not the shipper had been released by the carrier from the freight payment obligation. The Fourth Circuit adopted this same approach of semi-strict liability for shippers as articulated in Strachan Shipping and National Shipping Co. of Saudi Arabia, in Hawkspere Shipping Co. Ltd. v. Intamex, S.A.,96 also characterizing this doctrine as one of assumption of risk:97 We conclude that, where a shipper chooses to remit payment by way of a cargo consolidator, rather than directly to the ocean carrier, the shipper assumes the risk that the consolidator might not forward the freight payment to the carrier. The shippers duty to pay freight is not discharged, absent evidence that the carrier has actually released the shipper from its duty to pay under the bill of lading. Because Intamex and Amalco [the shippers] have offered no evidence that Hawkspere [the carrier] in fact released them from liability, the district court was correct to hold the shippers remained liable for the ocean freight charges.98 The Fourth Circuit also held that under U.S. law, the freight forwarder can be held to be the agent of the carrier in collecting the freight (thus discharging the shipper from liability) only if the shipper can show that the forwarder had actual or apparent authority to act for the carrier. Apparent authority could only be proven by evidence of overt acts on the part of the principal that would indicate an agency relationship; the subjective beliefs of the persons dealing with the alleged agent are thus irrelevant to the inquiry.99 Neither the mere fact that the forwarder collected the freight payment, nor the shippers belief that the forwarder was acting for the carrier, sufficed to prove such apparent authority, so that the shippers had not discharged their burden of proving that they had actually been released from liability for the freight. The Sixth and Eighth Circuits, however, have espoused a different position on this question (characterized as the equitable estoppel view), under which the shipper does not have to prove that the carrier had actually released it from the duty to pay freight after its payment to the forwarder, but needs merely to demonstrate that the carriers actions would have led a reasonable shipper in his position to believe itself to be released. Thus,
330 F.3d 225, 2003 AMC 1374 (4 Cir. 2003). Ibid. F.3d at p. 238, AMC at p. 1388. 98 In another case, a shipper, after booking the cargo through a freight forwarder and paying the freight (which sum the forwarder never remitted to the carrier), the shipper delivered the cargo directly to the carrier who carried it as the shipper wished. The Court concluded that the shipper had assumed the risk that the forwarder would not pay the carrier and held that there was a quasi-contract (i.e. an implied contract) between the shipper and the carrier which rendered the shipper liable to pay the freight a second time, in the interests of justice and so as to prevent the shippers unjust enrichment. See Contship Containerlines, Inc. v. Howard Industries, Inc. 2002 AMC 2727 (6 Cir. 2002). 99 Ibid. F.3d at p. 235-236, AMC at pp. 1384-1385. the Court rejected the view that the forwarder might have ostensible authority from the carrier (requiring the Court to examine the course of dealing and the position in which the principal placed the agent, asking generally what party was in the better position of preventing the loss), as maintainable only under English law, which did not apply in this case that it found to be governed by American law.
97 96

19 the shipper could be exonerated from the obligation of paying freight a second time by making proof of representations or conduct on the part of the carrier which could reasonably have been construed by the shipper to be tantamount to a discharge from further liability for the freight.100 In some circumstances the shipper can argue that the carrier intended to release the shipper from its obligation under the conference credit agreement and look solely to the freight forwarder for payment. The viability of this argument will depend on the facts of the case based on the correspondence and course of dealings between the parties:101 Did the release of the prepaid bill of lading to the freight forwarder in exchange for a freight due bill signed by the freight forwarder mean that the carrier intended to relieve the shipper of its obligation?102 Did the carrier direct its collection efforts to the freight forwarder rather than the shipper? Did the carrier's internal accounting procedures indicate that the carrier looked to the shipper for payment rather than the freight forwarder, even though the shipper was not billed directly?103 The shipper may also argue that the carrier intended to extend credit to the freight forwarder. Evidence of such an intention would be that the carrier required the freight forwarder, rather than the shipper, to sign the credit agreements.104 The Second Circuit, in Farrell Lines v. Titan Industrial Corp.,105 held that, when the unpaid carrier issued bills of lading stamped freight prepaid in exchange for due bills which made freight payable on demand and which were signed only by the freight forwarder and not received by the shipper, the carrier had thereby unilaterally extended credit to the forwarder. The Court also noted that the carrier had directed its collection efforts solely against the freight forwarder until the latter's insolvency had become apparent.106 Thus, contrary to the Fifth Circuit in Strachan,107 the Second Circuit held that the shipper, who had already paid the freight charges to the forwarder before the latter's bankruptcy, was not required to pay again to the carrier, since the carrier had looked to the freight forwarder for payment and had in fact dealt with the forwarder as shipper.108
Ibid., F.3d at p. 237, AMC at p. 1387, citing, in particular, Olson Distributing Systems v. Glasurit America, Inc. 850 F.2d 295 (6 Cir. 1988); Inman Freight Systems, Inc. v. Olin Corp. 807 F.2d 117 at p. 121 (8 Cir. 1986). 101 Strachan, supra, 701 F.2d at p. 489, 1984 AMC at p. 245. 102 Ibid., 701 F.2d at p. 489, 1984 AMC at p. 246. 103 Ibid., 701 F.2d at p. 490, 1984 AMC at p. 247. 104 Ibid. But see also Sea-Land Service, Inc. v. Amstar Corp. 690 F. Supp. 296, 1990 AMC 791 (S.D. N.Y. 1988), where the fact that the carrier initially looked only the forwarder for payment did not suffice to establish that the shipper was discharged from liability for paying the freight. 105 306 F. Supp. 1348, 1969 AMC 1412 (S.D.N.Y. 1969), aff'd per curiam, 419 F.2d 835, 1969 AMC 2503 (2 Cir. 1969), cert. denied, 397 U.S. 1042, 1971 AMC 813 (1970). 106 Ibid., 306 F. Supp. at p. 1350, 1969 AMC at pp. 1415-1416. 107 Supra. 108 Farrell Lines v. Titan Industrial Corp. 306 F. Supp at p. 1351, 1969 AMC at pp. 1416-1417, cert. denied 397 U.S. 1042, 1971 AMC 813 (1970). See also Inversiones Navieras Imparca v. Polysar Intern. 465 F. Supp. 102, 1980 AMC 1883 (S.D. Fla. 1979); Koninklijke Ned1loyd BV v. Uniroyal Inc. 433 F. Supp. 121, 1977 AMC 1746 (S.D. N.Y. 1977).
100

20

In the U.S., an ocean transportation intermediary (which includes both the ocean freight forwarder and the non-vessel-operating common carrier (NVOCC)) is required to furnish a bond, issued by an approved surety company.109 When a freight forwarder, who had received full payment of the freight from the shipper, failed to remit the sum to the carrier and subsequently became bankrupt, the carrier could claim payment of the unpaid freight charges from the surety under the freight forwarder's bond. After pointing out that the Shipping Act was designed to insure the collection of full freight charges by the carrier without specifically imposing responsibility for payment on any particular party, the Court in Farrell Lines v. American Motorists Ins. Co.110 held that the bond inured to the benefit of anyone for whom the freight forwarder had acted. Since the freight forwarder had performed services for, and been compensated by, the carrier, the bond benefited the carrier and the latter could recover from the surety. The Court also held that the extension of credit by the carrier in issuing bills of lading marked freight prepaid, without having received payment, did not require the suretys approval.111 A carrier acts at its own peril if it accepts without further inquiry a freight forwarder's statement to the effect that he represents the party named as shipper. In West India v. Vance,112 a freight forwarder, in preparing the carrier's bills of lading, designated as shipper a party, who in fact was not acting in that capacity. The carrier issued its bills of lading marked freight prepaid, without having received any payment of freight and without the request of the named shipper. The Fifth Circuit held that, since the mere representation of the fact of agency does not create that relationship, the carrier could not recover unpaid freight from the party named as shipper.113 Nor may the carrier sue the bankrupt estate of the freight forwarder on the grounds that freight was held in trust for the carrier when received by the freight forwarder. There is no such constructive trust.114 V. Freight Forwarder Agent - Reasonable Care

A freight forwarder agent, like any professional, must exercise the reasonable care and skill of his profession.115 In The Maheno,116 the freight forwarder was obliged to pack
Shipping Act, of 1984, 46 U.S. Code Appx. 1718(b)(1); 46 CFR 515.11(a)(2) and 515.21(a), requiring the furnishing of a bond, proof of insurance or other surety in certain amounts specified there for both ocean freight forwarders and NVOCCs. 110 572 F. Supp. 939 at p. 942, 1983 AMC 2705 at p. 2711 (S.D. N.Y. 1983), affd 728 F.2d 147 at p. 148 (2 Cir. 1984). 111 Ibid., 572 F. Supp. at p. 943, 1983 AMC at p. 2711. 112 671 F.2d 1384 at p. 1386, 1984 AMC 1157 at p. 1161 (5 Cir. 1982). 113 Ibid., 671 F.2d at p. 1387, 1984 AMC at pp. 1161-1162. 114 Black & Geddes, Inc., Bankrupt 1984 AMC 451 (S.D. N.Y. 1984). 115 Marston Excelsior v. Arbuckle, Smith & Co. [1971] 2 Lloyd's Rep. 306 (C.A.) at p. 310: As forwarding agents, they were under a duty to use all proper care in arranging the transport, and seeing that it was efficiently and properly carried out. See also in first instance, [1971] 1 Lloyd's Rep. 70 at p. 94: as agents to use reasonable care and skill as such agents. See also Rechtbank van Koophandel te Antwerpen, October 23, 1983, [1983], [1986] ETL 243. The requirement of reasonable care is often inserted into the
109

21 the goods without negligence in a consolidating container and to see that reasonable precautions were taken for the security of the container and its contents. It was held, however, that it would be unreasonable to insist on any particular stowage in the vessel as that function was the responsibility of the carrier.117 The freight forwarder as agent of the shipper has a fiduciary duty towards his principal.118 In consequence, the provision of false information as to which vessel is carrying cargo, the manner of loading and the actual sailing date constitute a breach of that duty.119 Similarly, as agent, he must obtain the best available rates for his client. A freight forwarder who profited from inflated rates by booking cargo through an intermediary (a NVOCC), rather than directly with the carrier, was convicted of criminal fraud.120 Despite the forwarders fiduciary duty, however, where the forwarder lacked knowledge of the sensitivity of a particular cargo and its need for special handling to avoid foreseeable damage, and the shipper had such knowledge, the forwarder was found to have no affirmative duty to discover the inherent characteristics of the cargo. Rather, the shipper had a duty to ensure that appropriate labelling and handline instructions were given to the carrier.121 Forwarders have been held to a duty of care in regard to checking delivery instructions given them. In Roy Cooke Investments Inc. v. Schenker of Canada Ltd.,122 a freight forwarders client loaned money to its partner, the loan being secured by certain motor vehicles that were to be exported from Canada and sold in Germany. The freight forwarder was held liable in negligence for the loss sustained by its client when, acting on directions given by the clients partner, and without checking with its client as to whether these directions were proper, the forwarder released the vehicles to consignees in Germany without collecting any payment.

standard terms and conditions of the forwarders contract. See Prima U.S., Inc. v. Panalpina, Inc. 223 F.3d 126 at p. 128, 2000 AMC 2897 at p. 2898 (2 Cir. 2000). 116 [1977] 1 Lloyd's Rep. 81 at p. 89 (N.Z. Supr. Ct.). 117 Ibid.; there was no question here of on deck stowage. 118 Knudsen v. Torrrington Co. 254 F.2d 283 at p. 286 (2 Cir. 1958); United States v. Ventura 724 F.2d 305 at p. 311 (2 Cir. 1983); A.P. Moller S.S. Co. v. Bromhead & Denison Ltd. 1982 AMC 1455 (S.D. Tex. 1981), affd 692 F.2d 755, 1983 AMC 2791 (5 Cir. 1982); Tenneco Resins, Inc. v. Davy Internation, AG 1988 AMC 1409 at p. 1410 (S.D. Tex. 1988). 119 Johnson Products v. M/V La Molinera 678 F. Supp. 1240 (S.D. N.Y. 1986). See also Rapiscan Asia Pte. Ltd. v. Global Container Freight Pte. Ltd. 2002- 2 SLR325 (Singapore High C.), in which the forwarder was held to be bound by both an express and implied duty to monitor, and to keep its client informed, of the progress of the latters shipments which it arranges. 120 U.S. v. Ventura 724 F.2d 305,1984 AMC 645 (2 Cir. 1983). 121 Tenneco Resins, Inc. v. Davy International, AG 1988 AMC 1409 at pp. 1410-1411 (S.D. Tex. 1988). See also Ionmar Compania Naviera, S.A. v. Olin Corp. 666 F.2d 897 at p. 904, 1982 AMC 1489 at p. 1497 (5 Cir. 1982); Harrison v. Flota Mercante Grancolombiana, S.A. 577 F.2d 968 at p. 979 1979 AMC 824 at pp. 833-34, (5 Cir. 1978). 122 (1987) 38 B.L.R. 177 (Ont. High Ct.).

22 Of course, the forwarder/agent is not responsible for cargo loss or damage sustained while the goods are in the custody and control of the ocean carrier.123 VI. Freight Forwarder Agent - Specific Duties

The specific duties which the forwarding agent assumes vis--vis the customer who retains its services are determined principally by the contract between them.124 The contractual duty of arranging the transportation of the customers goods normally includes a duty to select a carrier, vessel and crew qualified to carry the specific cargo in question, but it does not necessarily entail other obligations, such as packing or the hiring of a marine surveyor to attend at loading.125 The freight forwarder who acts purely as an agent is not a carrier is not subject to the Hague or Hague/Visby or Hamburg Rules or national enactments of them such as U.S. COGSA.,126 unless, of course, it issues a bill of lading with a clause paramount making one of those conventions or laws applicable to the bill or unless it incorporates the ocean carriers bill of lading by reference into its own.127 In general, the freight forwarder as agent must properly describe the goods to the carrier, so that the bill of lading in turn will describe the goods in accordance with the shipper's obligation under art. 3(5) of the Hague or Hague/Visby Rules. This obligation is quite broad. In consequence, a freight forwarder who did not enumerate the different packages on a bill of lading was held responsible for the fact that the cargo claimant was faced with a very low package limitation in its action against the carrier.128

Jumbo Navigation, N.V. v. Melchior 1991 AMC 1518 (D. Fla. 1991), relying on both Florida law and U.S. COGSA on this point. 124 Mediterranean Marine Lines, Inc. v. John T. Clark & Sons, Inc. 485 F. Supp. 1330 at p. 1340, 1980 AMC 1731 at p. 1746 (D. Md. 1980); Barr Co. v. Safeco Ins. Co. 583 F. Supp. 248 at p. 256 (N.D. Ill. 1984); John Brown Engineering, Ltd. v. Hermann Ludwig, Inc. 1991 AMC 1991 AMC 2540 at p. 2542 (D. S.C. 1991), affd without opinion, 960 F.2d 146 (4 Cir. 1992). 125 John Brown Engineering, Ltd. V. Hermann Ludwig, Inc., supra. 126 Zajicek v. United Fruit Co. 459 F.2d 395 at p. 402, 1972 AMC 1746 at p. 1752 (5 Cir. 1972); Sabah Shipyard Sdn. Bhd. V. M/V Harbel Tapper 178 F.3d 400 at p. 404, 2000 AMC 163 at pp. 166-167 (5 Cir. 1999), cert. denied 528 U.S. 1048, 2000 AMC 2999 (1999), holding that the COGSA package limitation applies only to carriers and not to forwarders (i.e forwarding agents). In Sabah, however, the forwarder was held to be a carrier as it issued a bill of lading, despite its contention in a letter to its client that it was only a forwarding agent. 127 See, for example, Atlantic Mutual Ins. Co. v. M/V President Tyler 1991 AMC 452 (S.D N.Y. 1990). 128 Cour d Appel de Toulouse, December 8,1983, [1985] ETL 111. The assured received 20,780.25 francs from the underwriters who received the same sum from the freight forwarder. The latter, however, only received the 2000 franc per package limitation from the carrier. See Cour de Cassation, April 26, 1984, DMF 1985, 331: A commissionnaire de transport who has been informed of the value of the goods has the strict obligation either to ship the goods at their declared value or to assume responsibility for their entire value in case of loss at sea, without being allowed to rely on the carrier's limitation of liability. See also Bonassies, Le Droit positif franfais en 1985, DMF 1986, 68 para. 22

123

23 Similarly in Bahrain Ins. v. Trein Maersk,129 the shipper was held bound by the freight forwarder's limited description of the goods on the bill of lading as a pallet, rather than as a number of packages, and in consequence the carrier was only responsible for $500 for the loss of the pallet, i.e. the loss of a single package. Although the responsibility of the forwarder to the shipper does not appear from the decision, one gathers that the forwarder was answerable to the shipper for its failure to act with the reasonable care expected of the profession. The forwarder/agent, as part of its duty to arrange a shipment, may also be obligated to ensure that the shipping documents are properly handled, for example by ensuring that the bill of lading issued in a documentary credit transaction is presented to the seller/shippers bank in a timely fashion, so that the bank will release the funds before the letter of credit expires.130 While the freight forwarder must act with the reasonable care of a professional,131 that obligation is not absolute. When asked to pay the duty on goods, to clear them through customs and to store them, a forwarder did just that. The goods were not insured and were stolen from a third party's warehouse. It was held that the freight forwarder had been led to believe the goods were insured and was therefore not obliged to advise the consignee/client of the insurance available. In consequence, he was not responsible to the client for the loss.132 In 1013799 Ontario Ltd. v. Kent Line International Ltd.,133 however, a freight forwarder was expressly requested by its shipper to arrange all-risk, warehouse-towarehouse insurance on a cargo of chocolate bars shipped in refrigerated containers (reefers) from Canada to Trinidad. Although the forwarder had assured the shipper that obtaining such cover would pose no problem, the bars were in fact shipped under a standard insurance policy for reefers, which did not cover all risks. When the bars melted prior to delivery, the shippers loss was unrecoverable from the underwriter under the policy. The Court found the freight forwarder, as well as an insurance broker, liable in negligence for having failed to advise the shipper that an extension of coverage was

1984 AMC 354 (S.D. N.Y. 1983). 68 F.3d 197, 1996 AMC 622 (7 Cir. 1995). In this case, the Court held that the contract between the shipper and the freight forwarder/agent was embodied in a letter of instruction from the shipper to the forwarder, as well as in the bills of lading subsequently issued by the forwarders subsidiary, an in-house NVOCC. The duty of the forwarder under the letter of instruction was broader than mere carriage, including, in particular, the obligation to present the bills of lading to the bank on time. Nor was the forwarder, as a mere agent, protected by the one-year time-bar of the bills of lading, which benefited only the carrier, identified in the bills as the NVOCC. 131 See, for example, Cour de Cassation, September 17, 2002 (The Santa Margherita), [2002] ETL 743, where a forwarding agent (transitaire) was held liable for having failed to exercise the due care of a professional forwarder in not noticing the apparent poor condition of a reefer container and for failing to take appropriate technical measures to remedy the malfunctioning in the containers refrigeration system. 132 Club Specialty (Overseas) Inc. v. United Marine [1971] 1 Lloyd's Rep. 482. See also Hof van Beroep te Antwerpen, May 17, 1978, [1978] ETL 683; Cour dAppel de Douai, December 19, 1985, DMF 1987, 161. 133 (2000) 21 C.C.L.I. (3d) 312 (Ont. Supr. Ct.).
130

129

24 available in the market, which, had it been purchased, would have provided compensation for the loss sustained.134 In a similar vein, a Belgian court has held that the forwarding agent owes a duty to provide information to its principal in relation to essential aspects of the contract of carriage.135 A French court has held that a commissionnaire de transport owes a duty to provide full information to sub-contractors it hires all information they need to perform their part of the carriage.136 When the weight of cargo has been supplied to the freight forwarder by the shipper, the freight forwarder is not responsible to the carrier for improperly declared cargo weights, because the forwarder agent is under no duty to the carrier to provide accurate shipping documents.137 Similarly, the freight forwarder agent does not have the primary responsibility for the proper labelling of dangerous cargo, nor does it have any duty to make an independent investigation of the cargo to determine if it is dangerous.138 It has been held, however, that it is an implied term of the contract between the shipper and the freight forwarder that the latter, upon being informed of a loss during the shipment by air from London to Lagos, will give the carrier timely notice so as to allow the shipper to recover the value of the lost goods from the carrier and the insurer.139 A freight forwarder, acting as the shipper's agent, is, of course, responsible for fraudulent misrepresentations it makes to its shipper-principal as to the services it intends to obtain.140 The freight forwarder, who performed services as the shippers agent, is the shipper vis-a-vis the carrier and cannot claim the benefit of the Himalaya clause and the package limitation in the bill of lading.141
Ibid. at p. 318. See also Overseas Medical Supplies Ltd. v. Orient Transport Services Ltd. [1999] 2 Lloyds Rep. 273; Granville Oil and Chemicals Ltd. v. Davis Turner and Co. Ltd. [2003] 2 Lloyds Rep. 356 (C.A.). See also Cour dAppel de Rouen, May 27, 1999 (The Nicole), DMF 2001, 10, observations P. Pestel-Debord. 135 Rechtbank van Koophandel te Antwerpen October 8, 2002, [2002] ETL 789. 136 Cour de Cassation, December 13, 1994, DMF 1995, 293, note R. Achard. 137 Atlantic Overseas Corp. v. Feder 452 F. Supp. 347, 1978 AMC 1203 (S.D. N.Y. 1978). A carrier was fined $65,520 by customs in the Ivory Coast for improper weights. It was held that the carrier could recover this sum from the shipper under sect. 3(5) of COGSA, but not from the freight forwarder. See also Brushfield Sargent & Co., Ltd. v. Holmwright Engineering Company, Ltd. [1968] 1 Lloyds Rep. 439. 138 Ward v. Baltimore Stevedoring Co., 437 F. Supp. 941, 1978 AMC 965 at p. 768 (E.D. Penn. 1977). 139 Marbrook Freight Ltd. v. KM1 (London) Ltd. [1979] 2 Lloyd's Rep. 341. The British Institute of Freight Forwarders Ltd. conditions existing in 1978 were applicable. 140 Reisman v. Medafrica Lines 592 F. Supp. 50, 1985 AMC 1681 (S.D. N.Y. 1984). See also Johnson Products v. M/V La Molinera 628 F. Supp. 1240 (S.D. N.Y. 1986). 141 Mediterranean Marine v. Clark 485 F. Supp. 1330, 1980 AMC 1731 (D. Md. 1980). A freight forwarder, as agent of the shipper, placed heavy equipment on a wooden skid and packaged it for ocean shipment. During loading by the stevedores, the skid broke and the equipment was damaged. The stevedore was allowed to invoke the Himalaya clause and the per package limitation, but the freight forwarder could not, since it acted as the shipper's agent in respect to the contract of carriage, rather than as the independent contractor of the carrier during the period covered by the Himalaya clause. But see also
134

25

The shipper, as principal, is bound by the acts of its freight forwarder/agent made within the scope of latters actual or apparent authority. In consequence, where the forwarder violated its principals long-standing instructions to arrange under-deck shipment and allowed on-deck stowage under a bill of lading providing for such carriage, the cargos all-risk insurance cover was lost under the insurance policy and the shipper could not recover from the insurer.142 Conversely, however, in another case where the freight forwarder was found to have been an independent contractor outside the control of the shipper, rather than the shippers agent, the forwarders knowledge of the ocean carriers practice of stowing vehicles on deck was not imputed to the shipper. Accordingly, the Court found that the shipper had not consented to the deck carriage and could therefore recover damages from the carrier for this unreasonable deviation, beyond the package limitation of U.S. COGSA.143 The position of the NVOCC seems to be somewhat different. It has been held that the shipper and its subrogated underwriter is bound by limitation and forum selection clauses contracted by an NVOCC with an ocean carrier, because the NVOCC is considered to act as an agent for the cargo owner/shipper and is aware that the NVOCC will engage another carrier to transport its goods.144 This seems strange, inasmuch as the NVOCC is otherwise regarded as a common carrier, rather than as an agent, of the party who engages its services. V11. 1) Freight Forwarder Agent Exclusionary and Limitation Clauses Incorporation of standard trading conditions (S.T.C.)

Most freight forwarder agents incorporate into their contracts the Standard Trading Conditions (S.T.C.) of the national freight forwarding association to which they belong. Courts must therefore be satisfied that the S.T.C. have been validly incorporated

Thiti Lert Watana Co., Ltd. v. Minagratex Corp. 105 F. Supp.2d 1077, 2001 AMC 80 (N.D. Cal. 2000), where a forwarding and customs agent, named as the receiving agent on a bill of lading issued by a freight forwarder/carrier, and who was responsible for delivering the plaintiffs goods to the buyers, was permitted to benefit from a Himalaya clause in the bill, which extended the carriers rights to any person of whose services the freight forwarder/carrier made use for the performance of the contract. 142 Morrow Crane Co. v. Affiliated FM Ins. Co. 1988 AMC 691 (D. Ore. 1987). 143 Constructores Tecnicos, S. de R.L. v. Sea-Land Service, Inc. 945 F.2d 841, 1992 AMC 1284 (5 Cir. 1991). 144 See Stolt Tank Containers, Inc. v. Evergreen Marine Corp. 962 F.2d 276 at pp. 279-280, 1992 AMC 2015 at p. 2020 (2 Cir. 1992) (limitation of liability); Kukje Hwajae Ins. Co., Ltd. 294 F.3d 1171 at p. 1177, 2002 AMC 1598 at p. 1604 (9 Cir. 2002) (forum selection clause); Jockey International, Inc. v. M/V Leverkusen Express 217 F. Supp. 2d 447 at p. 457, 2002 AMC 2377 at p. 2389 (S.D. N.Y. 2002) (forum selection clause); Barbara Lloyd Desings, Inc. v. Mitsui O.S.K. Lines Ltd. 2003 AMC 2608 at p. 2612 (N. Dk. Dist. Ct. 2003) (forum selection clause). See also Tarnawski v. Schenker, Inc. 2003 AMC 2230 (W.D. Wash. 2003), where the shipper was held bound by the bill of lading issued by the ocean carrier to his NVOCC, rendering U.S. COGSA applicable, thus precluding his invocation of remedies under the laws of the State of Washington.

26 into the contract of carriage, before they decide whether or not to give effect to the exemption and limitation clauses contained in such standard terms. It is the forwarder who has the burden of proving that the Standard Trading Conditions were brought to the attention of the shipper or were otherwise included in the contract.145 Should merchants, who deal constantly with freight forwarders, expect that the Standard Trading Conditions of the freight forwarder will apply? A Belgian court has required that the Standard Trading Conditions be explicitly mentioned in the correspondence or that a certified copy be attached to it, in order for a merchant to be bound by them, despite the fact that he had customarily dealt with them.146 The Supreme Courts of both Belgium and France have held that the freight forwarder could not rely on a limitation clause found in the Standard Trading Conditions, even when that clause was specifically referred to in the correspondence exchanged between the parties and in the invoices sent to the shipper in respect of previous shipments, because it was not established that the shipper knew of that clause or had accepted it at the moment of the conclusion of the contract.147 An English court held that in order for the conditions to apply the freight forwarder must specifically notify the other party of its reliance on them.148 Similarly, the Cour dAppel de Paris stated that the freight forwarder could not rely on the limitation of liability clauses of the Fdration Franaise des Commissionnaires et Auxiliaires de Transport, because the oral contract it had entered into did not refer to these limitations.149 On the other hand, it has even been held that a Czech merchant, who entrusts goods to a Czech forwarder for carriage to the Federal German Republic (F.G.R.), will be deemed to know that the liability of an intermediary forwarder in the F.G.R. will be subject to the General Conditions of German Forwarders and the exclusion clauses found in those Conditions.150 Similarly, the Singapore High Court,151 invoking Pyrene Co., Ltd. v. Scindia Steam Navigation Co., Ltd.,152 found that the Singapore Freight Forwarders Standard
Hof van Beroep te Antwerpen, December 1, 1976, [1977] ETL 563. See also Cour dAppel de Paris, November 23, 1994, DMF 1995, 887, note Y. Tassel. 146 Hof van Beroep te Antwerpen, May 3, 1978, [1981] ETL 433. 147 Cour de Cassation de Belgique, February 9, 1973, [1973] ETL 454; Cour de Cassation de France, May 20, 1986, [1986] ETL 356. 148 Salsi v. Jetspeed [1977] 2 Lloyd's Rep. 57. 149 Cour dAppel de Paris, October 16, 1985, [1986] ETL 137. 150 Bundesgerichtshof, July 12, 1974, [1977] ETL 124. For an interesting study as to how the Standard Trading Conditions of German freight forwarders have been treated by German courts, see Grard Auchter, Jurisprudence et lgislation rcentes en Rpublique fdrale d'Allemagne, DMF 1984, 168 et seq. 151 Rapiscan Asia Pte Ltd. v. Global Container Freight Pte Ltd. 2000-2 SLR 325 (Singapore High Ct.). 152 Ibid., citing Pyrene Co., Ltd. v. Scindia Steam Navigation Co., Ltd. [1954] 2 Q.B. 402, [1954] 1 Lloyds Rep. 321.
145

27 Trading Conditions were incorporated into an oral contract of carriage subsequently covered by a bill of lading to which the Conditions were attached. The parties, on concluding the oral contract, contemplated that a bill of lading would be issued later to cover the shipment. In addition, the S.T.C. had been expressly referenced in two preshipment quotations sent by the forwarder to the shippers agent, and the previous course of dealings between the contracting parties made it reasonable for the shipper to expect that the Conditions would form part of the contract of carriage, although the bill of lading had not yet been issued when that contract was concluded orally. Of course, neither the freight forwarder agent nor its principal is bound by any limitations in a contract to which they are not party, such as a terminal operators tariff contracted as between the terminal operator the carrier. This is so even if the forwarder has received a copy of the tariff.153 2) Exemption clauses Clause eleven of the British S.T.C., as it existed in 1968, read:154 The Company shall not be liable for loss of or damage to goods unless such loss or damage occurs whilst the goods are in the actual custody of the Company and under its actual control and unless such loss or damage is due to the wilful neglect or default of the Company or its own servants. Such a clause was relied on by a freight forwarder who had negligently failed to verify the credentials of the lorry driver to whom it entrusted its client's goods. This was not held to be a fundamental breach and the exemption clause stood.155 The clause, however, could not be relied upon where a container carried on deck was lost overboard, despite a freight forwarder's oral undertaking that the container would be carried underdeck. The oral undertaking was deemed to override the exemption clause and the freight forwarder was therefore held liable. 156 In Marston Excelsior v. Arbuckle, Smith & Co.,157 where there was no actual loss or damage to cargo, but heavy additional charges were imposed by governmental authority in the Federal German Republic, the Court of Appeal held that the English
153 154

Braber Equipment Ltd. v. Fraser Surrey Docks Ltd. (1998) 59 B.C.L.R. (3d) 108 at p. 113 (B.C. S.C.). See Marston Excelsior Ltd. v. Arbuckle, Smith & Co. [1971] 1 Lloyd's Rep. 70 at p. 78. 155 Gillette Industries Ltd. v. W.H. Martin Ltd. [1966] 1 Lloyd's Rep. 57 (C.A.). 156 Evans v. Merzario, [1976] 2 Lloyd's Rep. 165 (C.A.). The freight forwarder was declared not to be a carrier by Roskill, L.J. at p. 168. The ocean carrier had issued an on deck bill of lading, not having received contrary instructions. See Ingersoll Milling v. Bodena 619 F. Supp. 493, 1987 AMC 988 (S.D. N.Y. 1985), where a freight forwarder was held liable for seawater damage to cargo as a result of deck carriage and, contrary to the shipper's instructions to obtain clean bills of lading, the freight forwarder had accepted bills stamped stowed on deck at shipper's risk. Nor was the freight forwarder permitted to point to custom and trade usage in order to rely on a fine print clause in his invoice limiting his liability to $50. See also Cour dAppel dAix, February 22, 1985, DMF 1987, 426. 157 [1971] 1 Lloyd's Rep. 70 (C.A.).

28 freight forwarder breached its duty, as agent, to use reasonable care and skill, by being negligent in its supervision of the German road carrier. The freight forwarder was not permitted to rely on clause 12 of the then British S.T.C. which read:158 The Company shall not in any circumstances be liable for damages arising from loss of market or attributable to delay in forwarding or in transit or failure (not amounting to wilful negligence) to carry out the instructions given to it. The Singapore High Court applied the three tests laid down by Lord Morton in Canada Steamship Lines v. The King159 in determining whether or not to enforce an exemption clause160 in a forwarders S.T.C. and a similar bill of lading clause, in a case where the forwarder had negligently failed to monitor a shipment so as to ensure that it was loaded aboard a vessel which would deliver it to destination by a crucial date specified by the shipper. The Court held that Lord Mortons first condition of enforceability exemption clauses was not met, in that the clause at issue did not make any express reference to negligence or any synonym of that word. Although the clause met the second test, because its wording, in its ordinary meaning, was wide enough to cover negligence on the part of the servants of the proferens, it failed to meet the third test, inasmuch as its terms could also have applied to heads of liability other than negligence and therefore were insufficient to protect the forwarder from the consequences of its negligent misrepresentations as to the shipment..161 Nor was the forwarder benefited by the limitation of liability clauses in its S.T.C., because those clauses related to liability for delay and could not extend to liability for negligent failure to properly monitor the shipment. In France, commissionnaires pour les transports (freight forwarders who contract as principals), although guarantors of loss or damage to the goods entrusted to them, may include a contrary stipulation in their contracts.162

Ibid., at p. 78. The Court held that the wording was not sufficiently clear to exclude the forwarder's liability for breach of duty. 159 [1952] A.C. 192, [1952] 1 Lloyds Rep. 1 (P.C.). 160 The clause at issue provided: Subject to Clause 14, the Company shall not in any circumstances be liable for loss or damage however caused to property other than the Goods themselves, indirect or consequential loss or damage, loss of profits, loss of market or the consequences of any delay or deviation. 161 The Singapore Court cited with approval various decisions applying Lord Mortons three tests, including, inter alia, the Canadian Federal Court of Appeals decision in Canadian Pacific Forest Products Ltd. v. Belships (Far East) Shipping (Pte.) Ltd. [1999] 4 F.C. 320, (1999) 175 D.L.R. (4th) 449, 1999 AMC 2606 (Fed. C.A.), leave to appeal to Supreme Court of Canada refused, May 25, 2000, (2000) 258 N.R. 196 note. 162 Art. 132-5 of the French Commercial Code 2000. See also Cour de Cassation, September 17, 2002 (The Paraguay Carrier), DMF 2003, 151, observations Y. Tassel, where a commissionnaire de transport could have included in its contract a provision reflecting the regulation of the Port of Antwerp stipulating that goods left on the dock were at the risk of the shipper. Because the commissionnaire failed to include such a provision in its contract with the shipper, as art. 132-5 Comm. C. permitted, however, it was liable to the shipper for the cargo loss. The Port regulation nevertheless insulated the Port from any indemnity suit by the commissionnaire.

158

29 3) Limitation clauses

Limitation of liability clauses in Standard Trading Conditions have been held not to be subject to the same strict tests of enforceability applicable to exemption clauses. The reason is that while it is improbable that the shipper would agree to exonerate the forwarder totally from all liability for its negligence and that of its servants or agents, there is no such inherent improbability in the case of clauses which merely limit, as opposed to completely excluding, the forwarders liability. This is particularly true where the potential losses that might arise from the negligence of the forwarder or its servants are considerably greater than the charges which the forwarder may reasonably impose for the services it provides.163 In the United Kingdom, in determining whether to give effect to limitation clauses in Standard Trading Conditions of freight forwarders, courts must sometimes decide whether the limitation is reasonable within the meaning of the Unfair Contract Terms Act 1977,164 the onus of proof on this issue lying with the forwarder. In making such rulings, British courts have special regard to whether the parties to the contract were of relatively equal bargaining strength. In Overseas Medical Supplies Ltd. v. Ocean Transport Services Ltd.,165 for example, where the forwarder breached an explicit contractual duty to arrange for insurance on a cargo of medical supplies, the English Court of Appeal, owing particularly to the unequal bargaining power of the contracting parties, found a clause in the BIFA Standard Trading Conditions (1989) that would have limited the forwarders liability to 600 pounds, to be unreasonable. In addition, the limitation clause was not clearly worded. Conversely, in Granville Oil and Chemicals Ltd. v. Davis Turner and Co. Ltd.,166 where a freight forwarder also breached its contractual duty to arrange cargo insurance, the same Court held that a nine-month time bar clause in the same S.T.C. was reasonable under the 1977 statute, especially considering that the contract was between commercial parties of relatively equal bargaining strength, and that the parties must have been aware of those terms, based on their previous course of dealing. The previous course of dealings between the parties in hundreds of previous shipments over many years has provided the basis for upholding a $50. U.S. package limitation in some American freight forwarding cases, even where the parties agreement was silent on the limitation.167
See Rapiscan Asia Pte Ltd. V. Global Container Freight Pte. Ltd. 2002-2 SLR 325 (Singapore High Ct.), citing the speeches of Lord Wilberforce and Lord Fraser in Ailsa Craig Fishing Co. v. Malvern Fishing Co. [1983] 1 Lloyds Rep. 183 at p. 186, [1983] 1 W.L.R. 964 at p. 970 (H.L. per Lord Fraser). 164 U.K. 1977, c. 50. 165 [1999] 2 Lloyds Rep. 273 (C.A.). 166 [2003] 2 Lloyds Rep. 356 (C.A.). Because the freight forwarder was found to have contracted as a principal, one wonders why the one-year time bar applicable under the Hague or Hague/Visby Rules would not have been applicable. 167 Capitol Converting Equipment, Inc. v. LEP Transport, Inc. 965 F.2d 391, 1993 AMC 1609 (7 Cir. 1992), where the parties had done business hundreds of times before, and the $50. limitation was consequently upheld, although not the subject of any written agreement.. See also Royal Ins. Co. of America v. M.V. Columbus Queenland 1995 AMC 1138 (E.D. N.Y. 1995), where, in addition to an established course of dealings between the parties, and an ongoing commercial relationship involving
163

30

In James N. Kirby, Pty. Ltd. v. Norfolk Southern Railway Co.,168 an Australian shipper with goods to send to the U.S. contracted with an Australian freight forwarder, who issued the shipper its own bill of lading, assuming the responsibility of a carrier. The forwarder then contracted, as a shipper, with an ocean carrier under a bill of lading issued by that carrier. The Eleventh Circuit held that because the freight forwarder had contracted with the original shipper as a carrier, rather than as an agent, the original shipper was not bound by the ocean carriers bill of lading and therefore was not subject to the limitations of liability subsequently invoked under the Himalaya clause of that bill by a railway company to which the ocean carrier had subcontracted the inland oncarriage of the goods in the U.S.169 VIII. The Document Issued by the Freight Forwarder When a freight forwarder agent issues a document entitled bill of lading, that document, in the circumstances, may not necessarily be a bill of lading.170 A freight forwarder agent at times may issue a house bill of lading in its own name to each of several shippers whose goods it has consolidated into a single container, which container is subsequently offered on full container load (FCL) terms to a carrier from whom the forwarder receives a FCL bill of lading.171 The house bill will usually contain exemption clauses benefiting the freight forwarder or will at least incorporate the Standard Trading Conditions. Sometimes, even if the forwarder is acting as the shipper's agent, the house bill will invoke the conditions found in the actual carrier's contract of carriage.172 When the freight forwarder acts as a principal contractor or as a common carrier (e.g. the NVOCC in the U.S.), its bill of lading may be accepted as a full-fledged

numerous prior transactions, the $50 limitation per shipment was mentioned in two invoices presented by the forwarders to the shipper, and the parties were free to adjust the limitation upon a written declaration of value of the shipment. 168 300 F.3d 1300 at pp. 1304-1307, 2002 AMC 2113 at pp. 2117-2121 (11 Cir. 2002). 169 It would appear, however, that if the freight forwarder had contracted with the original shipper as the shippers agent, the shipper would have been deemed to be a party to the subsequent bill of lading issued by the ocean carrier to the forwarder, and thus would have been subject to the Himalaya clause of that bill benefiting the inland rail carrier. 170 Zima Corp. v. Roman Pazinski 493 F. Supp. 268, 1980 AMC 1522 (S.D. N.Y. 1980). See also A. Gagniere & Co. v. The Eastern Company (1920) 7 LI.L. Rep. 188 at p. 189; Arkwright Mutual Ins. Co. v. M/V Sarajevo Express 1994 AMC 359 (S.D. N.Y. 1993). 171 Modern Liner Contracts, A Special Report, Lloyd's of London Press, 1984, at p. 78. 172 The freight forwarder, however, may not be able to rely on the exemption clauses in the carrier's bill of lading unless it proves that the shipper actually knew of those clauses, that there was an agency relationship between the shipper and itself, and that it was entitled to claim protection under the carrier's bill as an employee, agent or servant. See D.J. Hill, Freight Forwarders, Stevens, London, 1972, para. 332, especially at p. 198, cited with approval in Comalco Aluminum Ltd. v. Mogal Freight Services Pty. Ltd. (1993) 113 A.L.R. 677 at p. 698 (Fed. C. Aust.). See Cour dAppel dAix, February 22, 1985 Revue Scapel 1985, 35; Bonassies, Le droit positif franais en 1985, para. 23, DMF 1986, 68.

31 document of title.173 The bill of lading issued by the NVOCC will often involve combined transport, and therefore different terms and limits of liability may become applicable according to the phase or mode of transportation.174 IX. Responsibility of the Freight Forwarder Carrier

The freight forwarder, acting as a principal contractor, is often considered to be a carrier and as such has all the rights and responsibilities of a carrier. In particular, the forwarder usually benefits from a clause in its Standard Trading Conditions which precludes its customer from asserting any right of counterclaim or set-off175 against the forwarders claim for freight.176 This rule has been held to benefit both the forwarder/carrier and the forwarder/agent.177 The forwarder as carrier, depending on the jurisdiction concerned, is also bound by the Hague, Hague/Visby or Hamburg Rules in respect of liability for cargo loss or damage occurring between loading and discharge in respect of contracts of carriage evidenced by bills of lading or similar documents of title which they issue.178 The Non-Vessel-Operating Common Carrier (NVOCC)179 is a freight forwarder carrier and has been permitted to benefit from the $500 per package limitation under
The Uniform Customs and Practice for Documentary Credits, 1993 revision, I.C.C. Publication No. 500, recognizes at art. 30 that Transport Documents issued by Freight Forwarders are acceptable by banks in documentary credit transactions. Art. 30, however, states: Unless otherwise authorized in the Credit, banks will only accept a transport document issued by a freight forwarder if it appears on its face to indicate: i. the name of the freight forwarder as a carrier or multimodal transport operator and to have been signed or otherwise authenticated by the freight forwarder as carrier or multimodal transport operator, or ii. the name of the carrier or multimodal transport operator and to have been signed or otherwise authenticated by the freight forwarder as a named agent for or on behalf of the carrier or multimodal transport operator. 174 Halm Industries v. Timur Star 1985 AMC 391 (S.D. N.Y. 1984). See Chap. 44, Through and Combined Carriage and Transshipment 175 See, for example, cl. 23A of the 1989 version of the Standard Trading Conditions of the British International Freight Association (BIFA), which provides: The Customer shall pay to the Company in cash or as otherwise agreed all sums immediately when due, without reduction or deferment, on account of any claim, counterclaim or set-off. 176 See, for example, Expeditors International Forwarding Ltd. v. Propak Systems Ltd. (1995) 92 F.T.R. 281 (Fed. C. Can.), where no set-off was permitted for cargo delay against the forwarders claim for freight due. The forwarder as carrier thus benefited from the rule reaffirmed in The Aries [1977] 1 Lloyds Rep. 334 (H.L.), whereby the set-off of cargo claims against a carriers claim for freight is prohibited. See also Schenkers Ltd. v. Overland Shoes Ltd. [1998] 1 Lloyds Rep. 498 (C.A.), where cl. 23A of the British International Freight Associations (BIFA) Standard Trading Conditions prohibiting such set-off was upheld as reasonable under sect. 3(2) of the U.Ks Unfair Contract Terms Act 1977, U.K. 1977, c. 50. 177 Britannia Distribution Co. Ltd. v. Factor Pace Ltd. [1998] 2 Lloyds Rep. 420 at pp. 422 and 423. 178 Comalco Aluminum Ltd. v. Mogal Freight Services Pty. Ltd. (1993) 113 A.L.R. 677 (Fed. C. Aust.), where the carriage was under a consignment note issued by the freight forwarder carrier, which the Court found to have the characteristics of a bill of lading or similar document of title. The Hague Rules did not apply to the cargo damage in this case, however, because it occurred prior to loading. But see also Canusa Systems Ltd. v. The Canmar Ambassador (1998) 146 F.T.R. 314 (Fed. C. Can.), where the freight forwarders bill of lading made it liable for loss of or damage to the goods from the time of taking possession of them until delivery. 179 The NVOCC is a hybrid; it is a common carrier with respect to the shippers who use its services; as such it files a rate tariff with the Federal Maritime Commission and is subject to all laws governing
173

32 COGSA.180 A clause in the multimodal rail/ocean bill of lading, which provided that damage or loss occurring at an unknown time should be deemed to have occurred during ocean transport, was also held valid.181 X. Freight Forwarders as Bailees

If the forwarder acting as a carrier cannot be held liable for the cargo loss or damage either on the basis of one of the carriage of goods by sea conventions or its own standard trading conditions or some term of the contract of carriage, such liability may nevertheless result from the role of the forwarder-carrier as bailee of the goods. As bailee, the forwarder takes possession of the owners (i.e. the bailors) goods with the latters consent, in order to deal with them as the bailor directs. The forwarder, as bailee, is bound by a duty to take reasonable care of the goods so bailed.182 The same duty applies to any sub-bailee to whom the forwarder as bailee entrusts the goods.183 The sub-bailee to whom the bailee has entrusted the goods with the bailors express or implied consent may ordinarily invoke against the bailor the exclusions and limitations of his contract with the bailee.184 XI. 1) France Commissionnaires de transport

French law recognizes the distinction between the forwarder as principal and as agent, by assigning different names according to the function performed. Freight forwarders as principals were traditionally governed in France by the Code of Commerce of 1807, at arts. 96-102, concerning commissionnaires de transport. In 1990, commissionnaires de transport became subject to a decree,185 which required their registration and established detailed norms governing their professional competence, ethics (honorabilit) and financial capacity (solvency). In 2000, the old Code of
common carriers. With respect to the vessel and her owner, however, the NVOCC is an agent of the shipper, and thus merely a customer. INA v. American Argosy 732 F.2d 299 at p. 301, 1984 AMC 1547 at p. 1550 (2 Cir. 1984); see also New York Foreign Freight Forwarders & Brokers Association v. L C. C. 589 F.2d 696 at pp. 704 et seq. 180 Halm Industries v. Timur Star 1985 AMC 391 (S.D. N.Y. 1984). The rail carriage did not have a higher limitation. 181 Ibid., at p. 396. Nor was the freight forwarder obliged to prove that the goods were ever loaded on board to benefit from the COGSA limitation of liability. 182 Morris v. C.W. Martin & Sons Ltd. [1965] 2 Lloyds Rep. 63 at p. 70, [1966] 1 Q.B. 716 at p. 726 (C.A.). 183 Metaalhandel J.A. Magnus v. Ardfields Transport Ltd. [1988] 1 Lloyds Rep. 197, cited by L. DArcy, C. Murray & B. Cleaves, Schmitthoffs Export Trade, 10 Ed., Sweet & Maxwell, London, 2000, para. 27026 at p. 608. 184 Singer Co. (U.K. Ltd. v.. Tees and Hartlepool Port Authority [1988] 2 Lloyds Rep. 164. 185 Decree No. 90-2000 of March 5, 1990 (Dcret relative lexercice de la profession de commissionnaire de transport), J.O. March 7, 1990, p. 2800, as amended.

33 Commerce was replaced by the legislative part (Partie Lgislative) of a new Code of Commerce.186 Freight forwarders as principals are now governed by arts. L.132-3 to L.132-9 inclusive of the new Code, concerning commissionnaires pour les transports (although the traditional term commissionnaires de transport continues to predominate). The new codal provisions correspond almost verbatim to arts. 96 to 102 of the 1807 Code as amended up until 2000. A commissionnaire de transport is a freight forwarder who acts in his own name, or under a trade name, for the account of a commettant (the principal i.e. his customer) (art. L.132-1, Comm. C.). His contract with his principal ordinarily requires the commissionnaire to organize the carriage of the goods from their point of origin to their point of destination (de bout en bout), although his mandate may be restricted and his specific duties may be defined more or less widely.187 He has a general privilge on the goods and on the documents relating to them for all his claims against his principal, including those arising out of prior operations, in principal, interest, commissions and accessory costs (art. L.132-2 C. Comm.).188 The responsibilities of the commissionnaire de transport are defined at arts. L.132-4 to L.132-6 inclusive of the Code of Commerce.189 He has an obligation de
The new Code of Commerce 2000 was enacted as a schedule to Ordonnance no 2000-912 du 18 septembre 2000 relative la partie Lgislative du code de commerce (J.O. September 21, 2000, p. 14,783). Ordonnance 2000-912 was adopted pursuant to Law No. 99-1071 of December 16, 1999 (J.O. December 22, 1999, p. 10,090), which authorized the French Government to adopt the legislative parts of certain codes by ordonnance. The Code de commerce was among the codes contemplated by that enabling legislation (see art. 1(4) of Law No. 99-1071). For the text of the new Code of Commerce on-line, see http://big.chez.tiscali.fr/adroit/Commerceetconsommation/html/commerce.htm. See also the Rapport au Prsident de la Rpublique du 18 septembre 2000 relatif la partie Lgislative du code de commerce (J.O. September 21, 2000, p. 14,777) and on-line at http://www.legifrance.gouv.fr/WAspad/UnTexteDeJorf?numjo=JUSX0000038R. Arts. L.132-3 to L.132-9 constitute Section 2 (Des commissionnaires pour les transports) of Chapter II (Des commissionnaires) of Title III (Des courtiers, des commissionnaires, des transporteurs et des agents commerciaux) of Book I (Du commerce en gnral) of the new Code de commerce. 187 See the observations of Y. Tassel on the duties of the commissionnaire de transport in Cour de Cassation, May 24, 1995, DMF 1996, 369 at pp. 374-375. The mission of the commissionnaire normally includes verifying the adequacy of the goods, the container and the ship (Cour dAppel de Paris, January 6, 1993, DMF 1993, 414); meeting the requirements of, and complying with instructions from, his customer (Cour de Cassation, December 1, 1992, Bulletin des transports 1992, 806); respecting the time limits he has undertaken to observe; clearly specifying to subsequent carriers their mission (Cour de Cassation, February 2, 1993, DMF 1993, 379, observations Y. Tassel); informing and even advising his customer or behaving like his partner (Cour de Cassation, February 24, 1994, DMF 1995, 30, observations Y. Tassel). The commissionnaire is not necessarily required to insure the goods or make declarations of their value. 188 Cour dAppel de Rouen, February 28, 2002, DMF 2003, 141, observations M. Le Petit Engelsen, who notes that art. L. 132-2 (recodifying art. 95 of the former Commercial Code, as amended in 1998), no longer makes the commissionnaires privilege dependent on his physical possession of the goods as if it were mere right of retention. 189 Arts. L.132-4 and L.132-5 of the Code of Commerce of 2000, virtually unchanged from arts. 97-99 of the Commercial Code of 1807, read as follows: art. L.132-4: Il est garant de larrive des marchandises et effets dans le dlai dtermin par la lettre de voiture, hors les cas de la force majeure lgalement constate. [He guarantees the arrival of the goods and effects within the delay specified in the contractual document, except in the cases of a legally established fortuitous event.]
186

34 rsultat190 (a liability as to result). He is ordinarily responsible for the care of the goods entrusted to him from door to door191 and contracts to bring them to destination, using whatever ways and means (voies et moyens) he freely chooses.192 He is also liable for the non-performance of the contract of carriage, whether resulting from his personal fault193 or from that of the subcontractors and other intermediaries (substitus) with whom he contracts in order to complete the transportation.194 The cargo claimant has the onus of proof that the loss or damage occurred during the period of responsibility of the commissionnaire.195

art. L.132-5: Il est garant des avaries ou pertes de marchandises et effets, s'il n'y a stipulation contraire dans la lettre de voiture, hors les cas de la force majeure lgalement constate. [He is the guarantor where there has been damage to or loss of the goods and effects, unless there is a stipulation to the contrary in the contractual document, except in cases of fortuitous events lawfully attested.] art. L.132-6: Il est garant des faits du commissionnaire intermdiaire auquel il adresse les marchandises. [He guarantees the acts of intermediaries to whom he has entrusted the goods.] See also Decree No. 90-200 of March 5, 1990 at art.1. See Cour dAppel de Paris, June 15, 1979, DMF 1980, 86; Cour d'Appel dAix, March 10, 1981, DMF 1982, 201 with note by R. Achard; Cour de Cassation, April 26, 1984, DMF 1985, 331; Cour d'Appel de Paris, October 1, 1986, DMF 1987, 431. 190 Cour dAppel de Rouen, February 28, 1979, DMF 1980, 461. See also Cour dAppel de Paris, June 9, 1976, DMF 1976, 594; Cour dAppel de Paris, January 11, 1985, DMF 1986, 166; Cour dAppel de Rouen, May 24, 1995, DMF 1996, 369, note Y. Tassel; Cour de Cassation, September 17, 2002 (The Paraguay Carrier), DMF 2003,151 (commissionnaires obligation of results not affected by an Antwerp port regulation making shipper responsible for goods on the dock). 191 See Cour dAppel de Rouen, December 20, 2001, DMF 2002, 515, obs. Y. Tassel: commissionnaire de transport has duty to package goods properly and take all measures to secure proper performance of the contract of carriage by selecting a ship fit to carry the cargo undamaged. Of course, his legal guarantee of his own performance and that of those he hires applies only to the leg of the journey which he is required to organize under his contract with his principal. See Cour dAppel de Rouen, December 7, 2000 (The NL/Crte), DMF 2001, 585, observations R. Achard. 192 Cour de Cassation, July 17, 1978, DMF 1979, 7; Cour dAppel de Paris, December 9, 1983, DMF 1984, 685. See Cour dAppel de Paris, January 14, 1983, DMF 1983, 606. See also Cour dAppel de Paris, April 25, 1984, DMF 1986, 109; Cour dAppel de Paris, January 20, 1986, DMF 1987, 375; Cour dAppel de Rouen, April 6, 2000 (The Mixteco), DMF 2001, 611; Cour dAppel de Versailles, March 6, 2001, Bulletin des transports 2001, 492; Cour de Cassation, March 6, 2001, DMF 2001, 499. The mere involvement of the shipper in negotiations with the carrier concerning freight rates or other details of the carriage has been held not to impugn the forwarders character as a commissionnaire de transport, however. See Cour de Cassation, October 30, 2000, DMF 2001, 582, observations Y. Tassel. 193 Cour dAppel dAix, November 18, 1980, DMF 1981, 714. See also Cour de Cassation, November 6, 1984, DMF 1985, 683; Cour dAppel de Paris, December 3, 1984, DMF 1986, 287; Cour dAppel de Paris, May 15, 1985, DMF 1986, 222; Cour dAppel de Rouen, June 24, 1998, DMF 1999, 351. His personal fault must, however, be proven to have caused the loss or damage sustained by his principal. See Cour de Cassation, July 7, 1998 (The Atlantic Island), DMF 1998, 826, report J.-P. Rmery. 194 Re liability for subcontractors, see Cour de Cassation , February 2, 1993, Bulletin des Transports 1993, 351; Cour de Cassation, November 29, 1994, DMF 1995, 364, note R. Achard; Cour dAppel de , December 7, 2000 (The NL/Crte), DMF 2001, 585; Cour dAppel de Rouen, January 18, 2001, DMF 2001, 612. Re liability for substitute commissionnaires, see Cour dAppel de Rouen, June 11, 1992, DMF 1993, 411; Cour dAppel de Caen, May 16, 1993, DMF 1994, 197, note P.-Y. Nicolas. See also Cour dAppel de Rouen, May 24, 1995, DMF 1996, 369 at p. 375 (observations of Y. Tassel). 195 Cour de Cassation, November 16, 1993, DMF 1994, 120, obervations Y. Tassel; Cour de Cassation, June 21, 1994, DMF 1994, 757, observations Y. Tassel; Cour de Cassation, January 14, 1997 (The MV Bibi), DMF 1997, 129, note R. Achard.

35 The commissionnaire de transport may invoke the limitations contained in the standard trading conditions of freight forwarders associations.196 Because he guarantees the proper performance of the carriage by the ocean carrier and any intermediaries with whom he contracts to secure the transportation, the commissionnaire may not, however, exclude or limit his own liability where he or the carrier has committed a faute inexcusable causing the cargo loss or damage,197 nor may he invoke any limitations under his own contract with his principal.198 He may, however, invoke the defences and limitations of the carrier in most cases,199 such as the failure of the cargo claimant to give prompt notice of loss or damage.200 He may also be exonerated from liability by proving the fault of his principal201 or force majeure (irresistible force).202 Like any other carrier, he is liable for the loss suffered when goods are delivered without presentation of the proper documents.203 Actions against the commissionnaire de transport are prescribed by one year from the date the goods should have been delivered (in case of their total loss) or by one year from the date when they were delivered or offered to the consignee in other cases (art. L. 133-6, second and third paras.). In international carriage by sea cases, indemnity suits by a commissionnaire de transport against a carrier must be taken within three months from

The principal association in France is the Fdration franaise des Organisateurs Commissionnaires de Transport (F.F.O.C.T.). See Cour dAppel de Rouen, May 24, 1995, 369, observations of Y. Tassel at p. 376 and authorities cited there. 197 See, for example, Cour de Cassation, May 14, 2002 (The Ethnos), DMF 2002, 620, report de Monteynard, obs. Ph. Delebecque, where the commissionnaire de transports inexcusable fault in permitting deck carriage of his principals cargo marked water-sensitive, without the shippers knowledge or consent, or any mention of deck carriage on the bill of lading, precluded the commissionnaire from benefiting from any limitation of liability for the water damage sustained by the cargo during a voyage at a time of year when severe storms were commonplace on the route selected. 198 Cour de Cassation, October 27, 1998 (The Girolata), DMF 1998, 1129, report J.-P. Rmery. 199 Cour dAppel de Rouen, June 16, 1994, DMF 1995, 458, observations Y. Tassel; Cour dAppel de Rouen, May 24, 1995, DMF 1996, 369, observations Y. Tassel. 200 Cour dAppel de Versailles, April 26, 2001, Bulletin des transports 2001, 437. 201 Cour dAppel de Rouen, December 10, 1987, DMF 1989, 182. 202 Art. 132-5 Comm. C. (formerly art. 95 Comm. C.). See Cour dAppel de Caen, March 16, 1993, DMF 1994, 197, note P.-Y. Nicolas; Cour de Cassation, March 16, 1999, DMF 2000, 224, observations C. De Cet-Bertin. 203 Cour de Cassation, January 8,1985,[1985] ETL 305; Cour dAppel de Paris, January 11, 1985, DMF 1986, 166. A commissionnaire de transport, who is described as shipper on an order bill of lading can recover from the carrier whose agent delivered goods to the notify party without the latter having surrendered a properly endorsed bill: Cour dAppel dAix, September 6, 1984, DMF 1986, 157. The commissionnaire must, however, have incurred some personal loss due to the improper delivery: Cour dAppel dAix, October 3, 1984, DMF 1986, 160. A commissionnaire de transports is, however, not equated to a transporteur, i.e. the carrier. The commissionnaire pour les transports is responsible for the overall transportation of the goods and especially the legal and contractual aspects. The transporteur is responsible for the actual movement of the goods and his privilege is only particular. See art. L-133-7 C. Comm. See Rodire, Trait, Affrtements & Transports, t. 3, paras. 926, 930 and 941. See also Cour dAppel de Rouen, February 28, 1979, DMF 1980, 461.

196

36 the date of service of the principal action.204 The commissionnaire must pay the claim of the cargo claimant or undertake to pay it, before instituting his indemnity suit.205 2) Transitaires

A transitaire, on the other hand, is merely a freight forwarder agent who acts in the name of a disclosed principal. His major involvement occurs in the transhipment of goods from one mode of transport to another.206 Unlike the commissionnaire de transport, the transitaire does not have complete freedom to arrange the carriage and select the carriers; however he is designated in the bill of lading.207 Nor are his claims secured by any privilege on the goods. His responsibility is defined by the articles on mandate in the Civil Code.208 He has only an obligation de moyens209 (a liability as to means; i.e. he must exercise due diligence). Being an agent, the transitaire must use reasonable care in carrying out the instructions given to him in his limited role of intermediary.210 He must, for example, carefully choose the actual carriers who will be responsible for the goods, but he is only liable for his personal fault.211 He must also preserve the recourses of his principal, notably by giving timely notices of loss or damage to the goods to the ocean carrier at fault.212 He benefits from no legal limitation of liability, but only from contractual limitations.213 The transitaires contractual liability to his principal for fault in the performance of his contract is prescribed by ten years under the Commercial Code,214 as is his delictual responsibility towards third parties is prescribed by ten years under the Civil Code.215

Hague/Visby Rules, art. 3(6)bis; Law No. 66-420 of June 18, 1966, art. 32. See also Cour de Cassation, February 2, 1999, DMF 2000, 318, report J.-P. Rmery; observations P. Pestel-Debord. 205 Cour de Cassation, May 4, 1982, Bull. civ. 1982, IV, no. 151, p. 133; Rodire & du Pontavice, Droit Maritime, 12 Ed., 1997, para. 281-1. 206 M. Rmond-Gouilloud, Droit Maritime, 2 Ed., 1993 at para. 741; A. Vialard, Droit Maritime, 1997 at para. 260; Rodire & du Pontavice, Droit Maritime, 1997, para. 281. 207 Cour dAppel de Rouen, April 6, 2000 (The Mixteco), DMF 2001, 611. 208 Arts. 1984-2010 of the French Civil Code. For an interesting analysis of the distinctions between transitaires and commissionnaires pour les transports (then called commissionnaires de transport), see an article by P.-Y. Nicolas, DMF 1978, 193. See also Rodire, Trait, Affrtements & Transports, t. 3, paras. 908 and 933. See Cour de Cassation, July 5, 1982, DMF 1983, 92, [1983] ETL 151; Cour dAppel de Lyon, May 12, 1976, DMF 1978, 204. 209 Cour dAppel de Rouen, July 7, 1972, DMF 1973, 285; Cour dAppel de Paris, April 24, 1974, DMF 1974, 674. 210 Cour dAppel de Rouen, February 12, 198 1, DMF 1983, 119; Cour dAppel de Rouen, June 3, 1999 (The Hapag Lloyd Clement, DMF 2000, 459. 211 Cour dAppel de Rouen, January 27, 1978, DMF 1978, 671, aff 'd Cour de Cassation, July 5, 1982, DMF 1983, 92, [1983] ETL 151; Cour dAppel de Rouen, February 7, 1980, DMF 1981, 81. See also Tribunal de Commerce de Marseille, April 9, 1974, DMF 1975, 102; Tribunal de Commerce de Paris, June 21, 1977, DMF 1978, 231; Cour de Cassation, October 14, 1997 (The Reefer Sea), DMF 1997, 1009, report J.-P. Rmery. 212 Cour de Cassation, October 14, 1997 (The Reefer Sea), DMF 1997, 1009, report J.-P. Rmery. 213 Cour de Cassation, February 29, 2000 (The Fort-Desaix and The Fort Saint-Charles), DMF 2000,448, , note J.-P Rmery. 214 Art. L. 110-4 Comm. C. 2000 (formerly art. 189bis of the Comm. C. 1807). 215 Art. 1382, 1383 and 2270-1 c.c. (France). See also A. Vialard, Droit Maritime, 1997, para. 261.

204

37 French courts must often scrutinize the contracts and circumstances of the individual case, in order to determine whether the freight forwarder was acting as a commissionnaire de transport or as a mere transitaire.216 Where the forwarder contracts with the carrier, as a true commissionnaire de transport (i.e. in its own name, for the account of its customer), the carrier may not take a direct action against the shipper to recover the freight. Such a direct action is possible only where the forwarder acts in its own name (i.e. as a mere agent of the shipper) in contracting with the carrier.217 3) NVOCCs

France, in this age of containerization in international oceangoing transport, must also confront the phenomenon of non-vessel-operating common carriers (NVOCCs), who are not specifically regulated by French legislation or regulations. Depending on the specific duties which they assume, NVOCCs are regarded by French jurists either as commissionnaires de transport or as carriers.218 Because they do not operate the vessels that actually carry the goods, and therefore do not have the control of the physical carriage itself, one scholar has argued that the NVOCC should be recognized as forming a new category of transport intermediary in French law, that of transporteur maritime contractuel (contracting ocean carrier) who sub-contracts the physical movement of the goods to the vessel operator.219 NVOCCs, once so classified, could then be regulated by appropriate national laws and professional norms.220 4) Conflict of laws

The law applicable to international freight forwarding contracts in France is determined by the uniform conflict rules for contracts established by the Rome Convention 1980,221 which apply in all European Union countries. Under the Convention, where the parties have not specified the law governing their contract (art. 3(1)) and where
See, for example, Cour dAppel dAix, November 21, 2001, Revue Scapel 2002, 38; Cour de Cassation, November 13, 2001, DMF 2002, 242, observations Y. Tassel. 217 Cour de Cassation, October 30, 2000, DMF 2001, 582, observations Y. Tassel; La Semaine Juridique, JCP G 2001, II, 10644; Cour dAppel de Rouen, May 20, 1999, DMF 2000, 736 (somm.). 218 See Isabelle Corbier, La notion juridique darmateur, Presses Universitaires de France, Paris, 1998 at p. 361, who states that in France the NVOCC is a commissionaire de transport subject to the Decree of March 5, 1990, and yet who also admits (a p. 360) that in issuing a bill of lading, the NVOCC appears to shippers as a carrier, whose relationship with cargo interests is governed by the rules of carriage of goods by sea. 219 See Corbier, ibid. at pp. 360-363, who appears to adopt the American view that NVOCCs are carriers in their relations with shippers and either agents of shippers or shippers themselves in their relations with ocean carriers. She argues strenuously, however, that they should not be considered armateurs (ship operators). 220 See Jean-Michel Morinire, Les Non Vessel Operating Common Carriers (NVOCC): Essai sur le concept de transporteur maritime contractuel, Universit de Nantes, 1997. See review by Yves Tassel, DMF 1997, 932. 221 Convention on the Law Applicable to Contractual Obligations, adopted at Rome, June 19, 1980 and in force April 1, 1991, 80/934/EEC, O.J.E.C. No. L 266/1, 1980.10.9. For text and a brief commentary, see W. Tetley, International Conflict of Laws, 1994, Appendix F at pp. 1032-1048.
216

38 the choice of the law applicable cannot be inferred with certainty from the terms of the contract and the circumstances of the case (art. 3(1)), the contract will be rebuttably presumed to be governed by the law of the country with which it is most closely connected (art. 4(1)). The country of that closest connection is rebuttably deemed to be the country of the habitual residence or (in the case of bodies corporate or unincorporated) of the central administration of the party whose performance is characteristic of the contract (art. 4(2)),222 unless it appears from the circumstances as a whole that the contract is more closely connected with another country (art. 4(5)).The national law of the country of the habitual residence or the central administration of the forwarder would therefore be the putative proper law of the forwarding contract. XII. Conclusion

The increased activity of freight forwarders and the expanded diversity of their work are striking facts of modern carriage of goods. This increase is a result of the container revolution, the emergence of multimodal systems of inland carriers, terminal owners and sea carriers, and the long term over-availability of tonnage in the world shipping market. Freight forwarders have fitted by chance or clever design into this new world shipping order and hence their new importance. Freight forwarders, despite or perhaps because of their newfound fortune, are faced with a dilemma - will they present themselves as principal contractors or as agents? At times they even flirt with the term carrier. Their solution to the problem has been new standard trading conditions which admit equivocally that they may be principal contractors, but the terms are so evasively wrapped in conditions, limitations and exclusions that there is little clarity as to their responsibility at law. Much of this uncertainty is the fault of freight forwarders, who contest any legislation or court decision which would find them as responsible parties to the contract of carriage. On the other hand, they do not want to be paid a percentage as agents. There is also the particularly intractable problem of determining whether the carrier may recover the freight and related costs of carriage from the shipper or consignee, after one or other of them has already paid these charges to the forwarder, and the latter, by reason of insolvency, bankruptcy or simple default, has neglected to remit the payment to the carrier. Freight forwarders (and the public) require and deserve a clear definition of their rights and responsibilities. The public also deserves such a definition. Because it is so difficult, if not impossible for freight forwarders alone to impose a fair and uniform, international contract, the adoption of the Multimodal Convention, 1980 would be a

See Cour de Cassation, October 12, 1999, Bulletin des transports 1999, 744, censuring a decision of the Cour dAppel de Paris which had not considered these factors in determining the proper law of a freight forwarding contract covering goods shipped from Belgium to France. See also commentary by P. Bonassies, DMF Hors srie no. 4, 2000, no. 46 at p. 40.

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39 major step forward in defining freight forwarders as Multimodal Transport Operators and thereby clarifying their legal status for the benefit of themselves and the public. Prof. William Tetley, Q.C. Faculty of Law McGill University Montreal, Quebec, Canada e-mail: william.tetley@mcgill.ca website: http://tetley.law.mcgill.ca/