Learning tough lessons from bill of lading wording change

Shipping lines have reportedly changed key wording on the bill of lading – with at least one Affiliate already discovering the implications of this the hard way. Max Chorus of Streff shares the company’s recent experience

In FIDI Focus issue 302, we reported on the uncertainties and possible surprises that may arise from changes in the contractual conditions imposed by shipping lines.

Streff has been involved in a legal case regarding the shipping of containers to Togo and promised we would report on the outcome once this had been concluded.

First, here is a reminder of the case details:

We were transporting two 40- foot containers of charity goods to Togo, on behalf of a customer, an NGO with a partner NGO in the destination country. Our contract specified that our services to this customer would end when the goods were unloaded at the port.

However, once the goods arrived in Togo, the consignee refused to pay the fees and taxes that were applicable for receiving the goods – and the containers therefore remained at the port.

We were not informed about this situation by either the shipper or the consignee.

The consignee refused to pay the charges even when they were contacted by the shipping line.

The shipper also refused to pay the costs so, after a few months, the shipping line turned to us. We were named in the bill of lading – and as both NGOs had ceased their activities – the liability arising from the clauses of the shipping line’s contracts applied to us.

This was based on the following reasoning:

The shipper, the consignee and the forwarder, who made the booking and/or the booking order to port at destination, are jointly and severally liable for the payment of all costs (demurrage and detention) incurred as a result of the situation.

The clauses and conditions of the bill of lading state that the merchant is liable for all costs. The term merchant refers to ‘the shipper, the right holder, the consignee, the consignee of the goods, any person holding or entitled to hold the goods as consignee or endorser of this bill of lading, or any person acting on their behalf’.

The shipping line’s claim amounted to more than €65,000 and it took our company to court to pursue it. We attempted to defend ourselves legally against this, but eventually our lawyers advised us that they no longer saw any chance of winning the case and we agreed an out-of-court settlement of €41,000.

So, what conclusions can be drawn from this?

With such a clause on the bill of lading, the only way for companies such as ours to protect themselves is to refuse any orders where they do not have full control of the organisation and door-to- door activities themselves.

We sincerely hope that our experience in this case can help other FIDI Affiliates avoid similar damages and protect themselves from significant financial losses.

My advice would be this: ensure you read the small-print terms and conditions of all your contracts for transportation by sea. Discuss with specialists in the field of insurance, or even lawyers, what these clauses really mean and make yourself aware of the risks.

We have already learned painfully and have adjusted our procedures accordingly.

The full article can be found here: https://www.fidifocus.org/fidi-services/change-in-wording-poses-risk/

Send this to a friend