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The Legal Framework of a Freight Forwarder

The Legal Framework of a Freight Forwarder

Locally (EAST AFRICA):

  • At regional level, the East Africa Customs Management Act 2004, regulates customs operations in East Africa. The freight forwarder must adhere to this act in transacting business
  • The Agency law under commercial law sets out the relationship when an agent is authorized to act on behalf of another called a principal. It talks about the liability of an agent to the third party, principal and vice versa to mention but a few.

At International Level:

International conventions relating to transportation of goods.

  • These are rules and regulations that govern the transportation of goods by various modes of transport. 
  • They govern the relationship between the transporter and the cargo owner. 
  • In the event of delay, damage or loss during transportation, these rules will determine the party liable and the amount of compensation. 
  • The rules specify in advance the duties and the responsibilities of the cargo owner and the transporter.

The Hague Visby Rules:

  • Initially, known as Hague rules which were adopted in 1924. 
  • As amended by the Brussels protocol 1968 and called The Hague-Visby Rules. 
  • These laws govern the carriage of Goods by sea and are employed by the shipping lines on their bills of ladings under contract of carriage. 
  • They define who the carrier is, the consignee, shipper etc. 
  • They spell out the liability of the carrier and the time allowed reporting loss and damage to the goods while under the custody of the carriage. e.g. 
  • In Article III section 6 the article talks about the reporting the loss, damage to the good in writing to the carrier at the port of discharge immediately at time of removal of the goods at delivery or when such damage is not immediately apparent with 3 days.

Hamburg Rules (United Nations Convention on Carriage of Goods by Sea 1978).

    • They define the carrier, shipper, consignee etc.
  • Application:
    • Applied when the port of lading is in a contracting state.
    • Applied when the port of destination is in a contracting state. They are applied regardless of the nationality of the ship, consignee, and shipper.
    • They are not applied to charter parties (renting a ship for your personal or business use) unless if a Bill of Lading is issued –it will apply.
    • They are applied if for every shipment in the case where you have been contracted for a series of shipments in the future. 
    • These rules talk about the time given to report in writing the loss and damage to the goods to the carrier
  • The Hague-Visby Rules and the Hamburg Rules govern the carriage of goods by sea under Bill of Lading

Warsaw Convention

  • As amended at The Hague, 1955 and by protocol no. 4 of Montreal, 1975.
  • These laws apply to the carriage of goods by air in regards to persons, baggage and cargo transported by air. For example, in Article 17 & 18, the carrier is liable for the loss & damage to person, cargo and baggage under the contract of carriage. 

International Chamber of Commerce (ICC Rules):

  • Also referred to as Incoterms they spell out the responsibilities, obligations of the buyer and the seller in an international sales contract. 
  • In some of these incoterms like DDP (Delivered Duty Paid), the buyer is responsible for shipping, clearance and delivery of the goods at a named place of destination and therefore will engage a freight forwarder to execute this contract.

Convention Merchandise for Road Transport (CMR)

  • The CMR Convention (Convention on the Contract for the International Carriage of Goods by Road) is a United Nations convention that was signed in Geneva on 19 May 1956. 
  • It relates to various legal issues concerning transportation of cargo by road. 
  • These rules govern the transportation of goods by road. 
  • It applies to contract of carriage evidenced by consignment note (Road Consignment Note). 
  • The rules specify the duties and responsibilities of the carrier and the cargo owner in the event of any loss or damage to the goods, the carrier’s responsibility is limited to 8.33 SDR per kilogramme.

Convention International Merchandise for Rail Transport (CIM).

  • These rules govern transportation of goods by rail. 
  • It specifies the duties and responsibilities of the cargo owner and the carrier. It applies to contract of carriage evidenced by consignment note (Rail Consignment Note). 
  • In the event of loss or damage, the liability of the carrier is limited to 17 SDR per kilogramme.

Rotterdam Rules 2008

  • Adopted by the General Assembly on 11 December 2008, the Convention establishes a uniform and modern legal regime governing the rights and obligations of shippers, carriers and consignees under a contract for door-to-door carriage that includes an international sea leg. 
  • The Rotterdam Rules provide a legal framework that takes into account the many technological and commercial developments that have occurred in maritime transport since the adoption of those earlier conventions, including the growth of containerization, the desire for door-to-door carriage under a single contract, and the development of electronic transport documents. 
  • The Convention provides shippers and carriers with a binding and balanced universal regime to support the operation of maritime contracts of carriage that may involve other modes of transport (Multimodal Transport).

The freight forwarders’ responsibilities as specified by international conventions

The international conventions have specified the responsibilities of freight forwarders, which include:

  • Providing CMR insurance, valid for the transportation period.
  • Notification before the transportation begins
  • Compliance to the requirements of the convention for ADR forwarding of dangerous cargo.
  • Compliance to the requirements for transportation of oversize loads in the countries through which the forwarding route passes.