Section 2 Cargo liabilities during through transports and lighterage

4.2.1 General

Traditionally the cargo owner or his freight forwarder made individual contracts with each link in the chain of transportation to bring the goods to their destination. To an increasing extent, transport systems have been developed where the cargo owner only needs one contract with the carrier who will organise the whole transport on his own ship in combination with other necessary means of transportation.

A through transport involves a chain of sea transports, whereas a combined (or multimodal) transport includes various modes of transportation such as road, rail, air combined with sea transport.

The chain of transportation must include the entered ship for liability to be covered under this clause. If the entered ship is not involved, the Member acts as a forwarding agent. As stated in the comments under 2.5, liabilities incurred in that capacity are not covered.

A Member who has agreed to arrange a through or combined transport may become liable to the cargo owner for loss or damage which occurs when the cargo is in the custody of another of the carriers involved. It follows from the comments under 2.6 that the cover is strictly related to the operation of the entered ship. Liabilities arising during transport other than on the entered ship are not covered unless stated in these Rules or otherwise agreed. This provision describes the extent of cover for liabilities arising while the cargo is in the care of another carrier or being lightered.

4.2.2 Through transport

Members carrying out through transport where the cargo is intended to be in the custody of another carrier and partly on board the entered ship ought to submit the terms and conditions of the through bill of lading to the Club. Furthermore, the Member must satisfy the Club that when the cargo is not in the custody of the entered ship, it is carried on approved terms such as CMR or similar conventions or liability legislation. This is important since the door must be kept open for a recourse action against the actual, physical carriers if the Member is forced to pay in the first instance under a through bill of lading. See below: Rule 10 Section 2 (b).

A Member has no legal obligation to assume liability for those who perform separate legs of the transport. On the contrary, The Hague and the Hague-Visby Rules allow the carrier to exclude liability for any loss or damage which occurs during a stage of a through or combined transport which is not performed by the carrier. However, even if the carrier makes such an exclusion, he may have to pay the claim if it cannot be established in whose custody the cargo was when it was damaged or lost.

Investigating, handling and settling claims under a through or combined transport bill of lading requires knowledge and experience of the applicable system imposing legal liability in respect of transport by sea, road, rail and air. It is recommended that Members contact the Club when damage or claims have been reported on cargo travelling under a through or combined transport bill of lading issued by the Member.

Usually the handling of such a claim requires close contact with the carrier in whose custody the loss or damage occurred and with his liability underwriter. As the money paid in settlement to the cargo owner will be claimed back from the carrier who is ultimately responsible, it may be necessary to keep him or his liability underwriter informed of major developments and to secure extensions of any applicable time bar.

As in all recovery situations, Rule 14 applies according to which the Club is subrogated to the Member’s right of recovery if it has agreed to compensate the Member for his loss. As described in the comments to Rule 14, the Member has an obligation to assist the Club in exercising any right of recovery.

A convention on International Multimodal Transport of Goods (1980 UN) was drafted but never entered into force. Similarly, the Rotterdam Rules were intended to be of multimodal effect but they too have failed to achieve acceptance.

Following a policy decision by the International Group (24 June 2008) the cover position in relation to through transports can be summarised as follows:

(a) Club cover and Pooling extend to contractual liabilities for loss and damage to cargo arising under an approved through transport contract of carriage complying with the Appendix V para 13 (b) Guidelines of the Pooling Agreement

(b) Club cover should extend to non-contractual liabilities (such as bailment) for loss or damage to cargo.

(c) Club cover should not extend to loss or damage caused by cargo (such as personal injury or damage to property) unless brought by the cargo owner by way of indemnity under the contract of carriage i.e. there should be no cover in respect of such claims if brought directly against the carrier as a claim in tort by someone who was not a party to the contract of carriage.

4.2.3 Transhipment under a direct bill of lading

The cover for transhipment liabilities under this section requires the issuance of a bill of lading that meets the requirements of Rule 10 Section 2 (b). If transhipment of cargo travelling on a direct bill of lading(i.e. for carriage from load to discharge port on one vessel) is undertaken, the carrier may be held liable for deviation in certain jurisdictions (see comments under 4.8.3.6). All bill of lading forms should, therefore, contain a suitable clause allowing the carrier to sub-contract all or part of the carriage of the cargo to a third party on a transhipment or feeder vessel. If such handling of the cargo is considered customary as, for instance, in the container trade, the court may find that the transhipment did not constitute a deviation or, at least, that it was not unreasonable.

4.2.4 Lighterage

The second part of this section describes the Member’s cover for liabilities arising during lighterage.

4.2.4.1 Lighterage must be contractual

To be covered, the lighterage must be based on contractual agreement. There are two types of contract involved. Firstly, the lighterage must be in accordance with the contract of carriage for the cargo in question. If the bill of lading or charterparty or other freight contract does not permit lighterage or if it is otherwise considered to be a breach of contract, there is no cover under this section. Secondly, there is probably a contract between the Member and the owner or provider of the lightering. Such contract should be on standard terms or on the most favourable terms obtainable locally. If the Member has contracted lighters on unusually burdensome terms, cover may be lost under Rule 10 Section 2.

4.2.4.2 Lighterage must be customary

To be covered, the lighterage must be customary. This means that the lighterage must be routinely carried out in the port in question. Lighterage outside a port or during tow from one port to another is not considered customary in the sense of this section. Liability during such lighterage is covered only if approved by the Club. Furthermore, even lighterage within a port may not be customary. To be covered, it requires that such an operation constitutes an established practice in that particular port for ships and cargo of the relevant type.