Many consignees have tried to find a way around this weight limit restriction, but only a few have ever succeeded. So, what’s needed to overcome it? One thing’s for sure, it’s a lot more than simply playing the gross negligence roulette wheel!
There are eight chapters and 51 articles in the Convention on the Contract for the International Carriage of Goods by Road, better known as CMR. You may not have read a single one of them, but if the word “logistics” sounds familiar to you, you should have at least heard of the infamous 8.33 SDR/KG weight limit. It’s the nemesis of every shipper, and the salvation of every trucker who has had an accident. Many consignees have tried to find a way around this weight limit restriction, but only a few have ever succeeded. So, what’s needed to overcome it? One thing’s for sure, it’s a lot more than simply playing the gross negligence roulette wheel!
The usual approach to overcoming the infamous 8.33 SDR/KG weight limit
The hauler`s 8.33 SDR/kg liability limit for damaged or lost shipment is one of the cornerstones of the CMR convention. Many who have tried to circumvent it have been tempted to increase the limit through a separate agreement with a carrier. However, ruthless article no. 41.1, which states: “any stipulation which would directly or indirectly derogate from the provisions of this Convention shall be null and void”, has quickly put a stop to any such plans. You may have spotted that CMR allows a shipper and a hauler to reach an agreement about a separate limit. As stated in article no. 26.1: “higher compensation may only be claimed where the value of the goods or a special interest in delivery has been declared in accordance with articles 24 and 26”. Both articles 24 and 26 follow the same phrasing – higher compensation can be granted “against payment of a surcharge to be agreed upon”. Sounds simple enough, doesn’t it? But sadly, no! There are two pitfalls here for shippers seeking greater compensation than the stipulated limit. Firstly, the value of the goods must be declared in a consignment note, and secondly, a surcharge payment must be agreed between the shipper and the carrier. We’ll look at each in turn.
Declaring the value
“It has been established in the CMR convention article 24, that the shipper might declare that the cargo value exceeds the limits described in article 23.3, if the agreed fee has been paid and that sum changes the before mentioned limit” E2-8562-587/2018, Supreme Court of Lithuania
This doesn’t mean you must spend a fortune with a trucker to overcome the weight limit. Far from it. The CMR convention simply says that a payment of a surcharge must be agreed. The Supreme court of Lithuania’s case no. e3K-3-123-219/2017 provides a good example of what can be achieved: A freight forwarder agreed in a transport order with a hauler that “a payment surcharge, which increases the hauler`s limit described in CMR article 23.3 up to the cargo value, is included in the freight fee (20% of freight fee)”. This example is based on Lithuanian law but provides flexibility for freight forwarders to be able to rely on a relative amount as payment of the surcharge.
You might be willing to reveal the actual value of the goods in your transport order, or you might prefer to simply state that “the hauler confirms that it is familiar with the market value of the goods. If the carrier doesn’t know the expected market value of the consignment, it must inform the customer.” But to tell you the truth, the latter is probably too little to secure your or your customer’s, interests.
Article 24 in the CMR convention is straightforward. A shipper can “declare in the consignment note a value for the goods exceeding the limit laid down in article 23.3”. If we follow this article word-for-word, then the value must be properly declared on the waybill. The same principle is held in the Vienna Convention on the Law of Treaties 1969, article 31, which states that it’s required that the ‘ordinary meaning’ be given to the terms of the treaty, although assistance can be sought from the travaux préparatoires, if the ordinary meaning is unclear, or if it leads to an absurd result.
Although, a very recent decision by the German Federal Court (Judgment of the German Federal Court of Justice of 17.12.2020, I ZR 130/19) has highlighted the significance of the value of the declaration on the consignment note. They took a literal interpretation of CMR’s articles 24 and 26 and decreed there was no mutual agreement between the sides due to a lack of declaration of “special interest” in the CMR waybill. Even though this decision is not legally binding in other countries, it acts as a persuasive authority for many.
On the other hand, however, English courts have distanced themselves from this approach and have adopted a “purposive” attitude when interpreting these CMR articles. The same tack was taken by The Supreme court of Lithuania. In the previously mentioned case, the freight forwarder declared the goods value in the transport order and consignment note which accompanied the cargo invoice. That has been deemed enough to evidence the declaration of value.
An alternative approach: full cargo insurance
If declaring the value of goods sounds confusing, there is a second option which is trending among European shippers. The declared value of the cargo is being increasingly replaced by the requirement for the hauler to purchase full cargo insurance. One such example can be seen in the finished vehicles logistics industry: “Lower limitations of liability set by mandatory transport law do not dismiss the Carrier of its obligation to take out a cargo carriage insurance for the full actual loss or damage to the cargo”.
The duties of the freight forwarder are listed in the Civil Code of the Lithuanian Republic. Article 6.824 tells us that a freight forwarder is accountable for organizing delivery of freight, signing transport orders, and other contracts ensuring loading and unloading and carrying out other duties related to freight transport. There is no obligation to take out cargo insurance for the freight forwarder. The list is not exhaustive, and an insurance policy can be interpreted as one of the other documents which freight forwarders can sign on behalf of their customers (this legislation might differ from EU country to country).
CMR does not preclude an agreement about provisions undiscussed in the convention. The convention does not stipulate the trucker’s duty to take out cargo insurance upon receipt of instruction. If you follow this path, you must remain clear and precise about your intentions. The Court of Appeal of Lithuania has advised (2A-437-117/2015) that the “cargo value must be fully covered by the haulers insurance” is not sufficient to establish the carrier`s duty to purchase separate cargo insurance.
However, there are as many “ifs” in this approach as there are positives. If the hauler is instructed to take out cargo insurance and fails to do so, you might be able to claim for any losses through failure to fulfil obligations. The claim would be based on Civil Code rather than the CMR convention since the liability arises from failure to fulfil obligations other than haulage. Furthermore, your transport order must be clear about the consequences to the carrier for failure to take out cargo insurance. In addition to that, a simple paragraph in the transport order might not be enough, as you might have to prove that you were interested in having cargo insurance by requesting a policy or inquiring about the premium.
So, what’s the answer? How do you overcome the CMR weight limit dilemma?
All in all, one could conclude it is best to complement your transport order by adding in one of the following articles to your agreement: were interested in having cargo insurance by requesting a policy or inquiring about the premium.
As in any good pharmaceutical commercial, you must understand that there might be side effects when implementing any of the above articles, and you should seek advice from your lawyers before commencing any changes.
It should also be noted that it’s a rare occasion when a hauler takes out separate cargo insurance, and it’s even rarer when a carrier has cargo liability insurance which addresses declared value. Although, it’s an open secret that most truckers don’t bother to read transport orders.
Our suggestions mean walking a thin line. The hauler`s liability insurance is unlikely to recognize them, and you will have to defend your interests in court. It’s always best to advise your customer to take out independent cargo insurance or through their freight forwarder, rather than relying on tricking the hauler into signing an excessive transport order.
Gediminas Dauksa
Group Practice Leader Transportation & Logistics
T +370 616 08451
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