Category: Industries

“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.

Let`s look at another scenario. You are acting as a freight forwarder. Your task is to ship a container full of Polish products from Gdansk port to Ghana. The shipment will travel in accordance with either EXW or CIF terms. You book cargo insurance with your local insurer. Is the Polish insurer eligible to insure such a shipment?

First things first, we must identify whose property interest would be insured as per the cargo insurance policy.  With EXW, the risk or liability for the goods transfers from the seller to the buyer as soon as the goods are made available at the named destination. In this case, the risk rests with the buyer in Ghana.  With CIF, the risk is transferred as soon as the goods are loaded onto the ship in Poland, meaning the seller is obliged to insure the goods, but the risk and interest lies with the buyer before the goods have left the country of origin.

In the transit of goods from Poland to Ghana there is very little to no EU country involvement, so how does an EU insurance policy apply?  In short, it doesn’t.  The insurer might argue that they are insuring the interests of the freight forwarder, defined by its liability.  These are governed by the Hague Visby rules which state that a maximum of 50,000 EUR liability (for a container weight load of 20 tons) is allowed. If the sum insured is higher, the Ghana based consignee`s interest would subsequently be insured by the Polish insurer who is seen as a non-admitted insurer in Ghana.

The good news is that most nations allow non-admitted insurers to insure goods in transit. The bad news is that there are a considerable number of countries which restrict such insurance, and it’s worth finding out which ones they are before you ship your goods!  For example, Ghanaian regulations state that marine cargo insurance of imports, not including personal effects, must be insured by a local Ghanaian insurance company.

The long and the short of it is the fact that there are no EU interests in this shipment and that Ghanaian law does not allow cargo insurance for imports outside of Ghana, matters not a jot to the local insurer who will still proudly issue your cargo insurance policy, and will also accept no responsibility if you ever have to make a claim.