Adv. Gill Nadel, Adv. Hila Wohlgemuth
International freight forwarders usually divide into two main types.
One type serves as the transport coordinator and does not actually transport the cargo. This freight forwarder will ask to limit his responsibility in a manner in which it will apply only towards his actions in the coordinating of the transport, but not towards the actual transport itself; therefore the freight forwarder will claim, in general, that he is not responsible for the damages caused to the cargo during the transport, including delays in its arrival to the destination.
Another type of freight forwarders take upon themselves a commitment to serve as a contractual freight forwarder of the cargo for an importer/ exporter. This freight forwarder issues a certificate of origin to the exporter/ importer. Although in actual fact the transport would be performed by a sea or air carrier, from a contractual perspective the international freight forwarder would be responsible towards the exporter/ importer for all matters regarding transport, including damages to the cargo or delays in their arrival to the destination. In this case, the freight forwarder would limit the scope of his responsibility towards the exporter/ importer through various clauses which would appear in the bill of lading issued by the freight forwarder to the exporter/ importer.
In general, the question of the scope of the freight forwarder's responsibility in a certain transaction would be determined by the price offer or other documents transferred by the freight forwarder to the exporter/ importer, in which the obligation taken by the freight forwarder would be stated.
Recently, the Haifa Magistrate Court exempted an international freight forwarder and its Israeli agent from responsibility to a delay in the arrival of imported cargo to Israel. The importer claimed that he suffered damages due to the delay in the arrival, but the court exempted the freight forwarders from responsibility. It shall be noted that the Israeli freight forwarder was represented by our firm.
The court ruled that the Israeli freight forwarder belonged to the first type aforementioned, meaning a transport coordinator, therefore he is exempt from responsibility. The court determined that the second freight forwarder was from the freight forwarder-carrier type, but in light of the case's
circumstances it was determined that he was not negligent, the delay was caused by force majeure, and the freight forwarder took reasonable actions to reduce the delay in the arrival of the cargo.
In addition, the importer was criticized for knowingly agreeing to a very tight schedule for the supply of the cargo in Israel, and for also delaying the release of the cargo after its arrival to Israel.
Case Facts and the Parties' Claims:
PolyExportan Ltd. (the importer) imported under FOB condition sealants manufactured by the Italian Imper Italia company, which is the exporter - supplier. The importer required these sealants for sealing work at the gymnasium of the Nahariya Municipality, as he had won a tender for performing such work.
The importer issued a letter of credit to the exporter which included a fundamental clause according to which the time of the loading of the cargo onto the ship at the export port would be until February 25th 2009, and the goods would not go through transshipment. The bill of lading issued by the international freight forwarder stated that the time of the loading would be on February 25th 2009 on the Charlotte Borchard ship. However, the cargo finally reached Israel on another ship only on March 13th 2009, and as according to the exporter's claim the shipment should have reached Israel before March 6th 2009, meaning that there was a delay of ten days.
A claim was filed against the international freight forwarder who handled the freight forwarding and against its Israeli agent. The sea carrier was not sued, and the exporter was expunged from the claim by the importer himself.
The importer claimed that due to the delay in the arrival of the cargo, he suffered accumulated damages totaling 88,000 NIS for temporary sealing work, damage to reputation, loss of transactions and more, as he committed to the Nahariya Municipality regarding a schedule for the project and because of the delay he was unable to withhold that schedule.
The importer claimed that the international freight forwarder's representation in the bill of lading, according to which he withheld the terms of the letter of credit, caused him damages as the funds were transferred to the exporter while the goods did not reach Israel on time and even, as discovered, were not loaded at the time stated in the bill of lading.
The Israeli freight forwarder, which is the agent of the international freight forwarder, claimed that he acted as the importer's representative only for the coordination of the transport and that he was not aware and did not commit to the timeframe of the loading and/or the arrival of the shipment to Israel.
The international freight forwarder claimed that due to force majeure - the lockout of the Port of Marseille, he was not able to load the goods onto the Charlotte Borchard ship at the time stated in the letter of credit, and that he had made every effort to transfer the goods onto another ship, and was even successful in doing so, therefore reducing the delay in the arrival of the goods.
The Verdict:
The court determined that even if the international freight forwarder's conduct was improper in relation to his representation in the bill of lading, indeed it did not cause the delay in the loading of the cargo onto the ship which transported it to its destination.
The court ruled that as the importer did not claim fraud and misrepresentation, indeed the exporter would have been entitled to receive his money according to the letter of credit as all of the goods he had obligated to supply were indeed supplied, and at most it was a delay of 8-9 days. The court criticized the importer for expunging the claim against the exporter.
The court ruled that according to the factual version presented by the importer, the delay in question was only 9 days, therefore the importer was criticized for the fact that even after the cargo's arrival to Israel, the importer only released it after 6 additional days, which contradicts his claim that he urgently required the cargo. From the analysis of the facts and time frames, the court reached the conclusion that the importer did not plan his actions correctly in regards to the work schedule with the Nahariya Municipality, and knowingly agreed to a problematic schedule.
In addition, the court analyzed the position and status of the international freight forwarder and his Israeli agent, while distinguishing between the Israeli agent - who acted as a freight forwarder-coordinator, and the international forwarder - who acted as a freight forwarder-carrier;
Regarding the Israeli Agent:
The court accepted the Israeli agent's claim that he was not aware of the demand that the loading would be before February 25th 2009, and that he did not commit to the importer on the time of the goods' arrival to Israel, on the time of the sea transport and/ or on the time of the loading overseas. The court rejected the importer's claim that in his first petition he stated that the shipment is urgent, and accepted the agent's stance that the word "urgent" is not enough and does not constitute an agent's commitment to specific carrier times, as the word "urgent" is commonly used.
The court accepted the agent's claim that he served only as an entity which coordinated and organized for the importer all logistical actions required for the receiving of the cargo in Israel, its release from the port and from customs in Israel, and as a vessel to transfer payments for all service providers [sea carrier/ land carrier/ customs broker]. The court ruled that the Israeli agent was the importer's agent for coordinating the transportation, and it is not possible to claim against him the responsibility of a freight forwarder-carrier. In addition, it was determined that it was not proven that the agent's negligence caused the delay in the loading of the cargo.
Regarding the International Freight Forwarder:
The court claimed that the international freight forwarder acted as a NVOCC sea carrier (freight forwarder-carrier), which bears contractual responsibility towards the various owners of the cargo combined in the shipping container, to transport their cargo to the destination port (as some type of carrier without a ship). Whether the status of the freight forwarder is examined from its issuing of a bill of lading - carrier, or whether it is derived from the essence of the actions performed by him, indeed in both alternatives he is a freight forwarder-carrier, because he is the one which coordinated the transport and selected the sea carrier, collected the cargo, loaded the cargo into the shipping container and issued a bill of lading signed by him. The court stated that even if there was no final date for the arrival of the cargo set by the importer, it does not mean that the international freight forwarder could be negligent, and he bears responsibility for the delay caused by the delayed loading of the cargo which ultimately caused the delay in the arrival of the cargo.
On the other hand, it was majority decided that it is not possible to commit to an exact arrival date, and that this commitment by the international freight forwarder and his agent was not given (not regarding a final destination date for the arrival of the cargo and not regarding the duration of the sea transport), and it is a 9 days delay at most. In the aforementioned case, the court did not find fault in the actions taken by the international freight forwarder and determined that he acted reasonably and coordinated an alternative ship in order to minimize the duration of the delay caused by force majeure - the lockout of the Port of Marseille.
The court ruled that the responsibility of the international freight forwarder, which is a freight forwarder-carrier, is increased personal responsibility, and emphasized that if the freight forwarder-carrier acted in circumstances of forgery or fraud, then the protections provided to him under the Maritime Transport Order would not be held, he is not entitled to relay on the order, and his contractual responsibility is determined according to the responsibility of the public carrier which was customary prior to the order - which is absolute responsibility.
However in this case, as aforementioned, the cargo reached the port of destination intact, there is no claim that it was harmed, and no commitment was given as to the arrival date or duration of the sea transport. The court wondered whether there is absolute responsibility for a several days delay in the loading of the cargo, caused by force majeure - the lockout of the Port of Marseille; and replayed that the law should be that at most the international freight forwarder caused a misrepresentation according to which the cargo was loaded on February 25th 2009 on the Charlotte Borchard ship and the burden to clarify what is the reason behind the delay in the loading of the cargo is transferred to him. In this present case, the freight forwarder proved that the delay was caused by force majeure and that he worked diligently to reduce the delay through the loading onto another ship.
Therefore eventually the claim against the freight forwarder and his agent was rejected, and the importer was charged 11,000 NIS in expenses towards only the Israeli agent. The court ruled that even though the claim against the international freight forwarder is rejected, in these circumstances it shall not rule legal expenses in his favor.
[Civil Case (Haifa Magistrate Court) 8696-04-09 PolyExportan Ltd. vs. Imper Italia S.P.A and others, verdict given on May 7th 2014, Justice Yoav Friedman. The international freight forwarder was represented by our firm].
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This document provides a general summary and is for information purposes only. It is not intended to be comprehensive nor does it constitute legal advice. If you are interested to obtain further information or wish to follow the legal developments on this matter, please contact Adv. Gill Nadel - Chair of the firm's Import, Export and International Trade Law Practice, Tax and Executive Compensation Department. 6089848.-3-+972, phone: Gill.Nadel@goldfarb.comEmail:
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