Gil Nadel, Adv.
A common argument: Shipping coordinators are immune from lawsuits
An argument commonly made by international forwarders is that when they do not issue a combined bill of lading (FBL) but instead serve as shipping coordinators on behalf of the importer towards the relevant bodies (marine shippers, continental shippers, etc.)- then they are not responsible for damages and delays in the cargo's arrival and that complaints should be referred to whomever is actually performed the shipping.
A recent decision of the court shows that this argument should not be unquestioningly accepted and that one should check the circumstances of the case and examine what was agreed between the sides. According to the circumstances of the case, the court can rule what is the extent of the international forwarder's responsibility towards the importer, for what he is responsible, and from what is he exempt.
The court: A forwarder can't sit and do nothing
An important decision on this issue was recently given by the Magistrate's Court of Tel Aviv תא 14746/05 (for the plaintiff: Sapir, Adv, for the defendant: Habar, Adv.)
That case involved a cargo of hothouses exported to Montenegro that reached its destination late, due to delays in Koper Port. The international forwarder filed action against the exporter for the shipping charges, while the exporter filed a counter-suit against the international forwarder for compensation for the delay.
At the bottom line, the court obligated the importer to pay the forwarder the shipping charges, but subtracted from the charges a sum of 10,000 NIS for intangible damages (pain and suffering) caused to the exporter (because the exporter did not succeed in proving what amount of financial damage was caused).
The court did not accept the forwarder's stance that it should be viewed as if it were only involved in an arrangement of international shipping and accompanying services, and not dealing with actual shipment of cargo or other actions entailed therein, and therefore that the delay that occurred in Koper Port was not within the forwarder's responsibility.
The court examined the contractual agreement between the forwarder and importer and found that it included “services of local and/or international shipping, including customs representation, logistics, and exhibitions and similarly related services, subject to the pricing proposal should it differ.” Both in the agreement and in the pricing proposal there was no mention that the forwarder would deal solely in arranging the shipment and would not be responsible for cargo tracking and for the quality of service provided by other bodies.
The court also accepted the exporter's claim that the international forwarder gave the impression to it (the forwarder) had the logistical expertise, experience, and abilities necessary to perform the shipment and have it reach its destination at the set time. The fact that the forwarder did not deal solely in “sending the paperwork” and ordering services for its customers, but also in implementing logistical solutions and in managing the shipping, is recognizable both in its functioning in practice and in the documents that it formulated.
The court added that the international forwarder has a duty to supervise and manage the shipment to its destination, even when it acts as a shipping coordinator.
Accordingly, the court ruled that even though there is room to distinguish between the job of the forwarder and the one who actually performs the shipping, the forwarder still has an obligation to act with expertise and reasonable care. The court found that the cargo was delayed in Koper Port for several weeks, and it seems that despite the exporter's repeated requests on the subject, nothing was done to try to solve the problem, like trying to ship the cargo via an alternative method. From this, the court derived that the forwarder did not act with the required reasonable expertise.
Responsibility for providing accurate bills of lading
Here is an additional case, that illuminates the subject from a different perspective. An Israeli exporter committed to supply 2000 tons of old iron rails to China. The exporter contracted with a customs agent to perform the export process and with a marine shipper to perform the shipping to China. The exporter packed the cargo into containers, and the cargo was loaded onto the boat, but later in the journey, the need arose, for reasons that will be specified later, to empty the containers and repack the cargo. This process resulted in additional costs to the exporter and a loss of profits on its part. For these damages, the exporter sued the customs agent (that actually served as an international forwarder coordinating shipping), the marine shipping, and the ship agent.
Regarding the suit against the international forwarder, the suit was based on the fact that the forwarder supplied the marine shipper with an incorrect temporary bill of lading, based on arbitrary data, and including inaccurate information about the weight of the cargo (the bill noted a cargo weight lower than the actual weight).
The court ruled, among other things, that the forwarder was negligent towards the exporter for having issued the temporary bill with arbitrary content and for not have informed the exporter about sending the bill or its content. The customs agent was also negligent for having failed to inform the exporter that if within 24 from sending the temporary bill and until the sailing of the ship a detailed bill of lading would not be given, it is possible that the cargo would not be loaded onto the ship.
At the same time, the court did not oblige the forwarder to compensate the exporter for its damages, since there was no causal relationship between the negligence of the forwarder and the damage caused to the importer. This is because the damage was caused not because of extra cargo in the containers which had not been declared to the marine shipper but because the cargo had not been properly packed. The court ruled that the forwarder need not have expected that the packing had been done improperly, since the forwarder did not participate in packing and only actively dealt with some of the issues routinely handled by international forwarders.
תא 031800/03, Magistrate's Court of Tel Aviv, decision given 23.4.07 (names of sides not listed)
And there are other examples
For other cases in which the court places responsibility on the forwarder (or ship agent) who works as a shipping coordinator, see the following articles:
http://www.nadel-law.co.il/Index.asp?ArticleID=748&CategoryID=86&Page=1
http://www.nadel-law.co.il/Index.asp?ArticleID=147&CategoryID=86&Page=2
http://www.nadel-law.co.il/Index.asp?ArticleID=152&CategoryID=86&Page=2
The above decisions clearly illustrate how responsibility of the forwarder should be checked in cases like these: one should check the general circumstances of the case, including the pricing proposal, the contractual agreement, the behavior of the sides during shipping, etc. One can also derive that every case will be judged on its own based on its circumstances.
Thus it is clear that a forwarder who acts as a shipping coordinator should define the scope of his responsibilities and actions well in the contractual proposal with the client. A vague formulation will work to the detriment of the forwarder, if he is the one to formulate the contractual proposal.
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