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INDEX OF CLAIMS PROCEDURES FOR INT'L OCEAN FREIGHT

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1. Overview of Ocean Cargo Claims

2. Sources of Ocean Cargo Claims Rules

a. Freight Forwarders (Non NVOCC) Not Liable For Cargo Damage Under U.S. Law

3. Claims Procedures For Ocean Freight

a. Written Notice of Loss

b. Why Such A Short Time?

c. Filing An Ocean Cargo Claim

d. Ocean Cargo Limits of Liability

e. Ocean Cargo Time For Filing Suit - Statute of Limitation & Time Bar

f. Ocean Notice Requirements

g. Contents of Written Claims Notices

h. Written Notice To Cargo Underwriter

i. Preserve The Evidence

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6. The Photo Gallery of Air & Ocean Cargo Loss

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Overview of Ocean Cargo Claims

Since the age of exploration it has been the general public policy of world trading nations that carrier liability for cargo loss & damage be limited. The goals for such policy have been to:

1.] Encourage carriers to face the uncertainties of International shipping without undue risk;

2.] Encourage shippers to purchase cargo insurance;

3.] Spread the risks of International shipping through a large group of insurance underwriters and shippers.

Current International laws governing the carriage of goods by sea had their beginning over one hundred years ago when the United States passed the Harter Act. Any laws that continue for one hundred years during a period of intense change must be viewed as having been inspired for their time.

A first attempt to create a uniform set of International cargo claim rules came with the Hague Rules of 1924. The Hague Rules established minimum terms and conditions for bills of lading covering the maritime transport of goods.

The U.S. Carriage of Goods by Sea Act of 1936 (COGSA) adopted the basic structures of the Hague Rules of 1924 . Thus from 1936 to 1968, the shipping world experienced some level of uniformity where the administration of cargo claims was concerned. There were two general exceptions being; a.) a small number of nations who adopted the Hamburg Rules, and b.) those nations which have not adopted International rules.

In 1968 the Brussels Protocol to the Hague Rules was enacted. Now referred to as the Hague-Visby Rules, this is the most widely followed current International standard. International groups such as FIATA have pleaded with the United States to adopt Hague-Visby, thus bringing most of the world in line with a single elegant standard. The U.S. thus far refuses.

Instead, the U.S. may once again go it's own way. COGSA may soon undergo major revisions with the Carriage of Goods By Sea Act of 1999 which has been pending before Congress for some time. The proposed law seeks to extend carrier liability to all ocean cargo service providers, such as CFS stations & truckers in the U.S.. Fears by some that "New COGSA" will extend the reach of U.S. law into other nations is unfounded. New definitions of "contracting carrier" and "performing carrier" are provided. The damage limitation is increased and brought closer to Hague-Visby. Watch for important changes to the current law.

The full texts of all the Internaional air & ocean cargo laws are available at our Transport Law Navigator feature.

To locate the carrier's limitation of liability for a particular case, the claimant should look to two basic sources:

1.] The reverse side of the ocean bill of lading should be reviewed in terms of the stated damage limit and the controlling law;

2.] The controlling law must be reviewed, unusually COGSA, Hague, Hague-Visby or Hamburg Rules.

 

Claims Procedures For Ocean Freight

The Carriage of Goods by Sea Act (COGSA) 46 U.S.C. App. 1300 et seq. was adopted by the United States in 1936 from the Hague Rules to govern the rights and responsibilities of carriers and shippers of goods by sea. Unlike the Warsaw Convention for international air transport, COGSA does not defeat a claim for failure to provide timely written notice.

COGSA applies "by force of law" from the time the goods are loaded on board the ocean carrier to the time they are discharged from the vessel. This period has often been referred to as "tackle to tackle", referring to the ship's unloading equipment. However, bills of lading from most ocean carriers extend the period of applicability "by force of contract" from the time of receipt, until delivery.

Written Notice of Loss:

The written notice of loss must be provided to the carrier or carrier's agent at the port of discharge. If the loss or damage can be readily seen, the written notice must be provided before or at the time of removal of the goods into the custody of the person entitled to delivery. If the loss or damage is not apparent, written notice must be given to the carrier or carrier's agent within three (3) days of delivery. Failure to provide such notice is not fatal to a claim, but it does create a presumption that the goods were delivered in good order & condition. On failing to give timely notice, a claimant must then overcome the burden by demonstrating that the damage occurred before delivery.

Why Such A Short Time?

1. The carrier must be given an opportunity to investigate the circumstances of the loss or damage;

2. To avoid fraudulent claims.

Filing An Ocean Cargo Claim

Make immediate inspection of each package before signing delivery receipt. Take proper exceptions on the delivery receipt in respect to all loss or damage existing at the time of taking delivery. It is most important that exact exceptions be taken in writing on the delivery receipt as to the conditions of the consignment and a copy of the delivery receipt must be retained for your claim file. Take photographs where applicable.

Contact a surveyor to assess the loss/damage immediately. The consignee should promptly notify a surveyor as soon as loss or damage is discovered. The consignee should refer to the back of the original certificate or call the Insurance company for a surveyor in their area. They may also use any surveyor who is approved by Lloyd's of London or the American Institute of Marine Underwriters. Surveyors are neither settling agents nor affiliated with the insurance company. Rather they are independents who report the facts to the insurance company and have the responsibility to determine the amount of loss. Usually the insurance company will pay surveyors directly for their services. However, in situations where a surveyor requires up-front payment, the insurance company will reimburse the claimant. Contact the Insurance Company immediately. In addition, a letter notifying the Insurer of the claim is required.

Verify that the seal numbers on marine containers match the document numbers. Also be alert when a seal is broken to the possibility that cargo may have been pilfered. Retain all products and packing until you are advised otherwise by the Insurance Company.

Notify delivering carrier of any shipment damage immediately and have a representative come out to inspect and write a damage report. Write to all carriers placing them on notice of claim. There are statutes of limitation to notify the carrier of loss, damage, or non-delivery. Retain all copies of the shipping documents. Generally the following documents will be required to settle a claim:

1. Proof of Insurance: Declaration Form or Original Certificate

2. Commercial Invoices

3. Non-negotiable copy of bill of lading or air waybill (front and back)

4. Claim Statement (an itemization of loss/damage claimed).

5. Copy of letter(s) to carrier(s) giving notice of claim.

6. Carrier's reply(s) if any.

7. Delivery receipts with exceptions noted.

8. Photographs (when applicable).

9. Survey report (when applicable).

10. Packing List.

11. Repair estimates (when applicable)

Additional documents may be requested at a later date.

Ocean Cargo Limits of Liability

Damage Limit U.S. COGSA: $500 per package or customary freight unit for shipments to/from the U.S.

Damage Limit Hague-Visby Rules : (Modification of Hague not adopted in U.S.) Notice of loss or damage must be given at port of discharge before or at the time of removal of the goods unless loss or damage is not apparent, in which case it must be given within 3 days of delivery. Limit is 666.7 SDR per package or unit or 2 SDR per kilo of weight, whichever is higher.

Damage Limit Hamburg Rules: (Modification of Hague not adopted in US). Limit: 835 SDR per package or 2.5 SDR per kilo of gross weight for damage. In the case of delay, 2 and 1/2 times the freight charges for delayed goods. Adopted by only about 2% of the world.

Ocean Cargo Time For Filing Suit (Statute of Limitation)

Limit For U.S. COGSA: One year from arrival of the goods, or when they should have arrived.

Limit For Hague-Visby Rules : One year from arrival of the goods, or when they should have arrived.

Limit For Hamburg Rules: Two years from arrival of the goods, or when they should have arrived.

Ocean Notice Requirements

Ocean: 3 days written notice to raise presumption of carrier responsibility.

Contents of Written Claims Notices:

Although there are no statutory requirements for the contents of written notices, shippers /consignees should provide the following details to the carrier or its agent:

(1) Name of Shipper

(2) Name of Consignee

(3) Bill of Lading Number (copy of bill of lading)

(4) Vessel Name and Voyage

(5) Date shipment Delivered to Carrier

(6) Place of Delivery

(7) Port of Loading

(8) Port of Destination

(9) Description of Goods

(A) Description of Goods Lost or Damaged

(B) Brief Statement of How The Goods Were Lost or Damaged

(C) Damage Amount, if known

 The notice of damage may be simply written on the bill of lading or on the receipt upon delivery. This process is known as "taking exceptions." Separate written notice should be sent by certified or registered mail, return receipt requested or via courier to the carrier or its agent, to the forwarder, to the NVOCC, and to all involved.

Written Notice To Cargo Underwriter. Do not forget to notify the marine cargo insurance underwriter in writing immediately. Such notice is a requirement of your insurance policy. Failure to notify your insurance company may invalidate your claim. Failure to timely notify the carrier of loss or damage may invalidate your insurance claim. Read your insurance policy with great care, before shipping the goods.

Preserve The Evidence: It is highly suggested that no sale/salvage occur until BOTH the carrier and the cargo underwriter have had a reasonable opportunity to inspect. Take photos of your cargo. Retain all packing material. Throw nothing away.

 

Marine Underwriters of Southern California

  

 * The Cargo Letter does not provide legal advice applicable to specific situations. The information provided is believed generally reliable, but should be confirmed through the current text of cited laws and authorities. It is understood that all laws & authorities are subject to change without notice to the public. Where specific situations or the conduct of your business are concerned, it is important to consult your company attorney or advisor directly. The Cargo Letter cannot be responsible for failure to follow these instructions.

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* The Cargo Letter does not provide legal advice applicable to specific situations. The information provided is believed generally reliable, but should be confirmed through the current text of cited laws and authorities. It is understood that all laws & authorities are subject to change without notice to the public. Where specific situations or the conduct of your business are concerned, it is important to consult your company attorney or advisor directly. The Cargo Letter cannot be responsible for failure to follow these instructions.