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Tuesday, September 10, 2013

Cargo Carriage and Marine Insurance - What constitutes delivery [part 2]

This is in continuation of my earlier post on ‘what constitutes delivery’…. Read the earlier one by clicking this link…... what is delivery !!

The condition pertinent to the liability of the carriage (Article 17) expresses:
- that the Carrier shall be liable for the total or partial loss of the goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery.  (subject of course to exemptions such as wrongful act, neglect of the claimant, inherent gice of the goods or circumstances which the carrier could not avoid and consequences whey they could not prevent), defective condition of packing and the like.  

It is reported that a District Court in Roermond (Netherlands) has given an interlocutory judgment that the Carrier's liability does not end with handing over of CMR note.  It is a reaffirmation of the stand that the liability of the carrier does not end with the handing over of the CMR only.  It is the actual custody of the goods which matters.   It is reported that cause of action arose  out of the transportation by road, ferry and rail of a consignment of printers for Xerox from the Netherlands to Sweden involving transportation by road, ferry and rail.  The Carriers had instructions to park the trailer carrying the cargo at a specified terminal on arrival at Malmo (in Sweden) and the CMR note was to be handed over the Ferry terminal’s offices.  The trailer was to be placed on a train days later for  onward carriage to the final destination interior Sweden.   As it happens, goods were stolen from the truck and the cargo owners lodged claim against the carrier.

bags being unloaded for delivery..


The contention of the road carrier was that they had delivered the terminal at the ferry terminal and theft occurred outside the period of their liability relying on the fact that driver had handed over the CMR note at ferry terminal’s office.    The Court held that mere handing over of the CMR note cannot be construed as delivery.   The interpretation perhaps drives home the point that there has to be physical delivery or handing over possession / custody of the goods.   It has further been clarified that the final judgment is yet to be delivered though this  interlocutory judgment is  considered significantly pronouncing the stance.

In our personal experience, we have had instances where lorry arrives nearer the factory (the final destination where delivery is to be effected) and by the time of its arrival, it was late in the evening or early in the morning, when the recipient factory was in operation; the truck driver generally parks the vehicle in proximity to the factory and goes sleep (even keeping away temporarily) – the delivery to be effected during the working hours of the factory.  Worser still, if there were to be intervening holidays arising out of Sunday or a festivity.  If and when a loss occasioned by fire, theft or any peril occurs – the goods are lost or damaged whilst inside the parking lorry, ready for delivery – can this be construed as the subject matter of insurance having reached its final destination as specified in the Policy ?

The answer perhaps could only be a “NO” – the transit could not be deemed to have come to an end, nor delivery effected by the carrier and the Insurer’s are still on risk when such event occurred.  There is the much need clarity in the new clauses sought to  be used in Indian market.  The revised clauses of 2010 which are yet to be used by most Insurers also, the duration or the period during which Insurers are liable commences from the time the subject matter insured is first moved for the purpose of immediate loading……. And terminates either

-        on completion of unloading from the carrying vehicle at final WH
-        on completion of unloading in any other WH or place of storage which Assured elects to use either for storage
-        when the assured elects to use the carrying  vehicle for storage
-        for transits by rail – expiry of 7 days after arrival of railway wagon at the final destination railway station
for transits by road only until expiry of 7 days after arrival of the vehicle at the final destination town named in the policy.

Marine confounds, confuses but always is interesting for the myriads of  possibilities, challenges and interpretations that it keeps throwing every day !

With regards
S. Sampath Kumar

18th Aug 2011.

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