Ed note: this is part 2 of an article in two parts; the first part is posted here.
4) NSAB 2015 and the Freight Forwarder’s legal position
4.1) Applicability of NSAB 2015
As stated in the preamble to NSAB 2015, the terms are a result of negotiations between the Nordic Association of Freight Forwarders and the shippers’ organizations in each of the Nordic countries.
This means that NSAB 2015 are considered commercially balanced and thus as an agreed document. Accordingly, a mere reference to these terms during negotiations between the parties will normally prove sufficient to regard the terms as incorporated.
Moreover, if the parties have a long-term cooperation based on NSAB, these terms will often be considered as generally incorporated, even though no specific reference to NSAB may have been made in respect of each individual booking.
Having said that, it is nevertheless still a requirement that the parties have had the intention to incorporate NSAB, either expressly or implied, in order that these terms be considered part of the contract. Thus, if NSAB have not been referred to by any of the parties, those terms will not apply.
The NSAB are recognized in the freight forwarding business, are generally accepted business standards and are often referred to as the provisions to apply, unless otherwise agreed specifically in the contract
4.2) The freight forwarder as intermediary or contractual party
Historically, it has often in disputes created uncertainties whether the freight forwarder had acted as contractual party or merely as an intermediary without contractual liability.
The freight forwarder’s services have changed during the years and today services provided by the freight forwarders are almost without exception offered in his own name and for his own account.
This change of the freight forwarder’s legal position has been reflected in the revisions of NSAB through the years. However, prior to the latest revision, it still happened that the freight forwarder, in case loss or damage of the goods occurred, claimed that he did not act with contractual liability, but referred the customer to pursue his claim against the sub-contracting carrier. Uncertainties thus still existed, the reason why the shippers in connection with the latest revision of NSAB had a strong preference to have included stipulations which more clearly stated the legal status of the freight forwarder.
With NSAB 2015 the freight forwarder’s legal position vis-à-vis the customer has now been more apparent. As a main rule, the freight forwarder is to be considered as a contractual party in all assignments. The freight forwarder is to be considered as intermediary only in connection with services described in section 3(c) of NSAB 2015 as follows:
“… if the freight forwarder does not undertake such services in his own name or on his own account and on the condition that the freight forwarder specifies to the customer that the services are undertaken solely as intermediary.”
Accordingly, with these provisions it will be extremely difficult for a freight forwarder to claim being an intermediary only, and in any case it requires that the freight forwarder had duly informed the customer that he merely accepted the assignment as intermediary.
It is probably of most relevance for a freight forwarder to accept assignment as intermediary in respect of specific additional services rather than for the entire assignment. This may be the situation, if he as an additional service to a contract of carriage subsequently offer to assist with e.g. insurance matters or packing of the goods carried out by a third party recommended by him. However, the requirement quoted above has still to be complied with in respect of such supplementary assistance in order for the freight forward to be considered as intermediary.
Even if NSAB is not incorporated, case law in Denmark demonstrates that it is extremely difficult for a freight forwarder to claim that he had acted as intermediary only. In case NSAB has not been incorporated, the requirement would most likely be similar to the provision in section 3(c) of NSAB 2015, at least it is required that the freight forwarder does not take any profit himself for the services offered except for handling fees etc.
4.3) The liability of the freight forwarder
According to section 15 of NSAB, the freight forwarder is prima facie liable for damage to, loss of or depreciation of goods which occurs during the carriage. A number of specific exceptions from liability is listed in section 16 of NSAB, of which in particular exemptions for loss or damage caused by fault or neglect of the customer and loss or damage caused by circumstances which the freight forwarder could not avoid or consequences which the freight forwarder was unable to prevent, is of specific relevance.
In general, the liability scenario in NSAB 2015 is quite similar to those in the CMR Convention
In case a certain mode of transport has been expressly agreed upon or it has been proven that the loss, depreciation, damage or delay has occurred whilst the goods were carried by a specific mode of transport, the rules applicable for such transport shall apply according to the network clause as per section 2 of NSAB 2015. The provisions of the network clause is quite similar to those known from FIATA-Multimodal Transport Bill of Lading. However, the network clause not only applies when mandatory legislation applies in respect of such specific mode of transport, but as well in case commonly used conditions apply with respect to such specific mode of transport.
The network clause applies not only in relation to liability and limitation, but as well in relation to notice of claim (section 27) and time-bar (section 28).
4.5) -The freight forwarder’s limitation of liability
The freight forwarder’s limitation of liability is divided into three categories as per section 21 of NSAB 2015:
- a) If the liability is due to loss of, depreciation of or damage to the goods, see section 21, i.e. transport related occurrences, it is limited to SDR 8.33 per kg (gross), thus equivalent to the limitation in the CMR Convention.
b)The liability in case of delay is similar to the CMR Convention, limited to the amount of the freight.
c) Contrary to the previous revisions of NSAB, NSAB 2015 introduces an additional limitation of SDR 100,000 per assignment, which applies for all other losses for which the freight forwarder is liable.
This additional limitation applies universally and covers all other liabilities of the freight forwarder not due to loss of, damage to or delay of the goods. With this additional limitation the freight forwarder is protected from limitation in respect of all losses in relation to the freight forwarding services provided. This includes e.g. delivery of goods to the wrong consignee as well as other non-compliance of any of the freight forwarder’s contractual obligations according to the contract.
4.6) The possibility of breaking the limitation
According to the previous editions of NSAB, it was not possible to break the limitation of liability, unless caused intentionally. If damage or loss was the result of gross negligence, the freight forwarder was – contrary to the CMR Convention – still entitled to invoke the limitation of liability in NSAB. [N1]
In NSAB 2015 this principle has been substantially amended. According to section 6 of NSAB, the freight forwarder is not entitled to invoke the limitations, if loss or damage has been caused by gross negligence of the freight forwarder or his own employees.
On the other hand, if the gross negligence is due to the freight forwarder’s subcontractors – and thus beyond his control – the freight forwarder will still benefit from the limitation rules.
In order to establish gross negligence, the claimant has to demonstrate the de facto cause of the damage, loss or delay in question. It is therefore not sufficient simply to demonstrate that the freight forwarder has not been able to explain how the goods were lost in order to establish gross negligence. This principle follows from section 6(3) of NSAB 2015.
4.7) Loading and unloading, stowing and securing – who is responsible?
If no specific agreement has been made as to the responsibility for loading and unloading, or for stowing and securing of goods, it has often proved difficult to place liability for damage caused in relation to these operations. Moreover, the driver often assists with these operations which thus raises the additional question, on whose behalf he acted in case of damage due to e.g. improper stowing or securing.
In NSAB 2015 it is now specified that – without any agreement to the contrary – it is the customer’s obligation to arrange loading and unloading of the goods, whereas it is the freight forwarder’s obligation to arrange stowing and securing of the goods.
If the driver assists with these tasks, he does so on behalf of the party with whom the obligation in question rests.
4.8) Misdelivery and cross-labeling
The previous editions of NSAB did not contain specific provisions dealing with the freight forwarder’s liability in case of misdelivery. Consequently, if goods had been carried to the wrong destination, and the transshipment costs proved to be considerable, the freight forwarder in some cases took the position that he considered the goods as a (constructive) total loss and offered compensation equivalent to the limitation amount of SDR 8.33, with the consequence that he was relieved from further transport obligations.
This was not considered fair from the customers’ point of view, considering it is the freight forwarder’s fundamental contractual obligation to arrange the carriage and to ensure that goods are safely carried to the destination agreed upon. Any failure to comply with this obligation should not be settled simply by payment of an unsubstantial limitation amount.
Consequently, it has now been added, see section 20(b) of NSAB 2015, that in case of misdelivery, the freight forwarder still remains responsible for redelivery of the goods to the agreed destination using the same or similar means of transportation. If the freight forwarder fails for reasons within his control to redeliver the goods to the agreed destination, he will be obliged to pay a compensation limited to the invoice value of goods.
4.9) Storage and warehousing
Section 25 of NSAB 2015 contains specific provisions regulating storage and warehousing services.
In case the freight forwarder undertakes storage and warehousing of goods, he is obliged – unless otherwise agreed – to take out cargo insurance for the risk of fire, water and burglary in his own name and for the account of the customer based upon the invoice value + 10%. In turn, if such insurance has been taken out, the freight forwarder will not be responsible for damage caused by such risks.
If the freight forwarder fails to take out such insurance, it might very well be considered as gross negligence, whereby his rights to limit his liability will be lost.
Should the goods stored become lost or damaged due to other risks than those described above, the SDR 8.33 limitation for loss of or damage to the goods will still apply.
Moreover, a further global limitation of SDR 500,000 applies with respect to the freight forwarder’s total liability to all customers with regard to damage occurring on one and the same occasion. The objective of this provision is to protect the freight forwarder from the significant consolidated risk in case of e.g. large fire or water damage in a warehouse. [N2]
This global limitation can be set aside like other limitations, should the claimant be able to prove that damage is due to either the freight forwarder or his employees’ gross negligence.
[N1] The possibility for the customer to breach limitation in case of gross negligence has been tested by the courts in two Supreme Court cases; U.2005.2438H and U.2006.632H. In both these judgments the Supreme Court upheld the provisions and concluded that the freight forwarder was well protected by limitation, even in case of the gross negligence scenario.
[N2] This provision was added as a consequence of a huge fire in a warehouse belonging to a Danish freight forwarder Mammen & Drescher in 1989. The freight forwarder was faced with a substantial total claim amount from a number of customers which would have ruined the company, should they have been held liable for the fire, see the Supreme Court’s judgment U.1995.856.