Arnold Van Steenderen + Charlotte Van Steenderen
Van Steenderen Mainport Lawyers, Rotterdam
The Dutch Freight Forwarders Association (“FENEX”) issued the first edition of its Standard Trading Conditions (“STC” or “Fenex Conditions”) on 15 March 1956. Since then the STC have been regularly reviewed and updated to keep pace with technical developments, changes in the law and court decisions. The Dutch Civil Code (“DCC”) contains in Book 8 (the law on carriage of goods and means of transportation) a specific section dedicated to contracts to forward goods[1]. The Fenex Conditions are supplementary to the non-mandatory provisions in Book 8. According to the DCC a contract to forward goods is a contract whereby one party (the forwarding agent) binds himself towards the other party (the principal) to enter, for the benefit of the latter, into one or more contracts of carriage with a carrier to transport goods which are to be made available by the principal; or, it is a contract whereby the forwarding agent undertakes to include a stipulation for the benefit of the principal in one or more such contracts of carriage (Article 8:60 DCC). From this definition it readily follows that in order to be qualified as a “freight forwarder” the forwarder shall procure that the goods are shipped from A to B.
Due to the very nature of the obligation undertaken by the freight forwarder he shall not be liable for the due performance of the contract of carriage by the carrier. The freight forwarder will without specific instructions received from the customer have full liberty as to the means, route and procedure to be followed in the performance of the services to be provided by him. In the revised 2018 version of the Dutch Forwarding Conditions the “services” to be performed by the freight forwarder are defined as all activities and work, in any form and by whatever name, including those performed by the freight forwarder for or on behalf of the customer. According to this definition a great number of logistic activities performed by the freight forwarder will fall within the scope of the Fenex Conditions. Whereas the section of the DCC referred to hereinbefore deals exclusively with freight forwarding in the strict sense, the 2018 Fenex Conditions are intended to apply to all and any activities of the freight forwarder in the course of business undertaken subject to the conditions with the exception of the freight forwarder carrying out the carriage of goods himself.
The following provisions are new compared to the 2004 version, or deal with topics that have been clarified or amended compared to 2004.
Article 3 (Third Parties)
The customer now gives the freight forwarder free rein to engage the services of third parties to execute the agreement, and to accept the GTC’s of those third parties on behalf and at the risk and expense of the customer, unless agreed otherwise with the customer.
In the 2004 version the acceptance of the GTC’s used by carriers and/or other third parties was not specifically mentioned. Under the 2004 the forwarder was already allowed at all times to accept the documents customarily used by the firms with which he contracted for the purpose of carrying out his orders from the customer (Article 7.1 old). This wording has been maintained in Article 8.2 of the 2018 version.
Article 5 (Customs Work)
The 2004 version was very brief about whether the freight forwarder was also engaged in performance of customs formalities. Article 5.1 (2018) is more or less similar to Article 6.1 of the 2004 version. In the 2018 version it has been made clear that the provision of information by the customer shall imply an order to engage in carrying out customs formalities, however, this order requires explicit written acceptance by the freight forwarder who will not be obliged to accept an order to carry out customs formalities (Article 5.2).
If the freight forwarder becomes aware of information or conditions indicating that the customer has not provided correct and complete information and/or documents relevant to the performance of the agreement he will be entitled to terminate the agreement without any obligation to pay damages resulting therefrom. The obligation of the customer to provide the freight forwarder in good time with any details and documents that are relevant will be dealt with further under Article 9.
Article 6 (Remunerations)
To a large extent Article 6 (6.4-6.6) is new. The freight forwarder is entitled to charge extra for a cost increase as a result of circumstances that are of such a nature that at the time of concluding the agreement it was not deemed necessary to take into account the risk that these circumstances would occur, or that they cannot be attributed to the freight forwarder or when third parties engaged in loading or discharging goods in the evening, at night, on Saturdays or on Sundays or public holidays, charge extra, or in the event of the loading and/or unloading time being inadequate.
The freight forwarder shall not be entitled to charge for demurrage, waiting time, etc. when this was caused by intent or deliberate recklessness on the part of the freight forwarder (Article 6.6).
Article 7 (Insurance)
The new provisions are almost identical to the previous ones in the 2004 version (then Article 5). Omitted to include in the new version is the provision that the freight forwarder, if requested by the customer, shall transfer his right to claim against the insurers if he has taken out the insurance in his own name and not in the name of the principal (Article 5.2 old). We are missing a provision that unless otherwise agreed in writing, the freight forwarder shall not be under an obligation to effect a separate insurance on the goods, but may declare the goods on any open or general policy held by the forwarder. New is also that the freight forwarder shall consult in advance with the client about the use of any special equipment in the performance of its obligations if this equipment does not belong to the freight forwarder’s standard equipment. The consultation should also involve whether the freight forwarder should take out insurance at the customer’s expense to cover the risks associated with the use of such special equipment (Article 7.3).
Article 8 (Delivery Date, Method of Delivery and Routes)
In practice timely performance by the freight forwarder seems of paramount importance to the customer. If a customer prefers a time for delivery of the goods and he states this in his requisition it should be noted that this shall not legally bind the freight forwarder unless arrival of the goods are specified as strict deadlines to be guaranteed by the freight forwarder (Article 8.1).
Also if the method of delivery and/or route is of importance to the customer the freight forwarder should be specifically instructed to do this. Otherwise the method of delivery and route shall be at the freight forwarder’s discretion, including the liberty to accept the documents customarily used by the firms it contracts with for the purpose of performing the agreement.
Article 9 (Commencement of the Services)
In this article the customer’s obligations to supply the goods in suitable packaging timely to the agreed location and to supply the freight forwarder in good time with all relevant information and documents are hammered out. Not only the customer guarantees that the information and documents that it provides are correct and complete, but he also guarantees that the goods made available for carriage to their destination comply with current legislation (Article 9.3). It is understandable that a freight forwarder does not want to incur any liability in respect of the compliance of the goods with the approximately 2,000 Dutch national standards, 6,000 EU standards and 9,000 international standards. The applicable product testing and certification requirements for individual product categories are specified in the various EU Directives and it is reasonable to put compliance therewith on the shoulders of a manufacturer or importer of these goods. There is no provision in the 2018 version for goods the freight forwarder already receives stowed in or on a transport unit (container, trailer, tanker, pallet, or any other device used for carriage of goods). It would have been prudent to include a warranty of the customer that the transport unit is in good condition, and is suitable for the carriage to the intended destination of the goods loaded therein, or thereon.
Article 11 (Liability)
The freight forwarder shall only be liable for damage or loss unless the customer can prove that the damage or loss has been caused by fault or negligence on the part of the freight forwarder or the latter’s employees. In all cases the forwarder’s liability shall be limited to 10,000 SDR per occurrence or series of occurrences with the same cause of damage on the understanding that the liability shall be limited to 4 SDR per kg damaged or lost gross weight. A further limitation of the loss to be indemnified is the invoice value of the goods or the market value, both at the time when the damage occurred (Article 11.4). The liability of the customer and the obligation to hold the freight forwarder free and harmless has been extended compared to the 2004 version. The customer shall be liable for any damage suffered by the freight forwarder as a result of (amongst other things) the non-compliance by the customer of any obligation pursuant to the agreement or to applicable national and/or international legislation, and as a result of any incident that is within the control of the customer, as well as a result of the fault or negligence of the customer and its employees or independent subcontractors that work on behalf of the customer (Article 11.7). Furthermore, the customer shall indemnify the freight forwarder against any third-party claims connected with or ensuing from the damage or loss referred to in Article 11.7 (Article 11.8).
The final paragraphs of Article 11 (11.10, 11.11 and 11.12) have been mirrored from the Dutch Logistics Services Conditions 2014 to protect the freight forwarder from liability based on tort (Article 11.10) and to grant employees and third parties the protection of the exemptions and limitations of liability conferred to the freight forwarder.
Article 17 (Sureties)
The 2004 version only created a right of pledge and a lien on all goods, documents and moneys which the freight forwarder held in its possession as against any party requiring their delivery (Article 19 old). The 2018 version also introduces the right to refuse the delivery of goods, documents and moneys, that the freight forwarder has or will obtain in respect of any party other than the customer and/or the owner of the goods. These rights can be exercised for what is still owed by the customer in relation to previous orders and for any amount payable by way of delivery C.O.D. (Cash-On-Delivery).
Article 18 (Termination of the Agreement)
In the 2004 version there was no provision about termination of the agreement. This Article is rather one-sided phrased in favor of the freight forwarder, e.g. if the freight forwarder consistently imputably fails to fulfil one or more of its obligations the customer may dissolve the agreement with immediate effect after it has notified the forwarder by registered letter giving reasons allowing a period of at least 30 days for fulfilment of the obligations, whereas if the customer consistently imputably fails to fulfil its obligations the freight forwarder may dissolve the agreement after sending a notice in writing and allowing a deadline of at least 14 days for fulfilment of the obligation. However, if the freight forwarder’s interests in the undisturbed conduct of its business would be impaired disproportionally, the freight forwarder may dissolve the agreement without observing a time limit (Article 18.3). Also the freight forwarder can terminate the agreement with immediate effect in the event of insolvency of the customer, whereas there is no provision to that effect for the benefit of the customer should the freight forwarder become insolvent.
Article 20 (Prescription and Limitation)
Notwithstanding the event that the freight forwarder is held liable by third parties for damages every claim is subject to prescription by the expiry of a period of 9 months and every claim vis-à-vis the freight forwarder shall be time-barred by the mere expiry of a period of 18 months (Article 20.1 and 20.2).
Article 23 (Arbitration)
The disputes which may arise between the freight forwarder and its customer shall be subject to arbitration under the Fenex Rules of Arbitration, but the freight forwarder shall be at liberty to bring before the competent Dutch court in the forwarder’s place of business any claims for sums of money due and payable, the indebtedness of which has not been disputed in writing by the other party within four weeks after the invoice date (Article 23.1).
Standard Form of Forwarding Agreement
The Dutch Freight Forwarders Association has also launched a Standard Form of Agreement which will be available to its members to be used in daily operations. By using this standard form the Fenex Conditions will be followed unless specific separate agreements are noted in this standard form.
[1] Section 3, Articles 60-73 DCC