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Qualifying Statements in Bills of Lading - Goods in a Sealed Container - Forwarding and Consolidation Practice

by Tony Young

At a recent meeting of international maritime lawyers concerns were expressed regarding containerized cargo with a qualifying clause in the carrier's bill of lading such as "said to contain" or "shipper’s load, stow, and count." What was the value of that clause and who has the burden of proof?

One opinion expressed was that the burden should not be on the carrier, which had no idea what was in the container, and which did its best to qualify the statement. Another comment was directed at the position under Canadian law that the carrier, having made a statement in the transport document regarding the goods, should bear the burden rather than the innocent consignee.

A US delegate noted that the buyer and the seller both wanted the carrier to include the description of the goods for commercial purposes. The original intent of the Hague Rules was to allow the carrier to clause such a description that it was unable to verify. If the container is delivered undamaged with the seal intact, then the description should not constitute prima facie evidence of what was in the container. But if the container is damaged or the seal is breached, then the description is prima facie evidence, but the carrier may still dispute it (if the carrier can sustain the burden of proof that is now placed on it). The conclusion of this speaker was that this is a practical solution, which was acceptable to the commercial interests in the United States.

It is important to fully understand the real life role (or roles) of freight forwarders in the carriage of goods by water.

In Asia, it is common practice to utilize so-called "go-downs" to stuff ocean going containers. Because of narrow streets and lack of inland infrastructure and inaccessibility of empty container positioning, it is common practice for shippers in Asian countries to deliver goods loose to a warehouse or a container stuffing area called "go-downs" typically located near container terminals. As small lorries (open trucks) deliver cartons loose, the goods are tallied and receipts are signed. Once all the goods have been accounted for, containers are stuffed and drayed to the ocean carrier's terminal for eventual loading on vessels.

Typical terms of sale would be FOB or FCA. Technically, if FOB, the container stuffing at the go-downs would be seller's responsibility, whereas, on FCA, it would be buyer's. In either case, ocean carriers are usually not involved with the tallying and container stuffing. Hence their issuance of "said to contain" or "shipper's load, stow and count" bills of lading.

What is important to understand is that the actual container stuffing in most cases is done by a third party: neither shipper nor ocean carrier. The third party is usually a freight forwarder. However, the role of the freight forwarder in this respect is that of either shipper or consignee's nominated agent and the scope is prior to the commencement of the contract of carriage, which is typically tackle-to-tackle. (Container stuffing at a go-down is "pre-carriage".) Often, with large shippers, especially large electronics manufacturers, the nominated freight forwarder actually operates from within the facilities of the seller, as the seller's outsourced "shipping department".

With respect to the concern about "said to contain" clauses, the answer is quite clear. The idea that a shipper or consignee hires a freight forwarder to stuff containers for them as precarriage agent is misconstrued. The contract of carriage should commence the moment the freight forwarder receives the goods into its custody. Thus when it stuffs the container, a forwarder should not be acting as the shipper or consignee's agent, but as a "conventional" or "break-bulk" carrier, or as an agent of one. Therefore, the forwarder is in a position to be able to issue a traditional clean on board, unclaused bill of lading witnessing the actual size, weight and piece count of the goods packed into a container and be responsible for the proper stowage within the container just like a master of a cargo ship in the old days.

The forwarder's bill of lading answers the "said to contain" and "shipper's load stow and count" problem. The FIATA FBL with its UNCTADD/ICC Rules even offers a 666.67 SDR per package pre-loading and post-discharge liability. It is an appropriate contract of carriage that solves the container claims problem, not the ocean carrier's necessarily claused bill of lading for a container loaded by a third party.

Still, forwarder and shipper can agree that the forwarder provides it services as agent for the shipper, and acts shipper's agent in arranging for contracts of carriage between the shipper and a common carrier. In those circumstances, no statute ought to be necessary to affirm his obvious agency role.

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