Drafting Core features of a Harmonised Multimodal Legal Regime A Checklist of What a Multimodal Transport Regime Should Have Prof Dr Irwin Ooi Ui Joo, LL.B(Hons.), LL.M (Cardiff), Ph.D (Cardiff), MCILT Faculty of Law, Universiti Teknologi MARA, Shah Alam Malaysia
Methodology for Drafting, ie Principles to Bear in Mind When Drafting a Multimodal Transport Legal Framework • [1] Draft the harmonised framework with digitisation of the logistics and supply chain in mind. • [2] Language to be kept simple so that industry stakeholders are able to understand duties, liabilities and obligations without the need to resort to a lawyer. • [3] The ASEAN Framework Agreement on Multimodal Transport 2005 will form the basis for this analysis, subject to suggestions for improvements where appropriate. 2
Core Areas (provisional, subject to change depending on consultation, discussion and industry stakeholder feedback)
[1] Formulate key working definitions. Article 1 of AFAMT 2005 • ‘Goods’ specifically includes deck cargo (Missing: A reference to ‘live animals’.) • ‘Multimodal Transport’ refers to ‘International Multimodal Transport’. A least two different modes of transport. Transportation between signatory states. Does not automatically cover ‘internal’ multimodal transport. • ‘Multimodal Transport Operator’ (MTO) is restricted to the principal contractual carrier, ie the person contractually liable for the carriage of goods using multimodal transport. Does not include agents or servants. 4
[1] Formulate key working definitions. Article 1 of AFAMT 2005 • ‘Multimodal Transport Contract’ (MTC) makes it clear that the relationship between the customer (ie consignee / consignor) and MTO is based on a contract of carriage, ie the MTO promising to deliver goods against the payment of freight. (Note: Article 24(1) - But claims with respect to the performance of the multimodal contract of carriage, can be founded in either contract or tort.) • ‘Multimodal Transport Document’ (MTD) provides written evidence of a contract of carriage where the MTO takes charge of the goods plus the obligation to care for and deliver the goods. (Missing: Express recognition of electronic MTD, although strangely Article 4(3) does recognise a ‘signature’ in electronic form.) 5
[2] Key characteristics of a multimodal transport document. Article 5 of AFAMT 2005 • Identification and description of the goods, ie nature, weight and quantity, plus apparent condition. • Identity and/or principal place of business of MTO, Consignor, Consignee. • Date and place of MTO taking charge of the goods. • Place / date / time for delivery. 6
[2] Key characteristics of a multimodal transport document. Article 5 of AFAMT 2005 • Negotiable (or non-negotiable) nature of the document. • Place / date of issue of the document. • Signature of the MTO (or his servant / agent). • Freight due, ie how much, when and by whom. 7
[2] Key characteristics of a multimodal transport document. Article 5 of AFAMT 2005 • Proposed route for transportation of the goods, and any places for transhipment of the goods. • Any other relevant details which are consistent with the applicable laws where the document is issued. 8
[3] Duty of the MTO to exercise due diligence to properly care for the goods in its possession (actual physical and/or constructive possession) from loss, damage or delay. Article 10(1) of AFAMT 2005 • MTO can avoid liability if it shows that it has taken all reasonable measures to avoid the loss, damage, delay. • Burden of proof is reversed here. Usually a cargo claimant, ie consignor/consignee has to prove that there was a failure to exercise due care. 9
[4] Duty of the MTO to use a vehicle / vessel fit for the purpose, eg ‘roadworthy’, ‘railworthy’, ‘seaworthy’, ‘airworthy’. • No express requirement of roadworthiness, railworthiness, airworthiness is provided for. For the purposes of clarity, it is better to have this drafted into the agreement. • In its absence, arguably, this is impliedly a part of the obligation to take due care in Article 10(1) of AFAMT 2005. But clarity of an express term is to be preferred over reliance on a nebulous implied term. 10
[4] Duty of the MTO to use a vehicle / vessel fit for the purpose, eg ‘roadworthy’, ‘railworthy’, ‘seaworthy’, ‘airworthy’. • However, strangely, if the MTO wants to take advantage of the exclusion of liability in Article 12(g), the MTO is required by the Proviso to Article 12 to prove that due diligence was exercised to provide a seaworthy ship at the commencement of the voyage. This is similar to the reversal of the burden of proof found in Article 10(1). 11
[5] Duty of the MTO to have liability insurance, or its equivalent. • Article 30(1)(c) of AFAMT 2005 recognises three specific forms of indemnity: • (a) Liability insurance policy. • (b) Protection and indemnity insurance (mutual insurance cover). • (c) Alternative financial instrument (ie wide enough to include a bank guarantee, but unlike to be used as this is commercially prohibitive … Expensive !!!). 12
[6] Guarantee of the consignor / consignee that goods are properly labelled, marked and packaged. Article 21(1) of AFAMT 2005 • Although not expressly mentioned, it is assumed that this shall be performed in good faith. • The provision could benefit from a warranty of legality of the goods from the consignor / consignee. 13
[7] Duty of consignor to notify of the dangerous nature of the goods deposited with the MTO. • Article 5 of AFAMT 2005 - an express statement of the dangerous nature of the goods must be in the MTD. • Article 21(1) of AFAMT 2005 - Duty to make the relevant declaration / notification 14
[8] Power of the MTO to deal with dangerous goods. • Article 21(3) of AFAMT 2005 - MTO is empowered to unload, destroy or render innocuous dangerous goods, with the Consignor liable to indemnify the MTO for all costs involved. • Article 21(4) - Power cannot be invoked if notice of the dangerous goods is validly given to the MTO. • Article 21(5) - Provision for invoking general average in respect of dangerous goods. 15
[9] Types of recognised ‘liability’ under the multimodal contract of carriage. • Article 10(1) of AFAMT 2005 recognises three distinct categories of loss / damage to cargo. • (a) Non-delivery of Goods (ie missing goods); • (b) Delivery of Damaged Goods; • (c) Delay in delivery of goods (ie which may or may not result in delivery. 16
[10] Standardised exclusion of liability. • Article 12 of AFAMT 2005 - Burden of Proof on the MTO to prove the applicability of the exclusions. • (a) Force majeure / frustration of the contract; • (b) Negligence of the consignor / consignee (or its agent); • (c) Insufficient packaging; • (d) Handling of the goods under the responsibility of the consignor / consignee (or its agent); 17
[10] Standardised exclusion of liability. • (e) Inherent vice of goods; • (f) Strikes; • (g)(i) Negligent navigation / management of a ship used in carriage by sea or inland waters; • (g)(ii) Fire (not caused by the actual fault of the MTO or with the privity of the MTO) • Note: (g)(i) and (g)(ii) are subject to MTO proving that there was due diligence to provide a seaworthy ship. 18
[11] Extension of liability and exclusion of liability to the MTO’s agent’s or servants • Article 8 of AFAMT 2020 - Vicarious liability of the MTO, as the MTO is made ‘responsible’ for: • (a) Servants acting within scope of employment. • (b) Agents used by the MTO for the performance of the contract. • Article 10(1) - It is a defence for the MTO to prove that servants or agents ’took all reasonable measures’. 19
[11] Extension of liability and exclusion of liability to the MTO’s agent’s or servants • Article 12(g)(i) - exclusion that is specific for servants of the carrier where goods are carried by inland waters or by sea. • Article 24(2) - envisages that in addition to the MTO, claims can be made against the MTO’s servants or agents used for the fulfilment of the multimodal contract of carriage. • Note: Better to combine all of this neatly into one Article, rather than having it scattered like this. 20
[12] Provisions on limitation of liability. • Article 14 of AFAMT 2005 - Loss / damage to goods (for sea and land waterways): 666.67 SDR per package or unit; or 2.00 SDR per kg of gross weight; whichever is higher. • Article 16 - Loss / damage to goods (for carriage by road, rail and air): 8.33 SDR per kg of gross weight. • Article 18 - Delay in delivery of goods: An amount not exceeding the equivalent of the freight (as stipulated under the multimodal transport contract of carriage). 21
[12] Provisions on limitation of liability. • Article 20 - Breaking of limit of liability requires proof by consignor / consignee of MTO’s intention / recklessness to damage goods. (Note: Very difficult to prove. Only successful once in a reported case, see The Atlantik Confidence [2016] EWHC 2412) • Article 24(3) - The same formula for breaking the limit of liability applies to servants / agents of the MTO. 22
[13] The regime sets a minimum standard. • Article 27(1) of AFAMT 2005 - Any attempt to go below the minimum standard is void. • Article 27(2) - The MTO is allowed to practice higher standards. 23
[14] Time limit for claims • Article 23 of AFAMT 2020 - 9 months. 24
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