Cargo Claims under UAE law


  • Date: 11/08/2010

Would the UAE recognize that the shipper, the carrier and the consignee are contracting parties to the Bill of Lading?

UAE law recognizes the fact that the bill of lading is evidence of a contract of carriage and the parties to the same are the shipper, the carrier and the consignee, all of whom are bound by the terms of the Bill of Lading.

However, UAW law states that while it may be possible to argue contrary to the contents of the Bill of Lading between the shipper and the carrier, the carrier may not argue contrary to the terms and conditions of the Bill of Lading vis-à-vis the consignee or endorsee who may be an innocent third party and was not a party to the negotiation of the original contract of carriage. The UAE Courts are, for the same reason, reluctant to hold consignees bound by terms on the reverse of a bill of lading, arguing that the consignee as a third party to the original contract had no opportunity to agree with or disagree with the terms of the same.

 

Would the UAE Courts uphold a foreign jurisdiction clause or foreign arbitration clause on the Bill of Lading?

The UAE Courts will not uphold a foreign jurisdiction clause or a foreign arbitration clause on the Bill of Lading as this is contained on the reverse of the bill. The court however may uphold an arbitration clause it if was signed by both parties and agreed in a separate document (for example, a charterparty agreement) and not printed on the reverse of the Bill of Lading.

The UAE Courts will always set aside such jurisdiction or arbitration clause on the reverse of the Bill of Lading between carrier and consignee/endorsee and apply the UAE rules of jurisdiction (as set out in UAE Federal Law No. 11 of 1992 ("the Civil Procedure Code")) to the dispute. However, an arbitration clause agreed in the charter party agreement will be upheld provided that a charter party agreement incorporating such clause is signed by both parties.

Is there any liability on the carrier to correctly stow the cargo and put the vessel in seaworthy condition?

ARTICLE 272

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When is a carrier liable for loss or damage to a consignee/endorsee?

According to Article 275 of the Maritime Code, the carrier will be liable for loss or damage in the following circumstances:

ARTICLE 275

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1. The carrier shall be responsible for loss or damage sustained by the goods during the period from the time he takes delivery of the goods at the port of loading to the time he delivers the same to the person having the right to them at the port of discharge unless it is proved that the said damage or destruction arose out of one of the following causes:

a. Unseaworthiness of the ship, but on condition that the carrier proves that he discharged the obligations set out in Article 272;

b. Errors of navigation or in the management of the vessel on the part of the captain, crew, pilots or other maritime workers;

c. Fire, unless the same occurred through the act or default of the carrier;

d. Perils of the sea or other navigable waters, or dangers or accidents thereof;

e. Act of God;

f. Perils of war;

g. Acts of public enemies;

h. Any detention or constraint by a power, state or people or judicial arrest;

i. Quarantine restrictions;

j. Any strikes or layoffs or any other obstacle such as to prevent continuance of the work in whole or in part;

k. Civil unrest and commotion;

l. Any act or omission on the part of the shipper or owner of the goods or his agent or representative;

m. Shortfall in bulk or weight or any other shortfall arising out a latent defect or from the particular nature of the goods or any defect inherent therein;

n. Insufficiency of packaging;

o. Insufficiency or imperfection of distinguishing marks for the goods;

p. Rescue or attempted rescue of persons or property at sea;

q. Latent defects not discoverable by ordinary examination;

r. Any deviation from course in the course of rescuing or attempting to rescue persons or property at sea or any other deviation for reasonable cause;

s. Any other cause which does not arise out of the default of the carrier or those working under him or his representative. The burden of proof shall be upon the person alleging such cause to show that no default of such persons was instrumental in causing the loss or damage.

2. It shall be permissible for the shipper in the circumstances set out above to prove that the loss or damage arose out of the default of the carrier or the default of those working under him in a manner unconnected with the navigation or management of the vessel.

Would the UAE Courts uphold an endorsement of the Bill of Lading with the words 'Shipper's Load, Stow and Court' or 'Said to Contain' when a claim for damages is brought against the carrier?

UAE law generally exempts the carrier from any liability resulting from the fault or omission of the shipper or any third party (see Article 275 (1) (1) of the Maritime Code). However, the courts in the UAE normally do not uphold the words "Shipper's Load, Stow and Court" or "Said to Contain" printed on the front of the bill of lading and will hold the carrier liable for the damage to the contents of a container or for loss following short landing of the contents of a container which was delivered sealed to the carrier. This is the case even if the seal was intact on delivery to the consignee, and is based on the argument that a carrier, in issuing a clean bill of lading, guarantees the contents of the container as described in that bill of lading. (See Dubai Court of Cassation Judgment No. 43/89 dated 3/2/1990).

However, in cases where damage was caused because of bad stowage and packaging, and the stowage and packaging can be shown to have been carried out by the shipper, some courts in the UAE may find the carrier not liable for the damage caused by poor stowage or packaging (see Article 275 (1) (n). (See Dubai Court of Cassation Judgment No. 171/90 dated 4/11/90 and Judgment No. 1718/91 dated 13/10/92).

Would the UAE Courts recognize the damages caused by "inherent vice" or "latent defect" in the cargo?

UAE Courts recognize that a carrier is not liable for any "inherent vice" or "latent defect" in the goods provided that proper evidence is provided to the court to prove that the damage was caused by a "latent defect" or "inherent vice" (see Article 275 (q). Such damage is understood as an exemption to the generally assumed principle of carrier's liability as set out in Article 275 (1) of the Maritime Code.

 

Would the carrier be liable for damages caused to cargo by an "act of god" or "force majeure"?

The carrier will not be liable for damages to the cargo caused by an "act of god" or "force majeure" pursuant to Article 275 (1) (d) and (e) of the Maritime Code unless the event could have been expected or it could have been avoided or forecast. In such circumstances, the carrier will be liable if he could have forecast the event and taken precautions or could have avoided the same as he has a duty of care to cargo interests in such circumstances. If the carrier wishes to prove an "act of god" in such circumstances, the same is proved by the carrier obtaining evidence of the weather, both in its severity and in its expectation at the place where the vessel sailed at that time (as evidenced by the submission of the vessel's log), and by obtaining English and Dubai Meteorological Office reports on the same as evidence.

Will the UAE Courts review whether the consignee has "title to sue"?

The UAE Courts acknowledge the fact that the bill of lading is either to the bearer or to the order of the shipper, or in the name of the consignee. In such cases (other than the last), proper endorsement on the reverse of the bill of lading has to be made to show that the plaintiff in any court proceedings has "title to sue" or proper endorsement of the bill of lading in his favour.

"Title to sue" may be proven by an endorsement on the bill of lading or by any other document to prove that the plaintiff has proper "title to sue" in the proceedings, such as a letter from a bank saying that the Bill of Lading was actually endorsed by such bank (provided of course that the bank was entitled to make such endorsement).

When would a maritime claim for damaged cargo be time barred?

A maritime claim pursuant to a contract of carriage will be time barred after one year from the date on which the goods were delivered or ought to have been delivered. The time of delivery is when the goods pass through the port gates. Time stops running on the date an action is officially filed before a UAE court. Such specific date is mentioned on the court summons.

However, a recourse claim against a third party by a person against whom a claim has been made will be time barred after the expiry of 90 days from the date the claim was made against him or from the date on which he paid. This 90 day period has in the past also been deemed to include the right of an insurer pursuant to subrogation.

There are also time bar provisions for other shipping activities within the Maritime Code, for example, a one year time-bar in charterparty claims (Article 224), two years in pilotage and towage claims (Articles 314 and 317), two years in marine collision claims (Article 326) and two years for marine insurance claims (Article 399).

What if details and information regarding the cargo provided by the shipper are not correct?

The carrier, when receiving the cargo, must put any "reservation" he may have on the front of the Bill of Lading before accepting delivery of the goods at port of loading. This is called "clausing" the Bill of Lading and any "clause" should be supported by a separate written document from the shipper agreeing to the specific wording of "the clause". The carrier may also have a recourse action against the shipper for any false information provided. However, the carrie r may not argue vis-à-vis a third party consignee or endorsee that some of the information provided was incorrect or incomplete if the bill of lading was issued clean and incorporated such information.

Who would be entitled to take delivery of the goods?

A consignee or endorsee who holds the original Bill of Lading will be entitled to take delivery of the cargo at the port of discharge. If the cargo is delivered to a party who does not present an original bill of lading, the carrier may be liable to the true owner of the cargo in contract and third parties in tort for the value of the cargo and/or damages.

What if there has been a difference in the terms and conditions of the charter party agreement and the Bill of Lading?

In case of differences between the charter party agreement and the Bill of Lading, the charter party agreement will supersede the relationship between the charterer and the owner. However, with regard to the relationship between the charterer and the consignee/endorsee, the terms and conditions of the Bill of Lading will supersede, unless a specific reference in the Bill of Lading was made to incorporate the terms of the charter party agreement.

What if there has been more than one person handling an original Bill of Lading and each has submitted a request to take delivery of the cargo?

Usually there should be one original Bill of Lading in the hands of the consignee/endorsee as ultimate receiver. However, of there has been more than one Bill of Lading issued, preference will be given to the consignee who holds an original Bill of Lading with a prior date of endorsement.

In cases where all endorsement dates are the same, the Master of the vessel may place the cargo into custody of a third party or into the custody of the UAE court until the matter is determined by the court. This would be a recommended course of action in circumstances where there are conflicting claimants holding original bills of lading, or if the Master is put on notice of any possible fraud.

What if the consignee fails to come forward to take delivery of the cargo within reasonable time?

If the consignee fails to come forward despite a notice given by the carrier to take delivery of the cargo, the carrier may put the cargo in the custody of a third party or into the custody of the local court after obtaining a court order for the same. The carrier may also apply to the court to obtain an order to sell the cargo for the payment of any costs, or freight payable in connection therewith.

The carrier also has the option of putting the consignee/endorsee on formal notice of the arrival of the cargo and discharging the same to the port authority's custody until such cargo is auctioned. This is commonly done as there is no cost to this for the carrier or his local agent. Sale of the contents of the container will occur six months from the date of arrival of the cargo at the port. The carrier may however be liable for port charges towards the port authority if the value of the port charges exceeds the amount recovered in the port auction of the goods (this is not usually the case).

What if dangerous cargo was shipped on board a vessel?

If dangerous cargo is shipped on board a vessel, the carrier may discharge all or part of the dangerous cargo or remove the danger at the shipper's cost, or may request the shipper to compensate him for any damages that the cargo may have caused if the carrier was not aware of the fact that the cargo was of a dangerous nature, or if the shipper failed to declare the dangerous nature of the cargo.

Can the carrier carry the cargo on the deck of a vessel?

The carrier may not carry the cargo on deck unless specifically agreed in writing by the shipper of unless the voyage was for coastal carriage only.

Is there any limitation of liability on the carrier's part for cargo claims?

The carrier's limitation of liability is specified under Article 276 of the UAE Maritime Code which states:

Article 276

Would an agreement between the carrier and the shipper to exempt the carrier from any liability be valid on court?

According to UAE law, any agreement to exempt the carrier from liability or negligence for damage to the cargo or to reduce any liability for the same will be null and void against the consignee/endorsee as holder of the original bill of lading.

The carrier however may agree with the shipper to increase his liability provided such a condition is specified in the Bill of Lading provided to the shipper.

However, there is an exception to the above (Article 280 of the Maritime Code), where the shipment is in connection with coastal shipment or the special circumstances of the carriage of a particular type of cargo justifies such an exemption. For such an exemption to be valid, the following conditions must be satisfied:

a. It must not be contrary to a public order or policy.

b. It must not be related to the care which must be exercised by the employees or agents of the carrier or their diligence in connection with the loading, storing, stocking, carrying, preservation and care of the goods being carried at sea or in the discharge thereof (see also Article 272 and Article 275 of the Maritime Code).

c. A Bill of Lading should not be issued.

d. The agreement should be written on a non-negotiable receipt and particulars thereof should be endorsed thereon.

Should a consignee give notice of damage or short landing of the cargo after delivery?

Normally if no notice is given to the carrier of the damage to the goods of the short landing of the cargo after taking d elivery of the cargo, the cargo will be assumed to have been delivered in the same condition as specified in the Bill of Lading (see Article 281 of the Maritime Code). However, the party in question may prove otherwise by evidence according to the Federal Law No. 10 of 1992, "Evidences in Civil Business Transactions Act ("the Evidence Law").

However, notice of damage or loss should be given within three days from the date on which the cargo was received. If a joint survey was carried out, no further notice is required.

Would the carrier be liable for delay in delivery of the cargo?

Article 285

If the cargo was shipped by more than one carrier consecutively, who will be liable for what?

The first carrier who issued the "through" Bill of Lading will be responsible for the cargo until the cargo is discharged and delivered din good condition to the consignee. However, other consecutive carriers may also be liable to the consignee/endorsee in negligence (tort). but not under the Bill of Lading, if their negligence in handling the cargo was proven to have caused damage to the goods. Such an action in tort caries a heavy burden of proof on the party alleging negligence in UAE Law. Any claimant needs to prove: (a) the loss or damage was incurred on the tortfeasor's leg of the voyage,; and (b) the cause of the loss or damage was directly caused by the negligence of the tortfeasor.

A "through" Bill of Lading carrier may claim against the subsequent carrier in contract by way of recourse if the "through" Bill of Lading carrier was found liable for loss or damage on the leg of the voyage under the responsibility of the second carrier. This is, of course, provided the contractual link between the two carriers is proven.

Would it be possible for the consignee to bring an action against the owners and the charterers of the vessel jointly in one set of proceedings?

it is common in the UAE for a consignee to bring an action against both owners and charterers. It is also possible to bring proceedings against owners, charterers and NVOC issuers of the Bill of Lading and/or "slot" charterers. However, it is established in the UAE that the party who will be responsible to the claimant in the proceedings is normally the party who contracted with the shipper to carry the goods, whether it was the owners, the charters or another party who issued the Bill of Lading.

Normally, the court takes into consideration the identity of the party who has issued the Bill of Lading and the identity of the carrier shown in the bottom right segment of the Bill of Lading. The court may also look at the terms on the reverse of the Bill of Lading to identify the carrier, but will not take any "identity of the carrier" clause on the reverse into account if the same is against the interests of the consignee/endorsee. Therefore, on a number of occasions, the court may discharge the action filed against the owners or charterers or both, as the case may be, depending who actually issued the Bill of Lading as carrier. Also, the court may find parties jointly and severally liable in circumstances where it is not possible to tell who is the actual carrier from the front of the Bill of Lading.

Is it possible for the consignee of the shipper to sue the shipping agent jointly with the carrier?

It is established by various court judgements in the UAE that the shipping agent is not liable for any claim under the Bill of Lading as the agent is not a party to the contract of carriage. The only time when the court will find the agent liable is if the agent can be proved to have committed a personal fault or negligence causing damage to the goods. The agent's liability in such case will be negligence in its personal capacity, and not as agent.

Is there a separate admiralty court in the UAE to hear maritime cases?

Maritime cases are normally heard before the civil courts in the UAE. There are no specialised admiralty courts in the UAE to hear shipping cases, although some of the individual judges do have significant shipping experience.

Cases are conducted in the Arabic language and arguments are carried out by exchange of written pleadings and submission of documents by either party before the case is reserved for judgment. However, "ex parte" applications and objection hearings can sometimes require verbal argument in court or at the judge's chambers.

Would the local court detain the Master or impound his passport if there is a claim against the owner of the vessel?

The UAE court will not usually detain the Master or restrict him from leaving the country nor will the court impound his passport even if there is an arrest on the vessel pursuant to a cargo claim. The Master will only be detained on his passport impounded if there has been an allegation as to a crime in accordance with the UAE Federal Law No. 3 of 1987 ("the Penal Code") committed on board of the vessel or with regard to documents, such as commercial fraud, damage caused by a collision involving another vessel or to another party's property, or in relation to the death or injury of a crew member on board the vessel.

If allegations are made against the Master of the vessel, the Master will be asked not to leave the UAE unless proper security is provided until the criminal case is determined by a final judgment. This will not be applicable to civil cases.

Would a claimant against the owners or the charterers of a vessel be able to serve the agent of the vessel and would such a service be considered as good service?

A claimant may serve a court summons on the owner of a vessel if they have a place of domicile in the UAE or a place of business via their shipping agent. Service on the shipping agent acting on behalf of the owners or the charterers will be considered good service for the purpose of UAE proceedings.

If, however, the owner or charterers have no representative in the UAE, service must be effected on their address in their country of domicile through diplomatic channels. service through diplomatic channels is extremely slow. In cases where the plaintiff has no knowledge of the address of the defendant or its whereabouts, he may request the court to give special permission to effect service by way of publication in a local newspaper which may or may not be accepted by the judge concerned.

Would the court rely on an expert opinion in court cases?

The court often considers the expert opinions obtained by each party. Even if the survey or the expert's opinion was not carried out jointly or by consent, the court will assess he respective expert's opinions and may rely on such opinions in giving judgment, if the court thinks that the opinion is reasonable and justified. Surveyors should be prepared to attend court as witnesses to support their survey reports if required, although in practice, surveyors are rarely called as witnesses. On many occasions, the court also refers cases to independent "court experts" registered with the court to evaluate the two opinions given by the parties experts or to assess the matter and provide the court with a technical summary of the case.

Court experts are only instructed by the court to deal with technical issues and facts and have no right to give an opinion on the legal issues involved in the case.

1. The carrier shall be responsible for delay in delivering the goods unless it is proved that the delay arises out of one of the causes set out in Article 275.

2. The carrier shall be deemed to have made delay in delivering the goods if he does not deliver the goods at the time agreed, and in the absence of such an agreement if he does not deliver them at the time at which an ordinary carrier would deliver them in similar circumstances.

The carrier will be liable for delay in discharging the cargo unless he provides evidence that the delay was caused by one of the provisions of Article 275 of the Maritime Code referred to above. The consignee/endorsee will, of course, have to prove his actual loss by way of evidence.

1. The liability of the carrier in all circumstances for loss or damage suffered by the goods shall be limited to a sum not exceeding ten thousand dirhams for each package or unit taken as a basis in computing the freight, or a sum not exceeding thirty dirhams per kilogram per gross weight of the goods, whichever is the higher limit.

2. If packages or units are grouped in cases, boxes or other containers and the bill if lading states the number of packages or units contained in each container, then each one shall be deemed to be a package or unit in connection with the fixing of the upper limit of liability and if the container is not owned or provided by the carrier and it is lost or destroyed it shall of itself be deemed to be an independent package or unit.

3. It shall not be permissible for the carrier to limit his liability as against the shipper if the shipper has provided particulars, before the loading takes place, of the nature and value of the goods and the particular importance attaching to the preservation thereof, and such particulars are set out on the bill of lading. The said particulars shall be deemed to be proof of the accuracy of the value set out by the shipper of the goods and it shall be permissible for the carrier to prove the contrary.

4. Special agreement may be reached between the shipper and the carrier or his representative to specify an upper limit of liability of the carrier different from the limit set out in this Article but provided that it may not be less than it.

5. In no cases shall the carrier be responsible for loss or damage sustained by the goods if the shipper has deliberately stated false particulars on the bill of lading relating to the nature of the goods.

In most circumstances, the carrier may limit his liability to the higher of Dhs 10,000 per package or Dhs 30 per kilogram of gross weight of the goods, and court judgments have upheld the carrier's right to limitation of liability under Article 276.

 

1

2. The carrier must also use the necessary care in loading, stowing, stacking, arranging, carrying, protecting, discharging and delivering the goods.

. The carrier must before setting sail and upon the commencement of a voyage use the necessary care to put the vessel in a seaworthy condition and to fit it out, man it and provision it properly. He must prepare the holds and cold rooms and other parts of the vessel to receive, carry and preserve the goods.

According to the Maritime Code, the carrier has a responsibility to put the vessel in a seaworthy condition suitable for the carriage of the goods and also has the responsibility, unless agreed otherwise, to stow and store the cargo within the hold of the vessel and to carry the same in good safe condition from the port of loading to the port of discharge.

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