Saudi Arabia - Time Bars

Date: 31/01/2017
Author: Hassan Omar
Source: Mutual Marine Services Al Mushtaraka Ltd.
Saudi Arabia - Time Bars

The time bar in Saudi as per the new Saudi Arabia COGSA rules as follows:

Article 46

An action for a claim for any right connected with the contract of carriage shall lapse upon the expiration of 365 days from:

  1. the time of delivery of the goods in the event that they have suffered total or partial loss or damage;
  2. the time of delivery of the goods in the event of delivery of delay beyond the time agreed;
  3. the time at which the goods are deemed to have been lost under Article 25(5) of the Rules

The new rules came into force in April 2013. I would like to add that the new rules are only Ministerial order, not legislation. However, during our recent discussion with the local lawyers  we would like to  refer to the commercial court law which is what the courts appear to use.

Time bar in Saudi Regulations is governed by the following:
 
The Commercial Court Regulation Article (427): (The claims of the freight of the ship, and the pensions and wages of the shipmaster and navigators and the rest of the service people used on it, and fulfilling that and giving the amounts owed by the passengers, and delivering the shipped goods, all shall be returned by the opponent by the passage of time if one year has passed since its arrival to the place conditioned for it to reach, as well as the claims related to foods given by the order of the shipmaster to the navigators and the rest of the ship officers and servants shall be returned by the passage of time if one year has passed since giving it.
 
The New Saudi Arabian Carriage of Goods by Sea Rules Article (48): An action for a claim for any right connected with the contract of carriage shall lapse upon the expiration of 365 days from:

  1. the time of delivery of the goods in the event that they have suffered total or partial loss or
    damage;
  2. the time of delivery of the goods in the event of delivery of delay beyond the time agreed.
  3. the time at which the goods are deemed to have been lost under Article 25(7) of the Rules.


The new Saudi COGSA rules now state time bar is 365 days, as such if no claim is presented within the one year it will be time barred, the old rules of the 3 years to prosecute etc is no longer applicable.

If any insurance company or recovery agent attempts to pursue a claim under subrogation, it should be noted that the commercial court has no jurisdiction. Insurance related disputes fall under the jurisdiction of the new Insurance Tribunal which falls under the umbrella of the Saudi Arabia Monetary Agency (SAMA). However, this tribunal is likewise expected to have to apply commercially oriented regulation as well as statute law.

Relevant articles from the Saudi COGSA rules as follows:

Rights and obligations of the consignee

Article 30: Obligation of the consignee to take delivery of the goods

  1. The rights and obligations in the contract of carriage and the provisions of these Rules shall be transferred to the consignee upon his coming into possession of the bill of lading.
  2. Upon arrival of the goods at destination, the consignee must accept delivery of the goods on the date and at the place agreed, and if he is in breach of that obligation by leaving the goods in the custody of the carrier, the latter shall have the right to dispose of the goods as agent for the consignee in the manner set out in Article 46 of these Rules, without bearing liability for loss or damage to the goods, unless the loss or damage arise out of default or neglect on the part of the carrier.
  3. The consignee shall bear all of the costs incurred by the carrier during the period from the date of arrival of the goods as a specified in the contract until the consignee takes delivery of them. 
     

Article 45: Procedures in the event that it is impossible to deliver the goods

  1. If the consignee does not take delivery of the goods from the carrier after arrival thereof at the place of delivery, the carrier must give written notice of that fact to the party having the right of disposal of the goods.
  2. If it is impossible for the carrier, after making a reasonable efforts, to ascertain the identity of the person having the right of disposal of the goods, he must give notice to the shipper to issue written instructions to him concerning the delivery of the goods.
  3. If it is impossible for the carrier to give notice to the shipper, the person in possession of the bill of lading shall thereupon be deemed to be the person having the right of disposal of the goods.
  4. If it is impossible for the carrier to give notice to the shipper or the person having the right of disposal of the goods or the party in possession of the of lading, or if he has not received instructions from any of them, the right of disposal over the goods shall pass to the carrier as agent of the consignee, and he may be in that event: 
    (a) discharge the goods if they are stuffed in containers, having regard to the circumstances and the nature of the goods; 
    (b) store the goods in a suitable place.
  5. If the consignee or person acting on his behalf makes delay in taking the delivery for a period exceeding 14 days from the date he is notified of the arrival of the goods, the carrier may do as follows:
    (a) dispose of the goods in accordance with the circumstances so requiring;
    (b) sell the goods in accordance with the customs, practices or usages in force, or as required by the relevant regulations, at the time and place where the goods are;
    (c) request the relevant authority to take delivery of the goods and to store them in its warehouses;
    (d) apply to the competent court to ascertain the condition of the goods and to give leave to him to place them under the supervision of a judicial custodian for the account of the shipper and on his responsibility.
  6. If the goods are sold under paragraph 5(b) of this Article, the carrier must hand over the proceeds of sale to the party having the right of disposal over the goods, after deducting the costs due thereon.
  7. The carrier shall not be permitted to exercise the rights referred to in paragraph 2 of this Article until after sending notice thereof within a reasonable time prior to the arrival of the goods to the consignee or to the party having the right of disposal over the goods. 

We normally advise agents that if the consignee has not taken delivery after a period of say 1 month, they then send registered letters to the consignee. If delivery is still not effected, the agents then approach the port authority to have the cargo auctioned.  Any proceeds from auction will first go towards payment of the demurrage accrued by the port.
 

Hassan Omar
Deputy Group General Manager,
Mutual Marine Services Al Mushtaraka Group.
Saudi, Yemen, Sudan, UAE, Somalia, Iraq, Djibouti , Eritrea,

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