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Legal Briefing Cargo Claims in India

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Legal Briefing Cargo Claims in India JULY 2 017 LE GAL BRIEFING Sharing the Club’s legal expertise and experience Cargo claims in India LEGAL BRIEFING Captain Sumit Madhu Sharing expertise Syndicate Manager L4 Sumit joined Thomas Miller after a career at The UK P&I Club has collaborated with sea, primarily on Advocate, Mr V. Subramanian, to issue this tankers, LPG and LNG vessels. Sumit is also a Legal Briefing on ‘Cargo Claims in India’. This Quality Management is the third Legal Briefing in this series, Systems Lead Auditor with experience in TMSA, terminal and vessel audits. providing guidance to Members on the Sumit speaks Hindi, Gujarati, Marathi and Malayalam. His team looks after specific issues relating to cargo claims in the Members from Eastern Europe to jurisdictions covered. Other briefings in this Russia, including India, and have expertise in all issues relating to India. series cover Cargo Claims in China and Cargo Direct +44 20 7204 2114 Claims in the United States. [email protected] If Members have any questions on any part of LEGAL BRIEFINGS TEAM the briefing, please get in touch with your Jacqueline Tan usual Club contact. Senior Claims Executive Jacqueline is a qualified Our thanks to Mr V. Subramanian (Kumar), barrister and solicitor. She handles FDD and Advocate, Venky’s Chambers, 11 4, Maker P&I cases and is the Chambers, 3, Nariman Point, Mumbai 4000 21 , editor of legal publications for the India, for his assistance with this briefing. Club. Jacqueline speaks Malay, French and Hokkien. She is also a member of the Club’s Legal and Environmental Team working with Dr Chao Wu. Direct +44 20 7204 2 118 [email protected] Dr Chao Wu Legal Director Chao leads the Clubs’ Legal and Environmental team. She is responsible for the legal aspects of Club documentation and cover for Members’ contractual arrangements, the Club’s Rules and Bye-Laws and general legal advice. Direct +44 20 7204 2157 Previous issues [email protected] Copies of previous briefings are available to download as pdfs from our website. Visit www.ukpandi.com/publications. 2 Legal Briefing July 2 01 7 INDIAN COGSA Cargo claims in India With the Indian Admiralty Act 2 01 7 coming into force later this year, this publication aims to highlight the types of issues owners may face with cargo claims in India. The maritime law of India relating to regulatory measures in relation to ships, The Act applies to carriage of goods by the carriage of goods by sea is governed goods and persons, in connection with sea under bills of lading or similar primarily by the Carriage of Goods by importation or exportation. It also documents of title issued in India, from Sea Act, 1925 as amended in 1993, the applies to clearance of goods for home a port in India, to any other port Indian Bills of Lading Act, 1856 and the consumption, exports, duty due on whether in or outside India (Section 2). MultimodalTransportation of Goods Act, goods, prohibitions, etc. The Act is similar to the Hague Rules, 1993. and as in the Hague Rules’ Articles, it Procedural aspects of claims are covered imposes responsibilities and liabilities, in the Civil Procedure Code, 1908 and and confers rights and immunities, The legislations the Evidence Act, 1872. upon the carrier. The Act applies equally to foreign merchant ships as The statutes and legislations which Apart from these legislations, well as to Indian merchant ships. apply by force of Indian law govern judgements of various courts in India COGSA is the substantive law in India goods loaded in India. Other lay down general principles of maritime on the subject of carriage of goods by legislations that could be applicable in law for dealing with cargo claims and sea and would apply compulsorily India in relation to cargo include: other matters. when the carrier is sued by his shipper based in India. (Indian) Merchant Shipping Act, 1958 Major PortTrusts Act, 1963 Indian COGSA For inbound cargo, the rights, liabilities Indian Ports Act, 1908 and obligations of the carrier and the Marine Insurance Act, 1963 Based on the Hague Rules 1924 cargo interests are governed by the Contract Act, 1872 relevant contract of affreightment. Sale of Goods Act, 1930 The Indian Carriage of Goods by Sea Act, This relates to the applicable law of the 1925 (was amended in 1993) or relevant contract (if the contract The Indian Ports Act, 1908 and the COGSA was enacted to recognise and provides for application of a foreign law Major PortTrusts Act, 1963 deal with the give effect to the Hague Rules 1924 as and/or convention), the general administration of the ports and the they would apply in India, and it principles of law as applicable in India jurisdiction over ships in ports. The substantially follows the Hague Rules. and Judge-made precedents. Customs Act, 1962, contains various Defences The Schedule to COGSA, referred to in Article IV provides for certain rights and immunities to the carrier and the ship from liabilities for loss or damage to the cargo. If the ship or carrier is able to set up any of these defences and offer evidence concerning the same, then such defences would be complete answers to cargo claims. The carrier may also rely on statutory defences such as the right of the plaintiff to bring the claim, privity of contract and jurisdiction. Factual defences such as short loading, weight, quality or quantity loaded unknown or not matching the description in the claused bill of lading are available. Cargo pilfered or missing post-discharge, or where the loss has occurred in spite of the carrier having July 2 01 7 Legal Briefing 3 TIME BARS complied fully with the customs or higher. If the Claimant can prove that the COGSA practice at the port also applies. damage resulted from an act or omission of the carrier done with intent to cause Article III, rule 6 of COGSA lays damage, or recklessly with knowledge down that the limitation period for Multimodal Transportation of that damage would probably result, then filing a suit under COGSA in India is Goods Act, 1993 (MTOG Act) this package limitation defense will not one year from the date on which the be available. goods were delivered (or ought to have The MultimodalTransportation of Goods been delivered.) The one year time Act was introduced in India in 1993. Some of the important changes and period can be extended by agreement This Act applies to all cases where two amendments to COGSA were brought between the parties after the cause of or more modes of transport are used in about by the MTOG Act: action has arisen. the course of transportation. The Act recognises multimodal transportation of It allows parties to agree an extension Rule 6, however, also contains the goods under a single transport of the one-year period to bring suit following provision: document, which covers all the modes for cargo claims. of transport. The multimodal transport “Provided that a suit may be brought after operator remains liable and responsible It increased the per package the expiry of the period of one year referred to the cargo owner. limitation in India to 666.67 SDRs to in this sub-paragraph within a further per package or unit or 2 SDRs per period of not more than three months as The MTOG Act provides for the kilogram of gross weight of the goods allowed by the court.” multimodal transport operator to be lost or damaged, whichever is higher. liable when the goods are damaged This means that a suit may be brought while they are in his charge. Indian law now expressly provides after the expiry of the one year period that neither the carrier nor the ship referred to above, but within a further shall be entitled to benefit from the period of no more than three months Limitation and Time Bars package limitation. That is, if it is (“time specified”), if allowed by the proven that the damage resulted from court. Therefore, after the 1993 The package limitation under Indian law an act or omission of the carrier done amendment, the period of limitation is 666.67 SDR per package or unit or with intent to cause damage, or for filing a suit under Indian COGSA 2 SDR per kilogram of gross weight of recklessly and with knowledge that may be up to a maximum of one year the goods lost or damaged, whichever is damage would probably result. and three months. But only if 4 Legal Briefing July 2 01 7 BURDEN OF PROOF permission is granted by the court or available. Depending upon the facts of actual shipper or merchant. Instead, the for a period agreed between the parties each case, the burden of proof required ship and its owner contracts with a after the cause of action has arisen. could be onerous and the defence multimodal transport operator, a non- expensive to run. This is especially so vessel operating common carrier Indian law on cargo claims matters due to the time it takes for litigations to (“NVOCC”), a freight forwarder or a recognises that the quoted provision in come for trial in India. cargo consolidator or such other parties Article III rule 6 above is not that a suit with whom the ship enters into shall be brought within one year from a Due to the backlogs in court, suits contracts of affreightment. The shipper specified date or that no suit shall be take anywhere between eight to ten or merchant is not a party to this brought after the expiry of one year, but years to come up for trial at the first contract of affreightment.
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