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International Cargo Carriage Contract: Case Law on Claims for Recovery of Freight Costs, Fines for Excessive Downtime, Material Damages for Loss of Cargo
Our law firm has almost reached the finish line in a legal dispute between a carrier and a customer under an international cargo transportation contract. Unfortunately or not, but it is not for us to judge, we joined this civil case after it was transferred from the conciliator judge to the “main judge” (he is also the presiding judge in the case). At that time, the controversial situation looked like this: the CSI had already taken interim measures by seizing our client’s funds located in the bank, as a result, a private complaint was filed in a timely manner against the court’s decision to cancel the interim measures, a response to the main claim was filed (in fact, it is also a counterclaim of the client), petitions for the attachment of documents to the materials of the civil case confirming and objecting to the plaintiff’s arguments and a great desire of the court of first instance to quickly consider the case. At the same time, we note that all of the above was done by the management of our client itself, without legal assistance!
It would seem that there is nothing complicated about it? There is an agreement signed by both parties and authorized persons, the cargo transportation agreement was concluded, according to the terms of its clauses it is necessary to make the remaining 50% of the freight. But, after reviewing all the documents submitted by our client, holding a mini-meeting with both the client and our colleagues, we, with errors, come to the conclusion that we really wanted to fight, if not 100% for winning the case, but for demonstrating character, integrity, and preventing the carrier from further negligent, irresponsible attitude to transportation. This is below and in as much detail as possible.
In fact, our client concluded not a cargo transportation agreement, but a freight forwarding agreement (we all know the difference between these subjects of the agreement and understand what we are talking about), the terms of the signed agreement do not quite protect our client, there are small rough spots/gaps, to which we understood that the court would pay attention. The carrier, also known as the forwarder, delivered only the greater part of the cargo accepted for transportation, approximately 20%, of the remaining cargo, in violation of the obligations assumed, he left it in an unguarded warehouse area, according to the words of the carrier himself, involved at the request of the plaintiff, he was in a hurry to get to the ferry to carry out the next loading in the EU. The cargo was lost, and it has its material value, in addition to everything else, the carrier violated the terms of delivery of the cargo (there is an excessive downtime of the vehicle), as part of the pre-trial claims work, the principal proposed to take into mutual settlement the amount of damage for partial loss of cargo, a fine for downtime. At the same time, such amounts were not recognized by the carrier/forwarder, since the CMR had a mark from the distribution warehouse about the acceptance of the cargo in full.
In order to restore justice in this persistent struggle, we filed a counterclaim, applied for interim measures, filed a considerable number of motions to attach documents (including the shipper’s claims for damage and downtime). It would seem that the court sees our position, despite the note in the CMR, and is about to issue a corresponding judicial act and that’s all, but the big surprise was the court’s ruling to leave the counterclaim without consideration. In order to protect property rights and continue attempts to prove in court that the carrier should be liable for the loss of cargo and property liability in the form of a fine for downtime, we cancel the ruling and the civil case is submitted for consideration as the basis for the court’s issuance of an additional decision on the counterclaim, since such a claim was stated.
The additional decision of the court of first instance was announced, the counterclaim was partially satisfied, the court recovered in full the excess downtime provided for by the terms of the contract, legal costs, but the claim for material damage due to partial loss of cargo was rejected due to the absence of more detailed information about the transported cargo in the terms of the concluded contract, confirmation of settlements with the shipper, the absence of a signed act on the fact of shortage of cargo at the time of its delivery at the distribution point.
We do not despair, we move on, it is necessary to gain a foothold in the appellate instance, we hope that we will be able to fill in the gaps that the court of first instance allowed, since such a judicial act will have a prejudicial effect for all participants in such transportation.
By this example we want to tell you, our future and regular clients, that there were and will be controversial issues regarding the execution of the contract, please, involve lawyers – claimants at the time of concluding the relevant contracts, who, taking into account their experience and judicial practice, if not completely, then certainly with minimal risk for you, will supplement the terms of the contract, or on a larger scale, with all the features and nuances, will approach it. Remember that each of us must do our job, leave the judicial-claim or contractual work to us, believe me, there is plenty of it there.
The second important and main advantage in my work on this case was the constant and stable support of the client for 6 months of hard work (not only representation in court, but also work with the CSI on the fact of double arrest of bank accounts, conducting business correspondence with the shipper, analyzing judicial practice), thank him for this!
In this regard, if you need qualified legal assistance related to international/republican automobile/railway transportation, legal disputes with freight forwarders, our company is always ready to protect your property rights and obligations both at the stage of concluding contracts and in the process of legal claims work!
Contact us right now to get advice and trust the experience of professionals in working with KORGAN!
Contact our specialists by phone +7 700 50 00 553 or click on the “order a call” button, which is below.
The trial and the court’s decision
Pre-trial negotiations on damages
Losses 143 000 Euro
Contractual slides
Rarely will a daredevil risk money, goods or his time without concluding a contract. And the one who shows the contract to a lawyer first will reduce his risks, or take them more consciously.
But there are non-standard cases: an urgent transaction, a contract of 30+ sheets… How to quickly understand the essence of the contract and calculate the risks?
Catch the top 5 tips + a tip as a gift
- 1. The main terms of the contract (subject, price, terms, payment, etc.) must be clear and understandable. Not clear or vague? Demand clarification and correction in the contract.
- 2. An equal volume of mutual rights, obligations and responsibilities, without bias in favor of one party. Bias not in your favor? The partner violates the principle of equality of the parties.
- 3. Do not fall for “oral” agreements. If it comes to a dispute, you won’t be able to rely on them.
- 4. Compare the final text of the contract with your amendments. It is much more difficult to make adjustments after signing the contract.
- 5. Always check jurisdiction. If jurisdiction is based on the location of the partner or an arbitration clause is specified, you are not an equal player in the business field.
Gift:
- 6. “We have a standard contract” is a myth of unkind partners. Any contract can and should be changed if the terms are not favorable to you. The exception is some types of contracts, but there are not many of them.
Any questions left? Ask us. We will share our experience and useful tips.
Peace of mind with KORGAN
In line for justice: state or arbitration court
In the realities of modern times, business acquires a “face”. It acquires a character, a mood, because business reflects our need for communication, recognition, popularity. We prefer a coffee shop where we know the barista or the owner himself, even from an Instagram page, we trust a doctor recommended by a friend, we buy goods in a well-known store.
But any partnership agreements, like acquaintances, can be with a minus sign: either you made a mistake and let us down, or your business partner did. What to do if pre-trial negotiations have reached a dead end, and the parties do not see any way to reconcile? The final step in the search for justice is the court. And here the most interesting part begins.
In Kazakhstan, for more than 20 years, there has been an alternative practice for judicial dispute resolution – through the state judicial system and in arbitration court.
With the state court, everything is more or less clear. Step by step: claim, evidence, state duty, consideration, court decision with the right to appeal. Minor variations of this path are set out in the country’s specialized codes and there is no need to retell them.
Let’s look at the arbitration court. Let’s start with the theory: in Kazakhstan, the work of arbitration courts is regulated by the Law “On Arbitration” dated 08.04.2016, which replaced two laws: the Law of the Republic of Kazakhstan “On Arbitration Courts” dated 28.12.2004 and the Law of the Republic of Kazakhstan “On International Commercial Arbitration” dated 28.12.2004.
There are two popular questions about the arbitration court: what is it and how does it work. The arbitration court is not a state court. It exists in the forms of permanent or temporary arbitration. The list of permanent arbitration courts is on the websites of the Ministry of Justice of the Republic of Kazakhstan and the Arbitration Chamber of Kazakhstan. Temporary arbitration is created to resolve a specific dispute. The court may include one or several arbitrators, who are elected by the parties to the dispute themselves. The arbitrator must meet the requirements of the Law “On Arbitration”. If the parties have applied to permanent arbitration, the dispute will be considered according to its rules; if the arbitration is temporary, the parties themselves determine the procedure for consideration. The procedure is approximately the same as in a state court: claim, evidence, response to the claim, consideration and decision on the merits. What to do with an arbitration decision? The same as with a state judicial act: you can appeal, you can issue an enforcement document.
Of course, it is impossible to tell about all the nuances within a short article, but there is good news, even two.
First: there is room for a couple of practical tips. To apply to arbitration, there must be an agreement or a condition in the contract on the jurisdiction of the arbitration court between the parties. Appealing to arbitration is paid, the cost is determined by each arbitration independently, and such payment can be much more expensive than the usual state fee. Before applying to arbitration, check its validity through the websites of the Ministry of Justice and the Arbitration Chamber of Kazakhstan. The competence of arbitration is limited by types of disputes.
Second: if everything is still unclear, but very interesting, or the business partner insists on an arbitration clause in the contract, contact us for advice. We will help, explain, protect.
In general, if we compare very broadly, state and arbitration courts are like state and private clinics. The choice is, of course, yours, but health requires a responsible attitude.