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Rail transportation consulting

10.08.2017

Rail freight in Kazakhstan is governed by the Law “On Railway Transport”, the rules of carriage and the contract. Disputes with the carrier over the safety of cargo, delivery times, carriage charges, fines under applications and charges for the use of wagons start with a claim: a lawsuit against the carrier may be filed only if it has rejected the claim in full or in part or has not answered it in time (Article 93(1) of the Law). Below is who submits a claim and how, what time limits apply, which acts are needed, what the carrier and the shipper are liable for and when the carrier is released from liability.

Claim to the carrier: who submits it and what it must contain

A claim under the contract of carriage is submitted by the sender (shipper) or the receiver (consignee), and in case of loss of or damage to wagons and containers, by their owner or other lawful holder. A representative may submit the claim on their behalf (Article 89(1) and (2) of the Law). The claim must be accompanied by documents confirming the right to submit it (Article 89(3)).

The claim must state (Article 89-1(1)):

  • the full name of the claimant, postal details and the date of the claim;
  • the circumstances on which the claim is based;
  • the claimant’s demands, the amount of the claim and its calculation, bank details;
  • a list of the attached documents and other evidence.

A claim of a legal entity is signed by its head or a person authorised by the head. A private business entity does not need a seal (Article 89-1(2)). If the receipt and the waybill were issued through electronic data interchange, the claim states the shipment number, the date of acceptance of the cargo and the details of the electronic carriage file (Article 89-1(3)).

Documents supporting the demands are attached in the original. The list depends on the case (Article 89(4)), including:

  • total loss of cargo — the cargo acceptance receipt with the destination station’s note of non-arrival and a document on the quantity and value of the cargo shipped;
  • shortage of or damage to cargo — the railway waybill, the commercial act of the destination station and documents on the quantity and value of the cargo shipped, missing or damaged;
  • delay in delivery — the railway waybill;
  • overpaid tariff — the waybill or the cargo acceptance receipt and documents confirming payment;
  • overpaid fees and fines — documents confirming their charging and payment;
  • loss of or damage to your wagons and containers by the carrier — the receipt with the destination station’s note of non-arrival, technical passports and documents confirming lease or ownership.

One claim covers one case. A claim for loss, shortage or damage of cargo is submitted separately for each shipment. Exceptions: a group of shipments of the same cargo from one shipper at one station to one consignee at one station, if one commercial act was drawn up for them, and a delay in delivery of several shipments that arrived within one day (Article 89(5)).

Time limits: claim, response, lawsuit

A claim may be submitted within the limitation period. The periods for submitting a claim are calculated (Article 90(1)):

  • for loss of cargo — after seven days from the end of the delivery period;
  • for shortage, damage, delay in delivery and refund of overpaid carriage charges — from the day the cargo is handed over;
  • for a fine for failure to fulfil an accepted application — from the end of the period for fulfilling the application under the rules of carriage;
  • in other cases — from the day of the event that gave rise to the claim.

The day of submission is the day the letter is handed to the post office or the claim is delivered to the carrier by hand (Article 90(1-1)). If the claim period is missed, the carrier may still consider the claim if it accepts the reason for the delay as valid (Article 90(2)).

The carrier considers the claim within one month of receipt and notifies the result in writing. If it refuses, it gives reasons with references to legal acts and documents (Article 91(1) and (2)). A claim drawn up in breach of the Law is returned within ten calendar days with the reason stated, and such a return is not a refusal to satisfy it (Article 91(4)).

The limitation period under a contract of carriage of cargo is one year and runs from the day after the event that gave rise to the lawsuit (Article 93(2) and (3)). A lawsuit against the carrier under a contract of carriage of cargo is filed with the court at the carrier’s location (Article 31(4) of the Civil Procedure Code). This is exclusive jurisdiction, and a contract cannot change it (Article 32 of the Code).

Acts: what to record when the cargo is handed over

Circumstances that may give rise to liability of the carrier, shipper, consignee or forwarder are certified by a commercial act or a general-form act (Article 92(1)). The carrier must draw up a commercial act when handing over the cargo if (Article 92(2)):

  • the name, weight or number of packages does not match the carriage document;
  • the cargo is damaged (spoiled);
  • the cargo arrived without documents, or the documents without the cargo;
  • stolen cargo was returned to the carrier;
  • the cargo was not delivered to the unloading point within 24 hours after the handover documents were issued — in this case the act is drawn up only at the consignee’s request;
  • the cargo was handed over for sale.

Other circumstances are certified by a general-form act (Article 92(3)). The parties may not refuse to sign an act, but if they disagree they may state their opinion in it (Article 92(4)).

On handover the carrier checks the cargo in the cases listed in Article 50(1), including when the wagon or container arrived damaged, with seals of intermediate stations, without seals or with damaged seals, when the cargo arrived with non-observance of the delivery date or violation of the temperature regime upon carriage of perishable cargo in refrigerated wagons, or when the cargo was loaded or is unloaded by the carrier. The carrier and the consignee determine the amount of damage jointly. Either of them may initiate an examination, and its costs are borne by the party at fault (Article 51).

What the carrier and the shipper are liable for

  • Loss, shortage, damage of cargo. The carrier compensates the value of the lost or missing cargo, and in case of damage, the amount by which its value decreased. For cargo with a declared value — the declared value. In addition, it refunds the carriage charge for that cargo if the charge is not included in its value. Cargo is deemed lost seven days after the end of the delivery period. The carrier is liable unless it proves that the loss, shortage or damage was not its fault (Article 76).
  • Delay in delivery. For each day of delay the carrier pays the consignee a fine of 5% of the carriage charge, but not more than 50%, unless it proves that the delay was not its fault (Article 79(1)).
  • Failure to fulfil an application. The carrier for failing to supply wagons and containers under an accepted application, and the shipper for failing to present cargo or to use the supplied wagons, pay each other a fine as a percentage of the monthly calculation index (MCI): per container with a gross weight up to 5 tonnes — 15%, from 5 to 10 tonnes — 30%, over 10 tonnes — 60%; per wagon — 150%; per refrigerated wagon and transporter — 290%; for cargo carried only in wagons on narrow-gauge lines — half of these amounts. The fine is charged regardless of the charge for the use of wagons. If the shipper warned the carrier that wagons would not be used at least three days before loading, the fine is reduced by one third. If the carrier also fails to supply wagons within the extended period agreed with the shipper, it pays a penalty of 5 MCI unless it proves that the failure was not its fault (Article 77).
  • Use of wagons and demurrage. The shipper, the consignee and the siding owner pay the carrier, or under a contract with the wagon owner — the owner, for the whole time the wagons and containers are with them, including the time for loading, unloading and shunting, and for idle time on main and station tracks through their fault (Article 49(1)). For late unloading the carrier increases the charge for wagons and containers held more than 24 hours beyond the process time, but not more than tenfold (Article 79-1).
  • Carriage charge. It is paid before the cargo is dispatched, unless the contract provides otherwise, and is calculated for the shortest distance. Final settlements with the consignee are made on arrival of the cargo (Article 47(1) and (2)). If there is a debt, the carrier may refuse new contracts of carriage until it is repaid and may retain the cargo as security for payment (Article 47(3), Article 52(1)). Late payments to the carrier bear a penalty equal to the liability for using another’s money under the Civil Code (Article 74(2)).

When the carrier is released from liability

The parties are released from liability if the obligation was breached due to force majeure, emergencies, military action, a state of emergency or a suspension or restriction of traffic announced under the Law (Article 86(2)). The carrier is also not liable in the cases listed in Article 87(1), including:

  • the obligation was breached through the fault of the shipper, consignee or forwarder;
  • the cargo arrived in a sound wagon or container with the shipper’s sound seals, or there are other signs that it was kept safe;
  • the cargo suffered due to its special natural properties or was handed over without stating in the documents the special conditions of carriage;
  • the information in the railway waybill is incorrect, inaccurate or incomplete;
  • the weight difference is within the norms of natural loss, moisture reduction and scale discrepancy, or the cargo was accepted by weight determined by the shipper without the carrier;
  • the cargo suffered due to hidden defects of the packaging.

So before dispatch it is worth checking the waybill details and the seals, and in case of shortage or damage, obtaining the commercial act of the destination station: without it a claim for these cases cannot be made (Article 89(4)(7)).

How we can help

We act for shippers and consignees in rail freight matters, including in relations with National Company Kazakhstan Temir Zholy JSC:

  • challenging the amount of carriage charges, including in court;
  • challenging additional carriage charges at the destination station and following an audit;
  • challenging fines for failure to comply with the cargo transportation plan;
  • challenging demurrage charges for wagons on station tracks and at junction stations;
  • claims and lawsuits over theft of cargo in transit;
  • claims and lawsuits to recover debts from the carrier;
  • challenging the results of tenders held by NC KTZ JSC.

We also help with organising carriage: we calculate carriage charges, obtain shipper, consignee and payer codes, register forwarder codes, submit GU-12 applications for the supply of wagons and advise on the carriage of goods by rail.

We handle lawsuits against the carrier under the service “Representation in court for businesses in Kazakhstan“, recover debts from counterparties under “Debt collection for businesses in Kazakhstan“, and draft and review contracts of carriage and contracts on the organisation of carriage under “Contract work: drafting and review of contracts“. Disputes over international carriage of cargo — in the article “International Cargo Carriage Contract: Case Law“.

The first consultation is free. Call us: +7 700 500 05 53 or write on WhatsApp.


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