In the globalised society we live in nowadays, where international business relationships are established at a fast pace, merchants who wish to develop their business in the area, as well as law practitioners, must be particularly familiarised with international transactions.
Among the various types of contracts concluded in international commerce, in this paper I would like to focus on the international sea transport contract, and especially upon the claims control clause inserted within, which can provide consistent support in settling lawsuits.
When concluding an international sales agreement referring to the sea transport of the merchandise, the business partners aim at achieving certain goals, which are the delivery and the receipt of the contracted goods, on one hand, and the full payment of the price on the other hand. These purposes impose on the parties the strict completion of the assumed obligations and the respect of the laws in effect, in order to create the framework for the execution of the contract under best circumstances. In this respect, several mandatory clauses are enforced, referring to quality, quantity, packing, marking, price, delivery, insurance, means of transportation, terms of payment, reception, contingency, arbitration, cancellation and penalties.
In today’s complex international sea transport framework, the transfer of merchandise implies much more than the transfer of goods from the production site to the end user. Regular international conferences attended by the cargo liner companies are held, where they establish the freight rate (the price that must be paid to the forwarder for the transport and for the dispatch of the merchandise under best circumstances) for the liners, i.e. ships designed to cover maritime routes according to a schedule. There are also the ships for the irregular routes that can be chartered for the carriage of various goods, bearing the name of irregular hauls. The ship owner and the shipper (the charterer) can conclude a contract for the chartering of the ship. This written agreement between the ship owner and the charterer is called a charter party, by means of which the ship owner agrees to rent the ship to the charterer, in exchange for the payment of the freight for the goods to be transported. As far as the accompanying documentation is concerned, some of the documents have a general character, no matter the carriage type (for example invoices, packing lists, origin and quality certificates), whereas others are specific to certain transport methods (consignment notes, bills of lading, etc.). The bill of lading, which also contains the claims control clause, stands as a proof for the freight contract and at the same time it represents a legal document - the title to the goods.
Although commercial practice is strictly legislated in international sea transport, a series of issues can arise at any moment, representing the main cause for the initiation and file-up of complaints. That is why whenever a breach of contract occurs, either party can appeal to the claims control clause inserted within. This clause envisages exactly the procedural aspects that must be followed, the parties’ rights and obligations regarding the claimed goods, the documentation that must accompany the complaint and it stipulates at the same time the legal time span allowed for filing the claim (Chiriacescu, 1994). The claims control clause appears mostly in reassurance policies where the cedant has retained little or no risk. Since it often happens for the insured and the cedant to find themselves in a foreign jurisdiction, the reinsurers, who ultimately have to pay for almost all of any valid claim under the policy, wish to ensure that they have full control (Chadbourne and Parke LLP, 2010).
In international sea transport contracts, in the case of a quality issue, like a fault in merchandise for example, all claims must be drafted in written form and must include the contract number, indication of the goods, the claimed quantity, the number and the date of the transport document, as well as the substantiation of the claim and the compensation demanded by the buyer. The complaint must also be accompanied by certifying documents, i.e. deeds to acknowledge the claimed shortage or faults, imputable to the responsible party, countersigned by the seller’s representative or, in his/her absence, by a duly commissioned neutral control authority (Chiriacescu, 1994). The buyer making the claim must store the concerned goods and cannot deduct part of their total value as a compensation for his/her loss.
The complaint must be submitted as follows: within thirty days in case of quantity shortages and seeming faults in the merchandise, counted from the ship’s arrival at the destination port, or forty-five days from the delivery date; within 180 days for hidden faults, counted from the ship’s arrival at the destination port, or 210 days from the delivery date. The seller will have to notify the buyer in writing within sixty days from the receipt of the complaint regarding the grounds for the invoked fault (Chiriacescu, 1994). If the seller accepts the claim, the fault will be rectified, either by replacing the goods or by indemnifying the buyer. However, since each shipment is considered to be an independent sale, claims upon one shipment will not entitle the buyer to disregard his/her contractual liabilities regarding other consignments.
To consider an example, in the Burns Philp (South Seas) Company Ltd. v. Marine Pacific Ltd. case-law, in 1979, the cargo was supposed to be shipped from Suva to Labasa. Having been carried on the deck of a barge which was damaged during the voyage, the cargo was lost. A clause subjected to the ‘Sea Carriage of Goods Ordinance’ was inserted in the bill of lading, stating that all goods shipped as deck cargo were to be carried at owner’s risk (Pacific Islands Legal Information Institute, 2010). The plaintiff appealed to the claims clause, highlighting the defendant’s breach of the contractual duty to properly secure and deliver the cargo. In return, the defendant denied the complaint. The Court’s decision was to dismiss the plaintiff’s claim, based on the argument that the bill of lading stipulated the enforcement of the Ordinance’s provisions. The ruling applied to goods understood as ‘goods, wares, merchandise and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried’ (Pacific Islands Legal Information Institute, 2010), thus limiting the liability of the forwarder. The plaintiff further appealed the decision, grounding that the lower court should have given a stricter interpretation to the law. The Appeal Court upheld the decision, agreeing that the Ordinance did not apply to the goods because of the stamped clause on the bill of lading. The clause was an express stipulation in the contract which effectively altered the liability of the carrier (Pacific Islands Legal Information Institute, 2010).
In conclusion, I would state that modern maritime carriage commerce is unconceivable without the insertion of the claims control clause within international sea transport contracts. The complaint must be settled by appealing to communication and in compliance with the contractual previsions and the commercial regulations in force, so as to prevent the contract cancellation. This is where the claims control clause pitches in; it can be activated at any moment, thus protecting the parties involved against all risks, since they are both interested in executing the contract.
