Documentary responsibilities

The consignment note

As stated earlier (p 339) the contract of carriage must be confirmed with a consignment note Art 6(2)). The CIM Rules lay down a number of formalities in relation to the consignment note and also the particulars that need to be included in this document. Although these formalities may seem too extensive and rigid, the reason for this stems from the expectation that it will play an important evidentiary role in the event of a dispute between the consignor/consignee and the carrier as for instance where the goods arrive damaged or there is a shortfall in the quantity delivered.

As for the consignment note itself, the CIM Rules do not recommend a model consignment note but leave it to the international associations and bodies to draft a suitable model consignment note. As for the formalities in respect of the consignment note, it must be made out for each consignment, unless there is a contrary agreement (Art 6(6)). Both carrier and the consignor are to sign it, although the signature need not be a handwritten signature. It can be replaced by a stamp, or an accounting machine entry or some other suitable means (Art 6(4)). On taking over the goods, the carrier must certify that he has done so in the duplicate part of the consignment note, which he must return to the consignor. The original travels with the consignment.

As for the contents of the consignment note, Art 7(1) stipulates a mandatory list of particulars to be included as follows:

•Place and date on which the consignment note is made out;

•Name and address of the consignor;

•Name and address of the carrier who has concluded the contract;

•Name and address of the person to whom the goods have been handed over if not the carrier with whom contract concluded;

•Place of delivery;

•Description of the goods and the method of packing;

•Where goods are dangerous the description provided for in the Regulation concerning the International Carriage of Dangerous Goods by Rail (RID);

•Number of packages and special marks or numbers necessary for identification of consignments less than full wagon loads;

•Number of wagons if full wagon load;

•If railway vehicle running on own wheels is handed over for carriage as goods the number of railway vehicle;

•In case of intermodal transport units,19 the category, the number or other characteristics necessary for their identification;

•Gross mass or quantity of the goods expressed in other ways;

•Detailed list of documents required for customs required by customs or other administrative authorities which are attached to the note itself or held at the disposal of the carrier with a designated authority or body;

•Carriage costs including carriage charge, customs duties and other costs incurred from conclusion of contract until delivery paid or statement that they are payable by the consignee; and

•Statement that the carriage is subject to the CIM Rules.

19 For example, containers, swap body (freight-carrying unit used for combined transportation of goods involving road and rail elements).

regarded as prima facie evidence (Art 12(2)). In the case of loading by the consignor, statements regarding condition,21 packaging, marks and so on will be regarded as prima facie evidence only if they have been examined by the carrier and recorded as such on the consignment note (Art 12(3)).

Reasoned reservations can be entered by the carrier – for instance, where he has been unable to check the accuracy of the statements entered on the consignment note by the carrier. In this event the consignment note will not be regarded as prima facie evidence.

Examination and verification

Given that Art 12(3) highlights the importance of verification by the carrier where goods are loaded by the consignor, do the CIM Rules impart any rights in respect of examination to the carrier? For instance, can he examine the consignment? Article 11(1) gives the right to examine at any time to ensure that the consignment corresponds with the entries. Where the examination is of the contents of the consignment, it is expected that it will be carried out in front of the person entitled (presumably the consignor). If this is not possible, then it must be conducted in the presence of two witnesses, unless the laws of the State provide otherwise. The inclusion of independent witnesses is to maintain the evidential value of the consignment note. Any reservations can be noted on the consignment note that accompanies the goods. If the duplicate is still available, then reservations are to be entered on that note too.22

Art 12(3) deals specifically with consignments loaded by the consignor. The consignor can require the carrier to examine the goods, and the carrier is obliged to do so and verify the accuracy of the statements on the consignment note provided he has the appropriate means of conducting it. Any charges he incurs for the examination of the goods will be charged to the consignor and noted on the consignment note.

Electronic data interchange (EDI) and the CIM rules

Although the CIM 198023 seemed to give limited recognition to electronic documents, the position is much clearer in the CIM Rules. According to Art 6(9), ‘[t]he consignment note and its duplicate may be established in the form of electronic data registration which can be transformed into legible written symbols. The procedure used for the registration and treatment of data must be equivalent from the functional point of view, particularly as far as concerns the evidential value of the note represented by those data’.This means that an electronic consignment note should be treated no differently from a paper consignment note, including its evidential value. The emphasis on evidential value obviously touches on some of the perceived weakness of electronic data, its intangibility and susceptibility to corruption and the reluctance in some jurisdictions to admit electronic documents as evidence. Nevertheless, as seen in Chapters 3 and 4, developments in the European Union (EU) and UNCITRAL have brought about some harmonisation in treating electronic documents no differently from paper documents and their admissibility as evidence. Since consignment notes are not documents of titles under the CIM Rules,24 none of the issues raised regarding transferability in the context of electronic bills of lading affect consignment notes.

21According to the Explanatory Report, the phrase ‘apparent good condition’ was not included since damaged goods such as motor vehicles can also be transported (at p 23).

22The duplicate is normally given to the consignor.

23See Art 8(4)(g) and Chapter 11 of 3rd edn of Carr, International Trade Law, 2005, Routledge-Cavendish.

24Art 6(5). In some countries (eg, India) consignment notes are regarded as documents of title. See CI and B Syndicate v Ramachandra [1968] AIR 133; Official Assignee of Madras v Mercantile Bank of India [1935] AC 53. Where consignment notes are treated as documents of title, issues in respect of transferability of electronic consignment notes may arise, as in the case of electronic documents.

Contracting out

The parties are not free to contract out of the provisions of the CIM Rules, unless otherwise provided in the Rules (Art 5). So, a stipulation that directly or indirectly derogates from these Rules will be regarded as null and void.The CIM Rules do not indicate the kind of clauses that would be regarded as repugnant. However, it is more than likely that clauses lowering the carrier’s maximum liability25 or the time limitation for bringing an action26 set by the CIM Rules and a choice of forum other than those indicated in Art 4627 will be regarded as derogations, hence null and void. Article 5, however, does not stop the carrier from agreeing to assume greater liability and obligations.

Carrier’s responsibilities and liabilities

Period of responsibility and liability for loss, damage or delay

The carrier is responsible for the goods from the time of taking over of the goods to the time of delivery (Art 23). The CIM Rules do not lay down the precise parameters of the taking over of or the delivery of the goods. No doubt this will be determined by a number of factors and the agreement between the parties, which would indicate the places designated for taking over and delivery of goods and provisions that are in force at the delivery point. So, for instance, where the goods have to be handed over to the custom authorities or octroi28 authorities at their warehouses that are not subject to the carrier’s supervision, this will be deemed to be equivalent to delivery to the consignee (see Art 17(2)(a)).

The carrier is also responsible for the acts of his servants and other persons whose services are used to perform the carriage as long as they are acting within the scope of their authority (Art 40).

The carrier is liable for loss or damage resulting from total or partial loss, or damage to the goods while they are in his charge, as well as damage or loss resulting from exceeding the transit29 period (Art 23(1)). The CIM Rules, however, provide two types of defences, general defences and defences specific to goods that fall within the special risks category. The general defences under Art 23(2) available to the carrier for escaping liability are:

•where the person entitled is at fault or has given orders that result in the loss or damage to the goods or exceeding of the transit period,

•inherent defect in the goods,30 or

•circumstances that the carrier could not avoid and the consequences of which he was unable to prevent.31

25See Liability amount.

26See Time Limitation.

27See Choice of forum.

28Duty on goods.

29The parties will normally agree the transit period. However, in the absence of such an agreement, Art 16 sets out the calculation of transit periods depending on whether the consignment is a wagon-load consignment or less than wagon-load consignment.

30The CIM 1980 used the phrase ‘inherent vice’. In the context of rail carriage Blower v GW Railway (1872) LR 7 CP 655, it was construed as ‘some defect in the goods themselves which by its development tends to the injury or destruction of the thing carried’ (at p 662).

31Presumably, as where unexpected heavy snowfall renders the railway lines unusable. There is some debate on whether ‘unavoidable circumstances’ is the same as force majeure. Art 17(2) of the CMR (see Chapter 12) allows a similar defence, and this was interpreted in Silber v Islander Trucking [1985] 2 Lloyd’s Rep 243. According to Mustill J, the words ‘could not avoid’ in Art 17(2) include the rider ‘even with utmost care’. ‘Utmost care’ lies ‘somewhere between, on the one hand, a requirement to take every conceivable precaution, however extreme, within the limits of the law and, on the other hand, a duty to do no more than act reasonably in accordance with prudent current practice’ (at p 247).

The burden of proof in these cases rests with the carrier who has to show that he falls within one of the above exceptions (Art 25(1)).

Where the carrier carries goods that fall within the special risks category listed in the CIM Rules, the presumption regarding the cause of loss or damage to the goods will operate in the carrier’s favour.32 The burden will then fall on the claimant to provide proof to the contrary. Under Art 23(3), the special risks are:

•carriage by open wagons pursuant to the General Conditions of Carriage or when the parties have agreed to such carriage and it has been entered on the consignment note;33

•absence or inadequacy of packaging in the case of goods that by their nature are liable to loss or damage when not packed or when not packed properly;

•loading of goods by consignor or unloading by consignee;34

•nature of certain goods that particularly expose them to total or partial loss or damage, especially through breakage, rust, interior and spontaneous decay, desiccation or wastage;

•irregular, incorrect or incomplete description or numbering of packages;

•carriage of live animals; and

•carriage that, under the provisions applicable or under an agreement made between the consignor and the railway and entered on the consignment note, must be accompanied by an attendant, if the loss or damage results from any risk which risk the attendant was intended to avert.

A further defence is available to the railway for goods that are normally subject to wastage in transit by the sole fact of carriage. Article 31 lists the goods and the acceptable levels of wastage. Where the wastage exceeds the permissible limits, the railway will be liable.

It is likely that there might be a number of carriers involved in the carriage of the goods performed under a single contract. In this event, the successive carrier, by taking over the goods with the consignment note, becomes a party to the contract of carriage and as such is subject to its terms. Each successive carrier, therefore, assumes responsibility for the entire carriage over the entire route up to delivery (Art 26).35 Where the carrier uses a substitute carrier,36 the carrier is not relieved of liability, but the substitute carrier (Art 27 (2)) will be subject to all the provisions of the CIM Rules governing liability.37 And the substitute carrier is equally subject to the loss of rights to invoke limits of liability. These provisions ensure that the claimant is not disadvantaged in any way should the carriage be performed by successive or substitute carrier. It is possible that the carrier may have waived certain of his rights by agreement.This waiver will not affect the substitute carrier, unless he has agreed expressly and in writing to them.

Liability amount

The CIM Rules use a complex formula for the calculation of liability depending on whether the goods are lost or damaged. Where there is total loss or partial loss, the value of the goods is calculated on the basis of the commodity exchange quotation, or the market price in the absence

32Where, however, an abnormally large quantity or package has been lost when goods are carried on open wagons this presumption will not apply (Art 23(3)).

33Goods in intermodal units or road vehicles carried on wagons will not be regarded as being carried on open wagons. Where consignor uses sheeting on open wagon the carrier will still assume the same liability as for carriage by open wagons.

34Normally, wagon load consignments are loaded by consignor.

35A similar provision is found in the CMR, which was interpreted by the English courts in James Buchanan and Co Ltd v Babco Forwarding and Shipping UK Ltd [1978] AC 141. See Chapter 12.

36On the question of whom to sue in the event of damage, loss or delay see below.

37On definition of substitute carrier see above.

of commodity exchange quotation (Art 30(1)). If the market price is unavailable, the value is determined from the price of goods of the equivalent kind and quality at the time and place of acceptance (Art 30(1)). The maximum liability of the railway is 17 Special Drawing Rights (SDRs) per kilogram of weight lost (Art 30(2)).

In addition, where goods are lost, the carrier is also under an obligation to repay carriage charges, customs duties and other charges that are incurred (Art 30(3)).38

Where goods are damaged, the compensation is the loss in the value of the goods. The amount is calculated by applying to the value derived, using the formula given in Art 30, the percentage of loss in value to the goods as a result of the damage at the place of destination (Art 32(1)). Where the entire cargo has lost value as a result of damage, the compensation cannot exceed the amount that would have been paid had the consignment been a total loss. Carriage charges and customs duties and other charges are also recoverable by the claimant in proportionate amounts (Art 32(4)). Where goods are lost or damaged as a result of the railway exceeding the transit period, then the carrier can claim four times the carriage charges (Art 33(1)).

These limits apply only in the absence of a declaration of value (Art 35) or interest in delivery (Art 36). In these cases, the compensation payable would be higher than the liability amount set by the CIM Rules.

The carrier, however, loses the benefit of the compensation limits if it is proved that the loss or damage results from an act or omission, which the carrier has committed either with intent to cause such loss or damage, or recklessly and with knowledge that such loss or damage would probably result under Art 36.This provision seems to be based on Art 25 of the Warsaw Convention as amended by the Hague Protocol. Words that import a mental element like ‘recklessly’ always cause difficulties in relation to the test to be applied. Should it be an objective or subjective test to determine whether the act or omission was reckless? As for the English courts, in the context of air carriage, the courts have applied a subjective test. Equally, knowledge in the context of Art 25 of the Warsaw Convention as amended was construed as not including imputed knowledge.39

Documentary formalities

During the course of carriage from the forwarding point to the destination point, customs and other administrative formalities have to be completed in respect of the goods.These are the responsibility of the carrier, although it may delegate these tasks to an agent.40 If the carrier or the agent it has appointed is at fault for instance, if the documents are lost or misused, then it shall be liable to the consignor. However, the responsibility for ensuring that the documents and information are correct rests with the consignor.

Carrier’s rights

The CIM Rules give a number of rights to the carrier. Apart from its right to charges,41 it also has the right to verify that the consignment corresponds with the particulars furnished in the consignment note by the consignor and any conditions for the carriage of certain types of goods are complied with (Art 11)).

38Presumably the liability will relate only to his part of the carriage. See Explanatory Report p, 33.

39See Chapter 10. Since the Explanatory Report to the CIM Rules states that one of the objectives was to achieve harmonisation with other transport conventions, it is likely that reference to court decisions in respect of similar or related provisions will be made in the course of arguing the case in the court. As to how the courts will respond is another matter.

40See Art 15.

41See ‘Consignor’s Responsibilities and Rights’ below.

Where circumstances prevent carriage, the carrier, under Art 20, has the freedom to decide whether to carry on with the carriage by using a route other than the one agreed on or wait for instructions from the person entitled. Where carriage is impossible, the carrier must ask for instructions, and, if no instructions are forthcoming within a reasonable time, he must take steps that seem to be in the best interests of the person entitled – for instance, where the carrier decides to sell perishable goods (Art 22(3)). Of course, the carrier will have to place the proceeds of sale at the disposal of the person entitled (Art 22(4)). In the event of circumstances preventing delivery, he must await instructions from the consignor or consignee depending on the circumstances (see Art 21).The carrier in these circumstances is entitled to receive the costs he has incurred for requesting instruction, acting on the instruction, failure of requested instruction to reach him or reach him on time and acting in accordance with Art 20 as long as such costs were not caused by the carrier’s fault. Charges applicable to the route followed can also be recovered and he will also be allowed the transit periods that are applicable to such routes (Art 23).

The carrier who has paid compensation also has a right of recourse against the carrier who has caused the loss or damage. Article 50 addresses the issue of this right of recourse in different scenarios – for instance, where it is difficult to establish when the loss or damage occurred or where one of the carriers become insolvent.42

Consignor’s responsibilities and rights

Loading operations

The responsibility for loading may be the subject of an agreement between the consignor and the carrier, but in the absence of an agreement the carrier is responsible for loading packages and the consignor for wagon loads (Art 13).

Responsibilities in respect of customs documents43 loading and packing of goods

All documents required by various authorities, such as customs and other authorities, are the responsibility of the consignor, and these must be attached to the consignment note or made available to the carrier (Art 15(1)). The consignor must ensure that the documents are complete, correct and regular. Where the carrier suffers loss or damage due to insufficient or irregular documents, the consignor will be liable (Art 15(2)).

The consignor also has the responsibility of packing the goods adequately and will be liable for losses or damage suffered by carrier unless the carrier knew or the defects were apparent when he took over but failed to make reservations. He must also comply with any packing or sheeting requirements of the customs or other administrative authorities. Where the consignor has not fulfilled these requirements, the carrier may take the necessary steps to ensure compliance. The consignor, however, will be liable for the costs incurred by the carrier (Art 15(8)).

Payment of charges

The consignor is responsible for charges of carriage, supplementary charges, customs duties and other charges that are incurred from the time of acceptance to the time of delivery depending on whether he has undertaken to do so (Art 10(1)). It is possible that the carrier and consignor may have agreed that the consignee is to pay the costs. Failure on the part to assert his rights in relation to the goods or take possession of the goods means the consignor remains liable (Art 10(2)).

42See above ‘Against Whom’.

43See also ‘Documentary Responsibilities’ above.

The consignor may make the goods subject to cash on delivery when he hands over the goods to the carrier. This means that it is the carrier’s duty to collect cash from the consignee before delivery. If the carrier delivers without collecting the payment, he will be liable to the consignor for the amount. Of course, it is always open to the carrier to sue the consignee for recovery (Art 17(6)).

Choice of route and transit

The parties to the carriage contract can agree on the transit period and the route. However, in the absence of agreement Art 16 provides the maximum transit periods to be calculated taking into account the agreed route. If there is no agreed route, then the calculations are to be based on the shortest route.The carrier, however, may fix additional transit periods where, for instance, there is a sea leg. This applies also to exceptional circumstances, such as exceptional increase in traffic (Art 16). These additional transit periods, however, must appear in the General Conditions of Carriage.44

Modification of contract

The CIM Rules give the consignor a number of rights to modify the contract of carriage. According to Art 18(1) of the CIM Rules, the consignor may:

•discontinue the carriage of the goods,

•request delivery of goods to be delayed,

•request that the goods be delivered to a person other than the named consignee or

•request goods to be delivered at a place other than the one named on the consignment note.

This right to modify the contract is extinguished, however, in the event the consignee has taken possession of the goods, or accepted the goods, or has exercised his right to modify the contract. This right cannot be exercised where modification is not possible, lawful and reasonable and does not interfere with the normal working of the carrier’s undertaking or prejudice consignors and consignees or other consignments (Art 18(3)).

To modify the contract, certain formalities must be met and the duplicate of the consignment note must be presented so that the modifications can be noted.

Consignee’s responsibilities and rights

Charges and delivery

The consignee is responsible for charges to the railway depending on whether the consignor has undertaken to pay all the charges or not. Where the cargo is sent on ‘cash on delivery’ basis, the consignee must make the required payment to the railway at the destination point. Were the carrier to deliver without collection of cash on delivery, he is liable to the consignor for the charges. He will have right of recourse against the consignee (Art 17(6)).

Once the goods arrive at the destination point, the consignee can require the carrier to hand over the consignment note and deliver the goods to him (Art 17(4)). The precise place or moment at which the goods are deemed to have been delivered will depend on the

44Art 3(c) defines General Conditions of Carriage as ‘the conditions of the carrier in the form of general conditions or tariffs legally in force in each Member State and which have become, by the conclusion of the contract of carriage, an integral part of it’. These General Conditions of Carriage are normally available on the rail operators’ websites.