7. Cargo operations claims

Mistakes may occur in day-to-day business, and these give cause for compliant. There might have been a misunderstanding about the goods to be supplied; perhaps a warehouse clerk made an error in addressing the parcel; sometimes a consignment is dispatched too late or delays are caused in transit; damage may have occurred during delivery; a manufacturing defect is discovered when a machine is used. It may happen in business that certain terms and conditions of the Contract are infringed by the Seller or by the Buyers and then the dissatisfied party makes a claim on the other party. The Buyers most frequently make claims because of late delivery, delivery of wrong or damaged goods, or goods of inferior quality, short-shipment delivery of goods, etc.

Considerable damage to cargo may result if due care is not paid to its handling. Lack of care at port of loading may result in damage. Sometimes the effect of damage is not immediately apparent, it may begin to show during the voyage.

Current International laws governing the carriage of goods by sea had their beginning over one hundred years ago. A first attempt to create a uniform set of International cargo claim rules came with the Hague Rules of 1924. The Hague Rules established minimum terms and conditions for bills of lading covering the maritime transport of goods. In 1968 the Brussels Protocol to the Hague Rules was enacted. Now referred to as the Hague-Visby Rules, this is the most widely followed current International standard.

The written notice of loss must be provided to the carrier or carrier’s agent at the port of discharge. If the loss or damage can be readily seen, the written notice must be provided before or at the time of removal of the goods into the custody of the person entitled to delivery. If the loss or damage is not apparent, written notice must be given to the carrier or carrier’s agent within 3 days of delivery. Failure to provide such notice is not fatal to a claim, but it does create a presumption that the goods were delivered in good order & condition. On failing to give timely notice, a claimant must then overcome the burden by demonstrating that the damage occurred before delivery.

On receiving the goods make immediate inspection of each package before signing delivery receipt. Take photographs where applicable. Contact a surveyor to assess the loss/damage immediately. Verify that the seal number on marine containers match the document numbers. Also be alert when a seal is broken to the possibility that cargo may have been pilfered. Notify your insurance company. Retain all products and packing until you are advised otherwise by the Insurance Company.

Generally the following documents will be required to settle a claim:

1. Proof of Insurance: Declaration Form or Original Certificate

2. Commercial Invoices

3. Non-negotiable copy of bill of lading / waybill (front & back)

4. Claim Statement

5. Copy of letter(s) to carrier(s) giving notice of claim

6. Carrier’s reply(s) if any

7. Delivery receipts with exceptions noted

8. Photographs (when applicable)

9. Survey reports (when applicable)

10. Packing List

11. Repair estimates (when applicable)

The Sellers can make a claim on the Buyers because of unreasonable amounts claimed from them and also when the Buyers fail to open a L/C in time or place a vessel under loading, etc.

Notice the basic principles of writing a letter of compliant:

Be polite and tactful.

State clearly and factually what is wrong.

Support your claim with documents.

Imply that your claim will be met as a matter of course.

Summarize your claim. State clearly what you expect.

Decide on the emphasis you want to give.

Do you want to appear threatening, pleading, reasoning or reproaching?

Your first letter of complaint should sound calm and reasonable. You will get better and quicker service than if you demand, threaten or accuse.

After the claim has been made it is considered and is either admitted as reasonable and justified or declined as groundless. In the first case the responsible party meets the claim fully or partly; in the second case they ask the other party to withdraw the claim.

In most cases the parties come to an amicable settlement of the claim but sometimes they may have to submit the matter to the Arbitration court at the Russian Federation Chamber of Commerce and Industry in Moscow and there the dispute is settled in accordance with the Rules for Procedure of this Commission, i.e. the parties appoint their arbitrators from among the members of the said Commission and if the two arbitrators cannot come to an agreement, they appoint an umpire. The award of the Arbitration Commission is binding upon both parties.

It is particularly necessary to exercise tact in handling complaints.

The reply to a complaint should always be polite. Even if the subject of the letter is serious, the tone throughout the letter should be courteous. Replies to compliant should be prompt and should start with some form of apology. You should not dispute the complaint until you have the full facts. Explain if possible the reasons for the delay, damage, wrong consignment, bad packing or inferior quality. If the customer is wrong it will be necessary to write a tactful letter explaining why you think so.

Finally you should write to the customer informing him that you are arranging replacements, price reductions or other remedies, and assure the customer that similar mistakes will not happen in future.

Various disputes occasionally arise between the CONTRACTING PARTIES in the course of cargo shipping or delivery. In maritime commercial practice the following are the most common causes giving rise to claims: loss of cargo in voyage, short-shipment or short-delivery of goods, all kinds of damage to cargo and/or its packing, both aboard and ashore, non-compliance with the clauses of CHARTER PARTIES and BILLS OF LADING, wrong calculation or non-payment of money and a good many other infringements and errors on the part of a contracting party.

The easiest way of settling claims is to reach an amicable solution (to come to an amicable agreement) without going to law, though not infrequently claims have to be settled by the MARITIME ARBITRATION COMMISSION or even in COURT.

To avoid claims for loss of or damage to goods, Shipmasters, must strictly comply with all terms and conditions of the CONTRACT OF CARRIAGE. It should, however, be noted that damage to goods may sometimes result from causes beyond the Carrier's control, among which are FORCE MAJEURE, perils of the sea, acts of war, etc.

Shipmasters wishing to protect their Owners' interests prejudiced through actual or suspected damage caused by any of the above factors must note a SEA PROTEST, which is usually to be done within 24 hours on arrival, but always before BREAKING BULK.

All damage and loss sustained by the vessel and/or her cargo during the voyage are, in the terms of Maritime Insurance, called AVERAGE. There are two kinds of average: GENERAL AVERAGE and PARTICULAR AVERAGE, of which the former is a partial loss deliberately but reasonably incurred by all contracting parties for the safety of the remaining property when in actual peril, while the latter is a loss incurred by the party at fault only.

NOTE 1: The main CONTRACTING PARTIES in maritime transportation are the Charterers, the Ship- and Cargo Owners (Shipowners or Carriers and Snippers or Receivers/Consignees).

NOTE 2: The MARITIME ARBITRATION COMMISSION is a special body for the judging of matters under dispute.

NOTE 3: FORCE MAJEURE is emergency conditions which can be neither foreseen nor prevented.

NOTE 4: BREAKING BULK is opening of cargo hatches before the commencement of discharge.