Britain in the EEC The implications of CMR (2)
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A REVIEW of leading clauses in the CMR agreement applying to transport for hire and reward within the nine member countries of the Common Market and, indeed, to certain transport outside the market, was begun last week, and this article continues this study.
If one of the carriers is insolvent, the share of the compensation due from him (in a successful claim) is divided among the other carriers in the chain in proportion to their shares of the carriage charges.
Article 41, para. I, says that any stipulation which would directly or indirectly derogate from the provisions of the Convention shall be void.
Mr A. E. Donald stressed to the recent Guardian Business Services seminar that many aspects of CMR imposed a serious liability on international hauliers even where loss or damage had not occurred while the goods were in their hands — particularly with containers. A United Kingdom haulier was nearly always either the first or the last carrier and therefore a convenient target for the claims.
Insure liabilities
It made good sense, said Mr Donald, for the international haulier to insure his liabilities under CMR in the excellent UK insurance market, though such "door to door" charges, usually calculated on a turnover basis, were not inconsequential. As with all UK goods-in-transit policies, insurances for CMR liability were only offered, in the UK, subject to certain restrictions and exclusions. Attention should be paid to certain exclusions and limitations which seemed regularly to appear on CMR liability covers offered — for example:—
A rticle 24 (Excess Values) r
required;
Article 26 (Interest in delivery) r required It was quite normal for any special liability under these articles to be excluded. It might be possible to extend the policy in this respect, subject to prior notice and payment of an additional premium:—
Article 37 (Successive Carriers Liabilities) Article 38 (Insolvent Carriers Liability) Exclusion of liability arising under these headings was dangerous.
Article 40, permitting successive carriers in the chain to agree among themselves provisions other than those laid down in Articles 37 and 38, also concerned insurers. fie felt it was normal
\iv and proper for insurers not to permit
any such special arrangements unless they were advised and were able to agree, subject to any additional premiums they might require.
It was not normally possible for a carrier to obtain insurance against claims brought under Article 7, para. 3, under which the carrier was liable for all expenses, loss or damage sustained through the omission from the consignment note of certain specified particulars (as set out in Article 6, paras, I and 2).
He advised a haulier to extend his CMR policy to include general average and salvage charges under the York! Antwerp rules — relating to the sea journey. This would enable the carrier to get release from the carrying vessel.
Insurers would always insert monetary limits in a policy but he felt any limit per ton of the goods carried should be firmly resisted. The limit any one vehicle should be, obviously, the maximum carrying capacity of the vehicle in tons multiplied by the maximum liability of i3500/£4000 per ton plus carriage charges and, particularly, Customs duties in relation to the goods normally or possibly to be carried. (In regard to highly dutiable goods — wines, spirits, tobacco, perfumes, clothing, for example — duty could heavily increase the £3500! 14000 per ton).
Insurers would also specify a limit any one loss (ie the maximum amount of money that the insurer would pay for any claim or series of claims arising out of any one happening or event). This limit any one loss should be high enough to cater for an event involving more than one laden vehicle or trailer.
It was particularly important, in Mr Donald's view, that an international haulier, as the principal or first carrier, should ensure, first, that his CMR insurance policy covered any liability that he might have as principal should goods be lost, damaged or destroyed in the hands of a sub-contractor.
Also, for the sake of his own claims record and own rate of premium — an international operator should ensure that his sub-contractors were aware of their CMR liabilities; sub-contractors should have either adequate insurance to pay for these liabilities or adequate financial resources if not insured.
Many senders imposed CMR conditions to sendings which did not fall within the scope of Articles 1 and 2 in Chapter 1 of the Convention. These sendings might or might not be accompanied by a CMR consignment note. The obvious danger was that a sub-contractor might have a good defence to a claim — in which event the claim would fall back on the shoulders of the principal contractor.
Contracting out
If CMR applies by force of law contracting out is impossible. Article 41,1, "Any stipulation which would directly or indirectly derogate from the provisions of the Convention shall be null and void" is specific enough. On this, Mr Donald said: "It is pertinent to remark that derogation from the terms of the Convention could work both ways, either to the benefit of the haulier by reducing his liabilities or to the detriment of the haulier by increasing his liabilities or by taking away some or all of his defences to a claim.
"Therefore, in effect, neither party to the contract of carriage can contract Out. However, circumstances can and do arise when it is normally right and proper for the carrier to have either more or (usually) less responsibility. It is possible to arrange a separate contract of indemnity between sender and carrier (which has a reasonable chance of succeeding either commercially or at law) to give effect to what is, in fact, a derogation from the Convention. This is a complicated matter on which it is wise to take the best legal advice and, certainly, each party to the contract should advise their respective insurers if this is attempted."
Mr Donald noted that no distinct pattern of legal judgments had yet emerged from Continental courts on CMR liability. The same decisions might not be made in this or in other countries. He was concerned that CMR insurance for international hauliers should be arranged on a proper basis. If that were done insurers could cope with difficulties over interpretation.
It seems clear from the foregoing that grave risks are run by international hauliers who do not budget for adequate insurance cover. In a fragmented industry like road haulage where a high proportion of operators both here and in Europe are small family businesses, the risk of a disastrous claim is not one to be taken lightly. No selfrespecting exporter would entrust his goods to a haulier whose insurance cover is suspect.
In the future, the CMR insurance market may well be covered by European-wide insurance companies. At present no such market exists and it behoves operators to deal with reliable British insurers who know the risks and legal pitfalls in international haulage. Proper cover is likely to be costly but inadequate cover could be ruinous.