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Incoterms© Ex Works (EXW): Explained

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Aerial view of a worker with a clipboard overseeing crates of apples in a warehouse, preparing for EXW shipment

In terms of costs and risks, the EXW Incoterm requires minimal involvement from the seller and greater responsibilities for the buyer.

The seller makes the goods available at their premises, meaning they limit their role to delivery; they do not assist in transportation or handle documentation.

It is the buyer who assumes the risks from that point onwards. The buyer is responsible for all transportation costs and risks.

EXW is a versatile Incoterm and can be used in various modes of transport (air, sea, etc.)

Let’s examine this Incoterms© in more detail.

Seller's Obligations under EXW

Aspect Description
Packing The seller must pack the goods, and if the buyer requires specific packing, they can request it, although they will bear the additional costs.
Delivery and Documentation Provide the goods and a commercial invoice in accordance with the sale contract. The seller must also assist the buyer, upon request, in obtaining any necessary export clearances and provide any transport-related security information.
Location and Timing Deliver the goods at the agreed place, though not required to load them on any collecting vehicle. Must deliver on the agreed date or within the agreed period.

Buyer's Obligations under EXW

Obligation Description
Payment Pay the price as agreed in the sale contract.
Clearances Obtain any export/customs clearances needed.
Notification Notify the seller in adequate time of their intention to take delivery.
Taking Delivery Take delivery of the goods and bear all costs and risks from that point onwards.
Pre-shipment Inspections Pay for any mandatory pre-shipment inspections required.

Cargo Insurance and Incoterms© Ex Works (EXW)

While not mandatory under EXW, cargo insurance is highly advisable. Incoterms© influences on cargo insurance policies.

It is common for both the buyer and the seller to arrange their own insurance to cover their respective responsibilities within the transaction. However, it’s not unusual for either party alone to secure a policy that covers the entire process.

Under EXW, shipments are typically insured under the buyer’s ocean cargo policy because the buyer bears responsibility for loss or damage during the “main carriage.” Importantly, the buyer should seek an insurance provider that offers comprehensive coverage for periods when the goods may be on the seller’s premises, during loading onto the conveyance, and while awaiting transit, even though the buyer is responsible for loss or damage.

Since most ocean cargo policies typically activate when individual shipments leave the origin warehouse (i.e., under the Warehous e to Warehouse provisions of the Open Policy), there may be a period when the buyer lacks insurance coverage. This gap can occur while the goods are still on the seller’s premises, during the loading onto the conveyance, or even after loading while awaiting transit, despite the buyer being responsible for any loss or damage during these times.

When operating under EXW, it is essential to consider specific types of cargo insurance that can provide comprehensive coverage throughout the various stages of the shipping process. Here are some key types of insurance that buyers should consider:

Type of InsuranceDescription
Warehouse to Warehouse CoverageThis insurance is crucial as it covers the goods from the time they leave the seller’s warehouse until they reach the buyer’s premises.
Loading and Unloading InsuranceSince the buyer is responsible for loading the goods onto the transport vehicle under EXW, insurance coverage for loading and unloading protects against damage that might occur during these operations.
Transportation InsuranceThis covers risks associated with the transportation of goods from the seller’s premises to the buyer’s final destination. Transportation can include any mode of transit—sea, air, or land—making it vital for the buyer to ensure that the insurance policy covers the specific modes of transport used in the shipping process.
All-Risk CoverageWhile more expensive, all-risk insurance offers protection against all risks of loss or damage to goods, except those specifically excluded in the policy. This comprehensive coverage is highly recommended for buyers under EXW to safeguard against unforeseen incidents during transit.
Contingency InsuranceSometimes, even when sellers provide insurance, buyers may opt for contingency insurance as a backup to cover any gaps left by the seller’s policy. This type of insurance is a prudent choice under EXW, providing an extra layer of security in complex international trade scenarios.

It is advisable to clearly define the terms and conditions of the insurance within the international sales contract to ensure that all stages of risk are covered, especially during critical points where the buyer is most vulnerable. By doing so, both parties can mitigate potential misunderstandings and disputes over responsibility for losses or damages.

Transfer of Risks and Responsibilities

Under EXW, the point at which risks and responsibilities shift from the seller to the buyer is clearly defined, but its implications are profound and require careful consideration.

The EXW Incoterm stipulates that the seller is only responsible for making the goods available at their premises or another designated location. The risks pass to the buyer from the moment the goods are made available at this specified location, even if the buyer has not yet taken possession of them. Legally, this means that the buyer bears all risks of loss or damage to the goods from that specific point in time.
Under EXW, the transfer of risk occurs at a very early stage compared to other Incoterms.

In summary, the legal implications of risk transfer are:

  • Liability for Damage or Loss: Once the risk has transferred, the buyer is liable for any damage or loss that may occur, regardless of the cause. The seller is no longer responsible for the goods after they have been made available at the designated location.
  • Insurance Requirements: Given the immediate transfer of risk, buyers are strongly advised to arrange insurance cover for the goods starting from the point they are available. This coverage should ideally extend through the transportation and delivery processes until the goods reach their final destination.
  • Cost Implications: The buyer should be prepared to bear all costs associated with the transportation, handling, and export procedures. This includes costs related to packing (if specified), loading, customs clearance, and any other logistical expenses necessary to move the goods from the seller’s premises to the buyer’s destination.
  • Regulatory Compliance: The buyer must also manage and comply with all export and import regulations. In an EXW arrangement, the buyer typically handles the export clearance, which involves understanding and managing the export regulations of the country where the goods originate.
  • Contractual Considerations: Parties using EXW should specify the exact point of risk transfer in their contracts to avoid ambiguity. Additionally, they might negotiate terms that could shift some responsibilities back to the seller, such as assisting with loading or providing specific documentation. However, this deviates from the standard EXW terms.

Common Insurance Claims in EXW Transactions and Key Considerations for Claim Management

Type of Claim Description Key Considerations for Managing Claims
Damage During Loading Claims arise when goods are damaged during loading onto the transport vehicle, a responsibility typically held by the buyer under EXW. Ensure thorough documentation of the loading process and conditions of goods.
Total or Partial Loss During Transport Loss or damage occurring during transportation from the seller’s premises to the buyer’s destination. Verify that the insurance policy covers the entire transit route and check for any exclusions that might affect coverage.
Theft of Goods Theft can occur post availability of goods to the buyer, especially if security measures during transport or storage are inadequate. Ensure the insurance includes theft coverage.
Damage Due to Poor Packaging Occurs when the seller’s provided packaging is insufficient to protect the goods during transit, which can be contested under EXW. Establish clear packaging standards and responsibilities in the sales contract. Consider third-party inspection prior to shipment.
Insurance Coverage Issues at Critical Points Disputes may arise over coverage during critical points such as while goods are still at the seller’s premises or during loading. Confirm the insurance activation time aligns with the transfer of risk in EXW terms. Adjust policies to cover all critical phases.

At Marlin Blue, as legal experts specialized in cargo insurance and shipping law, we provide specialized assistance primarily to insurance and reinsurance companies, offering expert legal consultancy, claims handling, and dispute resolution services. Feel free to contact us.

Open Cover in Marine Insurance

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Sunset over the bustling port of Mallorca, illustrating the vital role of marine insurance in international trade.

Open covers in marine insurance obligate insurers to cover all forward shipments that meet the pre-agreed terms within the policy duration, providing blanket coverage over a specified period.

These contracts are typically adopted by businesses that frequently ship goods, specifically by companies involved in high-volume trade over long periods.

This is because open-cover policies in marine insurance offer a reprieve from the frequent contract negotiations required by standard insurance. For shippers, they streamline the insurance process for consistent trade types, offering procedural simplicity and potential cost savings. From the insurer’s perspective, such policies simplify administrative tasks and ensure premium revenues.

1. What is a Marine Open Cover?

An open cover is an agreement between the insurer and the insured.

It is an arrangement designed to automatically cover all forward shipments by an insured party that meet specific pre-agreed criteria detailed, like terms, rates, and conditions, within the open cover policy. This relationship is pivotal as it dictates the duties and responsibilities of each party under the terms of the contract.

Open covers are generally structured as long-term contracts, often spanning an annual period to provide ongoing coverage. However, they can also be arranged as ‘always open’ or permanent covers, which remain effective until explicitly cancelled.

Unlike standard policies that define precise details upfront, during that period open covers allow the specifics, such as cargo weight and value, to be declared subsequently as shipments occur.

This flexible arrangement doesn’t provide a fixed sum insured but instead, adjusts coverage based on aspects like Possible Maximum Loss (PML) or Single Cargo Limit (SCL).

For instance, a multinational company might use an open cover to insure different crude oil shipments weekly, with details like source, tonnage, and value specified for each shipment.

Open cover can be structured with premiums paid from a cash deposit account held by the insurer, offering consistent coverage and financial stability with routine premium adjustments. Alternatively, premiums can be calculated per shipment based on each issued insurance certificate, providing a payment structure that aligns more logically with the actual movement of goods.

2. Advantages of Open Covers

  • Open cover policies reduce the need for individual endorsements for each shipment, streamlining administrative processes.
  • Premiums are often lower due to reduced administrative costs compared to individual policies.
  • Facilitates quicker insurance responses for multiple shipments, enhancing operational agility in fast-paced markets.
  • Enables easier price negotiations and budgeting for the assured.
  • The insured or their brokers can typically issue their own certificates.
  • An inadvertent omission to declare a shipment does not prejudice the insured, provided it is rectified promptly.

3. Open Cover Key Features

3.1 What’s Covered?

Open covers insure a wide array of goods, including those owned by the assured as well as those under their care, control, and custody for which they have insurance obligations.

This inclusive approach ensures coverage extends to all goods handled in the course of business activities, even if the assured does not own them.

The wording in typical open cover policies is deliberately broad to encompass all types of goods and interests that the assured may be involved with, whether directly or indirectly. This includes responsibility for insuring goods, legal liabilities, or following instructions to insure specific shipments.

However, the goods insured must be accurately and reasonably described in the policy to avoid issues such as non-coverage for errors in the description or misinterpretation of insured goods, as highlighted in legal precedents.

Some open covers also specify exclusions, like precious metals or dangerous goods, which might only be covered under specific conditions or additional rates. This breadth of coverage ensures that businesses can operate with confidence, knowing that their diverse shipping needs and potential liabilities are comprehensively addressed by their insurance policies.


3.2 Valuation of Goods

In terms of valuation, as other Cargo insurance policies, open covers usually adopt a CIF plus 10% valuation basis to accommodate potential profit margins, but they also cover complex scenarios like returned goods and used machinery with specifically tailored valuation bases. A basis of valuation of goods is a prerequisite in an open cover.


3.3 Modes of Transport

An open cover not only covers sea transport but also extends to other modes of conveyance. This includes rail, road, parcel post, courier services, and other connecting conveyances.

Craft risks, which are risks associated with smaller vessels used within port limits or to and from mid-stream anchorages (places where ships are anchored away from the port), are typically covered under the terms of an open cover if specified.

When high-value items are transported, especially in the insured’s own vehicles, the risk profile changes. Using personal or company vehicles can increase the risk because traditional avenues of recourse that exist when third-party carriers are used (like claims against a transport company’s insurance) might not be available.

Another specific consideration might be the quality of vessels used for transport, Insurers may adjust the terms of coverage based on the type of vessels involved in the transportation of insured goods, possibly requiring higher standards of maintenance or specific vessel types for certain kinds of cargo.


3.4 Global Coverage

Open cover policies typically compensate for physical loss or damage to insured items, as well as any related liabilities or expenses, according to the conditions outlined in the policy schedule. Common features include:

  • The cover provides all-risk protection in accordance with the ICC (A) or ITC (A) standards.
  • Protection against damage from accidents or fire during the journey is included in the cover.
  • The specific terms of coverage chosen will determine the premium rate.
  • Compared to the all risks cover, the basic cover is less expensive and only protects against specific risks.
  • The policy includes coverage for War and SRCC (Strikes, Riots, & Civil Commotion).
  • Theft, Pilferage & Non-delivery (TPND) are covered under the basic cover only.
    Buyers have the option to choose additional storage cover before the cargo is delivered.

3.5 Limits of Liability

Open cover usually specifies two main types of limits:

1. Per Bottom Limit
This refers to the maximum sum insured for goods aboard any one ship, which is determined based on the anticipated highest value of goods shipped.

Insurers might also include sub-limits for other modes of transport like rail, road, or air, especially when the ocean-going shipment limit is high, to prevent these limits from applying universally.

2. A location limit
Almost always included in open covers, this limit applies to the maximum value at a single location, usually set at double the per bottom limit. This covers unforeseen accumulation of goods at a location during transit.

For multinational groups, this is particularly crucial as large accumulations at ports can pose significant risk, highlighted by scenarios like a tsunami destroying several shipments at once.

Despite its importance, the definition of “location” often lacks clarity and consistency among insurance practitioners.


3.6 Certificate of Insurance and Good Faith

As with any other insurance contract, open cover is grounded in the principle of “utmost good faith,” obliging the insured to fully disclose all relevant information that could affect the risk assumed by the insurer. Non-disclosure can lead to the avoidance of the policy.

To facilitate this, insurers provide certificates that must be completed with each cargo shipment, detailing cargo value, travel period, and location. These certificates help manage the cumulative value of insured cargo, which is capped under the policy’s terms for a specific period.

Particularly under terms like CIF and CIP, these certificates are relevant because where the seller must secure marine cargo insurance for the buyer’s benefit. Open covers typically allow the broker, agent, or the assured to issue pre-signed insurance certificates.

In certain markets, these may require the assured’s countersignature to activate. Challenges arise with duplicate certificates, which are sometimes demanded by overseas buyers or banks. To mitigate risks associated with duplicates, it is recommended to limit their issuance and clearly mark any duplicates to specify their status.


3.7 Exclusions

Open cover typically excludes:

  • Insolvency of carrier
  • Wilful misconduct of the assured
  • Ordinary leakage in case of liquid cargo
  • Ordinary loss in weight
  • Improper packing
  • Inherent vice
  • Ordinary wear & tear
  • Cyber failures and malicious usage.

4. Considerations for Shippers and Insurers

4.1 Applicable legislation

The legal framework that will govern the open cover policy, should be agreed upon by both parties involved in the contract. This includes specifying the proper law that will apply to interpret the terms of the contract and the jurisdiction under which any disputes will be settled. Choosing the correct legal framework can affect everything from contract enforcement to dispute resolution processes.


4.2 Cancellation

An open cover policy in marine insurance continues until canceled, structured to provide continuous protection under agreed terms.

Cancellation can be initiated by either the insurer or the assured due to dissatisfaction with terms or a reevaluation of risks, though such cancellations are uncommon.

The cancellation notice typically takes effect 30, 60, or 90 days from the date it is issued or received. Some policies only allow cancellation at the renewal date, preventing mid-period termination.

Importantly, cancellations do not affect shipments already covered prior to the notice period’s expiry. If the policy includes stock throughput or storage, the cancellation terms should clearly state that insurers are not liable for storage risks post-cancellation.


4.3 Transfer

Circumstances under which the insurance coverage can be transferred to another party, if at all, must be stipulated. This is particularly relevant in scenarios involving the sale of the insured goods or changes in the ownership of the company being insured. Both parties should understand the procedure and conditions under which a transfer can be legally and effectively executed.


4.4 Period

The inception and termination dates either specify the local standard time at the place (or storage locations insured, if any) where shipment commences or the local standard time at the principal address of the assured.

Conclusion

In marine insurance, open covers are essential for businesses engaged in regular shipping activities. These policies provide a safety net against the myriad risks associated with marine transportation and offer flexibility crucial in the dynamic global trade environment.

Insurers evaluate various factors such as the type of goods shipped, shipping routes, and the overall risk profile of the shipper when offering open cover. Shippers should consider adopting open cover to streamline the management of extensive and continuous shipments, as it significantly reduces the complexities of handling multiple insurance contracts.

Underwriters assess the possibility of providing open cover based on detailed risk evaluations, the shipper’s claims history, and adherence to safety and packing standards. Therefore, shippers must maintain high standards of operational transparency and regulatory compliance to qualify for and derive maximum benefit from open cover policies.

For expert advice and tailored legal solutions that secure your assets and operations, reach out to a specialized team of lawyers today.

Picture of Guillermo Zamora

Guillermo Zamora

Lawyer

Incoterms: How do they affect Marine Insurance?

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Refrigerated shipping containers stacked at a port, illustrating the application of Incoterms in international trade of perishable goods.

Establishing standardized protocols is crucial for smoothly executing international transactions. Among these protocols, marine Incoterms© stands out as fundamental pillars, ensuring clarity and consistency across borders.

Primarily, they are designed to define three critical aspects of international commerce precisely: the allocation of logistic costs between the seller and buyer, the transfer of risks during the transport of goods, and the necessary customs documents and procedures for foreign trade operations.

Unbelievable as it may seem, buyers and sellers don’t always have the Incoterms© in mind when they take out freight insurance. Assuming that insurance will automatically cover a consignment until it reaches its destination is a common (and costly!) mistake.

Cargo insurance and regulations operate within the Incoterms© framework, as the risk of loss or damage to goods during transit significantly influences insurance policies and terms. The delineation of responsibilities and risks, as specified by Incoterms©, directly impacts the coverage and claims process, making an understanding of these terms essential for all parties involved in the international trade of goods.

This article delves into the essentials of Incoterms©, their significance for various stakeholders, and their implications on cargo insurance.

1.1 What are Incoterms©?

Incoterm® stands for International Commercial Terms. They are a set of trade rules, of voluntary use, crucial for the global trade of goods.

The purpose of Incoterms© is to precisely delineate three aspects of international commerce:

  1. The allocation of logistic costs between the seller and buyer.
  2. The transfer of risks during the transport of goods.
  3. The necessary customs documents and procedures for foreign trade operations.

The sales contract states the Incoterms©, so both parties know beforehand who bears which risks and expenses with respect to the transport and delivery of the goods sold.

2. For whom are Incoterms© relevant?

These rules are crucial for international sellers and buyers, but also for intermediaries in global trade, including carriers, lawyers, and significantly, cargo insurers.

International sale of goods implies several risks, expenses, and tasks that are split between the buyer and seller:

  • Paying the cost of freight
  • Incurring other expenses, such as loading and discharging
  • Clearing customs
  • Loss or damage to goods 
  • Arranging cargo insurance

Incoterms© play a crucial role in outlining who’s responsible for every step of the transport chain.

3. How are Incoterms© linked to marine cargo insurance?

When negotiating a trade agreement, buyer and seller are free to decide who sustains the risk and eventually takes out the required insurance.

The fact is Incoterms© don’t require the seller or buyer to provide marine insurance (except for the CIF and CIP terms).

However, they do define whether it’s the seller or buyer who will bear responsibility for any loss or damage that occurs during transit. Surely, it’s worth playing it safe and having this exposure to financial loss insured against.

Now, there’s something to take into account:

A marine cargo insurance policy can only legally pay out on goods the policyholder has an insurable interest in.

Wondering what “insurable interest” implies in this context? In plain words, it means you own the goods or bear the risk. So, in the event that the cargo got damaged, you’d suffer a financial loss.

If the Incoterms© specified in your sales contract points to the other party as the cargo owner, then your policy won’t pay your claim.

4. How do marine Incoterms© help?

Incoterms© provides clarity as to the parties’ obligations in key areas, enhancing the predictability and security of international trade. However, they do not cover every aspect that should be in a sale contract. Certain Incoterms© only apply to sea/inland waterway transport, while others can be used for all types of transport, making some more relevant for specific shipments.

5. Are marine Incoterms© compulsory?

The use of Incoterms© in sale contracts is recommended but not compulsory. They offer a framework that parties can choose to apply, to clarify the terms of their trade agreements, thereby reducing misunderstandings and disputes.

6. Origin and Evolution

The first edition of Incoterms© was published in 1936, with successive revisions and updates (usually every ten years) leading up to the current version, Incoterms© 2020.

This latest version was launched in September 2019 after a revision process that began in 2016, incorporating feedback from stakeholders, including the International Union of Marine Insurance (IUMI), and national ICC committees.
These updates reflect modern commercial practices, ensuring that Incoterms© remain relevant and useful tools for international trade.

7. Who Defines Incoterms©?

The International Chamber of Commerce (ICC) is the authority that defines and updates Incoterms©. This global organization undertook the revision of Incoterms© 2010 in 2016, incorporating views from stakeholders, including the International Union of Marine Insurance (IUMI), and national committees of the ICC.
The Incoterms© 2020 were launched as a result in September 2019, offering key updates to reflect modern commercial practices.

8. What is covered by the Incoterms ® rules?

They cover various aspects of the trade process, including:

  1. Licences/Authorisations/Security Clearances and Other Formalities: Incoterms® set out responsibilities for obtaining necessary export and import licences, authorizations, and security clearances. However, the specifics of these obligations depend on the chosen Incoterm.
  2. Contracts of Carriage and Insurance: While Incoterms® specify which party is responsible for arranging and paying for the carriage of goods and insurance, they do not govern the contractual details of these arrangements.
  3. Delivery: They define the point in the transaction where the risk of loss or damage to the goods transfers from the seller to the buyer, which is crucial for understanding delivery obligations.
  4. Transfer of Risk: This is a key feature of Incoterms®, delineating when the buyer takes on the risk for the goods, which can impact insurance requirements and responsibilities.

9. Classification and Categories of Incoterms 2020

According to the latest edition of the Incoterms (2020), there are 11 different trade rules. They are divided into 4 categories, based on the risk, responsibility and fees each party bears: E, C, F and D.

Out of them, 7 rules are applicable to any transport mode (multimodal terms), whereas 4 are “waterway only” .

EXW (EX-Works)

The seller makes goods available to the buyer at their premises. The buyer takes full responsibility for the transit through to the final destination.

FCA (Free Carrier)

The seller delivers the cargo to a carrier selected by the buyer at a named place. As the delivery point could be anywhere in the country of origin (e.g., a freight terminal), the contract of sale must specify where and to whom the cargo is to be delivered.

FAS (Free Alongside Ship)

The seller makes the cargo available alongside the vessel at the port of shipment, arranging export clearance and covering origin charges. The buyer bears all subsequent expenses and risks.

FOB (Free On Board)

The seller loads the cargo on board the vessel and clears it for export. After this, responsibility shifts to the buyer.

CFR (Cost and Freight)

The seller pays all costs up to the named port of destination. However, risk passes over to the buyer when the goods are loaded on the vessel.

CIF (Cost, Insurance & Freight)

This is one of only two Incoterms© which contains an obligation to provide insurance (the other one is CIP). The seller agrees to provide coverage for the buyer’s risk of loss or damage from the place of origin to the final destination.

CPT (Carriage Paid To) 

The seller agrees to pay freight costs to the destination, until the cargo is delivered into the custody of the first carrier. The buyer arranges onward transport and pays tax and duty.

CIP (Carriage and Insurance Paid To) 

In a nutshell, the same as CIF. However, the goods are made available to the carrier at a named place in the country of destination (as opposed to the port under CIF terms).

DAT (Delivered At Terminal)

The seller is responsible for all charges until the cargo is delivered to the agreed terminal (e.g., port, airport or any other hub). Once the cargo is unloaded, the risk passes over to the buyer.

DAP (Delivered At Place)

The seller delivers the goods to the buyer’s location. The latter is responsible for the import process, including unloading the goods at the destination.

DDP (Delivered Duty Paid)

The seller is responsible for the entire process, including import clearance and payment of applicable taxes and import duty at the destination.

For more information on the remaining set of Incoterms©, keep an eye out for our upcoming articles. If you ever find yourself in a dispute due to practicing the wrong Incoterms©, our expert legal team will help you solve it.

Key Clauses in International Trade Contracts: Understanding the Legal Side

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Also Read: Introduction to Charter Party Agreements: The Contracts That Move Cargo

Multinational corporations typically maintain bespoke international sales contracts, along with General Conditions of Sale and Purchase. In contrast, small to medium-sized enterprises often rely on standard forms or model contract templates.

This contract is greatly influenced by the United Nations Convention on Contracts for the International Sale of Goods (CISG), embraced globally across legal traditions, aligning commercial needs with CISG’s rules. Other key sources include the Uniform Law on the International Sale of Goods (ULIS), UNIDROIT Principles, and European Contract Law Principles, ensuring contracts are comprehensive and clear to minimize disputes.

International business contracts must, therefore, be specific and all-encompassing to significantly reduce misunderstandings, misconceptions, and disputes. For a contract to be specific and comprehensive, it must foster clear understanding and mutual agreement, thereby minimizing potential disputes.

Critical to establishing a legally binding agreement is unconditional acceptance, wherein the offeree agrees to the offer’s terms without modifications. This acceptance must be communicated effectively and unequivocally to the offeror to ensure the contract’s enforceability and the certainty of obligations and rights for all parties involved.

Unclear contracts can lead to a multitude of issues, including disputes over interpretation, costly legal battles, and performance delays, which may result in financial loss and damage to business relationships. Ambiguities may also challenge the enforceability of contracts, leading to potential legal recourse being unavailable when breaches occur.

Furthermore, such disputes can harm a company’s reputation and lead to inefficiencies and increased operational costs as parties negotiate clarifications or amendments.

1. Essential Elements for International Sale and Purchase Contracts

For buyers and sellers spanning diverse languages and global locales, certain core elements must be unequivocally outlined in their sale and purchase contracts to ensure comprehensiveness and legal robustness:

1.1. Parties

Identification of all parties involved, including the buyer, seller, and any intermediaries, is especially important when dealing with new contractual partners who may be located in different parts of the world.

This section should detail the legal names, addresses, and contact information, providing a clear point of reference for the contract. The main point is to verify the identity of the business partners.

 

1.2. Specification of goods

This clause is indispensable to the sale contract’s framework. Setting these out in detail in the sale contract will help both parties understand what is required.

As a general rule, buyers typically seek detailed descriptions to ensure the goods meet their commercial needs, while sellers prefer precision to guarantee delivery of the specified goods. Nevertheless, allowing for minor deviations in non-critical specifications, such as color or dimensions, can provide necessary flexibility without compromising the contract’s integrity.

If the document covers the sale of goods, it is necessary to specify within its content sufficient elements for the identification and determination of the goods in question. The document should include the following main items:

  • name and quantity of the goods and the unit of measure on which they are made;
  • description of the goods including their specifications, quality, etc.

Certain cargoes, like foodstuffs and pharmaceuticals, require specific quality standards. The term “international sale of goods” covers these transactions, but international trade also encompasses technology, services, finance, capital, and construction, often involving license contracts. Sometimes it may include additional agreements related to carriage, insurance, and foreign exchange, supplementing the primary sales contract.

 

1.3. Price

The parties shall clearly indicate:

  • The contract currency in which payment is expected
  • The price amount, in both figures and words
  • An explanation of what the price includes

 

1.4. Payments terms

Clause to outline how and when payments will be made. This includes payment method (e.g., letter of credit, bank transfer), payment schedule, and any conditions that must be met for payment to be released (e.g., submission of certain documents).

The selection of a payment method is influenced by various factors, such as cash flow concerns and the preference for leveraging banking services as a security measure, rather than directly transferring funds to a potentially unfamiliar business partner.

How does a documentary credit system work?

The buyer initiates a letter of credit in favor of the seller, and the buyer’s bank notifies the seller’s bank upon setup. Upon shipment, the seller submits the bills of lading to their bank, which verifies them against the contract and letter of credit. If the documents align, they are forwarded to the buyer’s bank for final approval. Upon satisfactory review, the buyer’s bank releases the bills of lading to the buyer, who then authorizes the transfer of funds to the seller.

While this system enhances transaction security by ensuring document verification, it is not foolproof. It primarily verifies document congruence, without guaranteeing the physical match of goods shipped to the goods ordered, potentially leading to discrepancies upon receipt.

 

1.5 Delivery Terms and Transport

Incoterms® shall be incorporated to precisely delineate the delivery terms, highlighting the exact location for goods delivery and assigning responsibilities for each phase of the transport process. This clarification is essential to ensure both parties are aligned on logistics and liability.

Detail the chosen modes of transportation, along with any specific requirements or constraints that may apply. Address which forms of transportation will be utilized and determine the party responsible for organization. It is crucial to establish whether this responsibility extends over the entire transit from seller to buyer or pertains only to specified segments.

The contract should comprehensively cover:

  1. Provisions regarding the shipping, handling, and insurance of goods throughout their journey. This includes identifying the party responsible for securing insurance and the extent of coverage necessary to safeguard the goods against potential risks during transit.
  2. Detailed clauses concerning the obligation to deliver the goods within agreed time frames. Since delivering the goods to the buyer is the seller’s primary responsibility, the contract must include explicit terms that govern the fulfillment of this duty. These terms should outline the processes for shipping, delivery schedules, and the protocols for handling delays or unforeseen challenges.
  3. By establishing clear responsibilities, timelines, and procedures for the transportation and delivery of goods, the contract sets a solid foundation for a smooth and predictable transaction. This detailed approach minimizes risks and ensures both parties have a thorough understanding of their commitments, facilitating a successful exchange.

1.6. Transfer of risk

Clarifying the transfer of risk between parties is essential, as it directly impacts the insurable interest—without risk, there generally isn’t an insurable interest. However, it’s crucial to understand that legal ownership isn’t always required for an insurable interest to exist. It’s important to distinguish between the transfer of risk and the transfer of title or ownership. These are separate elements within the sale contract, with the transfer of title often occurring after the transfer of risk. This distinction ensures both parties are aware of their responsibilities and the timing of risk transfer, safeguarding their interests throughout the transaction.
 
 

1.7. Packing and Labeling

Specifying packing and labeling standards ensures that goods are adequately protected throughout transit and comply with the import regulations of the destination country. This also includes considerations for environmental regulations related to packaging materials.

It’s essential for buyers to receive goods in pristine condition, and equally crucial for sellers to mitigate any contract disputes due to damaged goods upon arrival. Therefore, the contract must clearly outline the requirements for packaging and labeling:

  1. Packing standards: The contract should detail the expected packing methods to ensure goods are secure and protected against damage during transportation. This includes specifying the types of materials to be used, particularly if the goods are fragile or require special handling.
  2. Labeling requirements: Clear guidelines on labeling will help in identifying the goods, ensuring they meet all regulatory compliance for the journey and at the destination. This should cover any necessary product information, handling instructions, and hazard warnings.
  3. Packaging ownership and returns: Clauses related to packaging should clarify whether the packaging becomes the buyer’s property or remains the seller’s. If it transfers to the buyer, the contract must specify the included cost. Conversely, if it remains the seller’s property, terms should detail the timeframe within which the buyer must return it.

1.8. Custom clearance

For international shipments, customs clearance is required at both the export and import points. It’s essential to determine who will handle and finance these processes.

The contract should specify who is responsible for customs clearance, including the acquisition of necessary permits and the payment of any duties or taxes. Additionally, this section must ensure compliance with all export and import regulations.

1.9. Insurance

Detail the insurance arrangements, including:

  • Who is responsible for obtaining insurance. This determination often depends on the agreed Incoterms® in the contract, which dictate the point at which risk transfers from the seller to the buyer. For example, under CIF (Cost, Insurance, and Freight) terms, the seller is required to insure the goods during transport to the named port of destination.
  • The minimum coverage required. This amount can be influenced by the type of goods, their value, and the route taken.
  • Specific risks that must be covered. This might include general average, war risks, piracy, and other perils specific to the route or nature of the goods.

1.10. Penalties and Dispute Resolution

Specify the repercussions for failing to fulfill contractual duties, such as delays in delivery or payment, or delivering goods that fall short of the agreed quality standards. The contract should clearly define the mechanisms for dispute resolution, whether through arbitration, mediation, or judicial proceedings, and detail the applicable law and jurisdiction.

Contracts must articulate which actions or inactions constitute a breach and outline the available remedies for the aggrieved party. Additionally, the method for resolving disputes, including specifics like the venue for arbitration and the language to be used, should be mutually agreed upon.

Parties should have the option to choose between arbitration and litigation for dispute resolution. If arbitration is selected, the contract must indicate the arbitration location and the language to be used. Conversely, if litigation is preferred, the contract should specify which national or municipal courts will handle potential lawsuits, ensuring clarity and preparedness for any disputes that may arise.

Marlin Blue is poised to help insurers and reinsurers facing challenges with international trade contracts. Our services range from providing proactive advice to mitigate future risks to offering expert legal representation for ongoing claims.

Contact Marlin Blue for strategic legal guidance and support.

 

The Most Common Hull Insurance Exclusions

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hull insurance exclusions

On one hand, these policies are tailored specifically for marine hull and machinery, offering coverage for all types of vessels involved in both international voyages and domestic waters. On the other hand, the exclusions define the breadth of coverage, delineating the line between covered perils and those risks that remain the responsibility of the vessel’s owner.

This post aims to analyze hull insurance exclusions, their purposes, impacts, and variances between policies, providing a comprehensive guide for insurance and reinsurance companies managing marine claims.

Hull Insurance Exclusions Purposes

Hull insurance exclusions serve as a mechanism to delineate the coverage scope, ensuring that insurers can provide sustainable and affordable protections. 

These exclusions are integral for risk management, allowing insurance companies to clearly define and exclude coverage for risks that are too unpredictable, inherently hazardous, or fall outside their risk appetite. This selective coverage is crucial for maintaining the insurer’s financial stability and sustainability. Moreover, exclusions are key in premium control, enabling insurers to offer more affordable premiums by not covering all conceivable risks, which would necessitate higher charges due to increased risk exposure.

Exclusions also bring clarity to the coverage, setting clear expectations for shipowners and operators and preventing misunderstandings during claim processes. This is vital for policyholders to understand their liabilities fully and seek additional coverage if necessary. Furthermore, exclusions encourage the adoption of risk mitigation strategies by the insured. For example, if the policy excludes certain high-risk navigational areas, shipowners might be motivated to avoid these areas or enhance security measures, thus reducing potential claims.

From a regulatory standpoint, exclusions ensure compliance with international laws and sanctions, such as those related to trade with embargoed countries, reflecting the insurer’s commitment to legal and ethical standards. Additionally, they contribute to the stability of the insurance market by preventing widespread losses from covering highly volatile risks, ensuring the long-term viability and availability of insurance products. 

Hull Insurance Exclusions Purposes and Industry Needs

Hull insurance policies are not monolithic; they vary significantly across insurers, tailored to meet the diverse needs of the maritime industry. These differences often manifest in the exclusions section, where certain risks might be covered by one insurer but excluded by another.

As the maritime industry advances with the introduction of larger and more sophisticated vessels, along with enhancements in port infrastructure and operational technologies, transporting these valuable assets from one location to another has become more efficient. However, the omnipresent risk of natural disasters, maritime perils, and unforeseen incidents poses a significant threat, potentially leading to substantial financial losses for shipowners and operators.

When dealing with older hull insurance forms, insurers and policyholders might encounter additional exclusions not commonly found in modern policies. These might include specific navigational limits, where coverage is void if the vessel operates beyond predetermined geographical boundaries, or exclusions related to certain types of cargo that pose a higher risk.

To better understand the scope and implications of hull insurance exclusions, we shall examine several practical scenarios where the policy coverages do not extend, shedding light on the types of claims typically not covered under a standard hull insurance policy.

Hull Insurance Exclusions: Examples and Explanations

1. Routine Wear and Tear

A shipping company notices decreased efficiency in one of its oldest vessels due to the aging machinery. Despite regular maintenance, the natural degradation over time has led to significant machinery breakdowns. 

Hull Insurance Exclusion Explained:

This type of damage, inherent to the vessel’s regular usage and old age, typically falls outside the coverage of hull and machinery insurance.

The principle behind this exclusion is straightforward: insurance is designed to protect against sudden and unforeseen losses, not the inevitable decline in an asset’s condition due to regular use and age. Consequently, damage that occurs as a direct result of wear and tear falls outside the ambit of hull and machinery insurance.

The rationale for this exclusion is twofold. Firstly, it encourages shipowners and operators to maintain and replace critical components of their vessels proactively, ensuring that the ships remain seaworthy and efficient. Secondly, it delineates the boundary of an insurer’s responsibility, safeguarding against claims that stem from predictable, gradual deterioration rather than specific, unexpected incidents.

2. Intentional Damage

The owner of a struggling maritime transport company deliberately damages the vessel’s engine to claim insurance money.

Hull Insurance Exclusion Explained:

Insurers classify such actions under intentional damage, and thus, the resulting claims are not covered. This specific exclusion is fundamental to the principles of insurance, which are predicated on providing coverage for unforeseen and accidental losses. Intentional damage, being neither unforeseen nor accidental, represents a clear violation of these principles.

The rationale behind excluding intentional damage from coverage is multi-layered. Primarily, it serves as a deterrent against fraud, ensuring that insurance remains a viable mechanism for risk management rather than a loophole for financial gain through illicit actions. Additionally, it underscores the importance of ethical business practices and financial responsibility among shipowners and operators.

3. Acts of War or Terrorism

A vessel transiting through a high-risk zone is damaged in an act of piracy, considered an act of terrorism. Most standard hull insurance policies exclude losses due to acts of war or terrorism, requiring an additional war risks policy for such coverage.

Hull Insurance Exclusion Explained:

Most standard hull insurance policies explicitly exclude losses resulting from acts of war, terrorism, strikes, riots, civil commotions, or labor disturbances. These exclusions extend to a broad spectrum of hostilities, including war (declared or not), civil war, rebellion, revolution, insurrection, martial law, and military or usurped power. Furthermore, they cover the hostile detonation of weapons of war employing nuclear fission/fusion or other radioactive forces, acts of sabotage, confiscation, nationalization, seizure, detention, appropriation by any government or authority, and hijacking or unlawful seizure or control of the vessel.

The reason for these exclusions is multifaceted. Primarily, the unpredictable nature and potentially enormous financial impact of such incidents make it challenging for insurers to provide standard coverage without facing unsustainable losses. Instead, coverage for these risks typically requires an additional war risks policy, specifically designed to address the unique challenges and exposures associated with geopolitical conflicts and terrorism.

4. Nuclear Risks

A vessel transporting legal cargo passes near a recent nuclear accident site, resulting in radioactive contamination of the hull.

Hull Insurance Exclusion Explained:

Damage from nuclear activity and radioactive contamination is typically excluded in marine hull policies. This policy stance stems from the exceptional nature of nuclear risks, which encompass an array of challenges including, but not limited to, the direct impact of radiation on physical structures, the complex decontamination process required, and the broader environmental and health implications.

The exclusion of nuclear risks from standard hull insurance coverage is predicated on several factors. Primarily, the scale and scope of potential damage associated with nuclear incidents are often beyond the risk appetite of traditional insurance mechanisms. Furthermore, the unpredictable and far-reaching effects of radioactive contamination complicate the assessment and quantification of risks, making it exceedingly difficult for insurers to model potential losses and price policies accordingly.

5. Overloading of Goods/Cargo

To maximize profits, a bulk cargo vessel overloads with mineral ore, exceeding its safe carrying capacity while sailing on the Indian Ocean. This results in structural stress and subsequent hull damage.

Hull Insurance Exclusion Explained:

Insurance policies are designed to mitigate risks, not encourage reckless behavior. Consequently, damage resulting from overloading—a clear act of negligence—is typically excluded from hull insurance coverage. 

This exclusion serves as a deterrent against overloading practices, emphasizing the importance of adhering to safety standards and operational limits. It reflects insurers’ stance on promoting responsible shipping practices and safeguarding maritime safety. 

Overloading is among the most common causes of claims in the maritime industry, making this exclusion a key component in protecting against avoidable risks and encouraging shipowners to maintain rigorous standards of ship operation and cargo management.

6. Unlawful Acts and Breaches of Regulation

During a crew member’s birthday celebration, a vessel approached closer to Mauritius’s coastline for better internet connectivity. This decision caused the ship to run aground on a reef adjacent to UNESCO protected areas, leading to the spillage of approximately 1,000 tonnes of bunker fuel. This spill constituted the most severe ecological crisis Mauritius has ever faced.

Hull Insurance Exclusion Explained:

This incident directly reflects the type of scenario hull insurance policies are designed to exclude from coverage. Policies specifically outline that damages or losses resulting from illegal activities, breaches of maritime regulations, or irresponsible behavior—such as engaging in alcohol-fueled parties on board that compromise vessel safety—are not covered.

This exclusion underscores the insurance industry’s stance that coverage should not extend to risks stemming from deliberate or negligent actions that violate legal and ethical standards.

7. Ignoring Weather Warnings

Despite receiving severe weather warnings, a captain made the fateful decision to proceed with the voyage. This choice led to the vessel encountering a violent sea storm, resulting in significant damage. The adverse weather conditions, compounded by a lack of adherence to clear safety procedures, ultimately necessitated an emergency evacuation and the vessel being towed to safety. This incident highlights the critical importance of heeding meteorological advisories and the dire consequences of neglecting such guidance.

Hull Insurance Exclusion Explained:

Insurance policies distinctly exclude coverage for damage sustained when vessels sail into known adverse conditions, especially following explicit weather warnings. This exclusion reflects the insurance industry’s expectation for maritime operators to engage in responsible navigation and risk assessment practices.

Choosing to ignore weather warnings constitutes a clear violation of safety protocols. It is a decision that not only endangers the vessel and crew but also signals to insurers a disregard for the foundational principles of risk management. Consequently, insurance coverage is withdrawn for damages arising from such reckless navigation decisions, emphasizing the vital role of due diligence and safety adherence in maritime operations.

Conclusion

It’s clear that while hull insurance provides essential coverage to protect against physical damages and significant losses, the exclusions play a decisive role in defining the boundaries of this protection.

The variability among policies from different insurers underscores the need for a detailed and personalized evaluation when selecting the most appropriate coverage. Moreover, these exclusions not only serve to delineate the insurers’ liability but also promote safe and responsible navigation practices among shipowners and operators.

Marlin Blue is poised to help insurers and reinsurers facing challenges with hull insurance exclusions. Our services range from providing proactive advice to mitigate future risks to offering expert legal representation for ongoing claims. 

Contact Marlin Blue for strategic legal guidance and support.

Marlin Blue secures position as leading legal Consultancy with ALSUM membership

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This partnership is the culmination of vision and collaborative effort among distinguished members of the marine insurance and legal community, including Leonardo Umaña, Secretary-General of ALSUM, and board members Arturo Posada, Leonardo Morales, and Erika Schoch, whose warm welcome and support have been pivotal in this endeavor. Their acknowledgment and backing not only reinforce the significance of this alliance but also herald a promising future for synergies between Marlin Blue and ALSUM.

Marlin Blue’s inclusion as a member of ALSUM marks a significant step forward in our strategic plan for institutional strengthening in 2024. Through this alliance, we aim not only to consolidate our reputation in the sector but also to make a meaningful contribution to the development and professionalization of maritime law in the region. Partnering with ALSUM allows us to access a broader network of professionals and experts in the field, foster the exchange of knowledge and experiences, and enhance our capabilities to handle even more complex and challenging cases within the marine insurance sphere.

Our focus will be on further strengthening our legal services offering to H&M and cargo insurance providers, focusing on the specific needs of the LATAM market and adapting to its changing dynamics. We are committed to providing innovative and effective legal solutions, backed by our technical expertise and deep understanding of maritime laws and regulations.

This moment represents a significant milestone not just for Marlin Blue but for all our clients and partners, who will directly benefit from our expanded capacity and renewed focus on excellence and innovation in maritime law. We are excited about the opportunities this alliance with ALSUM presents and remain committed to continuing as leaders in providing specialized legal consultancy in the maritime sector.

Legal Precision in Hull Insurance: The Impact of the Wording in Exclusion Clauses

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Discussing the nuances of these terms helps clarify the extent of protection and the specific risks that are excluded, which can significantly impact both the insurer’s liability and the insured’s coverage expectations.

Let’s delve into specific examples.

1. The seemingly similar terms

The distinction between closely related terms carries different implications for coverage. For instance, the difference between “faulty design” and “faulty workmanship”, “wear and tear” and “gradual deterioration”, “seaworthiness” and “fitness for a voyage”, and “collision” versus “allision.” Each pair presents subtle differences that affect coverage.

For example, “seaworthiness” implies a vessel’s overall condition for safe maritime operations, whereas “fitness for a voyage” specifically relates to its suitability for a particular journey.

“Collision” involves impact with another moving vessel, contrasting with “allision,” which refers to striking a stationary object. These nuanced differences significantly influence the insurer’s liability and the claims process, highlighting the importance of precise terminology in policy documentation.

2. Modifications in the terminology

The adaptation of terminology within exclusion clauses in hull insurance policies testifies to an evolution in language that reflects not only advancements in maritime technology and operations but also a response to broader legal interpretations and risk management strategies.

In Nordic Rules, the transition from “ship” to “vessel” exemplifies this evolution, broadening the insured scope to include not just the physical structure and machinery but also onboard equipment and spare parts. This change, directly affecting coverage scope and potentially leading to premium adjustments due to increased insured value and covered risk, also caters to integrating advanced navigation systems that may eliminate exclusions for navigational errors.

Additionally, when utilizing older hull insurance forms, additional exclusions often added may pertain to risks that have become more prominent or better understood over time.

Regulatory changes in maritime law or insurance regulations, such as environmental concerns, necessitate policy adjustments to cover risks previously excluded. For example, during policy renewal or the negotiation of a new policy, insurers may adjust the exclusions to reflect their evolving understanding of risk exposure and the increasingly comprehensive regulatory environment. This adjustment might include more robust coverage for environmental damage or stricter liability standards for oil spills. 

This shift in language is key for aligning insurance policies with the maritime sector’s current needs and risks, demonstrating an adaptation to the contemporary operational and technological realities of vessels. The aim of adding such exclusions is to clarify coverage limits in response to evolving maritime risks and legal landscapes, ensuring a clear understanding of the policy’s scope for all parties involved.

Conclusion

Exclusions are key in tailoring insurance products to specific risks and accurately pricing policies. The precision in the wording or terms of exclusion clauses is essential for delineating insurance policy coverage. Accurate language mitigates misunderstandings and potential disputes by clearly defining the scope of coverage. 

At Marlin Blue, we offer guidance on how insurers can approach the process of modifying or removing exclusions, including risk analysis, market competition considerations, and policyholder communication. 

For more insights and guidance, contact Marlin Blue’s team and Marlin Blue’s website at www.marlinblue.com.

Phantom Carriers: Addressing Cargo Theft in Insurance Claims

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Cover book Phanton Carrier: addressing cargo theft in insurance claims

Phantom carriers are clandestine operators that infiltrate the logistics industry by presenting themselves as legitimate freight carriers. This fraud becomes apparent when goods are reported lost or stolen in transit, triggering insurance claims.

They employ a variety of sophisticated methods to appear credible, including:

Fake document fabrication

These criminals meticulously produce forged documents and set up counterfeit websites that closely resemble those of authentic logistics firms. This extensive forgery spans bills of lading, insurance documents, vehicle registrations, and other transport documents, making it exceedingly difficult for businesses to discern the legitimacy of their operations.

Investigations commonly reveal that the vehicles used in these operations are stolen, equipped with counterfeit registration numbers, and operated by individuals with fabricated credentials. Utilizing online transport databases, phantom carriers pose as reputable providers to respond to companies in dire need of transportation services.

Fake company cloning

This tactic involves replicating the identities of legitimate companies using disposable communication tools and computers with masked IP addresses, allowing these fraudsters to convincingly impersonate real transport providers. This method not only misleads companies seeking logistic services but also risks damaging the reputations of genuine, established businesses.

Fake consignee

In this elaborate scheme, an unknown forwarding company registers with the consignor, providing details of the trailer and the carrier. Upon verification by the consignor, the carrier appears to be a legitimate entity, with all necessary documentation for the semi-trailer set, insurance, driver’s, and vehicle documents verified and in order. The operation proceeds under the guise of normalcy, with the carrier tasked to deliver the loaded goods to their intended destination.

Upon arrival, however, the carrier reports to a consignee that was deceitfully added to the order by the phantom entity. This fake consignee then directs the carrier to offload the goods at a location different from that specified in the CMR document.

The justification provided is often a plausible but misleading one, such as the need to deliver to a “second warehouse – just around the corner.” Following these instructions leads to the disappearance of the goods.

Complicating matters further, the carrier, having followed the directions provided by the fake consignee, considers the delivery obligation fulfilled as per the instructions received from the forwarding company. This adherence to the fraudulent instructions, coupled with the CMR document’s assertion of correct delivery, obfuscates the theft, leaving the consignor without their goods and the phantom carrier with plausible deniability.

Place employee at legitimate trucking company

In some instances, phantom carriers may involve placing a complicit employee within a legitimate trucking company to leak sensitive information or to facilitate fraudulent activities directly. Alternatively, a member of the criminal group might get hired by the company for the same purpose.

Tucked carrier fraud

Phantom operators, under the guise of an unknown forwarding company, deceitfully secure transportation contracts. These carriers, verified by senders as legitimate entities with all requisite documents in order, are tasked with transporting goods. However, in a sinister twist, the goods are unloaded at locations not specified in the CMR document, leading to their disappearance. It’s later discovered that the carrier was instructed by the forwarder to perform a different transport than what was outlined in the CMR, with the carrier claiming to have simply followed the forwarder’s orders. In instances where carriers resist these unlawful directives, they face threats of violence, highlighting the dangerous lengths to which these fraudsters will go to execute their schemes.

Freight Forwarding Company Exploitation

In this scheme, forwarding companies attract carriers with the promise of high compensation, securing transport orders at competitive rates to amass large volumes of transport. However, after a period of operation, these companies abruptly cease payments to carriers, leading to significant financial liabilities. Eventually, these forwarding companies vanish, leaving carriers with unpaid dues and no means of recourse. The abrupt disappearance of both staff and ownership further complicates the pursuit of justice for affected parties.

Trailer Thieves

A particularly heinous operation involves phantom forwarders luring carrier vehicles under the pretense of legitimate loading assignments abroad, with the actual intent of stealing the vehicles rather than the cargo. This method has been linked to severe criminal activities, including the murder of drivers, as was notably the case when vehicles were directed towards the former Yugoslavia. The situation was exacerbated by premature police intervention, informed by leaked details, which hindered the comprehensive resolution of the case and the apprehension of all involved criminals.

These elaborate and nefarious tactics employed by phantom carriers and fraudulent forwarding companies demonstrate the significant risks and potential for violence within the logistics industry. The sophistication and audacity of these schemes underscore the urgent need for robust verification measures, vigilant monitoring, and a cooperative effort among industry stakeholders to safeguard against such fraudulent activities, ensuring the security and integrity of the supply chain.

The culmination of these fraudulent activities often leads to the disappearance of goods, as phantom carriers divert shipments to unauthorized locations, leaving businesses without their cargo and facing substantial financial losses.

Impact on the European Market

This phenomenon is particularly damaging in the European market, where the interconnected nature of logistics networks allows these fraudulent operators to blend in and target unsuspecting companies. They often exploit busy trade routes, major ports, and logistic hubs, areas where the demand for carrier services is high.

Particularly within the DACH region, which includes Germany (D), Austria (A), and Switzerland (CH), the effects are markedly severe. The dense web of trade corridors and logistical nodes that span across these nations not only facilitates the smooth transit of goods but also renders them particularly susceptible to the machinations of phantom carriers.

Various reports by TAPA EMEA (Transported Asset Protection Association Europe, Middle East & Africa) shed light on the scale and nature of cargo theft incidents, offering a glimpse into the situation in these countries.

For instance, intelligence from TAPA EMEA in 2023 underscored a worrying escalation in cargo theft incidents across the continent. Despite the United Kingdom registering the highest number of incidents in a given month, the DACH region remains conspicuously challenged by this menace. The strategic positioning of Germany, Austria, and Switzerland, coupled with their active ports and trade pathways, renders them prime targets for criminal undertakings, including those executed by phantom carriers.

In Germany, which serves as a crucial nexus for European logistics and transportation, the rising incidence of phantom carriers has necessitated a critical reassessment of security protocols and insurance frameworks. Acknowledging the profound economic repercussions of cargo thefts, evidenced by the staggering daily loss of products valued at €834,000 across the EMEA region in April 2023, the German insurance sector has led the charge in formulating sophisticated cargo insurance solutions aimed at curtailing these risks.

Similarly, Austria and Switzerland, albeit smaller in land area, confront analogous hazards owing to their integral positions within the trans-European logistics fabric. The considerable value and fluidity of commodities traversing these territories highlight the imperative for stringent legal structures and insurance schemes to safeguard against the financial losses engendered by phantom carriers.

Most Targeted Products

According to the 2023 updates and findings from various authoritative sources including TAPA EMEA and BSI, TT Club, there has been a notable shift in the trends and patterns of cargo theft, affecting different types of goods across the global supply chain.

Electronics, pharmaceuticals, and luxury items continue to be highly coveted by cargo thieves due to their high value-to-weight ratio, making them ideal targets for theft and subsequent resale on the black market. These goods offer high resale value with minimal traceability, attracting organized crime groups specialized in cargo theft.

Recent reports indicate a significant trend towards the theft of basic goods such as food and beverages, automotive parts, and fuel. This shift is partly attributed to the macro-economic impact of inflation, which has altered criminal patterns, pushing thieves to target goods that were previously considered less attractive. Fuel theft, in particular, has seen a rise, impacting supply chain security and resilience due to the vulnerability of trucks left stationary and susceptible to other forms of cargo crime.

How to fight phantom carriers? Prevention Measures

Mitigating theft in claims requires a comprehensive approach that necessitates careful attention and proactive measures from all entities engaged in the shipping process.

To substantially minimize risks and financial exposure, businesses must implement comprehensive prevention strategies. These strategies should encompass:

  • Verify all carrier documents for authenticity.
  • Check truck and trailer registration numbers.
  • Photograph the truck and its license plate during loading.
  • Request and document the driver’s license or ID.
  • Conduct thorough internet searches and phone verifications of company information.
  • Build and maintain strong relationships with carriers.
  • Limit carrier selection to a trusted group.
  • Enforce scheduled routes with controlled stops, disallowing personal detours.
  • Implement satellite and GPS tracking systems with frequent position updates.
  • Require multiple contact numbers and details for verification.
  • Establish direct communication with multiple carrier representatives.
  • Be cautious of unsolicited “special deals” or missing documentation, and report concerns to management.
  • Ensuring that all staff involved in the handling and transportation of cargo are aware of and trained in security best practices.

Ascertaining Liability in Instances of Cargo Theft by Carriers

In cases of cargo theft by phantom carriers, the insurance sector utilizes subrogation as a legal mechanism to recoup losses after compensating the insured. This process requires identifying liable parties, collecting essential evidence for a strong claim, and navigating jurisdictional challenges to enforce judgments.

Subrogation is vital for mitigating the financial impact of cargo theft and ensuring accountability.

Determining liability when cargo is stolen presents a multifaceted legal challenge, deeply rooted in the specifics of the transport contract, particularly the Bill of Lading. This contract may contain specific provisions related to theft prevention, any relevant instructions, reporting obligations, and security measures that dictate how liability is shared between shippers, carriers, and logistics providers.

The adjudication process also entails an exhaustive examination of the carriage contract’s clauses, the coverage details of the insurance policy, and the applicability of any relevant international conventions or national legislation governing cargo transportation. Notably, the Convention on the Contract for the International Carriage of Goods by Road (CMR) mandates shared responsibility among all parties in the transport chain, underscoring the principle of collective liability. This aspect is crucial for understanding how the CMR facilitates unified responsibility in the transportation chain.

Immediate documentation of theft, preservation of evidence, and prompt notification of all involved parties are essential first steps in liability determination. Additionally, victims may have the legal basis to sue third parties whose negligence enabled the fraud. For example, brokers who fail to verify a carrier’s legitimacy could face claims for negligence, misrepresentation, or dereliction of duty.

In certain scenarios, victims can pursue legal recourse against third parties whose oversight contributed to the fraud, emphasizing the legal implications of inadequate verification of carriers’ authenticity. These actions are grounded in principles of negligence, misrepresentation, or failure to perform due diligence.

We invite insurance companies and all industry stakeholders to reach out to Marlin Blue to discover how we can support your business in overcoming challenges, including recouping losses through subrogation, and maintaining the integrity of global supply chains.

Our resources are specially designed to enhance your risk management strategies, improve your handling of legal and insurance claims, and facilitate effective recovers post-subrogation.

SOURCES

  • TAPA EMEA. (2023a). “A Look at Cargo Crimes Reported to the TAPA EMEA Intelligence System (TIS) in the First Nine Months of 2023.” [Online]. Available: https://tapaemea.org/news/a-look-at-cargo-crimes-reported-to-the-tapa-emea-intelligence-system-tis-in-the-first-nine-months-of-2023/
  • TAPA EMEA. (2023b). “Over €12 Million of Goods Lost from Supply Chains in May 2023.” [Online]. Available: https://tapaemea.org/intelligence/over-e12-million-of-goods-lost-from-supply-chains-in-may-2023/

Top 15 Risks Covered for Shipowners in Marine Insurance

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A key strategy lies within the realm of marine insurance, where two principal policy types stand out: Hull and Machinery (H&M) and Protection & Indemnity (P&I).

These insurance types are indispensable tools for a shipowner, acting as a bulwark against the myriad risks that accompany maritime activities.

H&M insurance covers physical damages to the vessel, a crucial aspect of maintaining operational continuity after maritime accidents. On the other hand, P&I insurance covers a broader range of liabilities towards third parties, including damages to other vessels, injuries to individuals, and environmental pollution.

Together, these insurances form a comprehensive shield, fortifying a shipowner’s interests against the unpredictable seas of maritime operations.

Let’s delve into the specific risks and coverages relevant to shipowners in marine insurance:

Navigational Risks

The navigational risks could include groundings, severe weather damage, and damage to maritime structures. Such structures include docks, piers, jetties, bridges, undersea cables, and pipelines.

The H&M insurance is indispensable in this context, providing coverage for physical damage to the ship.

A classic example of where H&M insurance plays a crucial role is in the case of a vessel sinking without loss of life. In such a scenario, the insurance policy would typically reimburse the insured value of the hull to the shipowner.

Pollution Risks

In today’s environmentally conscious world, pollution risks stand out as a primary concern for shipowners.

The maritime industry, with its reliance on heavy fuels, has the potential to significantly impact the environment. Instances of oil spills, chemical leaks, or other forms of pollution can lead to severe ecological damage, resulting in hefty fines and cleanup costs.

Both H&M and P&I policies address these risks.

Collision Risks

Collision liability refers to the shipowner’s legal responsibility for damages caused by their vessel to another vessel, object, or property. 

In the event of a collision, the shipowner could be held liable for any harm inflicted upon the other vessel, its cargo, or any other property implicated in the incident. 

This liability may stem from various factors, including negligence, improper navigation, or other acts or omissions by the shipowner or crew.

Following a collision, the shipowner faces potential legal claims, liabilities to third parties, and significant repair costs.
To protect against these risks, they are covered under the H&M insurance policy. This policy typically covers three-quarters of the damages incurred in a collision. The remaining quarter is either absorbed by the shipowner or covered by P&I insurance.

General Average Contributions

The concept of ‘General Average’ is rooted in maritime law, wherein all parties in a sea venture proportionally share the loss resulting from a sacrifice for the common good. This can include the shipowner, cargo owners, and any other parties with a financial interest in the voyage.

For shipowners, the General Average principle can lead to substantial unforeseen expenses. Hence, having H&M insurance helps by covering their proportion of the loss, and ensuring that shipowners are not disproportionately affected by these shared maritime losses.

The Yantian Express incident in 2019, where cargo owners had to contribute to the losses, exemplifies the necessity of H&M insurance in covering such contributions.

Salvage Charges

In the event of an accident or emergency, the costs associated with the salvage and rescue of a vessel can be considerable.
These expenses are not limited to the recovery of the vessel itself but also include environmental cleanup efforts and measures to mitigate further damage. Additional costs such as legal and consultancy fees often emerge from incident investigations, litigations, or negotiations.

Furthermore, costs related to containment and mitigation are crucial for minimizing environmental and third-party property damage.
In scenarios requiring evacuation, expenses for crew accommodation and repatriation also arise.

A critical, yet sometimes overlooked, consequence is the loss of income during the vessel’s downtime.

H&M insurance typically covers the expenses related to the recovery and repair of the shipowner’s vessel, while P&I insurance may cover salvage-related liabilities towards third parties, including rescue operations for crew and passengers.

Miscellaneous Disaster-Related Expenses

In maritime operations, shipowners face “Miscellaneous Disaster-Related Expenses,” encompassing unforeseen costs from emergencies or disasters. These include emergency response and mitigation actions, legal and administrative fees, environmental cleanup, cargo-related expenses, crew accommodation and repatriation, and potential loss of income.

Such expenses are unpredictable and significant, necessitating comprehensive insurance to safeguard against financial instability.
These risks in the maritime industry may be covered under both H&M and P&I insurance policies, but the extent of coverage depends on the specific terms of each policy.

Constructive Total Loss

This occurs when the cost of repairing a vessel exceeds its value. H&M insurance covers such scenarios, providing vital support to shipowners.

Crew Liability Risks

Shipowners are responsible for their crew’s safety and wellbeing. These encompass responsibilities for crew injuries or illnesses, including medical expenses and compensation, and extend to repatriation and accommodation in emergencies or contract terminations.

Shipowners are also bound to honor contractual wages and benefits, even during vessel inactivity. Negligence, resulting in harm due to unsafe working conditions or inadequate equipment, can lead to significant liability. Additionally, labor disputes or contractual breaches may invoke legal challenges.

P&I insurance offers coverage for any liabilities arising from crew-related incidents.

Passenger and Third-Party Liabilities

Liabilities towards passengers and third parties, such as injuries or damage to cargo, are significant concerns in maritime operations. The risks increase manifold in situations like onboard accidents, cargo mishandling, or navigational errors.

P&I insurance provides protection against claims arising from such incidents.

Risks of Wreck Removal Liabilities

Shipowners are legally bound to remove wrecks, a duty that entails potentially expensive and complex operations. This responsibility often arises in the aftermath of maritime accidents where a vessel has sunk or been abandoned, posing navigational hazards or environmental threats.

P&I insurance typically covers these responsibilities.

Loss of Hire Risks

Loss of Hire insurance addresses the financial implications when a vessel is temporarily non-operational due to covered perils. Scenarios like repair, salvage operations, or inability to fulfill commercial activities are included.

Risks Not Covered by Hull and Machinery (H&M) Policy

Exposure to risks that fall outside the scope of H&M insurance necessitates additional coverage.
These risks might include certain types of environmental damages, specific legal liabilities, or other extraordinary expenses that are not traditionally covered by H&M policies.

Cargo Damage Risks

Cargo insurance, typically separate from H&M and P&I policies, offers coverage for damage or loss of goods in transit.
This insurance is crucial for safeguarding the financial interests of both the shipowner and the cargo owners, ensuring compensation for any harm or loss to the cargo

War Risks

The perils of war, including hostile acts, hijacking, and piracy, are unique challenges in maritime operations.
These dangers are explicitly excluded in the standard H&M insurance clauses, most notably in the Institute Time Clauses (ITC). Recognizing this gap, there exists a specific attachment known as the Institute War and Strikes Clauses, which addresses these exceptional risks.

War risk insurance is essential for providing coverage against these unique threats. It offers crucial protection in areas of heightened risk or during periods of conflict.

This type of insurance is especially vital for vessels operating in high-risk zones or during volatile times. With the standard H&M policies excluding war-related risks, the War and Strikes Clauses attachment becomes a key element in ensuring that shipowners have financial protection against these extraordinary risks.

Cyber Security Risks

As shipowners increasingly integrate technology into all aspects of a vessel’s operations and shore-side activities, cyber security emerges as a significant concern. The growing interconnectivity of these technological systems heightens the risk of cyber attacks, which can disrupt operations and lead to substantial financial losses.

Given the novel nature of these risks, they are not covered under the standard ITC in H&M insurance policies. To address this gap, the shipping industry has introduced a specific attachment known as the Institute Cyber Attack Exclusion Clause. This clause is a critical adaptation to the evolving landscape of maritime risks, acknowledging the unique challenges posed by cyber threats.
The Institute Cyber Attack Exclusion Clause outlines the limitations and exclusions related to cyber risks, highlighting the need for shipowners to seek additional, specialized insurance coverage for cyber threats.

For further information or to check if a specific claim is covered under your policy, please contact us.

 

Content reviewed by Guillermo Zamora.

 

Notice of Loss in Cargo Claims: 11 Key Questions for Claims Handlers

by
Consignee noting details on a clipboard, documenting receipt of goods

This is essentially a written expression of disagreement with the state of the delivered goods.

For those handling cargo claims operating within the domain of transport contracts, a deep understanding of this concept empowers them to competently manage and respond to a variety of important queries and challenges integral to the claims process.

The notice of loss initiates the formal procedure for assessing and addressing the loss or damage under the terms of the transportation contract. It’s important to distinguish this from a claim under a marine insurance policy, which is a separate process involving the insurance provider.
The specific requirements and form of a notice of loss can vary depending on the terms of the contract and the nature of the transportation. Therefore, consulting the relevant contractual documents is crucial for understanding the exact definitions and stipulations involved.
Let’s explore some key questions about “notice of loss,” a fundamental element in the landscape of cargo transportation and claims management.

1. What is a notice of loss?

A notice of loss is a formal declaration made by the consignee to the carrier, indicating the intent to claim for damages or losses that occurred during the transit of goods.
This notification is an essential initial step in the claims process under the transport contract, serving as an official alert to the carrier about the issues with the delivered cargo.

2. Who notified the claim?

In the context of cargo claims under transport contracts, the notification of loss or damage can originate from different parties, each influenced by their role in the shipping process and their exposure to the loss or damage.

Typically, the party that first discovers the loss or damage, or is most directly affected by it, assumes the responsibility to notify the claim. This can include:

  • More often, it is the consignee, the recipient of the cargo<, who issues the notice of loss. This is typically done upon receiving the cargo when the consignee might identify damages or discrepancies. Since the consignee is directly affected by the condition of the cargo, they are usually in the best position to notice and report any issues.
  • In some cases, a third party such as a freight forwarder, logistics operator, or legal representative may issue the notice of loss. This usually happens when they are acting on behalf of the shipper or consignee, or when they have identified the loss or damage during their handling of the cargo. It’s important that such notifications are properly authorized and documented to ensure they are recognized in the claims process.

3. Who is the notice of loss for?

The notice of loss should be directed towards the person or company responsible for the transport, or their agent or representative, who is presumed to be the responsible party.

The inclusion of the notice of loss in the consignment note at the time of delivery enables the carrier to:

  • Immediately become aware of any irregularities and prepares them to address a potential claim. This proactive awareness is crucial for taking timely and appropriate actions.
  • Provide legal certainty to both the carrier and their insurer. The carrier not only understands the existence of irregularities but also recognizes the potential need to face a claim related to these irregularities. This helps in preparing their response and any necessary documentation or evidence.
  • Preserve the right to recourse against the actual perpetrator of the damage, especially if they are not the actual carrier. This means that while the claim is initially directed at the carrier, the carrier may have the right to seek compensation from the party truly responsible for the loss or damage.

4. How do you make a notice of loss?

The most common method of making a notice of loss is by recording it in the consignment note.

According to the notification requirements under COGSA (Carriage of Goods by Sea Act), the written notice must be directed specifically to the carrier or their agent, forming a key element in the claim process.

This document is vital as it verifies the existence of the transport contract and details its terms and conditions. The note typically accompanies the goods throughout their journey, making it an accessible and reliable medium for recording any reservations or protests about the cargo’s condition.

It is important to understand that the notice of loss is a unilateral declaration. It does not require the carrier’s acknowledgment, represented by the driver or any other agent, either as a sign of agreement or as a mere receipt of the communication. This highlights the independence of the notice of loss from the carrier’s direct confirmation or acceptance.

While recording the notice on the transport document is crucial, it is also advisable to send a formal protest letter (document) to the carrier. This letter serves as an additional formal record of the notice of loss, providing a more comprehensive approach to documenting the claim.

In Spain, the Law of Land Transport Contract (Ley de Contrato de Transporte Terrestre de Mercancías) provides guidelines for handling road transport cargo claims. This law stipulates that for apparent damage or loss, the consignee must immediately notify the carrier at the time of delivery. This is often done through an annotation on the delivery or consignment note, which should be acknowledged by the carrier. Understanding and following these legal stipulations are vital for the valid and timely processing of claims.

6. In what scenarios is a notice of loss required in cargo transportation?

Here are some of the key scenarios where such actions are necessary:

  • Damage to goods
  • Shortage of goods
  • Late delivery
  • Non-Delivery
  • Concealed damage or loss
  • Incorrect goods

In each of these situations, timely and accurate documentation through a notice of loss is critical for ensuring that the claim is handled appropriately and the rights of the consignee are protected.

7. What information should a notice of loss contain?

A notice of loss typically needs to include the following information:

  • Date and time: The specific date and time when the loss or damage occurred.
  • Detailed description of goods: An in-depth description of the goods that were affected.
  • Estimated value: The estimated value of the loss or damage.
  • Circumstances of Loss: A description of how, where, and why the loss occurred if known.
  • Transport contract details: Relevant information from the transport contract, such as the bill of lading number.
  • Immediate actions taken: Any steps that were immediately taken after discovering the loss.

 

8. What are the consequences of failing to include a notice of loss?

If a notice of loss is not made in time, the carrier often benefits from a legal presumption that the goods were delivered correctly.

This presumption shifts the burden of proof to the claimant (typically the consignee), making it more challenging to establish that the loss or damage occurred during transit.

Failing to notify a loss within the specified time frames can have significant implications on the validity and success of a cargo claim. Without timely notification, it becomes more difficult for the claimant to prove the extent, cause, and timing of the loss or damage. This can significantly weaken their position in any legal or insurance claim.

Insurers may refuse to cover the loss if the failure to notify constitutes a breach of the policy conditions. Timely notification is often a key condition in insurance contracts.

Imagine a scenario where a consignee, “Oceanic Imports,” receives a shipment of electronic goods via sea transport. Upon delivery, the company’s warehouse manager notices several damaged boxes but decides to delay reporting this due to the busy season and the need to process orders. The manager eventually reports the damage to their insurance company and the carrier 10 days later.

However, the insurance policy stipulates that any damages must be reported within 5 days of receipt for the claim to be valid. Moreover, under the Hague-Visby Rules applicable to sea transport, the notification period for concealed damages is 3 days. Due to these missed deadlines, the insurance company refuses to cover the loss, citing a breach of policy conditions. Additionally, the carrier disclaims liability, arguing that the delay in reporting the damage has made it impossible to ascertain whether the damage occurred during transit or while in the warehouse of “Oceanic Imports.”

As a result, “Oceanic Imports” faces significant financial losses from the damaged goods, compounded by the inability to recover these losses from their insurer or the carrier. This example underscores the importance of adhering to the notification time frames stipulated in insurance policies and international transport regulations.

9. Is a notice of loss an assessment of damages?

A reservation (notice of loss) should not be confused with a formal assessment of damages. It serves a different purpose and has distinct legal implications:

  • Making a reservation does not confirm the actual occurrence of damage.
  • It’s a preliminary step that acknowledges a potential issue with the cargo, rather than a detailed evaluation of any specific damages.
  • The legal value of a reservation lies in its ability to flag a potential issue at the time of delivery. It serves as an early indication that the consignee may later raise a formal claim for damages, subject to further assessment and validation of the actual loss or damage.

10. Is a notice of loss sufficient to initiate an insurance claims process?

There is a widespread but erroneous belief that a notice of loss is enough to later claim compensation from the carrier for damaged or missing goods. However, this is not the case.

A reservation does not equate to an assessment of damages. It neither confirms the actual occurrence of damage nor determines its cause or extent. Rather, it merely indicates disagreement with the state of delivery, serving primarily to counter the presumption of correct delivery of goods at the destination. That is its sole legal value.

This is explained based on the regulatory framework governing the transport contract:

For International Transport: The CMR Convention of May 19, 1956, in its Article 30, states:

  • If the recipient receives the goods without verifying their condition in opposition to the carrier, or if, at the moment of delivery in case of apparent losses or damages, or within seven days from the date of delivery in case of concealed damages or losses (excluding Sundays and holidays), does not express reservations to the carrier indicating the general nature of the loss or damage, it will be presumed, unless proven otherwise, that the goods were received in the state described in the consignment note.

 

For National Transport within Spain: Law 15/2009 of November 15, in its Article 60.1, states:

  • The recipient must express reservations in writing to the carrier or its assistants, describing the loss or damage in a general way at the time of delivery. In case of non-apparent damages and losses, the reservations must be made within the following seven natural days after delivery.

 

When no reservations are made, it will be presumed, unless proven otherwise, that the goods were delivered in the state described in the consignment note.

Both regulations are almost identical (in fact, the Spanish law is almost a copy of the Convention). Although the Spanish law seems better drafted as it separates the reservation and its alternative, which is bilateral verification, while Article 30.1 of the CMR contemplates them jointly, and its wording is clearer.

Another difference is that the CMR only requires reservations about non-apparent damages to be written, while the national law requires all of them to be in writing. However, in practice, in international transport, reservations are also made in writing, specifically in the consignment note.

The implication of both regulations – for national and international transport – is the same. What they establish – read carefully, as they are stated only in a negative form – is that if no reservations are made at the destination, it is presumed that the goods were delivered correctly.

 

11. What is the next step after including a notice of loss?

Once the notice of loss is included in the consignment note, the subsequent steps are crucial for effectively managing the claim process. These steps typically involve:

  • Submitting a formal claim: This involves compiling and submitting all required documentation to support the claim. The documentation should provide detailed information about the nature and extent of the loss or damage.
  • Damage assessment by surveyors or inspectors: Engaging with professional surveyors or inspectors to assess the damage is a key step. Their evaluation will be critical in determining the severity and cause of the loss.
  • Continuous communication: Maintaining ongoing communication with the carrier and the insurance company is essential for the smooth handling of the claim. This ensures that all parties are informed about the claim’s status and any developments.
  • Follow-up on claim progress: Actively following up on the progress of the claim is necessary for a timely resolution. This includes responding to any inquiries and providing additional information as needed.

In cases where the goods are recoverable or salvageable, appropriate and reasonable measures should be taken based on the nature of the damage, type of goods, and specific circumstances.

These measures might include costs for salvage, such as storage, additional transportation, protection, etc. Such expenses are normally covered under a cargo insurance policy. Therefore, it is crucial to keep all relevant documentation of these expenses, as they are important for the claim process.

Final key recommendations:

  • Act Promptly and adhere to time limits
  • Maintain detailed documentation
  • Understand legal terms and seek advice
  • Consulting with maritime law professionals is invaluable for tailored advice and effective management of claims in compliance with legal standards.

 

At Marlin Blue, we provide specialized advice and effective management of claims, ensuring compliance with legal standards. Visit our Services Page for more information on how we can assist you.

For further insights and guidance, we encourage readers to explore the resources available on our website. Please refer to our About us page for an overview of our expertise in maritime law and Contact us for personalized advice on cargo claims.

Bibliography

  • Insuring Cargoes: A Practical Guide to the Law and Practice’, 2nd Edition, 2023.
  • Diego Esteban Chami, ‘La Protesta Aeronáutica: Teoría y Práctica’ (Abeledo Perrot).
  • “Carriage of Goods by Sea Act 1971”, legislation.gov.uk, available at <https://www.legislation.gov.uk/ukpga/1971/60> accessed [15/11/2023].

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