Trailer caught on fire and tyre blowout. Force majeure?

The products and clients involved

A shipment of almonds departs from Valencia, Spain, on route to Sempeter pri Gorci, Slovenia. In Brescia (Italy), the truck went on fire.

The incident

Due to this, the almonds that were to arrive in Slovenia never reached their destination, as the fire completely burned both the vehicle used and the merchandise inside, including the almonds which were insured by our client. It was possible to find out the origin of the fire thanks to the report carried out by the fire service that attended the scene, which confirmed that it had started after a puncture in one of the vehicle’s tires. The same conclusion was reached by the expert who inspected the truck.

The challenges we faced

In the course of the claim, there were differing opinions as to whether the matter could be considered as a circumstance that the carrier could not avoid and the consequences of which they could not prevent. However, in light of the documentation provided to support the exclusion of liability, the technical inspections of the vehicle do not in themselves prove the good condition of the tyres at the time of transport, as they do not refer to factors such as age, wear, or faulty pressure or balancing. Therefore, there was no cause for exoneration.

Conclusions

In this case, it was up to the company that transported the merchandise to demonstrate and prove sufficiently that the cause of the fire could not be avoided nor its consequences prevented. As a result, we were able to recover the amount of EUR 10,140 (100% of the amount claimed) for our client.

Cyber attack resulting in container loss

The products and clients involved

Our client is an insurance company who insured the cargo which was carried into the containers. The cargo was transported from Shanghai to Barcelona.

The incident

In June of 2017, a shipping company suffered one of the most serious cyber-attacks in the marine world in which they lost control of their systems. As a consequence of this cyber – attack, many vessels or containers couldn’t be located. In addition, different orders couldn’t be processed. In our case, the goods insured for our principals were lost in two different containers.

The challenges we faced

Usually, the cyber – attack is considered in the insurance policy as a force majeure. In other words, there isn’t a possibility to obtain a recovery because the carrier doesn’t have liability for the damage or loss.

However, the risks in the marine world are changing every day along with the world. It is very difficult not to assume that there is an important risk of suffering a cyber-attack, taking into account the development of new technologies. On this basis, we consider that companies should invest in security systems to protect from these new threats. We were facing two situations:

  1. The event is not unpredictable.
  2. The event is not irresistible We got an effective recovery from the shipping company.

Conclusions

It is very important to have an open mind when dealing with these types of challenges in order to prevent the exclusion of the carrier established in relation to the main transport conventions.

Fire damage claim: case study

Background

A shipment of footwear was transported from Portugal to Greece vía road transport.

The incident

The truck caught on fire on an Italian highway and the entire shipment was destroyed.

The challenges we faced

  • No information regarding the cause of the fire outbreak.
  • Limit of liability by CMR is lower than the amount paid by the insurer.

Conclusions

The insurer of the effective carrier accepted liability based on the fact that the cargo was under the carrier’s custody at the moment the loss occurred. In addition, we managed to receive an offer for 24,164.86 EUR, which is over the limit by weight established in the CMR Convention.

Cargo lost during transport: Breaking CMR liability limit

The products and clients involved

Shipping from Sweden to Spain. The type of cargo was
hairdressing supplies, and it was duly insured. Despite all efforts, it was impossible to determine the cargo whereabouts.

The incident

Cargo lost during transport. Probably in one of the warehouses.

The challenges we faced

  • Carrier’s liability was limited to 4.000 EUR (which was an 18% of the total loss) given cargo weight, and there were no clear-cut evidence of carrier wilful misconduct. 
  • In addition, the event occurred in the beginnings of COVID situation and its anomalous circumstances.

Conclusions

Although the circumstances did not point to a clear-cut negligence from the carrier, and the jurisprudence is not unanimous in these types of cases, through negotiation, we have managed to break the limit and to settle the case for a higher amount (a 200% of the CMR limit).

Therefore, having broken the CMR limitation and doubled its amount is a undoubted success. With this amicable solution we have managed to recover a 37% of the loss, in a very short time and without the costs, uncertainty and tardiness inherent to a lawsuit.

Contamination of the cargo by metallic particles

This case is an example of a liquid bulk cargo transportation claim, involving a significant issue of cargo contamination during transit, a critical concern in the transportation of hazardous chemicals.

The following section provides an overview of the key elements of the case, detailing the events, parties involved, and the nature of the incident.

The products and clients involved

The parties involved in this case are ABC Chemicals (the shipper), XYZ Logistics (the carrier), and DEF Manufacturing (the receiver). Each party plays a crucial role in the supply chain, and their actions and responsibilities are central to resolving this case.

The cargo in question was Styrene Monomer (Stabilized), a susceptible chemical product, transported by road from Spain to Italy.
The shipment included 24,340 kg of this product, intended for industrial use by DEF Manufacturing.

Incident details

During the transportation, the cargo was contaminated with metallic particles, detectable to the naked eye, and extractable with a magnet. This contamination rendered the cargo unsuitable for its intended purpose, leading to its rejection by the receiver, DEF Manufacturing.

This incident had significant repercussions for all parties involved. ABC Chemicals faced potential reputational damage and financial losses due to the rejected shipment. XYZ Logistics encountered potential liability claims and the necessity to address procedural gaps that led to the contamination. Meanwhile, DEF Manufacturing experienced operational disruptions due to the unavailability of the critical raw material, impacting their production schedule and efficiency.

Timeline of events:

  • Pre-Shipment: The cargo underwent standard quality checks and was certified as contamination-free before loading.
  • During Transit: The contamination likely occurred, although the precise point of contamination was initially unclear.
  • Upon Arrival: DEF Manufacturing identified the contamination, leading to immediate rejection and subsequent claims initiation.

Challenges Faced

The resolution of this case was complicated by several challenges.

One major challenge was the identification of the contamination source. Determining whether the contamination occurred at the loading point, during transit, or at the unloading point was critical. This necessitated an extensive investigation, including the involvement of a marine surveyor, and meticulous documentation to pinpoint the exact source of the contamination.

Another significant challenge was liability determination. Establishing carrier liability under international maritime laws and conventions, particularly focusing on the carrier’s duty of care, was essential. Ensuring that the burden of proof was met to hold the carrier accountable for the contamination required detailed examination.

Lastly, evidence collection posed its difficulties. Gathering and analyzing pre-shipment inspection reports, quality certificates, and laboratory analysis results were crucial steps. Additionally, comparing contamination reports with other shipments handled in the same period was necessary to rule out systemic issues at the shipper’s facility.

Key Legal Question

Who is legally liable for the contamination of the cargo, and what are the applicable legal standards and obligations under international maritime law and the specific contracts between the parties involved?

Legal Analysis

The legal analysis of this case involves examining the responsibilities and liabilities of each party involved. Several legal principles and contractual obligations come into play, primarily focusing on international maritime law, liability standards, and evidence requirements.

Contract of Carriage

The contracts between ABC Chemicals, XYZ Logistics, and DEF Manufacturing likely contain clauses regarding the handling, transportation, and liability for the cargo. These contractual terms must be examined to determine if any party breached their obligations.

Key clauses include those related to liability for contamination, inspection requirements, and procedures for handling disputes.

The rights and obligations of the carrier and shipper are typically outlined in the contract of carriage, which may incorporate standard terms from international conventions such as the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road) and relevant regulations for transporting hazardous materials.

Carrier’s Duty of Care 

Under the CMR Convention and other transportation laws, the carrier is responsible for exercising due diligence in ensuring the cargo is properly cared for during transit. This includes adhering to standards for transporting hazardous materials, such as the ADR (European Agreement concerning the International Carriage of Dangerous Goods by Road).

If the contamination is found to have occurred during transit, the carrier could be held liable for failing to meet these standards. However, the carrier may invoke defenses such as act of God, inherent defect of the goods, or insufficient packaging by the shipper.

Shipper’s Responsibilities

The shipper is responsible for properly packaging and labeling the cargo and providing accurate information about the cargo’s nature, complying with the ADR regulations. If the contamination is traced back to the loading point, ABC Chemicals could be liable for failing to ensure the cargo was free from contaminants before loading.

Burden of Proof

The burden of proof initially lies with the claimant (the shipper or consignee) to show that the cargo was damaged.

Once the damage is established, the burden shifts to the carrier to prove that the damage was due to an exception under the governing rules, such as those outlined in the CMR Convention, or that they took all reasonable measures to avoid the damage.

Evidence Collection

Pre-shipment inspection reports and quality certificates are crucial in demonstrating that the cargo was in good condition before loading. 

Evidence from cargo surveys and laboratory analyses confirming the presence of contaminants that were not present before loading supports the claim that the contamination occurred during transit.

Compliance with ADR regulations, including proper documentation and handling procedures for hazardous materials, is essential in establishing a clear chain of custody and responsibility.

Liability and Compensation

In this case, the failure to identify the source of contamination does not absolve the carrier from liability, as the pre-shipment quality certificates and post-incident analysis clearly establish that the cargo was contaminated during transit.

Legal precedents and maritime law principles typically hold the carrier liable for such in-transit contamination, unless they can prove the damage was caused by an excepted peril.

Impact on DEF Manufacturing

In this case, the failure to identify the source of contamination does not absolve the carrier from liability, as the pre-shipment quality certificates and post-incident analysis establish that the cargo was contaminated during transit.
Legal precedents and transportation law principles, including those under the CMR Convention, typically hold the carrier liable for such in-transit contamination unless they can prove the damage was caused by an excepted peril.

Resolution

An amicable settlement was achieved with the carrier, which agreed to compensate for 85% of the total loss, amounting to EUR 6520.75.
This resolution was facilitated by the robust documentation and thorough pre-shipment inspection reports that demonstrated the contamination that occurred during transit.

For expert legal advice on managing cargo claims and understanding carrier liability, contact us today. Our experienced team can help you navigate the complexities of transportation law and ensure your interests are protected.

Double insurance recovery

The products and clients involved

A sale of goods was arranged between a German maker of high quality cutting edge machinery and a very large Indian industrial conglomerate, for the purchase of two sets of brand new Horizontal Concentrix Machines along with their accessories for almost 1.000.000USD.

Original insurance and transportation

Transportation of these two sets of machines was arranged from their factory in China, in a multimodal carriage, up to the final storage depot of insured near Pune, Maharastra. What the final destination of the goods was and how many modes of transport are involved is an important factor to take into account; as such, the larger the number of conveyances that are involved in a transportation, the higher the risk of something going wrong is, as in this case.

 Similarly, it is important to properly define what the final destination of the goods is. For instance, if the final destination is well inland in the country, involving a truck journey, more risk is also attached to the carriage.

In order to properly understand the case, it is essential to be aware that within the terms and conditions of the purchase there was a clause regarding insurance stating the importer was to arrange for insurance of the goods during transportation. However, as the purchase was much more complex than a simple Purchase Order, a CIF Navasheva purchase was also agreed.

Contradiction of Insurance policies

Though this fact may seem confusing, it is very often the reality that a contract contradicts itself, articularly transportation contracts, international sale of goods contracts and also insurance contracts, as there are several documents nvolving one single agreement.

Therefore, these agreements may contradict themselves. Actually, an Indian importer of goods entered into an agreement with New India for the insurance of the goods while in transit.

Nonetheless, and this is the important point, it turned out there was a Chinese Insurance Company insurance policy in place for the same goods during the same transportation, covering the very same risk. Though there was some misinterpretation as to where the Chinese Insurance Company cover extended to, ie, Mumbai or final destination Pune. So, the Chinese Insurance Company certificate of insurance contradicted the Chinese Insurance Company insurance policy, creating ambiguity as to the extent of the insurance.

The incident

It is not unusual that things go wrong sometimes, as in this case. While inland transportation in India was taking place during February 2019, one of the trucks tilted and the machines were damaged.

Subsequent Claims

While there was not so much apparent damage to the machines, being a highly exact machine, all of the sensors inside the machine and plenty of its milimetrical features inside got damaged and the cost of repairs was concluded by experts to be beyond the cost of a new machine. Accordingly, total loss was declared.

The importer presented a valid claim towards New India for the loss and this claim was of course paid out by New India accordingly. Nonetheless, some flaw was detected during the claims handling process as there were discrepancies in between what the insurance policy of Zurich stated and what the insurance certificate stated.

Our Amicable Solution

After seeking advice from Marlin Blue, an amicable claim was brought against Chinese Insurance Company in order to get compensation for the indemnity paid out by New India, as it was detected the same risk may be covered under two different insurance policies.

It is always tricky handling claims in different countries, however, when it comes to China, the level of difficulty increases significantly as more obstacles are put in the way of an amicable claim. The Marlin Blue global network´s ability to open the right doors and find solutions was crucial in this case.

After the claim was presented, several refusals to compensate were received from Chinese Insurance Company, alleging the insurance policy was clear on what the destination of the transport was and its insurance cover, which is true as the final discharge point was Nhava Sheva Seaport, India.

Nonetheless, it is also true the insurance certificate stated a different destination for the goods, i.e. “warehouse of the importer, transhipment to be covered, if goods are transhipped”. Moreover, an insurance certificate was used in the documentary credit.

Lengthy discussions took place, in Chinese and in English, including some formal requests for settlements and even included seeking the advice of Chinese lawyers in order to bring litigation for the case if no amicable settlement was reached. After all this, a 200.000USD settlement was achieved, which was a great success and a good recovery, given the country where the claim was sought and even the very merits of the claim.

Moreover, it was not easy to get this money out of China, as Chinese authorities are very reluctant to remit money to overseas countries; therefore, some further negotiation was needed in order to finally get this money into the New India bank account. Marlin Blue was instructed by New India to carry on with recovery efforts for our Client.

Conclusions

It is always better to claim amicably rather than bringing litigation worldwide, regardless of the claimed amount involved. Marine insurance is an international business requiring a global approach. In this sense, having an open-minded team, handling any kind of disputed claims through dialogue and building bridges instead of starting a lengthy judicial process is always our preferred solution

Recovery with insufficient documentation / without a subrogation receipt

The insured of our client, a Spanish provider sold 33 transformers to their Polish partner and ordered the transport through a freight forwarder in Poland. The freight forwarder hired the effective carrier.

The incident

The truck set out from the shipper’s warehouse, but unfortunately suffered a road accident near Stare Miasto, Poland. All the 33 transformers were affected. Damaged goods were collected and transported to the destination warehouse.

The challenges we faced

  • The truck and the damaged goods were transported to the warehouse of the buyer. By the time our surveyor arrived, the cargo had been unloaded and therefore it wasn’t possible to inspect stowage and lashing.
  • The survey report did not determine the cause of the accident, as police report wasn’t available.
  • Our client couldn’t send us the subrogation receipt, as their insured delayed signing it, which means that we had to claim without having proper legitimization.  
  • A local salvage sale was attempted but was imposible to carry out because of applicable government restrictions.

Solutions

We initiated the claim against both the freight forwarder and the actual carrier, although it soon became clear that the two companies belong to the same group. Luckily they had cargo insurance, so we sent the claim to their insurance company as well. At the same time we made efforts to learn more about the circumstances of the accident and insisted that the insurer of the carrier would accept our explanations regarding the salvage sale.

Eventually they accepted our reasoning that damaged goods must have been transported back to origin because this was the most economic solution in the given situation.

Why do we consider it a successful case?

We obtained 100% of the loss amount in an amicable recovery, even before our client paid compensation to their insured. Considering not only the lack of subrogation receipt but of other important elements of the loss, this result is nothing short of remarkable.

Breaking limitation with an amicable deal is always better than uncertain litigation

Transport of merchandise, sent from the UK to the south of Spain. Cargo was aircraft spare parts, expensive pieces. The carrier lost the merchandise while it was in one of its transit facilities between way station Germany and its final destination in Andalusia.

Our customer insured the transport for the Spanish buyer and paid EUR 16.000 for the lost cargo.

The challenges we faced

There was no clear evidence of intent or negligence. The shipment was simply lost in a complicated route from origin to destination. Carrier even tried an internal investigation to find the lost goods and gave as many explanations as they could.

The liability limit by weight of the lost cargo, according to applying CMR Convention was only 200 euros, way less than the actual loss.

Carrier relied on that limit and their offer was exactly 200 euros.

The carrier had a relatively high deductible and the costs had to be assumed by one of their stations individually. Obviously, no station wanted to assume the loss.

Solutions

We already had a good relationship with the carrier from other claims in the past. They have always been reasonable.

We tried to make them see that the jurisprudence on the matter is not clear, except in obvious cases, and that a judge could perfectly consider that, during the complex journey that the merchandise followed, the carrier disregarded its duties of security and guarantee of the merchandise. Also, the cost of maintaining open litigation in court should be assessed, both in terms of money and time.

We were also a bit lucky that the person handling the matter inside the carrier had the ability to achieve an agreement among their stations about the deductible.

Why do we consider it a successful case?

An amicable deal is always better than uncertain litigation, especially when you can break a liability limitation with it.

Recovery from a Terminal when shipping company became bankrupt

The insured of our clients, cargo interest, hired Hanjin in order to transport frozen pork from China to Algeciras.

During the transport, Hanjin went bankrupt and this produced worldwide supply chain and shipping disruption as cargo ships were left stuck at ports and canals w aiting for cash payments.

The challenges we faced

In our case, three reefer containers of insured of our principals were in a terminal in Algeciras when it happened. As a consequence of the bankrupt of Hanjin, containers were left in the terminal.

When consignee got recover the goods, consignee found them with important damages due to broke cold chain.

Solution

Our client, insurance company of cargo interest, paid a compensation and they appointed us to make the recovery. Are there possibilities to recover from shipping company? In this case no, because shipping company went bankrupt. So, our strategy was starting recovery actions against terminal, because goods had been under their custody. And we got an agreement with insurance company of terminal.

Why do we consider it a successful case?

We consider it a successful case because it is very difficult to get a recovery from a Terminal when shipping company became bankrupt.

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