2. FIATA Introduction to Freight Forwarding Module 1 2021

The MTO’s Liability

Potential Claims

• Delivery of cargo without taking the
bill of lading in exchange;

• Delivery of goods to the wrong consignee/destination or
contrary to instructions;

• Delivery of goods
without collecting cash
from consignees;

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The SLA STCs

• SLA AGM 21st Mar 1986 approved
& adopted the then SLA STCs;

• was promulgated by advertisement & a
notice of the STC was published in The
Straits Times & Business Times (medias);

• the SLA STCs was therefore,
generally brought to the
attention of the public,
present & potential users…

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The SLA STCs

Incorporation & Promulgation of STC

• by advertisement;
• by incorporation into letterheads, bills, invoices, contracts

in which the STC are brought to the attention of the
Customers or Clients on a day-to-day transaction basis;
• STC copy given to Clients and Clients’ signature obtained,
acknowledging receipt;
• it is important to ensure that the STC forms part and parcel
of the contract between the parties !

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The SLA STCs

Purpose
• to govern the rights & liabilities of the Customer & the LSP

Incorporation
• express reference and/or course of dealings
• STCs must be incorporated at the time the contract is formed

e.g., when giving a Quotation, must make a reference to the
STCs
• if properly incorporated, sub-contractors are also protected
[Himalayan clause at clause 15(d)(i)]

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The SLA STCs

Application

• Clause Paramount [See Clause 2(e)]

Charges, Lien & Rights of Sales (Clause 16-24)

• No set-off [see Clause 16(a)]
• Contractual Interest at 2% per month on overdue invoices [see

Clause 19(c)]
- penalty ?
• Abandoned Goods [see Clause 20 & 21]
- right of disposal & sale
- conversion ?

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The SLA STCs

Charges, Lien & Rights of Sales (Clause 16-24)

• Right of Lien [see Clause 22]
- costs of feeding the lien lies with the lienee
- wrongful detention ? Only entitled to exercise a lien over the goods
of the person owing you the debt
- conversion ? Be careful in exercising right of sale…!
- Can you hold cargo under a lien if your overseas agent owes the
debt ?

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The SLA STCs

Exclusion of Liability
• Arrival & Departure dates

[see Clause 16]
- No guarantees are given

to cargo interest !
- Liability is excluded for

delay…!
• Containers [see Clause 27]

- generally, liability is disclaimed if the
container is not packed/stuffed by the LSP !

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The SLA STCs

Exclusion of Liability

• General Exclusions [see Clause 28]

- act or omission of the Customer
- acting in accordance with Customer’s instructions
- insufficiency of packing unless packed by the LSP
- handling, loading, stowage or unloading, unless

done by the LSP
- inherent vice
- riots, strikes, etc.
- any cause which the Company could not

reasonably avoid

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The SLA STCs

Exclusion of Liability
• loss of profit and/or

consequential losses ?
- excluded under clause 28

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The SLA STCs

Limitation of Liability (See Clause 29)

• for loss or damage :
- S$ 5.00 per kg of
gross weight or
the value of the
cargo whichever
is less
- in any event NOT
exceeding S$100,000.00

• for delay :
- not exceeding the value of the LSP’s charges

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The SLA STCs

Contractual Time-Bar (See Clause 32)

• Notice must be given in writing with 7 days from the date
of delivery or the date which the goods should have been
delivered

• suit must be commenced within 9 months from the date of
delivery or from the date the goods should have been
delivered
Jurisdiction & Law (See Clause 38)

• Singapore law to apply & exclusive jurisdiction of the
Singapore Court - may be a double-edged sword…!

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Basic Claims Handling

• As a Multimodal Transport Operator, you not only need to
understand your rights and obligations but,

• you need to know how to deal
with a claim that is made
against you by the cargo owner
or third party

• know how to make a claim against a sub-contracting carrier
or other person.

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Basic Claims Handling

• Deny liability whenever you can see that you are not at
fault

• When your liability may be incurred it is still best to deny
liability pending further investigation

• Inform your underwriters…
• If claims are settled, obtain a proper ‘Release and

Discharge’ certificate.
• You should then check the following:

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Basic Claims Handling

a) Whether the person claiming has locus standi**

• Is the claimant the Shipper or Consignee?
• If the Bill of Lading has been endorsed, the Shipper

loses rights of suit.
• If underwriters or recovery agents approach you, ask

for subrogation receipts (i.e. evidence that the person in

who’s name the action is being brought has been
compensated).

** locus standi is the ability of a party to demonstrate to the court
sufficient connection to and harm…i.e.. the right to bring an action

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Basic Claims Handling

Which International Conventions Cover ?

ROAD
The Convention of the Contract for International Carriage of Goods by
Road (CMR) : SDR 8.33 per kg of gross weight
RAIL
The International Convention for the Carriage of Goods by Rail (CIM) :
SDR 17.00 per kg of gross weight

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Basic Claims Handling

Which International Conventions Cover ?

SEA
The International Convention for the Carriage of Goods
by Sea

The Hague Rules :
Stg 100.00 per package
The Hague-Visby Rules :
SDR 2.00 per kg of gross weight, max.
SDR 667.00 per package
The Hamburg Rules :
SDR 2.50 per kg of gross weight, max.
SDR 835.00 per package

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Basic Claims Handling

Which International Conventions Cover ?

AIR – The International Carriage by Air
Warsaw Convention :

250 gold francs per kg of gross weight
Montreal Convention :

SDR 17.00 per kg of gross weight

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Basic Claims Handling

“SDR” What is it?

Singapore
DollaR ?

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Basic Claims Handling

Special Drawing Rights (SDR)

- is an artificial currency unit created by the
International Monetary Fund (IMF).
It is the IMF’s unit of account
and is used as an international

reserve asset to supplement existing reserve assets.

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Basic Claims Handling

Special Drawing Rights (SDR)

The value of the SDR is determined using a basket of currencies. The
basket is reviewed every 5 years to ensure that the currencies included

in the basket are representative of those used in international
transactions and the weights assigned to the currencies reflect their

relative importance in the world’s trading & financial systems.

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Basic Claims Handling

Special Drawing Rights (SDR)

The IMF has determined that 4 currencies

(the U.S. Dollar, Pound Sterling, Japanese Yen and the

Euro)* meet both selection criteria for
inclusion in the SDR valuation basket for

each 5-year period.

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Basic Claims Handling

Special Drawing Rights (SDR)

As the value of the SDR is determined by a basket of
currencies, it fluctuates daily, e.g., the value of 1 SDR

in terms of currency value of the U.S. Dollar
on 19th Sep 2016 was : 1 SDR = USD 1.63

http://www.imf.org

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Basic Claims Handling

b) Whether the claim is time-barred?

• Warsaw Convention - 2 years
1 year
• Hague-Visby Rules - 2 years

• Hamburg Rules - 9 months

• Most House Bills of Lading &

FIATA Bills of Lading -

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International Carrier Conventions

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Basic Claims Handling

c) The limitation amount

Montreal Convention 17 SDR per kg

Hague Visby Rules 666.67 SDR per package or 2 SDR per kg, whichever is
higher.
Hamburg Rules
835 SDR per package or 2.5 SDR per kg, whichever is
FBL higher

MTO’s Standard 666.67 SDR per package or 2 SDR per kg whichever is
Trading Conditions higher.
(STC)
Variable (See Singapore Logistics Association STC
Appendix IV) S$5.00 (US$3.57) per kg up to a
maximum of S$100,000 (US$71,430) per claim,
whichever is less.

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Basic Claims Handling

d) Notices
• Check whether notice of the claim in

writing has been received.
• Failure of the claimant to do so could

prejudice the claim.

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Basic Claims Handling

e) The likely party responsible
• Whether the loss was caused by agents or sub-

contractors :
– give notice of claim to the party concerned.
– suggest to claimant to claim directly against

that party.

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Basic Claims Handling

f) Sue and Labour
• Whether the claimant has mitigated the loss:

– inform the claimants that they have a duty to
mitigate their loss and ask for evidence, whilst
denying liability.

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Basic Claims Handling

g) Survey damage
• Ascertain whether

surveys were
conducted, and
evidence of loss
established:
– conduct your own

surveyor joint
survey, if possible…

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The Claims Procedures from a Freight Forwarder’s perspective

/insurer of 1. Notification of damaged
o give rise goods received from client
m

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The Claims Procedures from a Freight Forwarder’s perspective

actors 3. Reject claim and never
er) admit liability without the
Insurer’s consent. Inform client
to seek compensation from
cargo insurers

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The Claims Procedures from a Freight Forwarder’s perspective

nsurers 7. Collect evidence e.g.
lawyers personal statements
or records of telephone
conversations

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The Claims Procedures from a Freight Forwarder’s perspective

le 9. If the claim is one of
with cargo indemnity insurance pay the
bject to the claim and seek
, reimbursement
from the insurers

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In conclusion

• Prompt notification of any damage should be made to all
parties with a vested interest.

• Understanding the carriage conventions is essential for
negotiating settlement of a claim and giving correct advice
to the customer/owner of the goods

• If cargo owners do not insure the goods, they will have to
negotiate with the carrier’s liability insurers – which is an
arduous task..!

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In conclusion

• Understanding risk is the first step to controlling risk.
• Controlling risk allows the MTO to better able cope with

the hazards in international trade, stay in business and
prosper.
• Training staff about these hazards helps them to deliver a
better service to the customer thus retaining customers
and attracting new ones.

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Thank You

For further information on this
and other Training Courses

offered by GMLS, please contact
us on:

Website: www.gmls.co.za
Email: [email protected]

Office Mobile: +27 83 575 7569

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