Dr. Mohamed Karbal is a New York lawyer and founder of Karbal & Co, a full-service international law firm with offices in Libya and Dubai that serve the needs of businesses and governments in Libya and the United Arab Emirates.
There has been a debate in many countries on the degree of liability of the carrier and a freight forwarder on the issue of cargo claims; is a freight forwarder a principal or an agent? The debate indicates that a freight forwarder’s legal status in the shipping industry depends on the degree of involvement of a freight forwarder in the overall operation of shipping goods. A freight forwarder could limit his liability by limiting his rule and act only as an agent on behalf of the carrier.
Contrary to the belief that the courts of the U.A.E. are still behind their western counterparts when it comes to maritime litigation, the courts of Dubai have proven to be very advanced.
Despite the important role played by a shipping agent in the chain of logistics, the Federal Maritime Commercial Law No. 26 of 1981 did not establish the responsibilities of a shipping agent. Nevertheless, the courts of Dubai, in its efforts to determine the liability of a shipping agent, apply Article 8 of the aforementioned law, which allows a court to apply international maritime customs and rules of justice.
The general rule followed by Dubai courts is to consider the freight forwarder not as an agent in litigation of cargo claims, unless proven otherwise. There has been a clear application by the Dubai Court of Cassation which distinguishes between the carrier and the freight forwarder. In one case filed against a ship-owner and a freight forwarder for damages to goods, the Court of Cassation of Dubai stated that in performing duties such as delivering cargo to the ship, delivering bills of lading to shippers, delivery of cargo to consignees, and supplying fuel to the ship, a freight forwarder is acting as an agent for the carrier or ship-owner. All such acts performed by a freight forwarder are considered to fall under Agency Law, and a freight forwarder is therefore considered an agent.
The Court of Cassation of Dubai in the said case dismissed the claim against the freight forwarder for lack of evidence that the freight forwarder violated the rules of agency and acted as a principal. The Court also decided that unless the freight forwarder committed a tortuous act, the laws of the United Arab Emirates and the courts of Dubai place minimum liability on the shipping agent. This is due to the fact that a freight forwarder is not a party to the main shipping document, the Agreement of Affreightment.
One of the incidents that a freight forwarder may find itself responsible for is case of loss or damage to cargo is when the freight forwarder commits a tortious act.
As long as the freight forwarder acts on behalf of the shipper and refrains from acting as a principal in shipping matters, a freight forwarder’s liability will be limited.
Therefore, it is advisable that a freight forwarder limit their role to receiving cargo from the shipper and issuing bills of lading on behalf of the carrier.