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MARITIME CARGO CLAIMS- INDIA

Maritime Cargo Claims in India- Almost all international trade in goods is transported by the sea. The shipping industry plays a significant role in maritime transportation. It acts as a conduit of international trade and commerce and has become a linchpin of the global economy. Further, with the advent of globalization and removal of trade barriers, there has been tremendous increase in India’s participation in Maritime sector. Given the strategic importance of this sector in the overall economy, a proper framework has been delineated in various legislations which governs and regulate the maritime industry in India. Some of these statues are The Merchant Shipping Act, 1958, The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 etc.

Transportation of Cargo in India

Transportation of Cargo is the prime reason for shipping. Carriage of cargo by sea is vital to trade as it allows substantially lower logistics cost when it comes to large volumes and long distances. Inland water carriage involves a complex network of shippers, carriers and merchants which ensures that the consignment reaches the right place without any damage or loss. In India, the law of carriage of goods by inland waters is primarily governed by The Indian Carriage of Goods by Sea Act, 1925 (COGSA). The said Act is based upon The Hague Rules, 1924 which is an international convention to impose minimum standards upon commercial carriers of goods by sea. The Act on this subject-matter i.e. Maritime cargo claims cannot be read in isolation and it has to be read along with other connected Acts such as The Indian Bills of Lading Act, 1856 which deals with the position of goods carried by sea and The Multimodal Transportation of Goods Act, 1993.

Applicability of The Indian Carriage of Goods by Sea Act 

The provisions of The Indian Carriage of Goods by Sea Act (“the Act”) are applicable in connection with the carriage of goods by sea carrying goods from any port in India to any other port whether in or outside India. The Act contains several statutory provisions comprising of Sections and Articles which primarily establish the responsibilities, liabilities, rights and amenities of the carrier. The term ‘carrier’ is defined under Article (1) (a) which means the owner or the charterer who enters into a contract of carriage with a shipper.

Duties of Carrier under The Indian Carriage of Goods by Sea Act

In every contract of carriage of goods by sea, there is some degree of risk of loss involved. In this context, the role of a carrier becomes extremely important. The carrier has to discharge certain key functions like taking over the goods, its loading, handling, stowage etc. It has the duty to preserve the goods which it is carrying for transport through sea and deliver them to the consignee in the same good condition. The responsibilities and liabilities of the carrier are enumerated in Article III of the Act which provides that the duty of the carrier starts at the very beginning of a voyage to exercise proper due diligence which involves:

  • Make the ship seaworthy
  • Properly man, equip and supply the ship
  • Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

In simple terms the carrier has a legal obligation to ensure that the goods are managed and carried in a safe manner without damage.

Once, the goods are received into his charge, the carrier shall on the demand of the shipper issue a bill of lading. 

What is a ‘bill of lading’?

A ‘bill of lading’ is a legal document issued by the carrier (or its agent) to acknowledge receipt of cargo shipment. It is not a mere simple acknowledgement; it contains the terms of contract of carriage and other relevant details of the cargo. Once, the carrier issues a ‘bill lading’, he is responsible for the safe delivery of goods to its destination and in case any damage occurs, then the consignee would be entitled to claim compensation against the carrier. It is pertinent to note that the liability of carrier is not absolute and unlimited. Under the Act, the carrier is also entitled to certain rights and immunities. 

Rights and immunities available to a Carrier

Article IV of the Act set forth certain rights and immunities to the carrier. The carrier can avoid its liability by showing that the loss or damage to goods was not due to its own default but factors which were totally beyond his control. Clause 2 of Article IV enlists various circumstances, under which the carrier shall not be held responsible for the loss or any damage. Some of the circumstances are: 

  • Act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of ship.
  • Act of God
  • Act of war
  • Act of public enemies
  • quarantine restrictions
  • riots and civil commotions

The carrier who seeks the benefits of the aforementioned exceptions has the burden of proving that the loss to the cargo had occurred due to uncontrollable natural forces in operation. 

Limitation under the Act to claim Damages for Loss

In case the carrier fails to discharge his obligation in delivering the goods in proper condition to the consignee, then as per Article VI clause 3 of the Act, a notice of loss or damage must be given by the shipper at the time of taking delivery at destination or within 3 days of delivery if the damage is not apparent. Else, within 30 days, such delivery shall be treated as a prima facie evidence of the delivery of goods by the carrier as described in the Bill of Lading. A dispute with regard to the damages must be filed within one year after delivery of goods or the date when the goods should have been delivered. This period can also be extended with mutual agreement of parties provided the cause of action should have also arisen. It is pertinent to note that the period of 1 year to file a suit can also be extended by 3 months subject to leave of the court.

Fora and Dispute Resolution

The disputes related to admiralty, maritime law and carriage of goods comes under the definition of commercial disputes as per clause 2 (c) (iii) and (v) of The Commercial Courts Act, 2015. Hence, if maritime cargo claim amount in the suit is more than the specified value i.e. Rs. 3 Lakhs then the commercial courts having requisite territorial jurisdiction shall try and adjudicate the dispute. Else, the civil courts will have the jurisdiction to decide the issue.

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