Abandonment

1. Letter of Abandonment

Abandoned Cargo has become a damaging trend for carriers, shippers, consignees and freight forwarders in recent years.

It may be hard to imagine merchants not wishing to clear their cargo as soon as it arrives, but unfortunately it has become a common way for dubious shippers to cheaply dispose cargo. There are of course legitimate reasons such as the buyer folding or the storage/demurrage charges exceeding the cargo value, but all tend to punish the carrier/forwarder instead of the merchants. 

Most carriers have changed in recent years their merchant clause on the back of their bill of lading to not only include shippers, consignee, holders of bills of lading but also agents/booking parties or freight forwarders. This therefore places a lot of pressure on the forwarders to know exactly who they are doing business with because they are now responsible for these charges. 

Forwarders should be especially diligent in handling the following types of shipments:

  1. Any low value cargo where storage/demurrage will quickly exceed its value.

  2. ​Tires, rubber powder, scrap, plastic, second hand medical suppliers or any cargo that might be a means for cheaply disposing of the cargo. 

  3. ​Free hand shipments or any involvement from parties you know little about.

  4. ​To order or anything that may indicate the consignee details might be false.

It is important for all parties to act fast because, if genuine, a solution can be found before the storage/demurrage exceeds the cargo value. If fraudulent, and there was never an intention to pick the cargo up in the first place, then any delay will just increase costs. Cases can often reach over half a million dollars if cargo sits on a quay for a number of years while the booking agents/freight forwarders fight it out with the carrier.

If possible, it is also important to have the cargo unstuffed and moved to a bonded warehouse to stop the demurrage charges. Whether this falls on deaf ears or not, the booking agent must regularly keep the shipper/consignee fully appraised of the costs. Failure to do so could prejudice any recovery against them. Most importantly the merchant should not be allowed to abandon the cargo unless they agree to settle (and place deposit) for all charges. Simply saying they no longer want the cargo is not good enough and they must be fully aware all costs are against them. This might prompt some action especially in conjunction with a lawyer.

Work closely with the carrier to resolve the situation to find a quick solution but if the carrier is insisting you provide a Letter of Abandonment please carefully consider and suggested letter can be found on the documents page. Remember if you do not own the cargo (freight forwarder, NVOCC, booking agent) you should not be instructing to destroy third party property unless you receive this in the form or a written agreement from the shipper. 

Do's

  • Notify your insurers immediately and act quickly. 

  • Request to unstuff the cargo into a bonded warehouse.

  • Place the shipper/consignee on notice and regularly update them on the costs.

  • Place as much pressure on shipper/consignee to find a solution before costs exceed the value of the cargo.

  • Consider carefully before signing any letter of abandonment from the carrier that might implicate you in additional costs.

 

Don'ts

  • Keep quiet hoping it will go away or think your staff are going to resolve this. It will prejudice your insurance cover and most likely make matters worse.

  • Don't allow the shipper/merchant to issue a letter of abandonment without agreeing to pay all outstanding costs. If necessary, they should offer a deposit for demurrage/storage until all is resolved.

  • Accept any argument from the shipper that he sold cargo ex-works or has already been paid and therefore is no longer liable. This is the shipper's commercial arrangement and has no bearing on your relationship with the shipper.

2. Notice of Abandonment

It is important to not confuse a Letter of Abandonment with a formal Notice of Abandonment. The former is not a formal insurance or shipping document and has been invented by carriers to speed up the process of uncleared cargo.

 

Whereby a Notice of Abandonment is a long-established insurance document. The assured provides a notice of abandonment to his insurers in the event of a Constructive Total Loss. Instead of a Partial Loss where the insured would be expected to repair, but they have taken the decision the interest is beyond recovery.

The insurer may indeed (and often) refuse to accept the Notice of Abandonment but the mere silence from them is not acceptance. Once given the acceptance is irrevocable.

By acceptance, the insurer can take over the interest, and also under the Marine Insurance Act can claim any freight earned, although most policies do contain a Freight Waiver Clause. Refusal of the document does not influence the settlement but means insurers do not take ownership/subrogation of the interest. However, if it is a shipwreck or worthless cargo it may be in their interest not to because ownership may be more of a burden.

 
 
 
 
 
 

Act of God

 

Used in insurance terminology to describe a risk outside of someone's control. Such as a hurricane, heavy weather or earthquake. This is commonly a defence under international conventions to allow the carrier to avoid responsibility but often is mis-understood. The concept originally was to allow carriers who had to bear at least a proportion of blame/cost in the event of a major casualty to protect themselves but with modern technology this rarely has the same meaning.

In the event of a major incident this is often used as a first line defence for carriers to refute claims in the hope a certain percentage of claims will disappear but by no means should natural causes be sufficient grounds to accept.

The first question you should ask is whether such cause is completely out of the ordinary or could it be relatively common. For instance, sailing during the hurricane season then you would expect it could be fairly likely such an act could occur. Secondly, with the provision of modern technology one would expect appropriate precautions to be taken to avoid such an event. Lastly, does the event really constitute an act of god or whether something can be defined as of sufficient magnitude. For example, heavy weather may not be defined as heavy weather unless it is at least Beaufont 9 or more.​

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Whether a defence can be fought will depend on whether all reasonable steps were taken to avoid or protect against such an act. Generally, the following documents are required to determine this:

  • Letter of protest

  • Vessel logs

  • Weather reports/forecasts

  • Loading/lashing inspections

With this it can be determined whether the carrier can defend but generally carriers use this as an argument rather than vigorously enforced. 

 

Most non marine insurance policies specifically exclude this type of cover, but many marine policies do include this. What they won't cover is unseaworthiness of the vessel so if it was believed that the vessel failed to implement proper protection or took unnecessary risks prior to sailing this may be excluded.

To avoid such a situation, it is crucial for the shipper or forwarder to utilise a reputable carrier.

Ad Valorem Bills of Lading

 

Carriers may be asked to issue Ad Valorem Bills of lading and issued correctly works efficiently.

 

The process of showing the value of the goods on the transit document absolves the carrier from any possibility of limitation and they must settle the claim in the same way as if they had purchased cargo insurance. If the carrier chooses to self-insure it would therefore be charging a premium freight for such a service, so it is a mutual choice between all parties.

However, it is never quite so simple and often mistakes happen due to the shipper (whether knowingly or not) requesting the carrier to show the cargo value for letter of credit purposes. This should never be complied with no matter what reassurances are given, unless of course this service is mutually agreed. 

Often the request is simply for Letter of Credit requirements even if the value is not shown but reference to other documents should also be avoided. It implies the carrier has agreed or reviewed them which is clearly not the case.

 

If essential the Letter of Credit "reference" number in the remarks box can be shown with a caveat to explain: "The carrier has never seen this document nor makes any acknowledgement to its contents or existence. This is only mentioned at the request of the shipper for reference only and has no bearing to this document ".

Do's

  • Ensure you are charging a premium freight and properly insured.

  • Advised and agreed with your insurers.

 

Don't 

  • Enter the value of the cargo unless you wish for this to become an ad valorem bill. 

  • Be forced or put references to documents you have never seen or know of its existence. 

Back Dating Bills of Lading

 

Often carriers are asked to back date bills of lading or other transit documents.

This is generally for the purpose to comply the shipper/consignee letter of credit terms. This is highly illegally and must never be undertaken at any cost.

 

Even if the shipper or consignee promises to provide you with a LOI or any financial commitment, these will never be enforceable because you are acting illegal. The only option for the carrier is to provide a "Received for shipment" bill of lading but again this must always contain the correct information.

A "Received for shipment" bill of lading is a document which solely states "Received for shipment......X date" instead of shipped on board. At no point should a "Shipped on board" date should be issued and the "received for shipment" bill is only a temporary document and should be replaced once the vessel sails.

Do's

  • Never back date bills of lading.

  • Never show a received for shipment date under a shipped on board stamp.

  • Replace a received for shipment bill only after the vessel has sailed. 

Don't

  • Be forced to comply no matter what commercial threats are given. This is highly illegal.

  • Don't issue a received for shipment bill unless you know exactly what you are doing.

  • Don't issue any date unless it is absolute genuine. 

 

Note: You should always check with your lawyer and liability insurers before issuing any documents or responding to requests.

Brazilian Release Regulation

 

With the issuance of Normative Instruction 1356/13, the Brazilian Customs Authority has indicated the original bills of lading are no longer required in order to obtain release of the cargo. With the issuance of express bills of lading some may not see this as a major problem but unfortunately it has huge implications. It is nothing more than trying to redesign the wheel and the very function of bills of lading to also include a document of title. 

Unfortunately, this has led to multiple shipments being wrongful released because of pressure placed against the agent and without the actual shipper being paid. Bills of lading can be negotiable so this makes it more complicated but even if not, there is a huge risk for the carrier because bills can be used as collateral with banks.

Fortunately, the impact of this regulation has not been as bad as feared but the confusion is still in place and shipments are still being released without original bills of lading.

The advice from the IG Clubs is to consult a local lawyer if ever approached but generally do not comply with this request until proper legal or insurers consultation has been provided. This could have implications with your insurance coverage as well.

If this request is provided to you or your agent, then you should:

  • Consult a lawyer locally.

  • Avoid being pressured until this is done.

  • Try to identify the location of the original bills; feedback from the shipper may give an indication of the reason.

  • Many carriers have included a clause on a bill of lading for shipments to Brazil and this can be adopted.

 

Some carriers have chosen to include the following clause within the Marks & Description box on the bill of lading to add extra protection: 


"Notwithstanding any other provision contained in this Bill of Lading, the Merchant agrees that the Goods are considered formally delivered after effective discharge at a port in Brazil to the custody of Brazilian Customs at such port, and all liability of the Carrier whatsoever in connection with the goods (including, without limitation, for mis delivery) shall cease at that time. Furthermore, the Merchant acknowledges and agrees that the Carrier shall not be responsible under any circumstance for delivery of Goods without presentation of this original Bill of Lading in accordance with Brazilian Customs regulations."

Express / Sea Waybills

Express/Sea waybills are often used in today's world and even recommended by many carriers. Despite this, Express/Sea waybills of lading are not official forms of release because they are not documents of title.

A concept of a bill of lading is they can be endorsed to various parties during the voyage and the person who presents this at destination can collect the cargo. This has served its purpose for centuries for traders but with the modern-day containerised shipments this is not so practical.

Express or Seaways bills should never be negotiable and should never be released to any person other than the named consignee. Even if they purport to be the same company and even provide evidence of this. This is quite a common occurrence in the case- of wrongful release, especially in China where companies share similar names and addresses.

In the same way as a Telex release, the shipper/consignee should sign LOI's instructing the release and agreeing to the terms and conditions. This is because the Bill is not a document of title and there have been cases where the consignee's have argued they never sighted the terms and conditions so do not apply to them. 

For a template on LOI for express/sea waybills please refer to 'useful documents'. 

Do's

  • Issue Non-negotiable bills.

  • Ensure all parties have signed appropriate documents.

  • Collect all charges before releasing.

  • Carefully double check consignee details and only release against exact name.

Don't

  • Allow the consignee to collect without agreeing to your terms and conditions.

  • Allow the consignee to endorse to another party. 

  • Allow the consignee to collect cargo without document unless shipper has provided agreement.

  • Release until all charges has been collected.

 
 

General Average

 

Many shippers, freight forwarders and even carriers purport to understand general average but unfortunately this is rarely the case and often leads to more confusion. Only a hand full of people in the world really understand this and often do nothing else because it is so specialised. 

In simple terms it is the apportionment of costs arising from any sacrifice taken during the voyage for the better good. Such as jettisoning cargo to avoid the vessel capsizing or deployment of tugs if the vessel engines fail. In aviation terms it would be like having to pay for the cost of diverting or temporary repairing the plane before you reach your holiday destination.

Insurance brokers often spend a lot of time selling cargo insurance to protect against this, but this often falls on deaf ears until something happens. This leads to series of costly knock on effects where typically only the rich ship comes out best.

When General Average is declared the cargo owners are expected to place a guarantee or cash deposit to retrieve their cargo. There are no exceptions no matter how good client you are and in general the amounts are about 20% of cargo value. This is where the problems start and unless the merchant has cargo insurance this can be quite a lot of cash flow to put up within hours/days.

This then tends to lead to attacks against the agent or freight forwarder to provide but in the same principle as the carrier involvement they couldn't provide even if they wanted. Only the person who owns the cargo at the time of loss can provide.

After probably losing the client the agent/freight forwarder or carrier, the problems have only just begun. The cargo will probably be left on quay or abandoned so there will be additional exposure to unpaid storage/demurrage/destruction charges.

General Average is not rare and about 10-15% of insurers reserves are based on this.

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Whilst most pictures trying to explain General Average portray ships breaking up or sinking, this is misleading to describe the very purpose of this act. The very principles of General Average have to be successful so any failure to avoid the imminent peril is not General Average nor would parties be asked to contribute to any costs that may have been incurred.

Do's

  • Buy cargo insurance or sell cargo insurance with this in mind. So, when something happens it has been warned to you/them. 

  • Inform your insurers immediately and follow their advice. They will provide the guarantee and you will need to provide the bond.

  • Expect the case to last for many years. 3-4 years on average.

Don'ts

  • Don't believe this is something the agent/carrier or freight forwarder should be handling. Only the cargo owner.

  • Don't expect this will be cheap to handle without cargo insurance. Not only the guarantee or cash deposit but often this is contested so expect legal costs.

  • Don't expect the carrier will make any exceptions because you are a good client. Everyone is in the same boat. 

 

Letter of Indemnity (LOI) / Letter of Undertaking (LOU)

 

This universal legal document plays an important part in shipping for various reasons.


Often the carrier may ask the shipper/consignee or forwarder to sign such a document for carrying out a particular request or even carrying certain types of commodities. In other ways the merchant may request this from the carrier in the event their cargo arrives damaged should they want some security. Either way, these types of letters are exchanged frequently, but for many reasons people often do not understand what they are providing or collecting.

When a merchant or forwarder provides a LOI/LOU to the carrier for carrying certain types of cargo this will often be heavily weighted in favour of the carrier and may include the following terminology:

 

  1. Hereby accept full and unlimited responsibility.

  2. Cover all consequential and punitive damages.

  3. Waive all responsibility against the carrier whether they are at fault or not.

  4. Agree to indemnify the carrier on any demand in 14 days.

All of these terms are unacceptable and could prejudice your insurance cover if signed. What many people don't understand is that these LOI/LOU are drafted and re-drafted by people, probably not really qualified to do so, and there is no standard format. They can often be changed to be more accommodating and certain unreasonable requirements should be removed.

 

Always follow your insurers and lawyers' advice before signing and never feel compelled to sign if you feel uncomfortable. Often carriers become more cooperative if these changes come from experienced insurers or lawyers rather than the shipper themselves. Companies can easily become bankrupt resulting from a bad agreement set out in such documents, so it's important to weigh up the consequences before signing.

In the same sense, some people may not appreciate what they are signing but in the same way people sometimes do not know what they are receiving. LOI/LOU are not bank guarantees and unlike a bank guarantee you cannot walk into the office to demand payment. To even try to enforce this typically will take many years of court action and that is if they remain in business. LOI/LOU offer about as much security as a promise on a telephone.

 

LOI/LOU often appear in lost bills of lading cases. These should not be accepted in any form as security. Even if you know the company or a major corporation, problems will still arise in trying to enforce.

Do's

  • Consider LOI/LOU's offer little or no protection. 

  • Accepting LOI/LOU's wording needs to be carefully reviewed and considered.

  • Always change or discuss any sections you are unhappy with.

  • Always discuss with a lawyer before signing/accepting. 

Don't 

  • Believe they suffice as an alternative to a bank guarantee.

  • Make them unlimited. Make sure a maximum value is shown or based on limitation/liability.

  • Be forced to sign without having been agreed by your insurers.

Note: Always seek instructions from your lawyer/insurer before considering these documents.

 

 

 

 

Lost Bills of Lading

 

When bills of lading are lost this often places the freight forwarder or carrier in a difficult position even if it is not their fault. The consignee will place pressure to release the cargo with all number of promises or threats that are often untrue. Separately the merchant will feel angry with the carrier for being so uncooperative and having to incur extra costs.

From a carrier or forwarder's perspective below are some common reasons or documents merchants may provide to avoid having to provide bank security:

  1. The bill is a non-negotiable bill so no risk of wrongful release.

  2. Provide a company LOI/LOU​.

  3. Provide a police report that states bills are lost.

  4. DHL statement/letter that they lost the package.

  5. Provide a bank slip to show shipper has been paid.

 

Note: All these are not sufficient, and the cargo should not be released. 

The truth is there are often fraudulent reasons why merchants are unable to present bills of lading and these can arise from a commercial dispute with shipper, they are not the buyer or the bills have been provided as collateral to the banks. It is illegal for the carrier to release the shipment without original bills of lading so the consequences of wrongful release can be painful. At best the carrier would probably end up paying in full, but in addition they may end up paying consequential damages including for criminal investigations against them. 

Therefore, all major lines have very strict lost bills of lading rules and they are normally followed without question, no matter who the client is. These are: 

  • First Class Bank Guarantee - This should be an international recognised bank with branches in your country and should be up to 200% of the cargo value and at least 15 months. Maybe longer if Hamburg rules apply.

  • Confirmation the shipper has been paid and LOI also from consignee. 

Some carriers may offer their own surety as a substitute to a bank guarantee, but the same principles apply. The only three exceptions that might waive the requirement of a bank guarantee is for personal effects, charitable organisations or very low value cargo. Alternatively, it has been known for the merchant to obtain a court injunction that authorises the release, but rarely this is cost effective and normally there is a contractual dispute that prompts this method. 

From a carriers or forwarders perspective

Do's

  • Ensure you have obtained a first-class bank guarantee for 200% and 15 months or longer.

  • Written confirmation from shipper he has been paid.

  • Obtain an agreement from insurers before releasing.


Don'ts

  • Be forced into releasing because of threats or commercial ties.

  • Believe government regulations force you to release without checking with a lawyer first.

  • Accept a LOI as a substitute for a bank guarantee.

From a shippers or consignee perspective
Do's

  • Ask for LOI but avoid wasting too much time persuading release without bills. Each day incurs additional costs.

  • Consider a cash deposit instead of a bank guarantee for low value cargo.

 

Don'ts

  • Place threats against the carrier, in the long run, this may just make matters worse.

  • Waste money on lawyers trying to avoid the inevitable.
     ​

Note: Carriers or freight forwarders should always notify their liability insurers immediately and follow their instructions. Wrongful release claims may not be covered if knowingly releasing cargo without proper documentation. 

Lien on Cargo

 

On most bills of lading or other transit documents there is a clause that enables the carrier to take Lien on the cargo or in simpler terms the right for possession of the cargo until a debit can be paid.

 

Such a clause makes sense in the same way if you leave your car at the garage and the mechanic expects to be paid for the service prior to collection. However, this is rarely used correctly and can cause enormous problems and claims against the carrier or freight forwarder. 

On the back of the transit documents the Lien clause is usually extremely broad and in favour of the carrier but does not necessarily mean they are entitled to hold the cargo until all debts are paid.

General misconceptions arise for the following:

  1. Freight pre-paid bills. Often this is mentioned on bills without the freight actually being pre-paid and is purely a commercial decision by the carrier.

  2. Unpaid charges or freight arising from other shipments.​

In these examples the consignee rightly believes the charges are already settled so the carrier has no right to hold the cargo. By doing so, this may lead to hefty claims from the consignee for delay and consequential damages.

Holding any lien on cargo carries great risk for the carrier or forwarder so before doing so, firstly seek legal representation or advice from their insurers.

Do's

  • Discuss with a lawyer when considering applying a lien against cargo.

  • Inform your insurers/lawyers and seek their agreement.

  • Consider a Lien for Freight Collect to the particular shipment.

Don't 

  • Apply a Lien for freight pre-paid or charges that apparently have been settled by shipper.

  • Apply a Lien for charges from other shipments.

  • Withhold a release based on shipper’s instructions that he hasn't been paid for the cargo, or if there any other internal disputes between them. 

Note: Always consult a lawyer/insurer before applying a Lien on Cargo. Illegally holding cargo can have serious consequences. 

 
 
 
 

Switching Bills of Lading

 

Switching bills of lading is where the carrier is being asked to re-issue a set of bills of lading in exchange for returning the first set. Often there is a dubious reason for carrying out this request and the carrier should proceed with extreme caution. This is often for fraudulent reasons and examples of some requests may be as follows: 

  • Goods have been resold and the discharge port has now been changed.

  • The seller does not wish the name of his exporter to be disclosed, in the case where his consignee strikes a direct relationship with him.

  • The seller does not wish the buyer to know the actual origin of the cargo.

  • There are quotas for this type of commodity.

Apart from the above switching bills of lading could have serious implications against the carrier because the nature of trying to hide the true origin and could have implications in respect to customs or government regulations.

In order to be protected, it is strongly suggested that the carrier avoid issuing any switch bills at all, but if this is going to be considered then the following must be observed:

  1. Agreed with your liability insurers and follow back to back with the principle carrier. 

  2. They need to provide a clear reason for this request and in writing.

  3. All parties should agree. 

  4. Ensure the full set has been collected before re-issuing whether it is held by a bank or customs. 

  5. Have a LOI to hold the carrier completely harmless and they agree to cover all claims/costs by carrying out this request.

  6. Never change any information that is different from the original or this may be considered to be covering up the shipment. Port of loading, shipper, cargo description, etc. 

Do's

  • Ensure you know exactly what you are doing and consult with a lawyer.

  • Follow back to back with the master carrier if a forwarder.

Don'ts

  • Don't do if possible. 

  • Don't change any information that seems as hiding information.​

Note: Must notify and follow instructions from your P&I/liability insurers.​

Solas Weight Verification

 

What is the SOLAS Weight Verification?

This is a requirement of shipper or forwarders whose name appears on the bill of lading to verify the gross mass of a container. This will not only become international law under International Maritime Organisation (IMO), but most counties have incorporated this in their national law as well. Simply put, the ocean carrier will be required to not accept containers not accompanying a Verified Gross Mass (VGM) declaration and will be held responsible. These costs will be passed down the chain to the shipper or forwarder depending on who is on the bill of lading or even made the booking. Many details are still not known but fines and costs are expected to be costly.

 

First introduced
1st July 2016

Who provides the VGM?

The shipper or forwarder will be requested to provide this declaration which will in turn be used by the carrier.

What happens if the VGM is incorrect?

The cargo can be seized, delayed or even destroyed. However, there will be costly fines, storage, and re-stuffing charges. 

Who is responsible for these charges?

Ultimately the shipper or forwarder who provided the VGM. Failure to pay could result in action against them, being turned away, or a Lien imposed on the cargo.

The reason for this rule?

To stop shippers incorrectly showing the weight on a container and endangering safety. Therefore, the fines are expected to be large to deter this practice. 

Is this covered under Cargo Insurance?

Check with your service provider, but probably not. Seizure of cargo and reconsolidation charges or fines are not something that fall within this type of insurance. 

 

Is this covered under Liability Insurance?

Check with your service provider, but probably not unless it arose from a genuine error. If the shipper provided a forwarder with incorrect information this will be a liability against them which may not cover claims arising from government or customs regulations. 

How can I protect myself?

  • If you are the shipper make sure you issue the VGM correctly.

  • If you are the forwarder know the shipper well or better not be shown on the bill. 

  • If you are the carrier know the forwarder or shipper but immediately turn away the container.​

Telex Release

 

A telex release is a mechanism to quickly release goods in a similar way as an Express/Sea waybill of lading but when a full set of original bills of lading has been issued. As the name suggests this predates Express/Sea waybills and has been a long-established procedure.

 

However, this is not an official method of release, so strict procedures need to be followed:

  1. Ensure a full set of original bills of lading have been provided to origin agent. Customs or banks must never hold one copy, no matter what reason they give.

  2. Should only be carried out with a non-negotiable bill of lading.

  3. Ensure all charges have been collected prior to release.

  4. Ensure both the shipper and consignee sign/stamp the relevant Letters of Indemnity's below.

Common faults on carrying out telex releases is not collecting the full set and having a consignee or bank claiming the cargo at destination. Often excuses are that customs or a bank holds one of the bills of lading so can only provide two. If this is the case, then you must insist a proper release takes places and the original is sent to destination.

Another is 4/4 set of original bills are issued and the origin agent does not notice and only collects three.

For a template on telex LOI please refer to documents.
 

Do's

  • Ensure you have collected the full set of bills.

  • Ensure you have obtained all the LOIs, agreement and charges.

  • Ensure this is carried out by an experienced member of staff.

 

Don'ts

  • Be forced to issue with one bill in customs or at the back.

  • Without any of the parties signing/agreeing.

 ​

Note: We strongly recommend you follow advice from your liability insurer/lawyer when carrying out this type of request. 

Time Extensions

Time Extensions are requested to prolong the period governed by international conventions to file suit. This may be nine months or less, 1 year or even 2 years depending on which conventions are applicable.

 

To decide which extension is applicable will depend on the conveyance, country and where actually the loss occurred. Since this is a complicated matter it is highly recommended to seek legal advice to avoid any mistake.

A common misconception is a time extension is no longer applicable as soon as a claim has been filed with the carrier. This is incorrect and to avoid any claim becoming void there are only two exceptions:

  1. File suit to protect the claim.

  2. Apply for a time extension and receive written confirmation from the carrier this has been granted.

 

In case you are a shipper, freight forwarder, slot charterer etc., a similar extension must be obtained from the master carrier for any potential to obtain a recovery and avoid any claim being prejudiced by your insurers. This can be cargo insurers, liability, or P&I club.

 

To avoid any last-minute panic, it is strongly suggested a request for a time extension is made at least six weeks before it is supposed to expire and double check all bills of lading, containers, etc. are shown correctly.  

Common errors on time extensions are:

  • Case is already time barred but you have granted one anyway.

  • You grant a time extension before obtaining one from the master carrier. This will lead to any claim with your insurers being prejudiced.

  • You fail to show all the bills of lading numbers. Even if the intention is to request for all, or involves the same incident, if this is missing from the document it is no longer protected.

  • Time extensions are declined and not discussed with insurers. In case of a suit filed against you, liability insurers may decline cover because they were never given the option to respond.

  • Responsibility given to a junior member of staff who does not follow correct procedures or forgets entirely.

On a guide for a time extension document please refer to the document section.

 

Do's

  • Carefully check the time bars period.

  • Carefully ensure time bars are protected.

  • Ensure you have a mutual extension before granting your own.


Don'ts

  • Never grant time bars longer than the one provided to you.

  • Never grant time extensions unless agreed by your insurers.

  • Leave it too late before requesting. 

Note: It is essential to discuss any time extensions with your insurers prior to granting or declining. Also, you may wish to follow instructions from lawyers.