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Hard Brexit-increased liabilities for road hauliers and freight forwarders

Brexit will have many unforeseen consequences, and a hard Brexit in all probability more that most. BIFA has consistently argued that of all the modes, road will be the one most impacted by the changes will be road. BIFA has been recently approached by solicitors regarding Brexit’s impact on he the Convention for the International Carriage of Goods by Road (CMR) for damages, particularly where there is a delay.

Of all the international conventions it is the most shipper/consignee convention and compensation levels are rather more generous than they are under for instance Hague-Visby.  In this short briefing we highlight the main problems and suggest methods that Members can take to limit them.

Hard Brexit-increased liabilities for road hauliers and freight forwarders

Ever since the Brexit Referendum in June 2016, and the UK’s submission to the European Union under Article 50 of its intention to withdraw from the EU, BIFA has highlighted economic and trade related concerns. 

From a purely customs viewpoint a hard “No Deal” Brexit would result in:

  • The ending of the UK’s tariff free status with the remaining 27 Member States
  • Requirement for customs declarations as we are leaving the Single Market
  • Potential re-introduction of Tariffs
  • Re-introduction of non-tariff requirements such as Phytosanitary Certificates, Animal Health Certificates etc
  • Additional costs stemming from funding the payment of import duties, taxes and guarantees

All these requirements have the potential to lead to delays at the frontier, particularly when you factor in the large volumes involved and the fact that many traders and hauliers will be dealing with unfamiliar procedures and documentation.

These delays will impact on transit and delivery times. BIFA has publicly stated that relative to Brexit its greatest concerns relate to the road sector because of the potential disruption to trade patterns and issues relating to market access.  Now a new concern is emerging, the impact of the Convention for the “Contract for the International Carriage of Goods by Road (CMR”) for damages.  We must remind readers that as CMR is compulsorily applicable it will take precedence over BIFA conditions where and when applicable.

Of all the international conventions covering the main transport modes it would be reasonable to say that it is the most shipper/consignee friendly convention.  There are concerns regarding Article 17 (1) for damages that may be caused by a delay in delivery.  According to Article 19 of CMR a delay in delivery occurs when:

  • The goods are not delivered within the agreed timeframe; or
  • In the absence of an agreed timeframe, the duration of the carriage exceeds the time that it would take a diligent forwarder to deliver the goods.

Given the uncertainty surrounding Brexit, it is hard to see how diligent EU and UK forwarders could prepare for these potential delays.  Given the likelihood of customs clearance delays following a hard Brexit, it could be argued that such delays are both expected and thus could be avoided.  Therefore, the logistics provider would have difficulty on relying on the liability exemption included in Article 17(2). 

In reality given routes and capacity, however vigilant the operator, is it is difficult to see what they could be done to prevent delays at the frontier(s).  Under Article 23(5) of CMR, liability could be limited to the freight charges.  However, some solicitors have expressed a view that the carrier would be fully liable under Article 29 of CMR, which covers financial losses stemming from their own wilful misconduct.  In this scenario, a claimant could argue that a carrier had known that a delay would occur and thus be fully liable for the damages caused.  In defence, the carrier would have to argue contributory negligence, i.e. that the sender or consignee must have been aware of the potential delays (they have been well publicised) and seek liability reduction. 

What can be done to minimise this risk? BIFA is aware that some carriers are contacting shippers and importers advising them that in a hard Brexit scenario that import, and export customs clearance delays are expected, which will lead cargo being delayed.  The problem is that delays may get longer because if trucks cannot be offloaded from the ferry, then the latter will be delayed in sailing, which creates even longer delays and so on, it is a vicious circle.

BIFA has seen suggestions that carriers should contact shippers in accordance with Article 14 of the CMR Convention to reduce their liability risk.  One matter relative to the CMR Convention that does get raised on a regular basis relates to jurisdiction. It is highly advisable that Members ensure that their customers accept the jurisdiction of English Courts.

Disclaimer-this guidance is for general reference only and Members should seek the guidance of a suitably qualified legal professional where they feel that their business may be impacted to discuss their specific concerns.

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