Web alert: Multimodal Bills – A reminder

The club has recently seen an increase in shippers converting what are typically ‘port to port’ bills of lading into ‘door-to-door’, also known as multimodal, or combined transport, bills. For example, in one such bill the club has reviewed recently, on the standard CONGENBILL form, the ‘Port of Discharge’ was described as ‘Port of Kolkata, India, in transit to [a named] warehouse in Nepal’.

In so doing, the shipper here is (perhaps inadvertently) placing on the contractual carrier the burden of performing the entire journey (as described on the face of the bill) even though the carrier may have had no intention or ability to complete the final leg by road transportation. This means that that the carrier will also be liable for the entire journey, despite the combination of transport used.

Of course, many sea carriers do issue multimodal (or combined transport) bills, but the reverse of their bills also contain much more detailed and comprehensive terms as to responsibility and liability for cargo damage during a road, rail, sea or air leg. A multimodal bill will also usually be clear from its face, as it will either expressly include the ‘Place of Receipt’ as well as the ‘Port of Loading’, or the ‘Final Destination’ as well as the ‘Port of Discharge’, or perhaps both.

Under club rule 3.13.3 standard P&I cover will respond to ‘liability for loss of or damage to or responsibility in respect of cargo or other property being carried by means of transport other than the ship, for which the member may be liable under a contract of carriage… providing for carriage partly to be performed by the ship’ so long as this contract of carriage has been approved by the managers of the club.

Thus, for standard P&I cover to respond to combined or multimodal bills: (i) part of the voyage must be carried out by the entered ship; and (ii) the contract must have been approved by the club’s managers.

However, this doesn’t detract from the fact that a member will still be principally liable in the first instance for cargo damage incurred during, say, the road leg performed under a multimodal bill. Thus, it is vital that sufficient contractual arrangements (and, wherever possible, indemnities down the contractual chain) are made whenever a member agrees to issue a multimodal (combined transport) bill. Clearly, such arrangements wouldn’t have been in place if the member had issued the CONGENBILL mentioned above.

It should also be noted that if multimodal bills are agreed to by the club’s managers (ultimately at their discretion) there may be a requirement for some additional premium to be charged for the increased risk, or the club may even choose not to insure the journey other than the sea aspect due to unacceptable, viewed to be heightened, risks. Members therefore (as always) need to be vigilant, monitor carefully the bills they issue and exercise proper due diligence in respect of any request made by a shipper (or charterer for that matter) to amend the terms of a standard ‘port to port’ bill.

This article intends to provide general guidance on the issues arising. It is not intended to provide legal advice in relation to any specific query. The law is also not static. If in doubt, The Standard Club is always on hand to assist.