The transport sector is very international. Freight crosses international borders and enterprises from different countries are involved. Entrepreneurs must take into account international legal rules as well as the national law of foreign countries. Important examples of the latter are the national statutory rules

It might be impossible to identify with certainty the cause of damage sustained in the course of transport. Furthermore, it is possible that more than one party might be potentially responsible for the damage. The risk of becoming liable for damage without the possibility of recourse can be significantly reduced by careful drafting and enforcement of the contracts. To start with, more attention could be paid to the issues discussed below.

It is not enough merely to know your business partner if, in the case of a dispute, it is necessary to enforce claims against that company. The identity of the partner must be clarified beyond doubt. Where the business names of foreign companies are involved, this is not always a matter of course. In many cases, the parties correspond only by e-mail and never exchange tax identification numbers. This can lead to incorrect identification. For example, “Müller GmbH” is not the same company as “Müller GmbH & Co. KG”, and “Virtanen Ky” is not “Virtanen Oy”.

In the transport sector, the carrier is liable vis-à-vis the sender even for damage caused by third parties with whom the carrier itself did not contract for any part of the transport. The resulting liability may fall outside the scope of any insurance cover due to exclusions contained in the insurance contract. In addition, the carrier is at risk of not receiving payment for carriage if the designated recipient refuses to accept delivery or becomes bankrupt. The contract partner should not only be known, but should also have a reputation for being reliable and solvent. In case there is any doubt in connection with entering into a business relationship, one should ensure that possible later receivables are secured in an effective manner.

As far as protection of freight charges due under the consignment note is concerned, transport businesses usually rely on the expectation that they have a right of lien over the transported goods. However, the CMR convention, usually providing a reliable framework for international transports, does not contain any provisions in relation to the right of lien of forwarders or carriers. The question of whether or not the carrier or the forwarder is entitled to secure claims by way of charges against the goods is governed by the national provisions applicable in the place where the goods are situated. Local law also governs the situations in which the lien might be forfeited; for example, by disposing of certain documents or putting the goods into storage. Agreements between the parties on the lien are valid only insofar as they are permitted by the local law. The relevant provisions differ from country to country.

Charging against the goods is not possible if the carrier seeks legal regress against consignees since, once this situation arises, the goods are no longer in the hands of the carrier. If damage occurs, it would be reassuring to know that the consignee was properly insured and that there are bank guarantees in place to the extent that this is reasonable taking insurance exclusions into account. Demanding a guarantee from the ultimate recipient may be appropriate, especially in cases where the carrier accepts liability for tolls in the context of transit procedures.

It is general knowledge that the legal terms used in contracts are not always easy to understand. This is true, among other reasons, because the actual content of any contractual agreement is not entirely represented by the wording of the contract document alone. Statutory national and international law form an integral part of any agreement, filling the gaps where the contract wording does not deal with certain issues, but also setting aside contract clauses that conflict with mandatory national law.

Various general contract conditions are widely in use in the transport sector as well as in many other sectors. However, such general conditions do not necessarily become part of the contract even if an explicit reference is made to them in the contract text. Such reference will suffice if the partner is an entrepreneur and if the conditions in question are widely known and used in the relevant business sector. Where consumers – and possibly also small companies – are concerned, it is advisable to attach the full wording of the conditions to the contract in order to ensure that they are validly included in it. The preconditions for valid incorporation of general business conditions are not dealt with by the CMR and they vary from country to country.

Even the wording itself may give rise to interpretation issues. For example, the term “gross negligence” seems to describe a familiar concept. In practice, however, the line between gross and normal negligence is drawn in the water. Choice of law clauses are, in many cases, another example of provisions which are only seemingly clear. Their actual content is often difficult for a layperson to understand. The clause may read: “German law applies under exclusion of private international law”. Unlike a layperson may understand from this wording, this clause does not exclude the application of international rules such as the CMR or the UN Convention for the International Sale of Goods (CISG).

It is common sense that no one should agree to what he does not understand. This is particularly the case if the deal at hand is of significant economic importance. Without knowledge of what is agreed, and without carrying out a risk assessment based on such knowledge, one cannot make a solid decision on whether or not a risk is acceptable.

Article 31 of the CMR does not allow exclusive forum clauses in favour of the ordinary courts. Despite any forum clause, actions can be brought in any court of a country within whose territory the defendant has his or her principal place of business, or the place where the goods were taken over by the carrier or designated for delivery is situated. This means that it cannot be predicted in which country court proceedings will possibly take place. In the end, this issue may depend on who is first to decide to pursue a claim against the other party. Under these circumstances, it is impossible to ensure that legal action against a consignee can be dealt with in the same jurisdiction that is competent to decide the original dispute.

An agreement on the exclusive competence of an arbitration tribunal is therefore advisable. Article 33 of the CMR leaves room even for exclusive arbitration clauses. However, this type of arbitration clause is valid only if it provides for the application of the CMR. Whether such a provision must be expressly included remains a matter of debate among legal scholars. Therefore, in order to ensure the acknowledgement of the arbitration clause wherever it might be necessary, either for procedure or enforcement, the application of the CMR should be mentioned in the arbitration clause. Don’t forget!

Where Norwegian, Swedish and Finnish forwarders are concerned, the General Business Conditions of Scandinavian Forwarders provide for arbitration proceedings at the place of business of the forwarder, although disputes with a value of less than 30,000 euros and consumer disputes are excluded. This does not render a separate individual arbitration clause unnecessary, since the reference to the CMR is only implicit with reference to the General Business Conditions of Scandinavian Forwarders and the clause further covers only the relationship between the forwarder and the customer, and does not cover the relationship with the consignees.

The need for arbitration is obvious where disputes in the transport sector are concerned. Ordinary court proceedings can go on for years before a final decision is reached. Furthermore, where arbitration is used, it is possible to ensure that the judge is not only a legal expert but is also aware of the special conditions in the transport and logistics business.

In case of B2B contracts, Finnish companies agree on arbitration clauses almost without exception. If Finnish arbitration cannot be agreed upon, one could alternatively also consider arbitration in Denmark or Sweden, since Finnish insurance policies as a rule provide cover for proceedings, including arbitration, in the Nordic Countries. There is, however, no cover in respect of proceedings in the other European countries.