International Railway Carriage of Goods: Legal Regulation

 

February 24, 2025

BRACE Law Firm ©

 

In Russia, the railway transport sector is one of the largest segments of the economy. The role of railways in Russia is defined by vast transportation distances and the remoteness of industrial centers from sea routes. The carriage of goods by rail is a complex technical, legal, and technological process.

This article examines the primary sources of regulation for international rail transport (the "Rail Carriage"), the conclusion and execution of the contract of carriage, carrier liability issues, and dispute resolution procedures.

Russian and International Legal Regulation of Rail Carriage

The primary sources of legal regulation for the carriage of goods by rail in Russia are Federal Law No. 18-FZ dated January 10, 2003, the Charter of Railway Transport of the Russian Federation, and Federal Law No. 17-FZ dated January 10, 2003, On Railway Transport in the Russian Federation.

Pursuant to Article 14 of Federal Law No. 17-FZ dated January 10, 2003, On Railway Transport in the Russian Federation, the international carriage of passengers, goods, luggage, and cargo luggage involving rail transport is also carried out in accordance with the international treaties of the Russian Federation. Such treaties include the Convention concerning International Carriage by Rail dated May 9, 1980, and the Agreement on International Goods Transport by Rail, which entered into force on November 1, 1951.

The Convention concerning International Carriage by Rail dated May 9, 1980, as amended by the Protocol of June 3, 1999 (the "COTIF"), in which most European states as well as some states in Asia and Africa participate, was concluded to create conditions to facilitate and accelerate international railway traffic based on uniform rules in this area.

Cooperation between COTIF member states is carried out within the framework of the Intergovernmental Organisation for International Carriage by Rail (OTIF) established by them.

COTIF contains the following appendices, which are an integral part thereof:

• Uniform Rules concerning the Contract of International Carriage of Passengers by Rail (CIV) (Appendix A);
• Uniform Rules concerning the Contract of International Carriage of Goods by Rail (CIM) (Appendix B);
• Regulation concerning the International Carriage of Dangerous Goods by Rail (RID) (Appendix C);
• Uniform Rules concerning Contracts of Use of Wagons in International Rail Traffic (CUV) (Appendix D);
• Uniform Rules concerning the Contract of Use of Infrastructure in International Rail Traffic (CUI) (Appendix E);
• Uniform Rules concerning the Validation of Technical Standards and the Adoption of Uniform Technical Prescriptions applicable to Railway Material intended to be used in International Traffic (APTU) (Appendix F);
• Uniform Rules concerning the Technical Admission of Railway Material used in International Traffic (ATMF) (Appendix G).

Russia acceded to COTIF based on Federal Law No. 152-FZ dated July 17, 2009, which contains a reservation and a declaration on the application of Appendix B, Uniform Rules concerning the Contract of International Carriage of Goods by Rail (CIM), of COTIF only in relation to rail carriage of goods and only on specific sections of railway lines.

In accordance with § 6 of Article 1 of the CIM, each state signing COTIF may, when submitting its declaration of accession, declare that it will apply the CIM only to carriage performed on a part of the railway infrastructure located on its territory. This part of the railway infrastructure must be precisely defined and connected to the railway infrastructure of a member state. If a state makes the aforementioned declaration, the CIM applies only on the condition that:

• the place of acceptance of the goods or the place of delivery, as well as the route provided for in the contract of carriage, are included in the specified infrastructure;
• the specified infrastructure connects the infrastructure of two member states and was provided for in the contract of carriage as a route for transit carriage.

Thus, Federal Law No. 152-FZ dated July 17, 2009, specifies that the CIM applies to the carriage of goods on parts of the railway infrastructure from the pier of the Baltiysk ferry complex to the Baltiysk port railway station (2.84 km), as well as from the pier of the Ust-Luga ferry complex to the Luzhskaya port railway station (1.745 km).

Federal Law No. 453-FZ dated December 30, 2021, On the Declaration of the Russian Federation in Connection with the Implementation of the Convention concerning International Carriage by Rail (COTIF), extended the CIM provisions to new sections of railway infrastructure within Russia:

• from the Mamonovo border railway station to the Dzerzhinskaya-Novaya railway station (60 km);
• from the Zheleznodorozhny border railway station to the Chernyakhovsk railway station (48 km);
• from the Kaliningrad-Sortirovochny railway station to the Port of Kaliningrad (3.777 km);
• from the Buslovskaya border railway station to the state border with the Republic of Finland (2.7 km);
• from the Svetogorsk border railway station to the state border with the Republic of Finland (0.5 km);
• from the Vyartsilya border railway station to the state border with the Republic of Finland (1 km);
• from the Kiviyarvi border railway station to the state border with the Republic of Finland (3.7 km).

This Federal Law also provides that the Government of Russia shall make subsequent decisions on applying the CIM to carriage performed on sections of railway infrastructure. Currently, no such decisions have been made.

In the early 1950s, an urgent need arose to create uniform legal and economic norms to ensure international freight traffic. During meetings held in Warsaw on December 22, 1950, in Prague on April 23, 1951, and in Budapest on July 10, 1951, the texts of the first major documents for international passenger and freight transport were developed and agreed upon: the Agreement on International Goods Transport by Rail, which entered into force on November 1, 1951 (the "SMGS").

The SMGS is an international interdepartmental agreement concluded by the ministries in charge of railway communication in the following countries: Azerbaijan, Albania, Belarus, Bulgaria, Hungary, Vietnam, Georgia, Iran, Kazakhstan, China, North Korea, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Slovakia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, and Estonia. Please note that virtually all members of the Eurasian Economic Union (EAEU), except Armenia, are SMGS member states. However, on February 13, 2008, an agreement was concluded under which JSC RZD took the Armenian Railway CJSC into a 100% concession for a period of 30 years, with a right to extend the concession agreement for another 10 years. Now, the railways of Armenia are also known as South Caucasus Railway CJSC, which is a structural part of JSC RZD in Armenia. [1] The parties establish direct international rail communication for the carriage of goods via the railways of the aforementioned countries.

Numerous amendments and additions have been made to the SMGS. The version currently in effect is dated July 1, 2024.

The SMGS applies to all carriage of goods in direct international rail freight communication and only via the railway networks of the participating states. The SMGS is binding upon the railways, consignors, and consignees of goods. However, if the parties are simultaneously participants in other international agreements establishing legal norms for the contract of carriage of goods by rail, the carriage between the railway stations of these parties may be performed under the terms of those agreements. For example, Slovakia and Hungary, while participating in the SMGS, apply CIM norms and rules when performing international carriage of goods between themselves, as they are participants in COTIF. [2]

If the station of departure and the station of destination are located on railways of different track gauges, the carriage, depending on technical capabilities, may be performed by the following methods: transshipment of cargo from wagons of one gauge to wagons of another gauge, transferring wagons to bogies of another gauge, or using adjustable wheelsets.

Within the framework of Case No. A45-11805/2019, it was established that the carrier delivered goods to the consignee after transshipment at the Zabaikalsk station from 1,435 mm gauge wagons arriving from the PRC to 1,520 mm gauge wagons at a common-use area. The plaintiff, considering the transshipment of its cargo from Chinese wagons to Russian wagons and the associated fees to be illegal, filed a claim with the arbitration court. Meanwhile, the court pointed out that the operational technology of the Zabaikalsk station does not permit, either technically or legally, operations to deliver cargo from Chinese Railway wagons and thereby conclude international carriage while bypassing the transshipment and transport of wagons with cargo to common-use areas, and denied the claim.[3]

Form, Content, and Conclusion of the International Rail Goods Carriage Contract

As a reminder, pursuant to Article 784 of the Civil Code of the Russian Federation (the "Civil Code"), the carriage of goods is performed on the basis of a contract of carriage.

General conditions of carriage are determined by transport charters and codes, other laws, and rules issued in accordance with them. The conditions for the carriage of goods, passengers, and luggage by specific types of transport, as well as the liability of the parties for such carriage, are determined by the agreement of the parties, unless otherwise established by the Civil Code, transport charters and codes, other laws, and rules issued in accordance with them.

According to Article 785 of the Civil Code, under a contract of carriage of goods, the carrier undertakes to deliver the cargo entrusted to it by the consignor to the destination and deliver it to the person authorized to receive the cargo (the consignee), and the consignor undertakes to pay the established fee for the carriage. The conclusion of a contract of carriage is confirmed by the preparation and issuance of a consignment note (a bill of lading or other document for the cargo provided for by the relevant transport charter or code) to the consignor.

We also remind you that, as a general rule, the parties to a contract may, upon conclusion of the contract or subsequently, choose by agreement between themselves the law to be applied to their rights and obligations under the contract (Article 1210 of the Civil Code). In the absence of an agreement between the parties on the applicable law, the law of the country where the party performing the service of decisive importance for the content of the contract has its place of residence or main place of business at the time of the conclusion of the contract shall apply (Article 1211 of the Civil Code). In a contract of carriage, the carrier is such a party.

It should be noted that the SMGS establishes uniform legal norms for the contract of carriage of goods in direct international rail communication. For parties to a contract of carriage from SMGS member states, its application is mandatory. If the parties are simultaneously participants in other international agreements establishing legal norms for the contract of carriage of goods by rail, the carriage between the railway stations of these parties may be performed under the terms of those agreements. It should be noted that COTIF also does not prohibit the application of other international agreements.

Article 5 of the SMGS provides that in the absence of relevant provisions in the SMGS, the national legislation of the party where the entitled person exercises their rights shall apply.

Under the SMGS, in a contract of carriage, the carrier undertakes, for a fee, to transport the cargo entrusted to it by the consignor to the destination station via the route agreed upon by the consignor and the contractual carrier and to deliver it to the consignee. It should be noted that any condition of a contract of carriage that directly or indirectly deviates from the terms of the SMGS is invalid and void of legal force, except for cases specified in the SMGS. The invalidity of such conditions does not entail the invalidity of other conditions of the contract of carriage.

Pre-contractual coordination of carriage is performed before the conclusion of the contract of carriage in the following manner:

• between the consignor and the contractual carrier — in accordance with national legislation;
• between the contractual and subsequent carriers — in accordance with the procedure agreed upon by them.

The conclusion of a contract of carriage is confirmed by a consignment note; however, incorrect or inaccurate information entered into the consignment note, as well as the loss of the consignment note by the carrier, shall not affect the existence or validity of the contract of carriage. Appendix No. 6 to the SMGS, the Manual for the CIM/SMGS Consignment Note, contains a sample CIM/SMGS consignment note and rules for its completion and application.

Article 15 of the SMGS defines the list of information that must be contained in the consignment note. This includes, for example, the names of the consignor and consignee and their postal addresses, the stations of departure and destination, the number of cargo items, and the mass of the cargo.

It is important to note that the mass of the cargo is considered correct if the difference between the mass of the cargo determined by the consignor at the station of departure and the mass established by the carrier during a corresponding check does not exceed the value of the permissible tolerance. The permissible tolerance, not being an absolute or unchangeable value, is determined based on established commercial customs, the properties of the cargo, and the circumstances of the specific carriage, and is subject to proof by the parties under the general rules provided by procedural legislation. In particular, when proving the amount of permissible discrepancy in cargo mass, Recommendation MI 3115-2008, Mass of Goods Carried by Rail. Measurements and Accounting of Cargo Mass in Settlements between Consignor and Consignee, approved by the Federal State Unitary Enterprise VNIIMS of Rostekhregulirovanie on May 20, 2008, may be used.[4]

Consignment note forms are printed, and the consignment note is filled out in Chinese or Russian, as both of these languages are the working languages of the Organization for Cooperation between Railways, founded on June 28, 1956, at a session of the Meeting of Ministers in charge of railway transport of the SMGS member countries. By agreement between the participants of the carriage, the consignment note may be filled out in any other language. The consignment note may be issued either in paper form (paper consignment note) or as an electronic document (electronic consignment note).

The consignor bears responsibility for all consequences of incorrect, inaccurate, or incomplete information and declarations, as well as for their entry in the inappropriate column of the consignment note. If, before the conclusion of the contract of carriage, the carrier discovers incorrect, inaccurate, or incomplete information in the consignment note, the consignor is obliged to prepare a new consignment note if the correction of the information and declarations specified in the consignment note is not permitted.

Thus, from the materials of Case No. A40-164492/2018, it follows that at one of the stations of the Moscow Railway, the carrier prepared a commercial act stating that a control weighing of a wagon traveling from the Kozenki station of the Belarusian Railway to the Bukhara station of the Uzbek Railway was performed. As a result of the wagon's re-weighing, it was established that the net weight was specified as 52,272 kg in the documents, while in reality, it was 67,390 kg; the excess mass compared to the document amounted to 14,595 kg. The carrier assessed a penalty and additional freight charges for the carriage of the excess cargo mass. The courts established that the fact of the excess cargo mass was documented and satisfied the filed claims for the recovery of the penalty.[5]

The consignor attaches to the consignment note the accompanying documents necessary for performing customs and other administrative formalities throughout the entire route of the cargo. These documents must relate only to the goods listed in the given consignment note. Accompanying documents attached by the consignor to the consignment note must be specified by the consignor in the consignment note. If the consignor fails to fulfill this condition, the carrier must refuse to accept the cargo for carriage.

Accompanying documents may include commercial documents — i.e., documents used in foreign trade and other activities, as well as to confirm the execution of transactions related to the movement of goods across the customs border (invoices, specifications, shipping/packing lists) — as well as documents confirming compliance with prohibitions and restrictions (e.g., phytosanitary certificate, veterinary certificate).

If the consignor sends accompanying documents to the relevant administrative control body, it shall enter information to that effect in the consignment note.

The carrier is not obliged to check the correctness and sufficiency of the accompanying documents attached by the consignor to the consignment note. The consignor bears responsibility to the carrier for consequences arising from the absence, insufficiency, or incorrectness of the accompanying documents.

In Case No. A15-679/2019, regarding holding a company administratively liable under Part 3 of Article 16.1 of the Code of Administrative Offenses of the Russian Federation due to a discrepancy between the actual number of cargo items and that declared in the shipping documents discovered by the administrative body following a customs inspection and administrative investigation, the courts established that verification of the accuracy of information regarding the number of cargo items, total weight, and name of the goods was carried out by the applicant by reconciling the information contained in the transport and commercial documents; at the same time, the company did not have the right to check the actual compliance of the disputed cargo with the information declared by the consignor in the consignment note. Given these circumstances, the courts concluded that the administrative body failed to prove the applicant's guilt in the offense committed. [6]

Unless otherwise agreed by the consignor and the carrier, the delivery period is determined for the entire route of the cargo and must not exceed the period calculated based on the norms established in Article 24 of the SMGS.

The cargo delivery period is determined based on the following norms:

• for containers—1 day for every 150 km started;
• for other shipments—1 day for every 200 km started.

For specific goods, the carrier may establish different delivery periods.

Furthermore, the cargo delivery period may be increased, for example, during the transshipment of cargo into wagons of a different gauge or due to delays en route for reasons beyond the carrier's control.

The delivery period starts at 0:00 on the day following the date of the conclusion of the contract of carriage and ends at the moment the notice of arrival is delivered to the consignee. In this case, for notifications between 00:00 and 12:00, incomplete days are not rounded up or counted, while for notifications between 12:00 and 24:00, incomplete days are counted as full days.

The delivery period is considered fulfilled if the cargo arrives at the destination station before the expiry of the delivery period and the carrier notifies the consignee of the cargo's arrival and the possibility of placing the cargo at the consignee's disposal. The procedure for notifying the consignee is determined by the national legislation in effect at the place of delivery.

Article 25 of the SMGS establishes the procedure and rules for amending the contract of carriage. The right to give instructions to the carrier regarding the cargo and thus amend the contract of carriage belongs to both the consignor and the consignee.

Thus, the consignor may make the following amendments to the contract of carriage:

• change the destination station of the cargo;
• change the consignee of the cargo.

The consignee may make the following amendments to the contract of carriage only within the country of destination:

• change the destination station of the cargo;
• change the consignee of the cargo.

The consignee may amend the contract of carriage only while the cargo is at the entry border station of the country of destination. If the cargo has already passed the entry border station of the country of destination, any amendment to the contract of carriage by the consignee shall be made in accordance with the national legislation in effect in the country of destination.

The consignor's right to amend the contract of carriage terminates from the moment the consignment note is issued to the consignee or the cargo arrives at the entry border station of the country of destination if the carrier already possesses a written statement from the consignee regarding an amendment to the contract of carriage.

The carrier has the right to refuse to amend the contract of carriage or to delay the implementation of such an amendment only if:

• it is unfeasible for the carrier at the moment of receiving the statement to amend the contract of carriage;
• it may disrupt railway operations;
• upon changing the destination station, the value of the cargo does not cover all expected carriage costs to the new destination station, except in cases where the amount of these costs is paid immediately or its payment is guaranteed;
• upon changing the destination station, the carriers specified in the consignment note change and the new carriers have not coordinated the carriage.

Since the CIM has limited application on the territory of Russia, we will touch upon the main provisions concerning the conclusion of a contract of carriage.

In accordance with the CIM, under a contract of carriage, the carrier undertakes to transport the cargo for a fee to the destination and deliver it to the consignee. The contract of carriage must be confirmed by a consignment note prepared according to a uniform sample. The consignment note must be signed by the consignor and the carrier. The consignment note does not have the force of a bill of lading. A consignment note is prepared for each shipment. Except in the case of a contrary agreement between the consignor and the carrier, only cargo placed in one wagon may be the subject of a single consignment note.

The consignment note, unless proven otherwise, serves as evidence of the conclusion and terms of the contract of carriage and the acceptance of the cargo by the carrier. If the carrier performed the loading, the consignment note, unless proven otherwise, serves as evidence of the condition of the cargo and its packaging specified in the consignment note, or, in the absence of such data, of the apparently good condition at the moment of acceptance of the cargo by the carrier and of the accuracy of the indications in the consignment note regarding the number of items, their marks and numbers, as well as the gross mass.

The consignor and the carrier agree on who is responsible for loading and unloading the cargo. In the absence of such an agreement, loading and unloading are the responsibility of the carrier for individual items, while the loading of wagonload shipments is the responsibility of the consignor, and unloading after delivery is the responsibility of the consignee. The consignor bears responsibility for all consequences of incorrect loading performed by it and must, in particular, compensate the carrier for the damage associated therewith. The consignor is liable to the carrier for all types of damage and costs related to the absence or unsatisfactory condition of packaging, except in the case where the unsatisfactory condition of the packaging was obvious upon acceptance of the cargo by the carrier and was known to the carrier, but the carrier made no reservations in this regard.

The delivery period is established by the parties. In the absence of an agreement, this period may not exceed the period specified below. The maximum delivery periods are:

• for wagonload shipments: period for dispatch — 12 hours, period for carriage for every 400 km started — 24 hours;
• for small shipments: period for dispatch — 24 hours, period for carriage for every 200 km started — 24 hours.

The carrier must, at the provided place of delivery, hand over the consignment note to the consignee and deliver the cargo after receiving a receipt and the payments due in accordance with the contract of carriage.

Payments for International Rail Goods Carriage Performed by Russian Railways

Freight charges for the carriage of goods are calculated according to the tariffs applied by the carriers performing the carriage.

The basic tariff rates for the carriage of goods and infrastructure services performed by Russian railways are established by Price List No. 10-01, approved by Resolution of the Federal Energy Commission of the Russian Federation No. 47-t/5 dated June 17, 2003, which entered into force on September 20, 2003. At the time of this article's publication, the version dated June 7, 2023, is in effect.

Freight charges are calculated separately by each carrier participating in the carriage for the distances of carriage according to the tariffs in effect on the day the contract of carriage is concluded and in the currency determined in accordance with the tariffs applied for the given international carriage.

When the contract of carriage is amended, freight charges are calculated separately for the distance of carriage to the station where the amendment to the contract of carriage was made and from that station to the new destination station.

Unless otherwise provided by an agreement between the participants of the carriage, the payment of freight charges is the obligation of:

• the consignor — to the carriers participating in the carriage of the cargo, except for the carrier delivering the cargo, for the carriage performed by them;
• the consignee — to the carrier delivering the cargo, for the carriage performed by it.

If the consignor or the consignee assigns the payment of freight charges to a third party, that party must be specified by the consignor in the consignment note as the payer and must have a contract with the relevant carrier.

The carrier has the right to demand payment of freight charges before the start of the carriage; furthermore, until all payments arising from the contract of carriage are received, the carrier has the right to lien the cargo in its possession.

Liability of the Parties to an International Rail Goods Carriage Contract

Under Russian law, the carrier's liability is provided for by the Civil Code and the Charter of Railway Transport. Pursuant to Article 796 of the Civil Code and Article 95 of the Charter of Railway Transport, the carrier bears responsibility for the failure to preserve cargo after its acceptance for carriage and storage until its delivery to the consignee, unless it proves that the loss, shortage, or damage (spoilage) of the cargo or cargo luggage occurred due to circumstances that the carrier could not prevent or eliminate for reasons beyond its control — for example, due to defects in the container or packaging that could not be noticed during an external inspection when the cargo was accepted, or the use of containers or packaging not corresponding to the properties of the cargo, in the absence of traces of damage to the container or packaging en route.

Pursuant to Articles 796 of the Civil Code and 96 of the Charter of Railway Transport, the carrier shall compensate for damage caused during the carriage of cargo in the following amounts:

• in the amount of the value of the lost or missing cargo in the event of its loss or shortage;
• in the amount of the sum by which the value of the cargo decreased in the event of its damage (spoilage), or in the amount of its value if it is impossible to restore the damaged cargo;
• in the amount of the declared value of the cargo handed over for carriage with a declaration of its value, in the event of its loss;
• in the amount of the share of the declared value of the cargo corresponding to the missing or damaged (spoiled) part of the cargo handed over for carriage with a declaration of its value, in the event of a shortage or damage (spoilage) of the cargo.

The value of the cargo is determined based on its price specified in the seller's invoice or provided for by the contract, and in the absence of a seller's invoice or a price in the contract, based on the price usually charged for similar goods under comparable circumstances. Along with compensation for damage, the carrier also returns the collected freight fee and other payments due to the carrier in proportion to the amount of lost, missing, or damaged (spoiled) cargo, provided that such fee is not included in the value of the cargo.

Under the SMGS rules, the carrier bears responsibility to the consignor or consignee arising exclusively from the contract of carriage, within the manner and limits established by the SMGS. The carrier bears responsibility for the loss, shortage, or damage (spoilage) of cargo from the moment the cargo is accepted for carriage until the moment of its delivery. Circumstances serving as grounds for the carrier's liability for loss, shortage, or damage (spoilage) of cargo are certified by a commercial act.

In accordance with Article 29 of the SMGS, the carrier shall prepare a commercial act if, during the inspection of the cargo during its carriage or delivery, it establishes:

• a discrepancy between the name, mass, or number of items of the cargo and the information specified in the consignment note;
• a discrepancy between the marking on the cargo items and the information specified in the consignment note regarding the marks (stamps) of the cargo items, the station and railway of destination, the consignee, or the number of cargo items;
• damage (spoilage) of the cargo;
• the absence of the consignment note or its individual sheets for the given cargo, or the absence of the cargo for the given consignment note (loss).

If the national legislation of the country of destination permits the preparation of a commercial act after the cargo is delivered to the consignee, the consignee has the right to apply to the delivering carrier for the preparation of a commercial act after delivery due to a reason that could not be discovered by external inspection during delivery. Such an application to the delivering carrier must be made by the consignee immediately after establishing the loss, shortage, or damage (spoilage) of the cargo and no later than three days after delivery.

The carrier also bears responsibility for exceeding the cargo delivery period.

The limit of the carrier's liability may not exceed the amount of compensation payable by the carrier in the event of cargo loss. Pursuant to Article 42 of the SMGS, the amount of compensable damage is determined based on the value of the cargo. In the event of loss or shortage of cargo carried with a declared value, the carrier compensates the consignor or consignee for the amount of the declared value or the share of the declared value corresponding to the lost part of the cargo. In addition, the freight charges and other expenses of the consignor (consignee) received by the carrier for the carriage of the lost cargo or lost part thereof are subject to return if they are not included in its value.

The reason for the consideration of Case No. A40-173098/16 was the partial loss of cargo during its transit to the destination station. Based on the fact that the amount of compensable damage is determined based on the value of the cargo and having established the value of the lost cargo, the courts deemed the filed claims to be justified and subject to satisfaction.[7]

According to Article 39 of the SMGS, the carrier is released from liability for the loss, shortage, or damage (spoilage) of cargo accepted for carriage if they occurred:

• due to circumstances that the carrier could not prevent and the elimination of which did not depend on it;
• due to the inadequate quality of the cargo, container, or packaging, or due to special natural and physical properties of the cargo, container, or packaging that caused their damage (spoilage);
• due to the fault of the consignor or consignee or due to their requirements, because of which fault cannot be attributed to the carrier;
• for reasons related to the loading or unloading of the cargo, if the loading or unloading was performed by the consignor or consignee;
• due to the absence of a container or packaging necessary for the carriage of the cargo;
• due to the fact that the consignor handed over items for carriage under an incorrect, inaccurate, or incomplete name or without complying with the terms of this Agreement;
• due to the fact that the consignor loaded the cargo into a wagon or container unsuitable for the carriage of the given cargo;
• due to the incorrect choice by the consignor of the method of carriage for perishable goods or the type of wagon (container);
• due to the failure to perform or improper performance of customs or other administrative formalities by the consignor or consignee;
• due to inspection, detention, or confiscation of the cargo by state bodies for reasons beyond the carrier's control.

During the consideration of a case, it was established that during the transport of goods, a collision occurred between a shunting locomotive and a shunting train, resulting in the derailment of wagons carrying the disputed cargo. Upon delivery with an inspection of the cargo received by the client (plaintiff) under a rail consignment note, a shortage was established. However, the courts concluded that there were no grounds to satisfy the claim because they established that "the causal link between the derailment of wagons at the destination station after their acceptance by the plaintiff, who is the consignee, and the shortage of cargo reflected in the documents has not been proven, and the fact of damage to the wagons in itself does not indicate the possibility of losing cargo in such a manner."[8]

Furthermore, the carrier bears no responsibility for the loss, shortage, or damage (spoilage) of cargo accepted for carriage if they occurred during the carriage of cargo under special contractual conditions and the release from liability is provided for by these special contractual conditions.

The carrier bears no responsibility for a shortage of:

• cargo carried in containers or in bundles if the cargo was delivered to the consignee with the full number of items, in an intact container or bundle, and in the absence of external signs of access to the contents that could have caused the shortage;
• cargo carried without a container or bundle if the cargo was delivered to the consignee with the full number of items and in the absence of external signs of access to the cargo that could have caused the shortage;
• cargo if it was delivered to the consignee under intact seals of the consignor, as well as without external signs of access to the cargo that could have caused the shortage;
• cargo in containers loaded into a wagon by the consignor (with doors facing inward) if the containers in this wagon traveled without transfer en route and were delivered to the consignee without a check of the seals and without external signs of access to the cargo that could have caused the shortage;
• cargo accepted for carriage on open rolling stock if the cargo arrived in an intact wagon without transshipment en route and there are no signs that would indicate the occurrence of a shortage during carriage;
• removable or spare parts located in sealed containers if these containers were delivered to the consignee under intact seals of the consignor.

The carrier also bears no responsibility for damage to cargo accepted for carriage on open rolling stock if the cargo arrived in an intact wagon without transshipment en route and there are no signs that would indicate damage (spoilage) to the cargo during carriage.

The carrier is released from liability for exceeding the cargo delivery period if such excess was caused by:

• circumstances that the carrier could not prevent and the elimination of which did not depend on it;
• the fault of the consignor or consignee or due to their requirements, because of which fault cannot be attributed to the carrier;
• the failure to perform or improper performance of customs or other administrative formalities by the consignor, consignee, or a person authorized by them.

Article 43 of the SMGS defines that in relation to goods which, due to their natural properties, are subject to weight loss during carriage, the carrier is liable only for that part of the shortage that exceeds the following norms in percentages:

• 2% of the mass of liquid goods or goods handed over for carriage in a raw (wet) state;
• 1% of the mass of dry goods.

For goods carried in bulk, by heap, or by pour, if they are transshipped en route, the specified norms are increased by 0.3% for each transshipment.

In relation to goods not subject to weight loss during carriage, the carrier is liable only for that part of the shortage that exceeds 0.2% of the cargo mass.

In the event of damage (spoilage) to the cargo, the amount of compensable damage must correspond to the sum by which the value of the cargo decreased. In the event of damage (spoilage) to cargo carried with a declared value, the carrier compensates for the sum that must constitute the part of the declared value corresponding in proportion to the percentage of the decrease in the value of the cargo that occurred as a result of the damage (spoilage) (Article 44 of the SMGS).

According to Article 45 of the SMGS, if the carrier failed to comply with the cargo delivery period, the carrier shall pay compensation for exceeding the delivery period in the form of a penalty. The amount of the penalty for exceeding the cargo delivery period is determined based on the freight charges received by each carrier that allowed the excess delivery period and the magnitude (duration) of the excess period, calculated as the ratio of the excess delivery period (in days) to the total delivery period, namely:

• 6% of the freight charge for an excess delivery period not exceeding one-tenth of the total delivery period;
• 18% of the freight charge for an excess delivery period of more than one-tenth but not exceeding three-tenths of the total delivery period;
• 30% of the freight charge for an excess delivery period of more than three-tenths of the total delivery period.

Please note that when a claim is filed against the carrier for compensation for cargo loss, the penalty for exceeding the delivery period is not paid, while in the event of a cargo shortage, the penalty for exceeding the delivery period is payable in an amount determined based on the delivered part of the cargo.

Under the CIM rules, the carrier bears responsibility for damage caused in connection with the total or partial loss or damage of cargo from the moment the cargo is accepted for carriage until the moment of its delivery, as well as for delay in delivery, regardless of the railway infrastructure used. The carrier is released from liability to the extent that the loss, damage, or delay occurred due to the fault of the entitled person in connection with their instruction not attributable to the fault of the carrier, as well as in connection with special defects of the cargo (internal damage, loss, etc.) or circumstances that the carrier could not avoid and the consequences of which it could not prevent.

Cargo may be considered lost if it has not been delivered to the consignee or placed at its disposal within 30 days after the expiry of the delivery period.

In the event of total or partial loss of the cargo, the carrier must pay, excluding all other losses, compensation calculated on the basis of the exchange rate, or failing that, on the basis of the market price, or failing both, on the basis of the normal value of goods of the same kind and quality at the date and place where the cargo was accepted for carriage. The compensation must not exceed 17 units of account, which is the Special Drawing Right as defined by the International Monetary Fund.

Dispute Resolution in International Rail Carriage

The SMGS regulates the procedure for resolution as well as the jurisdiction of disputes arising during international rail carriage.

Article 46 of the SMGS provides that the right to file a claim against the carrier belongs to the consignor and the consignee. A claim is filed by the consignor against the contractual carrier, and by the consignee against the delivering carrier. The person filing the claim is obliged to justify the claim. Assignment of the right of claim is not permitted.

A claim is filed with a corresponding justification and an indication of the compensation amount. A claim is filed in paper form, and if there are agreements between the participants of the carriage, it may be filed in electronic form.

A claim for a single shipment for an amount equivalent to 23 Swiss francs or less is not subject to satisfaction. The exchange rate of the Swiss franc to the ruble set by the Bank of Russia as of February 9, 2025, is 107.27 rubles per 1 Swiss franc. If a claim is filed for a larger amount and is recognized as subject to satisfaction in an amount equivalent to 23 Swiss francs or less, this amount of compensation is not paid.

The carrier is obliged to consider the claim, give a response, and, upon full or partial recognition of the claim, pay the due amount within 180 days from the date of receiving the claim.

In the event of a partial or full rejection of the claim, the carrier is obliged to state the grounds for the rejection. If the claim was filed in paper form, the carrier also returns the documents attached to the claim.

A lawsuit may be filed only after filing a corresponding claim and only against the carrier to whom the claim was filed. The right to file a lawsuit belongs to the person who has the right to file a claim against the carrier.

The right to file a claim and a lawsuit arises:

• for compensation for shortage, damage (spoilage) of cargo, as well as for exceeding the delivery period — from the date the cargo is delivered to the consignee;
• for compensation for cargo loss — upon the expiry of 30 days after the expiry of the delivery period;
• for the return of overpayments of freight charges — from the date of payment of the freight charges;
• for other requirements — from the date of the occurrence of the circumstances that served as the basis for filing them.

A lawsuit may be filed:

• if the carrier did not provide a response to the claim within the period established for the consideration of the claim;
• if, during the period for consideration of the claim, the carrier reported the rejection of the claim in full or in part.

The lawsuit is filed in the proper judicial body at the location of the defendant. Since the parties to the dispute are participants in the SMGS, this agreement shall apply to the disputed relations.

The following periods for filing a lawsuit are established:

• for exceeding the cargo delivery period — within 2 months;
• on other grounds — within 9 months.

The specified periods are calculated from the moment the right to file a lawsuit arises. The day the statute of limitations begins is not included in the period. The running of the statute of limitations continues from the day the carrier reported the full or partial rejection of the claim or the claim was left unanswered by the carrier. Missing the statute of limitations is a basis for the rejection of the claims.

In Case No. A40-14548/2024, the courts, having compared the dates of receipt of cargo under all disputed consignment notes with the date the present lawsuit was filed with the court, taking into account the filing of claims with the carrier regarding the delay in cargo delivery and the period for pre-trial settlement of such claims established by Article 46 of the SMGS, the courts concluded that the statute of limitations for all consignment notes in the case had expired. [9]

In accordance with Article 120 of the Charter of Railway Transport, a claim is also mandatory before filing a lawsuit against the carrier related to the performance of cargo carriage.

Order of the Ministry of Transport of Russia No. 84 dated March 31, 2016, approved the rules for filing and considering claims for the carriage of goods by rail. Order of JSC RZD No. 2132/r dated September 29, 2020, approved the procedure for considering incoming claims from users of railway transport services in the field of freight transport in the Unified Automated System for Claims Work of the Corporate Transport Service System.

Documents confirming the requirements filed by the applicant must be attached to the claim. The specified documents are submitted in the original or in the form of a properly certified copy. If necessary, the carrier has the right to demand the submission of original documents for the consideration of the claim.

Claims against carriers may be filed within 6 months, and claims regarding fines and penalties — within 45 days (Article 123 of the Charter of Railway Transport). The carrier is obliged to consider the received claim and notify the applicant in writing of the results of its consideration within thirty days from the date of receiving the claim (Article 124 of the Charter of Railway Transport).

Lawsuits against carriers may be filed in the event of the carrier's full or partial refusal to satisfy the claim or in the event of the failure to receive a response to the claim from the carrier. Lawsuits are filed in accordance with the established jurisdiction within 1 year from the date of the events that served as the basis for filing the claims.

Under the CIM rules, the consignor, when filing a lawsuit, must submit a duplicate of the consignment note. Failing that, it must prove that the latter refused to accept the shipment. If necessary, the consignor must prove the absence or loss of the consignment note. The consignee, when filing a lawsuit, must submit the consignment note if it was handed over to it. Lawsuits in court based on the contract of carriage may be filed only against the first or the last carrier or the carrier that performed the part of the carriage during which the facts that became the cause of the dispute were noted. If the plaintiff has a choice between several carriers, it loses it if the lawsuit is filed against one of them.

Lawsuits in court based on the CIM may be filed in the courts of COTIF member states chosen by common agreement of the parties, or in the court of the member state on whose territory:

• the defendant has its permanent place of residence or its usual location, its main place of business, or the branch or establishment that concluded the contract of carriage;
• the place of acceptance of the cargo for carriage or its delivery is located.

Lawsuits may not be filed in other courts. If a lawsuit based on the CIM is pending before a competent court or if a decision has been made by that court on such a lawsuit, a new lawsuit on the same subject and between the same parties may not be filed, unless the decision of the competent court can be enforced in the state where the new lawsuit is filed.

The statute of limitations for lawsuits based on the contract of carriage expires within 1 year. The statute of limitations is 2 years in the following cases:

• payment of a cash-on-delivery charge collected by the carrier from the consignee;
• payment of the proceeds from a sale of the cargo performed by the carrier;
• damage arising from an act or omission committed either with the intent to cause such damage or with the understanding that such damage would probably be caused;
• one of the contracts of carriage in effect before re-consignment.

The running of the statute of limitations begins:

• for compensation for total loss of cargo—from the 30th day after the expiry of the delivery period;
• for compensation for partial loss, damage, or delay in delivery—from the day of delivery;
• in all other cases—from the day on which the lawsuits may be filed.

The day specified as the start of the statute of limitations is not included in the period.

Thanks to international rail carriage, a huge amount of cargo is transported both within the country and between states. The legal norms regulating the carriage of goods in international rail communication are quite complex. A correct understanding and application of these norms will help the parties effectively and in good faith fulfill their obligations under the contract of carriage.

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References

1. V. Kholopov, SMGS: New Rules for International Rail Goods Carriage. What an Exporter Must Know, Russian Foreign Economic Bulletin, 2016, No. 5.
2. Resolution of the Arbitration Court of the West Siberian District dated January 23, 2020, in Case No. A45-11805/2019.
3. Review of Judicial Practice on Disputes Related to Contracts of Carriage of Goods and Transport Expedition, approved by the Presidium of the Supreme Court of the Russian Federation on December 20, 2017.
4. Resolution of the Arbitration Court of the Moscow District dated March 25, 2019, in Case No. A40-164492/2018.
5. Ruling of the Supreme Court of the Russian Federation dated October 19, 2020, in Case No. A15-679/2019.
6. Resolution of the Ninth Arbitration Appellate Court dated September 28, 2017, in Case No. A40-173098/16.
7. Resolution of the Arbitration Court of the Moscow District dated November 20, 2017, in Case No. A41-66102/2016.
8. Resolution of the Arbitration Court of the Moscow District dated February 12, 2025, N F05-31006/2024 in Case No. A40-14548/2024.