Debts and Losses in International Transportation & Shipping
How to recover debt and losses in international transportation & shipping?

Foreign trade activities are inextricably linked with the transportation of goods from the seller to the buyer, and controversial issues in this area often occur. As a rule, there are several possible situations in which cargo may be damaged or lost:
- damage during loading and unloading operations and during transportation;
- violation of storage and transportation regimes;
- cargo theft;
- road accident;
- natural disasters (fires, floods, storms, etc.) and other force majeure circumstances.
International transportation of goods is carried out by various modes of transport: sea, rail, road and air, and the procedure for organizing international transportation of goods for each type of transport is regulated by separate regulatory documents:
- For carriage of goods by road:
– Convention on the Contract for the International Carriage of Goods by Road (CMR) (concluded in Geneva on May 19, 1956);
– Customs Convention on the International Transport of Goods using a TIR Carnet (concluded in Geneva on November 14, 1975);
- For air transport:
– Convention for the Unification of Certain Rules for International Carriage by Air (concluded in Montreal on May 28, 1999);
- For railway transport:
– Agreement on international railway freight traffic (SMGS) (valid since 01.11.1951);
- For maritime transport:
– United Nations Convention on the Carriage of Goods by Sea (concluded in Hamburg on March 31, 1978, Russia is not a party to this Convention);
– in Russia, when regulating water transport, the Merchant Shipping Code of the Russian Federation is applied.
Damage to goods during transportation entails losses for both the seller and buyer, as well as the carrier itself. For example, the carrier’s liability is provided for in Chapter IV of the Convention on the Contract for the International Carriage of Goods by Road, according to which the carrier is liable for the total or partial loss of the cargo or for its damage that occurs during the period of time between the acceptance of the cargo for transportation and its delivery, as well as for late delivery.
How to recover debt and losses in international transportation & shipping?
In accordance with Article 15 of the Civil Code of the Russian Federation, losses are understood as expenses that a person whose right has been violated has made or will have to make to restore the violated right, loss or damage to his property (real damage), as well as lost income that this person would have received if normal conditions of civil transactions, if his right had not been violated (lost profits).
Meanwhile, the Convention on the Contract for the International Carriage of Goods by Road determines that when the carrier is obliged to compensate for damage caused by the total or partial loss of cargo, the amount of the amount to be compensated is determined based on the value of the cargo at the place and time of acceptance for transportation. In this case, the value of the cargo is determined on the basis of an exchange quotation, or in the absence of one, on the basis of the current market price, or in the absence of both, on the basis of the usual cost of goods of the same kind and quality. In addition, the following are subject to reimbursement:
- payment for transportation;
- customs fees and duties;
- as well as other costs associated with the transportation of cargo, in full in case of loss of the entire cargo and in a proportion corresponding to the amount of damage in case of partial loss;
- other losses are not subject to compensation.
Recovery of losses from the forwarder under a contract for freight forwarding services
A transport expedition, in accordance with Article 801 of the Civil Code of the Russian Federation, is an agreement under which one party (the forwarder) undertakes, for a fee and at the expense of the other party (the client-shipper or consignee), to perform or organize the performance of services specified in the expedition agreement related to the transportation of goods.
Meanwhile, in accordance with Article 7 of the Federal Law of June 30, 2003 No. 87-FZ “On Freight Forwarding Activities,” the freight forwarder is liable to the client in the form of compensation for actual damage for loss, shortage or damage (spoilage) of the cargo after its acceptance by the freight forwarder and before the delivery of the cargo to the recipient specified in the transport expedition contract, or to a person authorized by him, unless he proves that the loss, shortage or damage (spoilage) of the cargo occurred due to circumstances that the forwarder could not prevent and the elimination of which did not depend on him, in the following amounts :
- for loss or shortage of cargo accepted by the forwarder for transportation with declared value, in the amount of the declared value or part of the declared value, proportional to the missing part of the cargo;
- for loss or shortage of cargo accepted by the forwarder for transportation without declaring value, in the amount of the actual (documented) value of the cargo or its missing part;
- for damage to cargo accepted by the forwarder for transportation with declared value, in the amount by which the declared value has decreased, and if it is impossible to restore the damaged cargo, in the amount of the declared value;
- for damage to cargo accepted by the forwarder for transportation without declaring its value, in the amount by which the actual (documented) value of the cargo has decreased, and if it is impossible to restore the damaged cargo, in the amount of the actual (documented) value of the cargo.
At the same time, when providing forwarding services related to the transportation of goods in international traffic, and using the corresponding forwarding documents, the limit of the freight forwarder’s liability for failure to fulfill or improper fulfillment of obligations stipulated by the transport expedition agreement cannot exceed 666.67 units of account per place or other unit shipment. The unit of account refers to the special drawing right unit defined by the International Monetary Fund.
Recovery of losses from the carrier under the contract of carriage
Controversial issues regarding the recovery of losses from carriers regularly become the subject of consideration by judicial authorities, for example, paragraph 24 of the resolution of the Plenum of the Supreme Court of the Russian Federation dated June 26, 2018 No. 26 “On some issues of application of the legislation on the contract for the carriage of goods, passengers and luggage by road and on the contract of transport expedition” it was determined that the carrier compensates for losses caused to its counterparty by improper fulfillment of an obligation in the form of delay in delivery of cargo. For example, in the event of delay in delivery of cargo, the shipper, as a party to the contract of carriage, has the right to demand compensation from the carrier for damages, the amount of which may also include the amounts paid by the shipper, who is the seller under the purchase and sale agreement, contractual penalties for late delivery of goods to the buyer.
Legal services
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Legal advice on international transportation of goods and recovery of losses
- Preparing a claim for recovery of losses to the carrier or judicial authorities
- Legal representation of a foreign trade participant in the recovery of losses from the carrier
- Interaction with cargo carriers on issues of recovery of losses during international transportation of goods