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Essential claim documents: from being right to being put in the right
Thursday, 12 March 2020

– Introduction

The principle of liability law is that the opposite party usually isn’t convinced by simply claiming something. The claim should be substantiated with arguments en documents. Although the liability regime of some relevant international conventions regulating i.a. maritime claims handling might seem clear, especially the amicable/pre-court phase might surprise the non-regular claimant. The claims handler of the carrier (or the P&I of the latter) requests many documents, some of which are not in the possession of the claiming party or not available for a specific case at all. This might complicate the amicable settlement phase and bring the cargo interests in an unfavourable negotiation position. The consequences are often a rejection of the claim or a settlement which is not in line with the merits of a specific claim. As the amicable settlement is often effective for the cargo interests (as the latter can handle the claim himself without lawyer’s fee, a settlement can be reached within a few months and cash flow weighs heavily for the cargo interests) and the carrier/his P&I is aware of this, the parties reach an amicable settlement in vast majority of the cases.

In my previous role defending the interests of the carrier as well in my current role offering recovery services to cargo interests, I have received questions on regularly basis on the claim documents. Sometimes the cargo interests simply don’t know what the carrier expects from him as they don’t know what the meaning or the purpose of a specific document is (like “assignment form” or “salvage invoice”). Therefore, I decided to dedicate an article to claim documents. Below you will see a list of documents, their explanation, what they should contain and whether they have to be presented to the carrier.

Copy of the bill of lading/waybill

The original set of the bills of lading has been handed in to the carrier to take delivery of the cargo. The claims handler of the carrier might request a copy (or a draft) of the bill of lading/waybill as this document is the evidence of the contract of carriage and contains relevant information with regards to the shipment. The claims handler can compare the information in the said bill of lading/waybill with the data in the remaining documents.

Packing list

This is the document that shows what cargo is loaded in the container/the boxes. The quantity (amount of boxes), the weight, the name of the product and the type are written in this document, mostly in the letter headed paper of the shipper/trader or in an Excell sheet. In order to avoid discussions afterwards, I advise my customers to also fill in the packing and harvesting dates in the same or a comparable document. This is useful if delay-sensitive perishable cargo is involved, when the carrier explicitly wants to know what maturity level of the cargo was before being stuffed inside the container. Often the information regarding the packing date is noted on the boxes (often in Julian calendar), but the boxes have either been sold or destructed once the cargo owner or his insurer/lawyer lodges the claim against the carrier. It’s better to provide the claims handler with a decent packing list with the harvesting and packing dates in it than to provide him/her with a picture of the sold/destructed box containing the packing date (which he/she has to convert from Julian to Gregorian calendar).

Commercial (export) invoice

This is the export invoice (often) showing the FOB- or CIF-price of the cargo. This document should contain the names of the parties, the invoice value, the name of the product, the invoice date etc.

Survey report

Once the carrier has been invited for a joint survey (and both the surveyor of the carrier and the cargo interests attend the survey), each surveyor sends the survey report to his client. The report contains the facts (like shipment details and general information about the cargo) and the findings of the surveyor. Based on the findings of the surveyor, the cargo interests can decide to drop the claim (because there is no damage/loss or the ascertained damage/loss is not transit related) or file a claim against the carrier. Otherwise, if the damage/loss is not transit related, the consignee can decide to lodge a claim against the shipper (based on the sale contract) instead of the carrier (based on the transport contract).

Pictures of the cargo

Both surveyors usually take pictures of the cargo and a collection of the pictures is placed in the survey reports as well. Pictures aren’t placed in the survey report always however, but the surveyor of the cargo interests has them. At least, my experience is that the surveyor always takes (many) pictures and in case the cargo interests work with a specific surveyor for the first time, they can request specifically from the surveyor to take picture of the cargo and the container. As to the latter, the surveyor normally doesn’t fail to take pictures of the thermostatic settings, the ventilation opening etc.

Destruction certificate

If the cargo is (partially or entirely) destructed, the cargo interests should provide the carrier with a destruction certificate together with other claim documents. This is the proof that the cargo has been destructed. A remark in the survey report that the cargo is total loss, is not sufficient for the carrier (in the amicable phase). The lack of the destruction certificate doesn’t mean that the claim will be rejected in full. It might however bring the cargo interests in an less favourable negotiation position which will consequentially lead to a lower settlement.

There are countries (especially the countries with a command economy or certain fields of economy in hands of the (local) government) where the destruction certificates are issued by the government or a governmental institution. In other countries, like the Netherlands, companies licensed by the government (recycling/waste companies) destruct the cargo and issue the destruction certificate. The cargo interests should make sure that this is mentioned if the claims handler of the carrier keeps requesting a destruction certificate “issued by authorities”.

Salvage sale invoice

If the cargo interests claim that the cargo was sold with depreciation, this should be evidenced with salvage invoices. Sometimes these might not be available, because the cargo interests sold the cargo f.i. to many parties in an attempt to mitigate the loss. The buyers in that case are mostly traders involved in less demanding markets, who buy damaged products to sell it in the local bazaar f.i. for a much lower price than in the supermarket. Although I always advise my customers to issue an invoice, this is not always possible practically. Meeting with a potential buyer, negotiating the price and the quantity and finalizing the deal sometimes happen in a couple of minutes in total and the buyer is gone with the products in minutes. The cargo interests then can prove that they have received a sum at a certain date, but they don’t have a “salvage sale invoice” in their possession. What I usually do, is to request the cargo interests to provide me with a sale account (showing what cargo is sold for what price). I provide the carrier with this sales account and I discuss the above mentioned circumstances with the claims handler, to better understand the dynamic world of the fruit business. This often helps, but also in this case the lack of these invoices may lead to a less favourable position in the negotiation process.

Laboratory analysis

Sometimes the surveyor decides to send a sample of a product to the lab for further investigations (f.i. to measure the ethanol percentage in the fruit). The claims handler might request this document to study the findings and the conclusion of the lab.

Pre-loading report

For some cargo, like steel, pre-loading (joint) surveys are customary. With other cargo, like perishable products, pre-loading survey is not customary. Therefore, this document often simply doesn’t exist. If it did exist, it is supposed to contain the pre-loading condition of the cargo (so the carrier can see that the cargo is stuffed in a decent condition). This is not a mandatory document and besides this, the surveyor at the port of discharge often writes in the survey report whether there were pre-loading issues with the cargo (and whether the damage/loss is transit related).

Letter of Authority

If the cargo interests (the cargo owner or his insurer) decide to appoint an external lawyer/recovery agency to start the recovery claim against the carrier, the carrier requests a letter of authority from the cargo interests to that firm/agency. This document shows that the firm/agency is authorized to lodge the claim and negotiate on behalf of the cargo interests.

Subrogation form

Sometimes the cargo owner has a transport insurance and sometimes he hasn’t. Even if he would have an insurance, it sometimes doesn’t cover the specific loss of the cargo owner although it is transit related. But if it is insured and the insurance contract covers the damage, the insurer will indemnify the cargo owner for his loss. In that case, the insurer has the right to get subrogated in the rights of the cargo owner. With a subrogation form the cargo owner subrogates his rights to the cargo underwriter/insurance broker, so the latter can start a recovery claim against the carrier as the party with the financial loss.

Assignment of rights

Under the relevant conventions, the consignee is the legitimate party to lodge a claim in case of loss/damage. However, the consignee is not necessarily the party with the financial loss sometimes (due to commercial terms or incoterms). In that case, if for instance the shipper is the party with the financial loss, the carrier might request an assignment form (also called “assignment of rights form”) from the consignee to the shipper, with the first assigning his rights to the latter so the latter (the shipper) can proceed with the claim against the carrier.

Harvest certificate

A certificate showing the harvest results. This is a non-mandatory document, which is issued in some countries (on request, during harvest period). Often they don’t exist however, while the claims handler of the carrier can request it as he/she came across it in a different file (with cargo from a different country, most probably). It’s neither theoretically nor practically possible to produce a non-mandatory document afterwards, weeks/months after the harvest at the request of a claims handler of the carrier.

Other invoices

For a successful recovery of other costs, the cargo interests should be in possession of documents of these costs. Costs related to destruction of the cargo, survey and repacking costs, transport costs etc. should be substantiated with invoices if the cargo interests claim these costs as well.

Phytosanitary certificate

Although an essential document for the food export business and food safety, the phytosanitary certificate is often not a decisive document for claims handling. Phytosanitary certificates are issued to indicate that consignments meet specified phytosanitary import requirements and are in conformity with the food safety laws.

From case to case additional documents might be requested by the claims handler of the carrier (like certificate of origin, TempTale chart etc.). Furthermore, other documents might be requested when (break) bulk cargo is involved. The above mentioned and analysed documents are however the documents that I have come across, with which I have been able to solve claims. If you have any questions regarding a document, either mentioned above or not, or if you want to see a template/an anonymized version of a specific document to get more familiar with it, feel free to contact us.
Our firm represents cargo interests (cargo underwriters/brokers as well as Merchants who are not insured) with their claims against ocean carriers. We are specialized in claim handling and recovery and we handle claims from A to Z. Besides this, we also give trainings to companies in claim management and debt collection. Feel free to contact us for more information.

About the author

Nurlan Agayev

Nurlan Agayev

LLM

Nurlan Agayev is specialist op het gebied van claims, incasso en contracten bij Alterlaw, een in Nederland gevestigd juridisch advies- en claimkantoor.