International Logistics Law: How to Handle Claims and Cargo Disputes

A bill of lading serves as a receipt for the cargo, evidence of the contract of carriage, and a document of title that allows the holder to claim the cargo at the destination or transfer it to a third party. The bill of lading also establishes the carrier's liability limits, the governing law, the jurisdiction for disputes, and any exceptions to carrier liability, and a shipper who fails to review the terms before loading may find that key rights have been inadvertently waived.

Logistics contracts and international trade contracts counsel can advise on the legal obligations created by a bill of lading and develop the contract of carriage review strategy.

Incoterms 2020 define the point at which risk of loss or damage transfers from the seller to the buyer, determining who must arrange and pay for transportation, insurance, and customs formalities. The most significant moment under each Incoterm is when the seller has completed its delivery obligation, because any loss or damage occurring after that point is at the buyer's risk even if the goods are still in transit.

International trade and commerce and international contracts counsel can advise on the correct Incoterms selection and develop the contract terms and risk transfer strategy.

Maritime cargo claims in the United States are primarily governed by COGSA, which limits the carrier's liability to five hundred dollars per package unless the shipper declares a higher value in the bill of lading. The carrier can invoke seventeen enumerated defenses including act of God, inherent vice of the goods, and the nautical fault exception, which protects the carrier from liability for errors of navigation or management of the vessel.

Maritime litigation and shipping dispute counsel can advise on the applicable cargo liability convention, assess the strength of the claim and applicable limitations, and develop the claim filing and recovery strategy.

Air freight claims are governed by the Montreal Convention, which caps the carrier's liability at seventeen Special Drawing Rights per kilogram unless the shipper declares a higher value at delivery, and the shipper must file written notice of damage within fourteen days or the claim will be time-barred. Multimodal transport contracts present complex liability questions because different conventions apply to different transport legs, and where the location of loss cannot be determined the multimodal transport operator's own liability terms govern.

Logistics transport and international dispute resolution counsel can advise on the liability regime for air freight and multimodal transport claims, assess the carrier's defenses, and develop the cross-modal claim strategy.

A force majeure clause excuses a party from performance when performance is prevented by an event beyond its reasonable control that could not have been anticipated at contracting and cannot be mitigated by reasonable action, and the specific qualifying events and procedural requirements vary significantly depending on the contract language and governing law. Courts have consistently required parties invoking force majeure to prove that the event directly prevented performance and that reasonable mitigation steps were taken.

Supply chain disruptions and international trade disputes counsel can advise on whether a specific event qualifies as force majeure, assess notice and mitigation obligations, and develop the force majeure invocation and defense strategy.

Demurrage is the charge imposed when cargo is not collected from the port within the free time period, and detention is charged when equipment such as a container is not returned within the free time, and both can accrue rapidly on a per-container-per-day basis without notice to the cargo owner. A party disputing these charges should examine whether the free time clock was properly started, whether carrier-caused delays paused the free time, and whether the charges are correctly calculated against the published tariff.

Shipping dispute and logistics contracts counsel can advise on the contractual basis and calculation of demurrage and detention charges, assess whether the charges are correctly calculated, and develop the dispute strategy.

The most significant legal risks in logistics outsourcing arise from the failure to define which party is responsible for cargo loss or damage, which party bears customs compliance liability, and how liability is allocated when a subcontractor causes the loss. A contract that relies on standard tariff terms with very low liability caps, or that allows unrestricted subcontracting, can result in the shipper bearing the full cost of a loss caused by the provider's subcontractor.

Logistics outsourcing and international business contracts counsel can advise on the key legal risks in the outsourcing arrangement, assess whether the service agreement adequately allocates liability, and develop the contract drafting strategy.

International logistics disputes are most commonly resolved through arbitration because logistics contracts routinely include arbitration clauses specifying a neutral forum, institutional rules, and a governing law that may differ from the country where cargo was loaded or discharged. The London Maritime Arbitrators Association and the Society of Maritime Arbitrators in New York are the most frequently used arbitral bodies for maritime disputes.

International arbitration and commercial litigation counsel can advise on the most effective forum for resolving the specific logistics dispute, assess whether arbitration or litigation is more favorable, and develop the dispute resolution and enforcement strategy.