In the Netherlands, forwarding agreements almost without exception make reference to the Dutch Forwarding Conditions. On 1 May 2018, a new and updated version of these Conditions (click here for the English version) has become operative. As of now freight forwarders and other logistics service providers can declare these conditions applicable to their services, thus incorporating a host of rules to govern their relationship with their principal.
Needless to say, service providers looking to use the 2018 Dutch Forwarding Conditions and their (prospective) principals alike would be well-advised to take note of the rights, obligations and liabilities conferred on the parties bound to these Conditions. What is often overlooked, however, is the fact that Dutch law also contains a number of mandatory provisions relating to freight forwarding and logistics contracts. The Dutch Forwarding Conditions are designed to elaborate on these provisions and should therefore not be regarded in isolation. For that reason, this contribution will start with a brief overview of the applicable statutory provisions before turning to the main changes to the Dutch Forwarding Conditions relative to the preceding 2004 version.
Dutch law on freight forwarding
Section 8:60 Dutch Civil Code (“DCC”) provides, in summary, that the contract to forward goods is characterised by an obligation on the part of the freight forwarder to conclude one or more contracts of carriage on his principal’s behalf. Thus, if and when the freight forwarder has concluded one or more contracts of carriage as prescribed by his principal, he has fulfilled his obligations pursuant to the contract to forward goods. As his obligations did not include a commitment to deliver the goods to the consignee, he in principle cannot be held liable in the unfortunate event that any loss, damage or delay should occur during the carriage of the goods.
Thus, in case of loss, damage or delay, the freight forwarder should not invoke the Dutch Freight Forwarding Conditions. Instead, he should assist his principal in recovering the damage from the (contractual) carrier by immediately informing his principal of the identity of the carrier, by providing all relevant documentation relating to the carriage, and by issuing at first request a declaration, which will allow the principal to exercise any rights the freight forwarder may have vis-à-vis the carrier pursuant to the contract of carriage. If the freight forwarder fails to name the carrier or to provide the relevant documentation, he will be liable by operation of law as if he had performed the carriage (Section 8:63 DCC).
By contrast, if the freight forwarder made a mistake in the performance of his own duties (for instance, if the wrong container is shipped because he mentioned an incorrect container number to the carrier), he can be held liable for breach of contract. In that case, he would almost certainly benefit from the applicability of the Dutch Forwarding Conditions.
Dutch law on Logistics services
Unlike for the contract to forward goods, there are no statutory provisions governing logistics services as such. Depending on the services agreed upon (which may be anything from customs clearance to taking receipt of the goods to arranging or providing storage facilities), the potential liability of the service provider may be governed by the provisions relating to (e.g.) the custody agreement (Section 7:600 ff. DCC) or the agreement to perform services (Section 7:400 ff. DCC). In addition, he can and in practice often will incorporate the Dutch Forwarding Conditions in his contract.
Generally, and leaving aside for a moment the peculiarities of each set of rules, a breach of contract on the part of the service provider would lead to his liability for the damage that resulted from this breach of contract. In such cases, the service provider who declared the Dutch Forwarding Conditions applicable is likely to be able to rely on the clauses limiting his liability, as well as on a number of other terms strengthening his position.
The main features of the 2018 Dutch Forwarding Conditions
Articles 1 and 2 – the Conditions have a very broad scope of applicability. They apply to “all activities and work, in any form and by whatever name” agreed upon between the Freight Forwarder (the service provider, including but not limited to the freight forwarder of Section 8:60 DCC) and the Client (his principal).
The previous edition of the Dutch Forwarding Conditions incorporated additional sets of general terms and conditions for certain activities such as storage. This incorporation, which in practice often leads to legal uncertainty and to irreconcilable rules being applicable simultaneously, has not survived the revision. Thus, a reference to the 2018 Dutch Forwarding Conditions no longer means a potential amalgamation of different terms and conditions.
Article 3 – the Freight Forwarder is free to accept the general terms and conditions of third parties at the Client’s risk and expense.
Article 5 – the Freight Forwarder who performs customs work is entitled to cease these activities without having to pay damages if he becomes familiar with information which indicates that the Client has not complied with his obligation to provide information which is correct, complete and in compliance with the law.
Article 7 – the Freight Forwarder is only obliged to take out insurance of any kind at the Client’s risk and expense upon explicit written orders to do so. Apart from this, the Freight Forwarder is entitled to take out insurance at the Client’s risk and expense to cover the Freight Forwarder’s potential liabilities from using equipment such as cranes or fork-lift trucks.
Article 11 – in case of fault or negligence, the maximum liability of the Freight Forwarder has been raised to 10,000 SDR per occurrence or series of occurrences (from 4,000 SDR). The limitation of liability per kilogram of damaged or lost gross weight remains the same at 4 SDR/kg.
Article 11 also extensively regulates the liability of the Client, who shall be liable for any damage suffered by the Freight Forwarder as a result of any breach of obligation on the part of the Client or any person working on behalf of the Client. In addition, the Client must indemnify the Freight Forwarder against third-party claims connected with this damage. However, the indemnity clause appears to relate only to damage resulting from acts and omissions of the Client. If the Freight Forwarder made a mistake which does not trace back to the Client, the Freight Forwarder will not be indemnified and will therefore (potentially) be fully liable to the third party claimant.
Article 23 – the arbitration clause has been streamlined. It no longer describes the arbitration proceedings but now refers to the FENEX Rules of Arbitration.
The Conditions have been modernised, but have not been changed fundamentally. The Dutch Forwarding Conditions tend to be regarded by Freight Forwarders as a panacea for all logistical misfortunes, but they are not. For one thing, Dutch law already lays the legal groundwork. The Dutch Forwarding Conditions provide further protection from extensive liability vis-à-vis Clients, but if a third party suffers damage as a result of the actions of a Freight Forwarder only adequate liability insurance can provide relief.