PROBLEMS IN MULTIMODAL TRANSPORTS TO IRAN/ IRAQ VIA TURKEY
Ozge Hakdan Erguc
Attorney At Law
In recent years a great majority of the imported goods by Iran and Iraq had been carried through Turkey and this transportation stil continues not in the same density and volume as it used to be mostly carried first to the Turkish Ports situated on the Mediterranian and Black Sea coasts by sea and then on trucks to the final destinations. Iranian and Iraqi buyers have purchased the goods mostly on CIF basis and therefore the exporters had undertaken to deliver the goods at agreed place of delivery, namely in Iran or in Iraq. Exporters had chosen the freight forwarder or transport operator in their countries and given the goods for transportation from their factories, deports or ports to the final destination against a Through Bill of Lading indicating that freight had been prepaid for the complete transportation.
Freight forwarder undertaking the whole transportation from the point where they collected the cargo untill the delivery place, gets the goods carried by vessel to Turkey and then by trucks from Turkey to final destination. Most of the freight forwarders or multimodal transport operators have carried the goods by the vessels which they had chartered and some of them who did not have enough cargo for a ship have shipped their cargo as a partial ahipment. Those freight forwarders who have acted as also charterer in the chain of carriagehave faced problems rising from their contract with the ahipowner and those problems have naturaly affected the subsequent phase of the transportation.
Increase in exports to Iran and Iraq have created a great number of carriers and freight forwarders in the countries of exporters, buyers and transit carriers. Suddenly new shipping and transport companies, some of them strong and experienced, some weak and novice, have arisen and a great competition started in order to get the business. As a natural result of their competition, the freight rates went down to the incredible amounts. Freight forwarders had to find out a good, efficient and inexpensive land carrier for the oncarriage of the goods from Turkish ports. They contacted some trucking companies with whom they could agree on fair conditions and concluded the contract. In the beginning of transit carriage to Iran and Iraq, there werw a few transport companies who werw capable of carrying out the carriage of transit goods in Turkey. But it did not take long for the entrance of novice, incapable and unexperienced trucking companies into the market. Those newcomers have given very low quotations to the freight forwarders and those low quotations have led them to the mistake of choosing the insuffcient land carrier. Some Turkish land carriers did not give low trucking quotations and they werw granted the contracts with very good conditions and fair reasonable freight rates. But they had a different problem like short capacity of trucks for moving the cargo without any delay and therefore the goods remained idle in the port area and every passing day increased the port storage charges, which passed over the value of the goods. Another part of land carriers never had even one truck, but they got the contract and then endorsed the goods to another firm by getting their commission paid. In turkey the land carriers who have carried those transit goods, used hired conventional trucks which are used in inland transport and usually owned by the driver. The biggest transport company of Turkey had pwned 150 trailer trucks with a total carriage capacity 4500 tons as their own and they had the hire agreements with 500 conventional truck owners who used to have agreements with more than two or three land carriers in order to carry the most suitable cargo for the highest freight. Multimodal carriers voyage charter parties with the shipowners had been based mostly on 50% of the freight to be paid in advance and the balance upon safe berth in the arrival port or on prepaid freight. Timeto time, freight forwarders or transport operators paid the first half of sea freight in advance and delayed in payment of the rest and could not present any guarantee untill the settlement of the accounts or an unexpected demurrage charge could not be paid deu various reasons. Multimodal carriers on-carriage agreement with Turkish land carriers are based also mostly 50% of fre,ght to be paid in advance togetherwith port charges and the balance upon presentation of waybill’ s copy duly signed and stamped by the consignee. The second half of the freight sometimes was not piad to the landcarriers and this has been one of the most frequent problem reason. As results of abovementioned and similar events the problems which will be enumerated and discussed below, have arisen and caused irreparable damage and loss to all parties of the multimodal transport contract and many big and small companies have gone bankrupt in Europe, U.S.A., Canada and in Turkey.
HOW THE MECHANISM WORKED AND WORKS IN THE PHASE OF TURKEY. Multimodel carrier finds a sub- carrier who will carry the goods by roed in Turkey and enters in a sub-carriage contract usually by exchange of telex masseges or letters. Generally parties do not present any guarantee or performance bond to each other although the multimodal carrier and exporter furnish consignee with performance bonds or guarantees. Multimodal carrier originals of bills of lading issued and signed by the master of the ship in order to enable the subcarrier to claim the goods from Customs Office where the ship will unload the cargo. Multimodal carrier also remits the port charges in advance to the subcarrier. Ship’ s agent notifies the subcarrier of ship’ s arrival, renders notice of readiness and asks for the original bills of lading. Land carrier endorses the bills of lading and delivers to ship’ s agent. Ship’ s agent issues delivery orders which is named as ordino in Turkey, for the goods to the name and order of land carrier. Land carrier sings and stamps the delivery orders presents them to Customs Office logetherwith a transshipment declaration named aktarma beyannamesi. Customs Office gets the present delivery orders and transshipment declarations and registers them. After registration Customs writes on the back of the delivery orders that the goods whose kind, quantity, weight have been specified in the order should be given to the landcarrier or to his order. Landcarrier pays the port charges togetherwith loading, storage fees to the port administration and present the delivery order. The workers of the port administration loads the goods on trucks at the presence of Customs Officers. Then land carrier issues five copies of Land Manifest for each loaded truck and present them with a separate transshipment declaration to Customs Offşce. Costoms Inspector certifies manifests and declarations, Manifest Offşcer registers and then the trucks are despatched. The kind of goods, packing type, number of packages, weight, value, truck’ s plate number, driver’ s name, carrier’ s title are clearly written in cumtoms documents. The dirver gives the land manifests and transshipment declarations to the Customs at the border, after inspection of the truck and cargo, passage from the border is written on the manifest and one copy is sent to the Customs Office where the cargo loaded and sealed, one copy is given to the driver. Landcarrier issues six copies of international waybill and gives it the driver to be given to the consignee and Customs of arrival place. This waybill is not certified or registered by Customs Office in Turkey. But the shipper, consignor, carrier, kind weight, number of packages, driver’ s name, truck plate number are to be written in the waybill. The truck driver gives three copies to the consignee upon his arrival to the designated delivery palce. Consignee reccives the goods and returns one copy of the waybill duly signed and stamped as an evidence of the delivery. Consihnee must write the remarks regarding short or late delivery, damage, loss, arrival and unloading dates Otherwise consignee will be considered as he has received the goods in good condition. In practice, this last copy of the waybill which is signed stamped by the consignee is presented to the multimodal carrier by the landcarrier in order to claim the remaining part of the freight to be paid after completion of the oncarriage. I would like to express here that after the regisration of the delivery order by Customs, only the registered holder of the delivery order can claim the goods from Customs. This is the application of Customs Offices and Ministry of the goods, multimodal carrier or exporter are obliged to bring an injunction decision from the competent court in case the land carrier does not give the delivery order and the goods back to the order of entitled party. This becomes a key factor in the solution of most of the cases, if the land carrier holds the goods in his hands when the problem arises.
MOST FREQUENT PROBLEMS Non-payment of sea freight Due several and various reasons the multimodal carrier delays in paying the sea freight or demurrage fees or any other incurred expenses or charges which become deu according to the charter party or any other specific agreement. If the shipowner can not abtain a satisfactory guarantee for his claims or if he is not paid, the master may refuse the delivery of the goods to the land carrier or to the order multimodal carrier. In this case, ship’, master delivers the cargo to the warehouse of the port and exercises the right of lien on them untill the claim is paid or guaranteed. If the ship master exercises the right of lien on the cargo and if the cargo has already been discharged, the goods are kept in the warehouse or open storage areas of the port administration under Customs control. If the cargo has not been discharged and the master wishes to keep the cargo on board, he may act so. According to the provisions o General Tariff of Ports Which is also applicable to those goods lying down in the port area, storage fee is charged in U.S. Dollars per day varying with the kind, type, package and Iying time. The charges are increased after elapse of the first 90 days and those expenses are to be paid by multimodal carrier at the end. General principle in Turkish Law is that the carrier or shipper who delivers the cargo to the warehouse is responsible for the storage fees. If the goods are not removed and left at the port without paying the incurred charges, the goods can be sold in an open auction. The ahipowner can start proceedings in order to again his claims and he can get the cargo sold by means of Execution Office. This kind of problems have arisen very and cargo qwners suffered the increased port costs and additional freight and charges. Non-payment of land carrier’ s freight and charges Another most frequently seen problem is caused by the default of multimodal carrier in paying land carrier’ s freight and charges. This occurs in the different phases pf land transport. 1 Land carrier’ s freight hasn’ t been paid before the beginning of the operations and the carrier has not started to carry the goods, but the delivery orders have been in his possession. Multimodal carrier has done the contract with land carrier, but he can not pay the freight and other expenses which must be paid in advance prior the commencement of the operations. It seems that there is not a big problem. If the freight is not paid, land carrier can notify the owners of the goods and other related parties and give up carrying the cargo and returns the goods togetherwith the bills of lading and delivery orders back to the entitled owner of the goods or to the multimodal carrier, then he claims his fees and charges from his contractual party in case he has deserved any fees or paid any charges or expenses. It is obvious that the expenses incurred for the goods can be claimed from the owner of the goods, but not the freight or any other indemnity based on non-performance of the contract. But some land carriers have acted just in the opposite and created very big problems. In many cases land carrier has refused to give the delivery orders and the goods back to the of the goods, shipper or multimodal carrier. Customs Office has also refused to deliver the cargo to the order of the owner or shipper and asked for the return of the registered delivery orders to be presented or returned to customs by the landcarrier to whose name the orders had been issued. Landcarrier insists to perform the contract of carriage by road although the qwner of the goods do not want to pay an excess freight as he had prepaid at time of taking over by the multimodal carrier. Sometimes the owner of the goods accepts to pay an additional freight to the land carrier in order to save his goods and to decrease the loss, but landcarrier demands the exact amount of freight, sometimes even over the market price. 2 Land carrier’ s freight hasn’ t been paid after completion of the oncarriage of various shipments. Multimodal carrier and his sub-carrier might have concluded various shipments and the land carrier who is also defined as sub-carrier have unsettled outstanding freight and several expenses claims while the transportation of subsequent consigments are going on. Multimodal carrier M ships cargo to Samsun port by vessel S and land carrier L carries the goods to Iran. Before the cargo ex-vessel S completely carried from Samsun port, M ships more cargo by another vessel T. Land carrier L starts carrying the cargo of vessel T before the cargo previous vessel S completely carried from the port area. The trucks carrying the cargo ex-vessel S have not returned the signed copies of waybills and therefore the account of vessel S remains unsettled while oncarriage of the cargo ex-vessel T is going on. Before the completion of oncarriage of the cargo ex vessel T, the accounting of vessel S is completed and land carrier L finds out that multimodal carrier owes him ie $ 20.000.- But this debt can not be paid by the multimodal carrier M and land carrier L stops operations seizing the cargo ex vessel T for his outstanding claim. The cargo wners ex vessel T wants land carrier their cargo as they paid freight for the whole carriage in advance. Land carrier L demands the freight for the carriage by road to be paid to him by the cargo owners claiming that he was not paid. Cargo owners find another carrier who will carry the cargo for a cheaper freight rate and previous land carrier L does not release the goods and demands his freight and charges to be paid and to carry the goods for a higher price. Land carrier’ s failure in fulfilment of the obligations Land carrier’ s failure in fulfilling the obligations has been another main problem area. This failure has arisen aspecially in carriage of the goods due to the carrier’ s lack of truck capacity. Yhe carriers who have undertaken the carriage of big volume of cargo without having adequate truck capacity could not move the cargo from the area in a reasonable time and the carriage has delayed causing high storage charges and putting the multimodal transport operator in the risk of losing the business and their performance bond given to the consignee and more important their reputation in transport world. Even in this kind of cases, sub carriers have refused to give the cargo back to the order of multimodal transport operator or to the cargo owners and they have demanded additional payments for attracting truck owners by offering higher freight rates. Non-fulfilment of obligations has caused the goods remained idle at the port area and storage fees increased tremendously reaching to a level over the value of the goods. Another result of idle lying in the port is being liquidated by Customs following the elapse of two years maximum lay time for transit goods.
LEGAL ASPECTS OF THOSE PROBLEMS First of all I must point out that Turkey is not a party to the CMR Convention and therefore we have to look at those problems from the point of wiew of Turkish Law. The law of carriage is governed by the Commercial Code in Turkey. Article 796 of Turkish Commercial Code states that the subsequent carriers replace the preceding carrier for all of the arising debts after taking over the goods and the waybill. By virtue of this article, the subsequent carrier takes over all the debts arising after receiving the goods and the waybill. The first debt or undertaking of the subsequent carrier who is landcarrier is carrying the goods to the designated delivery place and delivering the gods to the consignce. In abovementioned cases, land carriers refuse to carry the cargo claiming that their freight had not been paid muştimodal carrier who has entered in a contract with the land carrier and endorsed and delivered the goods for carriage by roed. In most of the cases, land carriers claim that they have the right lien on the goods and have been exercising their right of lien untill they are paid. By virtue of Article 794 of Turkish Commercial Code, the carrier has right of lien on goods for all of this claims arising from the carriage contract. But it is necessary to define on which particular goods, the right of lien can be exercised. In a decision of Turkish Court of Appeals dated 31.03.1951, it is stated that carrier’ s right of lien does exist for the claims arising from the carriage contract to which the carried goods are subject. Court of Appeals has also decided that carrier can exercise his right of lien arising from previous shipments on the goods carried later provided that the goods belong to the same consignor. (20 November 1975) Court of Appeals has decided that sub-carrier can exercise his right of lien if the preceding carrier has not received the freight completely or partialy. (31 may 1979) In the light of those decisions of Court of Appeals, we can say that sub-carrier can not seize the cargo claiming the existence of carrier’ s right of lien in case the freight has been completely prepaid to the preceding carrier, namely to the multimodal carrier. I have noticed that freight had always been prepaid in the disputes which I had been involved as a lawyer. Freight is prepaid because of the conditions of the opened letters of credit by the banks. In documentary credits, banks do not accept the transport document if it does not clearly proves the transport charges have been prepaid. The subcarrier can claim his freight and ather charges and expenses only fron his contractual party according to another decision of Court of Appeals. Article 777 of Turkish Commercial Code states that if the carriage has not commenced due to the reasons which are not false actions for the parties, the carrier can claim loading-unloading charges and other incurred unavoidable expenses even if the carrier is not entitled to freight. As explained above, carriers do not return the goods back to the entitled carrier or owner and Customs Officials also refuse to deliver the goods to the holder of title in case the delivery order has been given to a carrier and Customs ask for an injunction decision from the competent court which is sometimes obtained very difficult from the court as the judges are not mostly experts in transport and maritime cases due the seldomness of this type of disputes and the workload of the courts are extremely heavy. If the judge can have sufficient time reviewing the petition of claims, attached document and relevant provisions of Commercial Law togetherwith the decisions of Court of Appeals, such an injunction may be obtained without much difficulty. Usually in this kind of conflicts, injunction is obtained from the court upon presentation of a guarantee covering probable loss of defendant in case the court case is lost. In case the land carrier does not release the goods to the order of owners or holder of the title the cargo owner can send an official warning through Notary Public to the land carrier and gives him a reasonable time to relase of to commence the carriage of the goods and will inform him that otherwise he terminates the contract and keeps the landcarrier responsible for all loss and damage suffered by the owner of the goods. Then the owner of the goods who have paid the freight in advance to the multimodal carrier will apply to the court and will ask for an injunction decision in order to get the goods released for transportation. Court decision will be presented to the Customs for the release of the goods and the goods will be carried from the port. It is necessary to file the claims in 10 days following the date of injunction decision according to Turkish Civil Procedure Law. This might be an indemnity case or any other case like prevention of carrier’ s unlawful acts in order to keep the injunction alive. It is possible to apply to the court directly in person or by means of a lawyer. If claimant prefers to be represented by a lawyer, a power of attorney must be ıssued authorizing the lawyer for representation. If the headquarters and authorized directors of the claimant is out of Turkey, power of attorney must be issued by a local Notary Public and every and aythorization given to the lawyer must be worded separately and clearly. The signature and stamp of Notary Public msut be certified by the local court, the signature and stamp of the court and judge or authorized clerk will be certified by the bearest Turkish Consulate. Then this power of attorney must be reached to the lawyer in Turkey by the fastest means of transpotation as Turkish lawyers can not do any transaction on behalf of the client without presentation of the power of attorney. The signature and stamp of Turkish Consulate is certified by the Governor’ s Office in Turkey, then it is translated into Turkish language and the translation is approved by the local Notary Public in Turkey and a valid power of attorney becomes available. This bureaucracy unfortunately causes too much loss of time and every lost day while waiting for the power of attorney increases the lost and sometimes oblige the cargo owner to make an agreement with the land carrier on unfair grounds.
LAST CARRIER’ S LIABILITY The carrier shall be liable for the loss of the goods and for damage thereto occuring between the when he takes over the goods and the time of delivery to the consignee according to Article 781 of Turkish Commercial Code. There are some other responsibilities of the carrier stated in other articles besides this general provision. The carrier will be also liable for any delay in completion of the carriage in a agreed time or in a reasonable time in case of absence of an agreed time. (Article 780). The carrier is under obligation of notifying the arrival of goods to the consignee (Art. 789); notifying the consignor if the consignee can not be found or the consignee does not accept the goods. The carrier shall be relieved of liability if the loss, damage or delay has been caused by the acts or instructions of consignor or consignee or by any other reason which has not arisen with carrier’ s fault o by inherent vice and defects or by the nature or because of the insufficient packing (Art.781/2)? If there is partial loss, the carrier will be liable only for the lost part of the goods and will deserve for freight of the remaining part. In case the carrier has delivered no part of the goods which he took over, this is a total loss and carrier becomes liable for the whole loss. The goods need not have been destroyed or even damaged, they may have been mislaid or delivered to the wrong person. If the consignee does not accept the goods or can not be found at the designated delivery place, the carrier must inform the consignor of the sitution at oncewithout any delay and ought to ask for instructions. In case the conditions of carrier’ s situation does not allow to contact the consignor and to obtain the new instructions or in case the consignor has given nonperformable instructionsi the carier must apply to the local court at the arrival place and ask for the appointment of a custodian to whom he can deliver the goods (Art. 790/) ıf there is danger of sport of the goods, the carrier can get them sold upon a permission abtained from the court. Otherwise the carrier wil be liable for any loss or damage if he does not deliver the goods to a custodian in the explained manner. The last carrier is liable only for the ohase of the operation starting from the time when he takes over the goods ending by the delivery to consignee and is not liable for the whole operation covering the former phase and acts of preceding carriers or multimodal carrier.
NON-PERFORMANCE OF CARRIAGE IN A REASONABLE TIME The carrier must perform the cariage in the time agreed by the parties in contract or in case of absence of an agreed time, goods must be carried in a reasonable time conforming the conditions of the situation. If the parties of yhe carriage contract have agreed on the time of carriage for despatch and completion of the transport, they get it written in the waybill. If the time has not been agreed, the goods will have to be carried in a reasonable time conforming the kind, nature of the goods, vehicle, the weatheri climate, local specific conditions of the country to and through where the goods will be carried. Carrier will be liable for non performance of the carriage in the time explained above and consignor or consignee will have the right demanding the payable freight to be decreased or claiming compensation for damage or loss suffered because of the delay or non performance.
LIABILITY FOR ASSISTANTS AND SUBCARRIERS The carrier is liable for the acts and faults of the assistant or other persons employe in performance of the carriage contact. Article 782 of Turkish Commercial Code states that the faults of persons employed by the carrier or his servants are considered as his own faults. According to the same article the carrier is also liable for the faults or acts of the subcarriers to whom he has delivered the goods to be carried until the delivery of the goods to the consignee.