FREIGHT FORWARDING - Legal aspects Philip Teoh Partner/Head Shipping, International Trade, Insurance Practice Arbitrator Lawyer [QUALIFIED SPORE & MSIA] Azmi & Associates Malaysia 1

Freight Forwarders Forwarder as principal Forwarder as agent usually charges a commission Procures with due diligence others who perform the carriage, storage, packing or handling of the goods Customer enters into a direct contractual relationship with others Contract may be based on Federation of Malaysian Freight Forwarders Standard Trading Conditions Forwarder as principal usually charges an “all-in” price Enters into a contract of services with the customer Actual services undertaken by forwarder may be carried out by others Forwarder is not accountable to customer for his profits when contracting with the actual operators (c) Philip Teoh

Forwarder as Agent The freight forwarders role as an agent can be seen in cases where they do not issue any contractual documents (e.g. bill of lading, airway bill) and where their role is to arrange for transport. Eg. Arranging haulage for containerised cargo , booking cargo with liners What happens if cargo uncollected ? Responsibility as agent ? To cargo owner ; to carrier (c) Philip Teoh

Forwarder as Principal Where the forwarder issues contractual documents such as bills of lading and airway bills, they represent themselves to the goods owner as a contractual carrier. Forwarder has warehouse, trucks Eg. NVOCC Bills of lading, forwarders awb (c) Philip Teoh

DETERMINING Forwarders Role & LIABILITY What duties does forwarder actually perform ? What does he undertake in contract ? Does he deal physically in goods ? Label in contract not conclusive. (c) Philip Teoh

Contract – Detailed Formal Contract Tort – Representation Bailment Basis of liability Contract – Detailed Formal Contract STC – FMFF Tort – Representation Conversion Bailment To create objectives targeted to the audience and desired level of learning/thinking: 1. Ask yourself whether you want attendees to be able to: know, apply, integrate, consider the human dimension, care, learn to learn, comprehend, apply, analyze, synthesize, or evaluate .These outcomes represent different levels/kinds of thinking. 2. Match your action words to the desired level of learning/thinking (see Presenter Tips #1 at end of presentation template) 3. Match learning objective with appropriate teaching/learning strategy (see Presenter Tips #2 at end of presentation template).

Fmff Standard trading conditions Available to Forwarding Companies of the FMFF eg Selangor – SFFLA These conditions regulate the contractual relationship of the Forwarder and Customers Salient terms – Definition of role, limits of liability, time bar Approach by Malaysian Courts – Incorporation & Validity

BAILMENT Whenever the Forwarder is having control and custody of goods not belonging to the Forwarder, it is the Bailee of those goods The bailee has a duty to take reasonable care of the goods and return them in accordance with the terms of any express or implied contract of bailment Bailment duties are independent of contract and are imposed by law Contractual bailment arises when there is contractual relationship with the owner of the goods

Lien & Conversion A lien is a right to detain goods for non-payment of freight or warehouse charges The lien can be extended by contract Where the forwarder / carrier wrongfully detains, then the cargo owner can claim for conversion

Forwarder as carrier Where the Forwarder issues Contractual Shipping Documents eg Bills of lading, Airwaybills, the Forwarder becomes a Contractual Carrier The following Conventions are adopted and apply in Malaysia: Hague Rules – under the Carriage of Goods by Sea Act Warsaw Convention – under the Carriage by Air Act

Regulations revolve around Customs Requirements Customs Broker Licensed Customs Warehouse Free Commercial Zones Bonded Trucks and Non-Bonded Trucks To create objectives targeted to the audience and desired level of learning/thinking: 1. Ask yourself whether you want attendees to be able to: know, apply, integrate, consider the human dimension, care, learn to learn, comprehend, apply, analyze, synthesize, or evaluate .These outcomes represent different levels/kinds of thinking. 2. Match your action words to the desired level of learning/thinking (see Presenter Tips #1 at end of presentation template) 3. Match learning objective with appropriate teaching/learning strategy (see Presenter Tips #2 at end of presentation template).

Customs broker The Customs Broker will assist cargo owners to apply for Customs import, export and transhipment permits or certificates Customs 51% Bumiputra equity

WArehouses Ordinary Warehouses – Local Authority requirements, no customs requirements Public Bonded Warehouses – Customs - 30 % Bumiputra requirements Ordinary Warehouses – No Customs equity requirements

Trucking Land Public Transport Commission [ SPAD] under the Land Public Transport Act controls the issuance of Goods Licences for Commercial Vehicles eg Trucks, Prime Movers, Trailers Periodic Inspection required under the Road Transport Act to obtain Inspection Certificate

Integrated logistics services 3 Principal Activites: Warehousing, Transportation and Freight Forwarding Additional one : Distribution Supply Chain Management Other related / Value Added : Consolidation, Breakbulk, Packaging / Repackaging

Integrated logistics services Capital Requirements : Warehousing Facilities 5,000 m3 & 20 units facilities Transportation and Freight Forwarding Equity: 60 % Malaysian Equity

Main avenues Resolving disputes Court Forwarding & Logistics fall within the expanded jurisdiction of the Admiralty Court Arbitration Kuala Lumpur Regional Centre for Arbitration Mediation Private vs Court Mediation To create objectives targeted to the audience and desired level of learning/thinking: 1. Ask yourself whether you want attendees to be able to: know, apply, integrate, consider the human dimension, care, learn to learn, comprehend, apply, analyze, synthesize, or evaluate .These outcomes represent different levels/kinds of thinking. 2. Match your action words to the desired level of learning/thinking (see Presenter Tips #1 at end of presentation template) 3. Match learning objective with appropriate teaching/learning strategy (see Presenter Tips #2 at end of presentation template).

Books WRITTEN BY PHILIP TeOH Forms and Precedents on Shipping Annotated - Merchant Shipping Ordinance Merchant Shipping (Oil Pollution ) Act Collision Regulations Sale of Goods Act Bullen Leake Malaysia Chapter Halsbury’s Laws of Malaysia Shipping Sale of Goods Carriers [ Land, Air and Sea] Bailment, Lien and Limitation of Liability Conflict of Laws Equity Laws of Malaysia

Thank you! Philip Teoh Partner , Head of Shipping & Transport Azmi & Associates Malaysia Direct Dial: +6 03 2118 5010 | Mobile: +6 012 286 8591 General Line: +6 03 2118 5000 Facsimile: +6 03 2118 5112 Email: philip.teoh@azmilaw.com ; philipteoh@yahoo.com Web: www.azmilaw.com LinkedIn: Please send invite to receive Industry posts and join my 18,000 LinkedIn Network