Inside
this issue:
Obtaining the proper coverage in the
event of ocean carrier insolvency
Increased limitations on IATA air
waybills effective Dec. 30, 2009
FMC ruling allows OTIs to use
unlicensed agents
Commercial bankruptcies continue as
U.S. moves out of a recession
FMCSA proposes higher UCR fees and
reviews HOS
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Increased limitations on IATA air waybills
effective Dec. 30, 2009
Every five
years following the date that the 1999 Montreal Convention
came into force, the International Civil Aviation Authority
(ICAO) conducts a review of the treaty’s liability limits
based on inflation. If inflation exceeds 10 percent, the
ICAO notifies all government signatories – currently 91
countries.
Based on ICAO’s review, inflation increased 13.1 percent and
the agency proposed to increase the Montreal Convention’s
liability limits from 17 SDRs per kilogram to 19 SDRs per
kilogram. In previous correspondence, IATA indicated that
the new liability limits will go into effect as of Jan. 1,
2010. But IATA has now learned that the
ICAO Secretariat considers Dec. 30, 2009 as the
effective date for the revised liability limits.
The ICAO's Legal Bureau has confirmed to IATA that a letter
will be sent to all member states that will make express
reference to Dec. 30, 2009 as the effective date of the
increase. In the end, 12 countries filed disapproval notices
with ICAO of the increase, not six as originally reported.
It was still an insufficient number to stop the increase of
liability limits from being implemented.
IATA members should continue using the CSC Resolution 600b
air waybill until it is revised and approved, even if the
approval does not come until after Dec. 30, 2009. Courts are
still able to apply the revised limits (19 SDRs) because
subparagraphs 2.2.1 and 2.2.2 of 600b subject the carriage
to international conventions, applicable laws, government
regulations and the carrier’s conditions of carriage.
Accordingly, if
a new air waybill is not approved,
IATA will advise members to continue
using the existing air waybill, but not to “over-order.”
IATA is currently reviewing a proposed amendment to 600b
that would permit:
1.
Industry stakeholders to exhaust existing air waybill
stock after the effective date of the amended CSC Resolution
600b.
2.
IATA to conform CSC Resolutions to the revised
liability limits in the future (every five years) without
seeking approval in order to provide industry stakeholders
with timely notice of future changes to better manage their
air waybill stock. As the industry moves toward an
electronic environment, this would become a diminished
issue.
3.
IATA to satisfy U.S. government requirements that the
liability limits for transportation to and from the United
States, including non-convention travel, be harmonized at 19
SDRs.
The CSC will seek to adopt changes
through a mail vote. To view IATA’s notice in full, please
click here.
Liability issues for forwarders
When IATA’s 600b air waybill first became effective in March
2008, Avalon also noted potential liability issues where the
air waybill’s verbiage may conflict with other efforts by
forwarders to limit their liability in terms and conditions
of service, etc. While Avalon’s CTL policy provides coverage
for the IATA air waybill verbiage, the wording does expose
indirect air carriers to higher payouts at full value when
shippers should actually purchase Cargo Insurance to fully
protect their interests.
As such, we believe that forwarders will be best served by
taking proactive steps to limit their liability and manage
the increased exposure. One solution forwarders should
immediately consider is the publication of a tariff and/or
adopting conditions of carriage to address limitations of
liability beyond airport to airport. Your tariff should be
reviewed by a transportation attorney and be made available
to the shipping public. If you already have a tariff and/or
conditions of carriage, they should be reviewed with an
attorney as well.
Companies must always maintain the proper coverage to secure
their operations, especially with increases in liability.
Our Combined Transit Liability (CTL) program offers Errors &
Omissions Insurance with Cargo Legal Liability to provide
the coverage needed to protect businesses from costly
litigation by including coverage for attorney fees, court
costs and settlements. |
