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Indian Multimodal Transportation of Goods Bill 2017


Jagan - August 31, 2020 - 2 comments

  1. We were recently advised that the Indian Govt is in the process of updating its law1 with respect to the Multimodal Transport of Goods. We had, in our earlier article “Unintended Consequences of MTGA 1993”2 commented on the prevailing act, the Multimodal Transport of Goods Act 1993. In this article, we focus only on the new changes in the proposed Bill.
  2. The important changes together with our comments are as follows:
    1. Grievance redressal cell to be created by the Self-Regulating Organization (“SRO”)for redressal of commercial differences or disputes by Conciliation4:
      1. The proposed Bill allows aggrieved parties to submit their disputes in relation to multi-modal services provided by a registered Multimodal Transport Operator (“MTO”). The Grievance redressal cell after hearing the matter, may allow or reject the claim submitted. There is a provision for an appeal against the decision of the Grievance redressal cell and finally, an aggrieved party may approach the courts of competent jurisdiction (S 20 AB & AC) (New Section 2[ib], Section 26 and 27).
      2. While the Grievance redressal cell is certainly a good innovation for self-regulation, we submit that the provision for approaching the courts would lead to a self-defeating exercise, especially, given the delays prevalent in the Indian justice system. This being the case, we would suggest that perhaps this section can be coupled with an arbitration process (as provided in Section 35) and which should allow for the dispute to be settled finally by arbitration. Additionally, the SRO’s could work together and agree on a common arbitration process / rules along with a panel of arbitrators chosen from industry professionals to expedite the arbitration processes with minimal costs.
    2. Definition of Multimodal Transport – The Bill has given a wider definition then the prevailing act in that it covers all shipments involving two or more modes of transport provided one of the modes is by water i.e. it covers both inward and outward shipments (S 2k):
      1. The present act only applies to shipments out of India when there are two or more modes of transport and with there being no restriction that one of the modes has to be by water. The Bill, on the other hand, will also apply for import shipments into India as long as there is Ocean transportation coupled with other modes of transport (irrespective as to whether the modes of transport are in or outside India).
      2. We submit that as and when the Bill is enacted, it would override any compulsory cargo conventions (such as the Hague or the Hague Visby Rules) if litigated or arbitrated in India. Carriers (who fall under the definition of a MTO under the Bill) would need to follow the provisions so as to avoid being penalized as provided in the Bill.
    3. Wider definition of Multimodal Transport Document (“MTD”) and which allows any document having the particulars (as listed under S 9 of the Bill) and which can be replaced by Electronic Data Interchange messages (S 2la): Given the recent challenges faced by N Covid 19 and the stresses it has created in the documentary processes, this provision is indeed welcome. The challenge would be to widen the use of electronic messages instead of paper documents amongst the various parties (Carriers, Traders, Banks, Terminals, Transporters, etc.) given the prevailing differences in  technology together with the interoperability issues.
    4. Requirement that the Multimodal Transport Operator (“MTO”) is a member of an SRO: An MTO would need to be a member of a SRO and have a valid certificate issued by the SRO to act as a MTO in India. Additionally,  agents acting in India for foreign MTO’s shall deemed to be an MTO for the purpose of this Bill. Accordingly, an agent of an International MTO in India would need to ensure that their Principals do not fall foul of any of the provisions of the Bill and that they (agents) are members of an SRO to avoid penalties.
    5. Registration of MTO – The Bill provides for the SRO to issue certificates to its Members allowing them to commence services as MTO (S 3, 4, 5 & 6):
      1. Under the prevailing act, an MTO would need to apply to register with the competent authority after submitting an application. This is being done away with and instead the Bill provides for SRO’s to issue certificates to their Members enabling them to trade as MTO’s.
      2. SRO’s should work together with each other (other SRO’s) to ensure there is common criterion imposed by them (SRO’s) together with processes beneficial to the industry as a whole.
      3. MTO’s/ Carrier’s and Agents providing services which fall within the ambit of the proposed Bill should consider becoming a member of an SRO to avoid any issues cropping at a later date.
    6. Details of Insurance Coverage: The Bill expressly provides for the MTD to list the details of their insurance coverage available for the multimodal transportation of goods (S 9 p):
      1. We believe that this provision would be difficult to satisfy given that the Bill expressly does not provide for the type and extent of insurance coverages. While we believe that the insurance coverage referred to is related to the liability of the MTO, we believe that this should be best left to the SRO’s to decide i.e. both on the scope and extent of cover required by their Members.
      2. The other issue which may arise is with respect to import shipments. In this case, while the Indian agents of an MTO  would be considered as an MTO, they may have no control on either the type of insurance cover or the provision in the MTD. This being the case, they may fall foul of the provision of the proposed Bill such that they (agents) could be penalized.
      3. We would suggest
        1. that the Industry bodies make representations against this provision.
        2. if the provision does continue to remain, SRO/industry bodies should agree on common wordings to be added to the MTD’s and which could read as follow “We are insured for our liabilities as provided under the compulsory cargo conventions such as The Hague / Hague-Visby Rules or laws and up to a limit of USD _____”. 
    7. Penalties: There are various penalties listed for various offences (S 34): While we would prefer for the industry to self-regulate, the fact is that self – regulation may be difficult to achieve. This being the case, we do not have any comments on the penalty provisions, and which could be easily avoided by fulfilling the requirement under the Bill.
  3. The Bill is a welcome development given it not only allows for self-regulation by the Industry bodies but also that parties are aware of their rights and duties with respect to multimodal transport. The main lacuna’s identified in our earlier article appear to have been considered. Only time will tell the provisions of the new act and whether it achieves what was intended.

1. See the details of the Bill at dgshipping.gov.in/…/201706150420473010710circular_MMTGACTAnagha2_crews.pdf

2. Details of our earlier article can be viewed at nau.com.sg/unintended-consequences-of-the-indian-mtga-1993

3The organisations which comes to our mind that would fulfill the role of an SRO are AMTOI, INSA and CSLA.

4. See write up on Conciliation by PSA Legal psalegal.com/…/DisputeResolutionBulletin-IssueVII08092010070309PM.pdf

 

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2 comments

  1. VIJAY GALANDE

    1.The self- regulating organization should in fact be SELF-REGULATING and SUPERVISING ORGANIZATION. It must file the regulations with government and be accountable for supervising the adherence by members.
    2.Minimum requirements under the liability cover should be specified in consultation with cover providers, the tendency to misuse the delays in litigation also need to be discouraged in the interest of the trade.
    3. If agents acting in India for foreign MTO’s are deemed to be MTO, to ensure a liability cover level as required in India, an overriding MTD by Indian agent or some similar arrangement will have to be in place. Can the INDIAN PnI Club come up with a limited suitable cover for Indian Agent to help enforce the liability of Foreign MTO

    • admin

      Thank you for your comments.

      With respect to your point 3, we note that in the Bill, there is no provision of any overriding MTD to be issued by an Indian agent. We believe that it would be best for the application of the MTGA to the document / MTD issued by the Carrier/MTO.

      Liability covers for MTO’s and agents are easily available with both commercial and mutual insurers. However, the type of cover you suggest i.e. allowing Indian agent to help enforce the liability of foreign MTO is more of a counter-party risk and therefore Indian parties should only agree to act as agents subject to their being proper cover available by their Insurers to deal with related exposures.

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