Limitation of Liability – NVO’s

1. The English High Courtⁱ recently held that NVOCC’s (“NVO’s) acting as slot charterersⁱⁱ were also entitled to limit liability based on the Convention on Limitation of Liability for Maritime Claims 1976 as amended by the 1996 Protocol (as amended in 2012) (the ‘Convention’) so that they (slot charterers) bore similar liability as the Owners as provided in the Convention.
2. The judgementⁱⁱⁱ refers to NVO’s^iv who do not act as lot charterers may be also entitled to limit liability subject to review of the precise terms with the Owners (can be a Connecting Carrier Agreement^v or any other similar agreement). One of the defendants (Maersk) did not sign any Slot C/P or CCA but signed an agreement to transport services (“ATS”) and which provided for Maersk to issue their Own Bills of Lading to the cargo interests. The judge held that that ATS was akin to a Slot CP/CCA such that Maersk were also entitled to limit liability as provided in the Convention.
3. It appears to us that based on the above judgement, an underlying carrier (NVO/ Freight Forwarder issuing their BL’s as Contractual Carrier) would be entitled to limit liability as provided in the Convention should their contract with the upward parties provide for the issue of their (NVO/Freight Forwarder’s) BLs to the downward parties (which is what usually happens). Unfortunately, the common BL wordings of Feeder/Vessel Operators generally do not have any such express provision such that the NVO’s may not be entitled to the benefit of the limitation available under the Convention and which would result in their having an exposure for the difference between the sums they (NVO’s) may be liable to the cargo interests^vi and the sums they (NVO’s) could recover from the overlying carrier/feeder operator (who has limited liability under the Convention).
4. A NVO, if liable to the cargo interests/downward contractual parties due to any fault of the actual/performing carrier, should in turn be entitled to pursue for recovery from the actual/performing/upward contractual parties. Issues would arise when only the Owners are entitled to limit liability as provided in the Convention resulting in the NVO bearing the exposure for the difference to the cargo interests. This difference may sometimes be substantial.
5. In order to ensure that there are no gaps between the liabilities of Owners and NVO’s, we would recommend the following:
   1. NVO’s must in their contract with Owners/Operators expressly provide for them (NVO’s) to issue their BL’s to the cargo interests (this is obviously known to the Owners/Operators and who should have no issues given that they have no greater exposure arising from this).
   2. Freight Forwarders issuing their own BL’s as Carriers (technically a NVO) should also consider seeking such an agreement with Owners/Operators.
   3. Liability Insurers covering the risks of NVO’s and Freight Forwarders should educate their Insured’s so that they ensure to contract on “back to back” basis to ensure that there are no gaps.

^i. Sea Consortium Pte Ltd (t/a X-Press Feeders) v Bengal Tiger Line Pte Ltd
^ii. See our earlier article, Should a Container Operator become a Slot Charterer?
^iii. See complete judgement which can be downloaded at https://www.quadrantchambers.com/sites/default/files/2025-01/sea_consortium_pte_ltd_ta_x-press_feeders_v_bengal_tiger_line_pte_ltd_0.pdf
^iv.See Para 20 of the judgment.
^v.See Para 29 of the judgment.
^vi.See our earlier article, Hague / Hague Visby Rules – Can limitation be denied?