What Should You Know About Abandoned Cargos During Covid-19?

Posted by Dr. Hassan Elhais on March 22nd, 2021

During the hike of the global pandemic, many rights and obligations on the part of the individuals were brought to the pause and were even destroyed. Owing to this scenario, a number of cases came forward, questioning as to whether they can hide behind the excuse of force majeure in order to shun off the obligations which they have to perform with respect to any employment or contracts. This question was majorly posed in the maritime industry before the Maritime Lawyers of Dubai by the cargo industries as due to this situation a number of carriers are becoming liable for the unclaimed shipments. This eventually leads to the creation of a crowd of vessels on the ports.

The legal Paradigm

The carrier has a responsibility for the cargoes that are assigned to them until they deliver the same to the consignee. The custody of the goods remains with the carrier in cases where there is a default faced on the part of the consignee at the time of delivery or where due to some unavoidable circumstances the goods have not been received by the consignee. Thus in order to get away from these liabilities, the carrier have a number of options available at his disposal. The UAE maritime law under article 269 provides that:

If the person having the right to take delivery of the goods does not attend or if he refuses to take delivery of the same it shall be permissible for the carrier to apply to the relevant court for leave to deposit the same with a depositee to be appointed by the court. The carrier may request permission to sell the goods in whole or – in part to pay the freight.

The article provides with an explanation as to how can an application may be filed by the carrier in an appropriated court, where the custody shall be shifted to a trustee which will be appointed by the court or may even order the carrier to sell the goods and pay the freight charges. The principle of maritime lien as present in the common law is absent in the UAE law.

The obligation of the carrier with respect to the goods not collected, comes to an end whereby the consignee furnishes an acknowledgment that he has no intention to collect the goods which are in the custody of the carrier and as a result he has decided to abandon the goods. The act of giving a bill of lading or an evidence of shipping document by the consignee to the carrier without even taking the delivery is regarded as a sufficient evidence as to the intention on the part of the consignee to abandon the goods. The carrier will also be getting the power to be indemnified from any payment he will made with respect to the abandoned goods of the consignee. The article 287 (a) in this perspective provides that the prescription period for the claim is 1 year which is from the date of delivering of the consigned goods.

In case where the consignee tries to save himself with the reason of force majeure at COVID-19 times, the limitation period for the bank guarantee shall be extended by the consignee so that it does not be a hurdle in the validity factor of such guarantees.

But in case, the evidence as to the intention of the consignee with respect to the abandoned goods is not present, then in that case, the carrier can sort to article 269 of the maritime law.it is regarded as a “way out” for the carrier. But while practicing this way, the carrier has to undergo few challenges such as

  1. It is not easy for the court to find a competent trustee in such a case. But usually a trend has been seen whereby the carrier himself is appointed as a trustee by the court as he is the one who files the application for the abandoned goods in good faith or he may also be allowed to appoint the trustee for this purpose. The court in such cases just make sure that the carrier has an adequate facility of a warehouse to keep the goods safe.
  2. Another issue of the cost of the trustee is raised in the court and generally the court is of the opinion that the carrier shall bear the cost of the trustee.
  3. Sometimes the sale of the abandoned cargo is also allowed as the judicial procedure in some cases are a lengthy process which is very expensive also.
  4. Sometimes the value of cargo is less than the value of storing and saving the abandoned cargo.
  5. Lastly, in the current scenario of the global pandemic, due to the drowning of the economy of the countries all over the world, the cost of the cargo may be on a declining edge, which might lead in asking the court about the validity of this commercial procedure of filing an application in the court. For this purpose, carriers may seek to rely upon the regulations of the local port which provides for the unclaimed goods in order to avoid the situation of piling up of the cargoes on the port.

CONCLUSION

Though the UAE laws provide with the well-equipped mechanism for facing the situations of the abandoned goods but they are of little effect when we look from the pandemic point of view which has resulted in glorifying the above mentioned issues. However, the UAE civil law provides that the tool of preventing which is present in the hand of one of the parties of contract shall be used only when there is an agreement as it is a contractual defense available only when there is a clause for the same in the agreement. In addition to this force majeure is a situation which creates a situation where the parties cannot fulfill the contract or is impossible to do so, thus it is not in all cases of COVID-19 that the consignee will be exempted

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Dr. Hassan Elhais

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Dr. Hassan Elhais
Joined: December 20th, 2020
Articles Posted: 321

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