Understanding where and how C.M.R applies is essential to ensure you have the correct Freight Liability insurance
The Convention on the Contract for the International Carriage of Goods by Road (C.M.R) determines when hauliers transporting international shipments in the UK are liable for damage, loss or delay, and also the value of the liability.
C.M.R imposes a significantly higher liability on carriers compared to domestic conventions, such as the Road Haulage Association Conditions of Carriage (R.H.A).
The precise liability relies on a measure based on the market exchange rates of a basket of major currencies, but at current rates liability under C.M.R is over 6 times higher than under R.H.A terms.
Insurance underwriters need to understand which convention applies to a shipment when providing Freight Liability insurance in order to accurately calculate their exposure.
If they are not given the correct information, your insurance policy may well not pay the full amount of your liability in the event of a claim, so getting this wrong could result in a very significant risk to your business.
Your broker should have a working knowledge of international and domestic carriage conditions, so that they can provide you with advice on liability limits, and ensure that the correct cover is placed on your behalf.
GRP has an active Haulage and Logistics Practice which supports knowledge sharing around Group brokers, helping our team keep up to speed with technical issues and ensuring we provide our clients with the right advice and insurance.
The following brief summary of the convention should provide a helpful overview:
For further Information on Freight Liability insurance contact your local GRP Group broker
Convention on the Contract for the International Carriage of Goods by Road (C.M.R.) Overview
When does C.M.R. apply?
C.M.R. has been ratified by 45 European states and applies to every contract for the carriage of goods by road by vehicles for hire or reward from one country to another provided that one of the countries has acceded to the Convention.
This means that all international road transport by hauliers which either starts or finishes in the UK will be subject to C.M.R.
The convention applies by law and the carrier may not change the provisions by contract. It applies to the entire carriage of the goods so that hauliers involved in any stage of an international journey by road vehicle involving goods coming into or leaving the UK will be subject to the convention even if they do not travel beyond the British Isles.
A haulier therefore need not cross a frontier for C.M.R. to apply and this is particularly relevant for hauliers involved in dock traffic with trailers entering or leaving the country via roll-on roll-off ferries or through the Channel Tunnel.
Carriers responsible for goods under CMR must complete a “C.M.R. Note”, which constitutes proof of the contract of carriage by road, and determines the scope and responsibility for the operation performed and identifies the parties involved and the goods being transported.
Exceptions where C.M.R. does not apply
Exceptions to the above include:
- Carriage performed under the terms of any international postal convention.
- Funeral consignments
- Furniture removal
- The carriage of goods by road in vehicles for hire or reward between the UK and the Republic of Ireland
Liability for Containers
Containers are not included under C.M.R. (the rules were drafted before containerisation was introduced), so containers are often carried under recognised domestic conditions of carriage, most commonly the R.H.A.
However hauliers carrying containers from ports may be asked to accept a C.M.R. liability. If this is acceptable to both parties then, provided the Freight Liability underwriter agrees, C.M.R. liability insurance can be arranged.
C.M.R. Rules
The C.M.R. Convention is a very complex set of rules and in this context it is only possible to give an overview of the main issues:
What are hauliers liable for under C.M.R.?
From the time they take over the goods to the time of delivery, carriers are liable for:
- The total or partial loss of the goods
- Any damage to the goods
- Delay in delivery.
C.M.R. Defences:
Carriers are allowed a number of specific defences from liability which divide into two categories.
- Defences where onus of proof is on the haulier include:
- Losses caused by the wrongful act, neglect or instructions of the claimant,
- Inherent vice or through circumstances which the carrier could not avoid and the consequences of which they were unable to prevent.
Note, the onus of proof to show that hauliers could not avoid a loss and were unable to prevent the consequences is a heavy one and does not offer comfort apart from in the most extreme cases.
- Defences where onus of proof is on the claimant:
There are a number of special risks where if the carrier can establish that in the circumstances of the case, loss or damage could be attributed to these special risks then it shall be presumed that it was so
Examples of these special causes are:
- Lack of or defective condition of packing,
- Faulty stowage,
- The nature of certain goods which exposes them particularly to rust, decay or leakage.
Financial limits to the haulier's liability
The financial liability of the carrier is expressed in terms of "Special Drawing Rights" (S.D.R.s).
- The liability is 8.33 D.R.s per kilogram of weight and the value of an S.D.R. changes on a daily basis and is based on the market exchange rates of a basket of major currencies.
- As 16th December 2019 the S.D.R. conversion rate results in financial liability of £8,080 per tonne.
This marks a substantial increase from domestic conditions of carriage such as R.H.A. with liability at £1,300 per tonne.
Freight Liability insurance underwriters will need to take into account the hauliers exposure to C.M.R. vs. domestic conditions of carriage when setting terms for a risk.
Bear in mind that an articulated lorry can carry up to 31 tonne as such the insured limit within the Freight Liability insurance policy must be adequate and allow for currency fluctuations.