10th Symposium of Lawyers

1. Friday, 21 February 2014 10th Symposium of Lawyers “Actors in the global logistics chain and road transport operators: their roles, interactions and interdependence”

2. The intermediaries: various legal situations (conditions of access to the profession / contractual relationships) The situation in Germany Detlef Neufang Fachanwalt für Transport- und Speditionsrecht Lengsdorfer Hauptstr. 75 D-53127 Bonn neufang@ra-neufang.de Tel. 0228-9 25 35 34 Fax: 0228-25 08 35 BWVL

3. Freight Forwarder- Spediteur - Access tothemarket: Free In contrarytotheroadtransport, theaccesstothefreightforwardingmarket in Germany is not subjecttoanyregulationsandreglementations. Forforwardersthereare – on national or EC-level – noregulationslike in EC 1071/2009 or 1072/2009 Anybodywhowantstorun a freightforwardingenterpriseneedstoberecorded in thecommercialregister Access totheprofession: Free 3-years apprenticeshipin a forwardingenterprise & school or 3-years study(at a cooperativestateuniversitythatintegrates academic studies and work experience)= Bachelor of Arts. (Forwarding, transport & logistics) or Nothing

4. Freight Forwarder- Spediteur - The majorityofcarriers in Germany operateunderthename „Spedition XY“ (=freightforwarder), evenifthey do not organisetransports but just actas a sub-contractorand carry goodswith a truckfrom A to B A majorityofcarriersrefers on businesslettersetctothe German Freight Forwarders' Standard Terms and Conditions - Allgemeine Deutsche Spediteurbedingungen ADSp -

5. ContractualrelationshipFreightForwarder: „thearchitectofthetransport“ The legal nature of the forwarding contract = contract of agency Responsibility for the organisation of the transport The legal nature of a contract of carriage = contract for work and services Responsibility for the performance of the transport and the delivery of the goods to the consignee at the right time, the right place, without damage or loss

6. Freight Forwarder Germany hasquitedetailedregulations in the Commercial Code (ExtractfromBookFour – Commercial Contracts) Fifth Chapter Forwarding Business Section 453. Forwardingcontract Byvirtueoftheforwardingcontracttheforwarderisobligedtoarrangeforthedispatchofthegoods. The senderisobligedtopaytheagreedrenumeration. The provisionsofthischapteronlyapplyifdispatchinggoodsispartoftheoperationof a commercialenterprise. … All translationsofthesectionsofthe German Commercial codeweremadebythe German Associationfor Transport Law (www.transportrecht.org)

7. Freight Forwarder Section 454. Arrangingforthedispatchofthegoods The dutytoarrangeforthedispatchofthegoodsincludesorganisationofthecarriage, in particular 1. determinationofthemeansand route oftransort, 2. choiceofperformingenterprises, conclusionofcarriage, warehousingandforwardingcontractsrequiredforthedispatch, as well asprovidinginformationandgivinginstructionstotheperformingenterprises, and 3. securingthesender‘sclaimtocompensation. The dutiesoftheforwarder also includetheprovisionofotheragreedservicesrelatingtothecarriage such asinsuringandpackagingthegoods, labellingthemandclearingthemthroughcustoms. However, itisonlyiftheagreementcallsforitthattheforwardershallbeobligedtoarrangefortheconclusionofcontractsfortheseservices. The forwarderconcludestherequiredcontracts in hisownnameor, if he isauthorisedto do so, in thenameofthesender. In fulfillinghisobligationstheforwardershallact in theinterestofthesenderand carry out hisinstructions.

8. Freight Forwarder Section 455. Handling ofthegoods. Accompanyingdocuments. Dutiestoreportandprovideinformation The senderisobligedtopackageandlabelthegoodsasfarasneccessaryandtomakeavailabledocumentsas well asprovide all theinformationtheforwarderneedstofulfilhisduties. Ifdangerousgoodsaredispatched, thesendershall, in good time and in form of a text, informtheforwarderoftheprecisenatureofthedangerand, asfarasneccessary, oftheprecautionarymeasurestobetaken. The sendershall, evenif he is not at fault, compensatetheforwarderfordemageandoutlayscausedby 1. insufficientpackagingorlabelling, 2. failuretodisclosethedangerousnatureofgoods, or 3. absence, incompletenessorincorrectnessofthedocumentsortheinformationrequiredfortheofficialprocessingofthegoods. … … Ifthesenderis a consumer, he isliableonly in so faras he hadactedculpably.

9. Freight Forwarder Section 456. Due date for payment of renumeration The renumeration is payable once the goods have been handed over to the carrier

10. Freight Forwarder • Section 458. Forwarder acting as carrier (Selbsteintritt) • The forwarder is entitled to perform the carriage of the goods himself. If he exercises this right he has, as far as the carriage is concerned, the rights and duties of a carrier. In this case, he may charge the usual freight in addition to the renumeration for his services as a forwarder.

11. Freight Forwarder Section 459. Forwardingatfixedcosts If a fixedsumisagreedasrenumnerationwhichincludesthecostsofcarriage, theforwarderhas, asfarasthecarriageisconcerned, therightsandthedutiesof a carrierorseacarrier. In thiscase, he mayclaimcompensationforhisoutlaysonlytotheextendthatthisiscustomary.

12. Freight Forwarder Section 460. Collective Consignment (Sammelladung) The forwarderisentitledtoarrangeforthedispatchofthegoodstogetherthoseofanothersender on thebasisof a contractfor a collectiveconsignmentconcludedforhisownaccount. Iftheforwarderexercisesthisright he has, asfarasthecarriageas a collectiveconsignmentisconcerned, therightsandthedutiesof a carrierorseacarrier. In thiscase, theforwardermayclaim such renumerationasisappropriate in thecircumstances, not exceedinghoweverthefreightusuallypayableforcarriageofthegoodsif separate.

13. Freight Forwarder The 3 casesexplainedabove - Forwarderactingascarrier (Selbsteintritt) - Forwardingatfixedcosts - Collective Consignment (Sammelladung) cover 99 % of all forwardingcontracts The freightforwarder, asfarasthecarriageisconcerned, hastherightsanddutiesof a carrier - in casesof national transportaccordingtothe Commercial Code (HGB), Section 407 ff - in casesof international roadtransportaccordingto CMR „As farasthecarriageisconcerned“, = goodsaredamagedor lost whilethephysicalmovementofthegoods (not whilehandlingthecargo!) = theliabilityoftheforwarder = liabilityofthecarrier

14. Freight Forwarder Example: Freightforwarderagreestoorganise a transortofgoodsfrom Bonn, Germany to Palermo, Italyfor a fixedprizeof 1000 €. The forwarderchoses a well-knowncarrierwithgoodrepute; thiscarrierhandsthegoodsoverto a sub-carrier. Later on, thegoodsarestolenfromthetruckof a sub-sub-carrierwhilethedriveristaking a rest-time on an unguardedparkingplacealongthehighway in southern Italy. Becausethecontractingpartieshadagreed on a fixedprize, theforwarderhas, asfarasthecarriageisconcerned, therightsandthedutiesof a carrier. He isliableforthelossofthegoodsaccordingto Art. 17, 23, 29 CMR: The carrier/forwarder shall be liable for the total or partial loss of the goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery. Limitation: 8.33 units of account per kilogram of gross weight If the damage was caused by wilful misconduct of the forwarder (or his agents or servants or by any other persons of whose services he makes use for the performance of the carriage), he shall not be entitled to avail himself of the provisions which exclude or limit his liability or which shift the burden of proof: Unlimited liability of the forwarder Therefore, in Germany the distinction between a contract of carriage and a forwarding contract is less important than in other countries.

15. Freight Forwarder As faraslegallypossible, carriers/freightforwarderstrytolimittheirliabilitywithgeneralconditions. German Freight Forwarders' Standard Terms and Conditions Allgemeine Deutsche Spediteurbedingungen ADSp – 1.Jan. 2003 – The terms and conditions are recommended for use, starting January 1st, 2003, by the Federal Association of German Industry, the Federal Association of German Wholesalers and Exporters, the Federal Association of German Freight Forwarders and Logistics Operators, the Association of German Chambers of Industrie and Commerce, and the German Association of Retailers. This recommendation is not obligatory. ADSp are for more than 80 years THE Standard Terms and Conditions of the transport and logistic scene in Germany. Also on themarket: General Conditionsfor Road Carriers, ForwardersandLogistic Enterprises Vertragsbedingungen für den Güterkraftverkehrs-, Speditions- und Logistikunternehmer - (VBGL) - 13. June 2013 – recommendedby BGL

16. Freight Forwarder ADSp Area ofapplication 2.1 The ADSp apply to all contracts for the transportation of goods, irrespective of whether they concern freight forwarding, carriage, warehousing or other services common to the forwarding trade; these also include logistical services commonly provided by freight forwarders in connection with the carriage or storage of goods. 2.2 In the case of forwarding services regulated by sections 453 to 466 of the German Commercial Law (HGB), the freight forwarder is only responsible for arranging the necessary contracts required for the performance of these services, unless other legal provisions take precedence 2.3 The ADSp are not applicable for contracts that deal exclusively with - packaging, - the carriage of removal goods and their storage, - crane lifting, assembly jobs or heavy lift and high volume transports, except for normal transhipment services of the freight forwarder. - the carriage and storage of goods to be towed or salvaged. 2.4 The ADSp are not applicable for transport contracts with consumers.

17. Freight Forwarder ADSp 2.7 In the relationship between a principal freight forwarder and an intermediate freight forwarder, the ADSp are deemed to be the general terms and conditions of the intermediate freight forwarder. 19. Settlement Claims arising out of the forwarding contract and other related claims may only be set off against counter claims, if these are undisputed. 20. Lien andretention 20.1 The freight forwarder has a lien on all goods in his possession or other valuables in connection with any claim, whether due or not for any services for his principal in accordance with section 2.1. This lien does not exceed the general legal lien which applies. 20.2 The freight forwarder may exercise his lien for claims arising out of other contracts with the principal only if they are undisputed or if the financial situation of the debtor puts the claims of the freight forwarder at risk.

18. Freight Forwarder ADSp 22. Liability of the freight forwarder, cession of claims 22.1 The freight forwarder bears liability for all his services (section 2.1) according to legal regulations. Unless specified otherwise, however, the following shall apply. 22.2 If the freight forwarder is only responsible for arranging the contracts required for the services requested, his responsibility is limited to the careful choice of such third party service providers. 22.3 In all cases where the freight forwarder is liable for loss of or damage to goods, his liability will be in accordance with §§ 429, 430 of the German Commercial Law.

19. Freight Forwarder ADSp 23. Limitation ofliability 23.1 The liability of the freight forwarder for loss of or damage to goods, with the exception of warehousing on request, is limited: 23.1.1 to € 5 per kilogram of gross weight of the consignment; 23.1.2 in case of damage occurring to goods whilst being carried, the damage is limited - contrary to section 23.1.1 - to the legally limited maximum amount specified for this type of carriage; 23.1.3 in case of a contract of multi-modal carriage - including sea transport - to 2 SDR per kg; 23.1.4 to € 1 million or 2 SDR per kg per claim, whichever is the higher. 23.2 If only individual packages or parts of the consignment were damaged or lost, the maximum liability is calculated on the basis of the gross weight - of the whole consignment if it is rendered valueless - of that part of the consignment that is rendered valueless 23.3 The liability of the freight forwarder for damage other than to goods, excepting personal injury and damage to goods that are not subject of the contract of transportation, is limited to three times the amount payable for the loss of the goods, but not more than € 100,000 per event. §§ 431 section 3

20. Freight Forwarder ADSp 25. Burdenofproof 25.1 The principal must provide evidence that goods of a specified quantity and state were handed to the freight forwarder in apparent good order (§ 438 German Commercial Law). The freight forwarder must provide evidence that he delivered the goods as he received them. 25.2 The burden of proof that goods were damaged whilst being transported (Section 23.1.2) in the means of transport lies with the party claiming such damage. If the place where the damage occurred is unknown, the freight forwarder must specify the sequence of transportation by documenting the interfaces (Section 7) if requested by the principal or the consignee. It is to be assumed that the damage occurred during that stage of the transportation for which the freight forwarder cannot provide a clean receipt. 25.3 The freight forwarder is obliged to ascertain, through appropriate enquiries and obtaining evidence, where the damage occurred.

21. ADSp If the sender cannot proof that the goods were lost or damaged whilst being transported, the freight forwarder/carrier pays only 5 € per kilo (about ½ of 8,33 SDR)

22. Freight Forwarder Logistic Services Forwarders, being an importantpartofthesupplychain, moreandmoreleavetheir traditional fieldsofactivitiesandperformservices – uptonow – not commontotheforwardingtrade: “Such logistics services may be activities for the principal or third parties named by the principal, like, for example, order acceptance (Call Center), treatment of goods, country- or customer-specific adaptation of goods, assembly, repair, quality control, price labelling, shelf service, installation or implementation of goods and commodities or activities in connection with the planning, implementation, control or monitoring of the management of orders, processes, sales, returns, disposals, recycling and information technology. “ (From : General termsandconditionsoflogistics-servicesproviders )

23. Freight Forwarder Logistic Services Totheseactivitiesoftheforwarders, thesections 453 ff ofthe German Commercial Code andthe ADSp do not apply. The forwardersaresubjecttothe BGB – German Civil Code – thatgenerallydoes not limittheliabilityofthecontractingparties. Iftheforwardercauses a damageand he hadactednegligent he is not entitled to avail himself of the provisions in CMR, HGB or ADSp which exclude or limit his liability or which shift the burden of proof: Unlimited liability of the forwarder Therefore, theFederal Association of German Freight Forwarders and Logistics Operators triedtoestablish General termsandconditionsoflogistics-servicesproviders

24. Freight Forwarder Logistic Services 14. Liability of the service provider 14.1 The service provider is only liable if he is responsible for the damage caused by him. The resulting legal and contractual liability is limited to the forseeable, typical damage and 14.1.1 to 20,000 Euro per claim, 14.1.2 in the case of more than four claims with the same cause (e.g., assembly mistake) or production/delivery of goods with identical deficiencies to Euro 100,000 independent of the actually number of claims. This limitation of liability applies also to discrepancies between standard- and actual quantities delivered to the service provider; such discrepancies are to be set off against each other in the case of both shortages and surpluses. 14.1.3 for all claims within a year to 500,000 Euro. 14.2 The above exemptions and limitations of liability also apply to extra-contractual claims against the service provider, his employees and other parties assisting him in his work. 14.3 The above exemptions and limitations of liability do not apply to 14.3.1 fatal injuries, personal injuries and damage to health 14.3.2 as well as to binding legal stipulations regarding liability, e.g., the law on product liability. 14.4 The parties may agree to replace the above maximum sums with others against payment of a liability surcharge. 15 Qualifiedresponsibility The above mentioned exemptions from and limitations of liability do not apply to 15.1 violation with intent or gross negligence > of significant contractual duties by the service provider, his managerial staff or any other person acting on his behalf, > of other duties of the service provider or his managerial staff 15.2 If the service provider maliciously withheld information about the damage/deficiency or guaranteed the quality of the logistics service

25. Freight Forwarder Logistic Services Shippers refused to accept the limitations of liability of the logistic service provider. In contrary to the ADSp, the German market did not accept the General terms and conditions of logistics-services providers

26. Internet Platforms: New players, new risks:freight and vehicle exchanges in the www. • TimoCom/Truck&Cargo, Transporeon etc. • Truck&Cargo: • Up to 450.000 freight and vehicle offers daily updated • 100.000 Users from 44 European countries • More than 516 million tons of freight per annum • No specific regulation by law in Germany • Service contract between Internet platform and user?

27. Internet Platforms: New players, new risks:freight and vehicle exchanges in the www. Security? TimoCom: “Many companies are left with insufficient financial reserves. Consequently it is no wonder that "black sheep" are to be found in this industry, too. To counteract this situation, online platforms in particular should be operated along the lines of: "Trust is good, control is better!"We go even further. That means we do not only check new and existing customers, but we also offer you a comprehensive security package. Find out here about our security package TimoCom Secure which includes the following modules: Access check | TimoComIdentify” If goods are stolen by a “black sheep” that had been checked and was found “good” before by Timocom (or another truck&vehicle exchange), the sender can claim his losses from TimoCometc .

28. Thank you for your Attention!