For the purpose of constructing a factory in Indonesia, the claimant, a Hong Kong company, entered into a contract for the supply of freight forwarding services by the respondent, a Finnish company, and another company. The contract contained a clause stating that it should be governed and construed in accordance with the laws of England. The claimant alleged that it suffered losses as a result of delays in the services provided by the forwarders. In an interim award, the tribunal found in favour of the claimant and ruled on the amounts recoverable from the respondent in its final award.

Aux fins de construire une usine en Indonésie, la demanderesse, une société hongkongaise, a conclu un contrat de fourniture de services de transitaire avec la défenderesse, une société finlandaise, et avec une autre société. Le contrat contenait une clause stipulant qu'il serait régi et interprété selon les lois anglaises. La demanderesse a soutenu qu'elle avait subi un préjudice du fait de retards dans les services fournis par les transitaires. Dans une sentence intérimaire, le tribunal arbitral a tranché en faveur de la demanderesse et il a statué dans sa sentence finale sur les sommes recouvrables auprès de la défenderesse.

Con el fin de construir una fábrica en Indonesia, la demandante, una compañía de Hong Kong, concluyó un contrato para el suministro de los servicios de transitario por parte de la demandada, una compañía finlandesa, y otra compañía. El contrato contenía una cláusula estableciendo que debería ser regulado e interpretado según las leyes de Inglaterra. La demandante alegó que sufría pérdidas como consecuencia de los retrasos en los servicios proporcionados por los transitarios. En un lado interlocutorio, el tribunal falló a favor de la demandante y determinó las cantidades recuperables de la demandada en su laudo final.

'Losses allegedly suffered as a result of delays on the part of the forwarders

24. The evidence before us demonstrates that cargo from various suppliers was shipped to Indonesia on the vessels [1], [2] and [3], the two former shipments being from . . . Finland and the other being from . . . China.

25. In each case, the vessels discharged cargo at [port A] at the mouth of [river X], [vessel 1] arriving there on 16 July 1993, [vessel 2] on 22 July 1993, and [vessel 3] on 25 July 1993. The [vessel 1] cargo was delivered to the [factory] site on 19 August 1993, the [vessel 2] cargo on 22 August 1993, and the [vessel 3] cargo on 6 September 1993.

26. The case put by the claimant was that the forwarders had failed to comply with their contractual obligations as specified in the Appendix 1 of contract number 6021, which described the scope of work to be undertaken by the forwarders under the contract.

27. In particular, the claimant alleged that:

- there was considerable delay by the forwarders in effecting the shipments;

- the forwarders arranged the shipments on vessels which were too large to berth at [port B];

- as a result, the vessels had to be diverted to [port A];

- even after discharge, the cargoes remained in storage at [port A] for considerable periods as the forwarders had not paid various agents' fees;

and that in consequence, the claimant suffered losses of [sum of money] in respect of the [vessel 1] cargo, [sum of money] in respect of the [vessel 2] cargo, and [sum of money] in respect of the [vessel 3] cargo.

28. For its part, the respondent alleged that:

- no shipment schedule had ever been established, so that there was no basis for the claimant's allegation that the forwarders had failed to ship the various cargoes according to such a schedule;

- it had been expressly agreed that the claimant was to give at least 60 days notice before shipment dates, so that the forwarders could make necessary arrangements, but that no such notice had been given;

- the obligation to ship arose only after the claimant had undertaken various procedures, including the establishment of letters of credit for the cargo and after the cargo had been inspected;

- while the forwarders were to assist the vendors of the cargo in obtaining inspection reports from [inspection/certification company], the forwarders were not responsible for preparation of the documents or for the procuring of such reports;

- the claimant had failed to establish that the cargoes were ready for shipment on the dates alleged by the claimant;

- it was never anticipated that the cargoes would be shipped to [port B] but rather, that heavy lift and over-sized cargoes (including those carried on the [vessels 1, 2 and 3]) would be discharged at a port to be built by the claimant at [port C], that the claimant was unable to make [port C] ready in time and nominated [port D] as a substitute port, and that [port D] was also not ready in time, thus necessitating the diversion to [port A].

29. In order to deal with the competing allegations, we must refer at some length to the terms of contract number 6021, relevant portions of which are as follows:1.

Whereas, the Owner (the claimant) intends to construct a [factory] . . . (hereinafter referred to as the "Project").

Whereas, the Owner desires the services of a competent and well-qualified Freight Forwarder to organize shipments of plant and equipment from various parts of the world to the job site . . .

And, whereas the Forwarder (the forwarders) confirms that he has the proper competence and capability as required by the Owner and agrees, all in accordance with the terms and conditions set forth hereinafter, to execute the work and arrange the transportation of imported materials from the Port of Loading to Port of Unloading and from there land transport to the [factory site].

Now therefore, in consideration of the mutual promises and covenants exchanged herein, the parties agree as follows:

1 §

Forwarder's Assignment

The Owner hereby appoints the Forwarder and the Forwarder hereby accepts the appointment to carry out Freight Forwarding Services and related forwarding tasks as more closely elaborated in Appendix 1, Scope of Work to this Contract (hereinafter referred to as the "Services").

The Forwarder shall cooperate and is together with Vendor's Forwarders responsible for synchronizing and interfacing the Services.

2 §

Forwarder's Role

2.1 § The Forwarder shall exercise all reasonable skill, care and diligence in the performance of the Services under this Contract and shall carry out all his responsibilities in accordance with recognized professional standards.

. . . . . . . . .

Freight Forwarding Services

Appendix 1

Scope of Work

Scope of work for freight forwarding services

1. General

The Forwarder shall organize the shipment of minimum 120,000 to 200,000 freight tons from various part of the world for which the owner contracted the different Vendor's to supply the Goods FOB (inter INCOTERMS 1990) Port of Export to by owner indicated destinations (other works than [factory] Site) or to the [factory site].

2. Scope of Work

2.1 Forwarder to liaise with the Vendors and visit their workshops/plants in order to obtain shipping schedules and necessary information from Vendors to enable Forwarder the timely execution of the services, including:

- reporting of manufacturing status of Goods with Photographs, every two (2) weeks.

- planning chart for storage of cargo at [factory site] in accordance with the sequence of Erection shall be obtained by the Forwarder from the Vendor prior to shipment.

2.2 Arrange space booking with ocean-carriers within the contractual and agreed time limits and coordinate Vendor's deliveries FOB in order to ensure that no delay due to the Forwarder/Owner occurs.

2.3 Assist Vendors to get . . . Surveyor's Inspection Report "LPS" (clean report of findings) for the cargo to be shipped.

2.4 Ensure completion of all necessary documentation by the Vendors for shipment i.e. invoices, packing list, transport drawings, export permit.

2.5 Audit and advise Vendors, in case of incorrect documents prior to shipments and ensure that they are corrected.

2.6 Coordinate cargo movements to the designated Ports of Loading.

2.7 Coordinate cargo from various Vendors at the Ports of Loading without delaying any shipments with regard to scheduled/agreed FOB delivery dates.

2.8 Upon receipt of cargo at the Ports of Loading ensure:

- proper packing;

- current markings including numbers of packages;

- that the carriers pay all necessary attention during loading, transportation, unloading and storage in order to avoid any damage or pilferage;

- follow Vendor's instruction (if any) regarding location on board;

- report immediately cargo shortage, damage or loss and notify Vendor and Owner.

2.9 Forwarder will be responsible to provide/carry out and supervise:

- direct loading/unloading at the Ports of Loading/Ports of Discharge/transhipment and FOT [factory site];

- provide transport facilities for haulage to final destination at [factory site], FOT, including normal and special trailers;

- provide all necessary loading and unloading equipment including heavy lifts at 2 ports of discharge initially along [river X];

- provide SOC containers (Shippers Own Containers) at the cost of Vendor's as and when requested.

2.10 For the inland transport, the Forwarder shall:

- survey road and bridge conditions;

- apply for permits through the Owner from Public Authorities when required;

- arrange through the Owner with [electricity supplier] and the Telephone Office the necessary cutting of power and telephone lines;

- arrange through the Owner Traffic Police to escort heavy transports.

2.11 Forwarder shall, upon arrival of vessel, check cargo conditions on board and supervise discharging (with prior permission of the vessel's captain), prepare unloading report (with photographer in case of damage or if damage is suspected) and arrange insurance survey whenever necessary.

2.12 Forwarder to arrange within the Indonesian rules and regulations through the Owner custom clearance allowing direct unloading from vessels to truck/trailers for transport to the bonded areas at [factory site].

2.13 Forwarder shall receive and distribute within the agreed time limits shipping documents in accordance with Owner's instructions.

2.14 The Forwarder shall keep in constant contact with Owner and provide fortnightly status reports on all cargo with the following instruction:

- receipt of "ready for shipment notice" from suppliers;

- expected cargo ready for shipment;

- next shipping possibility;

- name of vessel;

- ETD;

- ETA;

- preliminary cargo details;

- damages and short landings;

- other relevant information.

2.15 Delivery of shipping documents by courier well in advance two (2) weeks before arrival of cargo for cargo ex-Europe, North and South America, for ex-Far East, Australia five (5) days and ex-Singapore one (1) day to ensure quick clearance and delivery of cargo to [factory] Site.

2.16 The Forwarder shall develop a logistics system for Owner's transport organization and assist and train Owner's personnel in proper cargo handling, transport, planning, storage and management at [factory] Site.

30. In our view, the forwarders, in entering contract number 6021, took upon themselves serious commercial obligations in terms of the logistics of transporting a substantial amount of plant and equipment to a remote and difficult construction site in [Indonesia]. The core obligation of the forwarders was to arrange for the efficient and timely transportation of cargoes to the [factory] site, and while, to some extent, the ability to fulfil the task was dependent upon actions of others (i.e. the claimant, [the factory owner], and the various suppliers), there is no doubt in our minds that in connection with the three shipments under discussion, the forwarders were under a contractual duty to ensure both the shipment of the cargoes and the delivery of those cargoes to [factory location] in an efficient and timely manner. While Appendix 1 of contract number 6021 spells out in some detail the tasks to be undertaken by the forwarders, the contractual duty can be found in the body of the contract itself, and in particular, in Clause 1 and in Clause 2.1.

31. We are prepared to accept the evidence of [Claimant witness] that the claimant and [the factory owner] were interested only in ensuring the delivery of the cargo to the [factory site], that they did not wish to be concerned with issues of transhipment or otherwise, that if the forwarders were able to ship cargo directly into the [river X] to save costs of transhipment, that was perfectly in order so far as the claimant was concerned, and that generally speaking, the claimant left it to the forwarders to make whatever arrangements were necessary. The evidence is consistent with our interpretation of the contract.

32. As mentioned in paragraph 9 above, issues of quantum have been deferred, by agreement, pending the publication of this Interim Award. Although therefore we have not had any evidence relating to individual aspects of the various claims, we understand the claimant's case in relation to the [vessel 1, vessel 2 and vessel 3] shipments to fall basically into three parts:

- that the forwarders were guilty of delay in effecting the shipments;

- that the forwarders nominated ships which were too large for the [river X], without making any arrangements to tranship the cargoes on to barges; and

- that the forwarders were responsible for further delays after the cargoes were discharged at [port A] prior to delivery to the [factory site].

33. [Claimant witness], in . . . his affidavit, stated as follows:

To ensure smooth delivery of the various equipment and to adhere to the timetable for the construction of the [factory], each major vendor and/or supplier was given a specific timetable ("the Delivery Schedule") by which the manufacture and delivery to the named port of loading or their respective equipment was to be completed. The Delivery Schedule was prepared according to the stage of construction of the [factory] at which the equipment would be required and this was made known to the respondents. A copy of the Delivery Schedule is annexed hereto . . .

The annexed document . . . in fact comprised a number of documents including 5 pages described as a shipment schedule. However in cross-examination, [Claimant witness] agreed that this document was actually prepared by [the other forwarding company acting with Respondent] after the shipments had been effected.

34. While the shipment schedule clearly shows the proposed FOB dates for the various cargo items as alleged by the claimant, thus lending support to the proposition that there were some delays in shipment, there is no other evidence before us to demonstrate that there actually were delays or that such delays were the responsibility of the forwarders. We have not been provided with any documentary evidence to indicate that the claimant or [the factory owner] informed the forwarders in writing of the necessity to ship the cargoes by any particular date, and while it may be implicit from the available documents that the shipments should have been effected earlier, we are puzzled by the absence of any written communication from the claimant or from [the factory owner] to the forwarders after the intended shipment dates had passed. It seems rather curious that if the shipment dates were as critical as is claimed by the claimant in this arbitration, there seems to be no contemporaneous evidence to support the allegation. In the circumstances, we are not satisfied that the claimant has made out a case in respect of delays in effecting the shipments.

35. That having been said, the evidence has satisfied us that the forwarders are responsible for the delays and additional costs incurred in connection with the shipments which had to be discharged in [port A]. We accept the evidence presented on behalf of the claimant that it was the responsibility of the forwarders to arrange shipments for delivery to [factory location], and that it was of no concern to the claimant where the cargoes were discharged, so long as the cargoes were delivered to the [factory] site at the agreed contract rates. While it would have been much simpler for the forwarders to complete their tasks had [port D] been completed, the evidence does not convince us that the claimant was contractually bound to provide port facilities at [port D] or indeed, at [port C]. Accordingly, we find that the respondent was in breach of its contractual obligation in this respect.

36. Similarly, there is sufficient evidence available to satisfy us that the respondent was guilty of delay in terms of cargoes discharged at [port A] but left in storage there for several weeks. Clearly it was part of the forwarders' obligation under contract number 6021 to ensure prompt delivery to the [factory site] following discharge of the cargoes at [port A], and whilst we would regard it as reasonable in all the circumstances to allow the respondent a few days or a week after arrival of each vessel at [port A] to effect delivery at [factory site], the delays of 34 days, 31 days, and 43 days for the [vessel 1], the [vessel 2] and the [vessel 3] respectively were unreasonable.

. . . . . . . . .

Whether the respondent is entitled to limit liability under the terms of the contract

55. Clause 8.1 of contract number 6021 provides as follows:

The Forwarder shall perform his Services under this Contract according to generally accepted sound international standards of care, skill and diligence applicable to the class of services provided for therein. The Forwarder shall be liable for the direct loss or damage caused by this negligent act, error or omission to perform the Services in accordance with the standard of care and competence stated in preceding sentence.

The Forwarder shall, however, in no case be liable for any loss or damage arising from factors beyond his reasonable control, or for loss of production or profits, or any other indirect or consequential loss or damage. The Forwarder's liability shall be limited to a total aggregate maximum of USD200,000.

56. The first sentence of clause 8.1 appears to be a simple statement of the obligations which the forwarders had under the contract, whether or not that sentence was included in the clause. Although we find the language of the second sentence to be somewhat curious, it also seems to merely restate what would have been the position had the contract been silent.

57. It is when one considers the second paragraph of clause 8.1 that more difficulty arises. The provision that 'the Forwarder shall … in no case be liable for any loss or damage arising from factors beyond his reasonable control' again seems to state nothing more than would have been the position had the contract been silent, while the provision that 'the Forwarder shall … in no case be liable … for loss of production or profits, or any other indirect or consequential loss or damage' is a clear statement purporting to limit liability to losses other than those described. The question which we are obliged to consider, therefore, is whether the final sentence of clause 8.1 has the effect of limiting the respondent's liability for all claims to USD200,000 as the respondent contends, or whether it has the effect only of limiting liability where the loss or damage claimed was caused by negligence, as is maintained by the claimant.

58. In Ailsa Craig Fishing Co Ltd v. Malvern Fishing Co Ltd (1983) 1 Lloyd's Rep.183, Lord Fraser of Tullybelton, after noting the very strict principles to be applied when considering the effect of exclusion clauses or indemnity clauses in contracts, went on to state as follows (at 186):

In my opinion these principles are not applicable in their full rigour when considering the effect of clauses merely limiting liability. Such clauses will of course be read contra proferentem and must be clearly expressed, but there is no reason why they should be judged by the specially exacting standards which are applied to exclusion and indemnity clauses. The reason for imposing such standards on these clauses is the inherent improbability that the other party to a contract including such a clause intended to release the proferens from a liability that would otherwise fall upon him. But there is no such high degree of improbability that he would agree to a limitation of the liability of the proferens, especially when, as explained in … the present contract, the potential losses that might be caused by the negligence of the proferens or its servants are so great in proportion to the sums that can reasonably be charged for the services contracted for. It is enough in the present case that the clause must be clear and unambiguous.

59. In our opinion, clause 8.1, although to be judged by less exacting standards than clause 8.2, has the effect of limiting the liability of the respondent to USD200,000 in aggregate only for all loss or damage caused by the negligent act, error or omission by the forwarders to perform the contractual services in accordance with accepted sound international standards of care, skill and diligence applicable to the class of services provided for in the contract. Clause 8.1 does not limit the respondent's liability otherwise.

60. Accordingly, as in the case of clause 8.2, clause 8.1 operates to limit the respondent's liability in connection with the claimant's losses as described in paragraph 52.1 [delays and additional costs incurred by Claimant in connection with the shipments on the vessels 1, 2 and 3 which had to be discharged in port A], but does not extend to protect the respondent in respect of the claimant's losses as described in paragraphs 52.2 [delay in relation to the cargoes which were discharged at port A but left in storage for several weeks] and 52.3 [additional costs, expenses and other losses sustained by Claimant consequent upon the discharge of cargoes from ships 4, 5, 6 and 7]. As we have already determined that the claims described in paragraphs 52.1 are time-barred, this conclusion is academic. Nevertheless, we need to state that these claims are claims for loss or damage caused by the negligent act, error or omission of the forwarders to perform the contractual services in accordance with accepted sound international standards of care, skill and diligence applicable to the class of services provided for in the contract, whereas the claims referred to in paragraphs 52.2 and 52.3 do not arise in this way. To repeat what was said in paragraph 54, the claims described in paragraph 52.2 arise from deliberate decisions of the forwarders to hold cargoes in storage at [port A] (in the case of the cargoes discharged from [vessels 1, 2 and 3]), while the claims described in paragraph 52.3 arise from deliberate decisions of the forwarders to discharge cargoes from the ships [4, 5, 6 and 7] in Singapore, and to hold them there, notwithstanding their previous agreement to transport those cargoes to [port B] and on to [the factory site].'

1
Editor's note: The text is reproduced as in the original.