28 Jan 2010
Forwarder Cargo Receipt
Forwarder Cargo Receipt (FCR) was the topic for discussion at a seminar we conducted late last year, in view of its different applications in the freight industry that has led to great confusion as to the role and function of the document in different scenarios. The FCR in its original form is just a simple cargo receipt. Its real-life usage however, has undergone a lot of modifications as forwarders are susceptible to the demands of exporters and importers. A grasp of the FCR application is therefore important to help ensure smooth operations and long-term loss prevention.
Q1. Is FCR transferable?
A. It all depends on the terms of the particular FCR. However, we have not seen any FCR stating that it is transferrable. We think this is mainly due to the fact that most of the FCRs in the market are not documents of title to the cargoes, and hence not being able to go even one step further to be transferable. Nevertheless, there is no law disallowing a FCR to be transferable. It is all about freedom of contract, and up to the decision of the parties (e.g. the forwarder, shipper and consignee) as per the contract.
Q2. If a shipper makes a valid change request and the consignee claims delivery both at the same time – who should we follow? What can we do to protect our interests?
A. The forwarder would not be in the position to decide whether to follow the shipper's new instruction or the consignee's cargo delivery demand. The reason is: the forwarder does not know whether the shipper or the consignee is the cargo owner. When the shipper and the consignee are competing for the cargoes. The forwarder should advise the shipper and the consignee to sort out the problem between themselves, and thereafter to give a joint instruction to the forwarder as to how to deal with the cargoes. In case the shipper or the consignee sues the forwarder for cargo delivery, the forwarder should join the other party to the same legal proceedings and let the court decide which party i.e. the shipper or the consignee has the right to take cargo delivery. Alternatively, the forwarder may take the initiative to commence an interpleader action in court against the shipper and the consignee, asking the court to decide to which party the forwarder should deliver the cargoes.
Q3. Buyers consolidation - the consignee can issue OBL consolidating many FCRs, hence the forwarder has no control of the shipment once it had been sent to the terminal. If a shipper requests the surrender of the FCR and the forwarder can not concede, what are we to do?
A. If it is the agreement between the parties (i.e. the forwarder, shipper and consignee) that the forwarder needs to issue its FCR to the shipper after the forwarder receives the cargoes from the shipper, then the forwarder should honour the agreement and go ahead and issue the FCR to the shipper. As it appears that the consignee is responsible for the subsequent consolidation and ocean carriage of the cargoes, it is likely that the FCR issued should state clearly that the forwarder is acting on behalf of the consignee to receive the cargoes from the shipper. In other words, once the cargoes are received by the forwarder, they are received by the consignee; hence the subsequent consolidation and sea carriage arranged by the consignee.
Q4. What are the laws governing the FCR (with blank back page) in China?
A. We think the PRC Maritime Code and the PRC contract laws would apply to FCRs in China.
Q5. Are there reference books or websites that introduce FCR use in China?
A. We are sorry but we have no information on these. However, we think the FCR in China is still after all a matter of contract and agreement among the parties (i.e. the forwarder, shipper and consignee).
Q6. What are the laws governing the FCRs (with blank back pages) in the other countries (e.g. Turkey)?
A. We think local contract laws in the particular country would govern the FCRs.
Q7. If we issue FCR (purely as cargo receipt for the consignee) to our customer, and the FCR is on our letterhead stationery with no back page terms, will there be any problems?
A. Provided that your FCR front page states clearly (i) you act for the consignee to receive the cargoes and (ii) your receipt of cargoes means the consignee's receipt of cargoes, the absence of the back page terms should be acceptable as (i) you do not have the contract with the shipper but the consignee and (ii) you will have separate subsequent contract terms with the consignee e.g. warehousing contract, local distribution contract, booking agency contract, or contract of carriage evidenced by your HB/L as appropriate in accordance with the consignee's instructions. Moreover, you can also print at the bottom of the FCR front page referring to e.g. you are doing all your business subject to your standard trading conditions (a copy is available upon receipt) which may limit or exempt your liability in certain circumstances.
Q8. The consignee under the FCR actually gives an instruction to the forwarder transporting the goods by air to a third party which will be stated as consignee under the air waybill. Therefore, the consignee under FCR and air waybill will be different, will there be any conflict?
A. If the FCR is a pure cargo receipt issued by the forwarder for the consignee (i.e. the forwarder on behalf of the consignee receives the cargoes from the shipper), there will be no conflict as the forwarder needs to listen to the consignee's instructions after the forwarder's receipt of the cargoes from the shipper. It so happens that the consignee subsequently instructs the forwarder to ship out the cargoes by air to a third party as consignee under an air waybill where the consignee under the FCR becomes the shipper.