Cargo claims industry has become full of false information that has been perpetuated over the years. Even simple notions have been over complicated and messed up. When cargo is damaged in transit a question who has a right to claim and/or issue Letter of assignment to third party service providers oftentimes arise.
Letter of Assignment (LOA): the document, whereby the cargo owner assigns ownership of the Claim to third party and which authorises to act on behalf of the Client. This document may be in many shapes and forms, including, but not limited to Power of Attorney, allowing nominated party to negotiate claims and collect payment for the cargo damage or loss from the liable party on their behalf.
Only 3 parties can have a right to claim damage initially: exporter, importer or freight forwarder.
Here are the 3 mostly encountered scenarios which you can run into:
Receiver receives cargo with damages, cannot sell and is left with a financial loss.
Agreement states that receiver will pay remaining 90% of the invoice for the cargo on arrival,
Goods are shipped to the receiver,
Cargo is damaged in transit,
Receiver receives damaged cargo and does not pay to the shipper,
Shipper is left with financial loss,
As it is the shipper who carries the loss in this scenario, the sequence of the LOA is as follows:
No complications here. Same draft of LOA applies to all above.
It is worth noting, that cargo interests might have a claim directly against the shipping line in “tort” (i.e. a non contractual liability) on the basis that there is a duty in law to look after something of which you have custody or control of property belonging to a third party. In this instance, LOA from freight forwarder is not necessary.
So, in conclusion, we can see from the above scenarios that there must be a completed “chain” of subrogation for cargo owner to recoup his loss. Having gained the permission, through LOA/s, he can then appoint a third party to carry out the legal work required to recoup the loss, in turn providing the third party with an LOA to move forward on their behalf.