Cemile Sultan Bambal

Attorney

17.10.2023

Freight Forwarders And Responsibilities Thereof

FREIGHT FORWARDERS AND RESPONSIBILITIES THEREOF


INTRODUCTION

           Various institutions emerge during the course of life as people continue to live in communities. Among these institutions of need, transport activities have assumed an important role in commercial life. Transport works, which were previously used in short distances in daily life, later turned into international transport activities in various fields. Along with the rapidly developing production and commercial activities in the international arena, transport activities are also increasing rapidly. The law of carriage has brought along legal regulations due to its international importance day by day. 

        With the development of transport systems, the scope and responsibilities of the parties in the transport business have been determined by regulating the legislation on this subject. In addition to the concepts of the carrier and the shipper, there have emerged persons called freight forwarders who mediate the carriage of goods from one place to another. The responsibilities of these persons are regulated in detail within the framework of legal regulations. Thus, the responsibilities of the parties are determined by preventing arbitrary practices and a safe environment is provided to the parties with legal assurance. In this sense, in our study, we have tried to draw the legal framework of the persons called freight forwarders in Turkish law, and in this context, we have tried to explain the elements and responsibilities of the freight forwarder.

         Our study is focused on the issue of freight forwarders and their responsibilities. As mentioned above, the purpose of this study is to explain the freight forwarding, which has become a business field in the globalised world order, and to effectively convey the responsibilities of the freight forwarder. In this study, firstly, the definition, elements and types of the freight forwarder in Turkish law are explained and then the principles regarding the liability are mentioned.

 

I.              FREIGHT FORWARDERS UNDER TURKISH LAW

A.    Freight Forwarders in General

  With the development of carriage activities, it has become necessary to define the legal framework, scope and limits of these activities. In parallel with the development of carriage activities, the carriage relationship consisting of the carrier and the shipper has expanded, and the persons who take part in the carriage as a representative or principal, called freight forwarders, have emerged[1]. The freight forwarder carries out the carriage activities by proxy and becomes a party to the contract only on behalf of his client who authorises him to execute the contract of carriage on his behalf[2]

Article 3 of the Road Transport Law No. 4925 defines the carriage works. Accordingly, carriage is defined as "taking the passenger from the place where the passenger boards the vehicle or the goods are delivered to the carrier to the destination point". A freight forwarder is defined as "a person who has adopted the profession of transporting goods on his own behalf and on behalf of a client for a fee"[3]. There is no definition of carriage in the TCC. However, the TCC regulates "Freight Forwarder" in the sixth and last part of the fourth book titled "Carriage Business", between Articles 917- 930. While preparing the section of the new TCC No. 6102 on freight forwarding, the provisions of the German Commercial Code amended pursuant to the German Transport Law Reform Law (TRG) dated 25/06/1998 were taken as a precedent[4].

    A contractual relationship arises between the consignor and the freight forwarder and the subject of this contract is the carriage of the goods. This contract is a freight forwarding contract and the scope of the contract is that the freight forwarder undertakes the carriage of the consignor's goods for a certain fee[5].  Pursuant to the first paragraph of Article 917 of the TCC, "with the contract of freight forwarding, the forwarder undertakes to carry the goods. With this contract, the consignor is under the obligation to pay the agreed fee". Brokerage of carriage is only applicable for the carriage of goods. The consignor is under the obligation to pay the agreed fee with the contract of freight forwarding [6]. The main purpose of the freight forwarding contract is the organisation of the freight forwarding business, which is the main obligation of the forwarder[7]. However, although the forwarder is not under the obligation to transport the goods himself, he is under the obligation to ensure that the goods to be transported are at the place of destination at the specified time [8].

A freight forwarder is a person who undertakes to carry goods on his own behalf and on behalf of the consignor. In the activity of transporting goods from one place to another, the freight forwarder finds a carrier and concludes a contract for the carriage of the consignor's goods on his own behalf but on behalf of his client and undertakes the obligation to carry the goods. In this respect, it can be said that the commission agent is an indirect representative. This situation can also be stated in Article 922/ of the TCC as "the receivables arising from the contracts made by the forwarder on its own behalf and on its account...", which means that the forwarder is an indirect representative [9]

     According to the doctrine, the contract of freight forwarding is considered to be a service, work or agency contract, which can be considered as contracts of performance of work (obligation to perform) in terms of its legal nature [10]. The carriage of the goods is accepted as the basic obligation of the freight forwarder. However, it is also possible for the freight forwarder to undertake the carriage of the goods. As a rule, for the freight forwarder who undertakes the carriage of goods, Article 926 of the TCC grants the right to take over the carriage of the goods. 

     In terms of liability, in a normal case, the freight forwarder cannot be held liable for the acts of the carrier as a rule, since it fulfils its obligation to transport the goods by preparing a contract with the carrier and ensuring that this person transports the goods. However, since the freight forwarder who undertakes the carriage works within the scope of Article 926 of the TCC shall be deemed to be the carrier or the shipper, his liability shall be determined according to the provisions governing the carrier[11] [12]. In this case, the forwarder has the right to demand the carriage fee in addition to its own activity. 

B.    Elements

1.                 Undertaking the transport of goods

The freight forwarder undertakes to transport the goods delivered to him by the consignor and ensures that the goods are relocated and transported from one place to another [13]. What is important in the contract of freight forwarding is the goods. In this respect, in case of brokerage in the carriage of passengers, the provisions of the agency are applied, not the provisions related to the brokerage agreement[14]

In a freight forwarding contract, undertaking the carriage of the goods is a primary performance obligation, while the carriage of the goods is a secondary performance obligation [15]. The nature of the goods may be understood as the concept of goods that may be subject to the contract of carriage. Accordingly, the concept of goods includes all movable things that can be transported. For example, animals, corpses, liquid gases can be shown. Since things that do not have a corporeal existence do not fall within the concept of goods, they are not within the scope of the carriage works brokerage contract[16].

2.                 Wage

       Pursuant to Article 808/1 of the previous TCC No. 6762, the freight forwarding services shall be performed in return for a fee. According to Article 917/1 of TCC No. 6102, the fee is a mandatory element in the contract of freight forwarding. If the freight forwarding activities are carried out free of charge, it is generally accepted that they will be applied according to the provisions of proxy [17]

    As it is explicitly stipulated in Article 917/2 of the TCC, it is necessary to accept that they are merchants. In accordance with Article 20 of the TCC, it is recognised that the freight forwarder has the right to demand remuneration with the acceptance of being a merchant [18]. The fee may also be determined separately in the contract. Pursuant to Article 920 of the TCC, the commission agent pays the fee to the carrier upon delivery of the goods. In this respect, the fee becomes due upon delivery of the goods to the carrier [19].

3.
                 Continuity of Forwarding Activities
 
      According to Article 808 of the previous TCC, a freight forwarder is defined as "a person who has adopted the art of transporting goods on his own behalf and on behalf of a client in return for a fee". In order to be a freight forwarder, it was required to accept this business as a profession and to carry on this business continuously. In the TCC No. 6102, the term "freight forwarder" was amended as "freight forwarding is a commercial enterprise activity" (Art. 917/2 of the TCC) instead of the term "who has adopted it as a profession" in the former law. No explanation is provided in the preamble of the article. 

      The freight forwarder should select the carriers like a prudent merchant and should take the utmost care. There are opinions in the doctrine regarding the acceptance of the freight forwarder as a profession and its continuation as a continuous activity. According to Article 11/1 of the TCC, "commercial enterprise is an enterprise in which the activities aiming to provide income at a level exceeding the limit stipulated for a tradesman enterprise are carried out continuously and independently". The freight forwarder may carry out the intermediary business not only on a continuous basis, but also on an incidental basis, and in this case, the provisions of TCC 917 et seq. should be applied by analogy [20]. According to some authors, pursuant to Article 917/2 of the TCC, a freight forwarder should be regarded as a person who performs the intermediary activity on a continuous basis and should have adopted this business as a profession [21].

4.
                  Contractual Basis
    Freight forwarding is established with a contract. With the contract of freight forwarding, the commission agent undertakes to transport goods. The TCC does not limit the validity of the freight forwarding agreement in terms of medium. In addition to land transports, it can also be said that it is a contract that can be established in air and sea transports[22]. The contract of freight forwarding is not subject to a form. It can also be concluded orally [23]. For the establishment of the contract, the mutual declaration of will of the parties to each other is sufficient. Even if there is no contract between them before, the contract is deemed to be established when the consignor sends the goods to the freight forwarder and the activities are started by the freight forwarder. In practice, documents such as transport documents and invoices are used to prove this situation[24].

II.            PRINCIPLES REGARDING THE RESPONSIBILITY OF THE FREIGHT FORWARDER

A.    In General Terms

      Carriage brokerage is regulated under Article 928 of the TCC No. 6102. Article 928/1 of the TCC stipulates that the freight forwarder is liable for the loss and damage of the goods in his possession. Regarding the conditions of liability, reference is made to the provisions of other articles regulating the liability of the carrier. Within the scope of these articles, "Articles 876 to 878, 880 and 881 and the first, second and fourth paragraphs of Article 882 and Articles 883, 885 to 887 shall be applied to the freight forwarder by analogy". In addition, Article 929 of the TCC regulates the liability of the freight forwarder arising from his auxiliary persons. Article 929 of the TCC has no equivalent in the TCC No. 6762. In the preamble of the article, the liability of the carrier is regulated in the same content with the provision adopted in Article 428 of the German Commercial Code[25].

B.    Liability of the Freight Forwarder for Loss and Damage of Goods

     In the preamble to Article 875 of the TCC, loss and damage are defined as "the loss or destruction of the goods, and damage is the damage to the goods even though they still exist". In the law of carriage, loss is the inability of the carrier to deliver the goods received for carriage. The fact that the goods cannot be returned temporarily does not mean that they are lost [26]. In other words, situations where the goods are lost in such a way that they cannot be recovered again, in other words, the possibility of utilising a good is not possible, should be accepted as loss. 

     Damage to the goods is a concept related to the nature of the goods. The decrease in the material value of the goods can be defined as damage. For example, a bad odour or staining of the goods indicates a decrease in its economic value. On the other hand, in cases where the material value of the goods is almost zero, it is necessary to evaluate the goods as loss[27].

     In order for the freight forwarder to be liable, the above-mentioned elements must be fulfilled and a valid freight forwarding contract must exist. Another issue for liability is that the damage must occur in the possession of the freight forwarder[28]. For the consignor, the freight forwarder keeps the goods in his possession. In terms of possession, the freight forwarder holds the goods for the purpose of performance arising from the freight forwarding contract between the consignor and the consignee. For this reason, the sender is characterised as indirect possessor[29].

    Since it cannot be expected that the freight forwarder will diligently protect something that is not under his actual control, the consignor must first deliver the goods to the freight forwarder. In order for the freight forwarder to be held liable, he must be in possession of the goods for the purpose of performance within the scope of the obligations under the contract[30]. Regarding the legal nature of the responsibility of the freight forwarder, it can be said that it is a type of responsibility based on the breach of the duty of care. At the same time, there is a prevailing view that the liability is a fault liability. This is because, according to Article 928/1 of the TCC, we understand this from the provision of Article 876 of the TCC, which we will apply to the freight forwarder by analogy.

C.    Liability for Damages Other Than Loss or Damage to Goods

     Pursuant to Article 928/2 of the TCC, a freight forwarder is liable for damages other than loss or damage to the goods in his possession only if he breaches his obligations. If the damage cannot be prevented despite the due diligence of a prudent merchant, the forwarder is relieved from liability (TCC 928/2).  If the damage is also caused by an act of the consignor or a special defect of the goods, the extent to which these facts are effective shall be taken into consideration in the determination of the saturation and scope of the compensation obligation (Art. 928/3 TCC).

    Article 928 of the TCC, which regulates the activities of a freight forwarder, does not regulate the liability for damages due to delay. In terms of the carrier, there is no reference to the limited liability of three times the amount of the carriage fee due to the delay of the carriage period regulated in Article 875 of the TCC. However, in this case, there is no situation that the freight forwarder shall not be liable for the delay of the goods. In the event of damage or loss of the goods due to late delivery of the goods, the forwarder is liable for the damage with its fault[31].

D.    Liability due to Auxiliary Persons

    Since an auxiliary person is a person to whom the performance of an obligation is entrusted by the owner, auxiliary persons can be divided into two subcategories as "performance auxiliaries" and "utilisation auxiliaries". An assistant in performance is a person who, within the knowledge and will of the owner, performs an obligation belonging to him or participates in his activities, while an assistant in utilisation is a person to whom the use of the right arising from the debt relationship is entrusted [32]. The liability of the freight forwarder for the acts of the auxiliary persons whose services are used by the freight forwarder is regulated under Article 929 of the TCC. 

     Pursuant to Article 929 of the TCC, "The freight forwarder shall be liable for the acts and omissions of his own men, and of the persons he employs for the performance of the carriage, during the performance of their duties." There is no regulation regarding the fault of the auxiliary persons in this regulation. In this case, even if there is no defective behaviour arising from the auxiliary person, if the goods are damaged or lost, the freight forwarder may be held liable[33].

The auxiliary persons of the freight forwarder are divided into two as "persons of the freight forwarder" (Art. 929/1, a) and "persons whose services are used for the performance of the carriage" (Art. 929/1, b). The employees of the freight forwarder are the persons working in the business of the freight forwarder. The persons whose services are utilised for the performance of the carriage are the persons whose services are utilised by the freight forwarder for the performance of his obligations and who are not employed by him. These may be natural or legal persons. 

The CMR Convention does not contain any provisions on freight forwarding. However, Article 917 et seq. of the TCC contains provisions on the legal liability of the freight forwarder in accordance with Article 3 of the CMR. In this context, the provisions regarding the auxiliary persons may also be applied to the carriage subject to the CMR[34].

CONCLUSION

        With the development of transport activities, the concept of freight forwarder has emerged in addition to the concepts of consignor and carrier. A freight forwarder is a person who acts on his own behalf, on behalf and account of his client. Unlike the TCC No. 6762, special provisions have been introduced in the TCC No. 6102 regarding the liability of these persons. With this regulation, it is aimed to prevent mutual disputes. There is no limitation in terms of the medium in the contract of freight forwarding. The contract may be concluded for land, air and sea transport. 

      A freight forwarder undertakes the carriage of goods. While the commission agent undertakes the carriage of the goods with the contract of freight forwarding, the consignor has the obligation to pay the agreed fee. In order to be liable for the loss and damage of the goods undertaken to be transported, the goods must be in his possession. In order to be held liable for goods that are not in his possession, the commission agent must act in breach of his duty of care. 

    The liability of the freight forwarder for the auxiliary persons is regulated under Article 929 of the TCC. Article 929 of the TCC stipulates that "the freight forwarder shall be liable for the acts and omissions of his own men and the persons used by him for the performance of the carriage, during the performance of his duties, as if they were his own acts and omissions."

In conclusion, our comprehensive study on transportation agency and liability is important in the field of transportation law and logistics. Considering the opportunities and challenges that this subject brings, the liability of transportation agents is an important issue for companies and individuals operating in the transportation and logistics sector within the scope of Commercial and Corporate Law. The distinction between transportation agents and transportation organizers in Turkish law will also be decisive in determining the liability provisions to which these persons are subject. In this context, it is aimed to understand the subject of transportation agency and liability in depth and to make this information useful for those interested in the logistics field.

REFERENCES

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ADIGÜZEL, Burak:   | Transport Law (Except Maritime Trade), Adalet Publishing House, 2018.
AKDENİZ, Umut:   | "Carriage Business Broker's Taking Over the Carriage Business and Legal Consequences of this", İnönü University Journal of Faculty of Law, C.4, S.2, 2013.
AKDENİZ, Umut: | Carriage Business Broker, Gazi University Institute of Social Sciences, Department of Private Law, Ankara, 2013.
ARKAN, Sabih: | Commercial Enterprise Law, Banking and Commercial Law Research Institute, Ankara, 2018.
ARKAN, Sabih:  | "Provisions Regulating the Obligations and Responsibilities of the Freight Forwarder" (Obligations and Responsibility), AÜHFD, C. 37, S.1-4, 1980.
ARKAN, Sabih: | Commercial Enterprise Law, p.254; Ayhan, Rıza, Çağlar, Hayrettin, Commercial Enterprise Law, Yetkin Publications, 2017.
ASLAN DÜZGÜN, Ülgen:   | Freight Forwarder in Turkish Legal System, In Sıxth International Mediterranean Social Sciences Congress, C.3, S.5, 2019.
AYDIN, Hüseyin:   | Implementation of the Provisions of the Agency Agreement in the Carriage Brokerage Agreement, Seçkin Publications, 2019.
CONGAR, Hikmet Cem:  | Responsibility of the Carrier in Road Transport and Limiting Conditions, Seçkin Publications, 2022.
ERDİL, Engin:  | International Carriage of Goods by Road Law, Seçkin Publications, 2020.
ERİŞ, Gönen:  | Transport Law According to Turkish Commercial Code with Explained Grounds and Case Law, Seçkin Publications, Ankara, 2015.
KARAMAN, Özlem: | "Kara Taşımaları Taşıma İşleri Broker, Hakları ve Sorumluluğu", Marmara University Institute of Social Sciences, Unpublished Master's Thesis, Istanbul, 2000.
KARAN, Hakan:  | Law On The International Carriage Of Goods, 3rd. Edt., Ankara, 2013, p. 61.
KULA DEĞİRMENCİ, Nil:  | "Carriage Brokerage in the Light of the Relevant Provisions of the Turkish Commercial Code and the Regulation on the Organisation of Carriage", BATİDER, 2019.
KULA, Nil:  | Turkish Goods Transport Law, Seçkin Publications, Ankara, 2018.
MİSİLİ, Sinan:  | "The Legal Nature and Characteristics of the Forvarder Contract in the Light of the New Turkish Commercial Code and the 1998 German Transport Law Reform", IÜHFM, Vol. 23, S.2, 2015
 
[1]Kula, Nil, Turkish Goods Carriage Law, Seçkin Publications, Ankara, 2018, p.115.
[2]Congar, Hikmet Cem, "Carrier's Liability and Limiting Conditions in Road Transport", Seçkin Publications, 2022, p.46.
[3]Article 3 of the Road Transport Law No. 4925.
[4]Eriş, Gönen, Transportation Law According to Turkish Commercial Code with Explained Grounds and Jurisprudence, Seçkin Publications, Ankara, 2015, p.1055.
[5]Aydın, Hüseyin, Implementation of the Provisions of the Agency Agreement in the Carriage Brokerage Agreement, Seçkin Publications, 2019, p.20.
[6]Aslan Düzgün, Ülgen, The Freight Forwarder in the Turkish Legal System, In Sıxth International Mediterranean Social Sciences Congress, C.3, S.5, 2019, p.3.
[7] Karan, Hakan, Law On The International Carriage Of Goods, 3rd. Edt., Ankara, 2013, p. 61.
[8] Misili, Sinan, "In the Light of the New Turkish Commercial Code and the 1998 German Transport Law Reform, the Legal Nature and Characteristics of the Forvarder Agreement and the Correspondence of the Term Forvarder", IÜHFM, C. 23, S.2, 2015, p.269.
[9] Aslan Düzgün, Ibid, p.3.
[10]Eriş,Gönen, Ibid, p.1056.
[11] In the decision of Y. 11th H.D. E.9203, K.9408, T.08.05.2013, it was stated that the carriage forwarder should be accepted as the carrier for the following reasons "...in the concrete dispute, as stated above, the defendant issued the bill of carriage and delivered the goods to the non-suiting y. Kaplan, the sub-carrier, by taking the goods as collateral. In this respect, while the court should accept that the defendant is the carrier and decide accordingly, it was not deemed correct to decide to dismiss the case as written by relying on the expert report in the opposite direction, and it was necessary to decide to overturn the decision in favour of the plaintiff for this reason."
[12]Akdeniz, Umut, " Freight forwarder's taking over the carriage business and its legal consequences", İnönü University Journal of Faculty of Law, C.4, S.2, 2013, S.181.
[13]Adıgüzel, Burak, Transport Law (Except Maritime Trade), Adalet Publishing House, 2018, S.298.
[14]Arkan, Sabih, Commercial Enterprise Law, Banking and Commercial Law Research Institute, Ankara, 2018, p.254; On the contrary, the decision of the Court of Cassation on whether those who act as intermediaries in the carriage of passengers are considered as freight forwarders is Y. 11.HD. E.87/6089, K.88/871, T. 16.02.1988.
[15] Akdeniz, Umut, Transport Services Broker, Gazi University, Institute of Social Sciences, Department of Private Law, Ankara, 2013, p.11; The primary performance obligation is the obligation that constitutes the first degree content of the contract, while the ancillary performance obligation can be defined as an obligation that does not constitute the essential element of the contract.
[16]Akdeniz, Freight forwarder, p.13.
[17]Arkan, Sabih, "Provisions Regulating the Obligations and Responsibilities of the Freight Forwarder" (Obligations and Responsibility), AÜHFD, 1980, C. 37, S.1-4, S.313.
[18]Aydın, Hüseyin, Ibid, p.23.
[19]In the decision of the 11th Civil Chamber of the Court of Cassation, E 2003/12020, K. 2004/5851, it is stated as follows "... Pursuant to Article 808 of the TCC, a person who has the art of transporting goods on his own behalf and on behalf of a client in return for a fee is called a freight forwarder. According to Article 810 of the same Code, if it is clearly understood from the contract between the parties that the work undertaken by the forwarder consists of selecting a carrier on his behalf and concluding a carriage contract, as in the concrete case, the forwarder is entitled to claim his fee after delivering the goods to the carrier. In this respect, in order for the defendant's liability for carriage to commence, the cargo must be loaded on the vehicle sent by the defendant and the carriage must be carried out by this vehicle. Otherwise, if the carriage was made by another vehicle, not the vehicle sent by the defendant, the defendant cannot be held liable, since a causal link cannot be established between the damage caused and the defendant.".
[20]Eriş, Gönen, Ibid, p.1057.
[21]Arkan, Sabih, Commercial Enterprise Law, p.254; Ayhan, Rıza, Çağlar, Hayrettin, Commercial Enterprise Law, Yetkin Publications, 2017, p.538.
[22] For the contrary opinion stating that the contract of carriage brokerage can only be in question in the carriage of goods by land, see Karaman, Özlem, " Freight Forwarder in Land Transport, Their Rights and Responsibilities", Marmara University Institute of Social Sciences, Unpublished Master's Thesis, Istanbul, 2000, p21.
[23] Kula Değirmenci, Nil, ""Freight Forwarding in the Light of the Relevant Provisions of the Turkish Commercial Code and the Regulation on the Organisation of Carriage", BATİDER, 2019, p.29.
[24] The 11th Civil Chamber of the Court of Cassation in its decision numbered E.2016/2125, K. 2017/4051, T.03.07.2017 states as follows "...even though there is no written contract of carriage between the parties, there is no dispute regarding the carriage, the carriage was outsourced by the defendant to an out-of-court company, and the defendant is a commission carrier pursuant to Article 814/1 of the TCC (Article 926 of the TCC), and it is pointed out that there is no need to comply with any form for the validity of the contract of carriage brokerage".
[25] Eriş, Gönen, Ibid, p.1083.
[26] Arkan, (Obligations and Liability), p.47.
[27] Akdeniz, Ibid, p.110.
[28] Bursa Regional Court of Justice, 5th Civil Chamber, E. 2018/1425 K. 2019/223, in a decision dated 2.4.2019, states as follows "... In the contract with the seller, the transport cost belongs to the buyer. Therefore, the buyer has the right to file a lawsuit. The transport forwarder is responsible for the damage and loss of the goods in his possession in accordance with Article 928 of the TCC. For this reason, the defendant's objections to the appeal are not appropriate"
[29]Pursuant to Article 975 of the TCC, "the person who maintains actual control over a thing directly is direct possessor, and the person who maintains it through another person is indirect possessor."
[30] Akdeniz, Ibid, p.112
[31] Adıgüzel, Burak, Ibid, 309.
[32] Değirmenci, Kula, Ibid, p.42
[33] Akdeniz, Ibid p.123
[34] Erdil, Engin, International Carriage of Goods by Road, Seçkin Publications, 2020, p.94.