The Legal Nature of the Freight Forwarding Contract: Foreign Experience and Russian Understanding

Keywords: carriage of goods, freight forwarding contract, intermediary contract, commission contract, agency contract.

Introduction

A freight forwarding contract is defined in the Civil Code of the Russian Federation¹ (hereinafter – the CC RF) through the obligation of one party to perform or arrange for the performance of services defined by the freight forwarding contract, such services shall relate to the carriage of goods (Art. 801). Paragraph two of the same Article lists some examples of such services. This list is open. Such a broad definition of the freight forwarding contract does not make it possible to establish the specific features which characterise it. For example, a comparison of the definition of freight forwarding contract and carriage of goods contract contained in Art. 785 of the CC RF and Art. 115 of the Merchant Shipping Code of the Russian Federation² (hereinafter – the MSC RF) demonstrates that the subject matter of a freight forwarding contract may also cover the performance of carriage itself. This is confirmed by the wording of the provisions in regard of the said obligations in Paragrphs 25–29 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 26 (hereinafter – Resolution No. 26) dated 26 June 2018 “On certain issues of application of legislation on the contract of carriage of passengers and luggage by road and on the freight forwarding contract”³ , which states that in certain cases the forwarder undertakes the obligations of a carrier and must be liable as a carrier. A similar conclusion may be drawn from a comparison of freight forwarding and, for example, stevedore services contract. Both of these contracts relate to the carriage of goods. The stevedore contract may also be covered by the definition of a freight forwarding contract from the CC RF.

Therefore, a freight forwarding contract may absorb obligations which are characteristics of other contractual types. This situation is important due to the fact that the freight forwarder’s liability is limited (Art. 6-8 of the Federal Law dated 30 June 2003 No. 87-FZ “On freight forwarding activities”⁴, hereinafter – the FL “On FFA”). In addition, there are also certain procedural peculiarities related to making a claim against the freight forwarder and limitation of action, the FL “On FFA” provides for a shortened limitation of action (1 year) for claims arising out of the freight forwarding contract. Also, a special pre-claim procedure is provided.

In view of the above mentioned ambiguity of the scope of the freight forwarding contract, it may arise a situation where the protection of a freight forwarder is enjoyed by an entity who, for example, carries out storage or stevedore operations.⁵ It becomes advantageous for such an entity to call itself a freight forwarder, as this would give it a preferential position in the obligation. In order to avoid such situations, it is necessary to define the scope of binding obligations that may be regulated by legal provisions on freight forwarding. In this connection, it is necessary to determine the rights and obligations which can and must arise from the freight forwarding contract, i.e., the subject matter of the freight forwarding contract and its legal nature.

The purpose of the article is to determine the legal nature of a freight forwarding contract in Russian law. In order to achieve this goal, it is necessary to determine the economic nature of the said contract, its subject matter and the basis of the freight forwarder’s liability in the said relations.⁶ In addition, within the framework of the present study, foreign experience in regulating freight forwarding relations, in particular, in English, French and German law, is also considered. These legal orders have not been chosen by chance, they are some archetypes of the understanding of freight forwarding, which will be outlined below.

I. Economic Nature of the Freight Forwarding Contract

The role of the freight forwarders in international transport chains may be described by the phrase “architect of transportation”⁷. This economic model of freight forwarding is expressed in several functions which are highlighted by the International Federation of Freight Forwarders Associations (hereinafter – the FIATA): advisory, loading, information, documentary, chartering, consolidation, insurance, logistics, supervisory, quasi-financial and transport (shipping) functions.⁸ These predetermine the position that the freight forwarder occupies in the transportation schemes.⁹

To understand the role of the freight forwarder more clearly, we shall look at the following example. Cargo needs to be transported from country A to country B by three modes of transport: road, air and water. It is not enough to conclude a contract with three different carriers in this respect; it is also necessary to arrange for transhipment, issue the transport, customs and other documents, arrange for cargo and carriers’ liability insurance in accordance with the rules of the jurisdictions in which the cargo will be in the course of carriage. Besides, carriers may be incorporated in different jurisdictions with differently regulated of carriage contracts, which affects negotiation process and pricing. All this creates conditions in which a business that needs to deliver goods from country A to country B has to bear high transaction costs due to logistical difficulties. A freight forwarder emerges to reduce such costs and to take on the responsibility of organising the transport process.¹⁰

As we may see, the role of the freight forwarder in the transport process is complex and absorbs characteristics of various economic activities.¹¹ The freight forwarder assumes many functions. Such functions, in turn, are aimed at the single objective of ensuring the safe transport of goods from one point to another.

II. Subject of the freight forwarding contract

1. England. Agent v. Principal

It is difficult to define a term “subject matter” in English law because of the principle of freedom of contract, which applies fully to all contractual terms.¹² In such a case, there are no strict statutory rights and obligations specific to the particular contract. The English court interprets primarily the will expressed by the parties, which subsequently receives legal protection.¹³

However, in English practice and doctrine, the role of the freight forwarder is generally divided into two types: that of principal and that of agent. The main criterion is the formation between the freight forwarder’s customer and the carrier of a privity of contract.

If the freight forwarder assumes the obligation to perform the carriage itself or through its servants, the freight forwarder is a principal.¹⁴ In such a case, the freight forwarder concludes contracts with the persons performing the carriage in its own name, and no privity of contract is formed between the freight forwarder’s customer and the carrier.¹⁵

If the freight forwarder facilitates the carriage of the goods, but a direct bond is formed between the carrier and the shipper (the freight forwarder’s customer)¹⁶, the freight forwarder is acting as an agent.¹⁷ A privity of contract between the actual carrier and the shipper may be evidenced by the direct issue of a transport document from the carrier to the shipper (the freight forwarder’s customer) or by a direct indication in the freight forwarding agreement that the freight forwarder is acting as an agent. However, the mere fact of privity of contract between the shipper and the carrier does not always relieve the freight forwarder-agent from liability for the actions of persons with whom it has contracted on behalf of its customer. For example, the freight forwarder-agent may bear the liability for the acts of persons with whom it has entered into such contracts by itself.¹⁸ In this sense, English law fully respects the above mentioned principle of freedom of contract and the contract may provide for very various combinations of the freight forwarder’s functions, duties and liabilities.¹⁹

If the freight forwarder assumes the duty of carriage, the freight forwarder is considered by the law to be the carrier, subject to according regulation, including limitation of liability of the carrier.²⁰ However, if as a general rule the contract stipulates that the freight forwarder acts as principal (e.g. if such a freight forwarder has issued a bill of lading²¹), but it can justify that it has acted as an agent and has not assumed the obligation to perform the carriage, then it is therefore not liable as carrier.

Therefore, the role of the freight forwarder in each individual case is determined independently, depending on the particular circumstances of the case and the actual legal position of the parties in relation to the obligation. This position is particularly relevant in cases of complex transportation of goods, where the freight forwarder carries out a certain part of the transportation itself and, for the rest, acts as an agent and creates a binding relationship between his customer and the actual carrier.²² In this case, the freight forwarder acts as an agent in one part of the transportation and as a principal in the other part.

In addition, a separate type of freight forwarding is distinguished where the freight forwarder is the bailee or quasi-bailee of the cargo. In such a case, the freight forwarder has control and liability for the safekeeping of the cargo (bailment) or assumes responsibility for the safekeeping of such cargo without actual storage thereof (quasi-bailment), but not during carriage and only within the activities taken place prior to carriage itself, such as transhipment or warehousing at port.²³ In such a case, the freight forwarder does not change from agent function to freight principal one.²⁴ Only the additional duties and responsibility are imposed on him.

Generally speaking, this division of the role of freight forwarders into principal and agent according to the criterion of the formation of privity of contract between the person actually performing the carriage and the freight forwarder’s customer does not absolutely prejudge the regulation of the binding relationship between the freight forwarder and the customer. It does not limit the principle of freedom of contract. In such a case, the “subject matter” of the freight forwarding contract is not crystallised.

Therefore, in English law, the role of the freight forwarder is of two types: the principal freight forwarder and the agent freight forwarder. The criterion for the division is the existence of privity of contract between the freight forwarder’s customer and the carrier.

2. Germany. A contract without subject matter

Traditionally in German law, the freight forwarding contract was an intermediary contract and was contained in the chapter of the German Commercial Code (BGB)²⁵ on intermediation together with the contracts of commission and agency. However, due to the 1998 transport law reform, the regulation of the freight forwarding contract in the BGB was relegated to other “transportation” contracts and the characterisation of such a contract as an intermediary contract was sidelined.²⁶

The definition of freight forwarding that existed before the transport law reform corresponds to the present definition of the contract in Austrian law.²⁷ According to this definition, the freight forwarding contract is defined by the freight forwarder’s obligation to organise the transportation of goods in its own name but in the interest of the shipper. At the same time, the regulation of the freight forwarding contract is optionally subject to the provisions of other intermediary contracts.²⁸

As a result of the German transport law reform, freight forwarding has been given a more general definition based on an enumeration of the freight forwarder’s duties (§ 453 of the BGB). However, this definition retained the characteristic of the freight forwarder as an agent²⁹ who arranges carriage in its own name but in the interest of the shipper (para. 3 of § 454 of the BGB). However, the direct reference to the commission nature of freight forwarding has been removed. The freight forwarder, for example, is obliged to follow the instructions of its client in carrying out its obligations (para. 4 of § 454 of the BGB).

The commission nature of the freight forwarding contract is the core that defines such a contractual type. Separately note that the commissioner traditionally performs legal rather than actual actions, establishes binding relations with counterparties in its own name but in the interest of the client.³⁰ This understanding of the commission nature of the contract predetermines its legal regulation. For example, rules on mandatory assignment or the obligation to follow the instructions of the commission agent are applied. The commissioner conducts someone else’s business. This must be stressed in order to understand the nature of freight forwarding contract in Germany.

At the same time, in line with the worldwide trend of freight forwarding regulation, in Germany, the freight forwarding contract may also involve the freight forwarder carrying out the transportation itself (§ 458 BGB). In such a case, he acquires rights and bears duties of the carrier.³¹ In this context, it is also important to bear in mind the narrow understanding of the German carriage contract, which is limited directly to the delivery of the goods. Therefore, freight forwarders who carry out the carriage themselves (i.e. have issued a transport document, a bill of lading) are subject to the provisions of the carriage in direct contractual relation with the shipper. This regulation is in line with the freight forwarder’s transport function highlighted in the first part of this article. A similar solution applies to cases where the freight forwarder performs certain duties specific to other contracts, such as a storage or stevedore contract. The provisions of the respective contracts apply to such a freight forwarder.

In view of the above, it may be concluded that the freight forwarding contract in Germany has virtually no subject matter. The freight forwarding contract is practically always regulated analogously to the other types of contracts. This is also evident from the predominantly referential way in which the freight forwarding contract is set out in the BGB.

3. France. Organisation of transportation from beginning to end

In France, the freight forwarding contract is defined through the freight forwarder’s obligation to organise the carriage under his own responsibility, in his own name, but in the interest of the shipper.³² The commission nature of the freight forwarding is also evident from the very name of the freight forwarder used in French “commissionaire du transport” (French “transport commissioner”, Art. L132-3 of the French Commercial Code (hereinafter the FCC).³³

Court practice distinguishes two main duties of the freight forwarder for which the customer pays: the organisation of the carriage and the carriage itself.³⁴ However, this position is contested in the doctrine, which, based on the nature of freight forwarding activities, sees only one obligation of the freight forwarder – the carriage, which it organises “from beginning to end”.³⁵

However, it should be borne in mind that within the framework of freight forwarding activities there are two contracts: between the freight forwarder and the customer and between the freight forwarder and the carrier. In the relationship between the freight forwarder and the customer, the freight forwarder acts as an agent and, accordingly, his rights, duties and liabilities are formulated based on the commission nature, with the specific features of the said contract characteristic of the French legal order. Nevertheless, the main characteristic of the commission contract is still the performance of legal acts in its own name but in the interest of the customer. In the relationship between the freight forwarder and the carrier, the freight forwarder is the shipper, with the according legal consequences.³⁶

In French law, the nature of freight forwarding is of commission nature.³⁷ The three types of status of the person providing the freight forwarding service shall be clearly distinguished: the freight forwarder, who acts as an agent and is not liable for the carriage of the goods; the contractual carrier, who does not perform the carriage but assumes responsibility for its performance; the carrier, who actually performs the carriage.³⁸

Therefore, French law, in contrast to the other legal orders analysed, expressly singles out the object of the freight forwarding contract which is the organisation of the carriage from the beginning to the end. In this regard, the French legal order has developed its own regulation of rights and obligations under the freight forwarding contract. The qualifying feature of the freight forwarding relationship becomes the activity of the freight forwarder during the whole process of carriage (duration) and the connection of such activity with the carriage.

4. Freight forwarding under Russian law

In Russia, the subject matter of a freight forwarding contract is set out in Art. 801 of the CC RF pursuant to which a freight forwarder undertakes to perform or arrange for the performance of services connected with the carriage of goods. Such definition creates an extremely broad scope of activities which may fall under freight forwarding contract. In this regard, there is ambiguity in Russian doctrine as to the legal nature and subject matter of the contract in question.

The following ways of defining the nature of freight forwarding in Russian doctrine may be distinguished:

• freight forwarding as a type of service contract³⁹;

• freight forwarding as a separate from others type of contracts in Russian law⁴⁰;

• freight forwarding as a type of intermediary contract, recognising the complexity of its legal nature.⁴¹

Authors who refer to the contract of carriage as a type of a contract for the rendering of paid services point to the fact that the freight forwarder’s activity does not produce any tangible result, as well as to such a characteristic of the service as “the simultaneity of its rendering and receipt”.⁴² Nevertheless, the definition of the legal nature of freight forwarding as a service does not bring any clarity to the definition of the activity performed by the freight forwarder. The criteria used to define a service in Russian law (Art. 779 of the CC RF) are so vague that virtually any contract can be classified as a service. Some authors, for example, refer intermediary activities to the services: commission and agency contracts.⁴³ In this context, our position is not that a freight forwarding contract cannot in any way be attributed to contracts for the provision of compensatory services under Russian law, but that such attribution does not introduce any legal certainty into the relations in question and is pointless at the current stage of development of Russian law.

A similar criticism can be applied to the position that freight forwarding forms its own type of binding relationship which cannot be attributed to any other varieties of contracts present in Russian civil law. In favour of such an understanding, A.V. Dineka points out that freight forwarding has a complex structure of relations between the client and the freight forwarder which has features “only externally (italics mine - B.K.) characteristic of other types of civil law obligations (paid services, storage)”.⁴⁴ In turn, S.Yu. Morozov justifies the impossibility of attributing freight forwarding to any of the existing types of contracts by the fact that freight forwarding is an accompanying contract and “cannot exist without an independent transportation obligation”.⁴⁵ At the same time, these authors deny the possibility of recognising freight forwarding as a complex contract and attribute, for example, freight forwarding to the freight forwarding activity of storing cargo or stevedoring it, denying the possibility of applying the provisions on other contracts analogously. Therefore, the said authors define a freight forwarding contract as a separate type of contract but, at the same time, they do not define the subject matter thereof.

In his turn, A. V. Egorov concludes that freight forwarding contract incorporates characteristics of various contractual types.⁴⁶ At the same time, he points out that the original understanding of freight forwarding was based on the intermediary nature of the freight forwarder’s activity, which in modern law is expressed in the freight forwarder’s power in his own name or on behalf of the client to conclude contracts aimed at carrying out transportation. This, in turn, makes it possible to apply to freight forwarding the provisions on commission and agency analogously.⁴⁷

In turn, the complex nature of the legal nature of freight forwarding activities is connected with the fact that the legislator uses for this contract a unique way to determine its specific features: not on the basis of the subject matter of the contract, i.e., the rights and obligations of the parties, but on the basis of its object, i.e., the social relations under which such contract is concluded – transportation of goods.⁴⁸ In this context, the use of various contractual structures in freight forwarding does not form the category of a mixed contract since, within the meaning of civil law, such a contract exists as a separate binding relationship. Nevertheless, it is impossible to deny the complex nature of a freight forwarding contract. In this context, we use the term “complex” contract in relation to freight forwarding in order to indicate the complex legal characteristic of freight forwarding activities but at the same time not to create confusion in the understanding of the term “mixed contract” (Art. 421 of the CC RF).

In our opinion, the forwarding activity is initially characterised by an intermediary nature which is expressed in the freight forwarder’s obligation to conclude transactions on behalf of and for the account of the customer, or on his own name and for the account of the customer. This understanding of freight forwarding is supported by the fact that the freight forwarder conducts someone else’s business. For example, Art. 3 of the FL “On FFA” indicates that the freight forwarder cannot deviate from the customer’s instructions unless this is necessary in the interest of the customer and unless the freight forwarder cannot request a corresponding instruction from the customer, and the customer, in turn, may request information on the progress of the freight forwarding.

Such a regulation in the case of the conduct of one’s own business is essentially meaningless, as a person can dispose of its business without the consent of any third party, including its counterparty. The consequence of the improper performance of an obligation by such a person would be a breach of contract and the liability it incurs to its counterparty. Therefore, in the case of conduct of one’s own business, there are two chains of relationships: client – executor, and executor – contractor, which, unlike in the case of intermediation, are not intertwined with each other. It is also noteworthy that the freight forwarder does not organise the transportation of his own cargo but that of its client.

However, if the freight forwarder performs any other services, e.g. stevedoring, such activity is not of an intermediary nature, as the person carries out his business with a clear result which is that the goods must be loaded, close interaction with the customer in this case, although desirable, is not a necessary characteristic of such a contract. At the same time, the organisation of the transportation process, which consists in making a binding relationship with counterparties, creates a situation in which the freight forwarder is not conducting its own business but that of its customer, for example, entering into contracts in its favour and creating for its customer direct or indirect binding relationships with actual performers. Such creation ultimately affects the customer’s position in such binding relationships and shall be subject to its will.

Such definition of the subject matter of freight forwarding activities is important because separate rules on liability and related circumstances have been established for freight forwarders, e.g., limitation of liability (Art. 6, 7 of the FL “On FFA”), reduced limitation of action for claims against the freight forwarder (Art. 13 of the FL “On FFA”) and others. Unreasonable expansion of the subject matter and, in this case, its complete absence creates a situation where it will be profitable for stevedores, bailees and other persons to call themselves “freight forwarders” and thereby enjoy a preferential liability regime.⁴⁹ The regulation of freight forwarding, at the same time, would not prevent such an abuse of right but, on the contrary, would encourage it by listing this type of “service” in para. 2 of Art. 801 of the CC RF.

Special attention should be paid to the fact that the freight forwarder may perform the carriage of the goods itself. This possibility is in line with the worldwide trend of the contract regulation (transport function). However, it should be noted that if the freight forwarder carries out the carriage of goods, it becomes a carrier, and the relevant provisions should be applied.⁵⁰

Therefore, freight forwarding is a complex contract which covers different types of contracts. The true freight forwarding (“freight forwarding by default”), however, is an intermediary contract. Where the freight forwarder undertakes to perform other services, the regulation of such activities of the freight forwarder shall be in accordance with those contracts to which the law attributes the performance of the relevant obligations. This understanding also correlates with the provisions on the interpretation of a contract (Art. 431 of the CC RF) pursuant to which the interpretation of a contract shall be based not on its title but on the rights and obligations of the parties to the relevant binding relationship in order to avoid abuse of right by the parties to such a contract.⁵¹

III. Freight Forwarder’s Liability and Related Circumstances

The liability under the freight forwarding contract, in all legal systems, corresponds to the breach of obligations under such a contract. It is noteworthy that freight forwarding may be of a different nature, intermediary activity, carriage, etc. We will consider the general characteristics and grounds of the freight forwarder’s liability, depending on the obligation he undertakes.

1. Freight forwarder liability under English law

As noted above, the freight forwarder’s liability when he assumes responsibility for the carriage is determined in accordance with the carriage regulations.

It is more interesting, in this context, the freight forwarder’s liability when the freight forwarder acts as an agent. The basis of the freight forwarder’s liability is the duty of care.⁵² The duty of care in English law is defined by the obligation of the agent⁵³ to conduct business and to look after the interests of its customer as if the agent were conducting its own business.⁵⁴ The same duty is incumbent upon the freight forwarder, who is the owner or quasi-owner of the goods, to take care of the goods as if they were its own.⁵⁵ In this regard, the freight forwarder-owner can avoid liability⁵⁶ for damage to the cargo if it proves that it has exercised the degree of care and diligence that it would have exercised in storing its thing.⁵⁷

In addition to the fundamental duty of care, the freight forwarder is also liable for the performance of the obligations that he has undertaken and for going beyond the powers that has been granted to it.⁵⁸ At the same time, the freight forwarder is given such information as is necessary for the performance of its functions, the disclosure of such information without the customer’s consent is also grounds for imposing liability on the freight forwarder.⁵⁹

In general, the liability of the freight forwarder acting as an agent is fully comparable to that of an ordinary commercial agent in English law. However, the economic function of the freight forwarder is so broad that he may undertake obligations corresponding to other models of liability, including strict liability of the freight forwarder for failure to fulfil them. In such a case, the limits and grounds of the freight forwarder's liability shall be determined by the court in accordance with the obligations he has undertaken.⁶⁰

If the freight forwarder assumes the role of principal, he becomes the contractual carrier in the relevant relationship and is liable in the same way as a carrier.

2. Freight forwarder liability under German law

The liability of freight forwarders under German law is determined in accordance with the obligations imposed on such a freight forwarder by the contract (§ 461 BGB)⁶¹ . This is primarily due to the fact that freight forwarding in Germany does not have its own unambiguously defined subject matter. In addition, the freight forwarder is responsible for the bailment of the goods he has accepted for forwarding. However, if the freight forwarder has not taken over the security of the goods, he shall only be liable to the extent that his actions resulting in damage to such goods were not consistent with the conduct of an ordinary merchant under similar circumstances.

The freight forwarder’s liability in Germany depends on the existence of a guarantee for the safe of the goods accepted for forwarding, or the absence of such a guarantee. If a guarantee is present, the freight forwarder is strictly liable; if there is no guarantee, the freight forwarder’s liability is limited to its fault or gross negligence.⁶²

However, if the freight forwarder undertakes the obligation to perform the carriage by itself, it acquires the status of a carrier, and its liability is defined in the same way as the carrier’s one (§ 458 BGB).

3. Freight forwarder liability under French law

The freight forwarder's liability under French law is based on the fact that it undertakes to organise the carriage of the goods from beginning to end and is therefore liable for transportation course.⁶³ The basis of the freight forwarder's liability is based on the relevant obligation.

Thus, the freight forwarder shall guarantee delivery of the goods to the place of destination within the time limits of the contract (Art. L132-4 of the FCC). In such a case, the freight forwarder’s liability will be determined by the obligations which the freight forwarder bears, and the guarantees given by such it in the contract.⁶⁴ The freight forwarder is liable for damage to the goods, unless otherwise stipulated in the contract (presumption of the freight forwarder’s liability for the safe of the goods, Art. L132-5 of the FCC).

In general, the limits of the freight forwarder’s liability in French law are determined by the contract and by the obligations imposed on the freight forwarder. However, as a general rule, the freight forwarder assumes the guarantee of safe delivery of the goods from the beginning to the end and is therefore liable in the event of failure to do so.

We note another peculiarity of the regulation of freight forwarding in France. If the freight forwarder is unable to fulfil his obligation to pay for the carriage to an actual carrier hired, the actual carrier may demand payment from the shipper or the consignee under its contract with the freight forwarder, even though such shipper and consignee are not parties to the relevant obligation (le méchanisme de l'action directe).⁶⁵ This situation applies, for example, if the freight forwarder has declared bankruptcy.

4. Freight forwarder liability under Russian law

The Russian Civil Code states that the freight forwarder's liability is determined in accordance with the general rules of liability of the parties to a binding relationship, and if the freight forwarder proves that the breach of the freight forwarder's obligation is due to the actions of the carrier, its liability is determined according to the rules of the carrier’s liability towards the forwarder (Art. 803 of the CC RF). Such definition of liability does not give a clear understanding of the nature of the freight forwarder’s liability and the grounds for its occurrence.

At the same time, there are several Articles in the Federal Law “On FFA” dealing with the freight forwarder’s liability. Art. 6 of the said Law defines general grounds of the freight forwarder’s liability. Art. 7 states the freight forwarder’s liability in case of damage or loss of goods accepted for forwarding. Art. 8 regulates the freight forwarder’s liability for breach of time limits of performance of its obligation. Acceptance of the goods for freight forwarding shall be confirmed by a special document, a freight forwarding receipt, or by other evidence. Such documents have only an evidentiary function, which is narrower than that of a bill of lading.⁶⁶ The limitations of the freight forwarder’s liability specified in the above articles apply only if the freight forwarder proves that the breach of obligation was not due to his fault or gross negligence (presumption of fault of the freight forwarder, principle of impossibility of limitation of liability for fault).

When examining the legislative provisions of the CC RF and the Federal Law “On FFA” concerning freight forwarding contract, we see that such regulation covers only those cases where the cargo has been accepted for forwarding. In judicial practice, this criterion actually means that the said articles apply only when the freight forwarder has accepted the obligation to carry out the transportation itself.⁶⁷ Such an obligation of the freight forwarder is expressed in the fact that the freight forwarder gives a guarantee of safe delivery of the goods, whether or not it has actually performed such carriage.

As the regulation of the freight forwarder’s liability in the FL “On FFA” is based on the freight forwarder’s obligation to perform the carriage itself, the freight forwarder’s liability for safe delivery of the cargo actually contains the limits of liability which are the same to the limits of the carrier’s liability (e.g., Art. 169 of the Merchant Shipping Code of the Russian Federation, hereinafter – the MSC RF⁶⁸).

However, the functions of the freight forwarder are much broader than those of the carrier. As stated above, the freight forwarder-carrier is only one of the possible formation of a binding relationship between the freight forwarder and the customer. However, Russian regulation of this institution is based on forwarding-carriage and does not regulate other types of forwarder-customer relations, unlike, as was shown above, in foreign legal orders. This situation leads to the fact that if the freight forwarder does not provide services for the carriage of goods and does not undertake to guarantee the safe delivery of them, the relationship between the freight forwarder and the carrier remains in a regulatory vacuum. In this context, the arguments of Russian authors that provisions governing other contractual types cannot be applied to freight forwarding by analogy actually create an impossibility to regulate freight forwarding at all.

However, the special regulation of freight forwarding-carrier set forth in the FL “On FFA” does not add clarity to the regulation of freight forwarding, as the legal position of the freight forwarder-carrier shall be based on the rules of carriage. There is no need for additional regulation of freight forwarding-carrier in Russian law.

Therefore, when examining the provisions of Russian legislation and court practice regarding freight forwarder liability, we see that the forwarding-carriage is over-regulated by the legislator, while other types of freight forwarding remain in a regulatory vacuum. Moreover, in some cases this over-regulation leads to the fact that persons assume obligations which are not in any way related to freight forwarding activities but enjoy the limitations of the freight forwarder’s liability.⁶⁹

In our opinion, in order to change this approach of Russian law to freight forwarding, it is necessary at the level of doctrine and judicial practice to develop an approach according to which relations under a freight forwarding contract shall be regulated in accordance with those obligations which the freight forwarder undertakes and those guarantees which it gives. At the same, these obligations and guarantees are the characteristics of other contracts. So, the provisions regulating such contracts shall be applied. The intermediary nature of the freight forwarding activity shall be taken into account, unless the contract provides otherwise. In the case of a freight forwarder assuming many obligations, such as carriage, stevedoring and agency, its liability shall correspond to the obligations which it has actually breached and shall be governed in accordance with the contractual model for which such an obligation is characteristic.

At the same time, the limitation of the freight forwarder’s liability may be caused by the desire of the legislator to protect a person who performs certain functions related to the carriage of goods. Granting such protection to freight forwarders is a controversial issue. However, it is a matter of legal policy.⁷⁰

Russian law does not define the subject matter of freight forwarding. Consequently, in granting additional protection to all freight forwarders, the legislator gives protection to such a wide range of persons that the use of such protection may in some cases be considered contradicting to good faith. For example, it is not clear how a stevedore who loads goods on a vehicle and a stevedore who loads goods in a warehouse should differ in their legal status. In this connection, in order to ensure uniformity of legal regulation it is necessary to form the subject matter of the freight forwarding contract. In our opinion, the model of freight forwarding as an obligation to organise transportation from the beginning to the end would be suitable for this purpose. However, there are no prerequisites for such an understanding of the freight forwarding in Russian law. Consequently, and the limitation of liability provided for in the FL “On FFA” leads to unexpected and, in some cases, unlawful results.

Conclusion

As it may be seen from the definition of the legal nature of freight forwarding, the contract in question is a complex binding relationship which encompasses a large number of economic functions. The actual set of such functions of the freight forwarder depends on the wording of the particular contract.

One of the functions of the freight forwarder is the transport function, i.e., the function of transporting the goods itself. In the performance of this function the freight forwarder undertakes the obligation to perform the carriage, which takes the form of issuing a guarantee for the safe delivery of the cargo.

From the point of view of its economic function, a freight forwarder who assumes a guarantee of safe delivery of goods is no different from a carrier, as the main purpose of such an undertaking is the safe delivery of goods to their destination (the cargo obligation). In such a case, the legal regulation of the relevant activity shall be identical. It does not seem fair that the same economic relationship may be regulated differently depending on the name of the contract.

At the same time, it must be remembered that the transport function is one of the possible functions of the freight forwarder. Other functions correspond to other contractual structures. Such constructions in their essence will correspond to contractual models existing in Russian law, e.g., service, agency and others. Such a peculiarity of freight forwarding is connected with the fact that a freight forwarding contract in Russian law is formulated not based on the subject matter of a binding relationship, i.e., the rights and obligations of the parties, but its object, i.e., those economic relations in connection with which such a contract is concluded (in this case, the carriage of goods).

Where the legislator considers such relations to be specific and concludes that additional protection is required by law, such protection may be granted. However, the formation of such limitations must respect the principle of uniformity in the legal regulation of similar economic relations. For example, protection cannot be given to freight forwarders who carry out stevedore works and at the same time not to persons who carry out the same work but without calling themselves “freight forwarders”.

At the same time, such limitation of the freight forwarder's liability may be due to the legislator’s wish to protect the person who organises the carriage “from the beginning to the end”. Nevertheless, unlike French law, Russian law does not stipulate the obligation to organise the carriage from the beginning to the end. On the contrary, it directly reduces the freight forwarding contract to separate obligations which the freight forwarder may perform (para. 2 of Art. 801 of the CC RF). Such regulation leads to the fact that a person who performs separate functions of a freight forwarder corresponding to any existing contract is thereby unreasonably protected. ■