MULTIMODAL TRANSPORTATION OF GOODS CHAPTER 23 ACT, 1993 & MULTIMODAL TRANSPORT DOCUMENT (MTD) AND HIS IMPLEMENTATION IN INDIA

1. Multimodal Transportation. 1. The Multimodal Transportation of Goods Act, 1993 (MMTG) provides for the regulation of Multimodal Transportation of Goods from any place in India to any place outside India involving two or more modes of Transport on the basis of a single Multimodal Transport Contract. This act came into force from 2.4.1993 and it provides for Registration of a person a Multimodal Transport operator and Multimodal Transportation can be carried out only by persons registered as MTO under MMTG Act, 1993. The Director General of Shipping has been notified as the competent authority to perform functions under the Act including registration of MTOs. The MTO registration is valid for period of 1 year and may be renewed for further period of one year from time to time. The Director General of Shipping has, after obtaining the prior approval of Ministry of Surface Transport, prescribed the Multimodal Transport Document under Rule 3 of Multimodal Transport Document Rules, 1994.

2. The Multimodal Transportation of Goods Act, 1993 was introduced to facilitate the
exporters and give them a sense of security in transporting their goods. The concept of door to door delivery, which is MULTIMODAL Transportation is all about, is catching up fast in international trade. Reduction of logistics costs is one of the important aspects of Multimodal Transportation, thereby reducing the overall cost to the exporter and making his products more competitive in the international market. It is in this context that the Government of India thought it necessary to codify the rules and regulations governing Multimodal Transportation and enacted the Multimodal Transportation of Goods Act, 1993 based on the UNCTAD/ICC rules which have gained widespread acceptance. The Multimodal Transportation Act lays down the standard terms and conditions governing this activity. Under the provision of the Act only those companies who are registered by the competent authority which has been notified to be the Director General of Shipping, can carry out Multimodal Transportation. This requirement of registration has been imposed by the government to ensure that only such companies which have the necessary expertise infrastructure and financial capability are allowed to undertake Multimodal Transportation so that the interests of shippers are fully protected. 3. As per the MMTG Act three categories of companies are eligible to be registered as MTO's. They are (1) shipping Companies (2) Freight Forwarding Companies (3) Companies which do not fall in either of the above two categories. In the case of Shipping Companies (which own and operate vessels) as well as Freight Forwarding Companies the turnover of the last three years should bed Rs. 50 lakhs or more to make them eligible for registration as MTO. In the case of a company falling under third category above, the Subscribed share Capital of the company should be Rs.50 lakhs or more. In addition the applicant company should satisfy the following: 1. Submit a certificate of turnover duly signed and issued by a Chartered Accountant within the meaning of C. A. Act, 1949.

2. have offices/agents/representative in atleast two other countries. 2. Multimodal Transport Document and its implementation in India -

1. The business environment is moving faster than ever before. Increased

competition at home and abroad means quality as well as profitability must be preserved. We live in a constantly evolving world where harmonization is extremely important and the trade desperately requires an efficient and simple door to door liability system. This was one of the reasons why ICC and UNCTAD developed the new UNCTAD/ICC Rules for Multimodal Transport Documents.

2. Increased containerization has resulted in Multimodal Transport of Goods under a

single transport document covering all modes of transport from the exporters premises to the consignee's premises such Multimodal Transportation under a single document has a number of advantages like reduction in overall transport cost reduction in delays, smoother and quicker movement of and improvement in quality of services. In India there was no uniformity followed in respect of MULTIMODAL Transport of goods. Government felt that absence of uniformity in such practices, leads to ambiguity and imbalance of interests between the operators and the cargo owners. A working ground was accordingly, set up to examine the prevalent situation and to recommend a law which should clearly determine the responsibilities and liabilities of MULTIMODAL transport operators for loss or damage. The new law on MULTIMODAL transport was enacted by issue of an ordinance in October 1992 and was later on replaced by the Multimodal Transportation of Goods Act 1993.

3. WHAT IS THE MULTIMODAL TRANSPORT DOCUMENT:

With the advent of containers, the ocean carriers started extending their services to Inland locations, as containers, are smoothly and easily handled from one mode of transport to another. One of the most important ingredients involved in such Multimodal Transport is the existence of a legal regime to govern the terms of the contract and specify the basis of liability and responsibilities of the Multimodal Transport Operator. Previously, a documents called Combined Transport Document (CTD) was being issued. However, although the format of the document broadly conformed to a specimen prescribed by the International Chamber of Commerce (ICC), the CTD has not been adopted by all operators uniformly. Thus, there was an absence of uniformity of liability and other condition. In India the Foreign Exchange Dealers Association of India (FEDAI) has evolved its own rules laying down the responsibilities and liabilities of Combined Transport Operators from the inland container depots. However, these rules could not obtain wide acceptance mainly because the Combined Transport Document evolved by FEDAI did not confer negotiability and title to the goods and also because such documents were required to be exchanged for a regular on - board ocean bill of lading at the port unless the letter of credit specifically permitted the production of a combined transport Document in place of a regular Bill of Lading. Looking to the urgent need of Industry and keeping in view the provisions of the Multimodal Transportation of Goods Act 1993 which is substantially based on the rules framed by the ICC and also taking into account the provisions of the UN Convention of 1980 on Multimodal Transportation of Goods, the Director General of Shipping, with the approval of the Govt., has issued an Order on 17th March, 1994 prescribing a model for the Multimodal Transport Document (MTD). The document has been prepared for carrying out the provisions of the Act keeping in view the primary objective of the legislation that the carriers are thereto serve trade and not

the other way around. The Multimodal Transport Document issued under the present law would be:i) a contract for the Transportation of Goods by Multimodal Transport.ii) a negotiable document unless it is marked non negotiable at the option of the consignor.iii) a document of title on the basis of which its holder can take delivery of the goods covered by it.The concerned parties who would have commercial interest who would be governed by the document once it is executed would be:i) The MTO who is the person responsible for the execution of the Multimodal Transport Contract.ii) The consignor who places the goods in question with the MTD for transporting the same and the consignee who is to take delivery at the destination.iii) The bankers who would provide the mechanism for documentary credit.iv) The insurers who insure the goods against loss or damage and the liability insurers who would cover the MTO's liability under contract. MTD AS AN INSTRUMENT TO ENFORCE THE PROVISIONS OF THE ACT. Once the Multimodal Transport Operator executes the Multimodal Transport Document, he immediately assumes the role of the owner of the goods, the Principal thereby authorizing the MTO to exercise the rights as that of the owner for claiming damages etc. and for other purposes, wherever necessary. The provisions of the Act shall have overriding effect over all other laws and any contract for MULTIMODAL Transport made in contravention of the provisions of the Multimodal Transport Act would be null and void.The issuance of the Multimodal Transport Document confers and imposes on all interested parties the rights, obligations and defences set out in the act. In issuing the MTD, the MULTIMODAL transport operator assumes responsibility for the execution of the contract as well as would be liable for the loss or damage to goods or delay in delivery as contained in the Multimodal Transportation of Goods Act 1993. CONTENTS OF THE MTD - GENERAL NATURE The document contains, inter-alia, particulars regarding general nature of goods, the name and principal place of business of MTD, the name of the consignor, the name of the consignee if specified by the consignor, the place and date of taking charge of the goods by the MTO, the place of delivery of the goods, the date or the period of delivery of the goods at the place of delivery, whether it is negotiable or non-negotiable, the place and date of its issue, etc. In addition, the standard terms and conditions regarding basis of liability of the MTO for loss or damage, delay etc. have been incorporated in the document. Relevant particulars contained in the internationally accepted documents recognized by International Chamber of Commerce have been taken into consideration while prescribing the document.The MTOs can now issue on a uniform basis Multimodal Transport Document as a negotiable instrument as per the Multimodal Transportation of Goods Act, 1993 and the banks will have no difficulty in discounting the bills when such a document is presented. STANDARD CONDITIONS GOVERNING MULTIMODAL TRANSPORT There are 24 main paras with sub-paras laying down the standard conditions governing Multi Modal Transportation in accordance with the Multi Modal Transportation of Goods Act 1993. Definitions of relevant terms are given in para 1 and are in accordance with the Act. Since this is a recent legislation required to be applied in connection with India's overseas trade and the consignees would be outside the country, it is necessary to give the definitions in these standard conditions so that all concerned parties in different countries are aware of the meaning of various terms as understood under the Act. The scope of applicability of the document is to be restricted in accordance with the preamble of the Act and has, therefore, been specified in the second condition. Similarly, the effect of issuance of the MTD should be well known to the parties affected by the document as this is an essential part of the Multimodal Transport contract and therefore, the same has

been shown in the document. The negotiability and the title to the goods has been incorporated in the standard conditions in accordance with Section 8 of the Act. Reservations regarding inaccuracies, grounds of suspicion or the absence of reasonable means of checking have been mentioned in condition 5 and are in line with Section 10 of the Act. The evidentiary effect of the Multimodal Transport Document is in accordance with Section 11 of the Act. Guarantee by the consignor as stipulated in Section 12 has been specified in Condition No.7. Conditions governing Dangerous Goods, as required in Section 21 of the Act, have also been incorporated in the standard conditions. Basis of liability and conditions of liability of the MTO for loss or damage when the stage of transport where the loss or damage occurred is not known/known have been covered in Condition Nos. 10, 11 & 12 and are in accordance with corresponding provisions in the Act. Similarly, the liability for delay, which is in keeping with Section 16 of the Act, has been stated in the standard conditions. The limits of liability are clearly spelt out in the said conditions. Section 20 of the Act lays down the conditions relating to notice of loss, damage or delay and these have been brought out in Condition No. 17. Further, provisions in respect of liens, limitation of action, jurisdiction, general average clauses, etc. have been clearly spell out in the document in accordance with corresponding provisions of the Act. Besides, specifying the applicable provisions of the Act the document also contains some of the conditions which are necessary to facilitate smooth transaction of Multimodal Transport. There is a residuary condition No. 25 relating to arbitration which permits concerned parties to incorporate suitable provisions by mutual agreement. STATUS OF THE MTD VIS-SIS PRESENTLY USED CTD The combined transport document, which is presently being used also for Multimodal Transportation, is essentially a document of contract for the carriage of goods for one mode of transport with the facility of inbuilt documentation for carriage of the same goods by another one or more modes of transport after the completion of the first mode. It may thus be appreciated that the CTD used in overseas carriage of goods is basically a commercial document for inter-modal transportation and a legal document for uni-modal transportation for each particular mode of transport covered under the CTD. The CTD facilitates onward movement of cargo by one mode to another mode on the basis of the original document with suitable endorsements. However, it is not meeting the requirements of providing a legal regime of uniform liability on the basis of a single contract of carriage of goods by Multimodal Transportation. The CTD, therefore will not meet requirements of the MULTIMODAL Transportation of Goods Act 1993 or even for that matter the UN Convention on Multimodal Transportation, strictly. The Multimodal Transport Document Model prescribed by the Govt. of India will not only be a commercially acceptable and negotiable document but will also be the basis for a contract of carriage governed by uniform liability regime for Multimodal Transportation of Goods in International trade besides being a legally tenable and enforceable instrument.