Useful Guide to Stowage for Road Transport of Goods

Already in 2006, the European Union estimated that 75% of the goods transported by vehicles on its roads were not properly stowed. What is more, it then calculated that 1 of 4 accidents involving vehicles fitted out for the transport of goods had their origin in deficient stowage.

Cargo stowage is considered the adequate placement, distribution, protection and fixing of goods inside a container or vehicle so that they can safely arrive to their destination, under the custody of the carrier. 

This has always been an ill-defined, imprecise term and has led to various interpretations. In response to this, the courts have accumulated multiple sentences with contradictory definitions in relation to the interpretation of the concept itself, as well as with respect to the similarities or differences in relation to others, such as the lashing of the goods.

On the one hand, there are courts that understand that lashing and stowage are different concepts for which different agents may be responsible (Murcia Provincial Court – Decision 88/2016 or the Supreme Court – Decision of 22 November 2006), yet, on the other hand, there are courts that consider that lashing is an intrinsic part of stowage and, therefore, must be carried out by the loader as part of his duties (Barcelona Provincial Court – Decision of 30 April 2015). 

Although the situation has improved, this is still a burning issue and we need to work on it. For this reason, the Basque Government, together with the Institute for Cargo Safety and other agents and institutions in the sector, has promoted the creation of a complete Basque Guide for Road Transport of Goods, which we believe can be very useful for the agents involved in these tasks and in the area of transport.

The Guide is based on four general rules, as follows: 

– Directive 2014/47/EU of the European Parliament and of the Council of 3 April 2014 on the technical roadside inspection of the roadworthiness of commercial vehicles circulating in the Union and repealing Directive 2000/30/EC

– Law 15/2009, of 11 November, on the contract for land transport of goods.

– Law 16/1987, of 30 July, on the Regulation of Land Transport.

– Royal Decree 563/2017, of 2 June, which regulates the technical roadside inspections of commercial vehicles circulating in Spanish territory.

In addition, the guide is divided into several chapters which, among other matters, deal with aspects such as stowage tools; damage caused by deficient stowage; who is responsible for the cargo, stowage and lashing; or what criteria are used in the inspections and how they are carried out. Furthermore, it tries to clarify, to the most possible extent, the controversies raised by this term, and to this end it provides the following list of aspects that are considered to be inherent to the concept of STOWAGE: 

– Verification of the packaging, check that it is suitable for the transport of goods 

– Protection, if necessary. 

– Loading into the vehicle. 

– Conditioning of the goods for transport.

– Stabilisation, if necessary. 

– Adequate weight distribution. 

– Fixing and immobilisation of goods.

– Checking during the journey, and subsequent tightening if necessary.

The Guide promotes that the loader makes a correct description of the goods and ensure that it is correctly packed (paying particular attention to dangerous goods). In addition, they must ensure that the vehicle and the fastening equipment used for the transport are suitable and that the person or entity in charge of loading the goods onto the truck is duly informed of everything. 

Regarding the duties of the loader, these basically consist of two concepts: (i) the review prior to loading and (ii) the review of the operation at the end of the loading and before initiating the transportation.

Finally, and with respect to the responsibility of the Carrier, even if this has not assumed the tasks of loading and unloading the goods in the means of transport, it is required to: (i) carry out a visual inspection of the truck and the goods to ensure that there is no lack of security; (ii) ensure that the vehicle can provide all certificates and markings, if necessary; (iii) check periodically the securing of the transported goods; (iv)  carry out loading, stowage and lashing only in the event of express agreement and prior to the presentation of the vehicle. 

The eternal question of who is responsible for incorrect stowage and/or lashing is answered in Article 20 of Law 15/2009, of November 11, on the Contract for Land Transport of Goods. This answer is still being worked on as it does not convince many of the agents involved in road transport, for whom the possible handling of the cargo by the carrier should be left without effect. The current response given by Law 15/2009 is clear: “The operations of loading the goods on board the vehicles, as well as those of unloading them, shall be carried out by the loader and the consignee, respectively, unless these operations are expressly assumed by the carrier before the actual presentation of the vehicle for loading or unloading. The same applies to the stowage and unstowage of the goods“.

In other words, if no express agreement is made prior to loading, the loader will be presumed to be responsible for securing of the goods. This is also ratified by RD 563/2017 and the subsequent clarifications of the “DGT” (Directorate General for Traffic), see our articles “Inspection of the securing of cargo on trucks, clarification by the DGT”  and “R.D. 563/2017, of 2 June 2017, Technical inspection of commercial vehicles

Similarly, article 21 of Law 15/2009 reinforces this interpretation, considering that it will be the loader who must prepare the goods for transport, just as it will generally be the receiver of the goods who will be responsible for their rejection at destination, unless expressly agreed otherwise.

As we can see, the Guide is very extensive in its content and presents a very high degree of details, by which it attempts to stipulate a common terminology and criteria which will help to establish greater legal security in the sector, as well as it aims to improve the practices, training, and competitiveness of operators and shippers, and the purpose of all this to promote a more professional and safe road transport of goods.

Evaluation of Electronic Evidence

Nowadays, a large part of our relationships, both at social and professional level, develops through the use and management of new technologies; a reality that, beside generating a social revolution, has also brought about a revolution in the labour and legal environment in which we, lawyers, operate. Among other questions, we should ask ourselves: is the evidential value of an email equivalent to a read receipt and a registered letter?; are video surveillance recordings or publications on social networks valid as evidence for the Courts?; is a contract always valid when it is concluded through electronic means, be it emails, telephone messages or other means of communication?; questions that both companies and legal professionals ask themselves when a deal or contract is called into question, and whose lack of a firm answer leads to a certain legal insecurity in this respect.

When we refer to electronic evidence, we mean all the information with evidential value that has been transmitted by electronic means or that is included in it; that is to say, we can differentiate between two modalities of electronic evidence; on the one hand, we have the data that has been stored in a technological device, and, on the other hand, the information that has been transmitted through communication networks. 

We can confirm that the Courts generally consider an electronic evidence valid as long as there are no doubts about its veracity. And this is the complicating factor since, to this effect, there is a need to demonstrate the authenticity of these proofs in two basic aspects: that their apparent author is their real author and that the data they contain has not been altered. Moreover, for an electronic evidence to be regarded as valid, it must have been obtained in a lawful way. Therefore, the evidence will have to incorporate data of legality, ownership, necessity, and procedural admissibility to the procedure.

These requirements are more than justified since modifying an electronic evidence is a simple task for any user with basic computer knowledge. In fact, you can easily edit an attachment or alter an e-mail message with respect to its (sender, receiver, date, etc.), its content or the folder of its location. Similarly, people with high computer skills can access servers and digital platforms, public or private, obtaining the information they want, whether confidential documents, passwords, account numbers, contacts, etc. leaving no trace of their presence in our “clouds”. This reality often falls within the phenomenon of “cyber-attack”, a figure that we already referred to in the article published by our firm on our website in June 2019: “Piracy, a Reality in the Twenty-First Century”.

In the hypothetical case that the Court or one of the parties questions the authenticity of the evidence, it will be necessary to verify it by a study carried out by a computer expert. If it is not provided voluntarily, to access the evidence always requires judicial authorisation, which will be granted provided that the basic principles of regulation, suitability, exceptionality, necessity, proportionality, and speciality are respected with this intervention. Let us not forget that when a technological device is intervened in a judicial context there are several fundamental rights that may be affected, both of the victims or people linked to the event, as well as of third parties not connected to the conflict, such as the right to privacy, communications or data protection.

Royal Decree-Law 26/2020, of 7 July, on economic recovery measures to deal with the impact of COVID-19 in the areas of transport and housing

On Wednesday 8 July 2020, Royal Decree Law 26/2020, was published in the Official State Bulletin, with the aim of approving a set of measures required for the purposes of economic recovery in the transport sector and in the field of housing, protecting the health of workers and travellers, guaranteeing the availability of essential goods and services, providing liquidity to companies and reducing administrative burdens.

In this article, we will analyse this regulatory text, focusing on the specific measures arising for the transport service. 

1. AIR TRANSPORT

Articles 2 to 7 include the management measures adopted for air transport. General prevention measures against COVID-19 that companies in the sector must guarantee compliance with, as well as all those that the Autonomous Communities have adopted. 

Operational guidelines have been established from Europe, which are applicable to the entire Spanish territory. The EASA/ECDC Guidelines will be compulsory not only for airport managers but also for companies that carry out their work as auxiliaries at airports: 

– Inform users on the preventive measures and health reasons why they should refrain from accessing the airport, as well as the consequences of detecting a person suspected of having COVID-19 during health checks. 

For its part, the Transport Facilitation Committee will be responsible for coordinating and supervising all the actors who have a role in the application or definition of these measures.

 

2. MARITIME TRANSPORT

Articles 8 to 14 set out the measures taken to revitalise the maritime sector. Firstly, the reasoned reduction of maritime traffic requirements for 2020 at the request of the concessionaire will be permitted, due to the impossibility of compliance (deriving from COVID-19). 

Likewise, the liquid quota of the occupation rate accrued during the financial year 2020 may be reduced, being determined this reduction depending on the decrease in maritime traffic or, failing this, on incomes attributable to the activity, the different types and also depending on the economic and financial situation of the Port Authority. 

With regard to the activity tax, the Port Authorities may (upon request of the taxpayer) leave the lower limit of the annual activity tax quota without effect for the year 2020. In turn, the enforceability of the activity fee established in the authorisation may also be modified. 

As we have already commented in other publications, this Royal Decree confirms that the fees for vessels (between 1 March 2020 and 31 October 2020) may be modified, depending on the reason for the stay in port waters. Likewise, the Port Authorities may grant deferrals of tax debts accrued (between 1 March and 31 October 2020) and not paid.

As a final comment, it should be noted that the provision of human resources at the passenger terminals serving the regular maritime services during the state of alarm, are considered as emergency services for all purposes.

 

3. RAIL TRANSPORT

With regard to Railway Transport, it should be mentioned that RENFE is authorised to arrange credit operations during the 2020 financial year, for the amount of 1 billion euros. 

It is also planned to authorise extraordinary credits to be financed with Public Debt.

 

4. ROAD TRANSPORT

Articles 18 to 30 contain the provisions relating to road transport. Firstly, moratoriums will be granted for the public goods and occasional passenger transported by bus. 

Among other measures, deferrals of payments of instalments on loan, leasing and renting contracts used by self-employed persons and public undertakings for the purchase of buses and public transport vehicles of more than 3.5 tonnes, maximum authorised mass, are accepted. 

With regard to the approval of road transport authorisations, this will be extended, establishing 2021 as an open deadline for approval of transport authorisations that should be endorsed in 2020 and have not been yet. Also, for those authorizations that should be endorsed in 2020 and have done so, the deadline for their next endorsement is extended until 2023. In addition, the opportunity to apply for extraordinary rehabilitation for public transport authorisations invalidated during 2020 is provided due to the inability to certify the requirements for their endorsement. 

Finally, an extension of 3 months is established for those technical inspection certificates of vehicles that expire between 21 June and 31 August. 

The importance of “Rebus Sic Stantibus” clause in a crisis scenario

In times of crisis such as the one Spain is currently facing due to the COVID-19, both personal and commercial circumstances may drastically change without someone or something being able to avoid it; exceptional circumstances during which individuals and companies are prevented from complying with any contractual obligation of any kind they are engaged in. In this scenario, the so-called “rebus sic stantibus” clause becomes important. 

The purpose of this clause is to cope with substantial amendments to conditions that might occur unexpectedly and unpredictably, and that will undoubtedly affect the contracting parties during the validity of the contractual relationship. These amendments, presumably, avert current conditions from those that favoured the contract signing under the agreed terms and make that the fulfilling of obligations and commitments arising from the contract cause extraordinary damages to one of the parties.

The health crisis that we are undergoing might serve us well as an example of substantial amendments to conditions; phenomenon we might observe in the transportation sector (cancellation of maritime line services, cancellation of flights, breach of charter contracts, paralysis of supply chains, suspension of orders, etc.) as well as in many other sectors of industry and commerce, which in general terms have been severely struck since the declaration of the state of alarm. A crisis that has been defined by the World Health Organization (WHO) as an absolutely unpredictable and unavoidable situation.  

In a situation like this, the “rebus sic stantibus” clause might open up possibilites for contract amendments on the basis of articles 7 and 1258 of the Civil Code, among others, in accordance with the requirements of good faith. This clause does not, under any circumstances, have recessive, resolutory or extinctive effects on the contract; the purpose of this clause is to set a framework of renegotiation of conditions of the contract between the parties in order to compensate, to some extent, for the generated imbalance.   

Although the legal regulation does not explicitly recognize this definition, the Spanish jurisprudential doctrine does as it is evidenced by the Judgements delivered by the Supreme Court in the previous national economic crisis. However, this clause does not apply automatically and in order to be able to apply the “rebus sic stantibus” clause, the jurisprudence lays down some essential requirements: 

  • – Extraordinary alteration of circumstances during the validity of the contractual relationship, in contrast to the circumstances existing at the time of the execution of the contract. 
  • A radical change in the obligations assumed by one of the parties that destructs the balance of the services in an exorbitant manner.
  • Everything is produced by the occurrence of absolutely unpredictable circumstances.

As we can observe when analysing the requirements for the application of the clause demanded by the jurisprudence, its historical application has been very restrictive. Nonetheless, the scenario of the economic crisis (for instance, the 2009 crisis) has extended its application since such circumstances may seriously affect the development of contractual relations.

Hence, the Supreme Court in its Judgment No. 214/2019, rec 3204/2016, of the Civil Chamber, First Section, April 5 2019, and in the Judgement No. 455/2019, of 18 July 2019, in order to accept the alleged amendments to contract, stipulates that these modifications must alter the relationship and the provisions of the contract, and must occur in an unpredictable and unavoidable manner. In other words, if the parties have been able to assume expressly or implicitly the risk that something might occur or they had to do so because this risk already existed at the time of executing the contract or it was reasonably predictable, the clause cannot be invoked. Nor can it be invoked in cases where the alteration is within the normal risks of the contract.

Similarly, in its Judgement of the First Civil Chamber No. 156/2020, rec 2400/2017 of, March 6 2020, the Supreme Court stipulates that, in order to be able to apply the clause, the referred contract must have duration equal to or more than one year, must be of a consecutive nature or of deferred execution. In fact, the Court assumes that it is unlikely that, in the case of contracts of less than one year, anything extraordinary and unpredictable, which would create a disproportion between the claims of the contracting parties, might occur. It remains to be seen if this aspect prevails in a situation such as that arising from the COVID-19 crisis. 

In addition to these two criteria, the Supreme Court considers that in order to effectively apply the “rebus sic stantibus” clause, the alleged situation cannot be contemplated or qualified as a habitual, normal or inherent risk or deriving from the contract (Judgement of the SC (Civil) Section 1, S 30-06-2014, rec 2250/2012).

If we analyse the actions of the Spanish Government, we can realize that it is adopting particular measures which seem to be inclined towards the effectiveness of the clause. An example of this is the Royal Decree Law 11/2020, of March 31, which exceptionally authorizes the suspension of electricity, natural gas and oil derivative products invoicing during the period of validity of the State of Alarm. 

As a conclusion in view of this difficult crisis situation that individuals and companies are facing, from AIYON Abogados, we advise to avoid, to the most possible extent, disputes and litigations in a situation that affects us all. Therefore, we recommend to preserve the contractual balance and respect the criteria of equity and good faith that should always underpin the agreements, promoting so the reestablishment of the balance in the relationship. For that reason we advise to foster agreements and negotiations between the affected parties to a contract, who can always count on the expert advice of our team of lawyers in pursuit of a satisfactory conflict resolution.      

News about the State of Alarm in Spain (April 6th, 2020)

On April 4th, the President of the Spanish Government announced his intention to request the Congress of Deputies to agree to the extension of the State of Alarm for at least 15 days more. Therefore the State of Alarm, enacted on March 14th, will be maintained until midnight of April 25th.

His petition seems to have the support of the leaders of the rest of the political forces in the State; nevertheless, the extension will not be made official until it is approved by the Congress of Deputies at the forthcoming plenary session scheduled for April 9th.

However, and as the President Pedro Sánchez has already announced, the extension of the State of Alarm does not necessarily imply the extension of the suspension of non-essential activities, a suspension tackled in our publication of April 2 (RDL 10/2020 of March 29th – Suspension of Non-essential Activities) that, since these restrictive economic measures were made public, has received a lot of criticism and pressure to analyse its possible moderation or suppression. Both on part of the industries that asked to maintain their essential activities in order to prevent the total economy freeze, and the political forces in the country. Therefore, and depending on the decisions made by the Government, these non-essential activities might be reactivated from April 9th. 

As we have seen, during the three weeks of the State of Alarm that we have already undergone in Spain, this situation is having an enormous impact on all social and economic sectors in Spain and, in particular, the sectors of industry, commerce and trade, and a part of the transportation sector have been severely hit by this situation.

 

FISHERIES SECTOR 

The Ministry of Agriculture, Fisheries and Food published Order APA/315/2020 of April 1st in the BOE (Official State Gazette). This Order establishes new criteria for the management of fishing quotas assigned to the Kingdom of Spain in order to optimize their use and modifies certain Ministerial Orders that regulate these concepts since 2014.  

This Order is mainly applicable to the stocks subject to the total allowable catches and quotas in the peninsula waters of the Atlantic Ocean. 

These are the main measures that have been taken: 

  • Flexibilization of the transmissions of fishing possibilities (quotas) for the vessels with individual distribution, thus allowing a better adaptation to the fisheries within the previously established distribution, that is to say, that the vessels themselves through the transmissions regulate the distribution of quotas. Those operating in the Bay of Biscay and the Northwest, Gulf of Cadiz and those trawling in Portuguese waters. 
  • Establishment of a mechanism for the annual optimisation of the boilermakers’ quotas. As of October 1st, vessels that have already exhausted their quotas will be able to continue fishing and using the quotas that will be left over for other vessels, thus guaranteeing the full use of the quotas allocated.
  • Establishment of procedures for the management of quotas allocated to Spain but which, until now, have mostly not been established. 
  • Establishment of criteria for the annual allocation of quotas not yet allocated in Spain, (blue whiting or horse mackerel in EU waters and swordfish in the North Atlantic). 
  • Establishment of uniform procedures for the cessation of activity and the closure of fisheries in cases where quotas have been exhausted. 
  • Establishment of management measures for recreational fisheries for sea bream in the Cantabrian Sea. 

The Order APA/315/2020, of April 1st, reinforces Spain’s commitment to sustainable and responsible fisheries management and shows progress in the regulation regarding the fishing quotas assigned to Spain.  

 

LAND TRANSPORT

Many measures are being taken with regard to land transport as it is an essential resource to secure the local supply chain, above all on local and national level. 

Administrations are beginning to ensure the protection of truck carriers by distributing personal protective equipment by enabling filling stations and providing places for weekly rest of at least 24 hours. 

Likewise, the National Road Transport Committee communicated to the Ministry of Transport its commitment to maintain transport and guarantee the supply of medicines in hospitals during the Easter weeks. 

For its part, rail transport is also adapting to this situation and some initiatives are already beginning to be made public, such as adapting trains of the Operator Renfe for the transport of patients affected by COVID-19 between different autonomous communities. 

 

AIR TRANSPORT

The Spanish airports are adapting to the COVID-19, among other forms, by enabling their esplanades to offer parking to the planes that, due to the evident reduction of flights, are not operating and therefore have to remain on the ground. 

Since the health emergency does not only affect Spain but it is a global phenomenon, many flights and many regular lines operated by air operators will be suspended for an undefined period of time.

 

MARITIME TRANSPORTATION

With regard to maritime transport, it is important to highlight the change of direction that the maritime industry is taking in order to face the pandemic. 

Many shipping companies are temporarily suspending some of their usual shipping lines, as well as adapting their rotations to the progressive increase in Asian imports to the demanding European continent. This increase is materialized in the fact that rates from the Mediterranean to the Far East have increased by 42.4% and in the oil price crash. 

Although there are shipping companies that have decided to suspend temporary their services with stopovers in Spanish ports, there are still sufficient services to guarantee the supply chain. 

For its part, the Spanish ports have been taking measures to mitigate the effects that might arise from abandonment of goods and containers in the ports (in many cases forced). Let us take as an example the Port of Barcelona that has implemented the so called “flat rate” regarding the cost resulting from storage of the containers in the ports with the aim to mitigate the economic impact that COVID-19 is producing in the importing companies. 

This measure adopted by the Port of Barcelona shall be applicable to the import containers located in the container terminals of the enclave between March 31st and April 13th (for the time being). According the experts’ estimation, the cost of storage of the containers will be reduced by 65 % as a result of these measures.

As we can observe, all sectors are renewing and readapting themselves in this uncertain and unknown situation we are just undergoing in order to guarantee the supply chain of products and materials, securing so that basic needs of the citizens are met and that the industries, to the maximum possible extent, continue operating.

RDL 10/2020, of March 29th, Suspension of Non-essential Activities

The recent Royal Decree Law nº 10/2020, of March 29th  orders the suspension of companies and non-essential works as a consequence of the declaration of the state of alarm issued on March 14th, an order that certainly affects both the economy and society in a global way.  

This suspension will last 11 days, from March 30th to April 9th, both inclusive, establishing that March 30th is considered a day of adaptation to enable the closure of all non-essential activities that shall be suspended in the following days. During this period the remuneration of the employees will be secured by means of the “recoverable paid leave”, as approved by the Government on March 29th. 

The problem is that the classification of activities which are considered essential and those which are not has caused controversy the first day of the shutdown. Consequently, the Government issued the Order SND/307/2020, of March 30th, which establishes the imperative criteria for application of the Royal Decree-Law 10/2020, of March 29th, and the model of statement of responsibility which allows the necessary journeys between the worker’s residence and the workplace, which supplements the RDL but without clarifying all the questions and doubts arising from the very same RDL. 

Let us recall that the Royal Decree law 463/2020, of March 14th, by means of which the state of alarm was declared in order to manage the health crisis situation caused by COVID-19, states that the supply of the population must be guaranteed at all times, by facilitating and ensuring the transport of goods throughout the national territory. On this basis, it should be noted that land transport companies and those companies related to maritime and air traffic pursuing or enabling this aim (without being this a limiting list), as well as the facilities providing these services shall guarantee their activity throughout the whole period of the state of alarm. In fact, Mrs. María José Rallo, the Secretary General for Transport, declared that transport is obviously included within the essential activities, and State Ports has initiated an information campaign to emphasize the functioning of the state port system to guarantee the distribution of essential items and goods during the COVID-19 crisis. 

Abiding to the sixth point of the annex of the RDL nº 10/2020, states: “The recoverable paid leave regulated by this royal decree-law is not applicable to the following employees: 6. Those who carry out transport services, both for people and goods, which continue to be carried out since the declaration of the state of alarm, as well as those who must ensure the maintenance of the means used for this purpose, under the protection of the regulations approved by the competent authority and the competent authorities delegated since the declaration of the state of alarm”. 

Similarly, article 4 of the RDL 10/2020 specifies what shall be understood as the minimum indispensable activity: “The companies that must apply the recoverable paid leave regulated in this article may, if necessary, establish the minimum number of staff or work shifts that are strictly indispensable in order to maintain the essential activity. This activity and this minimum number of staff or shifts shall be based on the activity carried out during an ordinary weekend or on public holidays”.

Therefore, in accordance with the sixth point of the annex of the RDL nº 10/2020 (which regulates the non-application of the paid leaves regulated in the present Royal Decree-Law) the port services are considered essential services (art. 18 of the Royal Decree, of March 14th), being some of them even mandatory for the vessels when in ports. Moreover, we must understand that all the State Ports of General Interest are strategic infrastructures by their very definition, some of them also being critical infrastructures. All of them are guarantors of operation of services that are defined as essential and must therefore continue to operate, guaranteeing supply by facilitating the flow of goods in them. 

The same interpretation shall be applicable to the companies that provide their services there: 

 – The commercial procurement service.

– The commercial supply service.

– The ship agency service.

– The commercial inter-port transport service.

– Port handling operations (dockers, etc.).

– The port passenger service.

– Mooring and unmooring service.

– The port towing service.

– The port consignment service.

– General services provided directly by the Port Authority or indirectly by third parties.

– The rest of the commercial activities related to the port activities, such as freight forwarders, customs agents, damage commissioners, container depots, etc.

With regard to road transport of goods, it is also asserted as essential and its workers can continue with their activity under the new exceptions to the compliance with driving and rest times implemented between March 29th and April 12th, both inclusive (Resolution of March 26th, 2020, of the Directorate General for Land Transport), and with the acceleration of driving facilitated by the so called cross-border “green lanes”. 

We should point out that transport activities remain fully operative as long as these are related to other essential economic activities (distribution of food and healthcare products, among others). What is more, the RLD n. 10/2020 is only applicable to the salaried employees, which means that the self-employed remain active except for those performing services for companies that were, on March 14th, classifies as no-essential and remain closed: restaurants and hospitality companies, sports companies, among others. 

Extension of the State of Alarm in Spain

The Congress of Deputies, at the plenary session on March 25, approved the extension of the State of Alarm for another 15 days, among other things. 

This means that all the measures, orders and decisions that have been implemented up to now and have been extended during the period of the State of Alarm shall be extended, a priori, for another 15 calendar days. In other words, the State of Alarm declared by the Royal Decree 463/2020 of 14th of March will last at least until midnight on April 11.

In fact, article 116 of the Spanish Constitution regulates the State of Alarm and establishes that it may be adopted by the Government for a maximum period of 15 calendar days. Yet it is precisely the article 116 of the Spanish Constitution that, in spite of limiting the action of the Government to declare the State of Alarm for a total period of 15 calendar days, in its second paragraph adds the possibility that the Congress of Deputies may extend such period, with unspecified time limitation. 

That is, as long as the Congress of Deputies approves the extension of the period of the State of Alarm the Constitution does not limit the duration of the period. Therefore, this could be prolonged if necessary.

Last measures adopted by the Spanish Government are:

LAND BORDER.- 

As we have already mentioned, the logical and direct consequence of the extension of the State of Alarm is that many of the Orders and Decisions that had been taken during the first two weeks of the State of Alarm shall also be extended during this second fortnight.

An example of this is the Order INT/283/2020, of 25 March, extending internal land border controls from 00:00 on 27 March 2020 to 24:00 on 11 April 2020. In other words, only the following persons will be allowed to enter the national territory by land: 

(a) Spanish citizens. 

(b) Residents of Spain. 

(c) Residents of other Member States or Schengen Associated States on their way to their place of residence.

(d) Cross-border workers. 

(e) Health or elderly care professionals on their way to work. 

(f) Those that provide documentary evidence of force majeure or necessity.

Exempt from these restrictions are foreign personnel accredited as members of diplomatic missions, consular offices and international organisations located in Spain, provided that they are travelling in connection with the performance of their official duties. Similarly, and in order to ensure the continuity of economic activity and to preserve the supply chain, these measures are not applicable to the transport of goods.

Another example is Order TMA/286/2020, of 25 March, which extends the ban on entry of passenger ships from the Italian Republic and cruise ships of any origin, on Spanish ports to limit the spread of COVID-19, from 00:00 hours on 27 March 2020 to 23:59 hours on 9 April 2020.

WORK.- 

At the same plenary meeting the Council of Deputies ratified the Royal Decree-Law, by means of which the objective dismissal for absenteeism was repealed (article 52.d of the Workers’ Statutes), which allowed dismissal for justified medical absences.

The main objective of the Minister of Health with the repeal of this article is to preserve the health of the workers, avoiding that they attend work while sick as they fear to be dismissed. Moreover, the Minister stresses that taking care of oneself, in addition to personal well-being, also guarantees the health of others. 

LAND TRANSPORT.- 

On the other hand, and in relation to the transport sector, on March 26th the Government enacted the Ministerial Order INT/284/2020 modifying the regulation that had been adopted during the State of Alarm for the management of traffic and circulation of motor vehicles. 

Article 1.1 states that the Minister of the Interior may agree to close to traffic roads or sections of roads for reasons of public health, safety or traffic flow, or to restrict access to certain vehicles on these roads for the same reasons. Furthermore, the paragraph 2 provides that, in the case of road closures or restrictions on the movement of certain vehicles, those intended for certain activities considered essential to ensure the supply of products and the provision of essential services to the population shall be exempted.

In particular, the vehicles considered essential to ensure the supply of essential goods and services are the following: 

a) Those of transport and health care, both public and private; those of the Security Forces and Corps, those of civil protection and rescue and those of fire extinction. 

b) Those transporting maintenance personnel or repair technicians for health facilities or equipment 

c) Those for the distribution of medicines and medical equipment. 

d) Those for the distribution of food. 

e) Those of the Armed Forces. 

f) Those for road assistance. 

g) Those of the road maintenance and conservation services. 

h) Those for the collection of solid urban waste. 

i) Those intended for the transport of melting materials. 

j) Those intended for the transport of fuels. 

k) Those intended for the production, marketing, processing and distribution of agricultural, livestock and fisheries products and their inputs; for the production, distribution, rental and repair of equipment and machinery for agriculture, fisheries, livestock farming and their associated industry, and for the transport and treatment of agricultural, livestock and fisheries waste and by-products and those of the food industry. 

l) Those intended for the carriage of perishable goods, understood as those set out in Annex 3 to the International Agreement on the Carriage of Perishable Foodstuffs (ATP) as well as fresh fruit and vegetables, in vehicles which meet the definitions and standards expressed in Annex 1 to the ATP. In any case, perishable goods must account for at least half the payload capacity of the vehicle or occupy half the payload volume of the vehicle. 

m) Those intended for the manufacture and distribution of cleaning and hygiene products. 

n) Those of the Sociedad Estatal Correos y Telégrafos, S.A. 

ñ) Funeral services. 

o) Those used by private security companies for the provision of security transport services, response to alarms, patrols or discontinuous surveillance, and those that are necessary for the performance of security services to guarantee essential services and supply the population.

p) Other vehicles that, if not included among the above, the agents in charge of traffic control and discipline consider, in each specific case, that they contribute to guaranteeing the supply of goods or the provision of essential services to the population.

Therefore, the circulation of these vehicles will be guaranteed during the entire State of Alarm, without limitation to restrictions, both existing and future.

INCOTERMS® 2020

What are Incoterms®?

The increase in the volume and complexity of the sales of national and international merchandise has generated a growth in the misunderstandings and litigation that can always arise between the parts of a contract; with greater reason when the two main parts of a contract, seller and buyer, are located in different countries. 

Already in 1936, and in order to facilitate international trade, Incoterms® were born from the hand of the International Chamber of Commerce (ICC). Rules that, applied to a contract of sale, help to define the obligations and responsibilities that each of the parties assumes in the business they jointly undertake. So, the Incoterms® are not a supranational legal rule, but Lex Mercatoria.

When choosing a rule adjusted to our business needs, there are many more aspects that we should take into account. 

Among others:

  • The means of transport to be used to send the goods from the seller’s premises to those of the buyer.
  • The nature of the merchandise that is the object of the sale, as it is not the same, if we have to urgently deliver perishable merchandise, send bulk merchandise on ships or carry out a palletized truck transport, among other cases.
  • The means of payment agreed between the parties. In this case, the situation will be conditioned on having to make the payment by means of documentary credit with banking entities.
  • The buyer’s own wishes. In fact, there is more and more competition between companies so, in many cases, the seller is forced to make the difference from their competitors.
  • The situation of the countries of origin and destination of the merchandise, since it may happen that we are facing countries with protectionist tariff policies or unstable legal situations or policies.

 

Incoterms® 2020

This year the last version of these rules has been finalized, which is born under the name “Incoterms® 2020” and will enter into force on January 1, 2020.

The rules are classified in the different groups that we detail below:

GROUP

INCOTERM®

DESCRIPTION

Group EEXWEx Works.
Group FFCAFree Carrier
FASFree Alongshide Ship
FOBFree on Board
Group CCFRCost and Freight
CIFCost, Insurance and Freight
CPTCarriage Paid to
CIPCarriage and Insurance paid to 
Group DDPUDelivery at Place Unloaded
DAPDelivery at place
DDPDelivery Duty Paid 

 

Among the novelties presented by this new version, the first and probably most striking is the redenomination of the rule DAT (Delivered At Terminal) that now happens to be called DPU (Delivered at Place Unloaded). This change of acronyms is a simple redenomination, since the obligations and functions of both terms remain exactly the same.

The term DPU is classified within the group of multipurpose terms, meaning that it is an Incoterm® suitable for any type of contracted transport (Road, road, air or sea transport), and is the only Incoterm® that provides that the delivery will only be carry out once the merchandise has been unloaded from the means of transport in which it has been transported. The new nomenclature that has been given to this term only evidences the fact that the merchandise will be delivered unloaded, unlike the rest of the Incoterms® in which the merchandise will be made available to the buyer at the port of destination , in the place designated by the parties.

Secondly, we must mention that in this new version of the Incoterms® when applying the Rule FCA (Free Carrier), it gives us the option, only in case that the main international transport contracted is maritime transport, that the buyer request the carrier or maritime carrier to issue a Bill of Lading on behalf of the seller, wherein the clause “on board” is included, which will record that the merchandise has been loaded on board the ship. 

The introduction of this clause in the Bill of Lading or Bill of Lading will facilitate the payment made by means of documentary credit, as mentioned above.

Thirdly, in this new version it is explained precisely which party will be responsible for carrying out customs procedures, assuming the costs and risks of that phase. The responsibility will be assumed by those who are obliged to transport the goods to the designated place of delivery. Also, for the first time, the dispatch of goods in transit is included.

Finally, we want to talk about what we consider to be the most important difference that this new version of the Incoterms® 2020 rules has brought. This are the different coverages for the merchandise insurance, during their international transport under the terms CIP (Carriage and Insurance Paid to) and CIF (Cost, Insurance and Freight).

While in the CIF term the seller will contract in favor of the buyer a transport insurance with a minimum coverage of clause C of the English Institute Cargo Clauses, which does not vary from the previous Incoterms® version 2010, in the CIP term, the seller will contract for the buyer the transport insurance with a maximum coverage according to clause A of the English Institute Cargo Clauses. 

Difference between CIP and CIF that is justified because CIF is commonly used for the maritime transport of bulk goods (raw materials, scrap, minerals, etc.) whose price per kilo is very low. Therefore, if insurance with maximum coverage is demanded, the policy would become more expensive, which would damage the negotiation margin of the sellers with their potential buyers.

In any case, we must not forget that the rules are part of the ancestral business of buying and selling merchandise, and will be subject to the modifications that the parties consider appropriate and determined in their contracts, within the freedom that national and international trade and rules grant them.  

A competitive but also a secure road transportation

We received a new case in our law firm. Our good clients request that we protect their interests in a case of cargo that was stolen during a road transportation between Spain and Italy, a contract that was agreed under the terms of the CMR Convention (Convention relative au contrat de transport international de Marchandise par Route, Geneva 1956).

Once we were acquainted with the details, we learned that several individuals had impersonated the identity of a Spanish freight forwarding company, as well as that of its manager, with the aim to conclude several business agreements by sending emails directly to potential Spanish shippers and offering them budget-friendly transportation from Italy. To our surprise, this plan involved phone conversations in which the fraudsters used the identity of real people, the issuance of false documents using names of real existing companies, the goods collection by the fraudsters themselves in broad daylight at the concerted warehouses, and many other circumstances fitting into an elaborated thriller.

This is not an isolated case. In fact, theft of goods transported by road by means of diverse subterfuges is a serious and a live issue given its high economic impact in Spain and in the rest of the European Union. This reality was noted by various national and international organizations and associations, and has been echoed by the international association TAPA – Transported Asset Protection Association – which has denounced that the resulting number of thefts of goods in 2018 is the highest ever recorded since its foundation 20 years ago and it continues increasing in 2019. Moreover, they point out that the crimes they record in their system represent only a part of the market reality.

All this requires reflecting on the risky situations and the lack of guarantees arising during road transportation, and particularly in international transportation, due to the current dynamics pursued in contracting and subcontracting, among other circumstances. It is a common practice to subcontract the same road transportation in an unlimited way which brings forth a creation of “a chain of subcontractors” which in many cases affects the quality of the service and in the worst cases goods are damaged or stolen.

It is quite frequently a case that an export/import company decides to contract a road transport and for that contracts a reputable carrier. From this very first contact between the two entities to the ultimate and effective realization of the transportation by a professional carrier a chain of subcontractors of the same transportation might be created, a fact that might be unknown to the shipper. At least, of course, until damages occur, and liability is claimed. And it is that the contracting carrier or the first carrier, due to internal organization or due to the lack of its own fleet, can subcontract the transportation agreed with the loader to another carrier that, at the same time, can choose to subcontract it to a third party and so on until a supply chain is crated, a chain which ends in the moment that the very last and effective carrier concludes the agreed transportation. This effective carrier might be located in the country where the business was originally agreed as well as in any other country. When a transportation contract is developed between the shipper/contracting party and the first carrier, it is common to agree a set of conditions and requirements but, when the realization of the transportation moves away from the sphere of the two parties that initially agreed it and it is forwarded to the subcontracted third parties, the conditions that were agreed originally in many occasions are not respected and consequently quality and guarantees are lost (lack of regulatory certifications and permits, non-compliance with the established hours of rest, lack of a valid transport insurance, lack of an insurance for the cargo, insufficient insurance coverages, etc. ).

In order to control this situation, and in particular the problematics presented here, that is, the continued growth of thefts during transportation, it should be seriously considered to implement greater control of road transportation from the moment of its contracting to its conclusion. This control could comprise of limiting the number of accepted subcontracts or by directly prohibiting them to the first carrier, requiring compliance with the initially agreed guarantees from the subsequent subcontracted carriers, establishing verifications of safety in case of subcontracting unknown carriers or requesting the safety standards in the modes of transport, among other options. We should remember that once damage has occurred the circumstances of each transportation and its agents will be scrutinized by the affected parties and their insurers. The result of this analysis might place the carriers and their insurance companies in a delicate situation if, in case of an intent or a serious negligence, limitations of the carrier’s liability exposed in the CMR Convention or in the Spanish Law 15/2009 Contract of Transportation of Goods cannot be applied.

Nowadays, the struggle between cost and quality is part of the reality of national and international road transportation. From our law firm, we urge that shippers and carriers focus on searching for the right balance when establishing a competitive and, at the same time, secure business framework.