"STC" protection allowed under AMS rules, determines TT Club

24 May 2004

The TT Club, the leading transport risk insurance provider,has secured an important clarification for its Members from the US Customs & Border Protection (CBP) service regarding the continued ability to utilize the term "said to contain" (STC) on bills of lading. This is an important protection against certain types of cargo claim, says the Club, and the clarification will help dispel fears about the loss of this defence.

Since the introduction of the Advance Manifest System (AMS), part of the US government's drive to improve security of maritime trade, there has been much confusion caused by one particular aspect of the rules. The AMS regulations ban, among other things, the use of the words "said to contain" and this has been widely interpreted to mean that those words cannot appear on a bill of lading.

Writing in the Club's electronic newsletter to Members, TT Talk, claims director Andrew Trasler remarked that the TT Club has been concerned about this interpretation, as it would rob carriers of an important protection when defending claims for cargo shortages.

Normally an ocean carrier is responsible for any shortages in cargo - based on the quantity originally stated in the bill of lading - discovered at destination. A consignee is entitled to rely on the statements in the bill of lading and the carrier cannot deny their truth.

However, in the modern world of containers, carriers cannot check every single part of every single load, so they have to take the shipper's word for it that the cargo is as stated. By using the phrase "said to contain" they are putting the consignee on notice that no warranty is given that the statement is absolutely correct. In the event of a dispute, the shipper has to demonstrate that he did, in fact, load the complete cargo as described.

"It seemed to the Club that the apparent prohibition of the STC clausing under the new US regulations would leave members exposed to claims for shortages that were not their fault," said Mr Trasler. "We have therefore made enquiries of the US customs authorities and have now received the assurance that the prohibition on the use of "said to contain" applies only to the manifests."

"These are documents drawn up by the ship operators listing all the cargo on board and while they are naturally based on the information contained in the individual bills of lading, they are documents used for administrative purposes only," explained Mr Trasler. "In other words, while the exact cargo details, weight and seal number must be replicated on the advance manifest system, that does not preclude the format of the wording on the bill of lading from varying slightly, for example to comply with the terms of a

letter of credit."

The US Customs & Border Protection service has confirmed to the Club that "the AMS rules do not control the language of the bill of lading", but only the type of reporting that has to be made to CBP. Providing that there is an adequate description of the goods, the words "said to contain" may still be

used in bills of lading.

ENDSNotes for editors:

The TT Club is the international transport and logistics industry's leading provider of insurance and related risk management services. Established in 1968, the Club's membership comprises ship operators, ports and terminals, road, rail and airfreight operators, logistics companies and container lessors. As a mutual insurer, the Club exists to provide its policyholders with industry-leading benefits, which include specialist underwriting expertise, a world-wide office network providing claims management services,

and first class risk management and loss prevention advice.

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Staff Author

TT Club