Customs errors and liability: how far does the freight forwarder’s duty of care extend?

1. What Goes Wrong in Customs Declarations?

A common situation is that an incorrect commodity code is used in the declaration. As a result, no import duties are initially paid, while such duties later prove to be payable.

Following a customs audit, a post-clearance recovery notice (UTB) is issued, including interest. The importer, as the formal declarant, is held liable and will in many cases attempt to recover this loss from the freight forwarder.

The question is whether such a claim is legally viable.

2. Applicability of the FENEX Conditions

In most cases, the FENEX Conditions (Dutch Forwarding Conditions) apply to the legal relationship between the freight forwarder and the principal. These conditions are decisive in the allocation of risks and liability.

It is important that these conditions:
• have been validly declared applicable; and
• have been properly provided to the principal

If these requirements are not met, (parts of) the conditions may be voidable.

However, large professional parties and/or parties that regularly conduct business with one another are generally less able to rely on this defence.

3. Duty of care of the freight forwarder

The freight forwarder’s liability is primarily assessed on the basis of its duty of care. This means that the forwarder must act as a reasonably competent and diligent freight forwarder.

This standard is objective and is determined on the basis of the circumstances of the case, such as the complexity of the goods and the information available to the freight forwarder. For professional service providers, the standard is generally higher.

Although the duty of care forms the legal assessment framework, it is in practice strongly influenced by contractual arrangements.

4. Responsibility for customs data

A crucial aspect of the FENEX Conditions is the allocation of responsibilities:

• the principal is responsible for providing accurate and complete information
• the freight forwarder is, in principle, entitled to rely on that information

There is generally no obligation on the part of the freight forwarder to verify or investigate the information, unless any inaccuracy is evident.

This means that errors in, for example, the commodity code will generally be for the account of the principal.

5. Limitation of liability

Even where the freight forwarder can be held liable, its liability is significantly limited under the FENEX Conditions.

Typical limitations include:
• liability only in case of proven fault or negligence
• a financial cap (approximately EUR 12,000 per event)
• short limitation periods (9 months) and long-stop periods (18 months)

These limitations make it difficult in practice to recover the full amount of damages.

6. Situation without FENEX Conditions

If the FENEX Conditions do not apply, the liability of the freight forwarder is assessed on the basis of statutory law, in particular the contract for services and general law of obligations.

In that case:
• the duty of care of the forwarder plays a more prominent role
• contractual limitations of liability are often absent

The position of the principal may then be significantly stronger.

7. Practical implications

In practice, this typically means:
• the importer remains responsible for incorrect data
• the freight forwarder’s liability is limited
• interest and ancillary costs are generally not recoverable

In addition, import duties and VAT are generally not regarded as damages, as they would also have been payable if the declaration had been correct.

8. Conclusion

The FENEX Conditions are a powerful tool for freight forwarders to limit liability risks. For principals, this means that they remain largely responsible for the accuracy of customs data.

This highlights the importance of properly organising internal processes and making clear contractual arrangements with the freight forwarder in order to minimise disputes and financial risks.

Questions?
Do you have questions about liability in the event of customs errors or about the application of the FENEX Conditions in your specific situation? Feel free to contact one of our specialists.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.