Shipping Agent’s Liability under the KSA Maritime Law
Transport & Logistics Focus
Ahmed HashemSenior Counsel, Head of Shipping - KSA
Karim MarounySenior Associate.Transport & Insurance
In this article, we will highlight on the shipping agent’s obligations and rights under KSA Law.
In light of the expansion in the shipping industry in KSA, shipping agencies have been evolving with the industry growth over the last few years. As such the maritime services provided by the shipping agencies in KSA have been required to support foreign vessels, that call at different ports throughout the Kingdom. The nature of the shipping industry requires the timely performance of any works and services, this approach is necessary to be maintained for the purpose of keeping up with the pace of maritime services to attract foreign vessels to KSA ports, as well as maintain the workflow therein, and in accordance to the KSA legislator definition in KSA Maritime Law.
The legal relationship that arises between the shipping agent and the vessel’s operator is a contractual relationship governed by the agency agreement signed by and between the parties, whereby the shipping agent conducts all the legal works and acts pertinent to the vessel in the ordinary diligence, in consideration for a fee/remuneration. Therefore, KSA Maritime Law defines in its Article No. (107) that the shipping agent shall handle all works/services, which are relating to providing ordinary needs for the vessel such as supplies, fuel, and spare parts. However, in the event that the shipping agent agreed with his principle to limit his works, the shipping agent shall remain responsible towards third parties for the required works related to his activity and cannot benefit from such limitation.
Furthermore, the said article explicitly states that the shipping agent is considered as the legal domicile of the vessel operator (Principal), and his representative in any lawsuit filed by or against the Principal in KSA.
The shipping agent's liability towards shippers and consignees, the shipping agent is not liable for any loss or damage that occurs to goods. Unless the same has been sustained due to the shipping agent’s personal default committed by him or its successors. Hence, shippers and consignees may not raise any claims as a result of any loss or damage that occurs to their goods, save the cases wherein they can prove that the damage or loss occurred is attributed to the default of the vessel’s Shipping' agent or its successors.
Hence, the shipping agent is responsible and accountable to the operator for conducting such duties as a remunerated agent under article 107 of the law, as mentioned earlier. Therefore, there is no dependency relationship between the operator and the shipping agent since the latter is carrying out the work assigned thereto in consideration for a fee/remuneration.
The Maritime Law stipulates that the law of the port state, whereon such contracts and acts are made, shall be deemed the governing law that organise the legal relationship between the shipping agents and the operators (Article 117). In this respect, KSA Maritime law authorises the shipping agent to file a lawsuit against his principal before the competent court, where the shipping agent’s domicile is situated within its territorial jurisdiction. Besides, the law set forth two years from the due date as a prescription period.
The shipping agent’s debt is a privilege debt, and the shipping agent also may have the right to apply for obtaining an arrest order against the principal’s vessel as a security for the collection of a debt thereof, since the shipping agent’s remuneration is deemed a maritime debt whereby the law permits the imposition of such action.
The Shipping's agent liability towards the vessel’s operator is governed by the agency agreement signed between both parties, as mentioned hereinabove. As for its liability towards shippers and consignees, the shipping agent is not liable for any loss or damage that occurs to goods. Unless the same has been sustained due to the shipping agent’s personal default committed by him or its successors. Hence, shippers and consignees may not raise any claims as a result of any loss or damage that occurs to their goods, save the cases wherein they can prove that the damage or loss occurred is attributed to the default of the vessel’s Shipping agent or its successors.
The legal nature of the scope of shipping agent’s works governed by the contract signed between him and the operator who has the right to exploit the ship on its account in its capacity as the owner or charterer, against agreed fees, and considered as be the operator’s domicile. However, the shipping agent is deemed responsible for the shipping agency works towards third parties, even if he agreed with his principle to limit his works. In this respect, KSA protected the shipping agent by considering his debt as a privilege debt, and the shipping agent is entitled by law to apply for arresting the vessel to collect his debt.
Finally, the shippers and consignees may not raise any claims or demand any compensation if any loss or damage occurred unless such loss or damage occurred due to its personal default.
For further information,please contact Ahmed Hashem or Karim Marouny.
Published in August 2023
