Thai Law Insights

Right of Suit under Thai COGSA-Some Salient Legal Problems

(Maritime Law Series Project)

Chatchawarl Sornsurarsdr/Prapanpong Chaikhamhan

For an action in the Thai Central Intellectual Property and International Trade Court against a carrier for loss or damage under the Thai Carriage of Goods by Sea Act of 1991, known as "Thai COGSA", as in other jurisdictions, cargo claimants and their lawyers may be concerned about whether they may sue in the name of a person who may not have a right to claim or, if they are proceeding against the wrong party, in a case where many parties were involved along the route, such as the carrier, shipper, consignee, insurer, freight forwarder or others.

A. Parties to the Carriage of Goods by Sea Contract & Right of Suit

Under Thai COGSA, no specific formality of the carriage of goods by sea contract formation (also referred as "carriage contract") is required. A carriage contract can be formed in writing or not, provided that it includes all legal elements of contract formation set out by Thai law.

The carriage contract should usually be executed as between the carrier and shipper. In actuality, the carriage contract is tied into a larger transaction mainly involving an underlying international sale of goods contract, international payment terms, insurance contract and dispute resolution terms; thereby entailing different parties under separate contracts involved coming to the scene when a dispute arises.

However, under the carriage contract, only the shipper and the carrier have the right to take legal action against one another if the cargo loss or damage occurs. In fact, the shipper is usually not the party who actually suffers the loss or damage incurred. It is usually the consignee, as also the buyer of the goods per the separate sale contract, who actually suffers loss.

Based on legal relationships, the consignee, as the third party to the carriage contract, should be the actual owner of the goods (as the buyer per the separate sale contract) at the end. However, the consignee has no right pursuant to the carriage contract to sue the carrier if the cargo is damaged or lost. This may seem unfair to the consignee. Thai COGSA does not include any clear provision that the consignee should have the right of suit against the carrier. This omission creates a legal dilemma.

B. Some Practical Solutions

B1. To find a solution to recover the consignee's right of suit against the carrier, the shipper may sue the carrier for the benefit of the cargo owner, namely the consignee by virtue of the separate sale contract or other legal relationships whereby the shipper is considered as acting an agent of the consignee in enforcing the carriage contract against the carrier. However, the consignee may sue the carrier on behalf of the shipper by virtue of the power of attorney granted by the shipper.

B2. An underwriter, such as insurer, can sue the carrier by virtue of subrogation under Thai insurance law, after indemnifying its client but, the insurer cannot claim from the carrier any amount more than the indemnity.

B3. The Thai Court may find a solution by exploring and assessing relevant English law governing the right of suit under the carriage of goods by sea relationships as general principles of law which may be applied in Court, provided that there is no conflict with Thai law.

B4. Some Thai legal scholars who have authority in this area of law have suggested that Thai COGSA should be amended by including a clear provision to entitle the consignee to have the right of suit against the carrier in case of loss or damage.