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Deal by Design
Welcome to this edition of Law Update, focusing on the evolving M&A landscape across the MENA region. With deal activity and value continuing to grow, the region is seeing increased investor interest alongside a changing regulatory environment.
This edition explores key legal and market developments affecting M&A transactions, including regulatory reforms, foreign investment, governance, due diligence and deal structuring across the region.
The issue of seafreight carrier liability is one of the most important topics in maritime law in general, and one of the most prominent issues raised by the contract of carriage of goods by sea in particular. This contract creates a fundamental obligation on the carrier to transport and deliver the goods to the consignee free from any damage or loss, and at the place and time specified in the contract. Since this obligation is one of the obligations borne by the carrier as a result, not as a means, any breach of it entails legal liability when damage occurs, whether the error is issued by the seafreight carrier himself or by one of his subordinates.
Therefore, the M seafreight carrier is liable for any damage to the transported goods whenever loss, damage, or delay in delivery occurs, considering that the purpose of the freight contract is to deliver the goods to the consignee in the agreed manner and time.The significance of examining this form of liability lies in its direct connection to the very core of commercial maritime activity—one of the key pillars supporting the national economy and international trade. The Omani legislator has given special attention to this matter, and the Maritime Law has set precise provisions that balance the rights of the carrier, the shipper, and the consignee. In this article, we examine the principal instances of maritime carrier liability as regulated under Omani maritime law. The article is structured into two main sections: the first addresses the carrier’s liability for the loss of or damage to goods, and the second outlines the carrier’s liability for delay in their delivery. It concludes with key findings derived from this legislative regulation.
The seafreight carrier is obligated, by virtue of the contract of carriage, to deliver the goods to the consignee in the same condition in which they were received from the shipper or their agent, and in the quantity specified in the bill of lading. Article 206 of the Omani Maritime Law stipulates that the carrier shall be liable for the loss of or damage to the goods if such loss or damage occurs during the period between his receipt of the goods at the port of loading and their delivery at the port of discharge to the consignee. Consequently, the carrier is liable for any total or partial loss of goods, as well as for any damage affecting them, whether in whole or in part, including shortages in weight or quantity, unless the shortage results from the natural “route deficit” that affects certain types of goods during transit. This deficit is estimated according to the nature of the goods; if they are liquids, a part of them may evaporate due to weather factors, and if they are grains, a small amount may leak during shipping or unloading operations.
The law did not specify a particular means to prove this deficit, leaving the trial judge full discretion to determine the appropriate means of proof in light of the circumstances of the incident. The bill of lading may contain reservations made by the carrier regarding the condition, quantity, or weight of the goods. In this case, it is presumed that the shortage or damage predates the carrier’s receipt of the goods, and the burden of proving otherwise falls on the consignee. However, if the bill of lading does not mention the quantity of goods at all, the carrier is not liable for any shortage, on the grounds that he received them as they were when shipped, unless the consignee proves that the quantity shipped was greater than the quantity delivered to him, and he and he possesses all legally admissible means of proof to establish that.
However, if the bill of lading is “clean,” meaning free of remarks or reservations, it is considered prima facie evidence that the carrier received the goods in the condition stated therein, and the carrier’s liability for any loss or damage occurring during the execution of the contract of carriage arises without the need to prove its fault. He shall not be relieved of liability unless he proves that the loss or damage arose from a defect in the goods, a force Majeure event, or the shipper’s own fault.
The Maritime Law, in Article 207, addressed the case of goods are deemed lost, stating that if the goods are not delivered within thirty days from the expiry date of the delivery period specified in Article 208, they shall be deemed to have been lost. This means that a long delay in delivery is considered a legal destruction of the goods.
The legislator also obliged the consignee to notify the carrier in writing in the event of loss or damage to the goods, specifying precise deadlines that must be adhered to. If the loss or damage is apparent, the consignee must notify the carrier within two working days from the date of receipt of the goods, otherwise it shall be presumed that they were delivered in the condition indicated in the Bill of Lading unless evidence to the contrary is produced.
. However, if the damage is not apparent, notification may be given within fifteen days from the date of delivery. These provisions are set out in Article 217 of the Maritime Law, which establishes a simple presumption that the goods are in sound condition when no notification is made. This presumption, however, may be rebutted by any legally admissible means of proof.
Jurisprudence has observed that the text of Article (217) did not explicitly distinguish between apparent and non-apparent damage regarding the presumption. Therefore, a large part of jurisprudence and the judiciary has tended to apply the same ruling in both cases, in consideration of the equitable balance of the parties’ legal positions.
However, the Omani legislator exempted the consignee from submitting the notification in the event of an inspection of the goods in the presence of the carrier or his representative upon delivery, where their condition is proven by an official report, thus eliminating the need for a written notification. This was stipulated in the third paragraph of Article (217), which clarified that conducting the inspection in the presence of both parties obviates the need for notification.
As for the assessment of compensation, the first paragraph of Article 212 of the Maritime Law specified a precise criterion for determining the carrier’s liability for the destruction, damage, or loss of goods, stating that the value of compensation shall not exceed 500 Omani Rials for each parcel or shipping unit, or 5 Omani Rials for each kilogram of the total weight of the goods, whichever is higher. The legislator also considered that parcels or shipping units collected in containers are considered a separate parcels or unit when compensating for them in the event of the container’s destruction, provided that the bill of lading states the number of parcels or units inside the container. However, if this is not mentioned, the container is considered a single parcel. If the container is provided by the shipper, it is counted as a parcel for him, but if it is provided by the carrier, it is not counted for compensation.
The seafreight carrier is also liable for delay in delivering the goods to the consignee, whether or not the delivery date is specified in the bill of lading. If the deadline was specified in the bill of lading and the seafreight carrier failed to adhere to it, then the carrier is directly liable for the delay. However, if the time limit is not specified, the carrier’s liability shall be assessed according to the custom regarding the type of goods, the nature of the carriage, and the conditions of the maritime voyage.
Article 208 of the Maritime Law clearly addressed this situation, stating that the carrier is responsible for delay in delivering goods at the port of discharge, and is considered delayed if the goods are not delivered within the agreed-upon time or within the usual period it takes an ordinary Carrier in similar circumstances to complete the delivery if there is no agreement on a deadline for the delivery of the goods.
The article also obliges the shipper to notify the carrier in writing of the delay within 30 days from the date of delivery, and the failure to notify results in the forfeiture of the shipper’s right to claim any compensation for the delay.
As for the estimation of compensation in case of delay, paragraph 2 of Article (212) of the Maritime Law stipulates that the carrier’s liability shall be limited to an amount equivalent to two and a half times the freight due for the delayed goods, provided that this compensation does not exceed the maximum limit stated in paragraph 1 of the same article. This regulation reflects the precision of the Omani legislator in achieving a balance between protecting the interests of the shipper on the one hand, and not burdening the carrier with unlimited liability on the other.
It is clear from an interpretation of the texts of the Omani Maritime Law that the legislator has established precise regulations for the liability of the seafreight carrier, achieving a balance between the interests of both the shipper and the carrier, and ensuring the stability of international maritime transactions. It established the carrier’s liability for the loss, damage, or delayed delivery of goods, with precise controls for proving this liability and specific deadlines for notification, as well as setting a ceiling for compensation to prevent exaggeration and maintain fair commercial dealings.