Export, Import and Carriage of Goods Disputes: Unpaid Shipments, Cargo Damage and Freight Claims

What counts as an export, import or carriage dispute

Any money or contract claim that comes out of buying, selling or moving goods across borders counts. So does a claim against someone who carried goods for you. The Commercial Courts Act, 2015 names these disputes directly in Section 2(1)(c), its definition of a commercial dispute: export or import of merchandise or services, admiralty and maritime matters, and carriage of goods. If the claim is worth Rs 3 lakh or more, which is the specified value under Section 2(1)(i), it goes to a Commercial Court. Those courts have stricter rules, and they keep far tighter timelines than an ordinary civil court.

Broadly, these files come in two shapes. One is a fight over the deal itself. Payment never came, or came short, or the goods were thrown back at you. Or, from the other side, the seller was late or sent the wrong stuff. That's a plain sale and contract case, and the Indian Contract Act, 1872 and the Sale of Goods Act, 1930 do most of the work. The other shape is a fight with whoever moved the goods. Think of a shipping line, an airline, a road transporter, a courier, a freight forwarder or a multimodal operator who lost, damaged or delayed your consignment, or gave it to someone with no right to it. Each mode of transport has a separate statute. Each sets its own notice rules. And the time limits are short, in some cases a matter of days.

Many files have both at once. Picture a Delhi exporter who is owed the price by a buyer overseas, and who also has a case against the forwarder that let that buyer walk away with the goods unpaid. Before anything else, figure out who is liable to you, and which law governs that liability. Get that right and you know which court to approach. You'll also know your deadline.

The law, in plain words

The deadlines are shorter than most traders think

Against a buyer, for the price of goods, you usually get three years under the Limitation Act, 1963. Article 14 covers goods sold and delivered, and Article 55 covers breach of contract. A written acknowledgment or a part payment starts the clock again. Our guide on limitation for recovery of money shows how to count it.

Carriage claims don't work like that. Against a sea carrier, you ordinarily have to file the suit within one year after the goods were delivered, or the date they should have been. Against a road carrier, the Section 16 notice must go within six months of booking. Airlines? A written complaint within 14 or 21 days, and the suit within two years. A multimodal operator gets nine months. And bills of lading and forwarders' terms often add shorter notice periods of their own.

When a cargo damage file lands on Advocate B.K. Singh's desk, the first thing he looks at isn't the damage. It's the dates. He wants the delivery date, the date of the first written complaint and the date of the survey, before he reads anything else. A good claim filed a week late is usually a dead claim. No amount of evidence brings it back.

The disputes we see most

• Foreign buyer not paying. You shipped on open account or documents against acceptance. The buyer took delivery, and the payments stopped. Quite often a quality complaint turns up later, conveniently, to justify holding back the money.
• Release without the original bill of lading. The carrier or its agent handed the cargo to the buyer without getting the original bill back, and the seller's security went with it. That claim lies against the carrier or the forwarder.
• Damage, shortage or contamination in transit. Wet cargo. Broken seals. Packages short-landed, a reefer container that let the temperature slip, or pilferage at a CFS or ICD.
• Detention, demurrage and freight. A line or forwarder bills container detention, port demurrage or revised freight, then holds the cargo, the delivery order or the bill of lading until you pay up.
• Rejection by an importer in India. The Indian buyer of imported goods won't pay, and says it's quality, or late arrival, or a price that has somehow changed.
• Agency and commission. Fights between exporters and their sales agents abroad or in India, indenting agents and customs brokers, over commission, advances and consignments that went missing.
• Letters of credit and guarantees. The bank refuses payment over discrepancies in the documents. Or the buyer invokes a performance bank guarantee you gave.

Who do you actually sue: the buyer, the carrier, the forwarder or the insurer?

If the goods arrived fine and the buyer simply won't pay, your case is against the buyer, for the price plus interest. Loss or damage on the voyage is where it gets tricky, and the Incoterm decides it. With FOB or CFR, the buyer normally takes the risk from the moment the cargo is on board. The buyer still owes you, and it's the buyer's job to go after the carrier. If your terms kept the risk on you right up to the destination, though, the carrier claim belongs to you.

Look at the bill of lading or air waybill. Whoever it names as carrier is the carrier. A forwarder that put out its own house bill may be treated as a carrier as well, while one that merely booked space for you, as your agent, generally isn't. Check the document on both sides. Who signed, in what capacity, on whose printed terms? In real life the defendant you end up chasing is often the line's agent in India, since it can be served here and has something here to attach.

If you had cargo insurance, the insurer may pay you first and then step into your shoes to sue the carrier. That's called subrogation. Before paying, insurers usually want you to sign a letter of subrogation and keep the time limits alive. Don't settle with the carrier, or give it a clean receipt, without telling the insurer. If the insurer has wrongly repudiated or short-settled your own claim, that's a separate fight, and our page on commercial insurance claim disputes deals with it.

Is Section 12A mediation needed before you file?

Usually, yes. Unless your suit seeks urgent interim relief, Section 12A of the Commercial Courts Act says you must try pre-institution mediation first. The Supreme Court made this compulsory for suits filed from 20 August 2022 in Patil Automation v. Rakheja Engineers (2022), and plaints that skipped it have since been thrown out under Order VII Rule 11 CPC. Urgency is tested on what the plaint says, read on its own (Yamini Manohar v. T.K.D. Keerthi, 2023).

The District Legal Services Authority, or the High Court Legal Services Committee, runs the mediation under the 2018 Mediation Rules. It has to finish within three months, which can be stretched by two months if both sides agree. Time spent in mediation is left out when limitation is counted. That helps a lot when a one-year carriage deadline is close. A settlement signed in mediation has the status of an arbitral award and can be enforced. The procedure is on our pre-institution mediation page.

Some trade cases really are urgent. Goods are about to be shipped out of India, a carrier is about to release cargo, or a foreign buyer has money sitting in an Indian account. Then the suit can go in straight away, with an application for an urgent injunction or for attachment before judgment. And foreign buyers skip Indian mediation all the time. When they do, the non-starter report lets you file.

How an export, import or cargo claim moves, step by step

This is the usual order for a claim in a Commercial Court in Delhi, Uttar Pradesh or Haryana. For carriage claims, steps 1 and 2 matter most. Get them wrong and little else will help.

1. Protect the claim that same week

   Give the carrier and its agent written notice of loss or damage, note the damage on the delivery receipt, and ask for a joint survey. With road cargo, serve the Section 16 notice within six months of booking. With air cargo, write within 14 days of receipt if the goods are damaged.

2. Get an independent survey and gather the papers

   Bring in a marine or cargo surveyor of your own. They should look at the goods, count packages, photograph everything and note down why it happened. Meanwhile pull together the contract, invoices, packing list, bill of lading or waybill, shipping bill or bill of entry, and all the emails. Export electronic records the right way. You'll be proving them with a Section 63 certificate under the Bharatiya Sakshya Adhiniyam, 2023.

3. Send a legal notice

   A clear notice to the buyer, carrier or forwarder sets out the facts, the amount, the interest and a deadline. It also shows you whether the other side wants to settle, or what its defence is going to be. What to put in it is on our legal notice for recovery page.

4. Go to pre-institution mediation

   Unless you need urgent interim relief, apply under Section 12A to the Legal Services Authority that has territorial jurisdiction. If the other side doesn't turn up or there's no settlement, the mediator gives a report. It goes in with your plaint.

5. Draft and file the suit

   Under Order XI, as amended for commercial suits, the plaint must list every document you hold or control. It also needs a statement of truth under Order VI Rule 15A. Get the valuation right, pay court fee on it, and file before the court that has both pecuniary and territorial jurisdiction. Where the claim rests on a written contract or a fixed sum, you may be able to file a summary suit under Order XXXVII instead.

6. Written statement and disclosure

   The defendant gets 30 days from service to file its written statement, extendable up to 120 days. After that the right is gone. Admission and denial of documents and inspection follow. Foreign defendants take longer to serve, and service abroad often has to go through diplomatic channels or whatever method the court allows.

7. Case management, evidence and judgment

   The court holds a case management hearing under Order XVA, settles the issues and sets dates. Evidence comes in by affidavit, followed by cross-examination, frequently before a local commissioner. If the defence is hopeless, say so early. Order XIIIA lets you ask for summary judgment.

8. Appeal and execution

   You get 60 days to appeal under Section 13 of the Commercial Courts Act. If the defendant is Indian, the decree is executed under Order XXI CPC, against its bank accounts, receivables or property. If it's foreign, you depend on its own country's law.

You won't need every step in every case. A lot of carriage disputes settle once the survey report and a firm notice are on the table. And a lot of buyer disputes settle in Section 12A mediation, as soon as the buyer realises the suit is real.

Time and costs, stage by stage

Where you file: court, value and territory

Value comes first. Under Rs 3 lakh, it isn't a commercial dispute at all, and the ordinary civil court hears it. In Delhi, a commercial suit worth up to Rs 2 crore is filed before the District Judge (Commercial Court) at whichever district complex has jurisdiction: Saket, Patiala House, Tis Hazari, Karkardooma, Rohini or Dwarka. Anything above Rs 2 crore is filed on the original side of the Delhi High Court, in its Commercial Division. There's been a proposal to raise the district limit, so confirm the figure on the day you file. Across the border in Uttar Pradesh and Haryana, each district has a court designated as Commercial Court, and that's where these suits go, be it Ghaziabad, Gautam Buddh Nagar, Gurugram or Faridabad. Appeals from there lie to the Allahabad High Court and the Punjab and Haryana High Court.

Next comes place. Section 20 CPC allows a suit where the defendant resides or works for gain, or where all or part of the cause of action arose. Delhi NCR exporters can often show part of it arose locally. The deal may have been closed in your office here. The cargo may have been handed over at ICD Tughlakabad, ICD Patparganj, ICD Dadri or the IGI Airport cargo terminal. Or the money was meant to land in a bank account here. The difficulty is that bills of lading and buyer contracts often name a foreign court, London or Singapore for instance, as the only forum. Our courts respect such clauses. Whether you can still sue here comes down to the exact words and your facts.

An arbitration clause in the contract usually sends the dispute to arbitration. Any court application for interim protection, or to get an arbitrator appointed, then goes under the Arbitration and Conciliation Act, 1996, which our network site arbitrationlawyer.in deals with. Ship arrest needs a coastal High Court with admiralty jurisdiction. Delhi can't do it. Our page on which commercial court will hear your case goes deeper into value and place.

Papers to gather before you file

Suing a foreign buyer, and getting paid after you win

An Indian court will hear your case against a foreign buyer if some part of the cause of action arose here and there's no binding clause pointing elsewhere. Winning isn't really the hard bit. Collecting is. If the buyer has assets in India, such as money owed to it by other Indian businesses, goods of its sitting here, or dues of an Indian subsidiary where the law permits, an Indian decree can be executed against them without much trouble. Assets abroad are another story. You'd have to enforce under that country's law, and some countries are reluctant to enforce Indian money decrees.

The rule runs both ways. Under Section 44A CPC, a decree from a reciprocating territory notified by the Central Government (the United Kingdom, Singapore and the UAE are examples) can be executed here as though an Indian court had passed it. A judgment from anywhere else needs a fresh suit in India based on it, and the defendant gets to raise the Section 13 CPC objections.

That's why careful exporters protect themselves before anything goes wrong. They use confirmed letters of credit, ECGC or private credit insurance, and an arbitration clause with a neutral seat, and they don't release original documents until they're paid. If the buyer deals regularly with other Indian suppliers or banks, attaching money owed to it here can be the quickest pressure you've got. In files that reach Advocate B.K. Singh, one practical question comes up early. Where are this buyer's assets, and can an Indian court reach any of them?

Urgent orders in trade disputes

A full trial is sometimes too slow. A Commercial Court can order a party not to release or ship goods, have cargo preserved for inspection, or make the defendant put up security. If a foreign buyer's goods or money are in India and the evidence shows they're about to leave the country to defeat your claim, you can seek attachment before judgment under Order XXXVIII Rule 5 CPC. And where the facts justify it, an Order XXXIX injunction can keep a carrier from handing goods to a party that hasn't paid.

Letters of credit and unconditional bank guarantees are a different matter. Courts are slow to stop payment under them, because they're independent promises made by banks. The usual exceptions are a clear fraud the bank knows about, or special equities of the kind that would cause irretrievable injustice. Frankly, don't build a case around stopping a guarantee unless your evidence of fraud is strong.

You can also ask the court to appoint a local commissioner to inspect goods lying at a warehouse or CFS and record their condition. It's useful when the carrier won't agree to a joint survey and the goods are about to be destroyed, auctioned by the custodian or sold. Once they're gone, so is your best evidence.

How it changes for MSMEs, large companies, importers and logistics firms

Small exporters and MSMEs. Claims here tend to fall between Rs 5 lakh and Rs 50 lakh, so the district Commercial Court hears them. If you're a registered micro or small supplier, Sections 15 to 17 of the MSMED Act, 2006 give you interest at three times the RBI bank rate, and Section 18 lets you take the dispute to the MSME Facilitation Council. That route is really built for buyers in India. With a buyer overseas, good paperwork and credit insurance will usually serve you better than a lawsuit. What rate of interest a court tends to allow is covered in our guide on interest on recovery suits.

Large exporters and importers. Bigger money, more often over Rs 2 crore, which means the Delhi High Court or arbitration. These cases usually come down to the contract terms, liability caps and expert evidence about how the damage happened. There's often an insurer in the picture. Sometimes its lawyers end up running the carrier claim.

Indian importers. Suppose the overseas supplier sent faulty or short goods and you'd paid in advance. Unless the contract gives Indian courts jurisdiction, you'll usually have to pursue that supplier abroad or in arbitration. Damage after the goods landed is different. A claim against the Indian forwarder, CFS or transporter is normally brought here. For disputes with Indian distributors over imported goods, see our supply contract disputes page.

Freight forwarders and transporters. They're often defendants. They're also plaintiffs, for unpaid freight and charges. A forwarder's freight claim is a plain money claim, and when it's well documented it often goes in as a summary suit. Customs, DGFT and GST disputes with the government aren't commercial suits at all. They go through appeals and writ petitions under their own laws.

What usually goes wrong

• Missing the notice or the time bar. The one-year sea time bar and the six-month road notice sink more good claims than anything else.
• Signing a clean delivery receipt. Take delivery without noting damage, shortage or broken seals and you've made the carrier's defence much easier.
• No independent survey. Photos from the warehouse staff, or a report from the carrier's own surveyor, leave the cause of damage wide open to argument.
• Suing the wrong party. People go after the forwarder who only acted as agent, while the real carrier is a foreign line whose time bar is quietly running out.
• Ignoring the Incoterm. Claiming against the carrier for a loss that was the buyer's risk under FOB. Or the other way round.
• Skipping Section 12A mediation. File without it when there's no real urgency and the plaint may be rejected.
• Letting go of documents too early. Sending the originals straight to the buyer on trust throws away the seller's main security for payment.

What to do this week

• Write down the delivery date, the booking date and today's date. Then work out which time limits apply to you.
• Get a written notice of loss or damage to the carrier and to its agent in India, both by email and by courier.
• Ask for a joint survey. If the carrier drags its feet, appoint your own surveyor.
• Tell your cargo insurer, and don't sign any settlement or clean receipt without its consent.
• Put the contract, invoices, bills of lading, delivery receipts and every email into one folder.
• Read the bill of lading and the contract for jurisdiction, arbitration and limitation clauses.
• Find out where the buyer or the carrier has assets or money in India.

Getting your shipping papers looked at

Paperwork and dates decide these cases far more often than clever argument does. So before money goes into a suit, get a few answers. Has the time bar already run? Who's the real carrier? Does the Incoterm leave the loss with you, or with the buyer? We talk about fees at the first meeting and agree them in writing, one stage at a time. Court fees, mediation fees and survey costs are on top.

If you'd like your bill of lading, contract and correspondence checked before you act, or want to hear how the new shipping laws are being applied, reach Advocate B.K. Singh's team through the contact page.