Freight Forwarder in Iranian Law

Freight Forwarder in Iranian Law

A freight forwarder is a person who, on behalf of the consignor, undertakes the coordination, organization, and execution of the transportation of goods. This role may involve arranging carriage in-house or outsourcing it to third-party carriers. In Iranian law, the freight forwarder’s function may be analyzed primarily under the general rules of agency in the Civil Code and, where relevant, under the Commercial Code.

Pursuant to Article 656 of the Iranian Civil Code, agency is a contract by which one party appoints another to act on its behalf in a specified matter. In this context, the freight forwarder, acting as the consignor’s agent, may perform a range of actions, including obtaining transport documents, arranging cargo insurance, concluding carriage contracts, coordinating customs clearance, and managing related logistics. In international transactions, the freight forwarder’s role becomes more complex and may involve contractual, statutory, and customary responsibilities, often requiring comparative analysis with international instruments and practices such as Incoterms, the CMR Convention, and FIATA-related rules and standard forms.

The Role of Freight Forwarders in Foreign Trade Contracts

In international trade, the freight forwarder acts as a facilitator and coordinator. The forwarder not only organizes the movement of cargo from origin to destination, but may also manage operational stages such as customs procedures, insurance arrangements, and packaging requirements. Under Iranian law, these services may be structured as a transportation services agreement governed by the general principle of contractual freedom under Article 10 of the Civil Code, together with the broader rules applicable to commercial contracts.

Depending on the parties’ agreement, the freight forwarder may assume various responsibilities and may be held liable for negligent performance under contractual and civil liability principles. In international practice, freight forwarders often rely on frameworks such as FIATA rules and Incoterms 2020. In Iran, however, interpretation tends to rely more on contractual terms and established commercial customs. For this reason, it is essential to define the forwarder’s duties, authority, and liability allocation with precision to reduce the risk of future disputes. Under Article 219 of the Civil Code, private contracts are binding provided they do not conflict with mandatory law.

Scope of Authority When the Freight Forwarder Acts as an Agent

Where the freight forwarder acts as an agent, the forwarder must operate strictly within the authority granted under the power of attorney or the contract. Under Article 663 of the Civil Code, an agent may not perform acts beyond the scope of authority unless expressly authorized. This principle applies equally in international transportation arrangements. For example, if a forwarder changes the mode of carriage without the principal’s authorization, or ships valuable goods without arranging insurance where the mandate requires it, the forwarder may be liable for resulting losses. Where the scope of authority is not clearly defined, interpretation is typically restrictive in favor of the principal.

From a commercial law perspective, when a forwarder deals with third parties, it should ensure that its representative capacity is clear and lawfully established. Otherwise, the forwarder may be treated as personally bound by obligations created with third parties. Accordingly, international contracts should avoid vague language and should expressly define the forwarder’s authority. Clear delineation of authority reduces disputes and strengthens commercial certainty.

Civil Liability of a Freight Forwarder in the Event of Loss or Damage

Where goods suffer loss or damage, a freight forwarder may be liable to compensate. The basis of liability may be contractual, civil, or negligent performance of professional duties. Under Article 515 of Iran’s Civil Procedure Code, an injured party may claim damages provided the defendant’s fault is proven and causation is established. If a freight forwarder fails to comply with transportation standards, negligently handles packaging or insurance, or selects an unsuitable carrier without appropriate diligence, liability may arise.

Although a freight forwarder may not be the physical carrier, the forwarder owes the consignor a duty of professional care and good faith due to the contractual relationship. In certain cases, dual liability may be argued: contractual liability toward the consignor and civil liability toward other cargo interests, depending on the transaction structure. Iranian judicial practice in comparable cases has imposed liability on forwarders where fault was established. Accordingly, careful drafting of the forwarder agreement and securing valid insurance coverage are of substantial importance.

Comparative Perspective on the Freight Forwarder’s Role in Islamic Jurisprudence

In Islamic jurisprudence, the agency contract is the primary basis for analyzing the freight forwarder’s role. Agency is generally treated as an authorization-based arrangement that may be terminated, limited, or conditioned. Scholars in both Shi’a and Sunni traditions recognize its permissibility, provided that the arrangement does not involve prohibited uncertainty, unjust enrichment, or unlawful conditions.

In transportation arrangements, the forwarder, acting with the owner’s authorization, may enter into ancillary contracts, such as carriage, insurance, and warehousing, which may be characterized as agency in transactions. If the forwarder exceeds authority or acts negligently, the forwarder may be liable as a guarantor, particularly where the forwarder was aware of foreseeable risk and failed to take preventive measures. Clauses purporting to waive liability require careful assessment because pre-fault waiver of liability is debated in jurisprudential analysis and may be considered ineffective in certain views. These considerations can be important when drafting international transportation agreements involving Muslim parties or performance in jurisdictions where Sharia-based considerations are relevant.

FIATA Contractual Frameworks and the Forwarder’s Role

The International Federation of Freight Forwarders Associations (FIATA) has developed contractual models widely used in global trade. These instruments, including the FIATA Model Rules for Freight Forwarding Services, provide structured frameworks addressing liability allocation, remuneration, insurance, and the forwarder’s authority. Under Iranian law, using such models is generally possible under the principle of contractual freedom in Article 10 of the Civil Code, provided that the terms do not conflict with mandatory domestic laws.

For example, clauses that attempt to exclude liability entirely may be unenforceable if they conflict with public policy or prejudice third-party rights. Under FIATA-based structures, a forwarder may act either as an agent or as a principal. In the agent role, the forwarder represents the consignor. In the principal role, the forwarder becomes a direct contracting party for carriage. Each structure has distinct legal consequences, and the chosen role should be expressly stated in the contract. In practice, aligning FIATA terms with Iranian legal requirements typically requires careful legal review.

The Freight Forwarder’s Role in Iran’s Customs System

In import and export processes, the freight forwarder often functions as an intermediary between the cargo owner and customs authorities. Under the implementing regulations of Iran’s Customs Affairs Law, a licensed customs broker must hold a valid permit and act within statutory limits. Typical duties include declaring goods, paying duties and charges, obtaining delivery orders, and preparing declarations.

In international transactions, a freight forwarder may also undertake customs-related responsibilities and may coordinate with customs, carriers, and insurers through ancillary agreements to complete delivery. Although these tasks may appear administrative, the legal exposure is substantial. Errors or false declarations can lead to customs offenses, seizure of goods, and significant penalties. For this reason, contracts with freight forwarders should specify customs obligations precisely and include safeguards such as liquidated damages, indemnities, or professional liability insurance.

Responsibility for Sanctions Compliance and Regulatory Alignment

Given the expansion of international sanctions regimes, compliance is a sensitive and increasingly important aspect of transportation agreements. In international practice, freight forwarders are expected to conduct screening regarding counterparties, origin and destination, and cargo characteristics to avoid sanctions breaches. Although Iranian domestic law in this area is less consolidated, principles of good faith and customary liability may support claims where a forwarder’s failure to comply results in the detention or seizure of goods in foreign ports.

Accordingly, contracts should include clear undertakings regarding sanctions compliance and define liability allocation in the event of non-compliance that causes loss. Contractual mechanisms such as termination rights, suspension clauses, and obligations to disclose sanctions-relevant information can reduce risk. These provisions are particularly important in dealings involving European and East Asian counterparties, where compliance expectations are often stringent.

Legal Consequences of a Freight Forwarder’s Failure to Deliver

A core responsibility of the freight forwarder is to ensure delivery to the designated destination, within the agreed time, and to the correct recipient. Failure in this respect may constitute a breach of contract and may trigger liability under general civil and contractual rules. Under Article 221 of the Civil Code, where an obligor fails to perform, the obligor must compensate the other party for resulting loss, provided the loss is direct and attributable to the breach.

In practice, delayed delivery or delivery to an unauthorized person is among the most common causes of disputes. In international transactions, the use of reliable transport documents, written instructions, and recorded delivery timelines is a key preventive measure. In domestic practice, it is advisable to generate and sign verifiable documents at each stage of handling and delivery, so that claims can be proven and damages recovered if a dispute arises.

Legal Recommendations for Contracting With a Freight Forwarder

To prevent future disputes, a detailed agreement with the freight forwarder is essential. The agreement should include complete identification of the parties, a clear scope of services, defined authority limits, allocation of liabilities, insurance requirements, sanctions compliance obligations, customs responsibilities, remuneration terms, contractual remedies, dispute resolution mechanisms, and, where appropriate, a governing law clause.

Under Iranian law, parties may structure their agreement freely, but they must avoid conflict with mandatory rules, including commercial law, customs regulations, insurance rules, and transport regulations. Key provisions typically include an arbitration clause, a force majeure clause, and carefully drafted limitations of liability. It is also prudent to review the forwarder’s professional track record, licensing status, and insurance coverage before execution. Legal counsel experienced in international contracts and transportation-related conventions can materially enhance enforceability and risk allocation.

Frequently Asked Questions About Freight Forwarders in Iranian Law