Damaged Cargo in Transport Law

Damaged Cargo in Transport Law

Damaged cargo in transportation refers to any goods or packaging that, during carriage from origin to destination, suffer physical damage, spoilage, breakage, leakage, deformation, contamination, or total or partial loss. From a legal standpoint, Article 386 of the Iranian Commercial Code holds the carrier responsible for preserving the cargo in sound condition, unless the carrier proves that the loss resulted from causes beyond its control. In addition, under the regulations of the Road Maintenance and Transportation Organization and the relevant maritime and air transport regulations, any damage to cargo should be documented in an official delivery report at the destination.

Under recognized legal and jurisprudential principles, the carrier is generally treated as a custodial party who bears responsibility for the goods, except in cases of force majeure or a valid contrary stipulation. Accordingly, under Iranian law, where goods are not delivered in sound condition, and the carrier lacks a legally acceptable defense, the carrier is obligated to compensate for the loss.

This issue may be pursued through formal notice of claim and subsequent civil proceedings or through the insurance process, depending on the circumstances.

Evidence Required to Prove Transport-Related Damage

A successful claim for transport damage depends on accurate documentation. The consignment note, whether for road, sea, or air transport, is the primary evidence of the contract of carriage and typically states the cargo description, weight, quantity, conditions, and the origin and destination. It should also include carriage terms, any limitation of liability, the carrier’s details, signatures and stamps, and tracking identifiers.

A delivery report at destination, signed by the consignee and, where relevant, customs or transport officials, is also important, particularly where it records the type and condition of the damage. Technical evidence is also commonly required, including an expert report to assess the nature and amount of the loss. Where the cargo is insured, the insurance policy and the insurer’s survey report should also be provided. Under Article 519 of the Civil Procedure Code, presenting adequate documentation and obtaining a formal expert assessment typically strengthens the claimant’s position. Without such evidence, proving liability, or even establishing the occurrence and extent of the loss, can be difficult.

The Carrier’s Liability Under the Iranian Commercial Code

Iranian commercial law addresses carrier liability in detail. Article 386 provides that where merchandise is lost or goes missing, the carrier must compensate unless it proves that the loss resulted from force majeure or the inherent nature of the goods. This reflects the core principle of contractual liability in carriage.

Article 387 further provides that if goods arrive late and the delay causes damage, the carrier may also be responsible for the resulting loss. Iranian law also distinguishes between domestic land carriage and international transport, in which trade practices and international norms may be relevant. Liability may be limited by contract or consignment note terms, but such limitations are valid only to the extent they do not violate the principles of fairness and public order. In cases of gross negligence, intentional misconduct, or serious fault, liability may be pursued even apart from contractual claims, including under the general tort principle reflected in Article 331 of the Civil Code. Therefore, a carrier cannot generally avoid all responsibility through broad disclaimers.

How to Draft and Serve a Formal Notice of Claim

A formal notice of claim is typically the first official step in seeking compensation from the carrier. Under Article 156 of the Civil Procedure Code, a formal notice is a recognized mechanism to communicate a claim to the opposing party and may later support the claimant’s good faith and diligence.

In transport disputes, the notice should be sent promptly after discovery of damage. It should include key information such as the consignment note number, cargo description, nature of the damage, date of discovery, demand for compensation, and a deadline for response. It should be served on the carrier at the carrier’s registered address through the official judicial service process, and the claimant should retain copies and proof of service.

Late or omitted notice may weaken the claimant’s position and, depending on the circumstances, may affect admissibility or evidentiary strength. In insurance-related claims, policies often require prior notice to the carrier before engaging the insurer. Accordingly, the notice functions both as a formal warning and as an important evidentiary document.

Claiming Compensation From the Insurer

If the cargo is insured, the primary recovery route may be through the insurer. Transport insurance may include domestic transport insurance, international cargo insurance, and common clauses such as Institute Cargo Clauses A, B, or C. After identifying damage, the insured party should notify the insurer promptly and request a survey.

The insurer’s surveyor or appointed expert will inspect the cargo and issue an assessment report.

Under the policy terms and the Iranian Insurance Law of 1937, the insurer must pay compensation when coverage applies, and the insured has complied with the policy conditions. A key point is that, after paying the insured, the insurer may pursue subrogation against the carrier. For this reason, the insured should cooperate by providing documents and preserving evidence.

If the insurer refuses to pay, the claimant may file a civil claim against the insurer in the competent public court, typically based on the insurer’s domicile or the policy issuance location. Invoices, the consignment note, survey reports, and photographic documentation are often decisive.

Statutory Time Limits for Filing a Claim

Time limits are critical in cargo damage disputes. Under Article 392 of the Iranian Commercial Code, claims arising from carriage must generally be filed within one year from the date of delivery or the scheduled delivery date.

If the claimant fails to file within this period, the court may dismiss the claim for failure to comply with the applicable time bar.

In certain contexts, such as international road transport governed by the CMR, the limitation period is generally one year. It may be extended through a written complaint in accordance with applicable rules. In insurance matters, Article 36 of the Insurance Law provides two years for claims against insurers, calculated from the date of occurrence or the relevant notice of loss, depending on the circumstances. While the Civil Code contains broader general limitation concepts, transport and commercial disputes often follow specific rules. Therefore, prompt documentation, timely notice, and filing within the applicable deadline are essential to preserve recovery rights.

The Competent Court for Transport Damage Claims

Selecting the competent forum depends on the type of transport, the contract location, the place of loss, and the parties’ status. In domestic transport, the public civil court of the defendant’s domicile, the place of delivery, or the place where the contract was concluded may have jurisdiction, and Article 11 of the Civil Procedure Code provides flexibility for the claimant in choosing among competent forums.

In international transport, jurisdiction may be more complex. If the contract or consignment note includes an arbitration clause or a forum selection clause, it should be considered, although provisions that violate Iranian public order may not be enforceable. In practice, many transport disputes are brought before specialized commercial branches, including in Tehran. Where damage arises from customs procedures at a customs facility, administrative litigation routes may also be relevant in certain cases. Correct forum selection can significantly reduce time and cost.

Referring Transport Disputes to Arbitration

Many transport contracts include arbitration clauses. Arbitration is a private and often faster method for resolving disputes, recognized under Article 454 of the Civil Procedure Code and consistent with established legal principles. In international transport, arbitration is frequently conducted through recognized institutions. In Iran, the Tehran Regional Arbitration Centre, affiliated with the Iran Chamber of Commerce, is commonly used in commercial matters.

Where an arbitration clause exists, court litigation is typically limited to specific situations such as invalidity of the arbitration agreement or enforcement-related issues.

Arbitral awards are generally enforceable unless statutory grounds for annulment apply. Arbitration may be initiated through a contractual clause or through a separate agreement concluded after the dispute arises.

Given the technical nature of logistics, insurance, and carriage rules, specialized arbitration often produces more precise outcomes.

The Role of Official Expert Opinion in Proving Damage

Official expert assessment is often a decisive evidentiary tool. Under Article 451 of the Civil Procedure Code, the court may appoint official experts where specialized evaluation is necessary to determine the cause or extent of damage. In cargo disputes, experts in customs, transport, and commercial matters may be appointed, depending on the subject matter.

Experts review documentation, inspect the damaged goods where possible, examine transport conditions, and issue a reasoned written opinion. Courts frequently rely on these opinions when determining liability and calculating compensation.

Parties may also obtain private assessments and submit them as supporting evidence, but official expert reports typically carry greater evidentiary weight.

This is particularly important for cases involving fragile goods, perishable items, moisture ingress, leakage, or delay-related damage.

How Damaged Cargo Compensation Is Calculated

Under Iranian law, compensation is generally based on full restitution of the actual loss. Pursuant to Article 515 of the Civil Procedure Code and the principle of compensating proven harm, damages should reflect the real value of the lost or defective goods. Where goods are totally lost, the market value at the destination is typically used.

Where goods remain usable but are impaired, the reduction in value is commonly assessed by expert opinion.

Ancillary costs, such as repair or restoration expenses, repackaging, re-carriage, and customs-related charges, may also be recoverable where causation is established. For perishable or time-sensitive goods, delivery timing can materially affect valuation.

If insurance has paid part of the loss, recovery may be adjusted in accordance with the insurance coverage and subrogation principles. Delay damages may also be claimed where the delay caused a provable loss and is supported by evidence. In practice, courts rely primarily on official expert assessments and prevailing market evidence.

Frequently Asked Questions About the Legal Definition of Damaged Cargo in Transportation