Special provisions for international rail transport to and from China

The international transportation of goods by rail is of increasing importance for China. It is estimated that by the middle of 2016 goods worth about 16 billion Euros were transported by rail from 25 cities in China to Europe in nearly 2000 trips. Meanwhile, goods can be transported from Germany to China within 14 to 18 days. Currently, there are direct freight trains between the following German and Chinese cities: Duisburg - Chongqing / Wuhan / Changsha; Hamburg - Zhengzhou / Wuhan; Leipzig - Shenyang. Further rail connections between Europe and China are constantly being added. In January 2017, for example, the first regular freight train went from the eastern Chinese coastal city of Yiwu via Kazakhstan, Russia, Belarus, Poland, Germany and France to London, which is more than 12,000 km away.

In the area of international rail transportation, China ratified the international SMGS convention (Russian original title: Soglschenije Meshdunarodnoje Grusowoje Ssobschtschenije), a treaty formed by China, Mongolia, North Korea, Vietnam, former Sowjet republics and Eastern European nations such as Poland, Bulgaria, Hungary and Albania. Annex 1 to the SMGS contains a liability system for cargo transported by rail (General Provisions on the Contract of Carriage of Goods in International Traffic).

The SMGS applies to contracts for the carriage of goods in international through railway traffics, which is defined as carriage of goods by rail on the territories of two or more states under a single document (consignment note), issued for the whole route.

However, China has not ratified the international COTIF (Convention Concerning International Carriage by Rail) and the CIM (Uniform Rules Concerning International Carriage By Rail, Appendix B to COTIF). Thus, rail transports between China and Europe occur between nations which either have ratified SMGS, COTIF or both conventions, which raises the question of the applicable rules of liability.

In practice, such transportations are generally not conducted as through-transportation, but on the basis of two contracts of carriage and are discontinued at the border of the area of application of the respective convention. The introduction of a unified CIM/SMGS contract of carriage by the CIT (International Rail Transport Committee) aims to enable a unified carriage through defined transport corridors.

Key provisions of the SMGS

Some key provisions of the SMGS can be summarized as follows:

Packaging	Consignor must ensure that goods which require unit containers or packaging to protect them are packaged adequately and that markings, labels or tags are applied correctly and that goods are loaded into suitable wagons.
Liability	Carrier is liable to consignor and consignee for loss or shortage of, or damage to (spoilage of), goods between the time of their acceptance for carriage and the time of their delivery. Circumstances constituting grounds for carrier's liability for loss or shortage of, or damage to (spoilage of), the goods, have to be certified by a formal report. Carrier is liable for exceeding the delivery period (delay) and has to pay a penalty.
Defenses	Carrier can escape liability for loss or shortage of, damage to goods in a number of situations which are set out in further detail. Some key points are when damage or loss was due to the quality or nature of the goods, due to the containers or packaging, due to the fault of the consignor or consignee or could not be avoided by the carrier or due to a special agreement concerning the freight.
Limitation	No liability cap on a per kg basis. Declaration of value can be made by agreement between carrier and consignor against a fee. For loss or shortage of goods the amount of compensation is determined on the basis of the value of the goods. For delay compensation has to be determined on the basis of the carriage charges of the carrier who caused the delivery deadline to be exceeded, and the value (length) of the exceedance of the delivery deadline.
Time	Actions against carriers have to be brought: within two months, if they concern exceedance of the delivery deadline; within nine months, if brought on other grounds.

For national rail transportations in China or where the SMGS does not apply or fully regulates a matter, the Railway Law of the People's Republic of China contains further provisions.

For more information, please see our article about the applicable transport liability regimes for shipping goods from and to China.

Further special regulations also apply in air transport, sea transport and in the case of multimodal transport.

updated 12 June 2017