Recognition of HAWBs under Chapter IX of the Civil Aviation Law

Jin Mao PRC Lawyers
Alan Zhou and Chu Bo Chen
[email protected]; [email protected]

House Air Way Bills, also commonly known as HAWBs, are documents issued by freight forwarders to consignors of air cargo. In the freight forwarding industry, HAWBs are fairly similar to Master Air Way Bills (MAWBs) – which are issued by or on behalf of airlines – as they serve as receipt of cargo and evidence of contract of carriage of cargo by air between carriers and consignors.

Section 106 of Civil Aviation Law of the PRC provides that “this Chapter (Chapter IX Public Air Transport, Article 106 to 144) shall apply to the transport of persons, baggages, or cargoes performed by the civil aircraft of public air transport enterprise, including the gratuitous transport performed by the civil aircraft of public air transport enterprise”. Interestingly, there is no definition of “public air transport enterprise”, which begs the question whether a freight forwarder that arranges transport of cargo by air and issues HAWB on its own behalf constitutes such an enterprise. This accordingly leads to two further questions: (1) is the freight forwarding industry recognised by the Civil Aviation Law; and (2) is HAWB protected by Civil Aviation Law?

It is the author's opinion that the definition of 'public air transport enterprise' under the Civil Aviation Law is not confined to airlines, but also includes those freight forwarders that arrange transport of cargo by air and issue HAWB on their own behalf. The reasons are as follows:

1) Under the Civil Aviation Law, 'carriers' are generally divided into two types, i.e. contracting carrier and actual carrier (please see Section 4 of Chapter IX of Civil Aviation Law). Any freight forwarder may perform contracts for carriage of goods by air through subcontracting the goods to an actual carrier. The privity between the contracting carriers and the actual carriers is bound by the MAWBs, while that between the contracting carrier and the consignor by the HAWBs.

2) The freight forwarding industry has been recognised by the Stipulations on the Administration of International Freight Forwarding Industry of the PRC as promulgated by the Ministry of Commerce on January 1 2004 (SAIFF). The Detailed Implemental Rules for SAIFF provide that:

“the international freight forwarder, when engaged in international freight forwarding operations as independent operator, shall refer to activities whereby it accepts the entrustment of the consignee, consignor or their agents of import and export, signs and issues transport documents, honors transport contracts and collects transport fees and service charges…the international freight forwarder, when acting as independent operator dealing in relevant activities listed in Section 32 of this Rules, shall sign and issue transport documents and bills to the owner of cargo. Should a business dispute occur with the owner of cargo, the signed transport documents and bills shall be used as the basis for dispute settlement”.

In other words, a freight forwarder, as an 'independent operator', is authorised by the Rules to accept the entrustment of air cargo, to issue HAWB (transport document), and to collect transport fees in air transport. The HAWB serves as receipt of cargo and evidence of contract of carriage of cargo by air between carrier and consignor, which is the basis for dispute settlement.

3) The Chinese courts have also recognised that the international freight forwarders that engage in international transportation activities shall have legal status as 'contracting carriers'. The High Court of Shanghai, in its Interpretations & Answers, states that “in judicial practice, should the party concerned sign and issue the NVOCC bill(s) of lading or the multimodal transport bill(s) of lading, it is appropriate to hold that that party is a NVOCC or a multimodal transport operator, and the contract between the party and the consigner or the consignee contract of carriage”.

In air cargo transportation, the freight forwarders that sign and issue house air waybill on their own behalf shall have the same or similar legal status as those who engage in sea transport and/or multimodal transport. These 'independent operators' shall be the 'contracting carriers' under contract for carriage of cargo by air as evidenced by HAWB. Even though these 'contracting carriers' are displayed on the face of the MAWB of airlines as 'shippers' or 'consignees', they differ from the real 'owners of cargo'.

4) There is no specific rule whatsoever on the freight forwarding industry in air cargo transport. If 'public air transport enterprise' under the Civil Aviation Law should be confined to airlines only, contracts for carriage between consignors and freight forwarders that act as 'independent operators' would be deprived of protection of the Civil Aviation Law. The disastrous but inevitable outcome would be that the freight forwarding industry in air cargo transport would descend into anarchy.

Therefore, freight forwarders, which perform as 'independent operators' in air transport, are and shall be deemed 'public air transport enterprises' with the meaning and implication as specified in the Civil Aviation Law. HAWBs, as a typical type of air transport document, shall be recognised and protected by the Civil Aviation Law.