Regulatory Background of Freight Forwarding in Ukraine
The Law of Ukraine “On Freight Forwarding Activity” as of 1 July 2004 No. 1955-IV as amended (the “Forwarding Law”) is the fundamental legislative act in the given field, which sets forth principles and general regulation on freight forwarding activity, rights, obligations and liabilities of the parties to the forwarding agreement, legal relations, arising out of forwarding of by all types of transport, except for pipeline transport, etc. The said Law shall also apply when a carrier acts as a forwarding agent.
The forwarding activity is defined as a commercial activity on rendering forwarding services as to arrangement and support of export, import or transit transportation of cargo. The forwarding activity shall be performed by the forwarding agent under instructions and at the expense of the client in accordance with the forwarding agreement concluded between the parties. Local Freight Forwarders are responsible for the preparation of the document packet to be forwarded to the local authorities, customs in the foreign country, the banks, and the Importer. May also be responsible for coordinating local truck/rail and may be asked to book space on vessels and have containers dispatched to the manufacturer.
Both natural persons and legal entities, irrespectively of the form of ownership, (both resident and non-resident) may act as forwarding agents. Commercial entities, rendering forwarding services, may have: (a) warehouses, (b) different types of transport, (c) containers, (d) production premises, etc. Moreover, forwarding agents are entitled to engage third persons in order to perform their obligations under the forwarding agreement and act in their own/their client’s name with the said third persons.
The Forwarding Law defines types of forwarding services. Forwarding services shall be rendered by the forwarding agent to the client when exporting from Ukraine, importing into Ukraine, transit through the territory of Ukraine or other states, internal transportations through the territory of Ukraine.
The forwarding agents may act both as an agent and a carrier. Under the Law on Licensing, the forwarding agent shall obtain a license for motor vehicle transportation only when he acts as a carrier, i.e. if the forwarding agent does not provide transportation services, no license is required.
Under a forwarding contract, a forwarder is obliged for payment or at the expense of the client to perform or arrange the provision of services stipulated by the contract related to the transportation of goods. A forwarding contract also envisages the provision of additional services (loading and unloading, payment of duties, goods storing, and fulfillment of customs formalities). In commerce such services are referred to as logistical services.
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