Customs Fines in Belgium for Undeclared Cargo in FCL/FCL Containers

May 2007

The Club is presently dealing with this matter on behalf of a shipowner Member who carried a 20’ FCL/FCL container from the Persian Gulf to Antwerp “said to contain” 433 bags of white rice. During a routine search of the container by the Belgium Customs Authority, the seal on the container was broken and it was found that the container in fact held only 286 bags of rice and behind these were a total of 90,000 cartons of cigarettes.

The Antwerp Customs Authority commenced criminal proceedings against, inter alia, the vessel’s agents, shippers and consignees for illegally importing the cigarettes contrary to Article 202 of the European Community Customs Code.

It was the owners’ position that their agent, acting on owners’ behalf, did not physically bring the goods over the border themselves, and, as the container was loaded, carried and discharged with the container seals intact, there was no reasonable means for the agents or their principals to check the contents of the container and therefore they should not be responsible for any resultant customs fine.

Article 202 of the European Union Customs Code gives a restrictive definition of who is liable for customs debt in the case of goods being imported illicitly namely the person who introduces the goods into the territory, i.e. the person who physically takes them over the EU border. This is in addition to those who have participated in introducing the goods, or who have acquired the goods or had them amongst themselves while they knew, or could reasonably have known, that the goods were imported in an illicit way.

In March 2005 the European Court confirmed in the Papismedov[1] case that;

“It is for the national court to establish, in the light of the circumstances of the main proceedings, whether the person who lodged the summary declaration or the customs declaration was, because he stated an incorrect designation, responsible for the unlawful introduction of the goods. If such is not the case, it is for that court to consider whether, by that action, the person participated in the introduction of the goods whilst he was or should reasonably have been aware that it was unlawful.”

Bearing this in mind, Article 24, §2 of the Belgian “General Customs and Excise Act” states that the person authorized by the vessel’s Master to submit the general declaration, i.e. the owners’ agent, assumes the legal responsibilities of the master in connection with the import of the goods. The Belgium Customs Authority therefore considered the agent as the principal customs debtor, instead of the master.

Lawyers appointed on behalf of the owners believed that there was a reasonable opportunity to reject liability for this matter, given that agents were innocent parties to the alleged smuggling operation.

The Court of first instance agreed with the owners’ position and rejected the claim against the agents, finding the shipper and consignee solely responsible for the smuggling. The Customs Authority appealed the decision.

The Criminal Court of Appeal have, unfortunately, overturned the original decision and found that, even if the shippers and consignees can be considered as debtors for the goods, the person who materially brought the goods in without declaring these should remain a debtor.

The Court also stated;

“The Court is of the opinion that in all reasonableness it cannot be accepted that (inter alia) even in case of an FCL container, the carrier by sea and their representing ship Agent should not and/or could not know the nature of the cargo actually being transported in the containers - sealed either commercially or Customs sealed - albeit only for the purpose of ensuring safety on board of the ship and in the country and place of destination.”

The Court therefore found the agents, as the representatives of the master/carrier, to be jointly and severally liable for the unpaid customs dues and fine. Investigations are presently underway to see whether this judgment can be appealed.

This judgment, as it presently stands, raises serious implications for carriers of FCL/FCL containers to Belgium. The Club understands from lawyers that although the relevant legislation in Belgium is presently under review, it is anticipated that the appropriate amendments will not come into effect in the immediate future.

It must be noted that this decision is only relevant to smuggling cases which are pursued through the criminal courts and should not have any bearing on carrier’s liability for claims under Bills of Lading.

 

[1] Case C-195/03 (reference for a preliminary ruling from the Hof van Beroep te Antwerpen): Ministerie van Financiën v Merabi Papismedov and Others (OJ C 158 of 5.7.2003)