Ms Kay Pysden and Mr Sam Perez-Goldzveig of Davies Lavery have released a report on the implications of a CSI programme which, though not legislative, brings administrative law issues into play.

The fact that there will be US Customs officers in British ports dealing with CSI implementation will have legal implications in that they will, in reality, be enforcing US regulations within UK jurisdiction, albeit with the apparent agreement of the British Government.

The impact extends to future potential security legislation and to what extent England may have to consider changing its legislation to fall into line with future US legislation without contravening its obligations under European Law. Other countries may also need to analyse the issue against their own case scenario.

If the programme affects the operation of the transportation of goods and the contractual rights and obligations of those involved in a detrimental manner, commercial losses may arise and legal challenges may follow.

According to US Customs, the programme has four main core objectives. Davies Lavery suggests a number of implications for each which include:

1) CSI will establish security criteria to identify high risk containers. Will discretion be operated fairly and will any checks operate unfairly against any particular group? If a container is considered high risk, what procedures would be followed? Would the carrier or freight forwarder be questioned and if so, will they have the benefits of legal protections existing under legislation enacted in this jurisdiction?

What will be the penalties or will the only consequence be delay? If a container is inspected and goods damaged during inspection, are UK or US Customs Authorities liable?

2) CSI will pre-screen those containers identified as high-risk before they arrive in the US.

This will inevitably cause delivery delays. Insurers and carriers need to consider contracts for carriage with reference to delay. Also, which government will deploy and pay for the extra personnel needed to perform pre-screening operations?

3) CSI will use technology to quickly pre-screen high-risk containers. This will only work if the information system is standardised and regulated by the governments through reasonable legislation. The technical issues may create contractual liabilities if the information required is not clear and uniform. If the information used is in breach of the Data Protection Act or unfairly used, other liabilities may arise.

4) CSI will develop and use smart and secure containers.

International standards through legislation is the only way forward. The development of smart and secure containers will take time. To impose the duty to use them without proper consideration will create problems. Not only do issues of costs arise here but also of reasonableness.

The report also points out the implications for shippers with an office in a port under CSI operation and an office in another port not under CSI operation. Such a company will not be able to offer the same services from both ports to their customers. A firm unable to send goods to the US expeditiously may find its customers forced to desert them.

The repercussions could be far reaching and may mean that US port authorities will turn consignments away. The liability for ensuing losses may fall on certain parties who would not normally be liable under current transport legislation, yet may be left without rights of recourse.

There are many other scenarios available to illustrate the inequality of the effect of CSI when not implemented uniformly. The importance, especially bearing in mind the European Community, is that anti-competitive issues may be involved and bilateral agreements between the US and other governments may be challenged in the near future on this basis.

Davies Lavery is concerned to point out that their report is not legal advice and that no party should act upon it without having taken appropriate legal advice.

MJ Information No: 17615