Chain of Responsibility (CoR) is a term given to an Australian legislative regime primarily under the Heavy Vehicle National Law (HVNL) which imposes a safety responsibility on all parties in the heavy vehicle supply chain who have control or influence over a transport task.
While this is principally a domestic law, it may affect foreign directors of Australian business, and affect how containers being shipped to Australia are packed.
There is renewed focus on CoR in light of amendments due to commence in mid-2018 and it is crucial that all levels of management in the supply chain, particularly executive officers, understand the potential personal liability they may face.
What is CoR?
Traditionally, drivers and operators have been the focus of road transport laws. However, under the CoR regime, compliance with transport laws is a shared responsibility of all parties in the supply chain. Anybody, not just the driver, who has control over a transport task can be held responsible for breaches.
This means that whether you're a consignor/dispatcher, packer, loader, scheduler, consignee/receiver, manager and operator – all parties must take all reasonable steps to prevent breaches of the road transport mass, dimension, loading, speed compliance and work hours laws.
In particular, these obligations apply to:
- freight forwarders and distributers who contract with or receive freight from heavy vehicles
- Shipping lines and their agents
- Importers, retailers and manufacturers.
In mid-2018, the HVNL will be amended to insert a 'primary duty' for each party in the CoR to ensure, so far as is reasonably practicable, the safety of the party's transport activities relating to that vehicle.
Under further significant amendments, particularly important to those unfamiliar with the Australian transport industry, the HVNL will focus attention on executive officers (including company directors) to review their business practices to ensure proactive and preventative steps are taken to manage risks.
Executive officer liability
A unique element of the amended CoR is that it imposes personal responsibility and liability on company officers. Under the HVNL, executive officers have an ongoing personal responsibility to prevent or reduce potential harm or loss and ensure the business' processes do not ask, require or direct activities which will result in a breach of the law.
An 'executive officer' is defined to include a director or any person, by whatever title and whether or not the person is a director, who is concerned or takes part in the management of a corporation. Note that the second part of the definition of 'executive officer' is defined by function. It covers any person "who is concerned or takes part in the management of the corporation", even if they are not formally employed or remunerated as managers.
Under the amended CoR, the maximum monetary criminal penalty for an individual will be A$300,000 per offence. Courts will also be able to jail offenders.
Extra territorial application of CoR
So how do these obligations reach outside Australia?
As global supply chains become more complex, there is increased importance for those entering the Australian market to understand CoR laws and to do all thing reasonably practicable to ensure that transport activities are conducted safely.
By way of example, shipping companies may not usually be considered part of the CoR, however if they book road transport for when the goods are unloaded, that shipping company and its directors are required to comply with CoR laws.
Furthermore, it means that any foreign entity looking to expand their transport operations into Australia, either by establishing a subsidiary or otherwise, must be aware that executive officers even based overseas can face personal liability for offences under the HVNL.
Executive officers must ensure they familiarise themselves with the CoR, understand the risk associated with their business practices which may result in offences and take steps to implement a framework for CoR risk identification, assessment and mitigation, including implementing a system to monitor and address non-compliance.
Container imports and the Load Restraint Guide
The other aspect of extra-territorial application relates to import containers. Load securing is an important aspect of CoR and imported shipping containers will need to be packed in accordance with Australian safety standards. The Load Restraint Guide sets the standard for load securing and the latest version can be found here.
Parties based overseas who have interests in Australian logistics operations will need to be familiar with the Heavy Vehicle National Law.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.