Shipping Lines, Freight Forwarding Agents and Road Haulage Operators All Affected By Legal Rulings

EUROPE – WORLDWIDE – A recent publication of the Maritime Advocate highlights in detail two cases which have a profound influence on the terms and conditions of the carriage of goods for shippers and shipping lines, road haulage and freight forwarding interests, and illustrate how individual circumstances and geographical location can influence the outcome. They also demonstrate the need to sometimes pursue such claims through a neutral Court to avoid local attitudes affecting a judgement on, what would be for most industry observers, a simple argument over problems which have arisen during the shipping of cargo, multi-modally or otherwise.

The first case concerned the theft of four consignments of Canon cameras whilst they were being shipped under CMR (Convention on the Contract for the International Carriage of Goods by Road) terms from a warehouse adjacent to Schiphol Airport in the Netherlands to Willich, Germany, in 2007. The consignee partially unloaded a road trailer which had carried the goods from Amsterdam but closed for the night and recommenced unloading the following day to discover that the goods were missing from the vehicle.

After the usual legal wrangle a carrier involved first won a judgement in the Netherlands that CMR terms were applicable and this was again upheld on appeal. This meant that the claim was valid in the amount of €50,000 and most in the trade would assume this applied throughout the contract as the responsibility for the goods passed through the hands of various subcontract carriers - which was exactly how the Dutch Court saw it. There was a judicial settlement between the cargo interests and the first carrier contracted, which resulted in the insurers paying out €500,000 which the first carriers insurers then sought to recover from the subsequent road haulage interests via the German Courts.

The subsequent carriers however challenged the amount claimed pointing out the Dutch Court ruling and saying the German legislature had no right to interfere. The German authorities referred the matter to the European Court of Justice which decided a week before Christmas that the Dutch Court’s decision should be respected and the EU ruling (viewable in full HERE) makes interesting reading in that it lays out the essential paragraphs of the relevant regulations which lead it to this conclusion.

At first sight the rules regarding compensation under CMR are in fact relatively simple stating, ‘Compensation shall not, however, exceed 8.33 units of account per kilogram of gross weight short *. In addition, the carriage charges, customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damages shall be payable'. Obviously this only applies when a contractor has fulfilled all that can be reasonably expected by a client, i.e. no wilful misconduct on the carriers or his agent’s part.

This case illustrates one of the major problems facing many a classic domestic or international road haulage movement. The Canon cameras were consigned via Netherlands based Nippon Express (Nederland) BV and Nippon Express Euro Cargo BV who subcontracted to Inter-Zuid Transport the carriage from Amstelveen to Willich in Germany. Inter-Zuid subcontracted to DTC Surhuisterveen BV who passed the job to neighbouring Dutch operator Kingma. The driver arrived at Willich on the evening of the same day he had loaded but too late to fully discharge and therefore parked up at the unguarded Canon premises. Upon unloading the following day the goods were seen to be missing.

To précis the EU Court decision it was ruled that the applicable regulation (Article71 of No 44/2001) meant that a Court in one country cannot come to a different interpretation to that decided in another state and that any interpretation must ensure that the conditions assured by the regulation are observed and ruled upon at least as favourably as those underwritten by the convention. Jos van der Meché, partner at Rotterdam lawyers AKD, is quoted as commenting:

"Simply put, Germany is a country of cargo interests, while the Netherlands is primarily a country of carrier and logistics interests. The German courts are therefore likely to award damages in full against CMR carriers, while the Dutch Supreme Court sets a very high bar for the breaking of limitation of liability under CMR.

"The judgment of the Court of Justice is very decisively in favour of the Dutch interpretation of CMR and the EU Brussels 1 Regulation. It effectively endorses the use of pre-emptive strikes in the Dutch courts by CMR carriers. It also specifically rejects the position of the Federal Court of Justice of Germany, and means that it is now much easier for CMR carriers to limit their liability by starting proceedings before the carrier-friendly Dutch courts, without the risk of being sued by the cargo-friendly German courts for the same claim at a later date. It furthermore emphasises the importance of starting proceedings and obtaining a judgment under Dutch jurisdiction as soon as possible after the occurrence of theft of or damage to cargo carried under CMR conditions."

The second case which is of particular interest to freight forwarders, consignees and carriers, concerns the structure of a Bill of Lading (B/L), a document upon which, along with cargo manifests, our entire modern shipping structure was originally based, and which still holds a vital place within many freight movements. Whilst a B/L is viewed by many as sacrosanct and the key to ownership of the goods, in many modern situations this is simply not the case. Originally Bs/L were constructed by the shipping line under the principal’s instructions and goods were only delivered against production of an original document upon the payment of charges. In this latest case a freight forwarder arranged the shipment of the goods under its own name but with the line concerned naming only the agent’s principal, i.e. the shipper, on the vital document, as ordered by the agent. 

The document was therefore published exactly as per the forwarding agents instructions, but when the goods arrived at port of destination they were not collected. The forwarder then requested the goods returned to the port of loading (Barcelona) which the shipping line duly did. After a time demurrage on the goods sitting at Barcelona began to build up on a daily basis and the shipping line advised the agent who refused the charges saying that, as they were not named on the Bs/L the contract was between the carrying line and the named actual shipper as a client.

The matter went to law and, despite the Commercial Court of Barcelona finding the freight forwarder responsible for contracting the carrier and the line fulfilling all obligations by correctly preparing the documents as instructed, the Court decided that, as the forwarder was not mentioned within the body of the B/L it was immune from charges incurred.

This decision produced some consternation locally as it appears to go against common sense, having as it does implications for many lines, shippers and agents alike and it was no great surprise when the Court of Appeal overturned the judgement stating that, although the B/L was prepared by the shipping line, the details were as provided by the principal i.e. the forwarding agent concerned and it was this company which has to bear any charges.

N.B. * Different forms of multi modal carriage have differing liabilities applicable to stakeholders under CMR and any other EU conventions, all generally based on SDR’s, special drawing rights, which are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF), and details of the obligations using each transport mode can be seen here.