Shipping & Transport - Germany

Facts
Decision
Comment

In a judgment issued on October 18 2007 the Federal Court of Justice again ruled on whether cargo handling at a sea port terminal during multi-modal transportation belongs to the leg of the carriage by sea.

Facts

The defendant had been instructed by the assured of the claimant to carry a printing machine from Bremerhaven by sea via Portsmouth, Virginia and then by truck on to Durham, North Carolina. During the carriage by sea the box containing the printing machine was on a trailer. On arrival at Portsmouth, the trailer with the box on it was unloaded and pulled to a storage hall approximately 300 metres away to be loaded onto a truck. When the box was being loaded from the trailer onto the truck, it fell and was damaged.

The claim was made for damages in the full amount according to domestic German land transport law. The defendant argued that its liability was limited to two special drawing rights (SDR) per kilogram pursuant to the German law on carriage by sea.

Decision

At first instance the Hamburg Regional Court granted damages in the amount of two SDR per kilogram, but dismissed the claim in excess of this. Upon the claimant's appeal, the Hamburg Court of Appeal granted the unlimited claim amount, as it applied land transport law and not the law of carriage by sea. The appellate court's reasoning was that the carriage of the box on the trailer from the vessel to the truck (for approximately 300 metres) constituted a separate leg of the multi-modal transportation, to which land transport law applied.

In its judgment the Federal Court of Justice confirmed that the defendant could not limit its liability to two SDR, but it substituted the appeal court's reasoning for its own findings.

The Federal Court of Justice had previously decided in its judgment of November 3 2005 (for further details please see "Federal Supreme Court Decision Crosses Land and Sea") that the handling of goods in port under usual circumstances is not to be regarded as a leg of its own but as an annex of the previous carriage by sea, which has now been confirmed. The court also specified that, whereas pulling the trailer from the vessel to the truck was regarded as part of the carriage by sea, the loading of the cargo onto the truck, which was determined to effect the carriage by land, was part of the leg of the voyage by land.

Comment

The Federal Court of Justice judgment has the merit of reducing future uncertainty by defining more precisely when - under normal circumstances - the leg of the carriage by sea ends and the subsequent leg of the carriage by land begins. The loading of the truck is held to be part of the land transportation.

However, this decision does not answer all the relevant questions. As in its previous judgment of November 3 2005 cited above, the October 18 2007 decision states that the discharge of the vessel and all handling in the port area still belong to the sea carriage leg of the voyage under normal circumstances. Therefore, it may be regarded differently under special circumstances. However, the court has given no indication as to the kind of special circumstances to which it refers. Future case law will have to clarify this.

Further clarification is needed to ascertain where the leg of carriage by sea begins, now that the court has precisely stated where it ends.

In its judgments of November 3 2005 and October 18 2007, the Federal Court of Justice gave three reasons for finding that the unloading and subsequent handling in the port belonged to the carriage by sea:

• The unloading, handling and storage of the cargo in the port area is allegedly characteristic of any carriage by sea, so that the possibility of a limitation to two SDR should apply;
• The cargo is usually checked for damage only when leaving the terminal and not before unloading, so it follows to separate the leg of carriage by sea from the leg of subsequent land transport at the moment when the cargo is checked for damage; and
• The carrier is obliged to hand over the goods to the consignee; therefore, the carriage by sea ends only once the cargo is handed on by the sea carrier into the possession of the following person authorized by the consignee.

A question involving cargo handling in the port area before carriage remains unaddressed: does the leg of carriage by sea include a peril when cargo is unloaded from a truck and stowed in a warehouse prior to carriage by sea, or does this leg commence only once cargo is loaded on a vessel, when the sea carrier takes it into its possession and checks it for possible damage in view of the bill of lading to be issued?

For further information on this topic please contact Olaf Hartenstein at Dabelstein & Passehl by telephone (+49 40 31 77 970) or by fax (+49 40 31 77 97 77) or by email (o.hartenstein@da-pa.com).