Is Cargo Handling and Storage at Port Terminal Part of Subsequent Sea Carriage?
April 09 2008
In a judgment issued on February 28 2008 the Hamburg Higher Regional Court again dealt with the question of whether cargo handling and storage in a port area during multi-modal transportion is considered an annex to the carriage by sea or part of the land transportation leg. Following the Federal Court of Justice's answers to the question of where carriage by sea ends (for further details please see "Cargo Handling at a Sea Port Terminal - Before and After Carriage by Sea", the higher regional court established the point at which it begins.
The defendant had been instructed by the claimant's insured to arrange the transportation of five concrete mixers from Bad Schussenried in Germany to Mumbai in India at a fixed price. The shipment was carried by truck to the port of Antwerp in Belgium. The defendant entrusted a company with the handling and storage of the cargo until the sea voyage could commence. The company also had a cargo-handling contract with the shipping company. After three weeks most of the shipment was found to have been stolen while in the custody of the cargo-handling company.
A claim was made for the full amount of damages according to German land transport law. The defendant argued that the handling and storage of cargo in a port area is part of the carriage by sea. Therefore, the liability limitation of two special drawing rights (SDR) per kilogram pursuant to German law should apply.
At first instance the Hamburg Regional Court granted the unlimited amount of damages under German land transport law. The court found that cargo handling and storage is sufficiently significant that it cannot be treated as an annex to subsequent carriage by sea.
The higher regional court found that the cargo-handling company received the shipment because of its contract with the shipping company, which was a strong indication that cargo handling and storage were related to the sea carriage leg. Furthermore, the court observed that the activities in question were to be seen as logical parts of the sea carriage leg. The court maintained that this rationale applies even if storage in the port area lasts several weeks, as the storage period depends on the shipping company’s provision of the vessel. Therefore, such storage must be considered an annex to carriage by sea and the liability limitation of two SDR per kilogram must apply. The court argued that storing cargo for three weeks is not an exceptional circumstance, which would otherwise justify a different view.
The decision marks a further step towards clarifying when and where carriage by sea begins and ends. As it is based on the Federal Court of Justice’s decisions and the reasons for them, it would probably have been upheld by the Federal Court of Justice in the event of an appeal. However, it became final on April 7 2008 and will not be subject to higher judgment.
However, in this case the company which handled and stored the cargo had a contract with the shipping company to accept the cargo on the latter's behalf; it remains to be seen how the Federal Court of Justice would rule in a case where no such contract exists. A further question also remains unanswered: what exceptional circumstances would be required to make storage in a port area subject to German land transport law?
Nevertheless, this judgment and those of the Federal Court of Justice provide helpful tools in determining the start and end of the sea carriage leg and the range of the two SDR per kilogram liability limitation.
For further information on this topic please contact Jan Tjarko Eichhorn at Dabelstein & Passehl by telephone (+49 40 31 77 970) or by fax (+49 40 31 77 97 77) or by email (j.eichhorn@da-pa.com).
Endnotes
(1) In decisions issued on November 3 2005 and October 18 2007.
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