Shipping & Transport - Germany

Facts
Decision
Comment


On January 21 2010 the Federal Court of Justice ruled on the question of whether a sender has any claim on the obligation to advise the carrier of the risk of an extraordinarily high loss in respect of goods carried. The court held that such risk in goods will be assumed if the value of the goods is in excess of 10 times the statutory limitation of 8.33 special drawing rights (SDR) per kilogram (kg) gross weight or, otherwise, 10 times the agreed limitation value.

Facts

The claimant, a transport insurer, claimed against the defendant and held it liable as the assignee of the sender's claims.

In November 2003 the sender contracted the carrier for the carriage of nine pallets of goods of a total weight of 2,780kg from Germany to Madrid. The carrier subcontracted the carriage to the defendant, which further subcontracted to the actual carrier that carried out the transport.

The actual carrier took over the pallets from the sender which were covered with black plastic foil. The goods were stolen and, subsequently, the nature of the goods loaded was disputed between the parties. The driver had completed a standard form of Convention on Contracts for the International Carriage of Goods by Road (CMR) bill of lading on the basis of information which was supplied by one of the sender's employees. In the box headed "Description of Goods" the driver wrote "PC-Ware", meaning computer products. After loading was completed, the driver deleted the two letters "PC" from the bill of lading. Upon arrival in Madrid the trailer was opened, whereupon it was discovered that the pallets had disappeared. The defendant was unable to explain when and how the goods had been lost and assumed that they must have been stolen while the driver was resting in a parking lot at night.

The claimant insurer indemnified the sender for the loss of goods by payment of €144,368 which it claimed from the defendant carrier, arguing that it was entitled to break limitation because of the carrier's gross negligence. The full value of the stolen consignment – 562 computer screens – was €144,368. The claimant submitted that the information given to the defendant when placing the order (ie, "PC-Ware") was correct and complete. The defendant had been aware that the transported goods consisted of valuable computer components. The defendant argued that it had not known the value of the goods because the claimant had failed to disclose this information when placing the order. If the defendant had known the value of the consignment, it would have rejected the order or demanded an increased freight rate. The defendant argued that the sender had thus negligently contributed to the loss and that such contributory negligence should be attributed to the claimant.

The higher regional court of appeal allowed the claim in full. The defendant's appeal on a point of law before the Federal Court of Justice was dismissed.

Decision

The Federal Court of Justice approved the higher regional court of appeal's rejection of the allegation of contributory negligence on the part of the sender for allegedly failing to disclose information in respect of the risk of an exceptionally high loss (Section 254(2)(1) of the Civil Code).

The higher regional court of appeal had correctly ruled that in this case there was no risk of an exceptionally high loss. Goods will be deemed a high financial loss risk in cases where the value of the consignment amounts to 10 times the general limitation of liability according to Section 431(1) of the Commercial Code and Article 23(3) of the CMR. This will be assumed if the parties to the transport contract made no agreement in respect of the freight carrier's limitation of liability. If an agreement includes general terms and conditions (Section 449(2)(2) of the Commercial Code) providing for a limitation below the statutory limitation pursuant to Section 431(1) of the Commercial Code, the value of the goods is in excess of 10 times the agreed limitation value. If general terms and conditions provide for a limitation of liability in excess of the statutory limit of 8.33 SDR, the assumption of a high risk loss is still the statutory limit times 10. If the parties to the contract of carriage negotiated the limitation of liability individually, rather than on the basis of terms and conditions imposed by one party, the individually negotiated agreement prevails over the limitation of liability according to Section 431(1) of the Commercial Code and Article 23(3) of the CMR.

Taking the above into consideration, the court held there was no risk of an exceptionally high loss on which the sender would have been obliged to inform the defendant when placing the order. As the weight of the consignment was 2,780kg and one SDR amounted to €1.21345 (when placing the order in November 2003), the limitation of liability according to Article 23(3) of the CMR would have been €28,100. Consequently, an exceptionally high loss triggering contributory negligence pursuant to Section 254(2)(1) of the code would have to be assumed only if the value of the consignment had exceeded €281,000. According to the claimant's submissions, the lost goods were worth only €144,368 (ie, less than 10 times the statutory limit). Consequently, there was no contributory negligence on the part of the sender or, by implication, the claimant.

Comment

Where goods are lost during transport, limitation of liability becomes crucial once the basis of liability has been clarified. Since transportation contracts usually involve several individual parties, contributory negligence can occur at multiple stages of the transport. The Federal Court of Justice has now clarified that an exceptionally high risk which should be disclosed by the sender to the carrier is pegged at the ten-fold limitation of liability of 8.33 SDR or at whatever amount the parties have agreed otherwise.

For further information please contact Caroline Hagenberg at Dabelstein & Passehl by telephone (+49 40 31 77 97 0), fax (+49 40 31 77 97 77) or email (c.hagenberg@da-pa.com).