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27 August 2008
On April 10 2008 the Court of Cassation ruled on the meaning of 'loss' under the Warsaw Convention. Although the ruling was on the basis of Article 18 of the original 1929 convention, it is valid for subsequent versions, including the Montreal Convention 1999.
The case involved a shipment from Belgium to Saudi Arabia undertaken by a Belgian contractual carrier which was substituted by a Jordanian actual carrier.
Once the shipment had left Brussels, the shipper instructed the airline by telephone to hold the goods in Riyadh, Saudi Arabia, presumably as the cheque to pay the goods had not been honoured, but this resulted in confusion. The airline's agent in Riyadh, thinking that the shipment was prepaid, delivered the goods to the consignee, having missed a last-minute telex clarifying that the shipment was collect.
Pursuant to Article 18, a carrier is liable for damage sustained in the event of destruction or loss of registered baggage or cargo if the occurrence which caused the loss took place during the carriage by air.
In the lower courts the shipper argued that its right of disposal under Article 12 of the convention had been violated. The airline countered that the shipper could not rely on its right of disposal under Article 12(1) because it had not complied with one of the compulsory formalities: the third copy of the air waybill had been provided not to the airline, but to the consignee. Without it, the shipper was unable to exercise its right of disposal and the airline was unable to comply with the shipper’s instructions.
The appeal court found that there had been no loss of goods, as they had been delivered to the consignee, not to a third party. Consequently, Article 18 did not apply. Furthermore, it held that the shipper could not claim the value of the goods against the airline according to common law. The court held that the carriers were not party to the contract of sale of the goods and that the shipper's loss of benefit from the loss of the goods was not directly linked to its instructions to the airline. The shipper had made no attempt to recover the loss in Saudi Arabia, either by taking legal action or by other means; thus, the damage that had allegedly resulted from non-compliance with the instructions was not certain. Therefore, the shipper's claim was dismissed.
The Court of Cassation upheld the appeal court's ruling. It held that there can be no loss under Article 18 if the goods are delivered to the consignee mentioned on the air waybill. The court also confirmed the appeal court's reasoning in common law that there could be no claim against the airline, as the shipper had taken no steps in Saudi Arabia to recover the price of the goods.
The ruling follows established opinion and precedent in Belgium, according to which loss may occur not only when goods are destroyed or lost, but also when an airline delivers goods to a third party which subsequently cannot be found. However, the ruling also usefully confirms the corollary of this principle: no loss occurs when goods are delivered to the consignee appearing on the air waybill.
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Pierre D Frühling