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16 April 2014
The Supreme Court has rendered another interesting decision in the ongoing road haulage dispute known as the 'sugar case'. The case has been progressing through the Belgian court system for some time now, eliciting heated commentary in the process. The Supreme Court again considered the scope of application of the Convention on the Contract for the International Carriage of Goods by Road (CMR), and whether all damages resulting from a loss that arises from a CMR contract can be recovered from the road carrier under Articles 23 and 25 of the CMR.(1)
A sugar trader instructed a road haulage firm to collect a consignment of sugar in bulk at a sugar mill using a clean tank lorry. Having previously carried a load of fertiliser, the driver swept the tank lorry before going to the factory and, as instructed, issued a certificate of cleanliness. At the sugar mill, the lorry was subjected to a visual inspection and was found to be satisfactory, so the 24 tons of sugar were loaded onto the lorry. The goods were then carried to a storage facility in Antwerp, where samples were taken that were found to be satisfactory. The driver was thereupon allowed to discharge the lorry.
Within the storage facility, the discharged sugar was carried by conveyor belt to the storage area to be added to the existing stores of sugar in bulk – goods owned by a number of other parties. However, the conveyor belt broke down and it was later discovered that the transported sugar had been contaminated by 'undeterminable particles', and that part of the contaminated consignment had already been added to the approximately 4,500 tons stored. The authorities were informed, and ordered the removal and destruction of all of the sugar.
After a thorough investigation, a court-appointed surveyor concluded that the driver had not swept the tank lorry thoroughly enough before loading the sugar, and that an estimated 20 to 40 kilograms of fertiliser had not been removed, thus contaminating the transported sugar that was subsequently added to the stored sugar.
Ultimately, both the transported sugar (24 tons) and the stored sugar (4,500 tons) had to be destroyed after removal from the storage facility, which resulted in a substantial claim. The sugar trader sought recovery from the CMR carrier for the counter value of both the transported goods and the already stored goods. This gave rise to a number of legal questions, including the scope of application of the CMR and the damages awardable under it.
The sugar trader issued a claim before the Antwerp Commercial Court. The court held in an interim decision of June 4 2004 that the CMR carrier was liable on a contract basis not only for the transported sugar consignment, but also for the affected sugar in storage. The court further held that the carrier could rely on the CMR liability limitation with respect to the transported sugar, but not for the stored goods.
The CMR carrier appealed to the Antwerp Appeal Court. On February 19 2007 the appeal court dismissed the CMR carrier's reliance on Articles 17.2 and 17.4.c of the CMR and confirmed that the carrier was liable under the transport contract for the damages resulting from the contamination of the carried consignment of sugar. The court also considered that the CMR legislation applied only to the transported sugar, and that the damages to the stored sugar were consequential damages, which are excluded under Article 23.4 of the CMR. In its decision, the appeal court held that the intent behind the CMR was to create an overall framework to regulate the contractual relationship between road carriers and cargo interests, and that this was an 'exhaustive' legal framework – meaning that even if the cargo-interested party could pretend to hold a claim against the carrier for damages, loss or delay arising from a CMR carriage, Article 28 of the CMR allows the carrier to rely on the CMR liability exclusions and limitations at all times. Therefore, the CMR carrier could, according to the appeal court, rely on the CMR limitation with respect to the transported sugar. The appeal court thus dismissed the damage claim for the stored sugar, considering it to be non-recoverable consequential damages under Article 23.4 of the CMR.
The sugar trader received only minor compensation for its damages and thus brought the case before the Supreme Court. In a January 16 2009 decision the Supreme Court held that the CMR deals only with the carrier's liability for loss, damage or delay in respect of carried goods. The Supreme Court further noted that "[t]he CMR Treaty does not handle the carrier's liability for other goods and in particular not the damage affected to other than the carried goods, which is subject to the applicable national law". Therefore, the Supreme Court held that the appeal court, in dismissing a damages claim under the CMR, had failed to consider that liability for the damages to the stored sugar also had to be determined under the general rules of common liability law.
The case was thereafter remitted to the Ghent Court of Appeal. On June 20 2011 the Ghent court rendered a decision that reiterated the stance set out in the Antwerp appeal decision. The Ghent court held that:
Seemingly criticising the previous Supreme Court decision, the Ghent court pointed out that a liability regime which de facto allowed claims for consequential damages under a CMR carriage through the 'chicane' of the applicable national law would create an unbalanced liability system, while the aim of the CMR is to come to an equitable liability regime that considers the interests of both cargo and carriers. Once again, the sugar trader could therefore recover only limited compensation for the carried sugar only.
The sugar trader again appealed to the Supreme Court. On January 23 2014 the Supreme Court ruled that Articles 17, 23 and 25 of the CMR deal only with the carrier's liability for loss, damage or delay in relation to the carried goods, and that these articles do not cover the carrier's liability for damages to goods other than the carried goods, which are subject to the applicable national law. The Supreme Court held that Article 25 of the CMR (which in turn refers to Article 23) did not constitute grounds to deny compensation for the loss of the stored sugar as consequential damages. In other words, the Supreme Court held that:
The case has been sent to the Brussels Appeal Court for further consideration and re-examination.
For further information on this topic please contact Dirk Noels at Kegels & Co by telephone (+32 3 257 1771), fax (+32 3 257 1474) or email (firstname.lastname@example.org). The Kegels & Co website can be accessed at www.kegels-co.be.
(1) Through the Law of May 3 1999, Belgium implemented the CMR legislation with regard to national road haulage contracts.
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