Time limitation for recourse claim against sea carrier cannot be more than two years from cargo delivery date

Facts
Decision
Comment

Facts

A sea carrier (A) contracted the transport of containerised cargo from China to Sweden in Autumn 2014.(1) A sub-contracted the last transport leg from Hamburg, Germany to Gothenburg, Sweden to B, which, in turn, sub-contracted the transport to a Danish shipping line.

On 22 October 2014, during the sea carriage from Hamburg to Gothenburg, the vessel encountered heavy weather which resulted in damage to the cargo. The containers were delivered to the consignees in Gothenburg on 23 October 2014.

A settled the cargo claims with the cargo interests between June 2016 and February 2018 and B, on this basis, indemnified A on 25 May 2018. The compensation paid by B was effectuated approximately 3.5 years from the date on which the containers had been delivered.

On 15 April 2019 B brought recourse proceedings against the Danish shipping line and submitted a claim for indemnification for the amounts that it had paid with reference to the liability provisions in the Danish Merchant Shipping Act (DMSA) based on, among other things, the Hague-Visby Rules. B submitted that the time limitation for its recourse claim was to be decided pursuant to Section 501 of the DMSA (which is based on the Hague-Visby Rules Art. 3(6)bis) and that this section should be construed to the effect that the one-year time limit for its recourse claim started to run only when B had compensated A. Section 501(2) states that "[f]or claims for recourse in respect of claims as mentioned in… the period of limitation shall be one year from the day on which the claim was paid or the legal proceedings on it initiated".

Article 3(6)bis of the Hague-Visby Rules reads as follows:

Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.

An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months, commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.

The Danish shipping line rejected the recourse claim and submitted that the claim was time barred pursuant to Section 501(2) of the DMSA. The shipping line pleaded that the section should be construed to mean that the recourse claim in any event should be deemed as time barred for one year from expiry of the general time limitation for A's claim against B to the effect that the recourse claim had become time barred on 23 October 2016.

Decision

The Maritime and Commercial Court decided that the recourse claim against the shipping line had become time barred. The court reasoned as follows:

With respect to the recourse claim the court refers to that parties to the legal relationship involving recourse have not agreed an extension of time. The question to be decided in the proceedings, thus, concentrates on whether the parties in the principal legal relationship, by agreeing an extension of time for the principal cargo claim, simultaneously by doing so in fact can extend time for the recourse claim with a similar period or whether this requires consent from the debtor for the recourse claim...

On the basis of the wording of the provisions in DMSA S. 501(2) and 501(1)(6), and the general purpose of the rules on time-limitation, the court finds that there is no basis for an interpretation to the effect that the time-limit for a recourse claim can be extended beyond the total time-limitation of two years - one year for the principal cargo claim and one year for the recourse claim – without the acceptance from the debtor of the recourse claim.

Comment

It follows from the decision that the time limit for a recourse claim between sea carriers for damage to cargo which falls under the DMSA, as a general rule, is a maximum of two years from the date on which the damaged cargo was delivered.

Thus, carriers seeking recourse must be aware that:

• by extending time for the claim raised by the cargo interest, it may be necessary to obtain a corresponding time extension from the sub-carrier against whom the recourse claim is made; and
• such extension must, in any event, be obtained at the latest two years from the date on which the cargo was delivered to the consignee.

For further information on this topic please contact Jesper Windahl at WSCO Advokatpartnerselskab by telephone (+45 3525 3800) or email (jw@wsco.dk). The WSCO Advokatpartnerselskab website can be accessed at www.wsco.dk.

Endnotes

(1) Maritime and Commercial Court decision of 16 June 2020 (BS-17718/2019-SHR).