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13 March 2013
On June 13 2012 the Federal Court of Justice clarified the rules pertaining to the freight forwarder's burden of proof and the scope of compensation in the case of partial loss of goods of exceptionally high value under the Convention on Contracts on the International Carriage of Goods by Road regime.
The claimant, a transport insurer, claimed compensation for partial loss of a consignment and held the defendant liable as the assignee of the shipper's claims.
In May 2008 the freight forwarder had entered into a contract to collect eight bottles of wine from France and to transport them to the claimant's premises in Germany. The driver took over the bottles, which were packed in a box for shipping. He received a waybill stating that the cargo had a total insurable value of €20,400. On delivery, it was discovered that the box had been opened on the underside and that six of the eight bottles had disappeared. The box had been reclosed. The claimant indemnified the shipper for the loss of the bottles by payment of the full value of the consignment - €15,300 plus interest and further costs - which it claimed from the defendant carrier.
The Munich District Court granted the claim in full. The defendant appealed and was partially successful before the Munich Court of Appeal, which partly overruled the judgment of the lower instance court and modified it to the extent that the claimant was ordered to pay half of the claim due to its contributory negligence in accordance with Section 254(2)(1) of the Civil Code. Both parties appealed - unsuccessfully - on a point of law to the Federal Court of Justice.
The Federal Court of Justice approved the judgment of the Munich Court of Appeal, as it had correctly ruled that the carrier was liable under Articles 3, 17(1) and 29 of the convention as the bottles had apparently been stolen, but - due to the contributory negligence on the part of the sender for failing to disclose information in respect of the risk of an exceptionally high loss - the extent of compensation was decreased by 50%.
The first issue for the court was to determine whether the carrier's liability was unlimited under Article 29. This would have been the case if the freight forwarder had caused damage through wilful misconduct or equivalent behaviour. The court found that this was the case, as the defendant had not satisfied its secondary burden of proof.
The court reconfirmed that, in principle, under German law the burden of proof rests with the claimant, but under certain circumstances the claimant may invoke a derivative burden of proof for the defendant with the consequence that the forwarder must state the relevant circumstances particular to the case. The reason is the difference between the level of information to which the claimant and the forwarder has access. Such a difference usually gives rise to the carrier's secondary duty to provide facts, as it is usually closer to the operations.
However, in this case the defendant contested its derivative burden of proof. It argued that this was not a case of loss of goods and thus did not explain in detail how the consignment was handled during the entire transportation. Contrary to this, the court found that this case was comparable with the case of (partial) loss of goods, and hence the defendant was obliged to state the relevant facts particular to the case (ie, the way that the transport was organised, the result of interface controls and the nature of the precautions taken to prevent damage occurring), in order to enable the claimant to put together an argument for the defendant's qualified fault.
The Federal Court of Justice further confirmed that the scope of compensation had to be reduced due to the contributory negligence on the part of the sender for failing to disclose information in respect of the risk of an exceptionally high loss pursuant to Section 254(2)(1) of the Civil Code sufficiently early (ie, at a point in time that still enables the freight forwarder to take the decision as to whether to perform the contract and, if so, to take the appropriate safety measures). This need not necessarily be at the time of the conclusion of the contract. The court rejected the claimant's argument that it had informed the defendant about the goods' high value when it handed over the waybill to the driver, as at that point in time the defendant had no possibility to react (eg, to cancel the transportation or adjust the freight rate), as it had already started fulfilling the transportation contract. In this respect the court clarified that the outward journey to France to collect the bottles was also part of the performance. According to the court, in such a situation the driver shall not be obliged to call the defendant in order to receive further instructions.
Where goods are lost during transportation, the allocation of the burden of proof is often crucial to the question of the limitation of liability pursuant to Article 29 and thus decisive for the scope of compensation. German courts have always aimed to strike a balance between the rule that the claimant sender bears the burden of proof for its claim and, contradictorily, the circumstance whereby the sender has no insight into the operations of the freight forwarder and its subcontractors.
The court's judgment again confirmed the two-step procedure in respect of the allocation of burden of proof that is usually applied in cases of loss of a consignment during transportation. If the claimant has submitted a possible scenario whereby the carrier acted with wilful misconduct or the like, the forwarder must state the relevant circumstances particular to the case and in addition – in cases of damage to goods – investigate and describe the cause of the damage. It further clarified that this approach shall also apply if the cargo is delivered, but some or all of the goods are missing as the packaging was opened and reclosed during shipping, as this situation is comparable to a case where goods are only partially delivered or not delivered at all.
However, in contrast to the case of damage to the consignment, the court's decision makes it easier for claimants to obtain full compensation, as the carrier's qualified fault is already accepted if the defendant does not comply with its procedural duty to submit evidence with regard to the circumstances of the loss in a substantiated manner. This judgment conforms with German case law in respect of the allocation of the burden of proof in respect of loss of goods.
The second part of the decision clarified the need for sufficient exchange of information in a timely manner. This ruling is correct since transportation contracts usually involve several parties that do not have the same access to information as the sender. In light of the judgment of the Federal Court of Justice, senders would be well advised to inform the freight forwarder about the high value of goods when concluding the transportation contract.
For further information please contact Alexandra Siedschlag or Marco G Remiorz at Dabelstein & Passehl by telephone (+49 40 31 77 97 0), fax (+49 40 31 77 97 77) or email (firstname.lastname@example.org or email@example.com).
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