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22 April 2009
On March 17 2009 the Hamburg Regional Court addressed the question of whether German shipping law could be applied to cargo handling in the course of a stopover during a sea carriage, where transhipping between the two parties involved had not been consented to.
The defendant was instructed by the claimants on the basis of a master transport agreement to ship a container from Germany to China via a multi-modal carriage by land and then sea. The terms of the master agreement stipulated that the defendant was permitted to transship the cargo only upon written consent of the claimants. However, during the shipping from Germany to China, the cargo was unloaded in Korea and the container discharged without the claimants' consent. The cargo was then damaged during crane operations in the harbour area.
The Hamburg Regional Court granted the claim in accordance with German Shipping Law (ie, Sections 606 and 660 of the Commercial Code), and awarded the claimant damages equal to two special drawing rights (SDR) per kilogram.
The court referred to the master agreement's stipulation that German law would apply to the carriage. The court rejected the claimants' argument that German land transportation law – under which the liability limit does not apply where wilful misconduct has occurred – was applicable to the carriage (Section 435 of the Commercial Code).
Furthermore, the court held that the forbidden transshipping did not give rise to unlimited liability. The handling of the cargo at the harbour in Korea was to be considered as an annex to the sea carriage, the court held, and not as an independent leg of land transportation. Consequently, German shipping law was applicable rather than German land transportation law. Section 565 of the Commercial Code states that breach of a prohibition on transhipping does not result in the application of a different liability regime from that under German shipping law, since this law also forbids the loading of the cargo onto a vessel other than the one agreed.
The liability limitation in German shipping law is avoidable only where individual default of the carrier's board of directors is in evidence.
This ruling is in line with the guiding October 2007 decision of the Federal Court of Justice which held that cargo handling at a seaport terminal during multi-modal transportation is to be treated as part of the leg of the carriage by sea (for further details please see "Cargo Handling at a Sea Port Terminal - Before and After Carriage by Sea"). The Hamburg decision provides further evidence that German jurisprudence extends the application of German shipping law to the handling of cargo before and after sea carriage, and to handling between separate legs of the sea carriage.
The Hamburg Regional Court clarified that non-consensual transshipping in the course of sea carriage does not give rise to unlimited liability, and stressed that the parties involved in a carriage agreement are free to agree upon the application of German law for the entire course of the transportation, including specific legs and the handling of the cargo.
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