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22 June 2011
The general procedural rule of nemo tenetur edere contra se ("no party is obliged to give evidence against itself") is modified by the German courts when considering whether a sea carrier has forfeited its right to limit liability according to Section 660(3) of the Commercial Code, which is the equivalent of Article 4(5)(e) of the Hague-Visby Rules.
Although it is settled law that in the event of loss or damage to cargo during sea transport, the burden of proof generally remains with the claimant (for further details please see "Evidence must comply with burden of proof"), in Germany it is generally sufficient for the claimant to allege circumstances which indicate that the carrier personally caused the damage recklessly or with intent and in the knowledge that such loss would be likely to result. Such circumstances can also be infered from the cause or the nature and extent of the damage; in cases of loss, it is also generally sufficient that the cause of loss itself is unknown to the claimant. In such cases the German courts presume that the loss or damage resulted from an act or omission of the sea carrier with intent to cause damage, with recklessness and in the knowledge that damage would be likely to result.
Accordingly, at this point the burden of proof shifts to the sea carrier, which must prove that it did not intentionally or recklessly cause the damage, by outlining the organisational measures that were taken to prevent the loss or damage (for further details please see "Supreme Court rules on goods damaged during inland transportation"). However, in a recently published decision by the Stuttgart Court of Appeal, the nemo tenetur rule was partly reinforced in connection with sea carriage in which a sub-carrier is engaged.
The claimant's insured entered into a multimodal transport contract with the defendant on a fixed-cost basis. The defendant was responsible for the land and sea transport of various pallets of new silver wire from Germany to Hong Kong. A sub-carrier was engaged by the defendant for the sea transport. The cargo was stowed in a container. After the sea transport from Germany to Hong Kong it was discovered that three pallets of new silver wire were missing. The cause of the loss itself was alleged to be unknown to the claimant.
The Stuttgart Court of Appeal first held that German law applied, as both the claimant and the defendant had their main branches in Germany.
Second, it held that liability had to be determined by applying the law on sea carriage as the goods had been lost during sea transit. The court stressed that stowing of the goods into a container is to be treated as part of the subsequent sea carriage (for further details please see "Cargo handling at sea port terminal – before and after carriage by sea" and "Is cargo handling and stowage at port terminal part of subsequent sea carriage?").
Third, the court pointed out that a defendant can forfeit its right to limit liability only by its own actions.
Finally, the court held that the defendant did not lose the right to limit its liability according to Section 660(3) of the code, since the claimant had not alleged to a sufficient extent circumstances which would justify the conclusion that the loss resulted from an act or omission of the carrier with intent to cause the loss, with recklessness and in the knowledge that the loss would probably result. This finding was mainly based on the fact that in the court's opinion, the loss in the case at hand could likewise be attributable to an act or omission by the sub-carrier which was instructed by the defendant. The right to limit liability according to Section 660(3) of the code would therefore become ineffective if, in cases in which a sub-carrier is engaged, the burden of proof as to the question of whether the loss was attributable to the carrier's act or omission also shifted to the carrier only because the cause of loss was alleged to be unknown.
The decision is correct in partly reinstating the nemo tenetur rule in connection with sea carriage where a sub-carrier is engaged. It allows the carrier to limit its defence in relation to the question of whether it has the right to limit its liability according to Section 669(3) by alleging that it acted with due diligence when choosing the sub-carrier. This differs from the view taken by the Supreme Court in cases in which the loss occurs during road or air transport. In these cases the carrier is obliged to put forward in detail the measures that it took to prevent the loss, even when engaging a sub-carrier. This is due to the fact that Article 25 of the Warsaw Convention and Article 29(2) of the Convention on the Contract for the International Carriage of Goods by Road also refer to acts or omissions of the servants or agents of the carrier. Accordingly, the responsibilities of the carrier are wider than those imposed by Section 660(3) of the code and Article 4(5)(e) of the Hague-Visby Rules, whereby only personal acts and omissions of the sea-carrier are decisive. This distinction has been retained in Article 61(1) of the Rotterdam Rules and the same applies to the planned reform of German shipping law (for further details please see "Experts suggest modernisation of shipping law"). It follows that the decision of the Stuttgart Court of Appeal as to the reinforcement of the nemo tenetur rule in connection with sea carriage when a sub-carrier is engaged is likely to be good law in future.
For further information on this topic please contact Maximilian Guth at Dabelstein & Passehl by telephone (+49 40 31 77 970), fax (+49 40 31 77 97 77) or email (email@example.com).
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