Logistics law in focus: current developments and challenges

FCJ judgment dated 27 October 2022 – I ZR 139/21 on interpreting German Standard Shipping Terms and Conditions (ADSp) 2017 for multimodal transport

The German Federal Court of Justice (FCJ) considered the interpretation of the currently valid ADSp 2017 (German Standard Shipping Terms and Conditions 2017) and clarified the relationship between the first sentence of No 23.1.2 of ADSp 2017 and the first sentence, case 2, of No 23.2 of ADSp 2017, which was previously disputed in the literature. In this case, one of several snow groomers was damaged during multimodal transport from Germany to the USA and the location of the damage remained unknown.

In a textbook-like examination, the FCJ initially determined the applicability of German substantive law on the basis of the first sentence of Article 5(1) Rome I Regulation in the absence of a choice of law by the parties in the transport contract. Due to the multimodal transport, the FCJ affirmed the applicability of sections 407 to 450 of the German Commercial Code via the provisions of sections 452 et seq. of the German Commercial Code with regard to the specific transport contract. The maximum liability amount of the indemnification obligation, which is regulated in sections 425 and 429 of the German Commercial Code was stipulated in deviation from section 431(1) of the German Commercial Code by the inclusion of ADSp 2017 in the contract.

According to their wording, both the first sentence of No 23.1.2 of ADSp 2017 and the first sentence, case 2, of No 23.2 of ADSp 2017 cover the case of cross-border multimodal transport including a sea route with an unknown location of damage. However, the first sentence, case 2, of No 23.2 refers to the statutory maximum liability amount, whereas the first sentence of No 23.1.2 limits the liability to 2 instead of 8.33 special drawing rights for each kilogramme, i.e. considerably restricts it. Since ADSp 2017 are model terms and conditions, the FCJ has interpreted them as standard terms and conditions of business. In doing so, the FCJ comes to the conclusion that the first sentence of No 23.1.2 ADSp 2017 is the more tailored provision which thus takes precedence in multimodal transport partly by sea with an unknown location of damage over the provision in the first sentence, case 2, of No 23.2. The FCJ particularly justified this by considering the opposite possibility: If the first sentence, case 2 of No. 23.2 was an exception to the exception to the first sentence of No. 23.1.2, it would additionally limit the already small scope of application, rendering the first sentence of No 23.1.2 practically useless.

Judgement by Karlsruhe Higher Regional Court, dated 17 February 2023 – 15 U 4/22 on the presumption of loss and unlimited liability under the CMR

Karlsruhe Higher Regional Court (OLG Karlsruhe) considered the presumption of loss in Article 20 of the CMR (Convention on the Contract for the International Carriage of Goods by Road) in the event of refusal of acceptance and unlimited liability under Article 29 of the CMR. In the case in question, the carrier was to transport jewellery and watches from a sender to a consignee abroad. The carrier used a sub-carrier for the leg abroad. When the sub-carrier wanted to deliver the goods to the consignee, the latter refused to accept them. The sub-carrier then took the goods to its warehouse and waited for further instructions from the carrier.

The whereabouts of the goods remained unknown for a long time; only during the trial, around two years later, did it emerge that the goods were still in the sub-carrier’s warehouse, whereupon they were returned to the sender.

The Higher Regional Court affirmed the carrier’s unlimited liability under Article 17(1) and Article 29 of the CMR. There was no delivery to the consignee and the consignee’s refusal to accept the goods did not lead to the assumption of delivery, the court said. Instead, in this case the carrier should have asked the sender for instructions in accordance with Article 15 of the CMR, which it failed to do. It added that even though the goods were recovered, the sender could consider the goods lost without having to provide further evidence, as they had not been delivered within 60 days of takeover and that insofar the presumption of Article 20(1) of the CMR is an irrefutable presumption. The Higher Regional Court rejected an exclusion of the carrier’s liability and instead assumed unlimited liability according to Article 29 of the CMR, because the presumption of loss is based on whether the circumstances that were decisive for the non-delivery constitute a special breach of duty. Because the goods were not properly recorded and handled in the sub-carrier’s warehouse and were therefore untraceable for approximately two years, the Higher Regional Court found a serious lack of organisation on the part of the carrier and thus a serious breach of duty justifying the accusation of reckless trading. The sub-carrier’s conduct in this respect was therefore attributable to the carrier under Article 29(2) of the CMR.

FCJ, order dated 23 March 2023 – I ZR 180/22 on the start of the limitation period regarding a storage contract

In this order on an appeal against denial of leave to appeal, the FCJ addressed the commencement of the limitation period for a storage contract. The claimant initially commissioned the defendant, a moving company, to carry out a private move. However, as the move ultimately did not take place, the parties agreed that the claimant’s items would be stored at the defendant’s premises. Due to a flood, all of the claimant’s items were temporarily flooded. It was not stated when the claimant got her items back, but she asserted her claims against the defendant in a letter shortly after the damage occurred. In particular, the limitation period for the claims was questionable during the following lawsuit.

According to the first sentence of section 475a of the German Commercial Code, the provision in section 439 of the German Commercial Code applies to the limitation of claims from storage. According to subsection 2 of section 439, the limitation period begins running at midnight of the day on which the goods ought to have been delivered. According to the case law of the FCJ, delivery is to be assumed when the carrier relinquishes custody of the transported goods and enables the consignee to exercise actual control over the goods with the consignee’s will and consent. In this case, the Higher Regional Court assumed the claimant was in a position to exercise actual control over the property again at the latest when the claims for damages were asserted. The FCJ has now firmly rejected this assumption.

Judgement by Hamburg Regional Court, dated 15 June 2023 − 407 HKO 20/22 on passing on the costs of shipping container demurrage

This is an interesting ruling by Hamburg Regional Court (LG Hamburg), representing a classic issue in day-to-day logistics. In the case, a freight forwarder took legal action against its customer for reimbursement of demurrage, detention, and storage costs as well as a low water surcharge. The claimant operated as a fixed-cost forwarder under section 459 of the German Commercial Code. The costs were incurred during the transport of sea freight shipments from the Far East, including on-carriage, and were invoiced to the freight forwarder by shipping companies. The claimant argued that the costs were caused by unforeseeable circumstances such as delays at the seaport of Rotterdam and technical defects on the railway line, for which neither it nor the shipping company were responsible. It invoked the 2017 German Standard Shipping Terms and Conditions (ADSp 2017) and the German Commercial Code to claim reimbursement of the costs. The defendant disputed the claims and argued the costs could have been avoided with reasonable care and were therefore not refundable.

The court ruled that the freight forwarder was not entitled to the costs it sought. The defendant company had concluded a forwarding agreement with the claimant freight forwarder at a fixed cost for multimodal transports with the consequence that according to the first sentence of section 459 of the German Commercial Code, the agreed freight forwarder’s remuneration covered all expenses associated with the transport.

The claimant was unable to base its claim on the second sentence of section 420(1) of the German Commercial Code. Although in the case of a fixed-cost shipping company transporting goods, the provision in freight law generally applies which states that the freight forwarder has a claim to reimbursement of expenses beyond the freight. However, demurrage and detention costs as well as the other claimed costs (storage costs, low water surcharge) are not covered by this provision because the second sentence of section 420(1) of the German Commercial Code explicitly covers only costs which are refundable expenses incurred for the goods. The aforementioned costs however, are not goods-related but transport-related costs.

In addition, No 17.1 ADSp 2017 does not give rise to a claim to reimbursement of expenses since it only applies to expenses which are outside of the carrier’s sphere of risk and responsibility. The court clarified that the claimant itself had to bear the responsibility for the risks, obstacles and incidents leading to the additional costs. This covers errors and inadequacies of any agents acting on its behalf and unpredictable technical defects or failures in the public transportation infrastructure. In relation to the circumstances at hand such as the cancellation of slots at Rotterdam port and the closure of a train line, the court dismissed the claimant’s arguments that those circumstances were out of its control and thus refundable. The claim for reimbursement of the low water surcharge and storage costs was also rejected as those costs fell within the claimant’s sphere of risk and were covered by the fixed-cost agreement with the defendant.

In summary, the court found that as a fixed-cost freight forwarder, the claimant bore responsibility for the costs incurred and could not pass them on to the defendant.

Judgement by Frankfurt Higher Regional Court, dated 28 March 2023 – 14 U 84/22 on a freight forwarder’s liability for damage as a result of migrants entering the loading area

The judgment by Frankfurt Higher Regional Court (OLG Frankfurt) concerns litigation over claims for damages in connection with a food shipment during which migrants entered the loading area of a refrigerated train, which led to the cargo being destroyed.

The claimant was tasked with transporting 33 pallets of products containing chocolate and cocoa from Stadtallendorf to Ternat in Belgium. Upon delivery on 30 March 2021 at least 29 stowaways were encountered in the refrigerated train.

The goods were refused by the defendant consignee and destroyed due to the suspicion of damage, as some of the packaging had traces of urine and some packages had been ripped open. The defendant, the consignee of the goods, claimed damages of €47,943.96. The claimant disputed the damage and argued the driver could not have prevented the migrants from entering the train and therefore the claim for damages was void under Article 17(2) of the CMR. The claimant also alleged that the vast majority of the goods were still useable.

The Regional Court upheld the claimant’s arguments. However, the defendant’s appeal was largely successful. The Higher Regional Court ruled that the claimant had to pay damages for the entire cargo. It contended that the carrier did not take every reasonable effort to prevent the migrants from entering and therefore could not invoke Article 17(2) of the CMR. It was also acknowledged that the damage to some boxes made the entire cargo unusable, which represented a devaluation of the entire cargo. Suspicion of damage alone was enough to assume damage, since that reduced the value of the goods on the market and the goods could no longer be properly placed on the market, the court said.

The judgment highlights the importance of carriers’ duties of care in international transportation law and the consequences of failure to fulfil those duties. It also shows that a legitimate suspicion of damage can be sufficient to establish an impairment of the value of goods and thus a claim for damages.

ECJ (7th Chamber), judgment dated 14 September 2023 − C-246/22 on cabotage regulations

The judgment by the European Court of Justice (ECJ) following a request by Cologne Local Court (AG Köln) for a preliminary ruling involved the interpretation of Directive 92/106/EEC and Regulation 1072/2009/ EC, especially regarding the transportation of empty shipping containers in combined transport and their exemption from cabotage regulations. The case arose from litigation between the managing director of a transport company, BW, and the then Federal Office for Goods Transportation in Germany (Bundesamt für Güterverkehr, BAG) (now the Federal Office for Logistics and Mobility (Bundesamt für Logistik und Mobilität)).

The Office imposed a fine for breach of cabotage regulations, which stipulate that a transport company from an EU Member State may only carry out a limited number of intra-state transport journeys in another EU Member State. The dispute focused on whether the carriage of empty shipping containers could be considered part of a combined transport and was thus exempt from the cabotage restrictions.

The ECJ specified that a combined transport is to be understood as the carriage of goods partly by road but with the majority of the route completed by rail, inland waterway or sea, with the road transport part having to be below a certain route length. The court ruled that the carriage of empty shipping containers between a container terminal and the location of loading or unloading of the goods counts as part of a combined transport. This also applies if this transport takes place immediately before or after the carriage of goods.

The ECJ also found that the carriage of empty shipping containers as part of combined transports was exempt from the cabotage provisions of Regulation 1072/2009. Accordingly, such transport is not subject to the strict restrictions that usually apply to cabotage transport. The court emphasised the importance of combined transports as a way to reduce road congestion, protect the environment and improve road safety. The inclusion of empty shipping containers in combined transport contributes to the promotion of this form of transport. Although the EU transport market is not yet fully harmonised, the judgment highlights the objectives of the EU’s common transport policy. This policy aims to remove barriers to the free movement of goods and services while ensuring that this is done in a way that takes account of public safety, environmental protection and the efficiency of the transport system.

In summary, the ECJ ruled that the carriage of empty shipping containers can be part of a combined transport and can therefore be exempt from cabotage restrictions, setting an important precedent for similar cases in the future.

 

This article is part of the "Update Commercial 2024". All insights and the entire report as a PDF can be found here.