Case Reference: 1 ZR 140/06
German Federal Supreme Court - Bundesgerichtshof (BGH)
Date of Judgement: 18 June 2009: Case Reference: 1 ZR 140/06
CARRIER’S LIABILITY: BREAKING THE LIMITATION OF LIABILITY: SUB-CONTRACTING
Over-ruling the judgments of the first and second instance courts, the Federal Supreme Court held that, in the case of loss occurring during the sea leg of a combined transport, the combined transport operator (CTO) is entitled to invoke the limitations of liability, if the loss was caused by recklessness of the sub-carrier. Any gross negligence on the part of the sub-carrier was not to be attributed to the CTO, provided there was no gross negligence on the part of the CTO itself.
Note contributed by Daja H. Böhlhoff, LLM (Maritime Law), Solicitor of German law firm Blaum Dettmers Rabstein  and International Contributor to DMC’s CaseNotes
The plaintiff instructed the defendant to arrange for the carriage of a used car from Germany to Angola. The transport was to be carried out by road from Kelsterbach (Germany) to Antwerp for on-carriage by sea in a container. The defendant took over the vehicle and handed it over to the sea-carrier in Antwerp. From there it was, contrary to the instructions given to the defendant, carried on deck to Dakar and transhipped in a container for on-carriage to Luanda without being in any way secured within the container. It arrived at Luanda in a severely damaged condition. The plaintiffs claimed from the defendant the full value of the car in the amount of EUR41,321, whilst the defendant invoked the limitation of liability of 2 SDR per kilogram according to sec.660 para.1 German Commercial Code (HGB), equivalent to Art. IV Rule 5(a) of the Hague Visby Rules.
The first and second instance courts held that the defendant CTO was not entitled to avail itself of the limitation of liability because the damage resulted from an act of the CTO done recklessly and with knowledge that damage would probably result, according to sec.660 para.3 HGB (equivalent to Art. IV Rule 5(e) of the HVR). It was irrelevant whether the loss had been caused by a reckless act on the part of the defendant or of the sub-carrier because such acts of the carrier’s servants or agents would be attributed to the defendant carrier according the sec.607 HGB (equivalent to Art. IV Rule 2(q) of the HVR.
The Federal Supreme Court agreed with the first and second instance judgments in so far as the claim was subject to German maritime law. The contract between plaintiff and defendant was for a combined transport. As it could be ascertained that the loss occurred during the sea leg, the matter was governed by sec.556 pp. HGB. Furthermore, the Federal Supreme Court confirmed that the loss was caused recklessly because the car had, contrary to the instructions given to the defendant, been carried on deck to Dakar and transhipped without any securing inside the container.
The Court further held that the defendant could not invoke as an exclusion of liability that the loss had occurred without its actual fault and privity or without the fault of its agents and servants according to sec.606 sent.2 HGB. The defendant had not provided evidence that the loss was not caused by the fault of the defendant or its servant or agents. The defendant could not be exonerated by the fact that it had given instructions to the sub-carrier to carry the car in a container because the non-compliance with such instruction on the part of the sub-carrier was to be attributed to the defendant as the sub-carrier’s principal. As a consequence, the defendant was in principle liable towards the plaintiff.
The Court found, however, that the defendant was entitled to limit its liability to 2 SDR per kilogram. The Court referred to the history of sec.660 para.3 HGB that had been introduced into German law by adopting the legal principles of the HVR, and stated that the unambiguous wording of Art. IV Rule 5(e) of the HVR referred only to acts of omissions of the carrier, without any mention of agents or servants, so that only recklessness on the part of the defendant CTO and not any fault on the part of the sub-carrier would be apt to break the limitation of liability. The Court further held that, if the defendant carrier is a corporate entity, it would only be deprived of the right to limit its liability if there was recklessness or intent on the part of its management as the defendant’s alter ego. That was not the present case, as the defendant and its managers were entitled to rely on the sub-carrier’s compliance with the instruction it had been given. The fact that the defendant did not arrange for additional supervision of the sub-carrier’s acts did not constitute any default on the part of the defendant.
The judgment is groundbreaking in that it is the first Supreme Court judgment to clarify the extent to which acts and omissions of a sub-carrier causing damage on the sea leg of a combined transport are to be attributed to the combined transport operator. Whilst under the German general law of transportation (which applies to all combined transports if the place where the loss occurred is unknown) recklessness of the carrier or its servants is sufficient to break the limitations of liability, the principles established in Art. IV Rule 5(e) of the HVR and its German equivalent apply to any loss that is subject to maritime law, even if maritime law applies because it can be established that the loss occurred during the sea carriage of a combined transport. Combined transport operators should therefore be eager to investigate the exact place where the loss occurred to try and establish a loss on the sea leg in order to invoke the limitation of liability successfully, because in cases of sub-carriage, it is rather unlikely that the court will find that recklessness on the part of the multimodal transport operator or its management itself to has caused the loss.