A road haulier’s insurance company had to pay damages worth EUR 35,000 to the road haulier, who had indemnified a freight forwarder in order to preserve their commercial relationship. The Maritime and Commercial High Court dismissed the insurance company’s arguments that it had been an ex gratia payment and that the claim was time-barred according to article 32 of the CMR-convention. 
A Scandinavian logistics provider and a Danish freight forwarder entered into a transport agreement regarding a transport of white goods from Eskilstuna in Sweden to Taulov in Denmark. The freight forwarder engaged a Danish haulier to perform the road carriage. On the way to Taulov the haulier locked the trailer and left it on the side of a road for the weekend. After the weekend, the haulier returned to the trailer and found that a large amount of the white goods had been stolen.
Immediately, the haulier reported the theft to his insurance company, who asked for more information and instructed the haulier in what to do. Subsequently, the freight forwarder sent an invoice directly to the haulier’s insurance company and requested compensation. However, the insurance company asked for more documentary proof of the loss, and a long period followed with correspondences between the freight forwarder and the insurance company about documentation.
After a year from the time of the theft, the insurance company rejected the freight forwarder’s claim for damages due to lack of documentation and due to alleged time-barring according to article 32 of the CMR-convention. The insurance company returned all received documents.
As the freight forwarder had not received compensation from the haulier or the insurance company, the freight forwarder closed the haulier’s clearing account. After this the carrier chose to pay the damages to the freight forwarder in order to preserve their relationship while pursuing the claim for damages against the insurance company on his own.
After a year from the insurance company’s refusal to pay damages, the haulier filed a lawsuit against the insurance company.
Insurance Company: the Insurance Does Not Cover Ex Gratia Payment
The insurance company argued that the haulier had not been under a legal obligation to pay damages to the freight forwarder. Because of this, the payment had to be considered an ex gratia payment, which the insurance did not cover. Furthermore, the insurance company stated that the haulier’s claim was time-barred according to article 32 of the CMR-convention, which provides that the period of limitation is one year.
On the other hand the haulier stated that he had been under a legal obligation to pay damages to the freight forwarder, because the haulier was responsible for the goods at the time of theft. At the same time the haulier argued that the claim should not be time-barred, because the period of limitation had been suspended by the written claim, cf. the special suspension rule in article 32 (2) of the CMR-convention. According to this rule, a written claim suspends the period of limitation until the carrier rejects the claim in writing.
During the court proceedings it emerged that some of the documentation which the insurance company had demanded was not relevant for the transportation in question.
The Maritime and Commercial High Court: The Insurance Company Must Pay the Damages
Initially the Maritime and Commercial High Court found that the claim was not time-barred. In connection with this the Court referred to the correspondence with the insurance company.
The Court stated that the haulier was liable towards the freight forwarder for the theft, cf. article 17 of the CMR-convention. The fact that the carrier had chosen to pay damages to the freight forwarder in order to preserve the commercial relationship before pursuing the claim against the insurance company was not to influence the haulier’s position. Thus, the insurance company had to pay the full damages of EUR 35,000.
This judgment illustrates that a payment does not necessarily constitute an ex gratia payment even though the purpose of the payment is to preserve a commercial relationship. A payment should only be considered as an ex gratia payment if there was no legal obligation to pay.
The Court was not of the opinion that time-barring had set in before the haulier voluntarily paid damages to the freight forwarder. In connection with this the Court referred to the correspondences with the insurance company regarding the claim. According to article 32(2) of the CMR-convention a written claim suspends the period of limitation until the carrier rejects the claim in writing and returns the documents. This suspension rule only applies to claims against the carrier or against someone who has taken the carrier’s place. You can read more about the suspension rule in our previous newsletter on the smuggling of Turkish perfume.
The judgment has been appealed to the High Court of Eastern Denmark and we will return when the High Court has handed down its judgment.
NOTES: Judgment of Maritime and Commercial High Court, 27 February 2015, case no. H-73-13]