Claudio Perrella Italy c.perrella@lslex.com

The 2014 Stability Law no. 190 introduced several changes to the road haulage sector in Italy.

The move aims to reduce fragmentation in the sector and dissuade the indiscriminate use of sub-carriers.

The new law establishes that the carrier can contract a sub-carrier only upon prior agreement with the sender/principal.

In the absence of such an agreement, contracting to another carrier amounts to a breach of contract entitling the sender/principal to terminate the contract.

It is not entirely clear (and the initial phase of the application of the law has proven this) how parties can agree upon the out-sourcing (either when stipulating the contract or in the course of its execution); such uncertainty is regrettable especially considering the serious consequences which can arise from a breach.

In fact, in the event of unauthorized outsourcing, the sender/principal may terminate the contract regardless of the fact that the sub-carriage has caused damage or delay: the lack of consent to sub-carriage is itself cause for termination.

The practical significance of the provision and the impact on existing contracts must be assessed case by case: it is likely that termination will be declared only in long term contracts, and it is likewise probable that the sender/principal will declare termination in the event of breach if he wants to be freed from a contract which has become burdensome or expensive in order to negotiate new terms.

The open question is what happens when a sub-carrier to whom the contracting carrier has turned without authorization causes damage in the performance of the carriage, especially in the event that no gross negligence occurs.

Cargo interests may surmise gross negligence, emphasizing the fact that entrusting a third party without consent from the sender/ principal is in itself a serious breach, to the extent that it would justify the automatic and immediate termination of the contract.

However, the argument lends itself to the objection that if the actual carrier is not found to have acted with gross negligence and is therefore entitled to invoke limitation, the contracting carrier would be barred from seeking limitation due to a violation of the contract which has no causal link with the event.

Another very significant development is the absolute prohibition imposed on the sub-carrier to use other sub-carriers.

The measure was introduced in order to avoid the phenomenon of the (often very long) chain of hauliers involved in the same service.

Pursuant to the new law, the sub-carrier cannot in turn entrust another carrier to provide transport services. If the ban is violated, the contract with the sub-sub carrier is null and void. 

The sub carrier who disregards the prohibition is thus sanctioned in the most severe way: the contract between the first sub-carrier and the second sub-carrier is null and void (not simply subject to termination) through a mechanism which totally deters recourse to sub-sub-carriage, as the sub-carrier is subject to the payment in full of the freight charges (therefore, he is exposed to the risks arising from the nullity with no financial benefit whatsoever).

The use of one or more sub­‐carriers is however permitted for firms engaged in the transport of consolidated shipments, each weighing less than 50 quintals, with services involving breaking bulk (meaning that goods are discharged and then divided and transferred from one mode of transport to another).

The provision is aimed at moralizing a sector often characterized by very long and often dubious chains of sub-carriers.

However, it often proves difficult to establish the identity of the various carriers involved in the chain.

Furthermore, the second sub-carrier may genuinely overlook the fact that there is a supply chain involved and he is entrusted with the carriage from the first sub-carrier who may have obvious interests in concealing the circumstances.

The sanction of the nullity of the contract here again poses relevant issues in terms of gross negligence of the carriers involved.

One should consider an event causing damage in a context where the actual carrier is entitled to seek the application of the limitation (gross negligence being excluded), which however takes place performing a contract null and void by application of law.

The sanction of gross negligence barring limitation would seem in fact automatic for the first sub-carrier, who has sub-contracted in breach of law.

The issue is less clear-cut with the second sub-carrier, who could be equally at risk of gross negligence for failing to make sure that the performance of the contract does not breach the law.

It is very likely that the application of the provision will often prove complex and give rise to questionable outcomes.

As regards the position of the carrier who is authorized to use a sub-carrier, who in turn violates the law by contracting out to a third carrier, it seems reasonable to evaluate on a case by case basis, without overlooking the fact that the first contracting carrier is liable (under article 1228 of the Civil Code) for the conduct of his servant [N1].

Furthermore, the provision establishing that the contract stipulated in breach of law is null and void has the effect of making a claim based on such a contract as a claim in tort (lacking a valid contractual relationship).

The non-contractual nature of the claim could result in a reversal of the burden of proof (the special ‘ex recepto’ liability regime of the carrier being unavailable), but would at the same time imply the automatic inapplicability of the limitation of €1/kg. as per article 1696 of the Civil Code, such a limitation being provided only for contracts of transport.

Finally, the invalidity of the contract of sub-carriage may have (and is likely to have) relevant implications as regards the insurance coverage of the carrier’s liability or the goods in transit.

These in fact often contain boilerplate clauses excluding coverage in cases where the carriage is performed in breach of law, or where the insured acts with gross negligence, and it is likely that violation of the new law will undermine the operation of the insurance coverage.

Besides, the insurance market is considering amendments to the existing policies in order to reflect the new provisions and the impact on coverage.

NOTES: [N1] Cassazione n. 3354/09 MW Trade Italia c. Stam.