The claimant, a Hamburg terminal operator, was instructed by the charterer of the BBC Naples, a general cargo vessel, to discharge and store pipes in the port of Hamburg.
The pipes were discharged from the vessel until it was realised that those at the bottom of the second hatch were covered in sludge. The dripping pipes were lifted over the pipes that had already been discharged. It was later discovered that the sludge was lead ore concentrate, originally stored in a separate department in the vessel’s hull, mixed with sea water. Lead ore concentrate is a noxious substance. As a consequence of the lifting operation, the pipes already discharged and placed on the pier also became contaminated.
The defendant, which was the consignee of the pipes, instructed the claimant regarding the decontamination works and disposal of the noxious lead ore concentrate. After completing the work, the claimant invoiced the defendant for costs of approximately €750,000. The defendant refused to pay, arguing that the terminal operator was responsible for the damage that had occurred during the discharging operation. The claimant commenced legal proceedings.
The Hamburg District Court allowed the claim. It found that the defendant was not entitled to withhold payment as it did not have a counterclaim against the claimant for damages arising from the contamination of the goods in either contract or tort. Even if the consignee had been the owner of the pipes, the terminal operator had not acted negligently.
The defendant appealed to the Hamburg Court of Appeal on the grounds that the lifting operation was legally subject to German land transportation law, which provides for a direct contractual claim of the consignee of goods against the actual carrier. The court denied leave to appeal by unanimous court order (File 6 U 175/12), an extraordinary device in German procedure law allowing the courts to reject instantly an appeal without any chance of success. The court found that there was no direct contractual claim based on land transportation law because the discharging operation performed by the claimant was not part of a contract of carriage, but rather part of a contract for production of works.
The defendant filed a complaint against the order to the Federal Court of Justice.
On April 10 2014 the Federal Court of Justice rejected the complaint (File I ZR 100/13).
It held that the Hamburg courts were correct in finding that the contract entered into between the terminal operator and the charterer was not a contract of carriage. In particular, the courts did not err by deviating from a line of precedents according to which a contract on cargo handling (ie, discharging and handing over goods to the consignee) is usually subject to land transportation law.
The case at hand could be distinguished from those cases as the terminal operator was also obliged to store the goods. The contractual relationship between the claimant and the charterer could thus be considered to be a contract with different characteristic elements, each of which was subject to its own legal regime (eg, the laws on land transportation, warehousing and production of works). If, however, one characteristic element is dominant – as was the case in this decision with regard to the warehousing element – the whole performance of the contract would be subject to the legal regime applicable to this dominant characteristic element.
The judgments by the courts in Hamburg and the Federal Court of Justice are correct based on the particular circumstances, and give rise to the following conclusions:
- The consignee of goods cannot bring a claim in contract against the terminal operator which is causing damage to its property, because there is no contractual or quasi-contractual relationship.
The consignee must take recourse against the carrier in accordance with the contract of affreightment and/or bill of lading agreed between them.
- Contracts on cargo handling, including warehousing, may be governed by the law on warehousing if the other elements are of an inferior nature.
- Lifting operations need not be subject to the limitations of land transportation law. The Hamburg Court of Appeal held that lifting operations, viewed in isolation, are characteristic not of a contract of carriage but rather of a contract for production of works.
- A claim in tort is subject to the terminal operator’s culpability. In this regard, before discharging operations, terminal operators are not obliged to examine whether goods are contaminated unless there are circumstances indicating such contamination.