Damaged cargo claims against air carriers (airlines) are subject to an extremely short statute of limitations, becoming time barred two years from the cargo’s date of delivery (or the date it should have been delivered), in accordance with international treaties (Warsaw, Montreal).
In other words, if the cargo’s owner or insurance company do not file a claim against the airline within the time frame defined by the treaties, the claim becomes time barred, along with any indemnity claims tied to it.
The cargo owner or insurance company may, at times, choose to file a claim against other entities in the chain of transportation, such as the international forwarder charged with caring for the cargo, claiming it was damaged due to the forwarder’s negligence.
The situation may arise of a cargo owner or insurance company filing an indemnity claim against an international forwarder towards the end of the two year limit. Can the international forwarder thereupon file an indemnity claim (third party) against the air carrier (the airline), claiming the cargo was damaged due to the air carrier’s negligence, even if such a claim would be filed in excess of two years from the date of delivery?
That is to say, can the air carrier claim the statute of limitation applies to his relations with the international forwarder as well?
The matter was recently decided by the Tel Aviv Magistrates Court, which accepted the air carrier’s claim, rejecting out of hand the suit filed against it.
It should be noted that a U.S. court reached a different conclusion, as will be described below.
Case Facts and Detailed Arguments:
In September 2011, cargo labeled as “DDU CLEARED, Door to Door Service” was loaded on the air carrier’s aircraft on its way to Spain. The cargo was flown to Liege, Belgium, and transported to the client in Spain via land transport. Upon delivery in Spain, it was discovered that the external wooden packaging was severely damaged, and a part of the machinery was protruding out of the wooden encasing. An appraiser determined the machinery was damaged by a powerful blow during the transportation process. The insurance company compensated the insurer (the exporter) for his damages, and filed an indemnity claim against the forwarding, courier and air and ground carriers as the entities responsible for the transportation of the cargo, claiming them to be jointly and severally responsible for the damage caused. The insurance company and air carrier reached a settlement. Therefore, the insurance company maintained its claim solely against the forwarder, the air courier and the land carrier, but the aforementioned companies beseeched the court to include the air carrier as a third party respondent. The airline submitted an appeal to reject the request out of hand, on grounds that the statute of limitation of two years stated in the Carriage by Air Act (based on the Montreal Treaty) having already passed.
The forwarder, air courier and land carrier companies claimed that the Montreal and Warsaw Treaties are not applicable in this case, since the indemnity claim disputed is between different units within the transportation chain, and therefore the statute of limitation of two years does not apply.
The Court’s Ruling:
The court ruled that the Montreal Treaty and the two year statute of limitation apply to relations between forwarder, air courier and land carrier companies and air carriers.
The court noted that it considered allowing the claim against the airline, since the insurance company filed the claim within the time frame defined by the law (within two years of the delivery date), and it is reasonable to assume the airline did not form a reliance on the assumption it would not be sued on the matter. Even so, the court ruled that once the forwarder, air courier and land carrier companies tarried and did not file a third party indemnity claim in due time, the claim must be dismissed.
Therefore, the court accepted the air carrier’s appeal, and denied the request to add the air carrier as a third party respondent due to the statute of limitation, seeing as the claim was filed in excess of the two years defined by the Montreal Treaty. The court did not entitle either side to legal costs.
In the U.S., a court reached a different conclusion, ruling that an indemnity claim by an international forwarder against an air carrier is not subject to the two year statute of limitation defined by the international treaties. The court ruled in this case that the term “The Right to Claim Indemnity”, which appears in the treaties, should be explained as referring to the relations between the importer\exporter\insurance company and the international forwarder\air carrier, namely to an indemnity claim regarding damage to the cargo. The court ruled that a claim filed by an international forwarder against an airline is not an indemnity claim regarding damage to the cargo. Rather, it is an indemnity claim regarding compensation the forwarder paid \ is charged with paying a third party. Therefore, in the aforementioned case, the court gave leave to the international forwarder to pursue his indemnity claim against the airline, even though the claim’s submission date exceeded the two year limit from the delivery date.
Ref: TA (TA Magistrate Court) 11911-08-12 Clal Insurance Ltd. Vs. TNT Express Worldwide and others, ruling from 29.3.15, presiding judge Noa Grosman.