A brief overview of the recent Belgian case law
Over the last few years, freight forwarders have been confronted with extensive (and sometimes outrageous) demurrage charges from sea carriers. Although demurrage serves its purpose in the industry, a fair, reasonable and balanced approach must be prioritised, especially when the freight forwarder “at home” has no control over the goods at destination.
In three recent cases, Belgian courts have dealt with this issue and have tried to find a fair balance between the interests involved.
- Comm. Antwerp 20th of March 2019, AR: A/15/12281, unpublished.
In its judgement of 20/03/2019 the first instance Commercial Court of Antwerp dealt with a carrier’s claim for demurrages (and storage costs) amounting to 4 full years.
Here, a Belgian freight forwarder had concluded a contract of carriage from Antwerp, Belgium to Tunis, Tunisia. At destination, the authorities had – pursuant to local custom legislation – seized the goods after four months, since no one had taken delivery of the cargo. The sea carrier, however, had failed to inform the relevant parties of this matter, so no one knew about this seizure.
The Antwerp court held that demurrages are “contractual damages” (and not part of the freight) meaning that demurrages are a compensation for the delayed return of the containers to the carrier. Demurrages being “damages” also means that the court has the legal power to reduce a claim for damages when the claim is disproportionate.
The court had noted that the position of the carrier over the last four years had been draconian and excessive, especially since it never communicated about the status of the containers. Moreover, it was only during the procedure that the parties learned that goods were seized by the authorities well before the claim was introduced to the court.
Taking the carrier’s attitude into account, the Antwerp court dismissed the carrier’s claim in full.
It should however be noted that this contract was governed by French law which gives judges, similar to Belgian law, the power to reduce (or dismiss) claims for damages when the aspects of the case allow for it.
Unsurprisingly, the carrier filed an appeal against this case. The judgement in appeal shall be discussed below.
2. CA Antwerp 18th of March 2019, AR: 2015/AR/2304, unpublished.
The Antwerp court of appeal (“CA”) rendered on the 18/03/2019 judgement in a similar case. The question here at stake was not whether or not demurrages were due, but for how long.
In short, the CA held that the “parking meter” cannot run forever. In the CA’s view, the meter stops running once the carrier is aware of the fact that its containers will never be returned.
This reasoning is somewhat similar to the well-known English case of “MSC v. Cottonex”. Like the English court, the Belgian CA looked for a moment from when it was no longer reasonable to claim demurrage.
When that moment occurs, however, is debatable (and depends on your point of view).
For some unknown reason (the CA did not go into detail), the CA held that this moment occurs one year after the goods were delivered. When one year passes, the carrier should know that its containers are “lost”. Demurrage accordingly ends. The CA therefore awarded one year’s worth of demurrages to the carrier.
Although we welcome that “a” limit is imposed, the CA did not address why it fixed this period at one year.
Like the previous case, the CA had to render a judgement under French law.
3. Comm. Antwerp 27th of April 2021, AR: A/17/05557, unpublished.
Just recently, on 27/04/2021, the first instance court had to issue a ruling on demurrage, but now in accordance with English law.
Here, a carrier had introduced a claim for demurrages against a Belgian freight forwarder amounting to nearly 3 years (between 2016 and 2019).
The freight forwarder had built its defence on the reasoning applied in “MSC v. Cottonex”. It had thus been argued that the contract of carriage became frustrated once the commercial purpose of the contract had ceased to exist.
Given that the consignee had informed the carrier mid-2016 that he would not take delivery of the goods (most likely due to quality issues), the court ruled that, from that moment on, the contract was frustrated.
The court as such effectively reduced the carrier’s claim from 3 years to just 6 months.
In its ruling, the court however noted that the carrier had failed to objectively prove what tariff parties had agreed to. As such, the court requested the carrier to provide additional proof, after which a final judgement would be rendered.
As of the time of writing, the final judgement has not yet been issued.
4. CA Antwerp 17th of May 2021, AR: 2019/AR/1993 and 2019/AR/2011, unpublished.
Finally, we go further into detail about the appeal against the first judgement of 20/03/2019 (see para. 1), introduced by the carrier.
Unsurprisingly, the CA confirmed the first instance judgement and (again) dismissed the carrier’s claim with its judgement of 17/05/2021. How the CA arrived at this result, is a bit different though.
Contrary to the first instance court, the CA did not dismiss the claim on the basis of its “reducing-power” under Belgian and French law (see above).
The CA noted that the carrier had based its claim on its own terms and conditions (“T&C’s”). Only in this way, the demurrages and their tariff were included in the contract of carriage (the contract itself nor the booking mentioned the tariff).
These T&C’s, however, merely referred to the carrier’s website in respect of demurrage charges, the exact tariff could not be found in full in the T&C’s.
Accordingly, the CA was unable to verify the content of the website at the moment of the conclusion of the contract, nor the amount of the tariff.
When claiming contractual damages, such as demurrages, the carrier must – of course – prove that parties had agreed on those damages. A mere reference to a website is, under Belgian law, insufficient.
Therefore, given that carrier failed to meet the burden of proof, the claim was again entirely dismissed.
It is to be expected that a similar reasoning shall apply to the first instance judgement of 27/04/2021 (see para. 3), where the carrier shall need to prove how the demurrage charge was agreed.
In conclusion, we see that courts try to find a balance between the interests of the carrier and those of the other parties involved. It is worth noting that demurrage are usually seen as contractual damages under Belgian law, meaning that they should be agreed upon prior to the conclusion of the contract of carriage. A mere reference to T&C’s seems to be insufficient (see case 4).
The fact that demurrages are damages also means that the carrier must be prudent and reasonable when claiming demurrages. The carrier must assure that demurrages did not occur because of its own attitude (see case 1).
Finally, even when the carrier is allowed to claim demurrage, demurrages are no never-ending line of credit or profit-making scheme for the carrier at the expense of the freight forwarder. At some point in time, demurrages should cease to run, something that is only fair. Although this principle in itself is recognized by Belgian and international jurisprudence, the end point of demurrage is still open for debate (see cases 2 and 3).
Case law on demurrage is still evolving and the last word has not yet been said. Let’s however hope that this discussion does not lead us to infinity and beyond.