Ref: Articles 17, 23 and 25, CMR
Charlotte J. van Steenderen, Van Steenderen Mainport Lawyers
The Convention on the Contract for the International Carriage of Goods by Road (“CMR”) provides a liability regime for international road carriage claims. Pursuant to article 17 paragraph 1 CMR, the CMR carrier is liable for the total or partial loss of and/or damage to the goods which occurs between the time of taking over of the goods and the time of delivery of these goods.
Pursuant to article 23 paragraphs 1 and 2 CMR, compensation in respect of total or partial loss of the goods is calculated with reference to the value of the goods at the place and time they were accepted for carriage. This value is based on the commodity exchange price, market value or the normal value of goods of the same kind and quality. Whilst compensation payable by the carrier may be limited to 8.33 SDRs per kilogram of gross weight (article 23 paragraph 3), there is also provision to recover carriage charges, customs duties and other charges incurred (article 23 paragraph 4). In the CMR “damage” is not defined. In the French version, damage is generally “avarie”, and the ordinary meaning of that word is “physical harm, or injury to an object”. However, the precise meaning in a given case depends on the context in which the word is used[1]. It has been held that in article 17 paragraph 1 CMR damage means any change in the physical state of the goods which reduces their value. Damage is characterised by external or internal physical deterioration, which results in diminution of value of the goods. Diminution of the value of goods without physical deterioration, however, is not damage as otherwise it would be too difficult to distinguish “damage” from loss of market, for which the carrier is not liable under the CMR.
Courts are regularly confronted with questions concerning the concept of “damage” under the CMR and recently a judgment of the District Court of East-Brabant was published[2]. On 24 February 2021, the District Court of East-Brabant handed down a judgment in a CMR road transport case where damage was caused by stowaways to a consignment of confectionery during an international transport from the Netherlands to France. The District Court held that the CMR carrier was liable for damage to the entire consignment of confectionery as the carrier could not prove that it had taken all measures that could reasonably be expected from a carrier to protect the cargo.
The facts of the case
[A] Holland sold confectionery products to [A] France. The sweets had to be transported from Veghel (the Netherlands) to a department store in Boigny-sur- Bionne (France). [A] Holland engaged [C] for the transport. [C] in turn engaged Forega. In its turn, Forega engaged X as actual carrier.
X picked up the confectionery with a truck in Veghel on 8 January 2018. According to the consignment note, there was nothing wrong with the sweets upon departure. Arriving in Boigny on 9 January 2018, it appeared that fourteen stowaways had crawled on board. They sat and walked on the boxes, ate part of the products, left garbage/food in the truck and urinated and defecated in the cargo area. The cargo was refused by the consignee and the driver returned to Veghel, arriving on 10 January 2018.
In Veghel the cargo was examined by [D] (the insurer of [C]). D issued a report on the investigation. The report states, among other things:
“Upon opening of the doors we noted an intensive, musty, unsavoury smell which probably originated from the immigrants. We noted on the first few pallets that they were stepped on. Boxes were deformed, also we noted dirt on the boxes and some boxes were misplaced. [..] We also noted many open wrappers which were scattered throughout the trailer.
In total we noted 4 bottles (3 of 50cl and one of 1,5 liter) filled with urine and multiple bags which were probably filled with stool. [..]
On every pallet we noted that they were stepped upon and dirt was found. Many boxes were opened and cargo was eaten. We found half-eaten candybars on multiple places in the trailer. [..]
It was discussed if the top layers of the pallets could be disposed of and the remaining layers repackaged. However in our opinion, based on the fact that urine bottles, bags with stool and other waste/dirt was found on both the top and bottom of the pallets and throughout the consignment we do not think this an option from a health and safety point of view. Moreover as a total of 14 persons (10 adults and 4 children) were found in this trailer.”
The insurer of X had the cargo examined by [E]. On 12 January 2018, [A] informed [C] that it would have the cargo destroyed because quality and food safety could no longer be guaranteed.
Forega paid compensation to its principal and held the actual carrier X liable. Forega argued that the actual carrier did not deliver the goods in the condition in which it received the goods in Veghel and is therefore liable under article 17 CMR. The actual carrier disputed liability, relying primarily on the principle of force majeure (article 17 paragraph 2 CMR).
The decision of the District Court of East-Brabant
The most far-reaching defence of X is a reliance on force majeure pursuant to article 17 paragraph 2 CMR. For this purpose X argued that as a careful carrier it had taken all reasonable measures to prevent damage to the products. The trailer was in fact sealed and locked, the driver had to stop at a parking place because of the rest and driving hours regulations. X could not divert to a (nearby) guarded parking lot because it was already full. X was also not warned about the possibility of stowaways and therefore did not need to take additional measures.
The District Court rejects the force majeure defence. The bar for the success of a force majeure defence is particularly high because the carrier must take all reasonably foreseeable measures[3]. The Dutch Supreme Court held in the Oegema/ Amev case that the force majeure defence can only be successful if the carrier can prove that they have “taken all the measures that could reasonably be expected from a careful carrier under the circumstances at hand, for preventing damage”. In this case a guarded car park was located six kilometres away from the car park used during the road transport. The actual carrier argued that the guarded car park was full at the time and offered proof of this claim. In response to Forega’s defence, the District Court ruled that it could not be assumed that using the guarded car park was impossible at the time of the driver’s arrival. Additionally, the District Court held that the driver could have taken additional measures in order to make sure that a guarded car park was reached in time (e.g., by leaving or stopping earlier).
Pursuant to Article 17 paragraph 1 CMR, the carrier is liable for total or partial loss and for damage occurring between the time of taking over and the time of delivery. In the event of total or partial loss, the assessment of damage will be made in accordance with article 23 CMR. In the event of loss, the goods must really be lost. It has been established that the goods are not lost. In the event of damage, the assessment of damage takes place in accordance with article 25 in conjunction with article 23 CMR. Damage must be defined as a (substantial) physical change – whether visible or not – in the condition of the goods, resulting in a diminution of value. The compensation shall be calculated according to the value of the goods at the place and time of receipt.
Pursuant to article 25 paragraph 2 (a) CMR, the District Court held that such depreciation does not have to be limited to the physically damaged goods, but could also include the other part of the consignment. The District Court ruled that a significant part of the cargo (at least one-sixth) was physically damaged.
Considering the fact that the fourteen stowaways remained in the cargo hold for a considerable period, it was likely that the entire consignment, including the undamaged part, represented no value, since the buyers would undoubtedly refuse to accept the goods if they knew what had occurred during transit. The fact that European law provides strict rules on the safety of food products intended for human consumption also played a role in the District Court’s decision. Therefore, the District Court ordered the actual carrier to pay Forega’s claim in full.
Comments
The District Court ruled that the actual carrier could not rely on force majeure because it should and could have taken further measures to prevent the stowaways from entering the truck. For damage within the meaning of Article 17 paragraph 1 CMR, it is necessary that there is a substantial physical change in the condition of the goods.
In recent years, the definition of “damage to goods” within the meaning of articles 17 paragraph 1 and 25 paragraph 1 CMR has been developed and better defined by both Dutch and foreign courts. In this recent case, the District Court reaffirmed that the claimant must prove a “substantial physical change” to the goods between the time of taking over the goods and the time of delivery in order to be able to claim damages. Although only one-sixth of the cargo was physically damaged, the actual carrier was also held liable for the remaining five-sixths of the consignment because these goods represented no value after what had occurred during transit.
This may not always be the case. This ruling contrasts with the “fear of loss” case we have discussed in an earlier newsletter (Broken seal, suspicion of tampering – “damage” under CMR Art 17?, dated 25 August 2020), brought before the District Court of Amsterdam by Danone. In the latter case, the District Court of Amsterdam held that a broken seal on a container was not sufficient to constitute “damage to goods”. Danone could not prove that substantial physical change had taken place.
Rotterdam, August 2021
Notes:
[1] International Carriage of Goods by Road: CMR by Malcolm A. Clarke, paragraph 57.
[2] District Court of East-Brabant 24 February 2021 Forega / X and Towarzystwo.
[3] Dutch Supreme Court, 17 April 1998, S&S 1998/75 and ECLI:NL:HR:1998:ZC2632 Oegema/Amev.