Charlotte J. van Steenderen, Van Steenderen Mainport Lawyers B.V.     

The Arnhem-Leeuwarden Court of Appeal rendered a judgment on 21 March 2023 (ECLI:NL:GHARL:2023:2521) in a case concerning a claim by insurer Ergo Versicherung AG against Morcargo B.V., Morcargo Transport B.V. and Morcargo Materieel B.V. Cell phones and laptops, among other things, were stolen during road transport. Insurer paid a large portion of the damage to a cargo interest and held the three companies liable as carriers and employers for the damage suffered. The claim is dismissed. ‘Parachute jumping’, Article 8:363 Dutch Civil Code, limitations of liability.

What this case is about

During a road transport carried out by Morcargo, Apple products (including cell phones and laptops) were stolen. Ergo, as insurer, paid a large portion of the damages to a cargo stakeholder. It holds Morcargo et al. liable as carrier and employer for the damages suffered and claims from them on the basis of subrogation the amount it paid out.

The Court at first instance dismissed Ergo’s claim. Ergo disagreed and appealed the judgment. That appeal did not succeed. Below, I will explain how the Court of Appeal arrived at that decision.

The facts as established

  1. A commercial relationship between Metro Group Logistics GmbH (hereinafter: MGL) – part of the Mediamarkt Group – and DHL has existed since 2012, under which DHL, by order of MGL, takes delivery of goods in the Netherlands from (among others) the company Five4U in order to distribute them via DHL distribution centers by road in the Netherlands, Belgium and/or Luxembourg. Five4U is a supplier of Apple products. MGL was insured with Ergo.
  2. A framework agreement existed between DHL and (Morcargo’s legal predecessor) Morcargo since 2013 under which Morcargo provided services as a carrier on behalf of and for DHL. As shown in Annex 2 of that framework agreement, Morcargo’s services mainly involved picking up from a terminal in Utrecht and subsequently transporting and delivering goods to addresses within the Utrecht region, or at least within the Netherlands.
  3. Morcargo picked up a semi-trailer loaded with Apple products from the terminal of Five4U at Zonnebaan 2 in Utrecht on behalf of DHL on 28 September 2016. The intention was that this semi-trailer would be transported to DHL’s distribution center at Rutherfordweg 2 in Utrecht and also delivered there on the same day. The equipment was intended partly for the Dutch market, and partly for the Belgian market.
  4. The Apple products did not arrive at the delivery address. The driver of the truck reported the theft with violence committed on 29 September 2016 in which the Apple equipment was allegedly stolen. However, the Overijssel District Court, Zwolle location, sentenced the driver to 12 months’ imprisonment with deduction of remand for, among other things, embezzlement in the course of employment in a judgment dated 19 February 2019 (ECLI: NL:RBOVE:2019:575). The verdict considered, among other things:

Defendant, as driver of a truck, unlawfully appropriated the cargo he was transporting for his employer, namely a large number of Apple products worth approximately half a million euros. Furthermore, to cover up this misappropriation, he made a false report of kidnapping, threatening and stealing. By acting in this way, the defendant harmed others (including his employer).”

  1. MGL, as cargo stakeholder, assessed its damages resulting from the embezzlement at € 214,087.88. DHL paid € 32,004.46 to MGL as (partial) compensation for these damages. Ergo paid the difference between these amounts (€ 214,087.88- € 32,004.46 =) € 182,083.42 to MGL.
  2. On 30 July 2020, Ergo first claimed payment of € 182,083.42 from Morcargo et al. Morcargo et al. did not make payment.
  3. In subsequent court proceedings, Ergo demanded that the Court order Morcargo et al. to pay the amount of € 182,083.42 it paid to MGL, plus statutory interest. It also claimed compensation for extrajudicial and litigation costs. The Court rejected Ergo’s claim.

The dispute on appeal and the findings of the Court of Appeal

  1. Ergo has formulated five grievances against the judgment. Grounds 1 and 2 address the Court’s finding of facts. The Court of Appeal has independently established the facts that it considers relevant for its assessment. As a result, Ergo no longer has an interest in these grievances. Insofar as Ergo wants to see other facts it has alleged added, it misses the point that it is up to the Court to make a choice from the facts that the Court considers important. The remaining grievances are directed against the Court’s opinion that Morcargo et al. are not obliged to reimburse Ergo for the amount it paid to MGL.
  2. It is not (any longer) in dispute between the parties that the contract of carriage between DHL and Morcargo is governed by the provisions of Book 8, Title 13 of the Dutch Civil Code (hereinafter: the DCC) and that the Convention relative au Contrat de Transport International de Marchandises par Route (hereinafter: the CMR Convention) does not apply to this contract. It is also not in dispute that Morcargo is the carrier and a party to the contract of carriage with DHL.
  3. It is further not in dispute between the parties that the contract between MGL and DHL under which the present transport took place is also not subject to the CMR Convention. Ergo has not objected to the Court’s finding that the agreement between MGL and DHL in this case only falls within the scope of the provisions of Book 8 of the Dutch Civil Code, and during the oral hearing before the court of appeal this was once again confirmed by Ergo’s counsel. The Court of Appeal, in assessing the grievances, therefore departs from this and concludes that the transport carried out by Morcargo within the Utrecht region was not part of a transport chain involving distribution of goods outside the Netherlands. Thus, this case involves contracts of carriage of goods by road within the Netherlands.
  4. Furthermore, it is relevant for the assessment that Morcargo et al. no longer dispute that the driver of the truck was involved in the misappropriation of the goods and thus that there was an intentional act of the driver.
  5. On the basis of the so-called parachute-jump, which is laid down in Article 8:1081 DCC in conjunction with Article 8:363 DCC, Morcargo as the carrier can invoke against MGL – and Ergo as the insurer that it claims is subrogated to MGL’s rights – the defenses that DHL, as a party to the contract of carriage with MGL, could have invoked against MGL. This is also the case if Morcargo is sued out of contract under Article 6:162 DCC or Articles 6:170 or 6:171 DCC. Ergo does not dispute that Morcargo may rely on the limitations of liability that DHL may invoke against MGL, but disputes that reliance on these limitations is possible in this case. This, according to Ergo, involves not only the limitation of liability to € 3.40 per kg arising from Article 8:1105 DCC, but also the limitation provisions. According to Ergo, these must also be seen as a limitation of liability, for which view it finds support in the provisions of Article 8:1700 DCC. When there is intentional or knowingly reckless conduct within the meaning of Article 8:1108 DCC, according to Ergo, Morcargo would no longer be able to rely on the one-year limitation period as set out in Article 8:1711 DCC, a provision that DHL can invoke against MGL. Morcargo et al. would, according to Ergo, for that reason be obliged to pay the damages as claimed. The Court does not go along with these contentions for the following reasons.
  6. Ergo argued that the intentional acts of the driver constituted intentional acts on the part of the carrier, so that the carrier could not invoke the limitation of liability provided for in Article 8:1105 DCC and the limitation period of Article 8:1711 DCC. The Court of Appeal considers that, in view of Article 8:1108 DCC, the carrier may not invoke any limitation of its liability insofar as the damage was caused by its own attributable act or omission, done either with the intent to cause such damage, or recklessly and with the knowledge that such damage would probably result therefrom. The background of the mandatory prescribed Article 8:1108 DCC is formed by the rule accepted in Dutch law that a carrier may limit or exclude its liability for damages caused by intent or conscious recklessness of subordinates. Because Morcargo is a legal person, the question arises as to when there is an ‘own act or omission’ of ‘the carrier’. Given the exceptional nature of the rule formulated in Article 8:1108 DCC on the limitation of the carrier’s liability to its own – intentional or reckless – acts, it will not soon be possible to assume that the carrier’s own acts are involved. Against this legal background it must be judged whether the alleged conduct of certain persons, in view of their position within the legal entity and in view of the further circumstances of the case, are to be regarded in society as acts of the carrier himself.
  7. Against the background of the above, the Court of Appeal concludes that, in view of the driver’s position as Morcargo’s de facto subordinate and as the one who was executing, his intentional acts that led to the theft of the goods do not count as intentional acts of the carrier itself. The driver is not an executive of the carrier. The fact that the driver in this case was hired by Morcargo from a third party, as argued by Morcargo et al. does not detract from the factual subordination, nor does it mean that his actions can be regarded as acts of the carrier itself. The fact that the driver can possibly be regarded as an assistant of Morcargo and Morcargo in that case is in principle liable towards third parties for his wrongful acts (Article 6:171 DCC) does not yet mean that the driver’s acts can be regarded as the carrier’s own acts within the meaning of Article 8:1108 DCC.
  8. Ergo has also argued, or at least this is how the Court understands its assertions, that the carrier itself acted intentionally or knowingly recklessly by employing this driver. To that end, Ergo argued, inter alia, that Morcargo et al. themselves indicated that the driver was not an employee of Morcargo et al. but of Kobalt Utrecht B.V. (hereinafter: Kobalt). Against that background, they would not have demonstrated in any way on what conditions the driver was hired and what requirements were imposed on the hiring company and the driver in that respect. Nor have they shown that the driver met all the conditions set by DHL and that a Certificate of Good Conduct (hereinafter: VOG) was available for the driver.
  9. A breach of the limitation of liability within the meaning of Article 8:1108 DCC is possible in the event of intentional acts or fault on the part of the carrier that is equivalent to intentional acts. Deliberate conduct occurs when acting with the intent to cause the damage. Acting recklessly and with the knowledge that the damage would probably result therefrom is said to have occurred if the carrier acting in this way is aware of the danger connected with the act and is aware that the chance that the danger will materialize is considerably greater than the chance that it will not, but does not allow himself to be deterred from doing so by this.
  10. Against this background and in the light of Morcargo et al.’s challenge, Ergo has not sufficiently substantiated that there was intentional or knowingly reckless conduct on the part of the carrier itself. For example, it is unclear which instructions of DHL were allegedly not followed by Morcargo, not to mention that the failure to follow instructions, without adequate explanation which is lacking here, is not sufficient for the assumption of intentional or knowingly reckless conduct in the sense referred to here. Morcargo et al. further argued in the pleadings and during the oral hearing, without contradiction, that the driver had driven for Morcargo without any problems for two years prior to the theft and that there was no reason whatsoever for them to assume that the driver could not be trusted, that they could not use the driver for the transport and that the chance of theft was greater than the chance that no theft would take place. That no VOG of the driver was available was also disputed; the driver would have also driven for PostNL which also requires a VOG. The Court does not come to evidence on this point. Even if the VOG had been missing, this would not, in view of the other circumstances of this case, justify the conclusion that there was intentional or knowingly reckless conduct on the part of the carrier.
  11. The conclusion is that the limitation of the carrier’s liability that Morcargo can invoke against DHL is not breached because of the deliberate acts of the driver. That intentional act does not entail intentional or conscious recklessness on the part of Morcargo itself within the meaning of Article 8:1108 DCC. This means that for that reason alone, Ergo’s argument that Morcargo is not entitled to invoke the short statute of limitations of Article 8:1711 DCC because of its own intentional or deliberate recklessness is not valid, whatever else that argument may be. MGL’s claim against DHL from the transport agreement is now time-barred, as Ergo acknowledged at the oral hearing. In view of the above, therefore, Morcargo can also rely on this limitation of liability. Ergo’s claim against Morcargo stems from this. In so far as in Ergo’s contentions a reliance on the limiting effect of reasonableness and fairness must be read, that reliance is also barred by the absence of intentional or knowingly reckless conduct on the part of the carrier itself. Ground 3 does not succeed.
  12. Ergo has further relied on Article 6:170 DCC and argued that the driver’s employer is, in principle, unquestionably liable for the damage caused. Ergo argued that it is necessary to first establish with which company the driver has entered into an employment agreement. Ergo believes that as long as it has not been demonstrated by Morcargo et al. which company contracted with the driver, it cannot be assessed which company is involved and which is not, so that there is also no reason to disregard Morcargo Transport. Ergo further argued that, based on Morcargo et al.’s own assertions, it is well established that Morcargo did not enter into an employment agreement with the driver. During the oral hearing Ergo also brought forward that for the time being it assumes that Morcargo Materieel is the employer, but that should Morcargo et al. prove that Kobalt is the employer, it should be borne in mind that Ergo has in the meantime issued a writ of summons against Kobalt.
  13. The Court of Appeal considers that in this respect it is important that only a party that is outside the transport chain of exploitation agreements cannot invoke the parachute jump as contained in Article 8:363 DCC. However, based on the main rule of Article 150 Dutch Code of Civil Procedure, it is up to Ergo to state and, if necessary, to prove that and with respect to which party involved in the proceedings and standing outside the chain of operating agreements, the requirements for application of Article 6:170 DCC have been met. This means that, among other things, it will have to state sufficiently unambiguously that and in the service of which legal person the driver performed his duties. In the opinion of the Court of Appeal, Ergo has not done so sufficiently substantiated. Ergo only argued that it must first be determined with whom the driver had concluded an employment contract, but that is insufficient in light of the defense of Morcargo et al. They have substantiated that the driver was employed by Kobalt, which is part of the Morcargo holding company and works as an employment agency for Morcargo and Morcargo Transport, while Morcargo Materieel is the owner of the trucks, among other things, and does not employ any personnel. Morcargo Transport makes contact with the clients and Morcargo executes the transport agreements and is the operating company, according to Mongarco et al. In view of the dispute, it would have been in Ergo’s power to state the reasons why and which legal entity, as a party in these proceedings, can be held liable on the basis of Article 6:170 DCC and that also in light of Article 8:363 DCC. However, it failed to do so, so that for that reason its claim against Morcargo et al. cannot be allowed either. Ground 4 also fails.
  14. Grounds 1 through 4 cannot lead to nullification of the contested judgment and therefore the fifth and last grievance also fails. Now that the grounds for appeal have failed, the Court of Appeal will not get round to assessing the other defenses put forward by Morcargo et al. which relate, inter alia, to the question whether MGL has a right of action in view of Article 8:1126 DCC and, if so, whether Ergo is actually subrogated to MGL’s rights.

The decision of the Court of Appeal

The judgment against which appeal was initiated is upheld. Ergo’s claim is dismissed. Ergo, as the unsuccessful party, is ordered to pay the costs of the appeal.