A Swedish exporter sold eight container-handling cranes to a Venezuelan buyer for $3,987,910. The exporter booked transport of the consignment from Halmstad in Sweden to Venezuela with a Danish contracting carrier that issued bills of lading to the exporter. The carrier's Swedish subsidiary subcontracted the sea carriage pursuant to a Conlinebooking 2000 liner booking note to a Dutch ship owner.
Under the liner booking note, all disputes arising in relation to the carriage should be decided in the Netherlands in accordance with Dutch law.
During the voyage the vessel was exposed to rough weather conditions and winds of up to Force 10 on the Beaufort scale, which resulted in damage to the deck cargo and the loss of eight trailers overboard. As a consequence of the damage to the deck cargo, the vessel's hatch covers were damaged. This resulted in water entering the cargo hold which damaged the container-handling cranes.
The exporter's cargo insurers initiated legal proceedings against the Danish carrier before the Danish Maritime and Commercial Court and submitted a claim for $387,557.
The Danish carrier brought third-party proceedings directly against the Dutch ship owner before the Danish court and submitted a claim that the ship owner should indemnify and hold the carrier harmless. The ship owner disputed that it could be sued before the Danish court as it had been agreed between the shipowner and the Swedish subsidiary that all disputes arising in relation to the carriage should be decided before the Dutch courts. In support of its claim, the ship owner submitted that by suing it directly (without involving the subsidiary carrier), the carrier could not prove that the jurisdiction agreement was unenforceable. The ship owner further disputed that it was liable for the cargo damage.
The court decided that the carrier's recourse claim directly against the ship owner could be heard in Denmark pursuant to Article 8(2) of the Brussels I Regulation.(1) The court reasoned as follows:
"It follows from Art 8(2) of the Brussels I-regulation that proceedings against a third party can be consolidated with proceedings pending before the court of the original proceedings, unless these were instituted solely with the object of removing it from the jurisdiction of the court which would be competent in its case. The claim against T [the Danish carrier] and R [the ship owner] is based on the same legal grounds, carrier liability, and the proceedings against T are brought at the place where it is domiciled. A case where T seeks to remove R from its jurisdiction, therefore, does not exist. Rather, it is expedient that the claims are consolidated and heard together."
The court further found that the ship owner was liable and should indemnify the carrier for the cargo claim.
There was agreement that the Danish carrier had no direct transport agreement with the ship owner; rather, the agreement was between the carrier and its subsidiary, which had then subcontracted to the ship owner. It follows from the Danish Merchant Shipping Act that a performing carrier may be held liable directly towards the claimant. However, pursuant to the act, legal proceedings may be brought in Denmark only if there is jurisdiction under the Brussels I Regulation. It follows from the judgment that the ship owner could not enforce the jurisdiction clause, as it had been agreed with the subsidiary carrier and not the carrier which brought the proceedings. As the carrier and the subsidiary carrier were interrelated companies that had undertaken joint and several liability regarding the exporter, and the claim against the ship owner was based on the transport contract between the subsidiary carrier and the ship owner, it was not obvious that the jurisdiction clause should not be given any effect.
For further information on this topic please contact Jesper Windahl at Windahl Sandroos & Co by telephone (+45 7733 7733) or email (email@example.com). The Windahl Sandroos & Co website can be accessed at www.wsco.dk
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.