Peggy Sharon Keren Marco August 29 2012 Who is the carrier's agent? Court reverses first instance decision Levitan, Sharon & Co | Aviation - Israel Peggy Sharon, Keren Marco Aviation First instance judgmentAppellate judgmentIn its 2010 Taga Electronics judgment(1) the Magistrates Court of Tel Aviv decided that Maman Cargo (an airport warehouse) was the carrier's agent (for further information please see "Who is the carrier's agent?"). On July 26 2012 the Tel Aviv District Court reversed the decision.(2)First instance judgmentTwo claims were filed in respect of cargo that was supposed to be delivered in Israel. The cargo was stolen by an employee of DHL Israel. The magistrates court decided that, under the circumstances, Maman Cargo Ltd should be considered as the air carrier's agent, as its services (ie, storing, unloading and dispatching the cargo to and from the aircraft) were part of the services provided by the carrier in the framework of the carriage.Accordingly, the court reached the conclusion that Maman's liability was limited under the Warsaw Convention. DHL and DHL Israel (the carrier and the forwarder) were held liable for sums according to the convention and full indemnity was imposed on the employee.Appellate judgmentAn appeal was filed by all parties, each based on different arguments.Maman as carrier's agent?The three judges hearing the appeal in the Tel Aviv District Court concluded that the magistrates court had been incorrect in deeming Maman to be the carrier's agent.The appellate court stated that Maman was an entity that operated according to the Airport Authority Rules (Unloading and Loading of Aircraft) 1988. The services provided by Maman included storage, loading and unloading of aircraft and delivery. All cargo that arrived in Israel was forwarded to Maman's warehouse and released only after receipt of approval from the Tax Authority.The judges ruled that in view of the purpose of the Warsaw Convention, as well as the monopolistic position of Maman and Supreme Court precedent, Maman should not be considered to be the carrier's agent. Maman's primary role as a bonded warehouse was to secure the cargo until all tax examinations had been completed - that is, it enabled the Tax Authority to carry out its activity, constituting the 'long arm' of the authority. Furthermore, Maman was not party to the carriage contract and its services were compulsory for the courier company.The district court cited Maman v Philip Gable Wright (CF 535/84), in which it was decided that it was sufficient that Maman's services were compulsory for aircraft companies in order for the convention not to apply thereto. The court therefore returned the case to the magistrates court, to determine whether Maman should be held liable for its alleged negligence.Liability of DHL and DHL IsraelBoth DHL and DHL Israel appealed the magistrates court judgment, which had found them liable according to the provisions of the convention. DHL and DHL Israel argued that since the magistrates court had decided that the two cargoes were stolen by the employee by his own will and outside the ordinary routine of business, there should be no vicarious liability for his wilful acts.The district court declined the appeals of both DHL and DHL Israel. It stated that according to Article 18 of the convention, carriers' strict liability is excluded only in the specific cases detailed in the article - namely:an inherent defect in the cargo;defective storage of the cargo carried out by an entity that is not the carrier;activity in relation to war or armed conflict; oraction of a public authority carried out in connection with the entry, existence or transit of the cargo.The court stated that a theft by an employee does not exempt the carrier from liability under the convention.DHL and DHL Israel also argued that the plaintiff benefited from double compensation (as the employee was obliged in full for the plaintiff's damages and DHL and DHL Israel were obliged for the limited amounts set in the convention). The court declined this argument and stated that compensation according to the convention does not provide full compensation for the loss and, as the defendant is jointly and severally liable, the respondents (DHL and DHL Israel) could not be released from their liability.For further information on this topic please contact Peggy Sharon or Keren Marco at Levitan, Sharon & Co by telephone (+972 3 688 6768), fax (+972 3 688 6769) or email ([email protected] or [email protected]).Endnotes(1) Taga Electronic Components Ltd v DHL Worldwide Express, CF 19308/01.(2) Taga Electronic Components Ltd v DHL Israel Ltd, CA 4480-10-10.