Court Rules on Liability for Retention of Goods

A Danish scrap metal merchant contracted with a Pakistan importer for the latter's purchase of 15 Bedford trucks for spare parts. The Danish firm placed an order for transportation of the parts in two 40-foot open-top containers with a ship broker, who booked the transport with a shipping company. The Pakistan purchaser did not pay in advance for the goods as agreed and so the Danish firm arranged with the ship broker that two negotiable bills of lading (in which the consignee was specified as 'to order') were to be issued for the goods, in order for the Danish firm to have the option of redirecting the goods to another buyer if the purchase price were not paid.

At the same time, the ship broker (in consultation with the Pakistan importer,and without the Danish firm's involvement) issued a bill of lading instruction which specified the importer's company Asif Impex as the consignee. The shipping firm prepared an import general manifest (IGM) on the basis of the bill of lading instruction and specified Asif Impex as the consignee/importer in it. According to the testimony of one of the shipping firm's employees, Asif Impex was named in the IGM because otherwise the Pakistan authorities would not have accepted the import.

The containers arrived in Pakistan on July 12 and 19 1998, and when the Danish firm did not receive payment from the importer it took steps to have them sent to a buyer in Afghanistan. In the meantime, the Pakistan importer (or Asif Impex) had claimed the goods from the customs authorities, wrongfully informing them that $20,000 had already been paid for the goods. In accordance with the importation rules of Pakistan, the customs authorities would not permit the re-export of goods, such permission being subject to the condition that the Pakistan consignee had refused to accept delivery of the goods.

Only on December 17 1998 (and incurring substantial difficulties and costs) did the Danish firm finally succeed in obtaining permission to re-export the goods. However, the goods had become damaged after their prolonged stay in the customs authorities' bonded warehouse and could only be sold at a substantially reduced price.

The Danish firm instituted legal proceedings against the ship broker and the shipping firm before the Maritime and Commercial Court in Copenhagen claiming damages for the loss suffered. The Maritime and Commercial Court found in favour of both defendants. With respect to the shipping firm, the court held that Asif Impex had been specified as the consignee in the IGM after reliance on information received by the shipping firm from the ship broker, and so the shipping firm had not made any mistake that would give rise to liability. The court held that the ship broker had been mistaken in specifying Asif Impex as the consignee in the bill of lading instructions without consulting the Danish firm, but the mistake was of secondary importance in comparison to the mistakes made by the Danish firm, particularly the fact that the containers had been sent to Pakistan without a buyer to pay the purchase price.

For further information on this topic please contact Jesper Windahl at Bech-Bruun Dragsted by telephone (+45 7733 7733) or by fax (+45 7733 7744) or by e-mail ([email protected]).