A Danish exporter sold a consignment of cream cheese spread to a buyer in the United Arab Emirates.
In August 2017, the exporter entered into a framework agreement with a Danish carrier (T) for maritime transport of dairy products from specified ports. The agreement stated that the parties were the exporter and T, and the agreement stated, among other things, the following:
[T] assumes liability in respect of all Services rendered by or for [Eksportøren] under this General Agreement regardless of whether the Services under this General Agreement are performed by T or its representatives or third party.
The exporter booked transport of the consignment of cheese in question from Vejle, Denmark, to the United Arab Emirates with T. The booking stated that there were "4x40 REEFER CONTAINERS, 3+ DEG CEL" and "Temperature Condition: 3.00".
On the same day, a booking confirmation was issued by T's Swiss parent company (T1). In the booking confirmation, T1 was listed as "carrier", while T was listed as "agent" for T1.
The transport from Vejle to the Port of Aarhus, Denmark, was subcontracted by T to a subcontractor (D). On 12 June 2019, D sent a timetable to T, which stated "40 empty TEMP: 03C". An agreement was concluded between the exporter and D (T was not a party to this agreement), which obliged D to ensure that the container was temperature-adjusted when it was picked up empty and before it was presented to the exporter for loading:
The container must be temp-set on and off the terminal no matter where it is to be picked up. The driver must, together with the staff on the street, on the way out, check that the temperature has been set in accordance with the booking/driving license.
D entered into an agreement on container transport with a haulier (S). Pursuant to this agreement, D "chartered" cars from S and was responsible for their daily operation. D had daily contact with the drivers, and S had nothing operational to do with the drivers. S received a settlement once a month from D, and S had no authority to decide what tasks the drivers were to perform for D. D explained during the case that D had not instructed S's drivers to check the temperature setting on the empty containers that S picked up in the port, and that the temperature should first be set, "when the container was handed in at the terminal after loading [and] that it therefore did not matter to S's driver that it was 3 degrees".
On 14 June 2019, the container was picked up by S at the Port of Aarhus and delivered to the exporter's terminal in Vejle. The exporter himself loaded the goods into the container and connected power. The container then stood at the terminal over the weekend. The container had not been set to 3°C, but was set to -20°C, so damage occurred to the cheese products in the container. The damages were calculated at 696,258.67 Danish kroner.
On that basis, the exporter brought an action against T seeking compensation. T denied being responsible, citing that the booking confirmation for the order was given by T as an agent on behalf of T1. T further denied having undertaken an obligation to adjust the temperature of the empty containers before they were presented to the exporter for loading. T simultaneously filed a recourse case against D, who sued S with a claim for release.
The Maritime and Commercial Court concluded that, as a contracting party in accordance with the framework agreement, T was responsible for the damage that occurred, and that T's booking confirmation could not change this.(1)
The Court further found that T had to be regarded as having undertaken an obligation to ensure that the empty containers presented to the exporter were set at 3°C.
The Court then further concluded that D should hold T harmless in part from the claim in the case, as the Court stated the following:
The court finds that the explanations given must be understood as meaning that the actual temperature setting of the containers was to be carried out by the terminal's staff following instructions from T, while the subsequent control of the temperature was the responsibility of [D].
The court finds that [D] never instructed [S's] drivers in checking whether the temperature was set correctly at the time of delivery. Against this background, and with reference to the fact that [D] had undertaken to control the temperature setting, the missing
temperature control of the container is attributed to [D] as at least gross negligence.
The Court finally acquitted S, finding that S was not liable to D, as D never instructed S's drivers to check whether the temperature was set correctly at the time of delivery:
The court then finds that [S] neither could nor should have known that there was one
agreement between the Exporter and [D] that the driver who received the container at the [terminal] should carry out a temperature check in connection with the delivery.
It is clear from the judgment, in accordance with settled case law, that it is incumbent on a party claiming to have contracted solely as an agent to prove that the co-contractor was aware of that fact at the time of the conclusion of the agreement. When there is a framework agreement stating that a party has a position as a contracting carrier, this legal position cannot be (unilaterally) changed by the carrier by issuing a booking confirmation on behalf of another party and stating that it has acted as an agent.
In its judgment, the Court found that a party who has undertaken to carry out a temperature setting check of a turned-off, empty container and fails to pass on the necessary instructions to its subcontractor to carry out the check may be considered to have acted with gross negligence.
Finally, the judgment did not explicitly state whether a haulier who makes equipment (truck and driver) available to a contracting party who himself instructs the driver directly regarding the performance of tasks can incur liability as a carrier. It can be stated that, in such cases, the haulier does not have a position as a performing carrier, as the agreement between the contracting party and the haulier cannot essentially be regarded as a transport agreement based on a promise to perform transport but may be regarded as an agreement on transfer of control over equipment and personnel.
For further information on this topic please contact Jesper Windahl at WSCO Advokatpartnerselskab by telephone (+45 3525 3800) or email ([email protected]). The WSCO Advokatpartnerselskab website can be accessed at www.wsco.dk.
Endnotes
(1) Judgment of the Maritime and Commercial Court in case BS-23642/2020-SHR.