Matti Komonen December 6 2017 Helsinki Appeal Court on carrier's liability for loss of pharmaceuticals HPP Attorneys Ltd | Shipping & Transport - Finland Matti Komonen Shipping & Transport IntroductionFactsDeviating from peremptory provisions of actGross negligenceIntroductionCorrect temperature is vital to maintaining the feasibility and effectiveness of pharmaceuticals throughout their lifecycle, including during carriage. Various guidelines have been issued and express provisions have been included in transport agreements to maintain the cold chain. Nevertheless, damage often occurs due to human error. The Helsinki Appeal Court (HelHO:2017:7) considered the following questions:Can the level of a carrier's liability be agreed in advance?Should liability for failure to maintain an agreed temperature be classified as gross negligence?Facts In this case, the pharmaceuticals and other pharma products were to be carried from Espoo to Seinäjoki (approximately 360 kilometres) during August 2013. Everything appeared to be in order at the commencement of the transportation. The trailer was suitable for the type of transportation in question and the transport contract between the carrier and the pharma company included the following detailed requirements regarding the cold chain management:The transport equipment must be suitable for the carriage of pharmaceuticals.The temperature must be maintained at between 8 and 25 degrees Celsius.There must be real time temperature monitoring devices to record and display the temperature in the truck's cabin and an alarm if the temperature goes above the prescribed limits.However, during the transportation the temperature fell below the agreed 8 degrees Celsius, resulting in alleged total loss. The reason for the loss was that the truck of the trailer and its driver were changed midway through the journey. The new driver activated the trailer's cooling system without checking its temperature settings. The trailer was equipped with conservative fixed-temperature monitoring devices which had no communication with the truck's cabin. The wireless devices necessary to communicate with the cabin were not installed or did not work as required. For reasons which remain unknown, the carrier breached its explicit contractual responsibilities to maintain the cold chain.The cargo insurer, having covered loss of consignment, sought full recovery from the carrier. The carrier rejected the claim to the extent that it had exceeded the limited liability calculated as per the weight of the goods in accordance with the Carriage of Goods by Road Act, enacting the Convention on the Contract for the International Carriage of Goods by Road in Finland.Deviating from peremptory provisions of act Concerning domestic transport, in Finland it is possible to deviate from the peremptory provisions of the act under certain special circumstances. According to Section 5.2 of the act:"No exception may be made to the provisions of this Act in domestic carriage unless such exception is made reasonable on account of the exceptional nature of the goods or carriage or of other special circumstances."The carrier and the pharma company had agreed in the transport contract that if the goods were damaged because the carrier acted against the explicit contractual provisions of cold-chain management, such behaviour would be considered wilful. The purpose of the clause was to prevent the carrier from invoking its right to limit liability pursuant to the peremptory provisions of the act. Therefore, the clause was applicable only if it was reasonable due to the exceptional nature of the goods, carriage or other special circumstances.According to the insurer, the clause was acceptable due to the special nature of the carriage of pharmaceuticals. The carrier disagreed. The Helsinki Appeal Court found that the clause was not acceptable under Section 5.2 because it is particularly usual to transport pharmaceuticals by road and it was not argued that this case was somehow exceptional. The District Court held differently and found that parties were entitled to agree on the meaning and consequence of the deviation from the specific contractual clause.Gross negligence Regarding alleged gross negligence, the Helsinki Appeal Court dealt first with Supreme Court precedents, according to which the following must be considered:whether there was any awareness of and indifference towards the risks undertaken; andwhether the carrier acted against its standard handling procedures or neglected the ordinary diligence of the trade.Gross negligence is considered to mean extremely serious carelessness or risk taking that is close to wilful misconduct and thus demonstrates an unscrupulous and indifferent attitude towards transport safety.The Helsinki Appeal Court referred to certain Swedish and Norwegian case law, concluding that gross negligence is possible, particularly in cases where the carrier has acted against explicit and concrete instructions.According to the court, temperature is of utmost importance in the carriage of pharmaceuticals and it was highlighted in the transport contract in numerous ways to ensure that the temperature requirements were followed during carriage. The carrier did not argue that it was unaware of the purpose of these requirements.The court considered whether the carrier as a company had committed gross negligence and then separately considered the driver's behaviour. According to the court, the carrier was liable for the fact that the monitoring devices had not been added to the truck or that the monitoring system had not been turned on. The fact that the reason for the inactivity of the monitoring system remained unclear proved that there was some failure in the control of transport. However, it was not deemed to be so careless as to be considered gross negligence. The court pointed out that it was also essential that instructions should be provided for situations where the temperature monitoring system in the cabin is out of order. It remains unclear whether for the carrier's benefit it was considered that such instructions existed but were not followed.The court found that the driver attempted to act with care. The trailer's cooling system was activated without the temperature settings having been checked because the new driver thought that the previous driver had adjusted the system correctly. However, due to the outside temperature, there was no need to use the cooling system. The driver did not follow the instructions to stop and check the trailer's temperature when it was discovered that it could not be checked from the cabin, because the driver wanted to reach the destination in time. The driver could not explain why the cabin's monitoring system was out of order. According to the court, the driver neglected his duties in many ways and therefore increased the risk of damage, albeit that in this case the risk was not particularly significant because the journey was short and the cooling system was activated by the outside temperature. However, the court found:no extreme or serious carelessness;no risk taking that amounted to wilful misconduct; andno gross negligence on the driver's part.Therefore, the insurer's claim for full compensation on the basis of gross negligence was dismissed.The decision is final and legally valid. However, as the court pointed out, there would have been no loss even if one of the many failures to follow the clear instructions had been missed and it may therefore be wondered whether the bar was set too high on this occasion.For further information on this topic please contact Matti Komonen at HPP Attorneys Ltd by telephone (+358 9 474 2207) or email ([email protected]). The HPP Attorneys Ltd website can be accessed at www.hpp.fi.