A recent legislative reform has set out a new regime for carriers' limitation of liability. The amendments concern article 1696 of the Italian Civil Code and relate to the limitation of liability of road carriers and to multimodal transports. The same legislative reform also modified other articles of the Civil Code concerning the legal regime of freight forwarders.
Article 1696 of the Civil Code sets out the principle of limitation of liability in case of loss and damages deriving from the carriage of goods. The previous regime contained a generic rule under which the carrier could limit its liability as follows:
- for domestic transport – to €1 per kilogram of the gross weight of the damaged or lost goods; and
- for international transport – by applying the limitation regime foreseen by the Convention on the Contract for the International Carriage of Goods by Road (CMR) (Geneva, 19 May 1956) (the CMR Convention).
Such limitation regime was not confined to road carriages; judicial decisions made it applicable to multimodal transports as well.
The regime under article 1696 of the Civil Code now expressly applies only to carriages of goods by road and to multimodal transport. Indeed, the recent amendment of article 1696 expressly specifies that the regime of limitation for carriage (both domestic and international) of goods by sea, air, rail and river is regulated under national legislation or international conventions applicable in the field.
As far as the carriage of goods by road is concerned, the carrier's liability for total or partial loss to goods under domestic transport by road can be limited to €1 per kilogram of gross weight of the goods lost or damaged. It is expressly indicated that the regime of limitation of liability under the CMR Convention will apply to international transports. This regime remains almost identical to the previous version of the article, but it is now limited to carriages by road only and it is not applicable to multimodal transports.
A new paragraph 3 has been inserted in article 1696 that introduces a new regime of limitation of liability for multimodal transport. In the event that the transport is carried out through different means of transport and it is not possible to determine in which stage of the transport the damage occurred, the carrier will be entitled to limit its liability to:
- €1 per kilogram of the gross weight of the goods lost or damaged in case of domestic transports; or
- €3 per kilogram of the gross weight of the goods lost or damaged in case of international transports.
The amendment codifies the regime of limitation of liability applicable to multimodal transport, which, in the past, was left to judicial decisions. The majority of Italian decisions adopted the so-called "uniform liability regime". Accordingly, regardless of whether, within a multimodal transport, one of the different transport legs prevailed or whether it was possible to locate the precise phase of the transport in which the loss or damage occurred, judicial decisions applied the general regime of transport set out by the civil code. In other words, and using a practical example, in the event that the sea phase of a multimodal transport was predominant, or loss or damages could be identified during the sea passage, the special regime of the Italian Code of Navigation or of the Hague-Visby Rules would not be deemed applicable, but the liability of the carrier would be regulated by the Civil Code and, accordingly, only article 1696 of the Civil Code would regulate the limitation of liability. The opposite theory, referred to as the "network liability system", has been embraced by few isolated judicial decisions and some Italian scholars. According to this theory, the liability regime is segmented for each separate leg of the multimodal transport where the loss or damage has occurred.
The new regime adopts the uniform approach as in the majority of the Italian case law, but introduces a new trait: in the event that it is possible to identify in which phase of the transport the damage occurred, the limitation of liability regime of such transport will be applicable and not the uniform regime, foreseen by the Civil Code. This regime is called the "modified-liability system".
Hence, in the event of an international multimodal transport whereby loss or damage to the transported goods can be attributed to the sea leg and the regime of the Hague-Visby Rules is applicable, the limitation foreseen by the Hague-Visby Rules will apply – that is, the carrier will be entitled to limit its liability to two special drawing rights per kilogram of the gross weight of the goods lost or damaged (or 666.67 special drawing rights per package or unit). On the contrary, if it is not possible to identify the stage of the international multimodal transport in which the damage occurred, the limitation of three kilograms of the gross weight of the goods lost or damaged foreseen by article 1696 of the Civil Code will apply.
Finally, it has to be noted that the new regime does not amend the conditions under which the limitation of liability cannot be invoked. The carrier is not entitled to limit its liability in the event that the loss or damage to the goods results from wilful misconduct or gross negligence by the carrier, its servants and agents, or any other party used by the carrier to perform the carriage.
The new limitation regime is a welcome provision aimed at clarifying the application of the uniform liability regime set out by the Civil Code and finding a compromise solution between the two opposite liability regime theories. Legal certainty of the uniform rule is mitigated by applying the special limitation liability regime of the leg of the transport to which the loss or damage to the transported good can be attributed.
For further information on this topic please contact Marco Manzone at Dardani Studio Legale by telephone (+39 010 576 1816) or email ([email protected]). The Dardani Studio Legale website can be accessed at www.dardani.it.