A Danish shipper took legal proceedings against a Danish freight forwarder before the Danish courts because of a damage, which occurred during transport while in the custody of an English road carrier. The Maritime and Commercial High Court did not allow the freight forwarder to summon the English road carrier to attend the proceedings. This was due to a framework agreement between the freight forwarder group of companies and the road carrier, which provided for exclusive jurisdiction in England.
A Danish shipper had hired a freight forwarder to arrange for carriage of wind turbines from Videbaek, Denmark to Kerry, Ireland. The freight forwarder subcontracted the various parts of the carriage to different carriers. One subcarrier was to truck the cargo from Videbaek to Esbjerg in Denmark, another to sail the goods from Esbjerg to Immingham in England, and from there on a third subcarrier was to truck the cargo to Liverpool in England. However, the turbines were damaged during the English national road carriage while in the custody of the third subcarrier.
The Danish shipper took legal proceedings against the freight forwarder at the Commercial and Maritime High Court of Denmark and the freight forwarder summoned the Danish as well as the English road carrier to the proceedings. The English road carrier argued that the parties had agreed on English jurisdiction and that the case should therefore be dismissed by the Danish court.
The international rules governing jurisdiction
Legal proceedings shall in general be started in the jurisdiction of the defendant. This main rule applies throughout the EU and follows from EU Regulation 44/2001. However, the law provides for a number of exceptions in various situations where it is considered to be reasonable that the defendant may be sued in other jurisdictions than his own.
One of these exceptions applies when more than two parties take part in the same legal proceedings. It is very onerous for a party if the same case against several parties is brought before different courts in different countries to be decided simultaneously. Therefore, the rules provide for the possibility of summoning other parties to the first legal proceedings. This means that the decision of the court is binding to all involved parties. This rule means that freight forwarders are usually given the possibility to summon the performing subcarrier to legal proceedings brought before the court by the shipper.
The law also provides for another exception in situations where the parties have made an agreement concerning the governing jurisdiction, i.e. where the parties have agreed that legal proceedings can only be initiated in a particular jurisdiction. A jurisdiction agreement is binding to the parties and decides exhaustively where legal proceedings can be started.
The English road carrier
The freight forwarder had booked the English road carrier by a fax via the freight forwarder’s Irish sister company. The booking did not specify which rules should apply to the carriage. The CMR Convention was not applicable due to the fact that this was a national carriage and the convention only governs international carriage of goods by road.
The freight forwarder argued that the EU rules regarding jurisdiction should apply. Since the shipper had started legal proceedings against the freight forwarder before the Danish courts the freight forwarder felt that he was entitled to summon the English road carrier to the case. The freight forwarder also reasoned his summons with process economic arguments; it would not be fair if the freight forwarder first had to suffer the expenses of a Danish lawsuit after which he would have to initiate recourse proceedings in England against the English road carrier.
The English road carrier on the other hand argued that the parties had agreed to submit to the exhaustive jurisdiction to the English courts, and thus that the case should be dismissed by the Danish Maritime and Commercial High Court. However, the jurisdiction agreement was a part of a framework agreement between the subcarrier and the freight forwarder’s English sister company. In other words the Danish freight forwarder was not directly a party to the framework agreement and the agreement did not relate to the particular carriage in this case.
The Maritime and Commercial High Court: The parties agreed on jurisdiction in England
The Maritime and Commercial High Court initially emphasized that the booking did not specify the applicable rules of law. Even if the Danish freight forwarder was not a direct party to the framework agreement the English road carrier had reasonable grounds to expect that the transport was governed by the framework agreement. Therefore, the Maritime and Commercial High Court dismissed the case against the English road carrier due to the jurisdiction clause in the framework agreement.
Freight forwarders should be careful when making agreements concerning jurisdiction. A freight forwarder usually operates as the middle man between the shipper and the performing subcarrier, and it can be very costly for the freight forwarder if he cannot summon the subcarrier to legal proceedings initiated by the shipper. This means that he risks having to take part in two different legal proceedings in two different jurisdictions.
The judgement also serves to illustrate the importance of agreements made by group companies. If one company in the group enters into an agreement with a third party this may be binding on all companies in the group even if one particular company is not aware of the framework agreement.
[Judgment of the Danish Maritime and Commercial High Court on 1 August 2013. Case no. H-27-12]