On 30 May 2016 the High Court of Justice in Rotterdam handed down a judgment in the case Kolmar Group A.G. v. Odfjell Terminals (Rotterdam) B.V. In this decision the Court upheld Odfjell’s defence based on art. 57 of the VOTOB terms and conditions under which the storage company shall not be liable for damage, loss, third-party claims etc., unless the client proves that such damage, loss, third party claims etc. were caused by willful intent or gross negligence on the part of the storage company itself, or of the staff responsible for the performance of the agreement with the client.
As in many national legal systems the law of the Netherlands starts out from the assumption that exemption clauses are in principle valid (application of the doctrine of freedom of contract), but a party under certain circumstances may not rely on the exemption. For instance, where the non-performance is a result of grossly negligent conduct.
Odfjell operates a tank terminal in the Rotterdam port area and after suffering from a number of incidents where chemical and/or dangerous goods escaped from the terminal, the terminal was shut down on 27 July 2012 to be gradually restarted again after some serious repair and maintenance work had been carried out under supervision of the authorities. Butanization of gasoline had to be stopped already in January 2012. After the terminal had re-started its operations by the end of August 2012, Kolmar started discussions with Odfjell in October/November 2012 for securing a number of storage tanks of different capacity at the terminal to start blending and butanization.
During the negotiations Kolmar tried to get to an agreement about a certain number of specific tanks connected to eachother for storage of gasoline and components. Odfjell took the initiative to send Kolmar various draft agreements for storage and handling which were discussed between the parties and amended. Without any agreement being signed the parties started effectively operating in December 2012. The start of butanization had been discussed and Odfjell had confirmed in emails and in various drafts of the agreement that their capability for butanization should become available again on 1 April 2013. However, shortly before that date Kolmar was informed that butanization would not be possible with effect from 1 April 2013.
Preceding to that date Kolmar had also suffered damages because of the less than flawless operations at the terminal. Tanks that Kolmar thought were included in the agreed upon tank configuration appeared not to be available and equipment of the terminal (e.g. mixers in tanks) broke down and could only be repaired by discharging product from tanks. In the proceedings Kolmar claimed approx. USD 17 million and EUR 3,5 million on account of its damages and Odfjell filed a counter claim for invoices that remained unpaid.
The Court held that Kolmar had not been able to convincingly prove that it had agreed with Odfjell that a specific tank configuration would be made available as from 1 January 2013. The Court also concluded that Odfjell had indeed made a firm commitment in regard to the capability to butanize as from 1 April 2013. On the basis of the oral evidence (including the testimony of the head of the public authority DCMR and the CEO of Odfjell) it transpired that nobody in Odfjell’s organization was exactly aware of what was needed to make butanization possible again and how much time it would take to comply with the statutory requirements for that. The Court also held that not a single person within Odfjell’s organization did take the lead in this field and assumed the ultimate responsibility. Some responsible thought that 1 April 2013 was achievable, but the Court in the end held that Odfjell had overrated their possibilities to meet that date. It also became clear that Odfjell at a certain point in time had made the equation not to further perform the steps that were essential to comply with the authorities’ requirements to start butanization.
Despite all this the Court held that Odfjell had not acted grossly negligent as is necessary to allow Kolmar’s claim to succeed irrespective of the exemption clause of the VOTOB conditions. This is a striking conclusion based on the facts as published since the Court also took into consideration that some of the staff at Odfjell had been well aware of the obvious risk of substantial damages for Kolmar should butanization not be possible on 1 April 2013. This is remarkable since Kolmar did also seek to rely on the Dutch Supreme Court’s decision in Telfort v. Scaramea (HR 5 September 2008, NJ 2008, 408), where the Supreme Court had ruled that the concept of gross negligence is capable of embracing not only conduct undertaken with actual appreciation of the risk involved, but also serious disregard of, or in difference to, the risk of substantial damages to the other party. For a more detailed comment please refer to the article in full in the Dutch language: “Incompetente bedrijfsvoering beloond: Odfjell mag zich beroepen op aansprakelijkheidsuitsluiting”.