On 29 May 2019 the Federal Court of Justice ruled on the appropriate jurisdiction regarding a head carrier's insurer's direct claim against subcarriers' liability insurers.
Cargo was damaged during transport from Milan, Italy, to Salzgitter, Germany. The carrier's liability insurer settled the damage with the shipper and then sued the Polish subcarrier and its Polish liability insurer in Germany, the latter by way of a direct claim as allowed under the Polish Civil Code.
The first and second instances affirmed their international jurisdiction and admitted the direct claim against the liability insurer on the basis of Article 31(1)(1)(b) of the Contract for the International Carriage of Goods by Road (CMR). The Federal Court of Justice confirmed this approach.
Although a valid contract for carriage is required in order to apply Article 31 of the CMR, the judges stressed that Article 31(1) is not limited to claims out of such a contract and that the convention includes the term "proceedings arising out of carriage under this convention" instead of "proceedings out of contract of carriage" on purpose.
The Federal Court of Justice confirmed that Article 31 of the CMR applies to both contractual and non-contractual claims based on supplementary applicable national rules if those claims have a sufficiently close link to a carriage governed by the CMR, which includes claims against persons other than a sender, carrier or consignee.
On this basis, the Federal Court of Justice ruled that an insurer's direct claim against a subcarrier's liability insurers has such a sufficiently close link.
The criterion of a 'sufficiently close link' is not suitable for determining jurisdiction. German and continental European jurisdiction rules are traditionally built on strict criteria without much discretion in order to create foreseeability. Whether a link is sufficiently close is too vague a basis for distinction.
The Federal Court of Justice's decision is certainly not the only possible solution for determining CMR jurisdiction for direct claims against liability insurers. Arguably, a direct claim against a liability insurer does not arise only "out of carriage under this convention", but also out of the insurance contract. On the other hand, without the CMR jurisdiction rule, there would have been jurisdiction in any event under Article 13(2) in connection with Article 12(1) of the EU Brussels Regulation recast. In any event, it would have been preferable for the court to have referred to other member states' case law regarding the scope of Article 31 of the CMR.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.