By a recent judgement[1], the Supreme Court came back to deal with an interesting issue: in the field of carriage, in case of insurance in favour of a third-party beneficiary, where the risk insured is loss or damage of goods, what rules apply in the event of a claim to identify the person entitled to compensation?

To better understand this issue, we summarise below a case brought to court.

A carriage company – in its capacity as carrier on behalf of third parties – entered into certain insurance policies in favour of a third beneficiary to cover the risks associated with the carriage. During the carriage, the company lost the cargo due to robbery. Since the insurers were late in the payment of the compensation, the carrier opted for directly refunding the consignors the cost of the lost goods, while being assigned by them the rights to recover the insurance indemnity.

At the end of first-instance proceedings, the insurers were ordered to pay compensation to the carrier.

At the appeal stage, however, the insurers were successful, claiming that – in the sale of goods to be transported from one place to another – the consignee/buyer of the goods, and not the consignor/seller, is entitled to claim compensation.

More specifically, the Court of Appeal applied Article 1510, paragraph 2 of the Italian Civil Code[2], according to which (in case of sale of goods to be carried) the seller is released from the obligation of delivery when handing the goods over to the carrier. Based on such rule, the consignors could not have transferred the right to recover the insurance compensation to the carrier, as they did not hold such right.

The Supreme Court clarified the point, holding that Article 1689 of the Italian Civil Code[3] (and not Article 1510) applies, according to which any rights arising from a contract of carriage vis-à-vis the carrier are transferred to the consignee when – once the goods have reached their destination or the time limit for their delivery has expired – the consignee makes a demand on the carrier for delivery up of the goods.

Since in the case at issue the stolen goods never reached their destination, the consignor still held rights vis-à-vis the carrier (i.e. the right to compensation). Therefore, the assignment of insurance rights from the consignors (actual holders of such rights) to the carrier was valid.

In the light of above, the Supreme Court stated the following principle: “in order to determine entitlement to the right to compensation, it is necessary to consider the impact of damage deriving from loss or deterioration of the carried goods; in this respect, the consignee’s right, pursuant to Article 1689 of the Italian Civil Code, exists only from the time when, after the goods have arrived at destination or after the time limit within which the goods must arrive has expired, the consignee makes a demand on the carrier for delivery up of the goods[4].

It should be noted that the Supreme Court had previously stated such principle in connection with an international contract of carriage of goods by road governed by the Geneva Convention of 19 May 1956 (the CMR note). For further details on this, we refer the reader to issue 32 of our Shipping and Transport Bulletin.