On July 8 2012 Danish company S contracted with an English shipowner to perform the unloading of a vessel in Kalundborg, Denmark. The assignment included unloading and transport within the terminal of a tower unit weighing 65 tons. In order to perform the work, in July 2012 S contracted with crane operator K, with which S had cooperated since 2004. During a period ending in April 2012 K stipulated, by reference in its invoices, that all works undertaken were subject to the the Convention on the Contract for the International Carriage of Goods by Road (CMR). The reference was as follows: "All transports are performed pursuant to CMR irrespective of Art. 1, i.e. in case of damage or loss compensation cannot exceed SDR 8.33 per kilo gross weight. All crane operations are insured with a sum of DKK 1 mio."
When K was contracted to do the unloading work its invoices did not – allegedly unintentionally – include the reference to the CMR. During the subsequent court proceedings K's manager gave evidence that although the unloading work did not fall under the scope of the CMR, the reference in the invoices was made because "K wanted to apply the terms on limitation of liability included in the CMR" and it was important that K "made it clear that compensation for damaged goods could not exceed SDR 8.33 per kilo".
The unloading operation commenced on July 15 2012 when K's driver parked the truck and the low bed trailer alongside the vessel so that the tower unit could be loaded onto the flatbed using a vessel crane. The driver subsequently gave evidence before the court that in his opinion, "it was not responsible to carry the tower section on the flat bed as it was very high". The tower was to be carried approximately one kilometre within the terminal in order to be stored on another quay. While the loaded flatbed trailer was being moved, the top-heavy load caused the trailer to overturn when the wheels of the trailer went into a slight dip in the surface. Significant damage was caused by the crane unit to the vessel and other property at the port. The English shipowner raised a claim for $950,000 against S, which paid compensation and instigated recourse proceedings against K. In support of its claim, S submitted that K:
- had acted negligently when performing the contracted work; and
- was liable pursuant to the rules on strict liability set out in the Road Traffic Act as the damages occurred due to a "road traffic accident".
K denied liability and submitted, among other things, that the claim had become time-barred under the CMR as it was raised more than one year after the incident.
The court found(1) that K was liable to pay compensation for the damages caused as it had acted negligently. The court found that the reference to the CMR was binding on S as a contract term, as the reference had been made in K's invoices and S's manager had given evidence that he had noted the reference. However, the court further held as follows:
"Based on [K's managers witness statement] and a literal interpretation, the reference on the invoices can only be deemed to include the limitation of liability rules of the CMR. Against this background the one year time-limitation set out in the CMR, thus, cannot be considered incorporated into the agreement on the basis of the stipulated reference."
The judgment concerns the effect stemming from an agreed contract term that an assignment has been undertaken "subject to the CMR". The court found that such a reference – with the express added stipulation that "compensation for damaged and lost goods cannot exceed 8.33 SDR per kilo" – was to be construed to the effect that only the rules on limitation of liability of the CMR (and not other rules, including rules on time limitation) applied. Pursuant to the judgment, when works excluded from the scope of the CMR are performed subject to the CMR as a contract term, either reference should be made to the CMR as a whole, or all relevant clauses of the CMR which are to govern the contract should specifically be incorporated by reference.
For further information on this topic please contact Jesper Windahl at Windahl Sandroos & Co by telephone (+45 3525 3800) or email (email@example.com). The Windahl Sandroos & Co website can be accessed at www.wsco.dk.
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