Court dismisses freight forwarder's demurrage claim against consignor
A freight forwarder faced a claim for demurrage because an Iranian consignee failed to return 11 containers. The freight forwarder tried to pass on the claim to the Danish consignor on the basis of a demurrage clause. However, the Court held that the containers had not been provided by the freight forwarder, but by the shipping line, and therefore the Court dismissed the claim. Moreover, the claim had lapsed because of inactivity / time limitation.
A Danish manufacturer of equipment for poultry production units (the Consignor) had in July 2005 sold a large quantity of goods to an Iranian buyer (the Consignee). The Consignor entered into a contract with a freight forwarding company (the Freight Forwarder) for the carriage of the goods from Aarhus in Denmark to the Consignor in Bandar Abbas, Iran. The goods were packed in 11 containers which were first carried by sea from Aarhus to Hamburg. From there the containers were shipped by a shipping line to Bandar Abbas. The delivery in Iran was handled by the freight forwarder's local partner (the Agent).
The 11 containers belonged to the shipping line which carried the containers from Hamburg to Bandar Abbas. According to the standard conditions of the shipping line, the containers were to be returned within ten days from the arrival of the shipping vessel to Bandar Abbas, and demurrage was payable in case of late return of the containers.
The FBLs (Negotiable FIATA Multimodel Transport Bills of Lading) which the Freight Forwarder had issued to the Consignor in connection with the contract of carriage read in clause 13.3 as follows:
"All dues, taxes and charges or other expenses in connection with the goods shall be paid by the Merchant. Where equipment is supplied by the Freight Forwarder, the Merchant shall pay all demurrage and charges which are not due to a fault or neglect of the Freight Forwarder."
The Consignee in Bandar Abbas did not return the containers. The shipping line then raised a claim for demurrage against the Consignee but did not succeed in making the Consignee pay.
In October 2006, the Freight Forwarder informed the Consignor that the Consignee had not returned the containers. At the end of December 2006, the Freight Forwarder forwarded an e-mail from the Agent saying that demurrage of USD 70,000 was payable.
In March 2007, the Agent bought the containers from the shipping line and withheld in May 2009 three new containers from the Consignor as security for the demurrage claim.
In July 2009 the Agent passed on the claim for USD 119,841 to the Freight Forwarder. The amount was said to cover the demurrage incurred as well as the release of the 11 containers.
The Freight Forwarder sued the Consignor in March 2010. In addition to the claim for demurrage and the release of the containers, the Freight Forwarder alleged that the Consignor was to pay travelling expenses and the costs of the Agent's withholding of the three new containers.
The Maritime and Commercial Court: The demurrage claim dismissed
The Court stated that according to international custom, the shipping line is to place containers at disposal and to allow the consignee a number (e.g. five) of so-called free calendar days to return the containers free of charge. It is also customary that the shipping line invoices the consignee for demurrage in case of late return of the containers.
The Court attached importance to the fact that it did not appear from the case documents, including the FBLs, that it was the duty of the Freight Forwarder to place the containers at the disposal of the Consignee. On the contrary, the claim for demurrage was raised by the shipping line against the Consignee. Consequently, the Court took into account that the shipping line had placed the containers at the disposal of the Consignee directly.
As the Freight Forwarder had not placed the containers at disposal, the Court held that the Freight Forwarder could not base its claim on the FBL, clause 13.3, as this clause concerns only equipment provided by the Freight Forwarder.
Nor was the Court satisfied that the Freight Forwarder had paid the amount claimed to the shipping line or the Agent or that the Freight Forwarder was obliged to pay the claim. The Court further found that even if there was a claim, it would have lapsed because the Freight Forwarder had not informed the Consignor of the claim until after more than one year and that more than three years passed before the Freight Forwarder raised a claim for payment against the Consignor.
IUNO's opinion
The judgment shows that the FBL clause does not make it possible under Danish law to pass on claims concerning equipment which has only indirectly been placed at disposal by the Freight Forwarder. In cases where the claim concerns demurrage incurred as a result of late return of containers, it is, as a general rule, a matter between the shipping line which has placed the containers at disposal and the consignee of the goods.
The judgment also shows that in all circumstances, claims arising from the carriage of goods will lapse if too much time passes before the claim is raised against the consignor.
[Judgment rendered by the Maritime and Commercial Court on 29 November 2011, case no. S-70-10]
A Danish manufacturer of equipment for poultry production units (the Consignor) had in July 2005 sold a large quantity of goods to an Iranian buyer (the Consignee). The Consignor entered into a contract with a freight forwarding company (the Freight Forwarder) for the carriage of the goods from Aarhus in Denmark to the Consignor in Bandar Abbas, Iran. The goods were packed in 11 containers which were first carried by sea from Aarhus to Hamburg. From there the containers were shipped by a shipping line to Bandar Abbas. The delivery in Iran was handled by the freight forwarder's local partner (the Agent).
The 11 containers belonged to the shipping line which carried the containers from Hamburg to Bandar Abbas. According to the standard conditions of the shipping line, the containers were to be returned within ten days from the arrival of the shipping vessel to Bandar Abbas, and demurrage was payable in case of late return of the containers.
The FBLs (Negotiable FIATA Multimodel Transport Bills of Lading) which the Freight Forwarder had issued to the Consignor in connection with the contract of carriage read in clause 13.3 as follows:
"All dues, taxes and charges or other expenses in connection with the goods shall be paid by the Merchant. Where equipment is supplied by the Freight Forwarder, the Merchant shall pay all demurrage and charges which are not due to a fault or neglect of the Freight Forwarder."
The Consignee in Bandar Abbas did not return the containers. The shipping line then raised a claim for demurrage against the Consignee but did not succeed in making the Consignee pay.
In October 2006, the Freight Forwarder informed the Consignor that the Consignee had not returned the containers. At the end of December 2006, the Freight Forwarder forwarded an e-mail from the Agent saying that demurrage of USD 70,000 was payable.
In March 2007, the Agent bought the containers from the shipping line and withheld in May 2009 three new containers from the Consignor as security for the demurrage claim.
In July 2009 the Agent passed on the claim for USD 119,841 to the Freight Forwarder. The amount was said to cover the demurrage incurred as well as the release of the 11 containers.
The Freight Forwarder sued the Consignor in March 2010. In addition to the claim for demurrage and the release of the containers, the Freight Forwarder alleged that the Consignor was to pay travelling expenses and the costs of the Agent's withholding of the three new containers.
The Maritime and Commercial Court: The demurrage claim dismissed
The Court stated that according to international custom, the shipping line is to place containers at disposal and to allow the consignee a number (e.g. five) of so-called free calendar days to return the containers free of charge. It is also customary that the shipping line invoices the consignee for demurrage in case of late return of the containers.
The Court attached importance to the fact that it did not appear from the case documents, including the FBLs, that it was the duty of the Freight Forwarder to place the containers at the disposal of the Consignee. On the contrary, the claim for demurrage was raised by the shipping line against the Consignee. Consequently, the Court took into account that the shipping line had placed the containers at the disposal of the Consignee directly.
As the Freight Forwarder had not placed the containers at disposal, the Court held that the Freight Forwarder could not base its claim on the FBL, clause 13.3, as this clause concerns only equipment provided by the Freight Forwarder.
Nor was the Court satisfied that the Freight Forwarder had paid the amount claimed to the shipping line or the Agent or that the Freight Forwarder was obliged to pay the claim. The Court further found that even if there was a claim, it would have lapsed because the Freight Forwarder had not informed the Consignor of the claim until after more than one year and that more than three years passed before the Freight Forwarder raised a claim for payment against the Consignor.
IUNO's opinion
The judgment shows that the FBL clause does not make it possible under Danish law to pass on claims concerning equipment which has only indirectly been placed at disposal by the Freight Forwarder. In cases where the claim concerns demurrage incurred as a result of late return of containers, it is, as a general rule, a matter between the shipping line which has placed the containers at disposal and the consignee of the goods.
The judgment also shows that in all circumstances, claims arising from the carriage of goods will lapse if too much time passes before the claim is raised against the consignor.
[Judgment rendered by the Maritime and Commercial Court on 29 November 2011, case no. S-70-10]
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