Freight claim for almost EUR 3.3m dismissed by the Maritime and Commercial Court in Copenhagen

Reason for the freight claim

A Danish transport and logistics group (the Carrier) raised a claim for freight of almost EUR 3.3m against a German state-owned forest company (the Consignor). The claim was brought before the Maritime and Commercial Court in Copenhagen, but the German company moved for dismissal of the claim.

Through a co-operative partner (the Trading Company), the forest company had sold a number of consignments of beech wood which were destined for buyers in China. Problems arose in connection with the payments by letters of credit from the buyers and in connection with the customs clearance procedure, and the Carrier gradually worked up a large unpaid freight claim. The Consignor, the Carrier and the Trading Company then made a settlement agreement. The agreement clarified some practical matters in respect of the co-operation, and it also contained a jurisdiction clause stipulating that disputes were to be decided by a court in Kassel in accordance with German law.

The Trading Company could not pay the Carrier's freight claim, and the Carrier then took legal action against the Consignor. Even if the jurisdiction clause stipulated that the agreed venue was in Germany, the case was brought in Denmark before the Maritime and Commercial Court in Copenhagen.

The Court: Jurisdiction clause formally valid

The Court found that the jurisdiction clause in the settlement agreement was formally valid.

However, the Carrier believed that the settlement agreement as a whole failed due to breach of conditions. Therefore, the Carrier argued that the jurisdiction clause was to be set aside, regardless of its validity, and that the Maritime and Commercial Court was competent to adjudicate this issue.

The Court ruled that the court appointed in a formally valid jurisdiction clause has exclusive jurisdiction to adjudicate the validity of the agreement containing the jurisdiction clause. The question of whether the settlement agreement had failed was therefore dismissed by the Maritime and Commercial Court. The jurisdiction to decide this question lay with the German court in Kassel.

The Carrier also relied on a Bill of Lading (B/L) which was issued by one of the Carrier's companies and which contained a clause on Danish jurisdiction. Consequently, the Court could adjudicate part of the case. However, the B/L covered only the carriage by sea to China, not the other links in the transport process. Therefore, only a minor part of the freight claim could be based on the B/L. As it also appeared from the B/L that the freight had been paid in advance, the Court found for this part of the Consignor's claim.

IUNO's opinion

The decision shows that jurisdiction clauses should not be underestimated: They are of material practical and legal importance. If only the jurisdiction clause complies with the formal minimum requirements, the question of the validity of the clause may only be decided by the court specified in the clause.

The decision further shows that jurisdiction clauses in B/Ls only protect the party designated as "carrier" and that the specification in a B/L that the freight has been paid in advance is generally binding.

[Judgment rendered by the Maritime and Commercial Court on 23 November 2011, case no. S-70-10]