Freight forwarder liable following smuggling of Turkish perfume
A Danish freight forwarder had to pay damages to the performing carrier because of a detention by customs authorities at the Bulgarian border. The freight forwarder was responsible as thousands of perfume bottles, which were not mentioned in the freight documents, were hidden in the cargo. Because of the period of limitation, the freight forwarder could not claim recourse against the shipper. Thus, the freight forwarder had to bear the loss. This has recently been decided by the Danish Maritime and Commercial High Court.
A Danish carrier and a Danish freight forwarder had collaborated for years. The carrier often performed road transport for the freight forwarder to and from Turkey. As the freight forwarder was engaged by a Turkish transport company to carry liquid soap to Denmark, the freight forwarder employed the carrier to perform the road transport.
As the carrier reached the Bulgarian borders the authorities conducted a customs check. It emerged that there were 11,000 bottles of perfume behind the soap, which were not stated in the customs and freight documents. Subsequently, the driver was detained for one and a half month for suspected smuggling before he was released on bail.
The truck and the trailer were kept in detention for more than six months. The detention caused expenses such as stand-off payment, bail, rent of a replacement trailer and costs related to the repossession.
The parties disagreed about the responsibility
The carrier claimed that all the costs related to the detention should be compensated by the Danish freight forwarder and the Turkish transport company. After the carrier had commenced legal proceedings, the freight forwarder filed a recourse claim against the Turkish transport company.
Because the freight and customs documents had not been filled in correctly the carrier stated that strict liability should be imposed on the freight forwarder in accordance with the CMR Convention article 7 and 11. According to these rules the shipper (which in the CMR Convention is called the ‘sender’) is liable for losses resulting from certain inaccurate information, regardless of whether there is fault or not.
The freight forwarder was of the opinion that since the Turkish transport company had named itself as ‘sender’ in the CMR consignment note, the transport company was the sender, not the freight forwarder. The transport company explained that in their opinion this only applied in relation to customs clearance and that in reality the company had only acted as an agent for the freight forwarder – not as sender.
The Maritime and Commercial High Court: Liability subject to the CMR-convention
The Maritime and Commercial High Court concluded that the freight forwarder was the contracting entity in relation to the carrier, and therefore the freight forwarder was also the sender in this connection. The freight forwarder was thus liable for the carrier’s loss related to the detention. Even though the Turkish transport company was named as sender in the consignment note, there was no contractual relationship with the carrier and there was no basis of liability.
The court stated that in the relationship between the transport company and the freight forwarder the transport company was sender, because of the naming as ‘sender’ in the consignment note.
However, as the special suspension rule in article 32 (2) in the CMR Convention only applies to claims against a carrier, not a sender, the freight forwarder’s recourse claim was time barred.
IUNO’s opinion
This judgment illustrates the different roles a freight forwarder can have in different relations. In relation to the Danish carrier the freight forwarder was ‘the sender’. By contrast, in relation to the Turkish transport company the freight forwarder was ‘the carrier’ whereas the Turkish company was ‘the sender’.
The judgment also illustrates how these different roles can be crucial in the application of the CMR convention. The suspension rule in the CMR Convention article 32 (2) can only be applied by the customer’s claim against the carrier. Therefore, the freight forwarder could not apply the suspension rule in relation to the Turkish transport company.
If a freight forwarder wants to avoid being time-barred by article 32 of the CMR Convention, he can:
- Agree with the counterparty that the statute of limitation is suspended, or
- Take legal action
When agreeing on suspension, the court fees are avoided at first, but this solution is not necessarily economical in the long run. The right solution depends on the situation at hand and the parties involved. However, under all circumstances parties should pay attention to the possibility of claims being time barred and of them being left with large expenses which they did not cause.
[Judgment of the Maritime and Commercial High Court, 2 May 2014, case no. H-57-12]
A Danish carrier and a Danish freight forwarder had collaborated for years. The carrier often performed road transport for the freight forwarder to and from Turkey. As the freight forwarder was engaged by a Turkish transport company to carry liquid soap to Denmark, the freight forwarder employed the carrier to perform the road transport.
As the carrier reached the Bulgarian borders the authorities conducted a customs check. It emerged that there were 11,000 bottles of perfume behind the soap, which were not stated in the customs and freight documents. Subsequently, the driver was detained for one and a half month for suspected smuggling before he was released on bail.
The truck and the trailer were kept in detention for more than six months. The detention caused expenses such as stand-off payment, bail, rent of a replacement trailer and costs related to the repossession.
The parties disagreed about the responsibility
The carrier claimed that all the costs related to the detention should be compensated by the Danish freight forwarder and the Turkish transport company. After the carrier had commenced legal proceedings, the freight forwarder filed a recourse claim against the Turkish transport company.
Because the freight and customs documents had not been filled in correctly the carrier stated that strict liability should be imposed on the freight forwarder in accordance with the CMR Convention article 7 and 11. According to these rules the shipper (which in the CMR Convention is called the ‘sender’) is liable for losses resulting from certain inaccurate information, regardless of whether there is fault or not.
The freight forwarder was of the opinion that since the Turkish transport company had named itself as ‘sender’ in the CMR consignment note, the transport company was the sender, not the freight forwarder. The transport company explained that in their opinion this only applied in relation to customs clearance and that in reality the company had only acted as an agent for the freight forwarder – not as sender.
The Maritime and Commercial High Court: Liability subject to the CMR-convention
The Maritime and Commercial High Court concluded that the freight forwarder was the contracting entity in relation to the carrier, and therefore the freight forwarder was also the sender in this connection. The freight forwarder was thus liable for the carrier’s loss related to the detention. Even though the Turkish transport company was named as sender in the consignment note, there was no contractual relationship with the carrier and there was no basis of liability.
The court stated that in the relationship between the transport company and the freight forwarder the transport company was sender, because of the naming as ‘sender’ in the consignment note.
However, as the special suspension rule in article 32 (2) in the CMR Convention only applies to claims against a carrier, not a sender, the freight forwarder’s recourse claim was time barred.
IUNO’s opinion
This judgment illustrates the different roles a freight forwarder can have in different relations. In relation to the Danish carrier the freight forwarder was ‘the sender’. By contrast, in relation to the Turkish transport company the freight forwarder was ‘the carrier’ whereas the Turkish company was ‘the sender’.
The judgment also illustrates how these different roles can be crucial in the application of the CMR convention. The suspension rule in the CMR Convention article 32 (2) can only be applied by the customer’s claim against the carrier. Therefore, the freight forwarder could not apply the suspension rule in relation to the Turkish transport company.
If a freight forwarder wants to avoid being time-barred by article 32 of the CMR Convention, he can:
- Agree with the counterparty that the statute of limitation is suspended, or
- Take legal action
When agreeing on suspension, the court fees are avoided at first, but this solution is not necessarily economical in the long run. The right solution depends on the situation at hand and the parties involved. However, under all circumstances parties should pay attention to the possibility of claims being time barred and of them being left with large expenses which they did not cause.
[Judgment of the Maritime and Commercial High Court, 2 May 2014, case no. H-57-12]
Receive our newsletter
Aage
Krogh
PartnerSimilar
The team