Goods left behind could not be carried by air at the expense of the freight forwarder

A freight forwarder had been hired by the shipper to arrange carriage of spare parts to a meat plant from Denmark to Canada. The consignee of the spare parts, i.e. the meat plant, had to be closed down in connection with a service check, therefore time was of the essence in connection with delivery of the spare parts. As pre-carriage from Copenhagen to Hamburg the booking specification stated “TRUCK” and thereafter shipping from Hamburg to Toronto by the vessel “MONTREAL EXPRESS”, with expected time of departure 18 January 2009 and expected time of arrival 29 January 2009.

The carriage to Hamburg went according to plan, after which the goods were to be loaded on board the vessel sailing to Canada. On 18 January the freight forwarder issued an On Board Bill of Lading, but due to an error the goods were left behind instead of being loaded. The goods were found at the warehouse in Hamburg on 5 February, i.e. six days after the expected time of arrival in Canada. The freight forwarder then offered to dispatch the goods by ship by 9 February meaning that the goods would arrive around 20 Feburary, i.e. three to four weeks later than what was planned. The shipper felt that this would be too late in relation to the closing down of the meat plant, which had already been carried out on the basis of the expected time of arrival. The shipper then picked up the goods in Hamburg and had them flown to Canada to catch up on the delay, in order to avoid a large claim for damages. This resulted in extra costs of approximately DKK 27,000.

The freight forwarder refunded the freight for the carriage by road and sea, but the parties disagreed whether the freight forwarder was liable for the extra costs of the carriage by air.

Legal basis

The shipper and the freight forwarder had agreed that the General Conditions of the Nordic Association of Freight Forwarders (NSAB 2000) should apply. Since the shipper terminated the agreement only one week after the estimated time of arrival, the freight forwarder did not agree that this was a case of delay, and furthermore the freight forwarder denied being guilty of gross negligence.

The shipper argued that the carriage had been delayed and that the network clause in NSAB 2000 Article 23 should apply. According to NSAB 2000 Article 23 the rules concerning a certain mode of transport shall apply if it is proved that the delay occurred during the carriage by that particular means of transport. The dispute should therefore be resolved either in accordance with the Danish Merchant Shipping Act or the Danish Carriage of Goods by road Act, depending on whether the Court found that the goods had come into custody of the sea carrier due to the storage in Hamburg. The shipper claimed for full compensation, arguing that it should be regarded as gross negligence that the goods had been left behind.

The Maritime and Commercial High Court: The Danish Merchant Shipping Act should apply, but the freight forwarder was not guilty of gross negligence

The Maritime and Commercial High Court applied NSAB 2000 and the network clause in NSAB 2000 Article 23. Thereby, the Court decided to apply the provisions of the Danish Merchant Shipping Act since the goods had come into custody of the sea carrier when it was left in the port.

If the carriage had been carried out by sea, the goods would have been delayed 3 - 4 weeks in relation to the expected time of arrival. The Court found that this was a substantial delay. However, since it was not the freight forwarder himself but a subcontractor who had left the goods in port, the freight forwarder was not guilty of gross negligence. Therefore, the freight forwarder was only liable for damages equivalent to the agreed freight amount – not the extra costs due to the carriage by air. The Court found for the freight forwarder, since he had already refunded the remaining losses.

IUNO's opinion

The judgment shows the importance of the network clause in NSAB 2000. Where a loss or delay may be attributed to a certain mode of transport, the rules concerning those particular means of transport shall apply. In this case the goods had only just come into the custody of the sea carrier and therefore the Danish Merchant Shipping Act was applicable – even if the goods were never loaded on board a ship. If the goods had been left behind during the carriage by road, the freight forwarder might have been liable for the negligence of the subcontractor.

The judgment is also a case in point that the right of a freight forwarder to limit his liability in accordance with the Danish Merchant Shipping Act is very rarely set aside. Gross negligence as such is not enough – the freight forwarder must be guilty of gross negligence himself. The shipper must arrange for a specific agreement concerning compensation in case of delay if he wants to be certain of better cover than just being refunded the freight amount.

[Judgment by the Maritime and Commercial High Court on 25 April 2013. Case no. S-68-12]