EN
Transport

P&I was able to present claim as agent, but the claim was time barred

logo
Legal news
calendar 1 November 2020
globus Denmark

A head carrier and a contracting carrier where both members of the same P&I club. The P&I club paid compensation in a claim between those two. Subsequently the P&I club brought a recovery claim against the performing carrier on behalf of the contracting carrier. The Court then had to assess, whether the contracting carrier had title to sue and whether the claim was time-barred. The Court found that the P&I club was able to make the claim as an agent, but that the claim was time-barred.

During ocean carriage 3 containers of cargo were damaged by water. The head carrier raised a claim against the contracting carrier. The contracting carrier and head carrier were both members of the same P&I club, which covered the claim for the head carrier. It was, however, the performing carrier that had the cargo in its custody when the damaged occurred. Therefore, the P&I club, which acted as an agent for the contracting carrier, raised a recovery claim against the performing carrier.

The performing carrier alleged that the contracting carrier did not have title to sue, since the P&I club had covered the claim from the main carrier. In other words, the performing carrier claimed that the P&I club had subrogated into the recourse claim and was thus the rightful claimant and not an agent. The contracting carrier disputed this, as the P&I club could not be considered as an insurance company, but instead as a society of ship owners.

Furthermore, the performing carrier alleged that the claim was time-barred, as it had been several years since the cargo had been delivered, and the primary claim occurred. Danish law allows a contracting carrier one year upon payment of a cargo claim to commence a recovery claim against the performing carrier. However, the cargo claim had been disputed for more than a year – and more than the additional year for bringing a recovery claim. Time extensions had been granted between cargo and the contacting carrier, but at some point of time the performing carrier had stopped granting time extensions to the contracting carrier. The contracting carrier then argued that the 12 month time for the recovery claim began only when the contracting carrier paid cargo, no matter when this payment was made.

The Maritime and Commercial High Court: The P&I club could sue as an agent, but the claim was time-barred

The Court agreed with the contracting carrier and found that the P&I club could not be considered an insurance company which had subrogated into the claim. Therefore, the contracting carrier was the legitimate claimant in the recourse claim, and the P&I club could thus claim as an agent.

However, the court found that the recovery claim does expire a year after the primary claim and that tis additional year is not suspended until the primary claim is paid. The court therefore found that the claim in this case was time-barred. Furthermore, the extensions of the claims that were given in the meantime had lapsed.

IUNOs opinion

The Court’s conclusion deviates from the general perception regarding how a P&I club is considered. In other case law, it has been held that a P&I club must be equated with an insurance company (U 2018.461 H). This may be due to the fact that the club was the party that ultimately suffered the loss.

The ruling may contradict a literal reading of the provision of law regarding the limitation period for the recovery claim. However, the ruling is not surprising as it is in line with intentions of the legislator and of the Hague-Visby Rules, which inspired the rule.

IUNO recommends that companies seek time extensions whenever possible instead of relying on unclear legislation

[The Maritime and Commercial High Court’s ruling in case BS-17718/2019-SHR on 16 June 2020]

During ocean carriage 3 containers of cargo were damaged by water. The head carrier raised a claim against the contracting carrier. The contracting carrier and head carrier were both members of the same P&I club, which covered the claim for the head carrier. It was, however, the performing carrier that had the cargo in its custody when the damaged occurred. Therefore, the P&I club, which acted as an agent for the contracting carrier, raised a recovery claim against the performing carrier.

The performing carrier alleged that the contracting carrier did not have title to sue, since the P&I club had covered the claim from the main carrier. In other words, the performing carrier claimed that the P&I club had subrogated into the recourse claim and was thus the rightful claimant and not an agent. The contracting carrier disputed this, as the P&I club could not be considered as an insurance company, but instead as a society of ship owners.

Furthermore, the performing carrier alleged that the claim was time-barred, as it had been several years since the cargo had been delivered, and the primary claim occurred. Danish law allows a contracting carrier one year upon payment of a cargo claim to commence a recovery claim against the performing carrier. However, the cargo claim had been disputed for more than a year – and more than the additional year for bringing a recovery claim. Time extensions had been granted between cargo and the contacting carrier, but at some point of time the performing carrier had stopped granting time extensions to the contracting carrier. The contracting carrier then argued that the 12 month time for the recovery claim began only when the contracting carrier paid cargo, no matter when this payment was made.

The Maritime and Commercial High Court: The P&I club could sue as an agent, but the claim was time-barred

The Court agreed with the contracting carrier and found that the P&I club could not be considered an insurance company which had subrogated into the claim. Therefore, the contracting carrier was the legitimate claimant in the recourse claim, and the P&I club could thus claim as an agent.

However, the court found that the recovery claim does expire a year after the primary claim and that tis additional year is not suspended until the primary claim is paid. The court therefore found that the claim in this case was time-barred. Furthermore, the extensions of the claims that were given in the meantime had lapsed.

IUNOs opinion

The Court’s conclusion deviates from the general perception regarding how a P&I club is considered. In other case law, it has been held that a P&I club must be equated with an insurance company (U 2018.461 H). This may be due to the fact that the club was the party that ultimately suffered the loss.

The ruling may contradict a literal reading of the provision of law regarding the limitation period for the recovery claim. However, the ruling is not surprising as it is in line with intentions of the legislator and of the Hague-Visby Rules, which inspired the rule.

IUNO recommends that companies seek time extensions whenever possible instead of relying on unclear legislation

[The Maritime and Commercial High Court’s ruling in case BS-17718/2019-SHR on 16 June 2020]

Receive our newsletter

Mads

Poulsen

Partner

Aage

Krogh

Partner

Lars

Rosenberg Overby

Partner

Mads

Christopher Whitta-Jacobsen

Associate

Similar news

logo
Transport

7 March 2021

Jurisdiction clause agreed, but not between the relevant parties

logo
Transport

4 January 2021

New cargo recovery options post Brexit

logo
Transport

6 December 2020

Spanish venue though jurisdiction clause did not apply

logo
Transport

6 December 2020

Owner of fishing vessel liable for collision as Officer on watch fell asleep

logo
Transport

25 September 2020

Forwarder responsible for water damage. Network clause in NSAB 2000 could not be applied

logo
Transport

25 September 2020

Can you deliver by tipping the cargo off the trailer?