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Transport

Too many cooks spoil the cheese

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Legal news
calendar 3 April 2022
globus Denmark

Shipping agent and contracting carrier were liable for temperature damage to a consignment of processed cheese. The cargo owner had to bear the part of the responsibility himself since he had not checked the temperature.

The case concerned the carriage of cheese from Vejle to the Port of Aarhus, where the temperature on the container was set to -20 degrees Celsius rather than +3 degrees Celsius by mistake. The cheese was a total loss and the owner’s insurance company claimed compensation for the loss from the shipping agent. The cargo owner had entered into a framework contract with the shipping agent, who had subcontracted a contracting road carrier and a performing carrier.

The performing carrier picked up the container at the terminal in Aarhus and drove it to Vejle. In Vejle, it was parked at the cargo owner’s terminal on Friday, loaded by the cargo owner and remained there for the weekend. The following Monday, the container was picked up at the terminal and driven to the Port of Aarhus. Upon delivery, it was discovered that the temperature was set incorrectly.

It was agreed between the cargo owner and the shipping agent that the container's temperature should be set already upon delivery from the terminal (on Friday). The contracting carrier was part of the email correspondence where this was agreed. Between the contracting carrier and the cargo owner, it was also decided that the cargo owner’s driver, after loading, should plug the container and check that the temperature was correctly set.

The shipping alleged that they were responsible for the temperature as they were only shipping agents. Instead, the contracting carrier or the performing carrier were responsible, as they had been instructed about the temperature and had the container in their custody. These two parties alleged that it was the cargo owner’s responsibility to check the temperature when loading the container.

Liability divided between the parties

According to the framework agreement in question, the court concluded that the shipping agent was liable as a carrier and was responsible for the temperature of the container being set incorrectly. However, the court found that the cargo owner had to bear 1/3 of the loss because they had not checked the temperature.

The court also found that the contracting carrier was responsible for monitoring the temperature. The court reasoned that the contracting carrier was aware of the agreement between the shipping agent and the cargo owner, where the temperature was to be set at the time of delivery of the container from the terminal. However, the contracting carrier had not instructed the performing carrier to control the temperature, which the court held was grossly negligent. Therefore, the contracting carrier had to bear part of the liability and indemnify the shipping agent for half of the compensation to the cargo owner.

The performing carrier’s driver had been given a delivery note with the temperature but had not been instructed to check the temperature. The court found that the performing carrier neither could nor should have known that there was an agreement to check the temperature. Therefore, the performing carrier was not liable.

IUNO’s opinion

The case is interesting in several ways. Firstly, because the shipping agent, who can often refer to being only an agent or to the conditions of the liner company, had an independent responsibility. Secondly, because of the division of responsibility in a somewhat unclear course of events between the parties. All parties knew how the container’s temperature should be set. The parties also all knew that there had been problems in the past, and this became a disadvantage for the cargo owner. As a carrier, the shipping agent was liable in the usual way, but, surprisingly, this could not be fully passed on when the court found that the contracting carrier had been grossly negligent. And the performing carrier perhaps had a slightly easy escape, as the driver had been handed a delivery note with the temperature written on it. There have been several decisions and cases concerning incorrect setting of temperature in container transport in the recent past. IUNO recommends that cargo owners and carriers go through their procedures and assess whether there is a need to clarify who should do what. Also, good insurers’ underwriters should pay special attention to this source of error in their risk management.

[The Maritime and Commercial High Court's ruling of 16 December 2021 in case BS-23642/2020-SHR]

The case concerned the carriage of cheese from Vejle to the Port of Aarhus, where the temperature on the container was set to -20 degrees Celsius rather than +3 degrees Celsius by mistake. The cheese was a total loss and the owner’s insurance company claimed compensation for the loss from the shipping agent. The cargo owner had entered into a framework contract with the shipping agent, who had subcontracted a contracting road carrier and a performing carrier.

The performing carrier picked up the container at the terminal in Aarhus and drove it to Vejle. In Vejle, it was parked at the cargo owner’s terminal on Friday, loaded by the cargo owner and remained there for the weekend. The following Monday, the container was picked up at the terminal and driven to the Port of Aarhus. Upon delivery, it was discovered that the temperature was set incorrectly.

It was agreed between the cargo owner and the shipping agent that the container's temperature should be set already upon delivery from the terminal (on Friday). The contracting carrier was part of the email correspondence where this was agreed. Between the contracting carrier and the cargo owner, it was also decided that the cargo owner’s driver, after loading, should plug the container and check that the temperature was correctly set.

The shipping alleged that they were responsible for the temperature as they were only shipping agents. Instead, the contracting carrier or the performing carrier were responsible, as they had been instructed about the temperature and had the container in their custody. These two parties alleged that it was the cargo owner’s responsibility to check the temperature when loading the container.

Liability divided between the parties

According to the framework agreement in question, the court concluded that the shipping agent was liable as a carrier and was responsible for the temperature of the container being set incorrectly. However, the court found that the cargo owner had to bear 1/3 of the loss because they had not checked the temperature.

The court also found that the contracting carrier was responsible for monitoring the temperature. The court reasoned that the contracting carrier was aware of the agreement between the shipping agent and the cargo owner, where the temperature was to be set at the time of delivery of the container from the terminal. However, the contracting carrier had not instructed the performing carrier to control the temperature, which the court held was grossly negligent. Therefore, the contracting carrier had to bear part of the liability and indemnify the shipping agent for half of the compensation to the cargo owner.

The performing carrier’s driver had been given a delivery note with the temperature but had not been instructed to check the temperature. The court found that the performing carrier neither could nor should have known that there was an agreement to check the temperature. Therefore, the performing carrier was not liable.

IUNO’s opinion

The case is interesting in several ways. Firstly, because the shipping agent, who can often refer to being only an agent or to the conditions of the liner company, had an independent responsibility. Secondly, because of the division of responsibility in a somewhat unclear course of events between the parties. All parties knew how the container’s temperature should be set. The parties also all knew that there had been problems in the past, and this became a disadvantage for the cargo owner. As a carrier, the shipping agent was liable in the usual way, but, surprisingly, this could not be fully passed on when the court found that the contracting carrier had been grossly negligent. And the performing carrier perhaps had a slightly easy escape, as the driver had been handed a delivery note with the temperature written on it. There have been several decisions and cases concerning incorrect setting of temperature in container transport in the recent past. IUNO recommends that cargo owners and carriers go through their procedures and assess whether there is a need to clarify who should do what. Also, good insurers’ underwriters should pay special attention to this source of error in their risk management.

[The Maritime and Commercial High Court's ruling of 16 December 2021 in case BS-23642/2020-SHR]

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