Wind turbine parts stolen in Canada: Carrier could not limit his liability under Canadian rules

A wind turbine manufacturer (the consignor) contracted with a carrier to carry wind turbine parts from Denmark to Canada. The carriage was subject to a master agreement which referred to the General Conditions of the Nordic Association of Freight Forwarders 2000 (NSAB 2000).

The cargo was stowed in containers and sailed from Hamburg to Montreal, but during the subsequent transport by road in Canada, a container with wind turbine parts was lost. The driver had placed the container at a lay-by Friday afternoon, and the container was no longer there when the driver returned after the weekend.

The cargo insurer paid compensation for the value of the lost cargo and then made a recourse claim against the carrier.

The insurer believed that the carrier's limitation of liability should be assessed in accordance with the General Conditions of the Nordic Association of Freight Forwarders because of the reference in the master agreement. Because of the weight of the cargo, the liability was not to be limited.

As opposed to this view, the carrier was of the opinion that the rules in the shipping documents issued by the performing sub-carriers applied to the cargo insurer. These documents provided for a lower limitation of liability than would otherwise apply. The consignor had received some of the underlying shipping documents, also in several previous carriages, and therefore had knowledge of them. The carrier also believed that local Canadian legislation providing for a lower limitation of liability should apply. As legal basis, the carrier relied on the network provision in article 23 of the General Conditions of the Nordic Association of Freight Forwarders.

The Supreme Court: Only the master agreement governs the limitation of liability

Both the Maritime and Commercial Court and the Supreme Court held that the limitations in the contracts of sub-carriage could not in themselves cause any change in the terms of the carriage which were agreed in the master agreement. This was also applicable even though the consignor was aware of the relevant terms in the contracts of sub-carriage.

The local Canadian rules were not relevant to the matter as no Canadian roadway bill had been issued. This meant that the rules were not compulsory in a situation like this. Consequently there was no information about ”statutory provisions and generally used and acceptable terms of carriage”, which is the condition for applying the network rule in article 23 of the General Conditions of the Nordic Association of Freight Forwarders.

The Supreme Court therefore upheld the decision of the Maritime and Commercial Court stating that the carrier could not limit his liability. As opposed to the Maritime and Commercial Court, the Supreme Court held that the carrier's liability also included a duty to compensate the freight for the lost cargo.

IUNO's opinion

The network provision in article 23 of the General Conditions of the Nordic Association of Freight Forwarders protects both the contracting entity and the carrier. Both parties may, applying this provision, rely on the statutory provisions and generally applied and acceptable transport terms which apply to the actual haul.

The Supreme Court's restrictive interpretation of the case shows that there must be clear grounds for the terms of carriage being acknowledged as generally used and acceptable. And it is generally irrelevant in this respect whether the consignor is actually aware of the terms.

The party relying on the network provision therefore has a heavy burden of proof to sustain. In connection with the execution of master agreements on multi-modal transports, the carrier must therefore not only rely on a reference to General Conditions of the Nordic Association of Freight Forwarders, but instead adapt the agreement so that he is sure to maintain his back-to-back coverage in relation to the consignor and the performing carriers respectively.

Finally, the decision shows that thieves have now also begun to steal containers with heavy wind turbine parts.

[Supreme Court judgment of 19 January 2012, case no. 36/2009]