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31 March 2010
A carrier under the Convention on Contracts for the International Carriage of Goods by Road (CMR) agreed to transport a consignment of 28.5 tonnes of sugar in bulk. During the road transportation the consignment was contaminated by a small residue of fertilizer, which had been left in the transporting tank due to poor cleaning of the silo-car before loading. Unaware of this contamination, the receiver unloaded the contaminated sugar into one of its silos, which already contained approximately 10,500 tonnes of bulk sugar in good condition. The contamination was not discovered until the discharge operations were completed. A total of 4,480 tonnes of sugar had to be removed from the receiver's silo and destroyed as unfit for human consumption.
There was no doubt that the contamination of the transported sugar and the resulting damages were subject to the CMR. However, it was unclear whether the carrier was also liable for the 4,451.5 tonnes of sugar already in the silo that had to be destroyed.
On June 4 2004 Antwerp Commercial Court held that the CMR carrier could be held liable only on the basis of the contract of carriage and could not rely on the liability exemptions and the limitations set out in Articles 17 and 23 of the CMR.
The Antwerp Court of Appeal reversed the decision and its reasoning on February 19 2007. It considered that the damages in this case - including the damage to the sugar already stored in the silo - occurred during and as a result of the transport operations; therefore, they resulted from an incorrect execution of the contract of carriage. The indemnification claim was fully subject to the CMR and its defences and limitations were deemed applicable.
The cargo interests appealed to the Supreme Court, which held on January 16 2009 that the CMR cannot apply to non-transported goods. Loss or damage to goods other than those transported is beyond the CMR's scope of application. In the case of non-transported goods, the carrier is therefore liable in accordance with the applicable rules of national law; thus, its liability is likely to be unlimited and to include foreseeable consequential damages.
The CMR is a compromise between cargo interests and road carriers' interests, giving the latter a predetermined and predictable liability scheme in relation to the weight of the transported cargo and, in turn, an insurable liability risk.
In respect of transported goods, and despite the Supreme Court decision, the CMR - in particular Article 23(4) - still applies.
However, the decision in relation to non-transported goods puts CMR bulk carriers in a difficult position, as they are no longer able to foresee the limits of their liability. For example, the silo into which the carrier discharges its goods may be almost empty or almost full and may or may not contain highly valuable goods - all of these considerations are beyond the carrier's control. Its liability in this respect is no longer related to the weight of the transported goods and no limitation can be invoked. Furthermore, a general CMR insurance policy covers the carrier's liability only under the CMR.
The decision thus gives rise to a form of liability for a CMR carrier that the CMR seemingly intended to avoid. However, the Supreme Court appears to have made clear its intention to align itself with the decisions by supreme courts in other CMR member states in a bid for uniformity of interpretation.(1)
The national common law applicable to non-transported goods is not always mandatory law, so a carrier may consider limiting or even excluding its liability in this respect. The question is then whether it will be able to rely on such contractual exemption clauses in respect of other parties, such as the receiver of transported goods (which is not bound by the contract) or - to take the example in this case - the owner of the goods stored in the silo. CMR bulk carriers should therefore be aware of this potentially high liability.
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