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12 December 2012
A recent Supreme Court decision illustrates how a consignment note under the Convention on the Contract for the International Carriage of Goods by Road (CMR) can provide proof of delivery of cargo. It also clarified the legality of contractual stipulations requiring CMR notes to be kept on file for six years and underlined the importance of this requirement under Dutch law in relation to the keeping of company accounts.
A Dutch seller of goods which are imported into the Netherlands for delivery to a buyer in another EU country does not have to charge value added tax (VAT). It suffices for the seller to invoice the buyer the sales price excluding VAT. In such intra-EU transactions, the VAT is reverse-charged and the seller does not have to pay VAT in the Netherlands; rather, the buyer pays the VAT in its own country.
Under such international sale of goods contracts, it is imperative that the seller can prove that the goods were indeed delivered to its foreign buyer. If it is unable to do so, the customs authorities will levy the unpaid VAT. For this reason, many sellers include a clause in CMR contracts with carriers stating that the carrier must present proof of delivery of the goods to the foreign buyer. This is usually the signed CMR consignment note.
The same clause also usually provides that the carrier must keep the original CMR consignment notes for many years and, on request, must be able to present the seller or shipper with such original notes so as to enable the seller to present proof to the customs authorities.
The dispute in question centred on a contract between Fujitsu TSI BV (the seller) and Exel (the carrier) containing a clause which provided:
"Proof of delivery. Vendor commits to have proof of delivery by means of a signed-for receipt CMR. This document will be available in its Dutch agent's office within two weeks after date of shipment. These documents should be kept on file for at least six years. They are to be filed in such a way that any particular CMR can be retrieved within 24 hours after a request from Fujitsu."
In this case the carrier was obliged to keep the signed CMR notes for six years and to have these available within 24 hours. The tax authorities launched an investigation into Fujitsu's records and checked the intra-EU transactions. Because the customs authorities could not ascertain whether the goods had indeed been deliverd to Fujitsu's buyers abroad, the authorities imposed unpaid taxes in the amount of €2.8 million. Fujitsu settled the claim with the customs authorities for €2.2 million and sought to recover this amount from Exel.
In the recovery action, Fujitsu argued that it had requested the signed CMR notes for intra-EU transactions several times, and that the carrier had only partly complied with such request. The court of first instance found that the recovery action failed for the simple reason that the request for the signed CMR notes had not been made within the agreed period of six years. A request had in fact been made, but this was directed to Exel's subsidiary EFM, which was not authorised by Exel to represent it in the event of a request being made for the handover of CMR notes.
The appeal court upheld this ruling, but the Supreme Court found in favour of Fujitsu. The Supreme Court said that the appeal court should have been more specific when it rejected Fujitsu's argument that principles of reasonableness and fairness should result in a finding that Exel was in no position to argue that the requests were directed to its subsidiary rather than to Exel itself.
Although the case before the Supreme Court dealt with a variety of issues, including representation, it also touched on the important issue of the contractual stipulation that the CMR notes be kept on file for six years. The question was whether such a clause was legally valid; the answer would seem to be yes.
Parties are free to include such clauses in their CMR contracts of carriage, and the CMR contains no stipulations with regard to the period of time during which CMR notes must be kept on file.
It is also accepted in the Netherlands that a signed CMR note is evidence of the fact that the goods have been carried to the foreign consignee or buyer. However, the tax authorities will generally require more documents than just the CMR consignment note (eg, invoices, insurance policy).
There is also another good reason for a carrier to keep CMR notes on file: under Dutch law, a company is obliged to keep its accounts on file for seven years, and a CMR consignment note is a document which forms part of a company's book-keeping records.
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