Hauliers and insurers have been plagued for many years by a German court interpretation of Article 31(2) CMR (Convention on the Contract for the International Carriage of Goods by Road) that a declaratory action by a haulier (such as exonerating or limiting his liability) did not constitute a pending action for the purposes of the CMR. For German courts and lawyers, declaratory proceedings were simply irrelevant.

In this instance, part of a consignment was stolen during the night in August 2007. Canon had entrusted the carriage of its goods (between the Netherlands and Germany) to Nippon Express. Nippon Express then subcontracted the carriage to Inter-Zuid Transport. The carriage was then sub-subcontracted to Kingma. The driver arrived at Canon's premises in Germany too late to unload the goods, so he left the truck overnight unattended at the recipient's unguarded premises.

Conflicts of laws

Canon immediately sued Nippon in Germany, where CMR limitation would be inapplicable in the circumstances, and the claim was settled for EUR 500,000 in March 2010. Nippon (who had not brought Inter-Zuid into the German proceedings) then commenced an indemnity claim against Inter-Zuid in Germany. However, Inter-Zuid had already tried to protect itself by obtaining a negative declaratory judgment against Nippon in Netherlands, according to which it was entitled to limit the claim under CMR. Therefore, in the German proceedings, Inter-Zuid argued in its defence that the German courts were bound by EU law to give effect to the Dutch ruling (according to Regulation 44/2001 on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters).

At this point the case becomes interesting for international hauliers and their insurers. In view of the German interpretation of Article 31(2), a Dutch declaratory award was of not much use to a haulier doing business in Germany and insurers were often under pressure to settle at amounts higher than CMR limitation when faced with German proceedings. The cost, duration and uncertainty of defending and appealing a claim in Germany were also disincentives. In this case, however, the significant difference in the figures made it worth defending Inter-Zuid in the German proceedings.

Surprisingly, the German courts agreed with Inter-Zuid on this occasion, but were obliged to refer the matter for a preliminary ruling to the European Court of Justice (ECJ). The questions asked concerned the applicability of Regulation 44/2001 to the CMR (and other international conventions). The ECJ ruled that Regulation 44/2001 was applicable and precluded the German interpretation of Article 31(2) - see the full judgment for the detail

Conclusion

This finding means that German courts cannot now ignore declaratory proceedings made by courts in other EU Member States. For freight forwarders and hauliers doing business in Germany (and their insurers), this case may bring some slight relief. However, for all parties in the transport chain, this case emphasizes how important it is to consider all the jurisdictional aspects of CMR claims, of getting your claim in first and of having good legal representation.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club