The Perils of being an International Transport Conglomerate

by Felipe Arizon (AACNI law firm, Barcelona Spain)

CIBERTRANS V. DHL International Limited (Barcelona Court of Appeal 2005)

Cibertrans acted in this matter as a freight forwarder operator, or “transitario” as it is known in Spanish law. Cibertrans paid compensation to a client for damages to the cargo, which the client claimed had occurred during transit from Dubai to Barcelona.

The underlying contract of carriage was between the cargo owners and DHL INTERNATIONAL EC (Dubai). The contract was concluded through the intervention of Cibertrans´ agents in Dubai, Messrs Total Freight.

The cargo arrived at its destination in a wet condition. Cargo owners submitted a claim for damages to DHL Victoria (Spain), DHL Middle East and DHL Dubai. The claim was referred to and ultimately handled by DHL Aviation (Brussels). DHL Aviation rejected liability as it concluded that the damage could not have arisen while the goods were in transit.

Cibertrans brought an action in the Spanish Courts for recovery of the amount it had paid its customer. Cibertrans did not name any of the DHL companies who had notice of the claim. Instead it sued DHL International Limited, a Bermuda Corporation that was not domiciled in Spain. As this DHL company had no prior information concerning the claim, it did not appear within the time allowed by the Rules of Court. As a result, it was declared to be in default, and unable to make a written submission as to its liability.

DHL International Limited was able to make oral submissions at the preliminary hearing, pointing out that as an independent corporate entity it had no responsibility for the liabilities of any other DHL company, and no relation whatsoever with the contract entered through Messrs. Total Freight in Dubai. The defendant’s submissions were supported by an important body of case law on the application of the doctrine of principle of privity of contract under Spanish law, and of the independent status of entities and corporations. The First Instance Court of Barcelona rejected these submissions.

On appeal, the Barcelona Court of Appeal upheld the earlier decision on the following grounds:

(i) The document that incorporated the contract of carriage contained the trademark “DHL WORLDWIDE EXPRESS”. The description of this trademark in the international DHL website explained that it referred to a Group of Companies operating under the same direction and providing services worldwide.
(ii) DHL had dealt with the claim as a group at the out of Court stage, and had never objected at any point that the claim would only be considered by a specific corporate entity within the DHL organization, for example the Dubai corporate entity.
(iii) The burden of proof as to the independence of the different corporations of DHL group was on DHL International Limited, which had on the merits produced no evidence contravening plaintiffs´ arguments.

One conclusion from this decision, which limits the effectiveness of privity of contract as a defence under Spanish law, is that Courts are ready to look at websites, trademarks, and to the conduct of the parties before the lawsuit is brought to ascertain whether a filial or a branch within a given Corporation Group can be made responsible for the damages or losses attributed to another Corporation of the Group.

AACNI law firm acted on behalf of the defendants before the Courts of Barcelona.

June 30, 2005