Art. 32 CMR: A Blow to the “Dutch Trick”

by Merlijn Hijzen (Van Steenderen MainportLawyers)

The Dutch jurisdiction has a dubious popularity among CMR carriers confronted with attempts from cargo’s side to break through CMR limitations when damage is allegedly caused by wilful misconduct or gross negligence. The strict interpretation of wilful misconduct and gross negligence by the Dutch courts has caused a rush by carriers to the Dutch Courts to commence negative declaratory proceedings in order to obtain judgment that they are not or limited liable. Initiating such proceedings may derogate the respective cargo interest from a lex forum that is less demanding towards a breaking through CMR limits. Whereas the value of a Dutch negative declaratory action is consistently limited by German courts, the Dutch trick has recently been put into perspective by the Dutch Supreme Court as well.

The facts

Ingram Micro Frameworks B.V. on 1 March 2002 instructed Uni-Data Logistics B.V. to perform the carriage of 299 computers stowed on 19 pallets from Rosmalen (the Netherlands) to Ditzingen (Germany). Uni-Data on its turn instructed Cabooter Internationale Expeditie B.V. who on its turn instructed Cabooter Internationaal Sneltransport B.V. (hereinafter: “Cabooter”) to perform the actual carriage. In the night of 2/3 March 2002 180 computers were stolen during this transport of which 51 were retrieved later. During the time of theft the trailer with the consignment of computers was parked in a shed operated by Cabooter located in the Netherlands. There was an alarm system in the shed. Fortis Corporate Insurance N.V. has compensated its insured Ingram for the losses caused by the theft.

German proceedings

On 28 February 2003 the subrogated insurer Fortis commenced proceedings against Uni-Data and Cabooter with the Landgericht Stuttgart. Fortis claimed for compensation up to the CMR limits (art. 23 CMR, paragraph 3). In its judgment of 20 September 2004, the Landgericht awarded Fortis’ claim and Uni-Data c.s. were ordered to compensate Fortis in accordance with CMR limits. Subsequently, Fortis held Uni-Data c.s. liable for compensation on basis of art. 29 CMR (breakthrough of the CMR limitation of liability) and commenced proceedings on 19 January 2005 at the Landgericht Stuttgart accordingly.

Negative declaratory action at the Dutch court

Prior to the second German proceedings, Uni-Data c.s. on 5 November 2004 have commenced negative declaratory proceedings against Fortis with the Court of ‘s-Hertogenbosch, the Netherlands. Uni-Data c.s. claimed that they could only be held liable up to CMR limits. According to Uni-Data c.s. there were no grounds to assume wilful misconduct or gross negligence.

In the Dutch proceedings, Fortis argued that a negative declaratory action will be subjected to a limitation period of one year as provided for in art. 32 CMR, paragraph 1, and that the action started by Uni-Data was already time barred due to the lapse of one year. The Court ruled in favor of Uni-Data and decided that since Uni-Data claimed non-liability for wilful misconduct or (the Dutch equivalent for default thereof) gross negligence, the action becomes time barred after the lapse of three years. Subsequently, the Court held that the damage was not caused by wilful misconduct or gross negligence and awarded the claim of Uni-Data c.s. Fortis appealed against that decision and argued that the judgment was in contradiction; although the Court had decided that wilful misconduct or gross negligence had not been established, it did apply the limitation period of three years that applies if the damage is indeed caused under such circumstances. The Court of Appeal confirmed the judgment in first instance but distinguished a positive claim, where compensation for damages are claimed, from a negative claim, where a declaratory judgment for non- or limited liability is sought. The Court of appeal considered that the former claim is subjected to the CMR limitation period whereas the latter is not.

Appeal at the Dutch Supreme Court

Fortis lodged an appeal with the DSC and argued that art. 32 CMR applies to all claims related to carriage which is subject to CMR and that the action of Uni-Data should be qualified as being such a claim. According to Fortis, the limitation period of one year should therefore apply since the court of first instance had assumed the damage had not been caused by wilful misconduct or gross negligence.

The Procurator General (“PG”) at the DSC filed an opinion for the DSC and outlined that according to German case law, the negative “Feststellungsklage” (negative declaratory action) does not set aside the positive “Leistungsklage” (action claiming for damages) since the two proceedings do not relate to the “same grounds” as provided for in art. 31 CMR, paragraph 2. In other words, German courts do not give effect to the CMR litispendence rule if a negative declaratory action is concerned. The PG also made reference to the DSC judgment of 28 November 2008, where the European Court of Justice (“ECJ”) was requested to give a preliminary ruling on basis of art. 234 EC Treaty as to whether a negative declaratory action and a claim for damages should be considered having the same grounds as provided for in art. 31 CMR, paragraph 2. A decision by the ECJ is still pending and therefore the PG advised the DSC to postpone judgment in the case of Fortis / Uni-Data until the aforementioned preliminary ruling is obtained from the ECJ.

Subsequently and surprisingly, the DSC ignored the advise to await the preliminary ruling of the and requested the PG in a second opinion to address the two following issues: assuming that a negative declaratory action is not an action in the sense of art. 32 CMR, is it, then, subjected to a prescription period, and, if so, which prescription period does apply? Additionally, should such action be considered subject to art. 32 CMR, which prescription period will then apply?

The PG reiterated finding it prudent to await the preliminary ruling by the ECJ but concluded that if a negative declaratory action is not subjected to the CMR, then the prescription period should be based upon the national law that is applicable to the agreement, which in the underlying case was Dutch law. Accordingly, a claim pertaining a negative declaratory judgment on liability is an action as held in art. 3:302 Dutch Civil Code (“DCC”). Subsequently, the prescription period of one year regarding actions related to carriage is applicable (art. 8:1711 DCC). As to the second point, the PG concluded that should a negative declaratory action fall within the scope of art. 32 CMR, then the prescription period of one year applies. After all, should such action be successful, then wilful misconduct or gross negligence have not been sufficiently demonstrated and there is no ground to argue that a prescription period of three years should apply.

The DSC applied the general rules of interpretation of treaties as prescribed by art. 31, paragraph 1 of Vienna Convention on the law of Treaties. Based upon the authentic English and French wording of art. 32 CMR (“any action arising out of carriage under this convention” and “les actions auxquelles peuvent donner lieu les transports soumis a la presente Convention”) the DSC is of the opinion that the term “action” (art. 32 CMR) and “legal proceedings” (art. 31 CMR) should be interpreted broadly. Such interpretation is in line with the object and purpose of the CMR prescription period that intends to create certainty and to prevent loss of evidence. Hence a negative declaratory action falls within the scope of art. 32 CMR. The DSC decided that according art. 32 CMR, paragraph 1, all claims are time barred after the lapse of one year, unless the exception of three years of wilful misconduct or gross negligence is applicable. The DSC subscribed to the conclusion of the Procurator General. It decided that to an action pertaining a negative declaratory judgment that the carrier is not or limited liable, the exception does not apply since awarding such claim assumes that gross negligence or wilful misconduct has not been established. Consequently, the DSC ruled that a negative declaratory action falls within the scope of art. 31 and 32 CMR and the right to start such an action will become time barred after the lapse of one year.

Comments

Relevant facts to establish whether wilful misconduct or gross negligence played a role may not be available shortly after an incident occurred. In order to stay the applicable prescription period and to avoid lex fora that are preferred from a CMR carrier’s perspective, (positive declaratory) proceedings claiming for compensation of damages are generally commenced promptly after the incident. However, bearing the DSC judgment of 18 December 2009 in mind, CMR carriers wishing to initiate negative declaratory proceedings in order to secure their limited liability, may be confronted with a prescription period of one year. CMR carriers should therefore immediately commence negative declaratory proceedings in order to safeguard the prescription period of one year to benefit from the strict interpretation of wilful misconduct and gross negligence. This regardless whether or not cargo interest have initiated court proceedings in order to claim damages in accordance with CMR limits.

Re: Dutch Supreme Court – judgment of 18 December 2009
Fortis Corporate Insurance N.V. v. Uni-Data Logistics B.V. and UPS SCS (Nederland) B.V.[/1]

N1: Treaty terms should be interpreted on basis of their ordinary meaning, in their context and in the light of its object and purpose. Since preparatory work of the CMR is not (publicly) available, it can not be used as means of interpretation.

January 7, 2010