The Carrier’s limitation of liability for multimodal transport held to be subject to the Hague Visby limitation rules

| Innsikt

The Norwegian Courts ruled that the Hague Visby limitation limits rather than the 4 times higher CMR limitation limits shall apply to the Norrland-claim. The Court of Appeal's judgement in August 2020 finally brought an end to the Norrland litigation.

The Norwegian Supreme Court rendered 14 May 2019 a principled decision on liability issues for multimodal transport. The judgment has wide-ranging relevance for the maritime sector. Following the Norwegian Supreme Court’s decision, the Court of Appeal’s judgment in 2018 was set aside. The Court of Appeal rendered in August 2020 a new decision after a new hearing of the appeal on whether the limitation of liability of 2 SDR per kg had to be set aside due to alleged gross negligence of the carrier.

Simonsen Vogt Wiig (partner Frithjof Herlofsen) successfully acted on behalf of the contracting carrier (Pentagon Freight Services) and its insurer (Gjensidige Forsikring ASA) against inter alia the owner of the damaged goods (Nexans Norway AS).

The main issue before the Supreme Court was if the carrier’s liability for cargo damage occurring under the sea transit of a multimodal transport, was subject to the Norwegian Carriage of Goods by Road Act (the CMR Convention) or the Norwegian Maritime Act (the Hague Visby rules).

The case concerned a transport of a ROV-cable (cable drum) from Stavanger, Norway to Wallsend, outside Newcastle, England. The contractual carrier had issued a CMR waybill to cover the multimodal transport from Norway to England, which included both the road and the sea transport. The cable drum was carried on an open semi-trailer. The MV «Norrland» met heavy weather during the sea transport, which resulted in the cargo moving from the semi-trailer and onto the adjacent trailer. The cargo became a total loss.

The contractual carrier offered a compensation calculated on the basis of the Hague Visby limitation as incorporated into the Norwegian Maritime Code – i.e. 2 SDR per kg. This was rejected by the cargo owner, which claimed full compensation pursuant to the Norwegian Carriage of Goods by Road Act.

The cargo interests were successful in the District Court and the first round of the Court of Appeal. However, the Norwegian Supreme Court found that even if the contract of carriage as such was subject to a CMR waybill, the exception provisions in Norwegian Carriage of Goods by Road Act Section 4, 2 paragraph applied. The exception afforded by the said provisions is based on the CMR Convention article 2.

The contractual carrier substantiated before the Supreme Court that the subject damage (1) was not caused by an act or omission of the carrier by road; and that it (2) was caused by some event which could only have occurred in the course of and by reason of the sea carriage.

The Supreme Court held that it was clear that the road carrier inadequately had secured the cable drum to the semi-trailer. However, the Supreme Court held that the sea carrier is the expert on the extraordinary risks that goods are being exposed to during carriage by sea, and it is his task – in cases where the goods are not properly secured upon delivery – to ensure that the goods are properly secured in accordance with applicable provisions and routines.  Furthermore, the ship owner cannot rely on the road carrier’s securing on an open trailer, and must therefore perform independent controls and perform adequate and proper securing operations, in accordance with the liability provisions in the Norwegian Maritime Act Sections 274 and 275 as well as Section 262.

The Supreme Court based its decision on inter alia the German Federal Supreme Court’s decision (Bundesgerichtshofs decision of 15 December 2011) and held that the damage was a result of the listing of the vessel due to rough sea which was an event which could only have occurred in the course of and by reason of the sea carriage. Thus, the Supreme Court concluded that the carrier’s liability for the cargo damage was subject to the provisions of Maritime Code.

The Court of Appeal’s first ruling with regard to the cargo owners’ claim under the liability rules of the Road Transport Act was thus given on the wrong legal basis. Furthermore, the Supreme Court was not in position to determine the carriers’ liability under the rules of the Maritime Code and whether the limitation of liability had to be set aside due to gross negligence. The Court of Appeal’s judgment was therefore set aside.

More than a year after the Supreme Court’s rendered its decision on the choice of law, the Court of Appeal rendered its decision 24 August 2020 on whether the limitation of liability of 2 SDR per kg had to be set aside due to the gross negligence of the carrier pursuant to the Norwegian Maritime Code.

The Norwegian Maritime Code section 283 is based on the Hague Visby rules section 4 (5) e) and provides that «A liable person cannot limit his or her liability if it is shown that the he or she personally caused the loss wilfully or through gross negligence and with knowledge that such loss would probably arise

As the Supreme Court has pointed out in their judgment from 2019, it was the sea carrier’s task to provide the proper securing of the good for sea transport. The Court of Appeal assumed that the damage to the cable drum most likely was due to individual negligence on the part of the individual employees who performed and controlled the specific loading and securing operation of the cable drum on MV Norrland and caused the total loss. The Court of Appeal held that the damage could not be linked to any system failure or other serious errors on the management level of any of the carriers and thus the conditions for setting aside the limitation of liability of 2 SDR per kg was not fulfilled. Accordingly, the contractual carriers succeeded and the compensation was limited to 2 SDR per kg in accordance with the Norwegian Maritime Code section 283.