Transport and Shipping Newsletter - October 2018 | Judgments

Valencia Provincial Appellate Court clarifies the content and electronic nature of Services Contracts between shipping companies and shippers

Valencia provincial appellate court judgment of May 15, 2018

In a dispute over a claim in respect of delays in the carriage by sea of waste between Spain and China as a result of the failure to receive or rejection of the goods by the recipient (after being carried back to Spain once they had been rejected for import into China due to a change in the law which prohibited imports of certain types of waste), Valencia Appellate Court reexamined the proceedings and the evidence taken and analyzed the existence and obligational content of a Service Contract between shipping company and shipper or carrier, which is binding on the parties.

In a judgment rendered on May 15, 2018, the court analyzed the features of Service Contracts between shipping companies and shippers, and noted the digital nature and electronic environment in which the obligational relationships unfold and the characteristics of these agreements, the dynamics of booking spaces on ships, the payment system, stipulated rates, etc., together with the fact of reflecting the service contract on the transport documents themselves, on the bills of lading, which are issued for each carriage of the goods.   

The court held that the Service Contract and the obligations that the parties enter into go beyond the strict obligations of the transport documents, which expressly mention that contract. The Service Contract number acts as a code for the person hiring or booking the carriage, from which the electronic nature of the contractual relationship may be inferred.

For this reason, the Chamber held, after mentioning another judgment by Barcelona Provincial Appellate Court, that the Service Contract cannot be separated from the transport documents that are issued to enable the receipt of the goods, in which the number of the Service  Contract appears beside the particulars of any document (shipper, recipient, ship, etc.). And therefore, the parties are bound by the covenants they entered into in the sphere of electronic contracts, and they cannot deny the existence of that contract by relying on a “potential evidentiary difficulty that may be associated with replacing the traditional form of contracts (on paper and signed, which the defendant appears to suggest to deny the existence of the contract and its terms and conditions)”.

Absence of a seaworthiness certificate does not exclude insurance cover for pleasure craft

Supreme court judgment of May 3, 2018

The Civil Chamber at the Supreme Court has upheld a cassation appeal lodged by the owner of a pleasure craft against its insurer’s refusal to cover a loss.

The loss was caused by an intentional repair by a third party (breakage and tears) of the boat’s sea cocks and hose pipe, which caused water ingress and subsequent sinkage while it was berthed in the harbor.

The insurer refused to cover the loss on the basis of the absence of seaworthiness certificates for the boat, which according to the insurer was a ground for exclusion from cover, even though that ground did not expressly appear in the general terms and conditions of the insurance contract. The insurer also relied on the (now extinguished) article 756.7 of the Commercial Code, according to which the insurer is not liable for the absence of the documents required in the marine regulations.

Setting that argument aside, the Supreme Court explained that for that ground for not being liable to apply, there has to be a causal relationship between the absent documents (seaworthiness certificate) and the loss, which was not the case, and therefore the absence of a seaworthiness certificate does not per se exclude cover under the insurance policy, in that the damage must have been caused by that absence.

CJEU refines definition of “air carrier” in relation to a wet lease

CJEU judgment of July 4, 2018

The CJEU has rendered a decision in relation to a request for a preliminary ruling submitted by a German court following refusal by the lessor of an aircraft to pay compensation to passengers who had suffered a delay to their flight.

The lessor had signed a wet lease on an aircraft for a stipulated number of flights. That contract provided that the charterer was responsible for ground handling including passenger handling, passenger welfare at all times, cargo handling, security in respect of passengers and baggage, arranging on-board services, etc.  On the passengers’ tickets, the charterer appeared as the issuer, but it was stated that the flight would be operated by the lessor.

Following a lengthy delay to the flight, passengers claimed from the lessor the compensation to which they believed they were entitled, which the lessor refused to pay.

Adopting the lessor's reasoning, the court argued that the definition of “operating air carrier” within the meaning of Regulation No 261/2004 and, in particular, of article 2.(b), does not include an air carrier that leases an aircraft and its crew to another air carrier under a wet lease, but does not bear the operational responsibility for the flights even where the booking confirmation of a seat on a flight issued to passengers mentions that the flight is operated by it.

European protection for delays also encompasses flights on the same booking, even if they include scheduled stopover with change of aircraft

CJEU judgment of May 31, 2018

In a decision on a request for a preliminary ruling from a German court, the CJEU addressed the definition of “connecting flight” in a case involving a delayed flight that departed from an airport situated in an EU member state and included a connecting flight at an airport situated in the territory of a third state, for which the final destination was another airport in this same third state.

The CJEU found that the referring court was asking in essence whether article 3(1)(a) of Regulation No 261/2004 must be interpreted as meaning that the regulation applies to the passenger transport effected under a single booking and comprising, between its departure from an airport situated in the territory of a member state and its arrival at an airport situated in the territory of a third state, a scheduled stopover outside the European Union, with a change of aircraft.

Insofar as there is a single booking, the court held that, to protect the rights of passengers, the definition of ”connecting flight” must be understood to mean two or more flights constituting a whole for the purposes of passengers’ rights to compensation, which applies in the case. A change of aircraft taking place in a connecting flight does not have any effect on this interpretation.

Therefore, even if there has been a stopover and connecting flight with a change of aircraft, passengers who have made a single booking will be covered by the protection afforded by EU legislation for a flight that departed from an airport situated in an EU member state and arrived at an airport situated in a third member state.

Compensation for delay in carriage by sea clarified by Valencia Provincial Appellate Court

Judgment of February 14, 2018 by Valencia Provincial Appellate Court (Panel 9)

That judgment, which decided a dispute over a claim for compensation for delay in the delivery of goods carried by sea, determined, subject to  article 283 of the Maritime Shipping Law (Law 14/2014), that compensation for delay is not objectively required in every case, instead only if the delay is (i) culpable (in other words there was willful misconduct or negligence on the part of the carrier meaning that the carrier is relieved of liability in the event of force majeure, for example) and, additionally, the delay (ii) caused damage (material or direct damage, and/or economic or indirect damage) to the owners of the carried goods. The judgment also established that this liability for delay is limited (in the quantitative terms of article 283 of the Maritime Shipping Law), unless the delay was caused by willful misconduct or serious negligence by the carrier, in which case the limit of liability would not apply.