ROAD CARRIER LIABILITY FOR DELAYED EXHIBITION GOODS

Contributed by Castrén & Snellman Attorneys Ltd

February 07 2007

Facts Decisions

Upholding a March 2005 decision of the Helsinki District Court, in December 2006 the Helsinki Court of Appeal held (Decision 3309) that a carrier that did not carry to an exhibition in Moscow goods delivered by the consignor to the carrier's warehouse in Espoo had the right to limit its liability for damages in accordance with Section 35(1) of the Contracts of Carriage by Road Act (equivalent to Article 23(5) of the Convention on the Contract for the International Carriage of Goods by Road).

Facts

Carriage customer A entered into a contract of carriage with carrier B, in which B undertook to transport A's exhibition goods by road from Espoo to Moscow and back. On October 24 2003 A delivered the exhibition goods to B's warehouse, from where B intended to transport the goods that evening to an exhibition to be held in Moscow from November 3 to November 6 2003. However, B's warehouse staff made a mistake, which resulted in the Moscow truck being loaded with the wrong goods and A's goods being left in B's warehouse. The warehouse staff's mistake was partly due to A having delivered the goods to B later than was agreed, resulting in A's goods not being dealt with by B's usual goods handling system. On November 1 2003 A noticed that the goods delivered to the exhibition in Moscow were not its exhibition goods. Immediately on receiving notice of the error, B began to arrange the loading of A's goods onto a transport that was leaving for Moscow that day. However, A notified B that it was too late to send the goods to the exhibition and gave notice that it was dissolving the contract of carriage with B as a result of the mistake.

B admitted that the damage was caused by its negligence and offered to pay A the freight from Espoo to Moscow as compensation for the delay. However, A was not satisfied with this offer and claimed full compensation from B in an action in the Helsinki District Court.

A's primary claim was that B could not limit its liability by invoking the provisions regarding delay, because B did not carry the goods referred to in the contract of carriage to Moscow. In A's view, B's carriage was not delayed, but rather had not been carried out in the manner defined in the contract of carriage. As the goods were not missing, reduced or damaged, A argued that the question of fault was not covered by the act and B's liability should be determined in accordance with the general principles of contract law. According to this view, B would have to compensate A in full for the damage caused.

A's second claim was that if the provisions of the act concerning delay damage were applicable to the case, B's actions were grossly negligent and therefore B would not be entitled to limit its liability.

In addition, A stated that if its primary and secondary claims were inapplicable to the case, B should be ordered to compensate the return freight of the exhibition goods in addition to the outgoing freight.

Decisions

The Helsinki District Court dismissed A's primary and secondary claims.

Regarding A's primary claim, the Helsinki District Court deemed that the delay damage provisions of the Contracts of Carriage by Road Act applied to the situation because the act does not require that the actual road carriage have begun. In the district court's view, the fact that A had notified B that it was dissolving the contract of carriage before B had started the actual road carriage did not mean that after this point the damage was something other than delay damage.

The district court also dismissed A's secondary claim that B had caused the damage through gross negligence. It stated that in Finnish legal practice on road carriage, 'gross negligence' has been considered to mean very serious carelessness bordering on willfulness, thus indicating an unscrupulous and reckless attitude. The district court referred to Supreme Court Decision 2001:17, which held that, when deciding a question of liability, attention must be paid to (i) the carrier's awareness of the risk of damage and attitude towards the risk, and (ii) the kind of behaviour which may be required of a professional and careful carrier. Even though B's warehouse staff had acted negligently, the district court did not consider B to have taken an indifferent attitude to the risk of damage because B's goods handling system was intended, in normal circumstances, to guarantee that no loading mistakes occur. Thus, the district court took into account the fact that, due to A's own actions, A's goods never fell within the scope of B's usual goods handling system.

However, the district court allowed A's third claim. It held that the contract of carriage between A and B was for carriage from Espoo to Moscow and back, and therefore the amount of compensation for delay damage was the total cost of the outgoing and return freight.

A and B both appealed the district court's decision to the Helsinki Court of Appeal to the extent that the decision was not in accordance with their claims. The Helsinki Court of Appeal upheld the district court's decision.

                                                              (In’tl Law Off.)