Breaking the limitation in transport matters, once again

20161027_121043Article 1911 of the Spanish Civil Code establishes the general principle that debtors will be held accountable for their liabilities with all their present and future assets. Limitation of liability is an exceptional figure under Spanish law. For this reason, Spanish Courts are always reluctant to accept the limitation of liability principles established in international conventions in matters of transport and seek a way to avoid such limitation of liability.

A recent judgment breaking the limitation of liability principles, in this case set forth in the CMR Convention, is the one issued by the Court of Appeals of Barcelona (Section 15) dated 13th September 2016.

In August 2012, plaintiff’s assured bought certain electrical equipment to be carried from the Netherlands to Spain. Land transportation was contracted with the defendant. The defendant, in turn, subcontracted the carriage with another carrier. Part of the goods did not arrive to their destination.

After paying the value of the goods to its assured, the plaintiff sued the contractual carrier. The defendant and its insurer accepted the loss of the cargo but asked the Court to limit their liability in accordance with Article 23 of the CMR Convention. The plaintiff argued that such limitation of liability was not applicable based on two considerations: (i) on one hand, the plaintiff alleged that having the parties included in the consignment note that the carried goods were electrical equipment and, given that the carrier was aware of the nature of the business carried out by the sender, the plaintiff was entitled to be compensated in the amount of the value of the goods; (ii) on the other hand, the defendant had not been able to offer any explanation as to how the goods had been lost, which according to the claimant was equivalent to willful misconduct.

On first instance, the Court adjudged that the parties to the contract had not made a special value declaration in the consignment note and had not paid a surcharge. Furthermore, the Court held that there had been no intention to cause damages or a voluntary or conscious lack of performance of the carriage obligations equivalent to willful misconduct. However, on appeal, the Court of Appeals of Barcelona reversed the first instance judgment and held that by not offering any information or explanation as to how the goods had disappeared, the contractual carrier had ignored fundamental aspects of the service he was engaged to provide. This act of ignoring fundamental aspects of the carriage equates, according to the Court of Appeals, to willful misconduct which excludes the right to limit liability. It was the carrier that had the means to show what had happened during the carriage but failed to provide an explanation. Part of the goods had not arrived to destination; a loss considered by the judgment evidence of a serious lack of care in the custody of the goods.