RDL 10/2020, of March 29th, Suspension of Non-essential Activities

The recent Royal Decree Law nº 10/2020, of March 29th  orders the suspension of companies and non-essential works as a consequence of the declaration of the state of alarm issued on March 14th, an order that certainly affects both the economy and society in a global way.  

This suspension will last 11 days, from March 30th to April 9th, both inclusive, establishing that March 30th is considered a day of adaptation to enable the closure of all non-essential activities that shall be suspended in the following days. During this period the remuneration of the employees will be secured by means of the “recoverable paid leave”, as approved by the Government on March 29th. 

The problem is that the classification of activities which are considered essential and those which are not has caused controversy the first day of the shutdown. Consequently, the Government issued the Order SND/307/2020, of March 30th, which establishes the imperative criteria for application of the Royal Decree-Law 10/2020, of March 29th, and the model of statement of responsibility which allows the necessary journeys between the worker’s residence and the workplace, which supplements the RDL but without clarifying all the questions and doubts arising from the very same RDL. 

Let us recall that the Royal Decree law 463/2020, of March 14th, by means of which the state of alarm was declared in order to manage the health crisis situation caused by COVID-19, states that the supply of the population must be guaranteed at all times, by facilitating and ensuring the transport of goods throughout the national territory. On this basis, it should be noted that land transport companies and those companies related to maritime and air traffic pursuing or enabling this aim (without being this a limiting list), as well as the facilities providing these services shall guarantee their activity throughout the whole period of the state of alarm. In fact, Mrs. María José Rallo, the Secretary General for Transport, declared that transport is obviously included within the essential activities, and State Ports has initiated an information campaign to emphasize the functioning of the state port system to guarantee the distribution of essential items and goods during the COVID-19 crisis. 

Abiding to the sixth point of the annex of the RDL nº 10/2020, states: “The recoverable paid leave regulated by this royal decree-law is not applicable to the following employees: 6. Those who carry out transport services, both for people and goods, which continue to be carried out since the declaration of the state of alarm, as well as those who must ensure the maintenance of the means used for this purpose, under the protection of the regulations approved by the competent authority and the competent authorities delegated since the declaration of the state of alarm”. 

Similarly, article 4 of the RDL 10/2020 specifies what shall be understood as the minimum indispensable activity: “The companies that must apply the recoverable paid leave regulated in this article may, if necessary, establish the minimum number of staff or work shifts that are strictly indispensable in order to maintain the essential activity. This activity and this minimum number of staff or shifts shall be based on the activity carried out during an ordinary weekend or on public holidays”.

Therefore, in accordance with the sixth point of the annex of the RDL nº 10/2020 (which regulates the non-application of the paid leaves regulated in the present Royal Decree-Law) the port services are considered essential services (art. 18 of the Royal Decree, of March 14th), being some of them even mandatory for the vessels when in ports. Moreover, we must understand that all the State Ports of General Interest are strategic infrastructures by their very definition, some of them also being critical infrastructures. All of them are guarantors of operation of services that are defined as essential and must therefore continue to operate, guaranteeing supply by facilitating the flow of goods in them. 

The same interpretation shall be applicable to the companies that provide their services there: 

 – The commercial procurement service.

– The commercial supply service.

– The ship agency service.

– The commercial inter-port transport service.

– Port handling operations (dockers, etc.).

– The port passenger service.

– Mooring and unmooring service.

– The port towing service.

– The port consignment service.

– General services provided directly by the Port Authority or indirectly by third parties.

– The rest of the commercial activities related to the port activities, such as freight forwarders, customs agents, damage commissioners, container depots, etc.

With regard to road transport of goods, it is also asserted as essential and its workers can continue with their activity under the new exceptions to the compliance with driving and rest times implemented between March 29th and April 12th, both inclusive (Resolution of March 26th, 2020, of the Directorate General for Land Transport), and with the acceleration of driving facilitated by the so called cross-border “green lanes”. 

We should point out that transport activities remain fully operative as long as these are related to other essential economic activities (distribution of food and healthcare products, among others). What is more, the RLD n. 10/2020 is only applicable to the salaried employees, which means that the self-employed remain active except for those performing services for companies that were, on March 14th, classifies as no-essential and remain closed: restaurants and hospitality companies, sports companies, among others. 

Extension of the State of Alarm in Spain

The Congress of Deputies, at the plenary session on March 25, approved the extension of the State of Alarm for another 15 days, among other things. 

This means that all the measures, orders and decisions that have been implemented up to now and have been extended during the period of the State of Alarm shall be extended, a priori, for another 15 calendar days. In other words, the State of Alarm declared by the Royal Decree 463/2020 of 14th of March will last at least until midnight on April 11.

In fact, article 116 of the Spanish Constitution regulates the State of Alarm and establishes that it may be adopted by the Government for a maximum period of 15 calendar days. Yet it is precisely the article 116 of the Spanish Constitution that, in spite of limiting the action of the Government to declare the State of Alarm for a total period of 15 calendar days, in its second paragraph adds the possibility that the Congress of Deputies may extend such period, with unspecified time limitation. 

That is, as long as the Congress of Deputies approves the extension of the period of the State of Alarm the Constitution does not limit the duration of the period. Therefore, this could be prolonged if necessary.

Last measures adopted by the Spanish Government are:

LAND BORDER.- 

As we have already mentioned, the logical and direct consequence of the extension of the State of Alarm is that many of the Orders and Decisions that had been taken during the first two weeks of the State of Alarm shall also be extended during this second fortnight.

An example of this is the Order INT/283/2020, of 25 March, extending internal land border controls from 00:00 on 27 March 2020 to 24:00 on 11 April 2020. In other words, only the following persons will be allowed to enter the national territory by land: 

(a) Spanish citizens. 

(b) Residents of Spain. 

(c) Residents of other Member States or Schengen Associated States on their way to their place of residence.

(d) Cross-border workers. 

(e) Health or elderly care professionals on their way to work. 

(f) Those that provide documentary evidence of force majeure or necessity.

Exempt from these restrictions are foreign personnel accredited as members of diplomatic missions, consular offices and international organisations located in Spain, provided that they are travelling in connection with the performance of their official duties. Similarly, and in order to ensure the continuity of economic activity and to preserve the supply chain, these measures are not applicable to the transport of goods.

Another example is Order TMA/286/2020, of 25 March, which extends the ban on entry of passenger ships from the Italian Republic and cruise ships of any origin, on Spanish ports to limit the spread of COVID-19, from 00:00 hours on 27 March 2020 to 23:59 hours on 9 April 2020.

WORK.- 

At the same plenary meeting the Council of Deputies ratified the Royal Decree-Law, by means of which the objective dismissal for absenteeism was repealed (article 52.d of the Workers’ Statutes), which allowed dismissal for justified medical absences.

The main objective of the Minister of Health with the repeal of this article is to preserve the health of the workers, avoiding that they attend work while sick as they fear to be dismissed. Moreover, the Minister stresses that taking care of oneself, in addition to personal well-being, also guarantees the health of others. 

LAND TRANSPORT.- 

On the other hand, and in relation to the transport sector, on March 26th the Government enacted the Ministerial Order INT/284/2020 modifying the regulation that had been adopted during the State of Alarm for the management of traffic and circulation of motor vehicles. 

Article 1.1 states that the Minister of the Interior may agree to close to traffic roads or sections of roads for reasons of public health, safety or traffic flow, or to restrict access to certain vehicles on these roads for the same reasons. Furthermore, the paragraph 2 provides that, in the case of road closures or restrictions on the movement of certain vehicles, those intended for certain activities considered essential to ensure the supply of products and the provision of essential services to the population shall be exempted.

In particular, the vehicles considered essential to ensure the supply of essential goods and services are the following: 

a) Those of transport and health care, both public and private; those of the Security Forces and Corps, those of civil protection and rescue and those of fire extinction. 

b) Those transporting maintenance personnel or repair technicians for health facilities or equipment 

c) Those for the distribution of medicines and medical equipment. 

d) Those for the distribution of food. 

e) Those of the Armed Forces. 

f) Those for road assistance. 

g) Those of the road maintenance and conservation services. 

h) Those for the collection of solid urban waste. 

i) Those intended for the transport of melting materials. 

j) Those intended for the transport of fuels. 

k) Those intended for the production, marketing, processing and distribution of agricultural, livestock and fisheries products and their inputs; for the production, distribution, rental and repair of equipment and machinery for agriculture, fisheries, livestock farming and their associated industry, and for the transport and treatment of agricultural, livestock and fisheries waste and by-products and those of the food industry. 

l) Those intended for the carriage of perishable goods, understood as those set out in Annex 3 to the International Agreement on the Carriage of Perishable Foodstuffs (ATP) as well as fresh fruit and vegetables, in vehicles which meet the definitions and standards expressed in Annex 1 to the ATP. In any case, perishable goods must account for at least half the payload capacity of the vehicle or occupy half the payload volume of the vehicle. 

m) Those intended for the manufacture and distribution of cleaning and hygiene products. 

n) Those of the Sociedad Estatal Correos y Telégrafos, S.A. 

ñ) Funeral services. 

o) Those used by private security companies for the provision of security transport services, response to alarms, patrols or discontinuous surveillance, and those that are necessary for the performance of security services to guarantee essential services and supply the population.

p) Other vehicles that, if not included among the above, the agents in charge of traffic control and discipline consider, in each specific case, that they contribute to guaranteeing the supply of goods or the provision of essential services to the population.

Therefore, the circulation of these vehicles will be guaranteed during the entire State of Alarm, without limitation to restrictions, both existing and future.

The Judicial System and Administrative Procedures throughout the Spanish state

On March 14, 2020, the President of the Spanish  Government declared the State of Alarm (by means of RD 463/2020) throughout the National Territory, due to the exceptional situation of danger to the Public Health generated by the COVID-19 outbreak. Thus, the part of the legal activity of the country has been practically suspended, with certain exceptions.

The measures to be taken by the Government in this regard must be aimed for protecting the health and safety of citizens, minimizing the progression of the disease and strengthening public health systems, but also trying to mitigate the health, social and economic impact that this exceptional situation may generate.

From the legal aspect point of view the main  measures are:

  1. The suspension of all procedural and administrative terms, what means that all these proceedings are actually suspended.
  2. The suspension of time bar terms and the expiration of any actions and rights has also been ordered.

These suspensions will be operative as far as the State Alarm is maintained, in principle 15 days as from the 14thof March 2020, but an extension is already foreseen.

The General Council of the Judicial Power issued two Orders on March 14, 2020, suspending all scheduled Court trials  and all procedural deadlines except for Essential Services.

These adopted measures are immediately applicable since 14th March 2020, being applicable to the whole country and that will remain in force while the State of Alarm remains, that is to say, for 15 calendar days from their publication except if they are extended.

Likewise, the Permanent Commission of the General Council of the Judiciary, working together with the Ministry of Justice and the Attorney General’s Office, agreed on the “Essential Services” that need to be maintained during this State Alarm.

These “Essential Services” will guarantee:

  1. Any legal proceedings which, if not carried out, could cause irreparable damage.
  2. Urgent internments of article 763 of the Law of Civil Procedure (non-voluntary internments for reasons of psychological disorder).
  3. The adoption of precautionary measures or other actions that cannot be postponed, such as the measures for the protection of minors in article 158 of the Civil Code.
  4. The courts of violence against women shall provide the corresponding on-call services. In particular, they shall ensure that protection orders are issued and any precautionary measures taken with regard to violence against women and minors.
  5. The Civil Registry shall provide permanent attention during court hours. In particular, they shall ensure that burial permits are issued, that births are registered within the prescribed period and that marriages are performed in accordance with article 52 of the Civil Code.
  6. Proceedings with detainees and others that cannot be postponed, such as urgent precautionary measures, removal of bodies, entries and searches, etc.
  7. Any proceedings with prisoners or detainees.
  8. Urgent actions in the area of prison surveillance.
  9. In the contentious-administrative jurisdictional order, urgent and undelayable health entry permits, fundamental rights whose resolution is urgent, urgent precautionary and preventive measures, and contentious-electoral appeals.
  10. In the social jurisdictional order, the holding of trials declared urgent by law and urgent and preferential precautionary measures, as well as the processes of Files for the Regulation of Employment and Files for the Temporary Regulation of Employment.
  11. In general, the processes in which a violation of fundamental rights is alleged when this are urgent and preferential (those whose postponement would prevent or make very burdensome the judicial protection claimed).
  12. The President of the High Court of Justice, the President of the Provincial Court and the Chief Justice will adopt the necessary measures regarding the cessation of activity in the judicial dependencies where their respective headquarters are located, and the closure and/or eviction of the same if necessary, informing and coordinating with the competent Monitoring Committee.

To ensure that these essential services are provided, orders are issued, to keep the court buildings operational and open. This will be done, however, by providing judges with the necessary protective elements to prevent the spread of viruses, warning signs providing information on minimum safety distances, by promoting teleworking and, in the case of rotating shifts, special attention will have to be given to people whose personal characteristics may became more sensitive to COVID-19.

To conclude, we would like to highlight the fact that prior to the publication of these Orders on 14 March 2020, and in view of the exceptional situation of some different territories, some Autonomous Communities, in the exercise of their autonomies, took measures such as those established by the CGPJ, to eliminate the spread of the COVID-19 virus, for example, Madrid, the Basque Country or the towns such as Haro (La Rioja) or Igualada (Barcelona). For its part, the Royal Decree ratifies all the provisions and measures previously adopted by the competent authorities of the Autonomous Communities and local entities on the occasion of the coronavirus COVID-19, which will continue in force and produce the effects foreseen in them, providing that they are compatible with it.

It is also compulsory for citizens and legal professionals to interact with the administration through the usual electronic offices, by telephone or via email, reducing the physical relationship to the essential and unavoidable procedures.

Claims Made Clauses

The “claims made” clauses in civil liability insurance contracts are regulated in article 73, paragraph 2, of the Spanish Insurance Contract Law (Law 50/1980 of October 8th). This paragraph contains two subsections that describe two types of temporary delimitation clauses, i.e., claims occurring clauses and claims made clauses.

The first of these clauses circumscribes the coverage of the insurer to the cases in which the damage has occurred during the policy period but claim of the injured party has taken place within a period of time, not less than one year, from the termination of the contract. In other words, these clauses determine that the coverage of the policy is limited to those events that occurred during the term of the contract if the claim can be made in a period of no less than a year from the termination of the insurance contract.

The second would be the one that circumscribes the coverage of the insurer to the cases in which the claim of the injured party is made during the term of the policy provided that, in this case, such coverage extends to incidents that take place during the policy or a retroactive date that cannot be less than one year. Therefore, in this type of clause the claim must be made within the validity of the contract although the fact that gives rise to the responsibility may have occurred previously.

In other words, in a civil liability policy, an error or omission occurred during the term of the policy will remain covered even if its harmful effects are discovered and communicated to the insurance company after the expiration of the policy but within the term agreed upon in the claims made clause (which cannot be less than one year). However, under a claims occurrence clause, losses will only be covered as a result of an error or negligence when they have been claimed to the insurer during the term of the policy, but in such case the error may have taken place at least one year before the entry into force of the policy.

Given that these clauses limit the rights of the insured, their validity is conditional on including an the extended period to make the claim or including a retroactive date, whatever the case may be, and also on their being specially highlighted in the policy and being expressly accepted in writing, as required by Article 3 of the Insurance Contract Law.

Having examined the question of whether the requirements of both subsections must be met cumulatively, the Supreme Court, in judgment No. 185/2019 of March 26, 2019, has determined that it is not necessary for a temporary delimitation clause to simultaneously meet the requirements of both subsections. The Supreme Court has interpreted that each subsection regulates a different type clause, with its own coverage requirements.

Royal Decree 596/2019 of 18th October on security and safety regulations applicable to the passenger vessels operating between Spanish ports.

On 21st December 2019, the Royal Decree 596/2019 of 18th October on security and safety regulations applicable to the passenger vessels operating between Spanish ports, which amends the Royal Decree 1247/1999 of 16th July, comes into force. 

This new Royal Decree seeks to take into consideration the combination of security measures that are required and the real conditions on board of the ships, without eluding matters such as crew training and preparation and their working conditions. 

The issuance of this new Royal Decree 596/2019 is motivated by the necessity to adjust the Spanish legislation to the existing European regulations, and the amendments mainly focus on maritime safety and security. For that, the Royal Decree amends primarily the wording of the articles that constitute it, but on a larger scale it modifies the articles 2, 3, 4, 6 and 13.   

In particular, the article 2, as we can observe, adds several new exclusions, such as vessels and sailing boats, offshore service vessels or support vessels and high-speed passenger boats when used exclusively in port areas. 

Regarding the article 3, this has been greatly amended since refences to the safety has been added by referring to the International Code on Intact Stability, 2008 (MSC 267 (85) IMO). In the same way it updates the regulation by amending the former Law 27/1992 by the current Royal Decree 2/2011, Consolidated Text of the State Ports and Marchant Navy Act. 

Its article 4, which concerns the classification of sea areas, has been amended completely. The definitions of sea areas have been simplified and, whereas in the previous classification the priorities were given to the areas where passenger vessels were operating, the current classification mentions simply sea areas and the point 3 of this article is exclusively devoted to the passenger vessels and their classification depending on the sea area where they can navigate.  

An additional paragraph has been included into the article 6, which regards significant repair works, changes and modifications performed on new vessels as well as on those already existing.  

Finally, it is worth mentioning that the wording of the articles 12 and 13 has also been amended in order to adjust them to the current international regulation. 

As we can see, legislation is a constantly progressing science that needs to be adapted to the new realities. It is evident that the reality of the sector in the matter of security applicable to passenger vessels in 1999 and the current reality are far from being even similar. Since there is a strong need for it, we do not doubt that the current reform will be welcomed.    

The responsibility of the Logistics Operator

Port operations of goods during its permanence in a port are of utmost importance for the correct development of the subsequent maritime transportation. Indeed, this is one of the most dangerous and sensitive phases for the goods throughout which it might suffer considerable damages if the operations are not performed appropriately and by qualified professionals. 

Attention is particularly drawn to the fact that there had been a poor regulation of this stage of transportation before the new Spanish Shipping Act came into force in 2014. This law, beside considering the common figures of navigation such as shipowners or shippers, also regulates other figures as harbor pilots and port operators. This last figure will be addressed in this article. 

The port operator frequently encompasses diverse nomenclatures (loader, stevedore, etc.) and the fact is that none of them covers in its description all operations that are effectively handled by port operators. In particular, the Spanish Shipping Act in its article 330 regards the operations that are handled by port operators such as: “the operations of loading, unloading, stevedoring activities on board the vessels, as well as those of reception, classification, depositing and storage in docks or harbor warehouses, and those of inter-port transportation”. 

Regarding the Port Handling Contract regulation, this has been constituted by very different norms throughout a very extensive timespan. In fact, the first legal text which attempts to regulate the Port Handling Contract at the level of international regulation is the United Nations Convention on the Liability of Operators of Transport Terminals in International Trade. This Convention provides, in a broad sense, the basis which the subsequent regulation would apply to develop legislation in this field of logistics.    

At national level, this concept was firstly regulated by the Spanish State Ports and Merchant Marine Act, developed currently under the Title VI – Provision of Services, as well as later in the Spanish Shipping Act, norm that regulates the figure of port operator from the article 329 onwards to the article 338. Articles which we strongly recommend reading.  

The mayor problem that might appear is that the law indicates that the Port Operator’s liability is based on the presumption of liability iuris tantum; that is,  there is a reversal of the burden of proof and it is assumed that the Port Operator is liable for possible damages to the goods unless the contrary is proved, as long as there is a protest (remark) of the receiver at the moment of delivery. Therefore, the moment of delivery of the goods and the possible remarks that the receipt which proves the delivery may or may not contain, is a good form of demonstrating whether the goods arrived already damaged from the point of departure or that, if damaged, these might have occurred in a previous stage of the transportation or handling and lashing of the goods.  

In fact, there are several parties which might request port operator’s liability. The principal one, obviously, is the party contracting the services; but there are other parties, as for instance the consignee of the goods, who might initiate a direct action against the port operator even though he did not contract him. 

It is thus evident that port operators will be held liable for damages to cargo and the only exceptions that the norm anticipates are those of force majeure or fortuitous cases, assessing always if all possible means to avert damages or delays have been deployed by the involved professionals. Consequently, in order to be exempt from liability, not only should be there any of the grounds for exception (force majeure or fortuitous case) but the port operator also has to prove that he tried to minimize, by any available means, the damages or delays. 

With regard to possible limitations, the Spanish Shipping Act regulates the limitation of liability for port operators in the articles 334 and 335 placing it at 2DEG/kg (Derecho Especial de Giro), 2,45 Euros/kg approximately. We understand that the legislator decides to apply this specific limitation to preserve a certain kind of agreement with the existing international rules related to Maritime Transport. In fact, the norm establishes that port operators should be granted the same exceptions as those provided for in the Hague-Visby Rules for carriers, with nuances developed in the article 334 of the Spanish Shipping Act.  

Therefore, when port operators receive the goods, they should check its state and issue a receipt, or a proof of delivery, noting down its state when deposited and indicating whether they observe any damage or not. The problem is, however, that the issuance of such receipts, despite its importance, is not a common praxis since it is the port operator who will have to prove that the goods were already damaged when they were delivered, if that was the case. 

The receiver of the goods, on his part, has the obligation to place a claim within 3 and 15 working days, depending on if these damages are visible to the naked eye or not. Once this period is over, the law presumes that the goods were delivered in perfect conditions.  

On the other hand, and in relation to the limitation period to institute proceedings against the Port Operator, as in other cases, it is not unlimited in time. The regulation seeks to avoid passivity and lack of interest of the parties, so it restricts the limit of the actions to be taken against port operators to two (2) years. In particular, the Article 337 of the Spanish Shipping Act, initiates the time period of two years in the moment of delivery of the goods by the responsible operator, or in the event of total loss on the scheduled delivery date: “Claims for damages, loss, or delays in delivery of the goods prescribe two years after their delivery by the responsible operator. In the event of total loss, the time limit shall be counted from the date on which the goods should have been delivered”.     

An interesting point of the article in comparison to international regulations is that it speaks about limitation period and not about non-interruptible time limit. The non-interruptible time limit cannot be interrupted whereas the limitation period can, providing thus for the possibility to extend the period of two years by means of the relevant interruption. 

In short, the figure of Port Operator is susceptible to claims for damages or delays in a transportation phase throughout which the goods might be exposed to high-risk situations. We therefore suggest always paying special attention to the moment of delivery of the goods granting thus an appropriate backing in case the cargo did not arrive in the expected conditions, as well as to the time limits when the damages could have occurred in order to be able to claim or reject claims, depending on who the affected party is.        

 

Cyber disruption in marine

Yesterday, one of our partners, Verónica Meana, took part in a practical conference organized by AON under the title “CYBER DISRUPTION IN MARINE” which was held in AON’s head office in Torre de Iberdrola in Bilbao. The conference was devoted to learning about and to sharing the risks and consequences that cyberattacks constitute in transportation and industry. 

Verónica had the opportunity to share the discussion panel with Max Bobys, Chris Bhatt and Nannette Wong, and in her presentation tackled administrative and civil responsibilities within transportation and logistics in the context of cyber threat, referring in particular to the maritime transportation sector and its agents. 

AIYON Abogados would like to thank AON for the opportunity we were given to participate in this event, which was greatly insightful in terms of better understanding of the new and future risks that the transportation sector is facing, the ways to deal with them and the insurance options available in the market of hull and machinery, civil liability and P&I insurance. 

The direct action of the carrier endorsed by The Supreme Court

In its Judgement nº 248/2019 dated 6th May ,  the Spanish Supreme Court has confirmed the right of the effective carrier to take direct action against the sender in case the freight for the transport has not been paid. The Supreme Court had previously ruled in favour of this direct action in its Judgement Nº 664/2017 of 24th November, after several conflicting second instance decisions (for example, of the Court of Appeals of Madrid, Zaragoza, Bilbao or Barcelona among others).

This way, the Supreme Court endorses for the second time one of the latest amendments related to the Spanish Land Transport Regime Act (LOTT) included in the Act 9/2013 of 4th July,   which in its Additional Provision Six establishes the following: “Direct legal action against the main sender in the event of intermediation. In the event of intermediation in a land transportation contract, the effective carrier can take a direct action for the unpaid part, against the principal sender and everyone who, when applicable, preceded them in the subcontracting chain, in case of non-payment of the freight for the transport by the contracting party, except in the case stipulated in article 227.8 of the restated text of the Public Sector Contracts Act, approved by Royal Legislative Decree  3/2011, of 14th November.” 

The Additional Provision Six does not limit this direct action to the sender who has not paid the contracted services. This direct action exists regardless of the relations established between the original parties to the contract and the effective carrier is entitled to claim the price of the transport not only against the main sender but also against the rest of the intervening parties (intermediaries) in the transport chain.      

The Supreme Court concludes in both judgments that: “The essential novelty that the amendment of the Act introduces is that the direct action can be exercised by the effective carrier regardless of whether the defendant (the sender or an intermediate subcontractor) has paid or not the price of the transport to his or her contracting party. In other words, The Additional Provision Six “LOTT” does not limit the exercise of the direct action to the case that the sender does not pay his contracting party. This direct action of the effective carrier exists even if the sender has paid its contractual carrier.” These clarifications are important and need to be taken into consideration since,  initially, the direct action in land transportation was assimilated to the direct action in a work contract set forth in article 1597 of the Civil Code (which was based in the concept of unjust enrichment) whereas the guarantee established in the Additional Provision Six of the “LOTT” has a broader scope and, undoubtedly, the right of effective carriers is protected in a more substantial way by interpreting that the purpose of the Act to protect the weakest part of the transport chain, i.e., the effective carrier.  

Therefore, although there can be no doubt that the position of the effective carrier remains protected by the Act and the Supreme Court interpretation of the same, the sender is placed in a complicated situation as, even if he complies with this obligation to pay the freight, he may still be involved in a third-party claim (actual carrier)  for the amounts already paid. If the sender were compelled to make double payment, he would have a recourse action against his contractual carrier and could demand the return of the amount payed to the effective carrier.  To protect the sender from such situation and to minimize this risk would to prohibit the contractual carrier to subcontract. In fact, the aforementioned 2017 Supreme Court Judgement advises the sender to have a control, insofar as it is possible, over this phenomenon, the risks of which were  already analyzed in our article dated July 10th, 2019, “A competitive but also a secure road transportation”.

Regarding the potential application of this provision to international land transport subject to the CMR Convention, there are contradictory positions. On one hand, some experts argue that the direct action should remain excluded from international transport under the above-mentioned convention because the convention does not include such possibility. On the other hand, other experts consider that the direct action should apply because the “LOTT” complies with the CMR Convention and because its text does not establish the geographical scope of application of the referred action. 

 

A competitive but also a secure road transportation

We received a new case in our law firm. Our good clients request that we protect their interests in a case of cargo that was stolen during a road transportation between Spain and Italy, a contract that was agreed under the terms of the CMR Convention (Convention relative au contrat de transport international de Marchandise par Route, Geneva 1956).

Once we were acquainted with the details, we learned that several individuals had impersonated the identity of a Spanish freight forwarding company, as well as that of its manager, with the aim to conclude several business agreements by sending emails directly to potential Spanish shippers and offering them budget-friendly transportation from Italy. To our surprise, this plan involved phone conversations in which the fraudsters used the identity of real people, the issuance of false documents using names of real existing companies, the goods collection by the fraudsters themselves in broad daylight at the concerted warehouses, and many other circumstances fitting into an elaborated thriller.

This is not an isolated case. In fact, theft of goods transported by road by means of diverse subterfuges is a serious and a live issue given its high economic impact in Spain and in the rest of the European Union. This reality was noted by various national and international organizations and associations, and has been echoed by the international association TAPA – Transported Asset Protection Association – which has denounced that the resulting number of thefts of goods in 2018 is the highest ever recorded since its foundation 20 years ago and it continues increasing in 2019. Moreover, they point out that the crimes they record in their system represent only a part of the market reality.

All this requires reflecting on the risky situations and the lack of guarantees arising during road transportation, and particularly in international transportation, due to the current dynamics pursued in contracting and subcontracting, among other circumstances. It is a common practice to subcontract the same road transportation in an unlimited way which brings forth a creation of “a chain of subcontractors” which in many cases affects the quality of the service and in the worst cases goods are damaged or stolen.

It is quite frequently a case that an export/import company decides to contract a road transport and for that contracts a reputable carrier. From this very first contact between the two entities to the ultimate and effective realization of the transportation by a professional carrier a chain of subcontractors of the same transportation might be created, a fact that might be unknown to the shipper. At least, of course, until damages occur, and liability is claimed. And it is that the contracting carrier or the first carrier, due to internal organization or due to the lack of its own fleet, can subcontract the transportation agreed with the loader to another carrier that, at the same time, can choose to subcontract it to a third party and so on until a supply chain is crated, a chain which ends in the moment that the very last and effective carrier concludes the agreed transportation. This effective carrier might be located in the country where the business was originally agreed as well as in any other country. When a transportation contract is developed between the shipper/contracting party and the first carrier, it is common to agree a set of conditions and requirements but, when the realization of the transportation moves away from the sphere of the two parties that initially agreed it and it is forwarded to the subcontracted third parties, the conditions that were agreed originally in many occasions are not respected and consequently quality and guarantees are lost (lack of regulatory certifications and permits, non-compliance with the established hours of rest, lack of a valid transport insurance, lack of an insurance for the cargo, insufficient insurance coverages, etc. ).

In order to control this situation, and in particular the problematics presented here, that is, the continued growth of thefts during transportation, it should be seriously considered to implement greater control of road transportation from the moment of its contracting to its conclusion. This control could comprise of limiting the number of accepted subcontracts or by directly prohibiting them to the first carrier, requiring compliance with the initially agreed guarantees from the subsequent subcontracted carriers, establishing verifications of safety in case of subcontracting unknown carriers or requesting the safety standards in the modes of transport, among other options. We should remember that once damage has occurred the circumstances of each transportation and its agents will be scrutinized by the affected parties and their insurers. The result of this analysis might place the carriers and their insurance companies in a delicate situation if, in case of an intent or a serious negligence, limitations of the carrier’s liability exposed in the CMR Convention or in the Spanish Law 15/2009 Contract of Transportation of Goods cannot be applied.

Nowadays, the struggle between cost and quality is part of the reality of national and international road transportation. From our law firm, we urge that shippers and carriers focus on searching for the right balance when establishing a competitive and, at the same time, secure business framework.

PIRACY, A REALITY IN THE TWENTY-FIRST CENTURY

Piracy in the maritime world is a reality with a history of hundreds of years, being sometimes prosecuted and other times protected by the institutions of the countries present in the different maritime areas around the world. We have been currently witnessing the fact that this phenomenon is still alive and that it is a way of extorting not only companies and individuals, but also governments of those countries that have to address these unlawful actions in the most thorough manner taking always into consideration the vessels’ safety, but above all the welfare of their crews.

Focusing on our own most recent experience, we know that there have been several pirate attacks in waters of the Indian Ocean against Basque fishing vessels, in particular the “Txori Argi” and the “Haizea Lau”, which only demonstrates that, while the pirate attacks at sea do not attract the spotlight of the news worldwide as they used to some years ago, piracy is by no means eradicated. In fact, and talking here on global scale, the incidents associated with this phenomenon far from being diminishing on the contrary have been increasing according to the report of International Maritime Bureau (ICC) which signals that there were 201 incidents of maritime piracy recorded during 2018 compared with the 180 incidents recorded the year before.

These incidents experienced last year, hijackings and kidnappings committed by pirates, whose target were not only cargo and container vessels, including the vessels of the UN organization involved in international aid programs for countries in specific critical situation, but also, to a larger extent, fishing vessels.

Piracy actions that have been recently concentrated on a mayor scale in waters of the Gulf of Guinea, an area that seems to have taken over what happened in the previous years on the Somalia coastline as the recorded incidents dabbled there in 2018 compared with the year before. In fact, waters of Somalia are enjoying a “relative peace”, at least in comparison with the situation in previous years, basically due to two circumstances. On the one hand, the massive deployment of the so-called “Operation Atalanta”, in which Spain is an active participant, and whose main objective is to protect the maritime traffic in the Indian Ocean against the acts of piracy  and, on the other hand, due to the own security measures taken by the vessels, such as the established operating procedures in case of a piracy attack and the presence of private security companies on board. Yet, the navigation close to the Somalian coastline still requires extreme caution on the part of the shipowners and their crews, as demonstrated by what happened with the fishing vessels “Txori Argi” and “Haizea Lau” this year, and which prevents us from excluding Somalia from the areas of risk.

If we look to the future, we can foresee that piracy, as we know it today, will gradually disappear as the navigation of autonomous vessels and vessels piloted by a remote control from a ground base (unmanned vessels) will become a reality on our seas and oceans, developing thus a new way of maritime navigation.

If we focus on this hypothetical scenario, it might be concluded that new cyber pirates could operate from any place around the globe without any need to be on-site and even without need to be a member of an organization, so that military deployments and private security companies on board, which are nowadays common means of deterrence and protection, could not be used as the main guarantors of a nonviolent navigation. The fight against piracy, which will, one way or another, continue being a present and future threat, will have to be adjusted to the scenarios that may evolve, as well as it should be the legal systems of the countries affected by this reality.

Accordingly, it should be noted that if the control system of an unmanned vessel were intercepted from distance by means of technology and for illicit purposes, it is certain that such situation would not fit in with the provisions of the United Nations Convention on the Law of the Sea (Montego Bay) related to piracy, since the convention specifies that such acts should be committed through the intervention of the crew or the passengers of a vessel and directed against another vessel. Furthermore, if we examine the crime of piracy after the amendment introduced by the Organic Law 15/2003 of 25th November, the current Criminal Code requires that a seizure of a vessel be preceded by an act o violence, intimidation or deceit and therefore the above mentioned situation (with no violence, intimidation or deceit due to the use of virtual means) would remain, at least at the beginning, out of the current criminal penalization.

To sum up, in accordance with the current regulation, it could be concluded that the possible future acts of piracy that were mentioned above would not be considered but cyberattacks with the application of the provisions for cybercrime and other common criminal definitions provided for in the Criminal Code in accordance with the particular circumstances of each case (misappropriation, damages, etc.). This is, however, insufficient since the future acts of piracy might involve, beside a cyberattack for specific purposes, an offence against the safety at the sea and navigation, a legal interest that the crime of piracy aims to protect.

Thus, we find it necessary to review the concept of piracy, so that it encompasses other scenarios that are currently not covered, such as cyberattacks against unmanned vessels, and that these cases remain not restricted to the category of computer specific crime and other offences. We, from our law firm as a team of professionals of the sector and due to our experience, consider that it is convenient, from now on, to be aware of the new forms of piracy, which might already be a reality, and hence to adjust the regulation and the strategies to be followed without delay in order to stay ahead and protect adequately vessels and their crews.