Direct Action by the Effective Carrier against the Principal Sender in case of Bankruptcy proceedings of an intermediary carrier

The Additional Provision Sixth of Law 9/2013, of 4th July, which amends Law 16/1987, of 30th July, related to the Spanish Land Transportation Regime (“LOTT) establishes the right of the effective carrier to claim, for the unpaid part of the price of the carriage, against the principal “sender” and all those parties that have preceded him in the contract chain, in case of lack of payment by his contractor. This provision has been analysed in various occasions by the Spanish Supreme Court (in judgement such as nº 644/2017, of 24th November, and 248/2019, of 6th May) as reported by Aiyon Abogados in the past.

The Spanish Supreme Court has stated, in the aforementioned judgments, that the direct action of the effective carrier, of the Additional Provision Sixth of LOTT, is not limited to the amount owed by the principal sender to the intermediary as the goal of the Provision is to provide a guarantee to final carriers who are considered to be the weakest link of the chain. For this reason, this direct action has been configured as a supplementary payment guarantee.

Recently, however, in its judgment nº 4405/2020, of 29th December, the Supreme Court has had the chance to examine the effect of bankruptcy proceedings in the direct action of the effective carrier. In this judgement, the Supreme Court analyses once again the Additional Provision Sixth of LOTT and corroborates that such Provision does not make any exceptions for bankruptcy proceedings. The Supreme Court also notes that, after the Additional Provision Sixth, the Amendments approved in the Bankruptcy Laws did not include carrier’s direct action amongst those that cannot be exercised once bankruptcy protection has been afforded. Since it considers that this direct action is not analogous to the action of the person that provides work and material to a contract against the owner of the works, which cannot be prosecuted once bankruptcy proceedings have been initiated, the Spanish Supreme Court confirmed the option to exercise the direct action by the effective carrier when the intermediary carrier is in bankruptcy regardless of whether the principal sender has previously paid or not its contracting party.