According to the provisions of the CMR Convention (which regulates international carriage of goods by road), the carrier is liable for the following:
- total or partial loss of goods (Article 23 of the CMR Convention)
- the damage of the goods (Article 25 of the CMR Convention) which appeared in the time between accepting and delivering the goods, and also
- the delay of the delivery (Article 23 point 5 of the CMR Convention; I have examined the subject of delay in my previous article: ...)
The provisions of the Convention provide the possibility to limit the amount of compensation in case the liability of the carrier has already been established.
The carrier should be aware what (compensation) risk is involved in any given carriage. Knowing the risk may help to adapt the amount of freight and to ensure that he has appropriate insurance.
Total or partial loss of goods
If the carrier is liable for compensation in respect of total or partial loss of goods, the compensation is calculated by reference to the value of the goods at the place and time at which they were accepted for carriage. In general, the market value of the goods at the place of accepting them is adapted. The value of goods is established according to the commodity exchange price or, if there is no such price, according to the current market price or, if there is no commodity exchange price or current market price, by reference to normal value of goods of the same kind and quality. Hence the amount of compensation may mot exceed the market value of goods.
Moreover, the CMR Convention provides quota limitation for compensation and the measure of compensation is the gross weight of the goods.
In addition, the carriage charges, customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in case of total loss and in proportion to the loss sustained in case of partial loss. Regarding other charges, there are discrepancies whether claims could be made to recover them (e.g. the costs of expert reports, return carriage, rescue action, cleaning, storage, disposal of goods, VAT. etc.).
The damage of the goods
In case of damage, the carrier shall be liable for the amount by which the goods have diminished in value, calculated by reference to the value of the goods at the place and time at which they were accepted for carriage. To establish how much the goods have diminished in value, market prices are crucial. Therefore the price level after the goods have been damaged requires to be examined. Some claimants repair the goods and indicate the repair costs as the diminution in value; however, the repair costs will not always reflect the diminution in value and may be challenged as excessive.
Aside from the above, the carriage charges, customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss.
The compensation may not, however, exceed:
- If the whole consignment has been damaged, the amount payable in the case of total loss;
- If part only of the consignment has been damaged, the amount payable in the case of loss of the part affected.
The delay of the delivery
In the case of delay, the compensation shall not exceed the carriage charges (Article 23 of the CMR Convention).
If the delay was connected to a damage of the goods, the compensation limits concerning the liability for the damage of the goods are applicable (see above), as the limit for delay, i.e. the amount of carriage charges, would in such cases be inappropriate. It is accepted that in the case of delay and the damage of the goods, one can cumulate the compensation for the damage of the goods and the compensation for the delay.
Apart from the duties mentioned above, a claimant is be entitled to claim interest on compensation payable. Such interest, calculated at 5% per annum, may accrue from the date on which the claim was sent in writing to the carrier or, if no such claim has been made, from the date on which legal proceedings were instituted.
The option to claim compensation exceeding the limits
There are three situations in which one may claim higher compensation from the carrier:
- the value of the goods has been declared (Article 23 point 6 in accordance with Article 24 of the CMR Convention)
- a special interest in delivery has been declared (Article 23 point 6 in accordance with Article 26 of the CMR Convention)
- the damage was caused by a wilful misconduct or default of the carrier, also if the wilful misconduct or default is committed by the agents or servants of the carrier or by any other persons of whose services he makes use for the performance of the carriage, when they are acting within the scope of their employment (Article 29 of the CMR Convention).
Declaration of the value of the goods
According to the provisions of the CMR Convention, the sender may, against payment of a surcharge to be agreed upon, declare in the consignment note a value for the goods exceeding the limit laid down in previous points, and in that case the amount of the declared value shall be substituted for the limit specified by the CMR Convention. There are thus two significant issues: firstly, the value must be entered into the consignment note and secondly, the sender must pay a surcharge. These conditions, however, are not always strictly observed. Regarding the entry to the consignment note, it is not always deemed necessary, it suffices that one is able to prove that the value of the goods has been declared in writing. And regarding the surcharge, it is often accepted that the surcharge is included in the carriage charges.
Declaration of a special interest in delivery
The sender may, against payment of a surcharge to be agreed upon, fix the amount of a special interest in delivery in the case of loss or damage or of the agreed time-limit being exceeded, by entering such amount in the consignment note. Then the sender may, independently of the compensation calculated as above, claim additional compensation, up to the total amount of the interest declared. However, the burden of proof that the damage has been done is on the sender. As was the case with declaring the value of the goods, the conditions that the special interest should be entered into a consignment note and a surcharge be paid are not always strictly observed.
Wilful misconduct or default
The issue of a wilful misconduct or default committed by the carrier or the agents of the carrier or by any other persons of whose services he makes use for the performance of the carriage, when they are acting within the scope of their employment, is an issue which requires a separate discussion as it exceeds the scope of this topic.
It is also important that said limits may be quoted also by subcontracting carriers, against whom e.g. the sender may claim compensation based on the principles of extra-contractual liability (that is, not the contract of carriage as he is not bound by it with the subcontractor and on the basis of which he could not claim compensation, but by virtue of e.g. a prohibited act).
Incidentally, it is worth mentioning that some carriers try to make contracts more favourable for them, including therein provisions stating that their liability is lower than the lower limits laid down in the CMR Convention. Nevertheless, in view of the fact that the provisions of the Convention are mandatory, such contractual provisions will be deemed null and void.
Attorney at law