Liability for Delays during Maritime Transportation

Courts admit a complaint for compensation for damages against shipping company for damage to cargo, caused by delay in delivery.

In April, 2012, a local shipper entrusted a shipping line with the maritime transportation of 12 consolidated containers with fresh garlic. Cargo was to be transported from San Antonio, Chile, to its final destination at the port of Lázaro Cárdenas, located in Mexico. Cargo arrived at the Mexican port with significant damage that consisted of over ripeness generated by a delay in delivery. As a result of this, total loss of the cargo was determined at US$ 1,058,111.

JUDICIAL SCENARIO

Conflicts that are generated by maritime transportation are the competence of arbitral justice, as set out under Article 1203 of the Code of Commerce. On April 3, 2014, shippers submitted a request before the civil courts for the appointment of an Arbitrator Judge.

Thus, and after having appointed by mutual agreement the Arbitrator Judge that was to hear the controversy, shippers presented the arbitration court with a complaint for compensation for damages and requested payment of US$ 1,058,111.00.

Plaintiffs claimed contractual liability stemming from defendant’s breach of the maritime transportation contract. Plaintiff mentioned that by virtue of the said contract, the transporter was bound to safeguard, transport and deliver the goods in the same quantities and conditions they were received.

In August, 2017, the Arbitrator Judge admitted the complaint, and sentenced the shipping line to pay the sum of US$ 726,773.01 for compensation for damages stemming from contractual liability due to the damage that affected the transported cargo.

As was to be expected, both the shippers and the transporters filed the respective appeals against the arbitration award, respectively requesting an increase in the sum to be paid, and rejecting the complaint.  

In April, 2020, the Santiago Court of Appeals dismissed the remedy of annulment on grounds of procedure and appeal filed by the shipper, and confirmed - in a statement - the appealed award. Regarding interest, the Court of Appeals stated that they should be calculated “as from the date of delivery of the cargo at the port of destination, that is to say as from may 15 and 16, 2021”.

Plaintiff filed a remedy of annulment before the Supreme Court, against the sentence issued by the Court of Appeals. This was also dismissed; the arbitration award, and what was ordered by the Court of Appeals, became final.

RELEVANT ASPECTS OF THE SENTENCE REGARDING LIABILITY   I   CRAWFORD - GRAHAM MILLER

The award from the arbitration court, confirmed by the Santiago Court of Appeals is extremely relevant, because it becomes one of the few sentences from our highest court that rules on the presumption of a correct delivery, reserves and application of liability limits applicable to maritime transportation.

In this case, exporters laid out and proved that upon delivering the goods to the shippers, the latter made no observations whatsoever as per the terms of Article 1017 of the Code of Commerce; therefore, according to Article 1019 of this same Code, the cargo is presumed to have been delivered in good condition (presumption of a good delivery). This article sets out that: “If the shipper or the person emitting the Bill of Lading in representation of said shipper, does not confirm in said document the apparent condition of the goods, it shall be understood that what was mentioned in the Bill of Lading was that the goods were in good condition”.

Our legislation establishes a liability system with presumed negligence in Article 984 of the Code of Commerce:  “Shipper shall be liable for the damages resulting from the loss of or damage to the goods, as well as delay in their delivery, if whatever caused the loss, damage or delay was produced when said goods were in shipper’s care under the terms set out in Articles 982 and 983, unless it can be proved that shipper, dependents or agents, took all measures that could reasonably be demanded to prevent the event and its consequences”.

As shippers provided no proof whatsoever that they had taken all reasonable measures to avoid the event and its consequences, the Arbitration Judge applied the presumption of liability mentioned above and sentenced the shippers.

1.    Lack of comments/presumption of correct delivery: Our set of rules regarding shippers’ liability is based on a series of legal presumptions in favour of the interests of the cargo, among which is the presumption of correct delivery set out in Article 1019 of the Code of Commerce. If, after the custody period has begun, the shipper does not record on the Bill of Lading the apparent condition of the goods, it shall be presumed that they were in good condition when delivered at their destination.

This sentence is relevant because it expressly indicates that in order for the ocean shipper to avoid liability, said shipper must generate necessary proof that all reasonable measures were taken to avoid the event and its consequences. Therefore, this generates a reversal of the burden of proof, which corresponds to the shipper and not to the exporting company. In this regard, the sentence issued by the Arbitrator Judge mentions the following under its twentieth recital:

“As the plaintiff was unable to refute the legal presumption set out in the code of commerce, it shall be confirmed that the damages were suffered during the shippers’ period of custody. It is also necessary to specify that under contractual law the creditor must prove the existence of the obligation, and does not need to prove that his noncompliance stems from the debtor’s negligence, because said negligence is confirmed by the mere existence of this noncompliance, and in the case of the contract for maritime shipment of goods, the shipper is bound to ship the goods and deliver them at the port of destination in the same condition they were in when received by shippers; said obligation was not complied with when shipper delivered the goods with the mentioned damage at the port of destination”.

2.    In the event of damage to cargo, it is not possible to plead a limit due to delay. Regarding maritime transportation of goods, shippers’ liability for damage or delays is limited. In the event of damage to the cargo, liability limit is found in Article 992 of the Code of Commerce, and in the event of delay it can be found in the next article.

Sentences analysed, expressly set out that the limit for delay may only be applied in those cases where no damage to goods exists, because if damage to goods exists, the applicable limit shall be the one set out under Article 992 of the Code of Commerce. In this regard, the twenty third recital sets out the following: “For the legal hypothesis, the rule set out in Article 993 of the Code of Commerce, as already mentioned, is based on the fact that the damages only stem from a delay in the goods, not from damage to said goods; therefore, the pleaded limit of liability is inadmissible”.