Madrid Court of Appeal examines shipping agent's liability

Julio López Quiroga.

17/05/2006 International Law Office

In a judgment issued on October 3 2005 the Madrid Court of Appeal examined the changing case law on the liability of shipping agents towards third parties for damage resulting from the carriage of goods by sea.

Until January 1998, courts seemed to consider shipping agents liable towards shippers and consignees for any damage resulting from the carriage of goods. Despite the fact that, from a legal perspective, shipping agents are merely agents and are not party to the carriage agreement (and therefore should not be liable as a general rule), many court decisions took a protective approach - particularly with regard to the local consignee of the goods, who could claim against its local shipping agent rather than having to sue a foreign marine carrier abroad.

These decisions were based on the following grounds:

  • Subrogation - the shipping agent assumes the liabilities of the master of the vessel from the reception of the goods until they are delivered to the relevant consignee. The agent is thus bound by the carriage agreement and liable thereunder.

  • Commercial commission (Article 246 of the Commercial Code) - if the shipping agent negotiates a matter concerning the vessel without mentioning that it is acting on behalf of the shipowner, it shall be liable before the counterparty.

  • Deposit agreement - the shipping agent is considered a depository of the goods and thus is bound by the custody obligation arising from the deposit agreement.

  • Definition of 'shipping agent' and 'shipowner' (Article 586 of the Commercial Code) - pursuant to an arguable but literal interpretation of Article 586, some decisions deemed both concepts (and thus their respective obligations and liabilities) to be interchangeable.

Notwithstanding this, case law changed in January 1998 as a consequence of the amendment of Article 73 of Act 27/1992, which specifically and clearly stated that shipping agents were not liable for shipowners' obligations towards shippers and consignees of goods carried by sea.

This measure provided a clear and reasonable solution to the issue, but unfortunately, not a definitive one. Another amendment to Article 73 (in force as of February 2004) discarded the non-liability clause included in the 1998 regulation, thereby taking a step back towards legal uncertainty. Currently, the regulation states that liability is governed by the relevant commercial law. It seems that it will lead to the revival of former case law on shipping agents, which will again have the burden of ensuring that the goods carried remain intact.

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