Rosewood Trucking v. Balaam
Rosewood, as a contracting sub-carrier in a chain of successive carriers, had no liability to the first carrier under CMR for a claim that had occurred whilst the cargo was in the custody of the actual carrier. However, it was liable to indemnify the first carrier under the terms of the subcontract between them. But its payment under the subcontract was not made "in compliance with the provisions" of CMR and so was not recoverable from the last carrier in the chain
DMC Category Rating: Confirmed
This case note is based on an Article in the December 2005 Edition of the ‘Marine Bulletin’, published by the Marine team at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website
The subcontract between P&O and Rosewood prohibited further subcontracting without consent but provided that, in any event, Rosewood would remain liable to P&O "as if it had itself performed or failed to perform the carriage". P&O paid the consignors’ claim and Rosewood indemnified P&O, as it was bound to do under the terms of the subcontract.
Rosewood did not take any assignment of any claims P&O might have, nor did it argue that it became subrogated to such claims. It simply relied on article 37 of CMR to seek recovery from Balaam.
Under article 36, the sender may only take legal proceedings against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event took place. In this case, that meant P&O or Balaam.
Under article 37:
(a) the carrier responsible for the loss or damage shall be solely liable for the compensation whether paid by himself or by another carrier…"
Simply as a matter of language, Rosewood did not pay P&O compensation "in compliance with the provisions of the Convention". It paid in compliance with its contractual obligations. Under CMR, Rosewood had no liability either to the sender or to P&O. Its liability arose under a contract to which Balaam was not a party.
Rosewood could have protected itself by its own contract with its subcontractor, by taking an assignment of P&O's claims against Balaam or, possibly, by way of subrogation. As it was, it was stuck with the loss.
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