Adv. Gill Nadel, Adv. Or Cohen-Sasson
Recently, an exporter's appeal was accepted, which claimed compensation from the international freight forwarder for delays in the arrival of agricultural goods to their destination and their subsequent decay. The Magistrate Court, which gave a verdict regarding the claim in March 2013, rejected the exporter's claim, reasoning that he had failed to prove that the goods were sent for export in good condition, and that the damage was caused by the shipment.
The Tel Aviv District Court reversed this ruling, and determined that the freight forwarder is responsible for part of the damage caused to the goods, and therefore will compensate the exporter accordingly, while the compensation will be determined by means of evaluation.
In our opinion, the appeal's verdict is a good example of a situation in which the court prefers justice considerations over formal considerations which relate to the exact method of proof of damage.
The facts and the parties' claims:
The R.T. Fresh company ("the Exporter"), which engages in the production and export of agricultural produce, contracted with the Fritz Advanced Logistics & Freight Forwarding Solutions company ("the Freight Forwarder") for the shipment of vegetables from Israel to Russia. According to the parties' agreement, the exporter is responsible for loading the goods into the shipping containers.
The goods reached the Novorossiysk Port at the time determined, but without the necessary documents; therefore it was not possible to release the goods on time. According to the parties' agreement, the shipment of the necessary documents for the release of the shipping containers at the port was the responsibility of the freight forwarder.
Eventually, the documents reached the destination port in delay, and when the shipping containers were opened, the exporter unfortunately discovered that practically all of the vegetables were in the advance stages of decay, which denounced the possibility of trading them; the Russian client reasonably refused to receive them in this condition.
The exporter claimed that the freight forwarder was negligent in filing the documents on time, which led to the delay in releasing the shipping containers, which in turn led to the vegetables' decay and their complete loss of value. The exporter added that he repeatedly emphasized to the freight forwarder that these are sensitive goods, and that every delay could cause irreversible damage.
The exporter claimed compensation of 216,000 ILS, which includes the value of the goods and additional expenses made by the exporter following the incident.
Opposing, the freight forwarder claimed that he did not obligate to provide customs broking services, unloading and/or releasing the goods in Russia, but to only provide freight forwarding services. The freight forwarder added that the delay in the shipment of the document was caused by the exporter's mistake in not providing the correct address, and that the sensitivity of the goods was not brought to his attention.
The Magistrate Court's verdict:
The Tel Aviv Magistrate Court ruled that as part of the freight forwarder's responsibility, he was required to deliver the documents relating to the release of the shipping containers on time, and when he failed to do so - he was negligent.
Nevertheless, the court exempted the freight forwarder from bearing responsibility and paying compensation to the exporter, reasoning that it is not possible to prove a connection between the freight forwarder's negligence and the delay in releasing the shipping containers to the damage caused.
Among other, the court relied on the exporter's admission that the packaging and loading into the shipping containers were defective while taking place in Israel, before being delivered to the freight forwarder, and that these defective actions caused the decay to begin.
The court ruled that even if we assume that the beginning of the decay process, which was caused by the defective loading into the shipping containers, was accelerated by the freight forwarder's negligence and by the caused delay, indeed there is no sufficient evidence which could "draw the line" between the damage caused in the loading process, and the damage caused in the release of the goods.
Considering the aforementioned, it was determined that the exporter could not claim against anyone else but himself. Accordingly, the court rejected the exporter's claim and imposed on him legal expanses totaling 7,500 ILS.
The appeal's verdict:
The District Court reversed the Magistrates Court's verdict, which first discussed the matter.
The District Court deepened the review of the appraiser's professional opinion which examined the damaged cargo, and reached different conclusions than the ones reached by the Magistrates Court.
It was concluded that there is a possibility to separate, even though it is not clearly outlined, between the damages caused by the defective loading into the shipping containers and the smashing of some of the goods, and the damages caused by the delay in releasing the goods, caused by the freight forwarder's negligence.
Eventually, it was determined that the exporter is entitled for compensation, due to the freight forwarder's contribution to the loss of value of the goods. Due to the difficulty to attribute which part of the damage was caused by the defective loading into the shipping containers and which part was caused by the delay in releasing the shipping containers, the compensation was determined through assessment.
The court partially accepted the exporter's appeal and ruled compensation of 45,000 ILS and imposed on the freight forwarder legal expenses and fees for professional services, totaling 15,000 ILS.
[The District Court: civil appeal (Tel Aviv District Court) 29904-04-13 R.T. Fresh vs. Fritz Advanced Logistics & Freight Forwarding Solutions, ruling given on 18.11.13, Justice Roth Lavhar Sharon. Representatives of the parties - for the exporter: Adv. Shohat, for the freight forwarder: Adv. Sapir.
The Magistrates Court: civil suit (Tel Aviv Magistrates Court) 14823-05-11 R.T. Fresh vs. Fritz Advanced Logistics & Freight Forwarding Solutions, ruling given on 3.3.13, Justice Mordechai Ben Haim. The names of the representatives of the parties were not mentioned].
Comments:
In certain circumstances, adhering to the legal formality leads to a ruling which varies from the natural justice perception. The case aforementioned is one of them.
In this case, the District Court ruled that injustice was caused to the exporter due to the freight forwarder's conduct, even if there is a difficulty to assess the damage to the goods, its timing and exact value. The court requested to "amend" this matter partially, and calculated the damage "by assessment", meaning by assessing the compensation via an inaccurate evaluation.
This result emphasizes a trend of a decrease in the importance of formality and an increase in the importance of values. It seems that sometimes the court searches for the essence and prefers justice, even when it requires the use of tools which bypass formal-technical obstacles.
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This document provides a general summary and is for information purposes only. It is not intended to be comprehensive nor does it constitute legal advice. If you are interested to obtain further information or wish to follow the legal developments on this matter, please contact Adv. Gill Nadel - Chair of the firm's Import, Export and International Trade Law Practice, Tax and Executive Compensation Department. 6089848. -, phone: 03Gill.Nadel@goldfarb.com Email:
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