Transportation law
Being right: A matter of negotiation - keep an eye on the FOB business!
The "FOB" Incoterm clause is often used in international commercial transactions. In the event of transport damage, it is often unclear who concluded the contract of carriage and who is entitled to make a claim against the carrier.
The case: The plaintiff is a transport insurer. Its German policyholder imported engines for the tailgates of motor vehicles from a supplier in Hong Kong. The shipment was transported by air freight to Stuttgart airport and from there to the consignee. When the shipment arrived at Stuttgart airport, damage was found on some of the pallets. The plaintiff took legal action against the German freight forwarder G. W. GmbH & Co. KG for damages, claiming that its policyholder, which had purchased the engines from the supplier in Hong Kong, had commissioned the German freight forwarder G. W. with the air transportation from Hong Kong to Stuttgart. Therefore, the forwarder G. W. was liable for damages. The defendant freight forwarder took the view that it had not been commissioned with the transportation, that it was not liable for the damage to the engines and that it had merely invoiced and collected the air freight costs from the plaintiff's policyholder on behalf of the Hong Kong-based freight forwarder.
Case law: The Munich Higher Regional Court dismissed the transport insurer's claim in the second instance after taking evidence by hearing witnesses (judgment of July 12, 2018, case no. 23 U 1884/17). The Court of Appeal stated that the plaintiff was unable to prove that its policyholder commissioned the German freight forwarder G. W. to carry out the air transportation of the shipment from Hong Kong to Stuttgart. The plaintiff was unable to present a transport order to G. W.. The taking of evidence by questioning the policyholder's employees and the forwarder G. W. as witnesses could not confirm any business contact with the forwarder before the start of the air transport. Rather, the result of the taking of evidence rather suggested that the Hong Kong-based forwarder G. W. Ltd., which belongs to the same group as the German forwarder G. W. GmbH & Co. KG, was commissioned by the supplier or the policyholder with the air transportation. The fact that the German G. W. invoiced the air freight costs to the policyholder also does not prove that a freight contract was concluded in Germany. The invoicing and collection of the freight costs was based on the remark "Freight Collect" contained in the "Shipper's Letter of Instructions".
According to the Munich Higher Regional Court, the agreement "FOB Hong Kong" did not constitute a contract of carriage between the policyholder and the German forwarder G. W. either. In the Incoterms FOB it is indeed stated under point A 3.a that the seller has no obligation towards the buyer to conclude a contract of carriage. However, if the buyer requests it or if it is customary in commercial practice, the seller can conclude the contract of carriage at the buyer's risk and expense under customary conditions.
Practical tip: If the seller and buyer agree on the delivery condition "FOB" in the commercial transaction, they should also clearly specify which of them, in whose name and for whose account, orders the sea or air transport from the port of departure (air port) to the place of delivery from which freight forwarder.
About the author: Bernhard Kahl has been a lawyer at the law firm Schnebbe Heuser & Partner in Hamburg since 2012. He previously worked for an international freight forwarder as an in-house lawyer for several years. His practice focuses on freight forwarding and transportation law, in particular
international air freight law.
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