In August 2010, Lene Bjerre Design A/S (LB Design), a Danish company designing and selling home and lifestyle products, bought a consignment of goods from M/S Bhatias Silverwares (Bhatias) in India. The goods were bought at a price of USD 30,891.41. LEMAN-International System Transport A/S (LEMAN) was hired by LB Design as contracting carrier and took on the multimodal carriage from India to Denmark. Sikkas Kwick Handling Services Pvt Ltd (Sikkas) was LEMAN’s agent in India. LEMAN in turn hired Hapag-Lloyd Aktiengesellschaft (Hapag-Lloyd) to perform the carriage by sea from India to Denmark. Hapag-Lloyd also delivered the container to be used during the entire multimodal carriage. Sikkas received the booking and booked the container after approval. The booking was forwarded to Bhatias who picked up the container and after custom clearance stuffed it and railed it out to the loading port. Sikkas was not present at any time when the container was delivered to Bhatias or stuffed. Sikkas issued a bill of lading on 31 August 2010 according to which the carriage was at 'Shipper’s Load, Stowe [sic] and Count'. Sikkas was listed as shipper and Bhatias as consignor. Hapag-Lloyd issued a freight bill according to which Sikkas was shipper and LEMAN the consignee. According to the freight bill the carriage was at 'SLAC = SHIPPER’S LOAD, STOW, WEIGHT AND COUNT'.

On 24 September 2010, the container was checked out of the Danish port without the cargo service having noticed any damage to the container. On 27 September 2010, the container arrived at LB Design. On arrival, LB Design discovered that the goods were damaged by water. Chubb, a subsidiary of Chubb Insurance Company of Europe SA (Chubb), paid out insurance to LB Design and subrogated into LB Design’s claim against LEMAN. LEMAN issued a third party notice against Hapag-Lloyd.

Chubb claimed that LEMAN was liable for the damage to the goods pursuant to s 275 of the Danish Merchant Shipping Act. Section 275 of the Danish Merchant Shipping Act, which corresponds to art 4.2.q of the Hague-Visby Rules, provides that the carrier is responsible for damage to the goods while it is in its custody, if the carrier cannot prove that damage is caused without fault or neglect either by the carrier or its agents and servants. LEMAN denied liability and claimed that Hapag-Lloyd was liable to indemnify LEMAN from any claims brought against LEMAN by Chubb.

Held: The damage to the goods arose after the goods had been stowed in the container. The damage was caused by water entering the container due to defects in the floor of the container and packings by the doorway. These defects to the container were present when the container was delivered by Hapag-Lloyd to Bhatias.

Due to the extent of the defects in the container and the circumstances of the container handover to Bhatias, who was to pack and stuff the goods, the Court found no reason to hold LB Design liable for the use of the container during the carriage despite its defects. It was Sikkas who was in charge of booking the container. There had furthermore not been produced any evidence as to the visibility of the defects to the container and thus whether Bhatias should have discovered these when receiving the container. The Court therefore found that LEMAN was liable for the damage pursuant to s 275 of the Danish Merchant Shipping Act (Hague-Visby Rules, art 4.2.q) as the goods had been damaged while they were in the custody of LEMAN.

Regarding the relationship between LEMAN and Hapag-Lloyd, the Court held that it could not establish with certainty when the water had entered the container. However, as none of the other containers had suffered any damage, the Court found that it was not proven that the water damage had occurred during the carriage by sea. LEMAN was thus liable for the damage as it had not proven that the damage did not occur while the goods were in its custody. LEMAN’s claim for Hapag-Lloyd to indemnify its losses was consequently dismissed.

LEMAN had argued that Hapag-Lloyd was liable for the damage as Hapag-Lloyd had delivered the defective container. The Court stated that LEMAN was hired by LB Design to facilitate the entire carriage, including booking the container. Furthermore, LEMAN had not performed any prior inspections of the container before using it. Due to these circumstances, LEMAN was liable for the fact that the delivered and defective container had actually been used during the entire carriage. None of the available evidence concerning the delivery and inspection of the defective container suggested that Hapag-Lloyd should be liable instead.