This decision relates to a motion for summary trial, asking the Court to decide a question of German law which will determine the quantum of the liability of the defendant, Hapag-Lloyd AG (Hapag-Lloyd), for loss of the plaintiffs' cargo. The plaintiffs are the owners of a cargo of ferroniobium who contracted with Hapag-Lloyd to transport the cargo in four containers from Montréal, Canada, to Antwerp, Belgium, by ship, and then from Antwerp to Moerdijk, the Netherlands, by truck. Three of the four containers were stolen from the terminal in Antwerp when an unauthorised trucker provided the terminal operator with the proper pick up numbers (PINs) for these containers and the terminal operator allowed the trucker to leave the terminal with the containers. Hapag-Lloyd has admitted liability for the purposes of this motion, but the parties disagree on the limitation of liability that applies to this loss.

The Court must decide whether, under German law, the loss of the cargo occurred during the ocean leg or the road leg of this multimodal carriage. The effect of German law, the sea waybill issued by Hapag-Lloyd governing this carriage, and their respective application of the Hague-Visby Rules and the Convention on the Contract for the International Carriage of Goods by Road (CMR), is that different limitation of liability regimes apply to the two legs (2 SDRs/kg and 8.33 SDRs/kg respectively).

Held: The loss of the cargo occurred on the road leg of the carriage and the loss is therefore subject to the limitation of liability applicable to road carriage under German law (8.33 SDRs/kg). Judgment is entered for the plaintiffs against Hapag-Lloyd in the principal amount of CAD 872,909.57. The parties have agreed that the other defendant, the agency Hapag-Lloyd (Canada) Inc, has no liability for the plaintiffs' loss, and the action against that defendant is therefore dismissed.

The Court considered the expert opinions on the principles of German law put forward by both parties, and preferred the evidence of the plaintiffs' expert witness on the basis that it was more consistent with the German case law. The determination whether a particular loss occurred on the ocean or road leg of a multimodal transport turns on whether the activity giving rise to the loss was characteristic of or attributable or closely tied to a particular leg. In this case, there is no connection between the activity at issue in this case and the storage of cargo following an ocean voyage. Rather, that activity is characteristic of or attributable to road transport, as it represents a security feature (albeit unsuccessful in the present case) intended to ensure transfer of the cargo to the correct road carrier. Therefore, as the present loss arose from an activity characteristic of road transport, German law would regard the loss as having occurred on the road leg of the multimodal transport. That analysis is not undermined by the fact that the cargo was not delivered to an on-carrier retained by the multimodal carrier. Indeed, it was precisely because the cargo was released to the unauthorised trucker that the loss occurred. The German jurisprudence focuses on the materialisation of risk and the allocation of that risk as between the different transport legs. In the present case, the risk that materialised was the risk that the cargo would be released to a party that was not entitled to have it. The PIN process was intended to mitigate this risk and ensure that only the on-carrier in the contractual chain from Hapag-Lloyd received the cargo. That process failed for reasons unknown to the parties, but the risk of such failure is surely a risk associated with the road leg, not the ocean leg.

Each of the parties took the position that, if Canadian law applied to this loss, certain Canadian jurisprudence upon which it relies would favour its position. However, resort to Canadian law is only appropriate in the event that the relevant German law has not been proven. The expert evidence is sufficient to allow the Court to determine the relevant principles of German transport law and their application to the agreed facts. The question can therefore be answered without recourse to Canadian law.​

[For the unsuccessful appeal to the Federal Court of Appeal, see Hapag-Lloyd AG v Iamgold Corp 2021 FCA 110 (CMI1474).]