The Swedish company E and the Republic of Venezuela concluded a contract for the delivery of three trucks with radar systems at a price of USD 16,641,000, which were to be shipped to Venezuela in 2000.

There was a dispute between the parties as to whom E commissioned with the transport, or the organisation of the transport, from Sweden to Venezuela. In any event, on 12 January 2000 E sent an inquiry to the plaintiff K which included the handwritten note 'UNDER DÄCK'. On 19 October 2000, the plaintiff submitted an offer which stated, among other things: 'on deck but in protected area on feeder legs'. The plaintiff also issued a booking confirmation on 31 October 2000. A bill of lading dated 17 November 2000 named B Line as the carrier, and the plaintiff K 'as agents for the carrier'. B Line is the Hong Kong-based T, which, like the plaintiff, belongs to the K Group.

B Line, represented by the plaintiff, booked the shipment of the trucks by the defendant from Gothenburg to Puerto Cabello. The booking note says: 'LASTNING UNDER DÄCK'. The defendant confirmed the booking on 14 November 2000 (represented by its agent) with the addition 'UNDER DECK'. The bill of lading of 17 November 2000 also contains the addition 'SHIPPED UNDER DECK'. On 21 November 2000, the plaintiff issued a notice of shipment and invoice to E.

The trucks were not shipped below deck, but on deck. They were delivered on 12 December 2000. The responsible authorities in Venezuela complained about deficiencies (especially corrosion damage). The plaintiff brought a claim against the defendant on 26 January 2001. On 31 January 2001, the defendant confirmed that the trucks had been shipped on deck. On 13 March 2001, B Line assigned its claims against the defendant to the plaintiff. On 17 May 2001, the trucks were examined at the instigation of the Venezuelan army and rejected. The trucks were transported back to Sweden and examined there. The extent of the damage is disputed.

The Republic of Venezuela assigned its claims to E. E ceded its claims to Z, an insurance company. The latter has been conducting litigation against the plaintiff in Sweden since 2005 regarding reimbursement of the repair costs. A claim will be made for SEK 15,069,249. The plaintiff defends itself there against the asserted claim. The litigation is still ongoing.

The plaintiff submitted at first instance that it had been commissioned by E to organise the sea transport at a fixed cost. The plaintiff then commissioned B Line. Since the plaintiff was a representative of B Line, the plaintiff's employee, on the one hand, in its capacity as the plaintiff's employee and, on the other hand, as a representative of B Line, concluded the freight contract between the plaintiff and B Line. The plaintiff alleged that the shipping on deck caused the damage. However, it could not judge to what extent the damage was also caused by the final recipient, which is why it is defending itself in Sweden against Z's claims. For this reason, it cannot currently quantify its right of recourse against the defendant. The plaintiff applied for a declaratory ruling that the defendant is obligated to compensate the plaintiff for damage suffered from and/or in connection with the deck carriage of the trucks, and an order that the defendant indemnify the plaintiff in respect of all future claims for damages brought by Z.

The defendant denied that the plaintiff had been commissioned by E to organise the transport of the trucks. Rather, the plaintiff only ever appeared as an agent of B Line. The defendant denied that the plaintiff had concluded a freight contract with B Line. The defendant asserted that it did not carry out the stowage planning itself, but left it to Eu. Eu noticed too late that the vehicles were not only excessively high but also excessively wide. That is why Eu - without informing the defendant - internally decided not to stow the goods below deck, but on deck. The defendant denied that the trucks had suffered any damage that could not have been remedied by simply washing them. The defendant relied on its limitation of liability under § 660 HGB [Commercial Code].

The Regional Court dismissed the action by judgment of 9 August 2006. The plaintiff appealed.

Held: The permissible appeal is partly justified. The defendant is obligated to compensate the plaintiff for damage suffered by the plaintiff from and/or in connection with the deck carriage, but only to the extent that T Ltd (acting as B Line) is liable to the plaintiff for this, up to a maximum of the value of 109,580 Special Drawing Rights (SDRs).

The plaintiff has the right to sue. It does not have its own contractual relationship with the defendant, but permissibly takes precedence based on the assigned rights of B Line. The assignment is also effective. German law is applicable in this respect. According to § 33(2) EGBGB [Private International Law Act], the law to which the transferred claim is subject determines its transferability. The transferred claim (that is the claim originally due to B Line against the defendant) is subject to German law, because cl 21 of the bill of lading contains an express agreement as to the applicability of German law. This choice of law is effective according to § 27 EGBGB.

Section 399 BGB [Civil Code] does not prevent the assignment. A right to exemption cannot be assigned due to § 399 BGB. An exception applies, however, if the right to exemption is assigned to the creditor of the substitute beneficiary. For this reason, the Court does not follow the arguments of the defendant. This case is not about an assignment of the plaintiff's claim. It is about an assignment of B Line's claims. Since B Line is the plaintiff's contract partner, B Line's creditor is also the plaintiff (and not - or at least not only - the party interested in the suit), so that it has a right to exemption (which originally belonged to B Line) which can also be assigned. The only special feature is that the plaintiff itself cannot assert a payment claim against B Line, but only a claim for exemption.

The above statements are based on the fact that the plaintiff is actually a creditor of B Line. This actual requirement for the exception to the prohibition of assignment (assignment to the creditor of the claim for compensation) is also proven. Contrary to the view of the defendant, the undisputed facts show that the plaintiff implicitly concluded a freight contract with B Line. However, the exact content of the contract has not been presented; in particular, there is no presentation that the plaintiff had expressly given B Line the instruction to transport the trucks below deck. Ultimately, however, this instruction follows from interpretation of the evidence. From the fact that B Line has obligated the defendant to ship the trucks below deck, it can be concluded that the plaintiff on its part (impliedly) obligated B Line to transport below deck. The defendant (who in the contractual relationship between the plaintiff and B Line is to be regarded as the vicarious agent of B Line) has violated this obligation. It is likely that B Line is responsible to the plaintiff for this breach of duty by its vicarious agent.

The contractual relationship between the plaintiff and B Line is decisive for this attribution. Either Swedish law or the law of Hong Kong will apply to this contractual relationship. In the opinion of the Court, Swedish law would apply to the contractual relationship between Plaintiff and B Line without a particular choice of law. The presumption of § 28(4) EGBGB is not relevant because the carrier (that is B Line in relation to the plaintiff) is not based in Sweden, but in Hong Kong. The closest connections within the meaning of § 28(1) EGBGB exist with Sweden, because the consignor (the plaintiff) is based in Sweden, the carrier (B Line) was represented by a Swedish company (the plaintiff), the contract was concluded in Sweden and the goods are from, and were transported from, Sweden. The defendant suspects, however, that the bill of lading issued by B Line (represented by the plaintiff) could contain a Hong Kong choice of law clause, which the plaintiff did not deny. Then Hong Kong law would apply.

Even if the Court has not examined Swedish transport law or Hong Kong's transport law in detail, there is a probability (which is sufficient in the context of the declaratory action) that B Line is liable for its vicarious agent (here the defendant) under both legal systems. Sweden is a contracting State of the Hague-Visby Rules; Hong Kong (as a Special Administrative Region within China) is a State Party to the Hague Rules (reference list B of the Federal Law Gazette, year 2008, p 268). According to arts 3.8 and 4.3 of the Hague Rules, as well as arts 3.8 and 4.3 of the Hague-Visby Rules, the carrier is generally liable if its servants or agents are at fault. The (mere) probability of damage occurring at this point does not depend on limitations of liability.

It is also probable that the plaintiff is exposed to a claim for damages from Z. It cannot be established with certainty that the plaintiff entered into an obligation towards E to transport the trucks below deck. The documents are somewhat contradictory in this respect. The defendant is the vicarious agent of the seller (in relation to E) and has in this respect violated this obligation. This would probably also be attributable to the plaintiff. The contract between E and the plaintiff is decisive in this respect. Swedish law is applicable here because both contracting parties are based in Sweden and the transport was to be carried out from Sweden. As stated above, it is likely that under Swedish law the plaintiff is liable for its vicarious agent because Sweden is a contracting State to the Hague-Visby rules. A claim for damages by Z (from the assigned right) in turn presupposes damage to E.

Nothing follows from § 611 HGB. It can be left open whether the plaintiff or B Line reported the damage to the defendant in good time (or whether E or the Republic of Venezuela reported the damage to the plaintiff in good time). In the case of a late notification, according to § 611(3) HGB, there is a presumption that the carrier has delivered the goods as they are described in the bill of lading, or that if the goods are damaged, the damage is due to a circumstance for which the carrier is not responsible. However, this only leads to a reversal of the burden of proof, not to an exclusion of the claim. Since both the condition of the trucks on delivery and the possible cause of the damage can be clarified, this mere reversal of the burden of proof does not lead, in the context of a declaratory action, to denial of the (mere) probability of harm.

However, the action is unfounded in so far as B Line has limitations of liability that go beyond any limitations of the plaintiff's liability. The plaintiff's application for a declaration is aimed at the fact that the defendant should compensate the plaintiff for 'the damage' in connection with the transport at issue, that is, the entire damage. However, it has no claim to this if there are further restrictions on B Line's liability.

In so far as the plaintiff takes action against B Line from the assigned claim for exemption, this claim can only go as far as B Line is exposed to a claim by the plaintiff. In so far as B Line can invoke an effective limitation of liability vis-à-vis the plaintiff, it is not exposed to such a claim, so that there is also no claim to exemption from the defendant to this extent. There are some indications that B Line can invoke more extensive limitations of liability towards the plaintiff than the plaintiff towards E (or Z). As already stated, the defendant assumed that the law of Hong Kong was agreed between the plaintiff and B Line. The plaintiff did not deny this. The Court has not scrutinised Hong Kong law. As stated earlier, Hong Kong is a party to the Hague Rules, but not the Hague-Visby Rules. It is therefore possible that Hong Kong law (like the Hague Rules, cf art 4.5) provides for a limitation of liability according to the number of packages/units (and not according to weight). This would mean that B Line is liable to the plaintiff to a significantly lower extent than the plaintiff towards E/Z, which then also has an impact on the extent of the exemption claim. The Court has indicated this in its order by adding 'but only to the extent that T Ltd (acting as B Line) is liable to the plaintiff for this'.

Section 437(2) HGB expressly states that the performing carrier can raise all objections to which the main carrier is entitled under the freight contract. This provision expressly refers only to claims in § 437(1) HGB, which are not at stake here. In the opinion of the Court, however, § 437(2) HGB contains a general legal idea. According to the legal assessment, a sub-carrier can invoke the limitations of liability to which the main carrier (or other sub-carriers involved in a chain before him) is entitled. If one were to recognise differential liability in deviation from this, § 437(2) HGB would be irrelevant.

The action is thus unfounded to the extent that the damage suffered by the plaintiff (the reimbursement of which the plaintiff is demanding as part of the declaratory action) may amount to more than 109,580 SDRs. The defendant rightly invokes limitation of liability under § 660(1) HGB. In the contractual relationship between B Line and the defendant, according to cl 21 of the bill of lading, German law is applicable. According to the bill of lading, a total weight of 54,790 kg can be assumed. The defendant is only liable to the amount of 2 SDRs per kg.

This limitation of liability is not excluded by § 660(3) HGB. This would only be the case if the damage resulted from an act or omission which the carrier had committed with the intention of causing damage or recklessly and with the knowledge that damage was likely to occur. The defendant itself has to be blamed for carelessness in the sense mentioned. It would not be enough if its employees (below the management level) or vicarious agents had acted recklessly. Section 660 HGB is based on the Hague-Visby Rules. Since, during the negotiation of the Rules, a corresponding request to omit limitation of liability even if the servants of the carrier were careless was rejected, the historical interpretation suggests that only carelessness on the part of the carrier itself would be sufficient to bar limitation of liability under § 660(1) HGB. Incidentally, in other international Conventions - unlike in maritime trade law - liability for qualified negligence on the part of the 'servants' of the carrier is expressly regulated (cf art 29 CMR; art 25 Warsaw Convention). A systematic interpretation also suggests that, under maritime trade law, qualified fault of the 'servants' of the carrier is insufficient for limitation of liability to cease to exist.

The members of the Executive Board of the defendant did not take care of the stowage planning themselves, but only provided a very general instruction that instructions from customers must always be followed and that, if this is not possible, consultations should be held. Qualified negligence would have been assumed if there had been an instruction from the management to ignore customer instructions in case of doubt, if a greater transport capacity of the relevant ships could be achieved. However, the plaintiff does not claim that there was such an instruction. In the opinion of the Court, control and the installation of security mechanisms are necessary for the concrete implementation of the instruction described by the defendant. However, it is not evident that these specific security mechanisms need to be planned at management level. In the opinion of the Court, at least in the case of a company of the size of the defendant and given the unambiguousness of the instruction in question, this can also be left to 'executive employees'. A member of the management board does not act 'recklessly and in the knowledge that damage is likely to occur' if he or she relies on clear and easy-to-follow instructions (deviation from customer instructions only after consultation with them) being reliably implemented and controlled by employees of higher or middle management.

[For the partly successful appeal to the Federal Supreme Court, see BGH, Urteil vom 18 März 2010 - I ZR 181/08 (CMI1109).]