TT Talk - The perils of being a multinational
- Date: 28/07/2005
- Source: TT Talk 69
We are indebted to our good friend Peter Jones, editor of the Forwarderlaw website, for the following story from Spain, which highlights a danger for multinational transport companies. Often such companies promote themselves under a single logo or trademark, giving clients the impression that one company will be responsible for the safety of their cargo throughout its journey. In reality however, the facade conceals a complex corporate structure consisting of different national companies, working together but each guarding its own identity. Often central administrative functions, including insurance and claims handling, are handled by different companies within the group. As this Spanish decision shows, such companies should take care to identify clearly their role and their relationship when handling claims on behalf of other members of the group.
The case before the court of appeal in Barcelona concerned a claim brought by Cibertrans against DHL International Ltd. Cibertrans acted as a freight forwarder and had been held liable by its client for wet damage to a consignment while in transit from Dubai to Spain. The original contract of carriage had been made between the cargo owners and DHL International EC in Dubai, and had been concluded through the agency of Cibertrans´ agents in the UAE. The consignees submitted a claim for damages to DHL Victoria (Spain), DHL Middle East and DHL Dubai. The claim was referred to and ultimately andled by DHL Aviation in Brussels.
DHL Aviation rejected liability as it concluded that the damage could not have arisen while the oods ere in transit. Eventually Cibertrans settled the claim from its client and then brought an action in the Spanish courts for recovery of the payment. It did not sue any of the DHL companies who had notice of the claim, but instead the writ names DHL International Limited, a Bermuda corporation. As this DHL company had no prior information concerning the claim, it did not enter an appearance and the court declared it to be in default. At a subsequent hearing. DHL International argued on the basis of long established privity of contract rules, that as an independent corporate entity it had no responsibility for the liabilities of any other DHL company, and no relation whatsoever with the contract concluded in Dubai. The lower court rejected these submissions and held DHL International liable. On appeal the earlier decision was confirmed, the court ruling that
a) The document that incorporated the contract of carriage contained the trademark
'DHL Worldwide Express'. The description of this trademark in the DHL website explained
that it referred to a group of companies operating under the same overall management
and providing services worldwide.
b) DHL had dealt with the claim as a group at the out of court stage, and had never
objected at any point that the claim would only be considered by a specific part of the DHL
organisation, for example the Dubai company.
c) The burden of proof as to the independence of the different corporations of DHL
group lay with DHL International Limited, but it had not produced any evidence to rebut the
Commenting on the case, Mr Felipe Arazon from AACNI Barcelona says that one conclusion from this decision is that the courts are ready to modify the privity of contract rules and to look at websites and trademarks as well as the conduct of the parties before the lawsuit is brought to ascertain whether a company within a given corporate group can be made responsible for the damages or losses attributed to another company within the group.
More on: http://www.forwarderlaw.com/