Delivery of container to wrong party

In November 2000, a liner agent accepted a booking of equipment for transportation from Europe to America. The cargo was in a single 40ft container. The booking was made by a freight forwarder. The bill of lading showed that the freight forwarder’s European agent was the shipper and the freight forwarder was the consignee.

The freight forwarder issued their own “house” bill of lading to the shipper, through to the inland destination. The only party that the liner agent could legally deliver the cargo to was the freight forwarder.

After the container was discharged from the ship it was transported by rail to its final destination. In spite of an instruction from the freight forwarder to the liner agent not to release the cargo it was in fact released to the end users. These end users were in financial difficulties and subsequently filed for bankruptcy without paying for the cargo.

The cargo owner claimed against the freight forwarder in Europe. The freight forwarder in turn filed a claim against the liner agent in the New York courts. ITIC appointed lawyers to represent the liner agent. The lawyer advised that the US COGSA package limitation of USD 500 applied. That would mean for the equipment had a total liability of USD 13,500 against a claim of USD 685,000.

An offer of the package limitation amount was made to the shipper, who rejected it. No further actions were taken between 2002 and 2006. Subsequently, the US proceedings were reactivated. The liner agent’s lawyers filed a motion for summary judgement limiting their liability to the package limitation amount. This was successful. The shipper however appealed.

The appeal court confirmed the ruling in favour of the liner agents. With the addition of interest the claim was ultimately settled for USD 15,000. Unfortunately, the costs of the appeal were extensive, amounting to more than USD 200,000, which were paid by ITIC.