The carrier had agreed to ship 13 containers with 310,440 kg ferronickel from Santos, Brazil, to Rotterdam, the Netherlands. The consignment had been sold at a price of USD 1,983,460.33 by a Brazilian company to a buyer located in London. The buyer contracted with a Rotterdam-based freight forwarder (shipper) who in turn concluded a contract of carriage with the carrier. On 8 June 2014, the carrier issued a shipped bill of lading. The seller of the goods was named as 'shipper' in the bill, the shipper as 'Consignee' and the buyer as 'Notify Party'.

The Euromax Terminal at Rotterdam was operated by Europe Container Terminals (ECT). The delivery of containers by ECT required presentation of a PIN number by the party requesting the delivery. This delivery arrangement was based on a contract between ECT and the carrier. The presentation of a bill of lading was not required to obtain delivery of the goods. Approximately one week prior to the arrival of a Rotterdam-bound vessel, the carrier would provide a computer-generated 7 digit number for each container to their customers. On 25 June 2014, the Shipper requested the PIN numbers in relation to the relevant 13 containers, which were provided on the same day. Still on 25 June 2014, the carrier issued a release order referring to the PIN numbers to ECT. On 26 June 2014, the vessel arrived at the terminal. The 13 containers were discharged at the Euromax Terminal. The shipper instructed a local carrier to collect the containers and provided the PIN codes. On 26 June 2014, 3 containers were delivered. On the following day, when delivery of the remaining 10 containers was requested, it turned out that only 2 containers in fact were available. Eight containers already had been collected by a third party who was able to present the relevant PIN codes.

The shipper’s liability insurer, after entering into an overall settlement agreement with the buyer of the goods, the seller and its cargo insurers as well as the shipper, paid an amount of USD 875,000. Both the seller and the buyer as well as their insurers and the shipper transferred all claims against the carrier to the shipper’s liability insurers.

Subsequently, the shipper’s liability insurers (insurers) brought proceedings against the carrier in the Hamburg Magistrate Court, claiming for damages in respect of the loss of 8 containers. The insurers argued that the loss occurred prior to the delivery of the containers. In particular, for the time the containers were located on the ECT terminal, they still were in the carrier’s custody. The weight of the goods lost was 191.04 mt. The limitation amount, based on the good’s weight, thus was (191.04 x 2 SDR) = 382,000 SDR. The carrier maintained that the shipper was not entitled to claim. The carrier’s principal defence was that the loss of the 8 containers occurred after delivery and thus not while they were in the carrier’s custody. The containers were delivered when the release order was given to the terminal and the consignee received the PIN number, which allowed him  to collect the containers at any time. And even if one assumed that the misdelivery of the containers occurred prior to delivery, any liability of the carrier would be excluded as the carrier in the circumstances was unable to prevent the loss by applying the diligence of a prudent carrier (s 498(2) of the Commercial Code). The carrier had provided a reliable system to ensure that only the intended consignee was able to retrieve the containers. The PIN numbers were provided solely to the shipper and the terminal and could not have been leaked to a third party. The Magistrate Court found in favour of the shipper and rendered a judgment according to which the carrier was to pay EUR 433,171.74 to the shipper. The carrier filed an appeal which was dismissed by the Hamburg Court of Appeal.

Held: The Court of Appeal confirmed that the shipper was entitled to claim from the carrier. Further, the Court of Appeal, in line with the Magistrate Court, concluded that the misdelivery occurred prior to the delivery of the containers and thus whilst they were in the carrier’s custody. For the purpose of s 498(1) of the Commercial Code, delivery normally requires that the carrier surrenders the goods in agreement with the consignee and puts the consignee in a position to take possession of the goods. It is not necessary that the consignee in fact obtains possession. The Court of Appeal further referred to a traditional principle applied by German courts that in German ports the terminal is considered to be the vessel’s 'allonge' [ie extension]. As a result, delivery only occurs when the terminal hands over the goods to the consignee or its agent. In respect of other than German ports, the circumstances needed to be considered. This seemed to support the carrier’s position, who relied on the agreements made in the contract of carriage as well as the customs at the port of Rotterdam. However, it could not be right to conclude that it is sufficient for the delivery of the goods that the carrier provided the PIN numbers to the shipper and gave a release order to the terminal. This occurred already on 25 June 2014, when the vessel still was at sea. As long as the goods were on the vessel, they in any case remained in the carrier’s custody. The earliest point in time when delivery could have occurred was when the containers were presented to the shipper on 26 June 2014. However, the Court of Appeal concluded that this was not the relevant date either. The court referred to the provisions in the Commercial Code on the consignee’s obligation to notify the carrier of any loss of or damage to the goods (see s 510). This requires that the consignee is able to inspect the goods. The Court of Appeal further found that the terminal, as far as the delivery of the goods is concerned, is the agent of the carrier.

It would be difficult to imagine how the custody over the goods could pass from the carrier to the consignee before the terminal physically handed over the goods to the consignee. This would require that the terminal no longer rendered services to the carrier under the terminal contract, but acted on behalf of the consignee. This would imply that the consignee owed a remuneration to the terminal who would assume the position of a warehouse operator. In effect, the consignee would obtain possession of the goods. As long as corresponding agreements are not in place, the carrier has not yet released the goods to the consignee. In the circumstances, the carrier had not released the goods as long as ECT was in possession of the goods on behalf of the carrier.

At the time ECT handed over the 8 containers to the third party, they were not yet delivered to the shipper. The terminal did not act on behalf of the shipper. ECT was still in a position to prevent the shipper from collecting the containers.

Further, the Court of Appeal found that the carrier had not been able to prove that it could not have avoided the loss by applying the diligence of a prudent carrier (s 498(1) of the Commercial Code). This would require that the carrier explained how the loss occurred and that it acted diligently to avoid the loss. It was undisputed that the party who collected the 8 containers had the relevant PIN numbers. The carrier had been unable to explain how the third party learned about the PIN numbers. As a result, the carrier needed to prove that all possible and reasonable steps have been taken to prevent such losses. In the circumstances, the carrier failed on that point. In particular, the carrier was not even able to identify the persons within its company and ECT who actually had access to the PIN numbers.