Extended time bar for recoveries against subcontractors

Extended time bar for recoveries against subcontractors in the Hague-Visby Rules, the Budapest Convention and the German Commercial Code

A permanent problem of the forwarder in the role of a contractual carrier (CC) is keeping the time bar for his recovery against the actual/effecting carrier (AC). If a lawsuit is initiated by the cargo interest against the CC in the last days of the time bar, it might be too late for the CC to sue the AC in time. If the lawsuit of the CC against the AC is given to court after the end of the time bar (mostly one year), then the recovery is time barred. In order to prevent that situation, time extensions requested by the CC and given by the AC are the usual tool. Very often the development is unpleasant if the expected time extension is still missing, and the remaining time is scarce. 

In such a situation, it is helpful to know that in some areas of transportation law, this problem is acknowledged, and solved in favor of the CC. The obvious solution to the problem is that the time bar in the relation CC to AC is not the same as in the relation cargo interest to CC, but longer. 

The first example is found in Art. III / 6bis of the Hague-Visby Rules. It says that the CC may bring an action for indemnity after expiration of the one year time bar, within at least 3 months (subject to the law of the court seized) after the CC has settled the matter or has been served with process against himself. This means in practice that the lawsuit CC against AC might happen years after the event causing the claim against the CC, because negotiations took according time. 

The next example is Art. 24 (4) Budapest Convention (CMNI). The convention governs European international river barge transportation. It copies the above mentioned process of the Hague-Visby Rules. The period for indemnity action is 3 months after settlement of the matter or receipt of service by the CC.

The third exception is § 439 (2) HGB (German Commercial Code). Here the time bar for recovery begins to run (!) with the final judgment against the AC, or with his settlement to cargo interest if there is no final judgment. Condition is that the AC is informed about the claim within 3 months after the CC has received knowledge about it. A similar provision is found in § 607 (2) HGB for seafreight. 

The exception of Art. 39 (4) CMR is of no broad use, because it only applies for the very special case that under one single contract for international road carriage, several successive carriers share the whole voyage and transmit cargo and waybill among them (Art. 34 pp. CMR). The time bar here as well starts to run with the final judgment against the concerned carrier, or with his settlement to cargo interest if there is no final judgment.

Anchor/RD February 05, 2020