1. Tick, tock Prescription and the notice of damage/complaints in multimodal contracts. Can the DCFR and the PECL help? Marian Hoeks, 11 September 2014, hoeks@law.eur.nl

2. 1.Difficulties multimodal transport contract 2.Rules on timely complaint and prescription 3.Recourse actions 4.The economics of the issue 5.Can the PECL and the DCFR help? 6. Conclusions

3. 1. Difficulties multimodal transport contract Applicable law Jurisdiction Prescription/extinction right of action

4. Applicability of the carriage conventions Sea transport; HVR; bill of lading/choice of law Air transport; art. 38 MC

5. Art. 38 MC – Combined carriage 1.In the case of combined carriage performed partly by air and partly by any other mode of carriage, the provisions of this Convention shall, subject to paragraph 4 of Article 18, apply only to the carriage by air, provided that the carriage by air falls within the terms of Article 1. (…)

6. Applicability of the carriage conventions Sea transport; bill of lading/choice of law Air transport; art. 38 MC Others via national law; e.g. art. 452a HGB, and art. 8:41 DCC?

7. 2. Rules on timely complaint and prescription  Art. 31 and 35 Montreal Convention (MC)  Art. 47 and 48 COTIF-CIM  Rule 3(6) HVR  Art. 30 and 32 CMR  Art. 23 and 24 CMNI

8. A. Prescription  Art. 35 MC; 2 years  Art. 48 COTIF-CIM; 1 or 2 years  Rule 3(6) HVR; 1 year  Art. 32 CMR; 1 or 3 years  Art. 24 CMNI; 1 year

9. A. Prescription – commencement Rule III(6) HVR Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.

10. A. Prescription – commencement Art. 32 CMR (…) (a) In the case of partial loss, damage or delay in delivery, from the date of delivery; (b) In the case of total loss, from the thirtieth day after the expiry of the agreed time-limit or where there is no agreed time-limit from the sixtieth day from the date on which the goods were taken over by the carrier;

11. A. Prescription – commencement Art. 35 MC 1.The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. (…)

12. A. Prescription – commencement ‘Delivery’ or ‘destination’ Multimodal carrier Unimodal subcarrier 1 day2 days ????

13. A. Prescription – commencement ‘Delivery’ or ‘destination’ Multimodal carrier Unimodal subcarrier 1 day2 days

14. A. Prescription – commencement Art. 35 MC 1.The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. (…)

15. A. Prescription – commencement ‘carriage stopped’ Multimodal carrier Unimodal subcarrier 1 day2 days 1 day !?

16. B. Timely notice of complaints or no action HVR, CMR, CMNI: Acceptance of the goods merely provides prima facie evidence of the delivery by the carrier of the goods as described in the transport document MC, COTIF-CIM: Acceptance of the goods without complaint leads to extinction of the right of action against the carrier

17. B. Timely notice of complaints or no action Art. 31 MC (…) 4. If no complaint is made within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on its part.

18. B. Timely notice of complaints or no action Art. 31 MC 2. In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within (…) fourteen days from the date of receipt in the case of cargo. (…)

19. QBD [2001] 2 Lloyd’s Rep. 133 and CA [2002] 2 Lloyd’s Rep. 25 See also Datec Electronics Holdings Ltd v. United Parcels Service Ltd, [2007] 2 Lloyd's Rep. 114 Singapore Dublin Paris Quantum v. Plane Trucking (2002)

20. Singapore Dublin Paris Quantum v. Plane Trucking (2002) What if?

21. B. Timely notice of complaints or no action Problems Art. 31 MC 1.Who is the ‘person entitled to delivery’? 2.When is the ‘date of receipt’?

22. B. Timely notice of complaints or no action Art. 47 CIM 1.Acceptance of the goods by the person entitled shall extinguish all rights of action against the carrier (…) 2.Nevertheless, the right of action shall not be extinguished : a) in case of partial loss or damage, if the loss or damage was ascertained (…) before the acceptance of the goods

23. 3. Recourse actions 1.COTIF-CIM: damage to be ascertained by carrier or person entitled to accept the goods, before the acceptance 2 days 3 days 1 day Multimodal contract Unimodal contract

24. R ecourse – e.g. COTIF-CIM 1.The MMT carrier has to rely on the rail and/or air carrier to ascertain the damage on time 2.Acceptance of the goods is not prima fa cie evidence of good condition; the air carrier has no incentive 3.The moments for ascertainment by the MMT carrier and the consignee may not match up (5 days apart) 4.The commencement of the prescription periods may not match up (5 days apart)

25. 4. The economics of the issue Arguments for prescription: Saving of transaction costs –Deterioration evidence and memory Higher administrative costs More errors in settlement/adjudication

26. The economics of the issue Trade-off between incentives and administrative costs A longer duration of the period in which a claim can be made: Increases the carrier’s incentive to exercise care, but also Increases the number of claims

27. The economics of the issue Arguments for the very short periods for ‘timely notice of complaints’?

28. 5. Can the PECL and the DCFR help? Principle: The claimant must have a fair opportunity of pursuing the claim 1.DCFR – Book 3, chapter 7: prescription 2.PECL very nearly identical

29. Art. 14:203 PECL - Commencement 1.The general period of prescription begins to run from the time when the debtor has to effect performance or, in the case of a right to damages, from the time of the act which gives rise to the claim.

30. Art. 7:203 DCFR - Commencement 1.The general period of prescription begins to run from the time when the debtor has to effect performance or, in the case of a right to damages, from the time of the act which gives rise to the right.

31. Art. 7:203 DCFR - Commencement 1.The general period of prescription begins to run from the time when the debtor has to effect performance or, in the case of a right to damages, from the time of the act which gives rise to the right. take overdelivery

32. Art. 7:203 DCFR - Commencement 1.The general period of prescription begins to run from the time when the debtor has to effect performance or, in the case of a right to damages, from the time of the act which gives rise to the right. No help here.

33. But: Art. 7:301 DCFR - Suspension in case of ignorance The running of the period of prescription is suspended as long as the creditor does not know of, and could not reasonably be expected to know of: (a) the identity of the debtor; or (b) the facts giving rise to the right including, in the case of a right to damages, the type of damage. Except the CMR, all conventions are semi mandatory

34. But: Art. 7:301 DCFR - Suspension in case of ignorance Does not help the multimodal carrier in relation to the requirement of timely complaint.

35. But: Art. 3:107 DCFR - Failure to notify non-conformity (1) If, in the case of an obligation to supply goods, other assets or services, the debtor supplies goods, other assets or services which are not in conformity with the terms regulating the obligation, the creditor may not rely on the lack of conformity unless the creditor gives notice to the debtor within a reasonable time specifying the nature of the lack of conformity.

36. And: Art. 1:104 DCFR - Reasonableness Reasonableness is to be objectively ascertained, having regard to the nature and purpose of what is being done, to the circumstances of the case and to any relevant usages and practices.

37. 6. Conclusions Soft law may beneficially influence international transport law where there is confusion or disagreement. However, the end result remains an area of grey instead of the desired black & white.