1. 1 Joint CIT/IRU Conference Bern, 5 September 2013 Multimodal Transport The Insurers’ Perspective Prof. Dr Rainer Freise Former Chairman of the CIT c/o DVA – Deutsche Verkehrs-Assekuranz-Vermittlungs-GmbH DE - 61352 Bad Homburg, Norsk-Data-Straße 3 Tel.: + 49 6172 / 48 68 – 600 Fax: -109 E-mail: Rainer.Freise@DVA.DB.de

2. FR 67 Prof. Dr. Rainer Freise Structure of the presentation: I.Insurance of freight transport II.Particular challenges for multimodal transport III. A practical example as an illustration 2

3. FR 67 Prof. Dr. Rainer Freise I.Insurance of freight transport Traditionally there are two special types of insurance for the carriage of freight: Goods in transit insurance indemnifies the consignor or consignee against loss of or damage to the goods (and if cover is extended consequential damage and losses as a consequence of delay also) independently of the liability of the forwarding agent or carrier and the extent of that liability. Carrier's liability insurance covers the statutory liability of the freight forwarder or carrier for the goods and for losses due to delay, liability which is normally limited. The difference between the loss and damage the consignor or consignee has suffered and the compensation that the carrier or freight forwarder has to pay is born by the goods in transit insurer who has recourse to the party liable or his carrier's liability insurer.

4. FR 67 Prof. Dr. Rainer Freise 4 II. Particular challenges for multimodal transport For multimodal consignments the various different liability regimes for the various modes (CMR, CIM/SMGS, Montreal/Warsaw, CMNI, Hague/Visby) come into conflict; frequently the appropriate international private law specifies that national law applies. In particular when the place that the loss and damage occurred is unknown, identifying the party liable and the law to apply is difficult. Frequently, therefore, goods in transit insurers can only assess the options for recourse for multimodal consignments with difficulty. They reflect that when calculating the insurance premium. The same is true for carrier’s liability insurers of multimodal carriers and flat-rate forwarding agents.

5. FR 67 Prof. Dr. Rainer Freise 5 Multimodal transport and insurance Liability regime applied Value of the goods Not covered by carrier’s liability SDR 19 17 8.33 Limits to compens ation ? ? ? National law MontrealCMR Hague/ Visby CIM ? Covered by the goods in transit insurer Insurer Liability Liability Insurer

6. FR 67 Prof. Dr. Rainer Freise 6 Having uniform law for all means of transport with standardised criteria for liability and standardised principles for paying compensation would make the extent of the exposure of insurers working in the freight sector more evident and likewise make their options for having recourse clearer. It would also make the calculation of premiums simpler. However, that is that conditional on such uniform law being simply structured, simple to understand and to apply and not applied in different ways by the courts of the various states (as we experience today, for example, in the application of CMR uniform law when wilful misconduct leads to the carrier having unrestricted liability).

7. FR 67 Prof. Dr. Rainer Freise 7 III. A practical example as an illustration A fire on the Turkish Ro-Ro ferry MV ‘UND Adriyatik’ in the Mediterranean in February 2008. The ferry was en route from Turkey to Italy loaded with numerous lorries on their way to Central and Western Europe. The lorries had been sent by Ro-Ro ferry across the Mediterranean to avoid the arduous road journey through the Balkans. The ferry, the lorries and their loads were burnt out. Numerous courts all over Europe (including in Germany) had to rule on claims for compensation made by consignees against the various CMR hauliers and forwarding agents.

8. FR 67 Prof. Dr. Rainer Freise 8 Structure of the ‘UND ADRIYATIK’ case in legal and insurance terms 1. The facts of the case CMR carrier + ship operator Loaded lorries on the ferry Lorry Roll on Roll offLorry Consignee Consignor of the goods Port of Pendik (Turkey) Port of Trieste (Italy) DE GB ES 2. The law in the case Article 2 CMR Through CMR contract of carriage between the consignor and the CMR carrier Contract of carriage by sea between the CMR carrier and the ferry operator on the basis of the Hague Rules 3. Insurance elements Goods in transit insurer indemnifies the consignor and tries to have recourse against the CMR carrier’s carrier’s liability insurer. Known location of incident

9. FR 67 Prof. Dr. Rainer Freise 9 Judgment of the German Federal Court of Justice of 15 November 2011 (reported in the periodical ‘Transportrecht’ 2012, volume 8 page 330): 1.The second sentence of section 1 to Article 2 CMR clarifies that if the loss and damage is exclusively attributable to the (permitted) carriage of the loaded lorry on the carrying vessel, the CMR carrier does not have a greater liability to his consignor than the carrier operating the carrying vessel has to him. 2. In this particular case, the loss of the goods being carried is not due to an act of the CMR carrier. 3.The fire on board the ferry was an incident specific to shipping because the densely packed lorries on board could not escape it.

10. FR 67 Prof. Dr. Rainer Freise 10 4.In accordance with the Turkish law applicable, the Hague Rules apply directly. They are ‘conditions prescribed by law’ within the meaning of the second sentence of section 1 of Article 2 CMR even if they are negotiable (dispositive law) in individual cases. 5.The management of the ship operator was not personally at fault so that the liability of the ship operator for the fire on board the ferry is excluded in accordance with Article 4 § 2b of the Hague Rules and therefore the liability of the CMR carrier is also excluded.

11. FR 67 Prof. Dr. Rainer Freise 11 Chances of the goods in transit insurer being successful in recourse against the CMR carrier: 100 %, if CMR liability applies and the CMR carrier is liable without restriction for the wilful misconduct of his servant or agent, the ship operator (because the fire-fighting equipment on the ferry did not work at all or stopped working after a few seconds): Article 2 para 1, first sentence and Article 29 CMR. 8.33 SDR/kg, if the normal CMR liability applies (Articles 17 and 23 para. 3 CMR). 0 %, if the liability of the CMR carrier for the fire on the ferry is determined by how the ship operator is liable to the consignee; if a maritime contract of carriage for the carriage of the goods would have had to be concluded between the consignor and the ship operator in accordance with conditions prescribed by the maritime law which applies in the particular case and if that law (like the Hague Rules) excludes the liability of the ship operator for fire on board (except where he has committed a fault himself) Article 2 para. 1 second sentence CMR taken with Article 4 § 2b Hague Rules.

12. FR 67 Prof. Dr. Rainer Freise 12 Result: The goods in transit insurer’s action for recourse against the CMR carrier (and his carrier’s liability insurer) in the ‘UND ADRIYATIK’ case was unsuccessful. Had the Rotterdam Rules rather than the Hague Rules applied, recourse might have been partly successful.