Yellowhammer—a whip for carriers: Who will be responsible for deterioration of perishable goods during border controls?
In September, the British media published a documentary on Operation Yellowhammer, analysing the possible effects of the UK’s withdrawal from the European Union without an agreement. The legal chaos caused by a hard Brexit could lead to several days of truck stoppages at the border, creating a risk of damage to perishable goods.
The impact of Brexit at the border
According to figures from Statistics Poland (GUS) for 2017, the volume of cargo transport by road, expressed in tonne-kilometres, achieved by Polish carriers constituted 17.5% of the total transport volume of the European Union. It is also estimated that about 8,000 trucks arrive in Great Britain every day, of which about 23% belong to Polish companies.
This state of affairs will undoubtedly be affected by Brexit, which, despite the conclusion of a tentative agreement, still raises many questions—also in terms of future legal regulations. It is possible that customs duties will be imposed or new rules of tax settlement (e.g. when crossing borders) will be established. It may be necessary to obtain new permits for road transport (on UK territory) and to carry out complicated and time-consuming border controls, including customs, phytosanitary, veterinary or product safety checks.
The report on Operation Yellowhammer shows that in the first months after Brexit, long queues lasting for several days may form at the borders. The situation becomes more complicated when the carrier is transporting perishable goods. The goods may deteriorate (or be destroyed) as a result of a stop of several days at the border, or incorrect border controls.
Therefore, the question arises as to who in such case will be liable for the loss under the civil law.
General rules on liability of international road transport
These issues of civil liability are regulated by the Convention of 19 May 1956 on the Contract for the International Carriage of Goods by Road (the CMR Convention). The convention provides a separate compensation regulation, distinct for example from general principles arising from the Civil Code. The CMR Convention emphases the principle of the presumed fault of the carrier in the scope of its civil liability (although some commentators regard this as risk-based liability). As a result, the burden of proving circumstances excluding the carrier’s liability lies on the carrier.
Undoubtedly, even a no-deal Brexit would not undermine this regulation, because the CMR Convention is a multilateral international agreement, of which the UK is also a signatory. Therefore, the UK’s departure from the EU will not result in “exclusion” of regulations arising from the convention.
The exonerating grounds (exclusion of liability for damages) are laid down in Art. 17(2) and (4) of the CMR Convention and are divided into two groups: general and specific. It is not ruled out that there may be factual circumstances in which these grounds overlap, but it should be borne in mind that the choice of a specific “group” is important, as it directly affects the procedural situation of the carrier. It is also worth noting that the exonerating grounds themselves, as laid down in the CMR Convention, have been the subject of analysis of the courts. In this respect, in the judgment of 14 May 1996 (case no. I ACr 333/96, Lex no. 26405), the Warsaw Court of Appeal held, “The exonerating grounds provided for in the CMR Convention are broader than those resulting from the Transport Law, but the difference is not that they also include a third party’s fault, but by waiving the requirement of external appearance of the event, it also allows as those reasons events whose origin lies in the sphere of the carrier’s activity, or the activity or characteristics of the equipment or means used. This means that under the CMR Convention, the carrier is exempt from liability both in the event of force majeure and for reasons mentioned above.”
As a general rule, “The carrier shall be liable for the total or partial loss of the goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery” (Art. 17(1) CMR).
But the general rule of exoneration states: “The carrier shall however be relieved of liability if the loss, damage or delay was caused by the wrongful act or neglect of the claimant, by the instructions of the claimant given otherwise than as the result of a wrongful act or neglect on the part of the carrier, by inherent vice of the goods or circumstances which the carrier could not avoid and the consequences of which he was unable to prevent” (Art. 17(2) CMR).
Among the specific grounds for exoneration, Art. 17(4)(d) of the CMR Convention is relevant for this article. Under this provision, the carrier is relieved of liability if the loss or damage to the goods arises due to a “special risk” due to the “nature of certain kinds of goods which particularly exposes them to total or partial loss or to damage, especially through breakage, rust, decay, desiccation, leakage, normal wastage, or the action of moth or vermin.”
Furthermore, pursuant to Art. 18(4) of the CMR Convention, “If the carriage is performed in vehicles specially equipped to protect the goods from the effects of heat, cold, variations in temperature or the humidity of the air, the carrier shall not be entitled to claim the benefit of [Art. 17(4)] unless he proves that all steps incumbent on him in the circumstances with respect to the choice, maintenance and use of such equipment were taken and that he complied with any special instructions issued to him.”
Exoneration if border control takes too long
From the point of view of the carrier’s position in litigation, it will be more advantageous to choose a specific ground. This results, among other things, from Art. 18(2) of the CMR Convention, stating that if (taking into account the factual circumstances) the carrier establishes that the loss or damage could have been attributed to a risk referred to in Art. 17(4) of the convention, it shall be presumed that the damage results from it. (Nevertheless, the claimant may prove that the damage was not due wholly or partly to that risk. Furthermore, the presumption does not apply to the cause mentioned in Art. 17(4)(a) of the convention—see Art. 18(3).) Therefore, the burden of proving a causal link is not incumbent on the carrier; it is sufficient for the carrier to establish that the damage resulted from a risk specified in Art. 17(4)(d) of the convention.
The procedural consequence of invoking this exoneration will also be a necessity to demonstrate that any equipment supporting the goods worked properly throughout the period of transport. This applies in particular to electronic monitors for maintaining temperature or humidity, as they are most often used for proper protection of goods. Any dysfunction of the devices for reasons attributable to the carrier makes it impossible to invoke the exoneration grounds. It is also necessary to prove that the carrier took all steps to properly select, maintain and use the devices, and that it has followed special instructions (if any). If all these conditions are met, the carrier will not be liable for any damage.
The situation is more complicated if, in litigation, the carrier invokes a general premise under Art. 17(2) of the CMR Convention. In such case, the carrier must prove not only the causal link (since Art. 18(2) of the convention will not apply), but also that the damage could not have been avoided in any other way, e.g. by choice of a different route (since there was also several days’ stoppage of trucks at the border crossing point—a prerequisite for inevitability of damage). Additionally, it would be necessary to demonstrate at the same time that the use of other types of protective devices, e.g. to maintain temperature or humidity, would not have eliminated the damage (the premise that the damage could not have been prevented).
However, it is reasonable to take the view that a stopping period of several days as a result of border control (in particular due to post-Brexit chaos) is in itself a circumstance over which the carrier has no control. Extended control may result not only from the not yet adapted infrastructure, but also from the need for thorough verification of the imported goods, i.e. from external factors beyond the carrier’s control.
It is worth noting that a person entitled to compensation may also claim compensation for damage resulting from the delay in delivery itself, i.e. failure to meet the transport deadline—issues regulated in Art. 23(5) of the CMR Convention. In this respect, the legal doctrine under the Transport Law rightly states that such damage is independent of damage occurring in the transported goods themselves (D. Ambrożuk in Convention on the Contract for the International Carriage of Goods by Road (CMR): Commentary), ed. K. Wesołowski et al., Warsaw 2015, pp. 325–328).
Exoneration in case of inadequate border control
One problematic area is when the damage is not caused by the long duration of border controls but by the way they are carried out, for example if the inspectors leave a semi-trailer open for too long, raising the temperature inside the vehicle. Clearly, the driver must supervise the transported goods in such a way as to prevent any negative incidents and, at the very least, to minimise any damage as much as possible. If the driver notices any danger, he is obliged to take immediate and purposeful action, as he exercises care over the transported goods. A passive attitude exposes the carrier to liability for damages.
It seems that if the damage occurs for this reason, the carrier could invoke only the benefit of the general exoneration requirement. In the compensation litigation, the carrier must therefore demonstrate not only a causal link (between the inspection activities and the damage to the goods), but also that the inspection carried out this way could not have been avoided or its consequences prevented. In the litigation reality, this can be extremely difficult to prove, which constitutes a significant risk at trial.
In the current legal situation, there are normative grounds to exclude civil liability of the carrier in case of damage to perishable goods due to prolonged or improper border controls. The carrier will then bear the burden of proving the relevant exoneration circumstances.
Undoubtedly, the approaching Brexit may cause delays in the cross-border supply of goods. It is still unclear what final form border controls will take and what formalities they will involve. Although a preliminary agreement was concluded on 17 October 2019, the representatives of the Northern Ireland Democratic Unionist Party stated that they could not support the negotiated agreement in such a form, due among other things to the mechanisms relating to customs duties and VAT. This poses a threat to transport transactions and the free movement of goods, as well as to economic relations between trading partners.
Therefore, transport insurance, including cargo insurance and road carrier liability insurance, can secure not only the substance of transported goods, but also economic relations. Nevertheless, it is worth remembering that in the case of civil-liability insurance, the insurance company’s liability is “accessory,” meaning that it is conditioned on the liability of the insured. Therefore, in litigation over compensation, the insurer may invoke grounds excluding or limiting liability which the insured could assert.
Mateusz Kosiorowski, Reprivatisation and Private Client practice, Wardyński & Partners