Court: cargo terminal is entitled to the protection of the Warsaw Convention in its capacity as an airline agent

In July 2010, the Tel Aviv Magistrate’s Court handed down a judgment considering, inter alia, the liability of a forwarding company that had served as a contracting air carrier for the transport of a shipment of electronic components to Israel, a local courier company which had acted as an agent of the forwarding company and had handled the shipment and a cargo terminal in which the shipment was stored upon its arrival in Israel.

The shipment was stolen from the cargo terminal by an employee of the courier company.

The court held that the liability of all three bodies: the forwarding company which had carried the shipment, the courier company which had handled the shipment and the cargo terminal in which the shipment had been stored, was limited in accordance with the limitations of liability applicable to air carriers under the Warsaw Convention.

With regard to the limited liability of the forwarding company which had carried the shipment and the courier company used as an agent by the forwarding company to handle the shipment – we believe that the court’s decision is correct and expresses the current trend in the case law whereby an international forwarder acting as a contractual carrier is regarded as entitled to the protections afforded to air carriers by the Warsaw Convention.

With regard to the cargo terminal – it is my opinion that the court’s decision to limit the liability of the cargo terminal (“Maman” Terminal) in accordance with the Warsaw Convention is incorrect and runs counter to Supreme Court rulings.

The court held that: “Maman [the name of the terminal – R.G.] is a central and important link in the process of air transport. All the cargos are transferred upon discharge to Maman’s detention warehouse, where they undergo a process of registration by the courier companies. The cargos are detained in Maman’s warehouses until their release by Customs…. Maman’s activities provide essential services to the air carrier and contribute to promoting the air transport.”

The court’s decision cited a previous ruling of the Magistrate’s Court in connection with the same cargo terminal where it was held that the terminal, in its role as a cargo terminal operator, was a vital link in the process of performing the contract of carriage, and therefore was an agent of the air carrier.

As noted, we believe that the court’s decision is wrong, inter alia, for the following reasons: first, to the best of our understanding, the cargo terminal did not raise any argument in court to the effect that it was entitled to the protections given by the Warsaw Convention by virtue of being an agent of the air carrier and the court drew this conclusion on its own initiative. Second, to the best of our knowledge, the previous decision of the Magistrate’s Court in connection with the same terminal – upon which the court relied in the present case – was set aside in an appeal submitted to the District Court. Third, this ruling of the Magistrate’s Court is completely contrary to the ruling given by the Supreme Court in Civil Appeal 535/84 Maman Cargo Terminals and Handling Ltd. v. Philip Gable Wright.

As we know, Supreme Court rulings bind lower courts and it is reasonable to assume that if the judgment in the Philip Gable case had been placed before the Magistrate’s Court, the outcome would have been different. In the Philip Gable case, the Supreme Court held that Maman Cargo Terminal was not an agent of the air carrier and was not entitled to the protections of the Warsaw Convention. The Supreme Court stated in this context that it was sufficient that the air carrier had no alternative but to resort to these terminal services and that these terminal services were imposed on the air carrier, in order to reject the terminal’s claim that it was entitled to the protections of the Warsaw Convention as an agent of the air carrier. (In this context we note that during the period relevant to the judgment, Maman Cargo Terminal was the only cargo terminal in the only international airport in Israel so that the airline companies, importers and exporters, had no alternative but to rely on these cargo terminal services).

The court held in the Philip Gable case that within the framework of the Maman Cargo Terminal’s rights to handle air cargo, the terminal operates on its own behalf and for the defined goals for which it was created, namely: storage, standardization, discharge, forwarding, handling, loading and unloading of cargo, etc. This activity is not performed by the terminal as an agent of the air carrier and the cargo terminal cannot seek to come under the protective umbrella granted to the air carrier. The conclusion reached by the court in the Philip Gable case was that the Maman Terminal was liable for damage caused by its negligence in accordance with the tort of negligence and as a matter of bailee law and it did not enjoy the limits of liability granted to the air carrier.

Civil File 19308/01 (Magistrate Court in Tel Aviv) Tagah Electronic Components and Phoenix Insurance Co. Ltd. v. DHL Worldwide Express, DHL International UK, Maman Cargo Terminals and Handling Ltd. and Alon Gal.

Adv. Roy Gilad