The Shipment Did Not Arrive in Israel – The Claim Against the International Forwarder Was Dismissed

The non-arrival or late arrival of a shipment or a damaged shipment will ordinarily give rise to a legal claim against the various elements in the logistical chain of transport including the international forwarder.

A judgment given by the Magistrate’s Court in respect of such a claim discharged an international forwarder from liability for loss of the shipment and the damages of the importer.

In that case, the importer entered into a contract with the international forwarder to forward a shipment of wine coolers from Canada to Israel. The shipment was due to be carried directly from Canada to Israel. As a result of a defect in the original vessel due to carry the shipment to Israel, the Canadian forwarder routed the shipment to an alternative vessel sailing to the port of Hamburg in Germany and not directly to Israel. While the cargo was stored in the port of Hamburg, during the process of transshipment, a fire broke out which caused damage to a considerable portion of the cargo. The fact that the coolers had failed to arrive and had been damaged by fire prior to the vessel being loaded in the port of Hamburg only became apparent after the vessel arrival in Israel.

The importer brought a tort action in negligence against the international forwarder for his handling of the shipment, routing of the shipment from direct transport to indirect transport via Germany, failure to ship the cargo by air or as a single cargo in a container and for providing incorrect reports to the importer. The importer assessed his damages at NIS 336,566.

The court’s finding discharging the forwarder from any liability and dismissing the claim against him, relied on the expert opinion of Barry Pintov, Director of the Umbrella Organization of Customs Agents and International Forwarders in Israel.

The court quoted a large portion of the expert opinion in its judgment: “in this case the defendant (the international forwarder) acted in accordance with all reasonable standards practiced in the international forwarding sector, and transmitted the order to the international forwarder in Canada which took all the measures necessary for the carriage of the cargo, including coordinating the shipment with the shipping companies, arranging for the exemption of the cargo from export tax, etc.; all this was carried out with the knowledge and at the request of the plaintiff. It is noteworthy here that as an international forwarder and not a shipowner, the defendant does not and cannot have any control over the logistical chain from the date of the delivery of the cargo to the shipowner, and therefore problems may sometimes occur in the logistical sphere, for example, in relation to ports, shore terminals, customs, shipping companies, etc. The international forwarding company does not and cannot have any direct or indirect control over their activities: loading the cargo on to the vessel; the sailing dates fixed by the shipping company in accordance with internal and external constraints over which the forwarding company has no control; problems which are in the nature of force majeure causing the cancellation or even postponement of a voyage. Occasionally there are problems which delay a vessel or prevent it from performing a scheduled voyage; prevent the safekeeping of cargo while in port, in shore terminals and on board the vessel; or prevent it from complying with the dates fixed for discharge of the cargo. The working premise is that these storerooms are under the supervision of the customs authority of the country in which the cargo is located and therefore it is the obligation of the customs authority to take all the necessary measures to safeguard the cargo. Nonetheless, occasionally unusual events occur such as collisions at sea, fires in storerooms, flooding and the like, over which the international forwarder does not and cannot have any control”.

Based on the opinion which was not contradicted (the defendant’s manager even noted that he did not have the tools to dispute this opinion), the court held that the conduct of the international forwarder was proper and professional and was consistent with customary professional norms. The court held that the importer had not told the international forwarder that it was particularly urgent to transport the cargo, even though the importer had been informed of the change of vessel and delay in sailing. In the circumstances of the case and in view of the fact that the importer expressly testified that his aim was to save costs, it was not necessary to tell him of the possibility of air transport in view of the great difference in costs of sea and air carriage. This was also true in respect of the possibility of suggesting to the importer to carry the cargo separately, as a single cargo in a container. This measure too would have doubled, if not tripled, the cost of carriage.

The court held that it would have been right to notify the importer of the fact that the substitute vessel was sailing to Germany and not directly to Israel, however, the absence of such notification caused no harm whatsoever to the importer and it was clear that if the forwarder had notified the importer of the decision to transship the cargo through Germany, the importer would have accepted this decision as the alternative would have been to wait until a vessel sailing directly from Canada to Israel became available, which might take a few weeks. It was the function of the forwarder to choose the fastest alternative route to bring the cargo to Israel and in that case routing the cargo onto an alternative vessel sailing to Germany and not directly to Israel was the correct measure aimed at speeding the arrival of the shipment to Israel.

The importer complained of receiving incorrect reports from the Israeli forwarder to the effect that the shipment was on its way to Israel. Only following the arrival and discharge of the vessel was he informed, allegedly tardily, that the cargo had not been loaded on the vessel because of the fire. The importer alleged that he transmitted the incorrect notifications which he had received from the Israeli forwarder to his customers, causing him a loss of reputation. The court also rejected this argument relying on Mr. Pintov’s opinion which stated that “from the date of loading the cargo on to the vessel, a date reported to the Israeli forwarder, the Israeli forwarder was unable to maintain a watch over the shipment of the cargo to Israel. Unlike air cargo, where it is possible to keep abreast of the transport of the cargo at a logistical interface through the logistical chain, in sea transport this is impossible except, as noted, at the original point, when the cargo is still in the possession of the Canadian forwarder. From the date the shipment leaves the possession of the Canadian forwarder the system is technically unable to maintain a continuous watch over the cargo”.

At the intermediate destination (Hamburg), the container was emptied of its contents, and all the cargos were routed to their individual destination. The Israeli forwarder could not know the date of recontainerization of the cargo and its departure from the intermediate port towards Israel. During the relatively short period of time between the arrival of the container at the intermediate port and its recontainerization in a new container routed to Israel, the cargo ‘lost’ its original identity, from the point of view of the Israeli forwarder, until its arrival in Israel.

In these circumstances and in view of the fact that it was undisputed that the Israeli forwarder had notified the importer of the fire immediately upon becoming aware of it, the court also rejected this argument.

The result of the judgment was that the importer’s claim which attributed professional negligence to the Israeli forwarder was dismissed on the basis of an examination of the conduct of the particular international forwarder in the specific circumstances of the case, and in view of the professional norms practiced in the sector.

Shmuel Grossman, Adv.