Italy: Container Detention Charges In Italian Case-Law

Many contracts in the shipping industry provide free use for a certain period of the container, and provide for increasing daily charges after such a free time.

The shipping line usually specifies a number of free days after which the container must be returned clean and empty to the terminal or the depot.

Arguments frequently brought before the Courts are that daily costs for renting containers from a third party are generally far less than the daily detention fee charged by shipowners, and it is frequently alleged that no binding agreement has been reached as regards the daily charges applied by the line.

Italy is no exception, and there have been over the last 20 years quite a few proceedings where owners have sought the recovery of container detentions.

In some jurisdictions, container detention has been qualified as penalty clauses,1 with the consequence that it has been disputed whether the quantum of charges being levied by the lines (or their agents) are reasonable and fair and cab be enforceable as damages, or whether they should be construed instead as penalties and be unenforceable.

There is no distinction however under Italian law between penalty clause and liquidated damage clause, and the general rule is that such a clause is valid provided it is fair and reasonable.

It is now settled case-law that:

a) the supply by the shipping line of containers employed for the carriage of goods gives rise to a contract of lease, separated from the contract of carriage, which exposes the shipper and/or the consignee to the payment of detention charges.

b) the charges must be agreed upon; the agreement can be evidenced by the indication of the daily detention fee on the front of the bill of lading, or by exchanges of correspondence between the line and the shipper.

c) if there is no convincing evidence of such an agreement, the charges can be assessed by the Court, possibly on the basis of equity.

It is possible therefore to ask the Court to reduce the charges on the grounds that the penalty for the delayed restitution of the containers is excessive, and can quickly reach an amount largely exceeding the value of the container.

A few decisions have in fact dramatically reduced the quantum claimed by the Owners, and in a few cases the detention awarded have been kept at the value of the container.

It happens rather frequently furthermore that owners react slowly in advising the shipper as regards the delay accrued at discharging port and the receivers’ failure to collect the goods, and are owners may likewise be slow in taking the measures available at destination in order to dispose of the cargo and obtain the release of the containers, thus failing to reduce the detention.

It is worth noting in this respect that under Italian Law (article 1227 Civil Code) the debtor is entitled to ask the Court to reduce the amount of damages in proportion to the extent of damages which could have been avoided by the creditor if mitigating measures had been taken.

Owners generally address their requests of payment of the detention charges to the party appearing as shipper on the bill of lading, and freight forwarders are often requested to settle the charges, since the freight forwarder under Italian law acts in its own name and on behalf of the principal for the stipulation of the contract of carriage, and frequently appears as shipper in the B/L.

The possibility for freight forwarders to successfully challenge claims for container detention largely depends up on the possibility to argue and prove that the forwarder acted on behalf of a principal whose identity was fully disclosed at some stage of the stipulation of the contract of carriage.

This is the position held by the Court of Appeal of Genoa:2 the Court found conclusive evidence of the existence of a contractual relationship between the sellers/exporters and Owners in the correspondence exchanged between the parties for the confirmation of the booking; another element which has been considered particularly significant (but the issue is still controversial and far from being settled under Italian case-law) is the indication of the principal as “shipper” on the bill of landing, because according to the Court of Genoa this amounted to a confession.

The Court of Genoa however, expressed a different view in a case3 relating to the protracted detention of 4 containers in the port of Mombasa: the tribunal considered that the forwarder had failed to provide clear evidence that the identity of the principal had been disclosed to the carrier, and was reinforced in this assumption by the fact that the whole correspondence relating to the transport had been exchanged between owners and forwarders.

The Court nonetheless expressed an important principle where, after having found that the owners had informed the shippers about the receiver's failure to collect the goods and redeliver the containers just six months after delivery, held that the forwarder was bound to pay for the detention charges only for the period following the declaration, deducting the free period agreed upon.

The issue has been recently considered by the Italian Supreme Court4, by a decision which is quite accurately motivated and is likely to become a leading case.

The Court has confirmed that the contract whereby owners provide the availability of containers is a contract of lease, and that owners are bound to put on notice the shipper as regards any delay accrued at discharging port, stressing that Italian civil code (article 1690) and maritime code (article 450) contain provisions specifically aimed at enabling the carrier to seek and receive instructions from the shipper, and dispose of the goods in case no receiver shows up asking delivery of the goods.

The Court has added that although the aforesaid provisions refer to contracts of carriage, they nonetheless apply to the contract for the lease of the containers, since the two contracts are inherently intertwined, and that a duty of promptness in alerting the shipper about any delay at discharging port is an application of the duty of good faith and diligence in performing the contract.

The Cassazione has concluded stating that wherever the carrier does not inform within a reasonable deadline the shipper he will lose the right to seek the payment of detention charges, since the contract of lease of the containers would be in this case brought to termination.

Footnotes

1 See for instance the decision of the New South Wales Consumer, Trader & Tenancy Tribunal in D V Kelly Pty Ltd v China Shipping (Australia) Agency Co Pty Ltd [2010]

2 Court of Appeal Genoa 30 May 2005

3 Court of Appeal Genoa 2 August 2006

4 Cassazione, n. 12888/2009, Soc. Ari c. Soc. grandi traghetti Gilnavi

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions