In judgment 5098 handed down on 9 March 2006, the Supreme Court in Italy declared that, in the maritime transport of cargo, the judge deciding the merits of the case has to ascertain the degree of negligence of a carrier and his employees or agents, for a carrier's right to limitation of liability, as provided for in article 423 of the navigation code, not to be applicable in cases of loss or damage to cargo where there is gross negligence or wilful misconduct. Specifically, pursuant to the aforementioned judgment, the rule is ratified whereby a party suffering loss or damage to his cargo during the performance of a national maritime transport contract is entitled to damages in proportion to the actual economic loss incurred if the event causing the loss or damage is the result of the carrier's conduct, or that of those assisting him, being grossly negligent. Consequently, determination of the degree of negligence is paramount in that a carrier may use article 432 of the navigation code as a defence to limit his liability only in cases of "simple negligence".
Facts
The case in question came about as a result of judgment of 21 July 1997 entered by the Court of Naples ordering Tirrenia di Navigazione to pay ITL 200,000 (around 100 Euro), pursuant to article 423 of the navigation code, for damage caused to a truck belonging to a fruit cooperative, Cooperativa Agricola La Torre, containing oranges which, during the crossing from Palermo to Naples during the night of 4 and 5 February 1992, was overturned due to a rough sea and a cable that should have blocked the truck by securing it to the ship's structure not being hooked up correctly. In fact the cable was secured by staff to the vehicle's bumpers instead of a ring on the truck designed for this purpose.
The Court of Appeal of Naples confirmed the decision of the court of the first instance, stating further that the liability limitation rule was applicable even in the case of gross negligence. The Cooperative lodged an appeal with the Supreme Court that, in an order dated 8 April 2003, referred the question of the constitutional lawfulness of article 423 (i) of the navigation code to the Constitutional Court. The Constitutional Court, in its judgment no. 199 of 26 May 2005 declared article 423 of the navigation code to be unlawful for the part of the text that does not exclude the liability limitation in cases of wilful misconduct or gross negligence of the carrier and his employees or agents.
Comment
This judgment is particularly significant in that it is the first case that applies the rule laid down by the Constitutional Court in judgment no. 199/2005, excluding the liability limitation applicable for damages provided for in under article 423 of the navigation code in cases where damage to cargo being transported is ascribable to the conduct of the carrier or those aiding him being grossly negligent.
Having said this, Italian law, however, does not specify the criteria on the basis of which the degree of negligence shall be determined; thus, it is up to the discretion of the judge deciding the case to determine, based on the evidence before him, whether the carrier is liable for gross negligence or negligence.
The Supreme Court has considered the concept of "gross negligence" stating that "gross negligence" is the conscious behaviour of a person acting with exceptional and inexcusable imprudence and negligence, who not only omits to act with the due diligence required for the particular task in hand without even the basic diligence normally observed by a reasonable man or by others in similar circumstances, even if it is found that there is no intention to cause damage.
From the precedents of case law it would appear that the circumstances on which judges deciding the merits of a case have based their assessment of the existence of gross negligence and can be summed up as follows:
- cargo being stolen or lost, breach of contractual clauses and instructions from the charterer, or non compliance with specific technical provisions during the transport of cargo;
- failure to use suitable restraining equipment, taking into account sea conditions, and the number of bays available when transporting motor vehicles.
If it is deemed that damage to cargo being transported is ascribable to reasons under letter (a), the carrier will without doubt respond to "gross negligence" because he could have avoided the damage if he had performed his duty of due care that is the principle underlying all cargo transport contracts. By contrast, in cases under letter (b), the carrier shall only respond for negligence unless the existence of circumstances can be proven, such as to convince the judge deciding the case that the carrier has failed to observe a minimum degree of diligence generally used.
As far as the burden of proof is concerned, the party claiming damages for the loss incurred has to show the existence of gross negligence on the part of the carrier as described above, otherwise his claim for economic loss cannot exceed the ceiling of 103.29 Euro as provided for under article 423 of the navigation code, except in those cases where, before embarking, the charterer has submitted a declaration of value. It should be noted that the prior declaration of value is still the only tool available under Italian law that guarantees the charterer the right to obtain full compensation for economic loss incurred.
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.
