Order of the Supreme Court of 05.08.2020, case А21-8646/2019

(FitoBalt LLC v. CMA CGM Rus LLC)

Facts: FitoBalt (claimant, principal) entered into an agency agreement with CMA CGM Rus (defendant, agent), under which the defendant promised to provide freight forwarding services and organise the shipment of principal's export and import cargoes. After the claimant agreed to sell a cargo of bananas, the defendant entered into a freight forwarding contract with a company called Rechdan on the claimant’s behalf. Rechdan, presumably, then nominated the French CMA CGM S.A. as a carrier for this cargo.

During carriage, the wrong temperature regime was maintained in containers, as a result of which the claimant had to destroy the bananas worth 800,000 rubles. He later brought proceedings against the defendant, claiming that in this case the defendant was in fact acting as a freight forwarder and not as a mere agent.

Commercial court of the Kaliningrad region, 13th Commercial Court of Appeal: the claimant concluded a freight forwarding agreement with Rechdan, not with the defendant CMA CGM Rus. The defendant acted merely as an agent and is not a party to the contract of carriage. Since no evidence has been presented to the contrary, the claim should be dismissed.

Commercial Court for the North-Western Circuit: in the circuit court, the claimant argued that the defendant was in fact a freight forwarder, since he himself actually participated in the carriage of goods. The claimant also referred to the fact that there is an agency agreement between the defendant and the carrier (CMA CGM S.A), containing an indemnity provision which allegedly applied to the benefit of the claimant as a third party.

The court rejected these arguments - the claimant’s statement that the defendant was the actual carrier was not supported by the evidence.

According to the bill of lading, CMA CGM S.A. acted as the carrier. The courts have correctly concluded that there was no basis to make the defendant, who acted merely as an agent, liable for damage to the goods.

The Supreme Court upheld the decisions of the lower courts.

Comments: for some reason, the claimant here could not or did not want to sue either the Russian freight forwarder, Rechdan LLC (the most likely and the most appropriate defendant), or the carrier, the French CMA CGM S.A. (likely because the claimant was not stated as the shipper in the bill of lading and the terms of the bill contained an LCIA arbitration clause).

The claimant’s innovative approach was to sue the agent, the Russian CMA CGM, which most likely entered into agreements with the forwarder and / or carrier for the claimant. Unfortunately for the claimant, agents are not considered parties to contracts of carriage, and the claimant was unable to prove that the Russian CMA CGM was in fact a freight forwarder.

Another quite interesting argument advanced by the claimant was based on the indemnity clause in the agency agreement between the Russian and the French CMA CGM. Under this provision, the French CMA CGM undertook to indemnify the Russian CMA CGM for all losses incurred by the latter as a result of possible cargo claims. The claimants argued unsuccessfully that this wording allowed them to enforce the indemnity as third parties to the agency agreement.

However, such a provision does not give any rights to third parties like the claimant and does not purport to confer any benefit on them. It merely establishes a right to compensation between two affiliated entities. The claimant’s argument was thus predictably dismissed. ■