EVER GIVEN — German court denies cover for financial losses under cargo insurance

By Prof. Dr. Dieter Schwampe Senior Insurance Partner Arnecke Sibeth Dabelstein, Hamburg IUMI Professional Partner Member of the Legal & Liability Committee of IUMI and Vice President of the Comité Maritime International (CMI)

Everybody still remembers the EVER GIVEN casualty. It is said that the most losses following the grounding of the ship in the Suez Canal in March 2021 were pure financial losses resulting from delay. In the first judgement rendered in Germany on cargo insurance on the EVER GIVEN casualty, the Regional Court of Düsseldorf recently rejected a cover action for such losses under a German cargo policy. On the facts, the claimant had purchased certain goods in China for resale in Germany. He had alleged that the goods had a limited lifetime and that the delay had led to a reduced value. Additionally, he claimed he had to order a replacement cargo, and shipped this by air, as he was under a delivery obligation to his own resale buyer. It was common ground between the parties, that DTV Cargo 2000/2011 (see, the standard German cargo insurance conditions, do not provide cover either for delay or for pure financial losses. The Court action, therefore, concentrated on the question whether the loss suffered by the claimant was covered under the Pure Financial Loss Clause hereafter PFLC, which was also part of the policy. For various reasons, the Court held it did not.

First, cl. 1 PFCL requires that the carrier involved in the insured shipment is liable under the terms of a standard forwarding, carriage of goods or warehousing or similar contract under German law. The Court denied that there was liability here. Error in navigation, initially pleaded by the claimant, was no issue, because the parties finally agreed that standard contracts exclude such liability (cf. cl. 25 of the German General Freight Forwarders Conditions, ADSp). Between the parties, it was not in dispute that not only the vessel had been arrested, but also the cargo. A proper reason for denying liability, thus, would have been that no carrier is obliged to put up security to release cargo from arrest. However, referring to the fact that according to the arrest order, the arrest would be lifted not against a guarantee, but against settlement of the claim, the Court held that there is no fault in not providing a guarantee where no guarantee would lead to the release of the respective cargo from arrest.

The Court also rejected the argument that there is liability because the carrier should have provided a guarantee to release and then tranship the cargo for on-carriage to destination. Against this background, the Court left open whether transhipment was a realistic possibility at all, an aspect which would have required taking evidence. The Court’s main reason for rejecting the action, however, was that cl. 4.3.1 PFCL excludes the perils of confiscation, deprivation of possession or other acts of authorities. The Court held that the arrest at least are other acts of authorities, rejecting the claimant’s view that arrest orders by courts do not so qualify.

It should be added that another cover extension available in the German insurance market, the Confiscation Clause ( leads to no other result. While this clause does cover the perils of confiscation, deprivation or other acts of authorities, it does so only in respect of loss or damage to the goods. It does not provide protection against pure financial loss. Apart from that cl. 3.2.2 excludes loss or damage resulting from court orders in connection with a civil procedure.