7. Who is responsible for damages to a fish shipment due to the disconnection of the cooling systems?

View PDF | Print View
by: gill@nadel-law.co.il
Word Count: 1680
Date: Wed, 7 Dec 2011 Time: 1:45 AM

Recently, a verdict was handed down by the Magistrate Court of Haifa on a claim of a frozen fish importer, whose goods were damaged due to the disconnection of the electricity from one of the containers at the Haifa port. The importer filed a claim against all who were involved in the shipment, including the marine carrier, the ship agent, Haifa port and the Ministry of Health. The court had to decide who should be liable.

The facts of the case and claims of the parties:
Resources Company imported to Israel in 2006 a shipment of frozen Bermundy fish and paid the supplier 275,000 NIS. These fish should have been kept at a temperature of minus 18 degrees Celsius. The shipment was imported to Israel by Yang Ming Shipping Company and the ship agent – Conmart.

With its arrival to Israel, the container was brought to Haifa Port and transferred by the port to the terminal of Kishon River, but by mistake, at the terminal the container was not connected to the electricity for three whole days. Neptun Company is a subcontractor of Conmart in the Haifa Port, and that is the company responsible for connecting the cooling containers to the electricity.

And so, when the importer came to release the shipment, the Ministry of Health decided to check the fish, and decided that it was deserved to be eaten by people. The insurance company rejected the importer's claim for compensation and after a few months, another examination was conducted by the Ministry of Health, who released the shipment.

The importer filed a claim for 440,000 NIS against the shipping company, the ship agent, the Haifa port and its subcontractor, his insurance company and even against the Ministry of Health, and requested for the damages caused to the shipment

The importer claimed that the damage was a result of the negligence of these parties and that he was forced to sell the goods for 145,000 NIS - a lower price than the price they were purchased for. All of the defendants in this logistics chain denied their liability and asked that the claim against them be dismissed.

The verdict:

Firstly, the court had to decide whether or not the goods were damaged, since the examinations of the Ministry of Health were contradictive. The court decided that the first examination was more reliable as it was more comprehensive, and the physician that testified on this examination was not contradicted. In light of this the court decided that although the goods were not extremely damaged, their quality was between reasonable and poor.

After that, the court had to determine when was the damage was caused – was it in China, before the goods were loaded, as the defendants claimed, or was it in Israel as the importer claimed? The court noted that the Chinese Ministry of Health approved the shipment and approved that it was edible and kept in minus 18 degrees, and it was proved that the State of Israel accepted such approvals. Therefore, the court rejected the defendants claim that the damage was caused before the goods were loaded on the ship in China. In addition, the court rejected the claim that the damage was caused during the shipment at sea since it was not proven.

On the matter of the temperature raise, the court decided that while the container was not connected to the electricity in the Haifa Port, its temperature rose from minus 18 to minus 10 and as for the fish, since the evidence wasn't conclusive, the court assumed the temperature of the fish rose to minus 12 degrees. The court determined that, understandable from the testimonies, leaving the fish at minus 12 degrees made the upper layer of ice on the fish defrost, causing damage to the fish.

In light of all this, the court had to decide who was liable for the damage. It was proven to the court that there is a procedure according to which when the Haifa Port transfers a container from one place to the other, in the port itself, it does not always inform the ship agent – Conmart, in this matter. Therefore, the court decided that Conmart and its subcontractor Neptun could not have known about the transferring of the container to the terminal at Kishon, and so was unable to prepare beforehand to connect it to the electricity. Furthermore, the court decided that from the testimonies it arises that when a container is “missing”, the ship agent assumes it has been released by the importer.

In light of all this, the court decided that the Haifa Port is cardinally liable for the damage, however the ship agent and its subcontractor were also liable for not predicting that such obstacles can occur and trying to prevent them. Therefore, the court determined that 60 percent of the liability was Haifa Port’s, 20 percent was the ship agent's, Conmart, and 20 percent was the subcontractor's, Neptun.
In the matter of insurance, the insurance company claimed that it covers damages if the container is out of order and not if it was disconnected from the electricity. The court rejected this claim and decided that according to the insurance policy, one may conclude that it covers damages caused from the rise of the temperature regardless of the reason why, and that in any case, if there is a doubt, the interpretation of the policy will be against the insurance company who formed it.

On the matter of the amount of the damages, the court rejected the importer's claim that he should be compensated the value of the cargo plus an extra 35 percent, and determined that this were correct if he suffered total loss, but since the loss was only partial, the compensation should be lower than the damage actually caused. The court also rejected the claim that the shipment was to be sold to a buyer for 433,000 NIS since it was not proven with documents and evidence.

In light of all this, the court determined that the importer was not entitled to damages for loss of profit or for transportation costs, but only for the direct damages caused, meaning the difference between the purchase price in China (275,000 NIS) and the selling price in Israel (145,000 NIS), which amounts to approximately 130,000 NIS, including interest and consumer price index linkage – 170,000 NIS.

In light of all this, the court partially accepted the importer’s claim and ordered Haifa Port to pay 60 percent of this sum, the ship agent and marine carrier, Conmart, 20 percent and its subcontractor 20 percent. It was concluded that the insurance policy covers the incident and that it should compensate the importer. However, it was also decided that all the other parties must compensate the insurance company, so eventually the insurance company did not have to pay anything.

(C.F. (civil file) (Magistrate Haifa) 18527-06 Resources v. Migdal et al. verdict from 15.5.11, Judge T. Naot Perry, names of the representatives of the parties were not mentioned).

About the Author

Gill Nadel - Born in Israel in 1969, graduated from Bar Ilan University`s Faculty of Law (cum laude) and from the Department of Musicology. He also has a master`s degree in law from the same institution. Member of the Israel Bar since 1999. Speaks Hebrew, English and Polish. Fields of expertise: Commercial and Business Law, International Trade Law, Import and Export Law, Intellectual Property Law, Maritime and International Forwarding Law, Litigation and Court Representation. Adv. Nadel provides lectures on international trade law and import and export law to in courses organized by the Bar Ilan University Center for Commercial Law, Israel Bar, Israel Chambers of Commerce, Manufacturers Association of Israel, Israel Export Institute, Customs Brokers Association, International Forwarders, and more.

Comments