- Friday, March 30, 2018
Under Turkish law, the liability regime is established as personal and unlimited1. However, in some circumstances, the legislation prefers to limit liability, considering the balance of interest between the parties. In this respect, the Turkish Commercial Code ("TCC") adopted the limited liability of a sea carrier under some conditions stipulated in the TCC. Additionally, the TCC relieves the carrier from liability entirely for losses or damages arising from some specific circumstances, providing substantial benefit to the sea carrier. This article reviews the liability regime stipulated in the TCC for sea carriers, and limitations of the same under the TCC.
Liability of the Carrier
The main principle is that the carrier is obliged to exercise due diligence in the performance of the contract of carriage, which shall not be lesser than a level of diligence that can be expected from any prudent carrier, particularly during the loading, stowing, trimming, carriage, keeping, and discharge of the goods. However, the parties may agree in the contract that the loading, stowing and unloading of the goods will be performed by the shipper and consignee (i.e. FIO clauses).
Article 1178 of the TCC sets forth that carriers are liable for the loss of or damage of cargo, or delay in delivery caused by circumstances occurring in the period during which the goods were in the custody of the carrier. As per Article 1191 of the TCC, all provisions with respect to the carrier's liability shall also be valid for the actual carrier with reference to the part of the carriage that was performed by it. Nevertheless, the carrier is responsible for the whole carriage, whether or not the carriage was performed wholly or partially by the actual carrier. In this respect, the TCC stipulates that the carrier is vicariously liable for losses caused through the fault or neglect of the actual carrier or its servants. This period of responsibility includes the times during which the carrier has charge of the goods at the ports of loading and discharge - the "port to port" period.
On the other hand, carriers will not be held liable if damage or loss occurs due to a fault in the technical management of the vessel or a fire on board, so long as the damage or loss did not arise due to the carrier's own fault. In other words, in such cases, the carrier is excused from liability even if the loss or damage had been caused by the negligence or fault of the carrier's employees. Additionally, the carrier is excused from liability if the loss or damage has arisen while saving or attempting to save lives or property at sea.
In principle, the liability of the carrier is based on fault2. However, the carrier's fault is "prima facie" presumed where the claimant establishes that it suffered a loss or damage caused by circumstances that occurred during the period the goods were in the custody of the carrier. The burden to prove the absence of fault or neglect rests with the carrier.
In order to rebut this presumption, the carrier must prove that the loss was not caused or contributed to through its fault or neglect, nor the fault or neglect of its servants and agents. Unless the carrier rebuts this presumption, its fault or neglect is presumed.
On the other hand, in certain circumstances as set forth in Article 1182 of the TCC, the fault presumption is reversed. According to Article 1182 of the TCC, the existence of the below- mentioned circumstances give rise to prima facie evidence that the carrier is not liable:
1. Perils and accidents that occur at sea or on other waters upon which the vessel can operate;
In this respect, if the loss, damage or delay in delivery occurs due to above-mentioned reasons, it will be presumed that the loss, damage or delay in delivery was caused through no fault or neglect of the carrier or of its servants and agents. In such cases, the claimant must prove that the loss was indeed caused by the fault or neglect of the carrier3.
The total amount recoverable from the carrier is calculated by reference to the value of such goods at the place and time of delivery. The value of the goods is fixed according to the commodity exchange price or, if there is no such price, according to their market price or, if there is no such price, by reference to the normal value of the goods of the same kind and quality.
Delay in Delivery
Delay in delivery occurs when goods are not delivered to the place of destination provided in the contact of carriage within any time expressly agreed upon or, in the absence of such agreement, within the time it would be reasonable to expect of a diligent carrier. As per Article 1178/5 of the TCC, goods are deemed to be lost if they have not been delivered within sixty consecutive days following the expiry of the time for delivery.
Limitation of Liability
Unless the value of the goods has been declared by the shipper and has been included in the bill of lading, the liability of the carrier for the loss of or damage to the goods, or delay in delivery is limited to 666,67 units of account (SDR) per package or unit or 2 SDR per kilo of gross weight of the goods, whichever is higher. When the goods are consolidated in a container, pallet or another shipping units, the packages enumerated in the bill of lading are deemed packages/shipping units. Otherwise, the goods in a container or such shipping units are deemed to be one package/ shipping unit. If the value has been declared and included in the bill of lading, then the carrier shall not be entitled to invoke limitation and is obliged to compensate the declared value.
On the other hand, as per Article 1186/8 of the TCC, the limits both for the loss, damage or delay of delivery stipulated, above, can be increased by an agreement between the parties in the freight contract. In such a case, the value agreed upon by the parties will be deemed as the liability limit.
The liability of the carrier for delay in delivery is limited to an amount equivalent to two and one-half times the freight payable for the goods delayed; however, this amount cannot exceed the total freight payable under the contract of the carrier. If the goods are damaged or are deemed to be a total loss due to the delay in delivery, the limitation amounts adopted for the loss of or damage to the goods applies to the liability of the carrier.
Loss of the Benefit of Limitation of Liability
Wilful misconduct and gross negligence of the carrier causes the loss of the right to limit liability. According to Article 1187/1 of the TCC, the carrier is not entitled to invoke limitation of liability, provided that the loss, damage or the delay in delivery resulted from an act or omission of the carrier made with intent to cause such loss, damage or delay in delivery, or recklessly and with the knowledge that such loss, damage or delay in delivery would most likely result. The same principle applies to the carrier's servant and agents, as well.
1 Sözer, Bülent Deniz Ticareti Hukuku, 2nd Edition, Istanbul 2012, p.602