Welcome to the Saudi Arabia focus edition of Law Update.
One of the key markets in the Middle East and North Africa (MENA) that continues to lead from the front is the Kingdom of Saudi Arabia (KSA). As the largest country in the Middle East and the 18th largest economy in the world, the progress KSA continues to make is underpinned by its Vision 2030 that envisions developing the country as an investment powerhouse and hub that ultimately connects Asia, Europe, and Africa. Given Saudi Arabia’s significance to the regional economy, our team of experts have prepared a range of pertinent articles that provide insights into new laws, regulations, and the legal landscape in the Kingdom.
This edition will provide you with an up-to-date guide on matters such as; the framework issued by the Saudi Central Bank on IT governance, the anti-corruption landscape under Vision 2030; we also provide practical tips for dispute avoidance. This is only a snapshot; there are many more articles within the KSA focus section for you to read, which we hope you will find valuable and enjoyable.Read the edition
Siri Hashem - Senior Associate
In addition to that, the judgment considers the issues related to the interruption of time limitation of cargo claims.
Court of first Instance
The Plaintiff filed a court case before Abu Dhabi Court of First Instance against the Carrier (First Defendant) and the two ship agents (Second and Third Defendants) asking the appointment of an expert to assess the damages sustained by him as a result of the late de-stuffing of the Cargo at the Discharging Port for the purpose of delivery. The alleged damages comprise of containers demurrage and storage fees, fright surcharges and loss of profit due to market prices fall down in addition to cost and interest.
The Plaintiff is a receiver of four consignment of Cargo shipped in containers on board the carrier’s vessels from China to Zayed port (Discharging Port) under four bills of lading as full container load (FCL). The bills of lading were issued marked as such and the agreed terms of shipment were containers yard (CY) / container freight station (CFS).
The Plaintiff argued that he contracted with the First Defendant to ship the Cargo from China to the Discharging Port in four consignments as aforementioned in order to be delivered after de-stuffing. After the Containers were discharged, the Plaintiff repeatedly asked the Defendants to deliver the Cargo in accordance with the contract but they did not comply until February 2009 which caused the above claimed damages.
The expert concluded that the First Defendant is liable to compensate the Plaintiff for the loss of profit and demurrage paid to the First Defendant.
After the expert submitted his report to the court, the Plaintiff amended his claim and asked the court to order the First Defendant together with the Second and Third Defendants to jointly pay the Plaintiff the compensation amount quantified by the expert in his report.
The First Defendant argued before the court that based on Article 484 of the Civil Transaction Law No. 5 of 1985 as amended (CTL) the claim is time barred because of the lapse of one year from the cargo delivery date without the Plaintiff taking any judicial procedures to clearly claim the alleged damages. He further argued that filing a case for the appointment of expert is not considered to be a judicial procedure for the purpose of claiming specific amount and that it is merely an action to verify a situation which may not interrupt the one year time bar.
The court of first Instance found that the case is time barred because the main claim for damages was filed before the court after the lapse of one year and two months of the date of cargo delivery. The court pointed out that despite the fact that the claim for the appointment of an expert was filed before the elapse of time bar, such action does not interrupt the time bar because it does not fall within the meaning of the judicial procedures that interrupt the time bar as drawn by Article 484 of the CTL. Accordingly the case was dismissed.
It should be noted that the court considered the date of amending the case of appointing an expert in order to include the demand for awarding damages as the date on which the main claim for damages was filed (judicial procedures for the purpose of claiming specific amount). Nevertheless, the case of appointing an expert was filed before the elapse of the time bar.
Court of appeal
The Plaintiff filed an appeal before Abu Dhabi Court of Appeal against the same Defendants on the following basis:
1. The court of first instance judgment had wrongfully applied the law as follows:-
2. The judgment was not issued on the basis of enough reasoning.
The court issued a preliminary judgment appointing another expert to examine the claim and the documents and to visit the Discharging Port authorities in order to find out whether the Defendants were late in delivering the Cargo and the exact quantum of damages sustained by the Plaintiff.
When the case was handed over to the expert the First Defendant raised the following points:
In this regard it is worth noting that in the normal circumstances in container operations where there is no congestion, the responsibilities of various parties involved are:
1. The Carrier is responsible to transport the cargo from the port of loading to the port of discharge.
2. The Carrier’s agents are responsible at the port of discharge to:
3. Port’s responsibility is to:
3. Consignee’s responsibility is to:
The Expert submitted his report to the court concluding that the First Defendant did not perform his obligation in the proper manner by delaying the cargo delivery. Accordingly, the Defendants were liable to compensate the Plaintiff for the surcharges imposed on all the receivers in the GCC countries ports including the Plaintiff for congestion problems in addition to demurrage and the storage fees. Concerning the loss of profit incurred due to the late delivery, the expert found that this a commercial risk which must be undertaken and expected by the traders.
The court of appeal found that the delay was caused by:
The court concluded that, had the Plaintiff taken delivery of the First Number of containers he would have had his full containers gradually de-stuffed and cargo received in a short period of time. Concerning the storage fees, the bills of lading clearly state that the receiver is responsible for storage and handling fees and thus the Defendants may not be held responsible for the same.
Accordingly, the court of appeal held that:
The case was further appealed to the Cassation Court of Abu Dhabi which in turn upheld the Court of Appeal judgment.