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  • Overview

    The question of whether a party contracts as principal or agent for another is a familiar one in disputes arising from the carriage of goods by road.

    The issue was revisited recently by the English Commercial Court in the case of Mar-Train Heavy Haulage Ltd – v – Shipping.DK Chartering A/S (Trading as Frank & Tobiesen A/S) (“S”) and four others [2014] EWHC 355 (Comm).

    Forwarding agents act in many capacities – sometimes as agents, sometimes as principals. It is well established that when a Judge has to decide whether a party is acting as a principal or an agent, it is very much a matter of impression on the facts formed by the evidence. However, five relevant factors are applied in deciding such questions:

    1. The terms used by the parties in making their contract.
    2. Any description adopted in relation to a party’s role.
    3. The course of any prior dealings
    4. The nature and basis of charging
    5. The terms of any CMR note

    It is a matter of impression looking at those individual elements and then stepping back to look at the question overall. The exercise often involves evaluation of expressions like ‘agent’ and ‘sub-contractor’ which not only have a broad commercial, as well as legal meaning but are used loosely by busy business people including many for whom English is not their first language. Where services are provided in different ways in what may be several countries in the course of a transaction, the range of activity of an agent or subcontractor may be very wide or narrow and still be consistent with that function.

    The various principles were considered in this dispute which followed damage to a component part of wind turbine in Ireland.

    Siemens entered into a freight forwarding services framework agreement with ShippingDK. They contracted Abnormal Load Services (ALS) who traded on British International Freight Association (BIFA) 2005 terms who in turn contracted with M (who traded on Road Haulage Association (RHA) 1998 terms) for the final internal road haulage in Ireland.

    The Defendant (S) applied to set aside service of the claim form issued by the Claimant (M) and for a declaration that the Court had no jurisdiction to hear the case on the basis that it had contracted with ALS as principal and that ALS was not the agent. Accordingly there was no contract with S.

    M argued that S had consented to English jurisdiction by virtue of clause 16 of the RHA 1998 conditions on which it traded which provide for English law and jurisdiction.

    In applying four of the five factors to the above facts (CMR was not relevant), the Court held that M was correct and that ALS was acting as agent only. The Judge was particularly persuaded by an operation manual drawn up by ALS which repeatedly referenced that it was contracting with S as agent only. A similar document had been utilised in previous contracts.

    As an interesting aside, the Judge declined to consider S’s alternative argument that unilateral consent to jurisdiction was required, not bilateral consent as evidenced in a contract.

    It is essential to carefully consider the capacity in which you are contracting and to make that clear on all contracting documentation so that if a dispute later arises the contemporaneous evidence can be produced in direct support.

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