Terminal allowed to release containers for a fixed fee after Hanjin bankruptcy

Terminal allowed to release containers for a fixed fee after Hanjin bankruptcy

Arnold van Steenderen
22 May 2018

ECT held Hanjin containers hostage

Rotterdam based Europe Container Terminal ("ECT") exercised its right of retention on Hanjin containers following the carrier's bankruptcy in 2016. ECT and Fenex (the Dutch trade association for logistic service providers and forwarders) agreed that the containers would be released to the cargo interests upon payment of EUR 500 per container. OTX Logistics nevertheless demanded that ECT would charge the actual handling costs as per the terminal agreement between ECT and Hanjin and to receive insight in the tariffs from that agreement.

The Rotterdam Court however held that it was acceptable for ECT to charge a fixed fee given the circumstances. An efficient release of the Hanjin containers would be compromised should ECT be ordered to charge the actual handling costs per container. Moreover, the Court held that ECT was under no obligation to give OTX Logistics access to the terminal agreement with Hanjin.

Following Hanjin Shipping’s application for a suspension of payment on 31 August 2016, Hanjin containers were blocked at the Europe Container Terminal (“ECT”) in Rotterdam. ECT was a creditor to Hanjin and exercised its right of retention (lien) on the Hanjin containers stored. ECT announced that the retained containers would be released to the cargo interests upon payment of EUR 1,000 or EUR 1,500 per container, depending on the type of container. Fenex, the Dutch trade association for logistic service providers and forwarders, filed for interim injunction proceedings before the Rotterdam Court. On 2 September 2016, the Court ordered that the containers should be released upon putting up security for or payment of the actual handling costs in accordance with the fees agreed on in the terminal agreement between Hanjin and ECT. The Court allowed a EUR 25 surcharge per container, but dismissed payment of demurrage, detention and the need of a security deposit. In spite of the judgement, Fenex and ECT agreed that the Hanjin containers would be released to the cargo interests upon payment of EUR 500 and a security deposit of EUR 1,000 per container.

OTX Logistics Rotterdam (“OTX”) did not wish to conform to the agreement reached between Fenex and ECT. In order to avoid new interim relief proceedings, OTX and ECT concluded a settlement agreement on 12 September 2016 and agreed that, i.a.

  • ECT will substantiate the handling costs of EUR 500 per container;
  • OTX agrees to payment of mentioned EUR 500 per container;
  • ECT will release all present and future containers without undue delay to OTX;
  • The handling costs and security deposit will be settled with the money OTX has put in the trust account of ECT’s counsel. 

Notwithstanding the settlement agreement, OTX brought an action on the merits before the Rotterdam Court on 3 November 2016. 

Proceedings

OTX primarily claimed full access to the actual handling costs per container as per the terminal agreement between Hanjin and ECT. Should the actual handling costs and the EUR 25 surcharge together be lower than EUR 500, OTX’ claim was that ECT must return the surplus to OTX. Alternatively, if ECT failed to disclose the actual handling costs, OTX requested the Court to determine the handling costs and surcharge at a total of EUR 265 per container.

OTX based its claim primarily on ECT’s statutory duty under Article 6:199 Dutch Civil Code (“DCC”). OTX asserted that, as a manager of Hanjin’s affairs, ECT must render account of the handling costs. The same follows from Article 7:403 DCC as ECT is party to a contract for services with Hanjin. Alternatively, OTX stated that ECT must render account pursuant to unwritten law. ECT held that OTX’ claim should be dismissed since a settlement agreement had been concluded between ECT and OTX. Therefore OTX had no interest in the claim. Furthermore, ECT disputed that it had not any duty under statutory or unwritten law to render account of the handling costs. ECT stated that it was bound to confidentiality regarding the terminal agreement with Hanjin. ECT believed its interest outweighed OTX’ interest in disclosure of the terminal agreement.

Decision

The Rotterdam Court handed down its judgment on 30 August 2017. The Court first established that ECT has a right of retention on the containers following the bankruptcy of Hanjin. ECT is entitled to retain the containers until it received payment from Hanjin. Considering this, ECT had no obligation to release the containers to the cargo interests, including OTX. Nevertheless, ECT has agreed to release the containers to the cargo interests upon payment of a fixed fee of EUR 500 per container. Establishing the actual handling costs per container would be too much of a burden and would undermine an efficient release. Most cargo interests agreed to this approach and OTX did so as well by concluding the settlement agreement. Therefore the Court held that there was no ground for OTX’ claim to pay the actual handling costs or, alternatively, EUR 265 per container. The Court dismissed OTX’ claim for obtaining access to the terminal agreement between ECT and Hanjin as well. ECT was not legally bound to disclose such commercially sensitive information to third parties. The Court held that, unlike OTX stated, ECT cannot be considered to be a manager of Hanjin’s affairs under Article 6:198 DCC. Furthermore, the Court held that the agreement between Hanjin and ECT does not qualify as a contract for services. Therefore ECT has no duty to render account for the actual handling costs pursuant to Article 6:199 DCC or Article 7:403 DCC. Such duty for ECT is neither to be found in unwritten law. The Court dismissed all claims and ordered OTX to pay to ECT EUR 500 per container as was agreed on in the settlement agreement.

Comment

OTX’ strategy in this matter might have been nothing ventured, nothing gained, but nonetheless seems odd. One can understand OTX’ reluctance to conform to the agreement between Fenex and ECT. Why should OTX pay EUR 500 per container plus a security deposit when the Rotterdam Court initially ordered that only the actual handling costs and a EUR 25 surcharge were to be paid? Interesting is what caused OTX to nevertheless conclude the settlement agreement with ECT and virtually agree to the same terms as in the Fenex/ECT-agreement only to file proceedings a couple of weeks later. It would seem that OTX could no longer wait for release of the containers and tried to have it both ways. In that light it comes as no surprise that the Rotterdam Court dismissed OTX’ claim.

Also interesting is that the Rotterdam Court dismissed payment of actual handling costs on grounds of efficiency. This is understandable considering the consequences of a bankruptcy of a major carrier as Hanjin. ECT now has to deal with multiple cargo interests instead of only with its known business partner Hanjin. This efficiency is however paid for by the cargo interests, while Hanjin and ECT are at the least at break-even.

This article has also been published on the website of Lexology.