A recent judgment by the Hon’ble Supreme Court of Appeal of South Africa, in an Appeal named Schenker South Africa (Pty) Limited vs. Fujitsu Services Core (Pty) Limited (508 of 2020) [2022] ZASCA 7 (18 January 2022), overturned the Judgment of the High Court of South Africa and pronounced that the Freight Forwarder is not liable for the loss due to the theft of Cargo by Employee for various reasons.

In the said case filed by Fujitsu Services Core (Pty) Limited against Schenker South Africa (Pty) Limited before the Hon’ble High Court of South Africa, the claimant Fujitsu imported a consignment of laptops and accessories from its affiliate company in Germany to the value of $516,887/- and engaged the services of Schenker South Africa (Pty) Limited to assist with the logistics, freight forwarding, warehousing and clearing of the consignment. Thus the scope of services by Schenker included receiving the consignment from the Carrier; delivering them by road to Fujitsu after performing the necessary customs clearance and other logistical services. Once the consignment arrived in the storage at the South African Airways Cargo Warehouse and was ready to be delivered to Fujitsu, Schenker issued necessary documentation to its drawing clerk, one Mr. Wilfred Lerama, authorizing him to collect and deliver the Cargo to Fujitsu. On 23rd June 2012, Mr. Lerama arrived at the warehouse to collect the laptops on behalf of Schenker and Fujitsu. The consignment was then loaded onto his truck, which was “not marked with the Schenker Branding,” and drove off, never to be seen again. Consequently, Fujitsu filed a claim for damages against Schenker in relation to the theft of its consignment.

In the said case, even though the High Court pronounced its Judgment holding the Freight Forwarder, Schenker, liable on the grounds of Vicarious Liability (Holding liable for the fraudulent act by its Employee) and on the terms and conditions of the National Distribution Agreement entered into between both the Parties, the Hon’ble Supreme Court of Appeal, dismissed the Judgment of High Court. The Supreme Court of Appeal, while interpreting Clause 17, titled “Exemption Clause” of the said Agreement, determined that Schenker had been “handling or dealing” with the Cargo at the time of the theft, as contemplated by the Exemption Clause and was therefore executing the contract. The exemption clause 17 of the National Distribution Agreement reads, “Except, under special arrangements previously made in writing, the Company (Schenker) will not accept or deal with bullion, coins, precious stones, jewelry, valuables, antiques, pictures, human remains, livestock or plants. Should Customer (Fujitsu) nevertheless deliver such goods to Company or case Company to handle or deal with any such goods, otherwise than under special arrangements previously made in writing, Company shall incur no liability whatsoever in respect of such goods, and in particular, shall incur no liability in respect of its negligent acts or omissions in respect of such goods….”. The Supreme Court of Appeal further observed that if Fujitsu had informed it that the Cargo was valuable, it could have reduced the risk by taking appropriate steps, including but not limited to employing security guards or taking out fidelity insurance.

The difference of opinion, observation, and comments by both the High Court and the Supreme Court of Appeal, though, has raised a concern among the Parties from various industries, who are now being advised about the importance of careful drafting of the contractual terms and the difficulty in recovering the stolen goods, however, has allowed the Freight Forwarders to breathe a sigh of relief.

Even if there are few circumstances where the Court declares the Freight Forwarder not liable for the loss or damage to the consignment or any other claims against them, different Courts of different jurisdictions consider various factors depending on which role they assume when agreeing to make the shipping arrangements. In any case, experts advise the Parties who engage as Freight Forwarders to take a Freight Forwarder’s Liability Insurance Policy with any reputed insurance company so that they would get the required assistance to deal with the claims as appropriate.