Customs & Trade in Israel

12 November, 2023

A Claim Against an Air Carrier's Agent Was Rejected Due to the Lack of a Timely Protest

Lawsuit Against DHL Israel Dismissed in Accordance with The Montreal Convention

In a recent legal development, a lawsuit against DHL (Israel) Ltd. was summarily dismissed, citing the Montreal Convention and Air Transport Law. This case is part of a broader series of legal rulings concerning claims filed between 2020 and 2021 against the company. These cases primarily revolved around allegations of shipment delays between China and Israel. The judgments in these cases led to claims being either outright rejected or having their compensation significantly reduced. The key factor behind these rulings was the determination that DHL acted as an agent of the air carrier, allowing them to enjoy the protections offered by the Montreal Convention and Air Transport Law.

To provide context to these lawsuits, it is important to consider the timeframe in which they took place – March and April of 2020. These months coincided with the height of the COVID-19 pandemic in Israel, a global event with far-reaching consequences for international trade, especially imports from China. Despite the considerable challenges faced during this period, DHL Israel played a crucial role in the economy by facilitating the transportation of essential cargo. This included critical items like life-saving ventilators and coordination related to the arrival of COVID-19 vaccines in Israel. Remarkably, this was achieved while managing a staggering volume of around 400,000 bills of lading for shipments imported to Israel during March and April 2020.

It’s worth noting that the authors of this article represent DHL Israel.

Case Background: Shipment Delays Amid the Pandemic

The lawsuit that led to this recent ruling was brought against DHL by an importer who had purchased medical masks from Hong Kong. This importer claimed to have suffered financial losses due to shipment delays in 2020 when the cargo was en route to Israel amidst the COVID-19 pandemic.

The plaintiff, an importer, had ordered KN95 standard protective masks from suppliers based in Hong Kong. These masks were intended for distribution in Israel during the height of the COVID-19 pandemic. To transport these masks to Israel and deliver them to the plaintiff, the suppliers engaged DHL Hong Kong, which acted as the air carrier. DHL (Israel) played a role in promoting the shipping contract within Israel. This promotion was facilitated through the company’s commercial affiliations with various DHL entities around the world, positioning DHL (Israel) as an intermediary in the process of promoting the shipping contract.

Claims and Counterarguments

The plaintiff contended that DHL had committed to delivering the packages within a specific time frame. Furthermore, the plaintiff alleged that the packages were substantially delayed due to an alleged directive from DHL to split the packages abroad. Consequently, some packages did not arrive at all, and those that did reach the plaintiff arrived significantly late. Based on these circumstances, the plaintiff claimed a financial loss totaling approximately 1.1 million NIS.

DHL’s counterargument was a request for the dismissal of the claim. The company asserted that it acted as an agent of the air carrier in the disputed shipments, thus falling under the protections provided by the Montreal Convention and the Air Transport Act. According to DHL, the plaintiff’s claim was inadmissible due to the absence of a timely protest regarding the alleged damage, as mandated by the Montreal Convention. Alternatively, even if the plaintiff could establish that a timely protest was made, DHL argued that the damages claimed were subject to the limitation of liability outlined in the Montreal Convention. According to this limitation, damages had to be calculated using the compensation formula within the convention: the weight of the shipments multiplied by 22 SDR (Special Drawing Rights), where 1 SDR was equivalent to 1.3 USD.

DHL argued that no specific commitment was made to the plaintiff regarding a specific delivery time frame. DHL asserted that the shipping contract had been established between the suppliers and DHL Hong Kong, so any commitments should be directed to the suppliers. DHL also contended that any package delays were due to the suppliers decision to split them in Hong Kong, an aspect over which DHL had no control or influence. Additionally, DHL claimed that any delays in package delivery were not their responsibility, as they did not serve as the customs agent for package release. Moreover, if the packages were missing, they were not stored with DHL but with a third party, over which DHL had no control.

In response to DHL’s request for dismissal, the plaintiff presented a counterargument. The main contention in the plaintiff’s response was that air transport laws and the Montreal Convention did not apply to the relationship between them and DHL. To support this claim, the plaintiff insisted that, to establish the Convention’s applicability, DHL was required to present an “agency agreement” between itself and DHL Hong Kong. Since no such agreement was presented, the plaintiff maintained that DHL’s claims should be dismissed. Furthermore, the plaintiff asserted that they have provided a substantial volume of correspondences and protests sent to DHL in real-time as evidence of their adherence to timely protest requirements.

In response, DHL countered that the presentation of any formal agreement between itself and various DHL entities was unnecessary. DHL argued that the established legal test, both in foreign case law and adopted in Israel, pertains to the functional assessment of who actively promotes the shipping contract as a key determinant of the agency. It was beyond dispute that DHL played a pivotal role in advancing the handling of the plaintiff’s shipments within the airport, contributing to the finalization of the shipping contract.

Court Decision

The court accepted DHL’s arguments and rejected the plaintiff’s claims. Firstly, the court addressed whether DHL acted as an agent of the air carrier. The court endorsed DHL’s perspective that the functional test should be applied to determine agency status rather than relying on specific agreements between the air carrier and the alleged agent. The court emphasized the appropriateness of considering foreign jurisprudence and scholars views in interpreting international treaties. Given this approach, the court examined the actions undertaken by DHL at the airport in connection with the plaintiff’s cargo. The court found that these actions, including unloading, receiving, sorting, dispatch coordination, and customs reporting, indeed advanced the shipping contract. These activities were considered obligations of the air carrier, necessitating a forwarder’s intervention to fulfill them, with DHL serving as that forwarder.

As a result, the court concluded that DHL qualified as an agent of the air carrier and should benefit from the protections conferred by the Montreal Convention.

The court then addressed whether the plaintiff had sent a timely protest, a requirement for establishing their right of action against DHL. The court ruled that the plaintiff failed to present evidence to support their claim of timely protests, as required by the Montreal Convention. This was despite the plaintiff’s assertion that they had sent numerous correspondences and protests to DHL in real-time. The court pointed out that these documents were conspicuously absent from the plaintiff’s initial claims letter.

In light of these considerations, the court determined that the plaintiff had not met the burden of proving the timely submission of the protest. As a result, the plaintiff’s claim could not be entertained.

Given these circumstances and findings, the court granted the request for an outright dismissal and subsequently rejected the plaintiff’s entire lawsuit. The court also allocated costs in favor of DHL, amounting to NIS 15,000.

Similar Rulings

This recent judgment aligns with several other rulings involving DHL in Israel. In these cases, DHL was consistently considered an agent of the air carrier, leading to the rejection or significant reduction of claims due to the limited compensation ceiling stipulated in the Montreal Convention. For instance, similar issues were discussed in the cases of Said Gara v. DHL (Israel) Ltd., Uzi et Arik Ltd. v. DHL (Israel) Ltd., and Y.S. Shion (2010) Ltd. v. DHL (Israel) Ltd., resulting in a consistent legal stance regarding DHL’s status as an agent of the air carrier in various shipment delay cases.

The content in this communication is provided for informational purposes only and is not intended to be comprehensive. It does not serve to replace professional legal advice required on a case by case basis. The firm does not undertake to update the information in this communication or its recipients about any normative, legal or other changes that may impact the subject matter of this communication.

Written by: Adv. Gil Nadel, Adv. Ranon Goren

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