Trucking Company Must Compensate for Failing to Insure Cargo

On December 16, 2020, the Argentine National Court of Appeals in Commercial Matters upheld the decision of Commercial Court No. 18 ordering a trucking company to compensate a textile company for stolen cargo on the grounds that it had not contracted the mandatory cargo insurance required under Article 10 of the Land Cargo Transit Law  (Law No. 24,653).

The plaintiff filed a complaint against the trucking company and the driver of the stolen vehicle for the damages resulting from the theft of the cargo being transported. The complaint came after the plaintiff had attempted, to no avail, to collect the total worth of the cargo entrusted to the defendant.

The contractual relationship between the parties was not disputed in the proceedings, nor was the carrier’s duty to perform timely and proper delivery. On the contrary, the carrier based its defense on the provisions of article 172 of the repealed Commercial Code, which was only applicable because it was in force at the time the facts had occurred. Those provisions place the burden of defective goods, force majeure or unforeseeable events on the shipper.

The defendant then contended that it was the plaintiff who had decided not to take out the mandatory insurance provided under Article 10 of the Land Cargo Transit Law, even after having been warned of its duty to do so.

The trial court (known locally as “first instance” court) found that pursuant to article 176 of the Commercial Code, the carrier has a duty to compensate even in the event of damages or loss arising from unforeseeable circumstances, when it is demonstrated that the loss arose from its negligence or fault, for failing to use the means or precautions a diligent person would have used in identical circumstances.

Thus, the lower court deemed it demonstrated that the carrier “had not adopted the necessary measures to prevent the harm suffered by the shipper; that is, the carrier had failed to take out mandatory cargo insurance” and concluded that, taking into account the duty to compensate provided in Article 176 of the Commercial Code, the carrier cannot be exempted from liability, even if the actual theft was deemed as force majeure.

Under article 10 of the Land Cargo Transit Law, all transporters must have mandatory insurance both to circulate and to render services. Paragraph b) stipulates that cargo insurance is mandatory when there is a carriage contract and insured risks must be indicated in the policy. In addition, it also stipulates that either the shipper or consignee may contract the coverage, as can the person delivering the certificate of coverage to the carrier or the person doing the actual transporting, but expenses incurred in the contract framework are borne by the cargo provider.

In this respect, the Court of Appeals upheld that the carrier is responsible for insuring the cargo, and simply warning the plaintiff that the shipper could take out insurance was insufficient to deem that duty fulfilled. The Court held that, by transporting the cargo without the required coverage, the carrier assumed liability.

Lastly, the Court concluded that, if a shipper or consignee refuses to take out mandatory insurance on its cargo, the carrier must refuse to transport the cargo or take out its own insurance, which must be suitable to meet the required legal duty.

Case: “Daulerio, Diana v. Transportadores Unidos S.R.L. et al.”(File No. 15106/2015).