Indemnity Insurance Company of North America v. Agility Logistics Corporation (S.D.N.Y. 2018)

United States District Court, Southern District of New York

Facts

Indemnity sued Agility for inspection costs after a jet engine was transported to Germany using a non-compliant truck (tractor), contrary to the terms of the AWB, which specified road transport only on a certain type of equipment.^[1]“All ground transportation must be full air ride.” This means that every axle of the truck must have an air-ride suspension. See P2. No transport-related damage was found.

Issue(s)

At P1:

The Montreal Convention imposes liability on air carriers for “destruction . . . of . . . cargo,” “loss of . . . cargo,” or “damage to . . . cargo.” In this case, a carrier transported a jet engine on the wrong type of truck. That mistake required the recipient to do a costly inspection, which ultimately revealed no transport-related damage. This raises the novel question of whether the Montreal Convention allows recovery of inspection costs even though there was no physical damage to any cargo. For the reasons that follow, the answer is no.

Discussion

At P7:

The engine was not damaged, destroyed, or lost. And though it is a harsh result, the Convention’s plain text bars recovery. Because this result is harsh, the Court invited supplemental briefing on this issue. Indemnity points to a handful of cases awarding inspection costs, but in all of those cases, the cargo was actually damaged. (See Dkt. No. 51 at 1–2.) It is one thing to say that a carrier is liable for the inspection cost of damaged cargo. It is quite another to say that a carrier is liable for inspection costs even when the cargo was not damaged. Once the cargo is damaged, destroyed, or lost, the carrier is arguably liable for inspection costs; but if the cargo is not damaged, destroyed, or lost, Article 18 imposes no liability.

Useful for

Inspection costs not damages under the Convention if cargo not actually damaged

Treaty provisions considered

Article 18 MC99

Montreal Convention 1999

Legislation considered

None identified.

Key subjects or concepts

Cargo/ Damages/

Appeals history

No relevant appeals or appeal history identified for this case.

Other case information

Lawyers or counsel before the United States District Court, Southern District of New York:
No counsel or legal team identified for this case.

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