The title of Article 704 sounds general and that is why it is often misread. This is not a general rule of recourse for everyone who has compensated damage on behalf of another. It is placed in the carriage chapter and regulates one specific situation — the mutual allocation among carriers.

Who the rule applies to

The article begins conditionally: if under this chapter a carrier has already compensated the damage, he acquires the right of recourse. Two prerequisites follow from this:

  • The subject of the recourse claim is the carrier — and not any person who has paid on behalf of another;
  • Compensation already actually carried out must be — the right of recourse does not arise before payment.

Logic of distribution

When several carriers participate in one carriage, the burden of damage is distributed in three ways:

  • If it is established, which carrier's action caused the damage — the burden is borne entirely by him;
  • if responsible are several — each participates in the compensation in proportion to his share;
  • If it is impossible to determine responsibility — the burden is distributed again in proportion to the share in the freight.— the burden is distributed again in proportion to the share in the freight.

That is, the criterion is not the distance transported or the value of the cargo, but what share each carrier received from the freight charge.

Why is this important

A single cargo is rarely transported by one company: the chain involves a freight forwarder, the main carrier, and subcontractors. The injured client, as a rule, sues one of them— the one with whom they have a contract. That is when the second, internal dispute begins: who and in what proportion will reimburse this amount.

Article 704 regulates precisely this second dispute.

What you should do in advance: The recourse claim is as strong as it is documented, where and in whose possession the cargo was damaged. Therefore, acceptance-delivery acts for each section, notations in the consignment note, and recording the condition of the cargo at every stage of transfer are decisive. Without these documents, the case moves to the third rule — proportional distribution — which means that even those not at fault will pay a part.

International transportation

If the transportation is international, it is necessary to simultaneously check the CMR Convention — on the contract for the international carriage of goods by road. Its norms use the same logic of recourse, and a ratified international agreement has superior force compared to domestic norms.

What Article 704 is not

If you are not a carrier but have compensated the damage on behalf of another, your claim is based on another ground: recourse among joint debtors, unjust enrichment, or insurance subrogation — depending on what relationship you had. In these cases, reference to Article 704 cannot substantiate the claim.

Nikoloz Pkhaladze

Lawyer · Founder, Managing Partner | Al. Kazbegi Ave. 24g, AXIS, 10th floor, Tbilisi | +995 597 117 795 | www.pkhaladze-law.ge