Fire sale of BMWs backfires: Hague court rejects exhaustion defence

[Oliver Fairhurst]

Fire sale of BMWs backfires: Hague court rejects exhaustion defence

Oliver Fairhurst Monday, November 17, 2025 - District Court of the Hague, exhaustion, Oliver Fairhurst, trade mark exhaustion, trade mark infringement

EEA customs procedures are complicated at the best of times, but how does exhaustion interact with goods damaged by fire in transit, unexpectedly towed to an EEA port, and sold off by the insurer? In a pro-rightsholder judgment, the District Court of the Hague has found infringement and ordered the enterprising defendants to pay damages, costs, and potentially deliver the vehicles up to BMW. 

The fire

In 2023, a cargo ship (the Fremantle Highway) carrying 3,783 vehicles caught fire en route from Germany to Taiwan. The fire was devastating, with one crew member tragically dying and the remaining crew surviving only by jumping into the sea. It raged for almost a week before it was brought under control. The stricken ship, which was by this point considered a serious environmental risk, was towed to Eemshaven in the Netherlands to be salvaged. 

Not all of the cars on board were destroyed, and among the surviving vehicles was 260 brand-new BMWs. As with any disaster, enterprising people will spy an opportunity, and so it was with these vehicles. Following the insurer paying out on the losses, the insurer, via the loss adjuster, sold the cars to Pienemann et al (Pienemann), a group of companies and individuals involved in, amongst other things, the trade, leasing and financing of vehicles. 

Pienemann notified BMW that it intended to sell the vehicles, to which BMW objected (albeit while considering to buy the vehicles if they were found on inspection to be in saleable condition). BMW’s objection was based on its EU trade mark and design rights, supported by concerns over safety and related concerns over its reputation. Peinemann argued that BMW’s trade mark rights were exhausted. BMW disagreed, and said that even if they were exhausted, it had legitimate grounds to object to the onward sale (mainly being the contamination caused by the vehicles being in the vicinity of the fire). 

The case

The outcome of the case hinged on whether the cars had ever been put on the EU market with BMW’s consent. BMW’s case was that they had only ever been within the territory of the EU under the external transit procedure under ‘T-1’ transit status (under the Customs Code of the European Union (EU) No. 952/2013). Under this procedure, goods can be assembled in the EU from non-Union parts, and prepared for export to a non-EU recipient. Accordingly, while the cars had entered the territory of the EU, they had never been placed on the EU market with BMW’s consent. 

Pienemann disputed this, pointing to the sale in Germany to the Taiwanese BMW importer PGM, and claiming that BMW had realised the value of vehicles in the EU. Pienemann added that its inspections of the cars had indicated they remained in good condition, with pollution levels below permissible limits. It went further to counterclaim seeking declarations and injunctions to prevent BMW being able to interfere with their onward sale of the vehicles. 

The Hague District Court sided with BMW and ordered the sought declarations, recall, surrender, damages and costs. The court found that the goods remained under T-1 status from when they were first assembled all the way up until when they were sold to Pienemann. The court agreed with BMW that when a party sells goods within the territory of the EEA, but under the external transit procedure, and destined for a seller outside of the EEA, it does not place them on the EEA market. This was despite the insurer having sold the vehicles under its subrogation rights; the crucial point was that BMW did not consent to the sale into the EEA. BMW’s trade mark rights had not been exhausted, and there was no need to consider the legitimate grounds requirement. 

Pausing there, readers will note that the insurer paid PGM for it loss (i.e. the value of the vehicles), and sought to recover that loss by selling the vehicles on to Pienemann. The key factor seems to be that PGM took the vehicles subject to the obligation only to sell the vehicles outside of the EEA. Businesses using this customs procedure would be well advised to check they have covered off this eventuality in their sale contracts. 

The court considered the decision of the CJEU in Class International (Case C-405/03). In that case, Class had been storing trade marked goods in a warehouse under the external transit procedure and customs warehousing procedure, to which the proprietor had objected. The Court determined that the trade mark proprietor could not prevent this transit storage solely on the basis that the products might be put on the market; they needed more. 

BMW, however, had evidence that Pienemann had offered to sell the vehicles to businesses in the EU, including even to BMW, and had actually sold at least one vehicle that had since been registered in the Netherlands. These acts were sufficient for the court to find infringement. Interestingly, the individual defendants were also found liable. 

Having been found to infringe, Pienemann argued that the request for delivery up and destruction of the vehicles was disproportionate, claiming to have a firm interest from a Taiwanese buyer. Pienemann had spent €5.1million on the cars, which if BMW got its way would be completely wasted. 

The court seemed highly sceptical of this route, considering that BMW had shown good evidence that the cars were not fit for sale, even outside of the EEA [Merpel: is it unusual for a court to have regard to the safety of consumers outside of its jurisdiction?]. Pienemann was partially successful, with the court giving them an opportunity to prove that the vehicles could be safely sold outside of the EEA, and pending an appeal. 

Sometimes, an offer may seem to good to be true. For the defendants in this case, this is one of those instances. 

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