Overview
Cases
Ford v Malaysian Airline Systems Berhad
[2013] EWCA Civ 1163 [2014] 1 Lloyd’s Rep 301, [2013] EWCA Civ 1163
Aiken J
VI. Analysis and conclusion
In Fenton v J Thorley & Co Ltd[30] Lord Lindley pointed out that “accident” is not a technical legal term with a clearly defined meaning. He said that, generally speaking, “…an accident means any unintended and unexpected occurrence which produces hurt or loss”. Lord Lindley also pointed out that the same word is often used to denote an unintended or unexpected loss or hurt apart from its cause. In Saks v Air France O’Connor J began her analysis of what “accident” meant in Article 17 of the Warsaw Convention by quoting this well-known passage from Lord Lindley’s speech in the Thorley case, but she went on to demonstrate that the word “accident” in the Convention does not have the same meaning as that suggested by Lord Lindley. Thus, as Lord Scott of Foscote noted in the Deep Vein Thrombosis case,[31] O’Connor J was clear, first, that “accident” in Article 17 refers to the cause of the passenger’s injury, not the injury itself. Secondly, this cause must be an “event” or a “happening”[32] which itself has the characteristic of being “unexpected” or “unusual”. It is clear from all the cases that there is no distinction in meaning between “event” or “happening”. However, there could be a distinction between an event which is “unexpected” and one which is “unusual”. Although an event which is “unexpected” is likely to be “unusual”, an event which is”unusual” is not necessarily one that is totally “unexpected”. However, I accept that in many cases an event that is “unusual” will be one that is also “unexpected”.
In the Deep Vein Thrombosis case Lord Scott of Foscote states that the relevant event or happening must be “unintended and unexpected”[33] from the point of view of the victim of the accident. It is from the victim’s perspective that the quality of the event or happening has to be considered.[34] In other words, it is from the victim’s point of view that the event or happening has to be “unexpected” or “unusual”.
It is also clear that it is the “unexpected” or the “unusual” nature of the event that must be “some link in the chain” which results in the “bodily injury” of the passenger. Hence, at page 406 of the Saks case, O’Connor J states:
“Any injury is the product of a chain of causes, and we require only that the passenger be able to prove that some link in the chain was an unusual or unexpected event external to the passenger”.
This leads on to a consideration of the third qualification which was made by O’Connor J and which has been universally accepted since Saks v Air France, viz. that the “unexpected” or “unusual” event must be “external” to the passenger. The facts of the Saks case itself show the point that O’Connor J was making. There the passenger had been made deaf in one ear as a result of the normal operation of the aircraft’s normal pressurisation system. The injury to the passenger was caused by “the peculiar internal condition” of the passenger, rather than some “unusual” or “unexpected” external event which was (at least) a cause of the “bodily injury” of the passenger.
In the present case, on the assumed facts there can be no doubt that the effect of the injection of the diuretic, together with Mrs Ford drinking green tea and other fluid as the doctor counselled her to do, was that Mrs Ford’s kidneys became more active, so that more fluid was produced and, because of her urethral stenosis, she suffered increased fluid retention and increased discomfort. So the immediate cause of the alleged “bodily injury” was the “peculiar internal condition”[35] of Mrs Ford, just as it was held to be in the Saks case itself and in the Deep Vein Thrombosis case. In those cases the trigger on the “peculiar internal condition” of the passenger which produced the “bodily injury” complained of was the “usual, normal and expected operation”[36] of the aircraft. Hence there could be no “accident” in either case because there was nothing “unexpected” or “unusual” that had any causative effect in the “chain of causes” resulting in the “bodily injury” complained of. I think that the same analysis applies in the Barclay case, because it was the inept action of the passenger in relation to the aircraft’s plastic strip along the gangway, which was a normal and expected construction of the aircraft, that was the cause of the “bodily injury” in that case.
However, even if the immediate cause of Mrs Ford’s “bodily injury” was her “peculiar internal condition” (ie. her urethral stenosis), if a cause that led to the reaction was an event that was external to Mrs Ford and was one that was “unusual” from her perspective (as opposed to that of anyone else), then, as I understand the meaning of “accident” in Article 17.1 as interpreted in the cases, this would bring the present case within its terms. So, in my view, the key issue is whether the actual act of giving Mrs Ford an injection of a diuretic in the circumstances that prevailed can be characterised as an “unusual” event from the perspective of the ‘victim”, Mrs Ford and the “unusual” nature of that event was “a cause” leading to the “bodily injury” alleged. (Mr Chapman did not, rightly, argue that there was an “unexpected” event).
I find this a difficult question, which can be easily argued both ways. The administration of an injection in the course of an international flight by a doctor passenger after a very brief discussion with the patient when neither previously knew the other is not part of the usual, normal or expected operation of the aircraft, although the action of the air hostess in asking the doctor passenger if she could help probably was. On the other hand, the actual administration of an injection by a doctor, in the hope and expectation that it would relieve the condition complained of (cystitis), is quite usual. Therefore, if the act of administering the injection is to be characterised as “unusual” and this unusual characteristic was a cause leading to Mrs Ford’s “bodily injury”, then this must be because the particular circumstances in which the act was performed, viewed from the perspective of Mrs Ford, make it so, whilst excluding from consideration Mrs Ford’s actual reaction to the injection, which was the result of her “peculiar internal condition”.
I have concluded that the circumstances in which the injection was administered by the doctor cannot be characterised as “unusual” for the purposes of Article 17.1. There is no evidence that the actual administration of the injection was done in an abnormal way. The only “unusual” aspect of the whole process was that it was carried out in the course of an international flight by a passenger doctor on another passenger (with proper consent) as a result of a request to the doctor for assistance by a crew member. But the key point is that there is no evidence that any of those characteristics had any causative effect in the chain of events that led to Mrs Ford’s “bodily injury”. The same chain of events would have taken place wherever the injection had been administered. It seems to me that the simple fact that the injection was administered in mid-flight rather then elsewhere cannot provide the circumstances with the necessary “unusual” characteristics so that this event constitutes an “accident” within Article 17.1. I would adopt the language quoted by Lord Phillips of Worth Matravers MR in his judgment in the Deep Vein Thrombosis case:[37] “If the event on board an airplane is an ordinary, expected and usual occurrence, then it cannot be termed an accident. To constitute an accident, the occurrence on board the aircraft must be unusual, or unexpected, an unusual or unexpected happening”. The event in this case is the actual administration of the injection. That, in itself, was not unexpected, or unusual.
There was some debate before us about the effect of statements made by Laws LJ at [35] of his judgment in the Barclay case[38] and whether in Air Link Pty Ltd v Paterson [39] the New South Wales Court of Appeal, in particular Sackville AJA, were correct in suggesting that Laws LJ had stated that a passenger must demonstrate that the “event causing injury occurred independently of anything done or omitted by the passenger”.[40] I certainly do not read Laws LJ as laying down any such condition in that passage of his judgment; indeed, it would be inconsistent with all the case law since Saks v Air France. All he was doing was emphasising that the “unusual” or “unexpected” nature of the “event” or “happening” must be external to the passenger and the relevant cause (from the “unusual” or “unexpected” nature of the “event” or “happening” which is part of the causal chain leading to the “bodily injury”) must be independent of anything done or omitted by the passenger, rather than being what was done or omitted by the passenger. In that case it was the passenger’s action in the way she got into her seat that caused the injury.
VII. Disposal
I would dismiss the appeal.
Lord Justice Leveson:
I agree.
Lord Justice Maurice Kay:
I also agree.
APH Manufacturing B.V. t/a Wyeth Medica Ireland v. DHL Worldwide Network N.V.
[2001] IESC 71 [2001] 4 IR 531, [2001] IESC 71
Fennelly J
CONTRACTUAL RELATIONSHIP
4. It is necessary to refer to the facts surrounding the contractual relationship between the parties.
5. From the month of February 1994, the Respondent commenced the purchase of consignments of Gestodene Micronised from Schering AG, Berlin and arranging for their transport from Germany, via DHL’s Brussels Hub to Ireland. It was apparent from the beginning that each consignment would have a very high value. The dimensions of each cylindrical package, a fibre drum, would be 42 x 42 x 42 cm and its weight 7.3 kg. There would be one consignment per month.
6. The Appellants indicated at a meeting with the Respondent on 17th February 1994 that they would only accept the consignments if the Respondent either paid for an on-board courier which would cost £1,000 per consignment or else signed a document called a “Hold Harmless” letter, which will be described shortly. The Respondent indicated that every shipment should be monitored through the system and given priority attention. The Respondent declined the option of the courier on the ground of cost, but agreed to the “Hold Harmless” letter. This purported to limit DHL’s liability to US$100 and provided that the respondent was to arrange its own insurance. It was to cover all the shipments.
7. The letter read, in part:
“DHL shall not be required to effect any insurance of such items against any risks and (notwithstanding DHL’s actual or imputed knowledge of the value ) and I/we confirm that I/we will arrange such insurance in such and against such risks as I/we deem appropriate and at my/our own expense and responsibility. I/we warrant that such insurance will contain a waiver of all rights of subrogation against DHL.”
FACTS OF THE ACCIDENT
8. Pursuant to these arrangements three consignments were transported from Germany to Ireland without incident. The consignment, which I will call the package, despatched on 28 th April 1994 was damaged beyond repair at the DHL Brussels Hub on the night of 1st May 1994.
9. The Brussels Hub is the central sorting office for DHL. It is the largest of its kind in Europe. Trucks and aircraft arrive from all over Europe. Their loads are unloaded , sorted and placed on aircraft for onward transport to their final destinations. DHL aims to provide an overnight service: goods despatched at the end of one day should reach their destination he following day. At the relevant time it handled about 100,000 shipments each night. The work is at its most intense between midnight and four o’clock in the morning.
10. Goods are classified as conveyables if they are suitable for transport on conveyor belts and non-conveyables if they are not. The package was a considered to be a small non- conveyable, being less than 25 kilos in weight and less than one metre in length. The system for its handling was that it would be transported in a container with the conveyable goods to Building 3. There, non-conveyables would be sorted out and left to await transport to their outward destination. No witness was available to give evidence as to how precisely the package was transported, but the Appellants accepted that it was most likely taken from the off-load part of Building 3 to the reload part by a fork-lift truck fitted with a wooden pallet and that it was not secured on the pallet. There is, however, no evidence at all as to whether the package was placed there alone or stacked with other items on the pallet, or of where it was on the pallet. All that is known is that it was found on the ground between two entrances to Building 3 (the one from which it would have emerged and the one where it would have re-entered to be reloaded) in a damaged condition. It is admitted that, if it fell off the pallet in this area, there was a high probability of its being damaged, as indeed it was, by the wheels of another vehicle. There were many vehicles transporting goods, often at speed, at the most intense period of activity at the Hub.
11. On that set of facts, the learned trial judge found that:
“The risk of a small non-conveyable so falling being run over by another vehicle is very high having regard to the large number of vehicles operating in the Brussels Hub and the speed at which and the pressure of time under which the vehicles operate in that area and the relatively confined area over which such vehicles must travel . The importance of properly securing a small non-conveyable must have been very evident to the Defendants. If this consignment had been carried in a baggage trolley or an aircraft container it is most unlikely that the same would have fallen in the course of being transported. For this reason, having regard to the contents of the Defendants’ induction manual an the evidence given by Mr Sodergard [the Defendants’ General Manager] I find as a matter of probability that this consignment was being carried from building 2 to building 3 on a wooden pallet by a forklift truck and that it was unsecured and expected to stay in place under its own weight . Had this consignment been carried on a baggage trolley or aircraft container it is most unlikely that it could fall out unless the baggage trolley or the container was not completely or properly closed which, according to Mr Sodergard is not very likely to have occurred.”
12. It is agreed that the learned trial judge inadvertently misstated the carriage as having been from Building 2 to Building 3, but this is immaterial. His findings were relevant to his conclusions as to the issue of recklessness under the Warsaw Convention . I will summarise the relevant provisions of the Warsaw Convention before returning to some other evidence upon which the respondent relies in the appeal.
WARSAW CONVENTION
13. The Warsaw Convention as amended from time to time has the force of law in the State by virtue of certain provisions of the Air Navigation and Transport Acts. Section 17(1) of the Air Navigation and Transport Act, 1936 provided:
“The provisions of the Warsaw Convention as set out in the First Schedule to this Act shall, so far as they relate to the rights and liabilities of carriers, passengers, consignors, consignees and other persons, and subject to the provisions of this section and the next following section, have the force of law in Saorstát Eireann in relation to any carriage by air to which the Warsaw Convention applies, irrespective of the nationality of the aircraft performing that carriage.”
14. It is common case that DHL is responsible, subject to the terms of the Warsaw Convention, for loss or damage to goods occurring while they are being handled at the Brussels airport. Article 18(2) defines “carriage by air” as comprising a time when the goods are in the care of the carrier in an “aerodrome.”
15. The provisions relevant to liability are in Chapter III of the Convention.
16. Article 18(1) imposes strict liability:
“Article 18(1) The carrier is liable for damage sustained in the event of the destruction or loss of or of damage to any registered luggage or any goods if the occurrence which caused the damage so sustained took place during the carriage by air.”
17. Article 20(1) permits the carrier to escape liability “if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.” No attempt was made to discharge this burden. Nor was reliance placed on Article 21 which envisages a form of contributory negligence.
18. The liability of the carrier is, however, restricted by Article 22(2) (as amended by the Hague Protocol) to a small sum per kilogram of weight, expressed in French francs, and unrelated to any actual loss, unless the consignor of the goods makes a “special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires.” The respondent relied on certain purported declarations for the purpose of this Article but the learned trial judge rejected these claims as not being specially directed to the invocation of the Article. There is no appeal form that part of his judgment. Thus, at first sight, the limitation applies.
19. The carrier is not permitted to fix any lower limit of liability than that provided for. Any provision of a contract attempting to impose such a limit is “null and void” (see Article 23). The Hold Harmless Letter contained a purported limit but the Appellants do not rely on it.
20. The main focus of the case both in the High Court and on the appeal has been on Article 25 of the Warsaw Convention as amended by the Hague Protocol of 1925, to which effect of law in the State was given by section 7 of the Air Navigation and Transport Act, 1959. As so amended it provides:
“The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission or a servant or agent, it is also proved that he was acting within the scope of his employment.”
21. In its original form, Article 25 had provided:
“The carrier shall not have the right to avail himself of the provisions of the present Convention which exclude or limit his liability, if the damage is due to malice or to such default on his part as, in accordance with the law of the Court seised of the case is considered to involve malice.”
THE ALTERNATIVE CLAIM
22. Two further provisions of the Warsaw Convention are relevant to the respondent’s alternative claim alleging “gross negligence” ( grobe Fahrlassigkeit) by the Appellants, based on the “Important Notes” ( wichtige Hinweise) printed on the German version of the Airwaybill . Those notes would impose liability on the carrier for gross negligence. They provided that where the Warsaw Convention applied, liability of the carrier would be limited by the Convention except as follows:
“(a) In respect of direct consequence of damage loss or unreasonable delay of the consignment where the Defendants have demonstrated wilful intent or gross negligence.
(b) In respect of indirect consequences of damage loss or unreasonable delay of the consignment the Defendants shall be liable in respect of wilful action, gross negligence and culpable non-observance of essential contractual terms.”
23. The learned trial judge heard evidence of this concept in German law from expert witnesses, concluding that it was not, for the purposes of this case materially different from the concept of recklessness envisaged by Article 25 of the Convention. The “Important Notes” were attached only to the German language version of the Airwaybill. Even in that form, it was never given to the respondent. The printed terms in English, printed on the reverse of the English language version of the Airwaybill contained no reference to “gross negligence” or to any similar concept.
24. Article 6 of the Convention provides for an “air consignment note” (called the Airwaybill in amendments to the Convention) to be made out by the consignor in three parts. Article 11(1) provides:
“In the absence of evidence to the contrary the air consignment note shall be evidence of the conclusion of the contract, of the receipt of the goods and of the conditions of carriage.”
25. In this connection, the Appellants accept that the Warsaw Convention does not prevent the carrier from adopting obligations including a basis of liability going beyond the terms of the Convention . Article III. 2 of the Guadalajara Convention of 1961 (given effect in the State by the Air Navigation and Transport Act, 1965.) envisages that there may be “a special agreement under which the contracting carrier assumes obligations not imposed by the Warsaw Convention…” They say that there was no such special agreement in this case .
THE HIGH COURT JUDGMENT
The learned trial judge reviewed authorities on the normal meaning of the term “recklessness.” He held that failure to take account of knowledge of probability of damage as an additional component of the test in Article 25 would deprive the conjunction “and” of meaning. His review of the authorities on the interpretation of the Warsaw Convention led him to conclude that, while the test for recklessness was an objective one, the test for knowledge is subjective. So stated, his conclusions on the law have been accepted at the hearing of the appeal. It is rather his application of these tests to the facts of the case that have been challenged. The learned trial judge expressed himself as follows:
“Having regard to the foregoing I find that the Defendants were reckless having regard to the following circumstances:-
1. The consignment was carried on a wooden pallet by forklift without being secured.
2. The nature of the consignment was such it was likely risk (sic) that it would be dislodged by movement of the forklift.
3. It was likely that if dislodged the consignment would be run over by another vehicle having regard to the heavy volume of vehicular traffic, the speed at which that traffic travelled and the constraints under which the drivers operated.
To adopt the phrase from S.S. Pharmaceutical Co Ltd v Qantas Airways Ltd the treatment of the consignment amounted to deplorably last (sic, should read ‘bad’) handling
Further I find that a reasonable person having knowledge of the circumstances enumerated above would have knowledge that damage of the nature which in fact occurred would probably result if the consignment fell from the forklift. The onus therefore, passed to the Defendants to show that the actor did not subjectively have the requisite knowledge; they did not apparently seek to identify the actor although it would probably have been possible to do so from their rosters for the night in question and in consequence no evidence as to the actual state of knowledge was led.
In consequence of these findings the Defendants are not entitled to rely on the limitation of liability under the Convention.”
26. The learned trial judge also held that the effect of the airwaybill was to render the Appellants liable if damage was caused by gross negligence. He found as a fact, having heard the evidence of experts on German law called by the respective parties, that gross negligence covered both the subjective and objective tests of liability, which he had discussed in respect of Article 25. Consequently, he found the Appellants liable under that heading also.
THE APPEAL
27. There is no contest on any issue of primary fact. The Appellants challenge the inferences of fact drawn by the learned trial judge both in support of his conclusion that the Appellants were, objectively speaking, guilty of recklessness and that the actor responsible for the act that caused the damage actually knew, i.e. subjectively it was probable.
28. The challenge to the findings of the learned trial judge are summed up in the contention that there was no direct evidence and no evidence from which inferences could reasonably be drawn as to:
(a) how that container came to be on the roadway;
(b) where it was coming from and where it was going to;
(c) the manner in which the container was loaded or stacked, including whether there was any other article on the pallet;
(d) what caused the container to fall to the ground.
29. On the issue of knowledge, the Appellants argued that it was impossible to draw inferences from the facts of the fall of the container to the ground as to the state of knowledge of the unidentified actor involved in its fall. The respondent was relying on the same conclusions drawn from the fact that the container was carried unsecured on the pallet of a fork-lift truck to infer recklessness (objectively) and knowledge of probability of damage (subjectively). Furthermore, the learned trial judge, at one point, appeared to shift the burden of proof to the Appellants, whereas it should always rest on the claimant, i.e. the respondent.
30. The respondent fully supported the approach of the learned trial judge and said that he was entitled to infer knowledge not only from the facts he had found and recorded in his judgment but also from the uncontradicted evidence of the experts called for the respondent and from certain admissions made by Mr Sodergard, particularly that it was not rational to carry the container in the manner described.
31. As to the proof of knowledge of probable damage, the respondent argued that the learned trial judge did not impose any legal burden of proof on the Appellants. The facts of how the accident happened were at all times exclusively within the control of the Appellants. At a certain point, where evidence was given from which it was reasonable to infer knowledge in the absence of an explanation, the learned trial judge was entitled to draw that inference from the failure of the Appellants to give evidence. In fact, the learned trial judge did not go so far. He merely concluded that the objective facts would lead a reasonable person to believe that damage was likely. In those circumstances, he held that the evidential burden passed to the Appellants who could call the actor to give evidence of his subjective state of knowledge. Reliance was placed on a decision of the Federal Court of Australia in Trade Practices Commission v David Jones (Australia) Pty Ltd and others 64 A.L.R. 67 on the drawing of inferences from failure to give evidence.
THE CONVENTION CLAIM
32. Although the Convention enjoys the force of law in the State by virtue of the Air Navigation and Transport Acts, it is an international agreement. As such, it should receive a purposive interpretation. On the other hand it falls to be applied by the courts of each contracting state in accordance with its national procedural rules and, in particular, the rules of evidence. There is no system of reference of questions of interpretation for rulings to bind the courts of the contracting states as there is under the Treaty Establishing the European Community. Hence, it falls to this Court to interpret the Convention in accordance with its scheme and objects. It may, of course, have regard to notions such as recklessness as they exist in the common law, but terms in the Convention should receive, as far as practicable, an autonomous Convention meaning. It is desirable that such an international agreement be interpreted with reasonable consistency in the different contracting states. Inconsistent decisions could lead to forum shopping. Decisions of the courts of other contracting states are useful sources of guidance for that purpose.
33. Article 25 comprises the distinct elements, recognised in the case law, of a reckless act and knowledge of its probable consequences, although the two are inevitably closely related.
34. The parties referred to Sidhu and others v British Airways plc [1997] AC 430 (“ Sidhu”); Goldman v Thai Airways plc [1983] 1 WLR 1186 (“ Goldman”), both decisions of the House of Lords. The principal other authority was the decision of the Court of appeal of Australia in SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] LLR (“ Qantas”). Other useful authorities cited were Antwerp United Diamond B.V.B.A. v Air Europe [1996] Q.B. 317 (“ Antwerp United” ); Nugent and Killick v Michael Goss Aviation Ltd [2000] 2 Lloyd’s Reports 222; Rolls Royce plc v Heavylift Volga DENPR Ltd [2000] 1 Lloyd’s Reports 653.
Sidhu is not, on its facts, of direct relevance to the present case. The House of Lords there held that the Convention excluded other common law remedies, where passengers claimed that the aircraft was negligently landed in Kuwait to coincide with the Iraqi invasion of that country and leading to the imprisonment of the passengers, but brought their proceedings outside the two-year time limit laid down by Article 29 of the Convention. Nonetheless, the speech of Lord Hope contains (at page 453) a passage which is relevant to the interpretation of the Convention. Having noted the tendency of the common law to provide a remedy whenever a breach of duty has led to a loss, he continued:
“Alongside these principles … there lies another great principle, which is that of freedom of contract. Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contract. Exclusion and limitation clauses are a common feature of commercial contracts, and contracts of carriage are no exception. It is against that background, rather than a desire to provide remedies to enable all losses to be compensated that the Convention must be judged. It was not designed to provide remedies against the carrier to enable all losses to be compensated. It was designed instead to define those situations in which compensation was to be available . So it set out the limits of liability and the conditions under which claims to establish that liability, if disputed, were to be made. A balance was struck, in the interests of certainty and uniformity.”
35. Although these remarks concerned the reliance of the carrier on a limitation period for the making of claims, they are equally applicable to the Convention rule limiting the quantum of the carrier’s liability and the conditions under which that limitation could be overcome. The limit will not apply, by virtue of Article 25, if the “act or omission of the carrier his servants or agents was done with intent to cause damage or recklessly and with knowledge that damage would probably result.” In the passages cited by the Appellants from the authorities judges have used different terms to describe the special nature of this requirement. O’Connor L.J. in Goldman spoke of “exceptional wrongdoing”; in Antwerp United, Hirst L.J. referred to “extreme misconduct” and Kirby P. in Qantas to a “rigorous standard” and “stringent requirements.” Gleeson C.J. and Handley J.A., in the last-mentioned case, accepted such descriptions “provided that the more colourful description is not permitted to replace the language of the Article as the test to be applied.”
36. In my view, a court should not lightly infer recklessness from the sort of evidence which would merely justify a finding of negligence. While it is clear that an intentional and a reckless act are not the same, the juxtaposition in Article 25 of the latter with the former demonstrates that proof of recklessness in the true sense is required, i.e. the commission of an act, conscious of the danger of damage but not caring whether damage will occur. Eveleigh L.J. in Goldman emphasised the need for caution in resorting to cases on English statutes. What had to be determined was “the meaning of a convention …. incorporated into English law.” He thought that the ordinary meaning of recklessness could be described thus: “When a person acts recklessly, he acts in a manner which indicates a decision to run the risk or a mental attitude of indifference to its existence.”
37. I would adopt the explanation of the scheme of the Convention given by Kirby J.A. in Qantas (page 297):
“From this scheme of the Warsaw-Hague Convention, it may be deduced that the Convention introduced an early form of quasi no fault liability in air carriers and entitlements in passengers and consignors without the need on their part to prove fault. True, the air carrier could escape liability altogether; but only by proof of the matters set out in art. 20. The onus of proving those matters lay upon the air carriers. Likewise, the passenger or consignor could escape the régime under art. 25; but only by the proof of the stringent requirements set out in that article. The general régime was to be that laid down in art. 22. The price for the entitlement provided under that article was the imposition of a maximum coverage which, even in 1929, was not high. To secure a higher coverage for cargo, a special declaration, attracting higher charges was contemplated. Alternatively, the consignor could take out its own insurance. In construing the phrase in art. 25 which must be applied to the facts of the present case, it is vital to keep this overall scheme of the Convention clearly in mind. The phrase appears in articles which are designed to give effect to that scheme. It must therefore be given a construction which advances the achievement of its purpose and does not frustrate the attainment of that object.”
38. As a matter of principle, it is true that a judge applying the standard of proof on the balance of probabilities may be able to infer that an act was committed recklessly in the sense of described by Eveleigh L.J.. The evidence would need, however, to be clear and cogent. This is not to alter the standard of proof. It is the consequence of the fact that people do not readily, in the normal course of their lives, and particularly in the ordinary course of their work act in conscious disregard of the consequences of their careless actions. Clear and convincing, though not necessarily direct proof would be needed to displace the assumption that people will in general try to avoid obvious risks of damage to others.
39. As to the element of knowledge, it is common case that the Convention envisages proof of actual knowledge. The learned trial judge approached the issue of knowledge on that basis, though with a qualification to which I will refer later. It is, therefore, strictly speaking unnecessary to refer to the authorities on this issue in any detail. Kirby J.A. in the Australian Court of Appeal in Qantas referred in some detail to the travaux préparatoires for the Hague amendment to demonstrate that actual knowledge was intended to be the test. Eveleigh L.J. in Goldman also analysed the travaux préparatoires though only to support his own conclusion, based on the wording of the provision, to the same effect. He could “not believe that lawyers who intended to convey the meaning of the well-known phrase ‘knew or ought to have known’ would have adopted “with knowledge”.”
40. It is instructive to consider the application of these principles to the cases which have been cited. Goldman was a personal injury claim by a passenger who was thrown violently form his seat when the plane was flying through an area of clear air turbulence. (CAT). The trial judge had found the captain guilty of recklessness in failing to turn on the “Fasten Seat Belts” sign when he had been warned to expect CAT. The Court of Appeal felt unable, though without much apparent enthusiasm, to disturb his findings on this issue based as it was on his assessment of the witnesses, expert and other. On the other hand, there was in the view of the Court of Appeal no evidence from which he could have found that the captain knew that damage would probably result. Eveleigh L.J. laid emphasis on the “adverbial phrase ‘with knowledge that damage would probably result’” and concluded: “I cannot see that we are entitled to attribute to him knowledge which another pilot might have possessed or which he himself should have possessed.”
41. The principal case in which the agreed principles were applied to the contrary effect, i.e. against the carrier, was Qantas. In that case, goods in transit under the responsibility of the carrier, and marked “Keep dry and cool”, were left in the month of January unprotected and without any waterproof cover for some seven hours in the open on tarmac during a thunderstorm at Sydney Airport. Such storms are frequent in Sydney at that time of year and one had been forecast. As stated in the leading judgment, “it was obvious to everybody that it was a wet day, and the likelihood of a thunderstorm was also apparent.” The goods were liable to damage from rain and were in fact damaged to the extent of being rendered unsaleable. The carrier admitted “deplorably bad handling.” The majority in the Court of Appeal declined to disturb the findings of the trial judge. In particular, the majority considered that inferences could be drawn from the failure of the carrier to call as witnesses identifiable persons, who had been directly responsible for the handling of the goods. The majority judgment contains the following passage:
“However, servants or agents of the appellant unloaded this and other cargo and moved it to its intended location. The inference is fairly open, as we have already held, that such servants or agents, including Mr Johnson [the person in charge] and perhaps others, observed the marks on the cargo which indicated that it should be stored in a dry environment, observed the poor state of the plastic wrapping later reported in Tokyo, observed that it was raining, and that a typical Sydney summer thunderstorm was likely, and left the cargo in the open without taking the steps that they knew would be essential to protect that cargo if it should rain heavily. On the basis such servants and agents must also have known that such ‘deplorably bad handling’ of the cargo would probably result in damage to the cargo.”
42. The respondent relies heavily on this passage as well as on a decision of the Federal Court of Australia-General Division in Trade Practices Commission v David Jones and others (“Trade Practices” ) 64 A.L.R. 67 on the inferences that may be drawn from failure to give evidence. The Appellants, on the other hand, rely equally strongly on the dissenting judgment of Kirby J.A. in Qantas. That learned judge disagreed with the majority not only in respect of the inferences of recklessness but more especially in respect of the issue of knowledge of probable damage.
43. It remains the task of the Court to determine, however helpful the authorities which have been cited, whether the learned trial judge in this case erred in drawing inferences which led him to the conclusion that the acts of the Appellants their servants were both reckless and done with the requisite knowledge. Even where there is general agreement on the applicable legal principles there can be divergences in their application even to similar facts.
44. The core of the conclusion of the learned trial judge is that the carriage of the package on a wooden pallet by forklift without its being secured was likely to lead to the package being dislodged. In the latter event, it is not disputed that severe damage was highly likely. However, nothing is known about how or where the package was placed on the pallet or how it was dislodged. The evidence is as consistent with its having been placed alone on the pallet as with or surrounded by other consignments and as consistent with its being placed at the back as at the front or side of the pallet. Equally, there is no indication as to whether it fell off or was dislodged by accidental contact with another passing forklift truck or a different method of conveyance. In this state of affairs, there is no doubt that, at common law, a court would presume negligence against the carrier, thus imposing upon him a burden to disprove fault on his behalf. Nonetheless, it is not enough, in my view, to justify an inference of recklessness, i.e. a conclusion that some unnamed servant or agent of the Appellants behaved not merely carelessly but with indifference as to the risk of damage to the goods. A conclusion of recklessness would not be an inference but would be speculation.
45. The respondent attached a good deal of importance to a claimed admission in evidence by Mr Sodergard, the Appellants’ General Manager, that the transport of the package on a forklift in the manner described was not “rational.” This evidence needs to be seen in context and it should be remembered that the witness was not a native speaker of the English language. What he said was: “It is not a very practical way of transporting shipments of this kind. They are not very rational to do so, so it’s not something that our supervisors would encourage staff to do.” It is by no means clear that it concerns the safety of the carriage. It is significant that the learned trial judge did not attach the same importance to this admission as the respondent. I do not think it is open to this court on appeal to make findings of primary fact, which would be required if it were to draw any conclusions from this piece of evidence. The same applies to the expert evidence upon which the learned trial judge did not pronounce any conclusion. I do not think the inference of recklessness was justified.
46. In the light of this conclusion, it is not strictly necessary to consider the issue of knowledge of probability of damage. I will deal, however, with that matter as an alternative and on the hypothesis that my primary conclusion is not correct. Even assuming a servant or agent of the Appellants to have behaved recklessly in placing the package on the pallet in the manner considered by the learned trial judge to be reckless, I do not consider that there is any evidence to justify a finding of subjective, i.e. actual, knowledge on the part of the operative in question that damage was probable. I accept, for the purposes of this issue that it is not necessary to identify still less name the operative in question. It would be sufficient if it could be shown that an operative of the Appellants, in handling the goods recklessly, must have known that damage was probable.
47. I do not think the learned trial judge correctly applied the subjective test. Firstly, having referred to the authorities, including Goldman and Qantas, he stated that the test of knowledge was subjective, but went on to say
“However, the onus on a Plaintiff to satisfy the Court on the subjective test of knowledge can be satisfied by establishing facts which must have been apparent to the actor which would give the requisite knowledge to a reasonable person that damage would probably result whereupon the onus would pass to the defendant who could offer the actor in evidence as to his subjective state of knowledge. In the present case the actor has not been identified and accordingly in order to satisfy the requirement of Article 25 it is sufficient for the Plaintiff to show that the circumstances are such that a person acting with knowledge of those circumstances must be regarded as having the requisite knowledge.”
48. His final conclusion quoted earlier in this judgment is based similarly on the test of a reasonable man as the basis for shifting the burden of proof. This is, in my view, incorrect. It is the approach that was rejected by the Court of Appeal in England in Goldman, where Eveleigh L.J. refused to accept an approach based on “knowledge which another pilot might have possessed or which he himself should have possessed.” In effect, the learned trial judge relied on the same facts to found his inference of recklessness by some servant or agent of the Appellants as to reach the further conclusion that the same servant or agent had the requisite subjective knowledge. This blurs the distinction between the two parts of the test. It submerges the subjective requirements of the second part in the objective requirement of the first.
49. The respondent invited the Court at the hearing of the appeal to follow certain dicta in the Australian case law regarding the drawing of inferences from the failure of a defendant to call rebutting evidence. The facts in Qantas from which the majority of the Court of Appeal of Australia were prepared to draw inferences from failure to call evidence were different. In that case, there was direct evidence of the markings on the consignment which the responsible personnel must have seen. The person directly in charge of the cargo was identified by name, was in court during the hearing and was not called. Furthermore, the carrier had admitted “deplorably bad handling.” These elements were of such a character as to convince a majority of the court that the person in question, if called, would not have been able to deny that he knew of the likelihood of damage from leaving the goods in the open during a thunderstorm. I would distinguish that type of case, where there was compelling reason to infer actual knowledge from the silence of the carrier from a case, such as the present, where the actor has not been identified. I am conscious of the complaints made by the respondent regarding the Appellants’ failure to investigate the occurrence, to furnish a report on it and general lack of cooperation. I do not think these criticisms are sufficient reason to justify a finding of fact made by inference that a particular person had a particular state of mind. The criticisms cannot fill gaps in the evidence. They are not such as to persuade that such a state of mind is more likely to exist. For similar reasons, I am not persuaded of the relevance of Trade Practices . That was a case of alleged collusive pricing arrangements contrary to Australian legislation. There was evidence of a meeting at which a number of the defendants attended but of which none were called to give evidence and of parallel pricing in the relevant market thereafter. The effect of the decision can be fairly summarised as meaning that, where there is evidence of market behaviour from which the existence of an arrangement or understanding could be reasonably inferred combined with evidence of a meeting between the relevant market operators, a court could more readily infer that such an arrangement or understanding was arrived at at the meeting in question when none of the participants availed of the opportunity to give evidence. The probability of the meeting having been the occasion of collusive market behaviour was increased by the fact that those attending declined the opportunity to give evidence. No analogous conclusion can be drawn in the present case. No person has been so identified as to lead to the presumption of knowledge that the particular handling of the package would probably result in damage. The learned trial judge made it clear that he was not drawing any additional inference adverse to the Appellants from their failure to call evidence. He stated:
“I do not draw any additional inference from the failure to do so in this case as the evidence before me was that the actor had not been identified and indeed had he been identified the onus would nonetheless remain on the Plaintiff as the Defendant here as always is not obliged to give evidence.”
50. I agree that, in the circumstances, it would not have been warranted for the court to draw an inference of knowledge of probable damage from the failure of the Appellants to call evidence from the responsible operator or actor.
51. For these reasons, I would allow the appeal insofar as the Convention issue is concerned.
GROSS NEGLIGENCE
52. As explained above, the respondent’s case on this issue depends entirely on the terms of Article 11(1) of the Warsaw Convention, combined with the inclusion of the “Important Notes” ( wichtige Hinweise ) on the German language version of the Airwaybill. The contractual arrangements between the parties had been made in February at a meeting in Ireland. All discussions were in the English language. The German language printed document was never at any stage sent to the respondent, who were not even aware of it until after the accident. It was sent only to the German consignor, which was not a contracting party. The English-language version of the printed notes attached to the Airwaybill contains no reference to “gross negligence.” Article 11(1) makes the terms of the Airwaybill evidence of the conditions of carriage only in the absence of evidence to the contrary. Each of the points I have mentioned tends to the contrary of the “Important Notes” as a contractual document. The Appellants have, of course, acknowledged in oral argument that a carrier may, in principle, and in particular by virtue of a “special agreement” of the type envisaged by Article III of the Guadalajara Convention, assume obligations and thus liability greater than the terms of the Convention. Nonetheless, that liability must be based on the terms of the contract. I do not believe that the “Important Notes” formed part of the contract between the respondent and the Appellants. It is clearly not a “special agreement” as envisaged by the Guadalajara Convention. Accordingly, the Appellants could not be held liable for gross negligence. I would allow the appeal on this ground also.
53. Accordingly, I would allow the appeal and substitute an order dismissing the claim of the respondent.
Post Office & Anor v British World Airlines Ltd
[2000] EWHC 204 (Comm)
Thomas J
The construction of clause 4 of the contract between the Post Office and BWA
It was common ground that the liabilities between the Post Office and BWA should be determined by the provisions of the contract. It was not in issue that the scope of clause 4 of the contract, particularly when read with clause 13 and clause 3, was wide enough to make BWA liable for any loss or damage of any item of mail accepted by BWA, subject only to the force majeure clause. It was agreed for the purposes of the preliminary issue that the mail had been accepted by BWA and was at their risk under the terms of the contract.
However, it was contended by BWA that it was only liable under the contract to the Post Office for the amounts which the Post Office had to pay to its customers if that amount had been paid under one of its schemes; and that, in any event, the contract provided a still further limitation as the separate paragraph of clause 4 which subjected BWA to the liabilities imposed by the Carriage by Air Act 1961 applied the limitations of liability contained in the Article 22 of the Warsaw Convention as set out in the 1967 Order.
The Pot Office contended that the reference in the contract to the schemes made under the Post Office Act did not restrict the liability of BWA to pay the Post Office only for mail that was carried under schemes. BWA were made liable in respect of all mail carried; the reference to the schemes provided only a limitation of liability. Furthermore, the Post Office submitted that, as the parties had in any event agreed a limitation of liability by reference to the schemes of the Post Office Act, it was inconceivable that they had agreed yet a further limitation under the Warsaw Convention, particularly as that was calculated by weight and thus in a wholly different manner from the per item limit in clause 4.
It is convenient to consider these points in turn.
The reference in the contract to schemes made under the Post Office Act
It was common ground that clause 4 should be construed by reference to the surrounding circumstances and the principles set out in the judgment of Lord Hoffman in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 at 912f to 913e. On the material before me I am satisfied that the background known to the parties included the following matters:
( The Post Office carried mail (including parcels) either under one of its schemes or under contracts entered into with its customers.
( Mail would be carried under contracts which were entered into between the Post Office and their customers on Parcelforce 24/48 terms or on terms that might include the imposition of liability of the Post Office for loss or damage; it was a feature of the Parcelforce 24/48 terms that inclusive insurance was provided up to a specified amount per item.
( The Post Office provided an ordinary mail service called Parcelforce Standard which provided for compensation as an optional extra.
Against that background, it is difficult to understand how two commercial parties could sensibly have intended clause 4 which in general terms imposed the risk of loss on BWA to limit that risk only to mail carried under one of the statutory schemes. Indeed it seems to me clear from the language of the clause that these two parties intended no such thing and intended the reference to the schemes made under the Post Office Act to act as a ceiling for compensation paid by the Post Office, whether the liability of the Post Office arose under a scheme or under a contract.
The language of the clause, viewed against the surrounding circumstances, made that quite clear. It provided that BWA “shall be liable to pay to the Post Office” for each item lost or damaged “such sum of money as shall be equal to the amount which the Post Office shall, at its sole option and discretion, pay to the sender or addressee of such items as compensation”. Those words are, in my view, clear and imposed liability to pay the amount that the Post Office decided to pay as compensation. There were no words limiting the compensation payable to compensation payable under a scheme. If the parties had intended such a result to follow, given the fact that the parties knew that mail would be carried both under schemes and under contract, I am sure they would have said so.
The wording of the proviso which follows is a limitation on the amount payable. It is clear from the language that by using the words “provided always that such amounts shall not in any case exceed the maximum amount payable [under a scheme]” the parties were referring to the schemes purely for limiting the amount payable. They were not using the proviso to determine whether compensation was payable at all. It seems to me by the use of the reference to the amount the parties made their intention clear.
I am therefore sure, both as a matter of the language of clause 4 and as a matter of a sensible and purposive construction of the clause, that BWA are liable to pay the amount the Post Office paid as compensation for any item lost or damage, but subject to the maximum amount payable under the Post Office schemes.
The position in relation to the amounts paid to BT
It follows therefore that, as the Post Office was bound to pay compensation to BT under its contract with them if the accident was caused by the negligence of BWA, then if they paid on the basis that the accident was or may have been so caused, then the Post Office would be entitled to recover the amount paid from BWA, subject to the limit set out in the Post Office schemes.
The position in relation to the other customer claimants
However, in respect of the other customers which contracted with the Post Office (and possibly also BT on the assumed findings for the purpose of this preliminary issue), the amount the Post Office paid was paid on the basis they were paying out “the insurance cover which should have been arranged under clause 6.5 of the Parcelforce 24/48 terms”. Indeed as clause 6.2 of those terms excluded the Post Office’s liability, there was no other basis on which the Post Office would have paid Motorola, Burberrys and Wemyss Weavecraft.
The question therefore arises as to whether this was paid “as compensation” within the meaning of clause 4. BWA said that the sums paid to Motorola, Burberrys and Wemyss Weavecraft were not paid as compensation within the meaning of clause 4, first because there was no obligation for the Post Office to pay and secondly that what was paid was a payment in lieu of the insurance cover which should have been obtained.
The first contention made by BWA depended upon clause 6.4 of the Parcelforce 24/48 terms and conditions. Under that clause, the Post Office was entitled at any time to modify or withdraw the insurance arrangements. BWA therefore submitted that as the Post Office was entitled at any time to withdraw the insurance arrangements, once it had done so, it was under no liability at all.
I do not accept that argument. Considering the Parcelforce 24/48 terms as a whole, it is clear that the Post Office could only withdraw the insurance arrangements if it gave notice to its customers. I am sure that clause 6.4 was subject to an implied term to that effect and the implication of such a term was necessary to give business efficacy to the contract. If one considers the whole of the terms against the background as advertised, it is clear that the insurance arrangements were a key feature of the services offered to its bulk customers. In my judgment, it could not be withdrawn without giving reasonable notice, thus entitling the bulk customers to decide whether they wished to continue to use the service. As it is to be assumed for the purpose of this preliminary issue that no notice was given, I am satisfied that the Post Office was bound to compensate Motorola, Burberrys and Wemyss Weavecraft on the basis that insurance should have been obtained.
The second argument put forward by BWA was more formidable. They pointed to the fact that under clause 6.2 of the Parcelforce 24/48 terms, the Post Office excluded all liability for loss or damage for the parcels; the Post Office could never therefore have been liable to pay compensation for parcels carried under the Parcelforce 24/48 terms. Instead, the Post Office had agreed to arrange insurance up to a specified sum per parcel; under clause 6.7 of the Parcelforce 24/48 terms, the Post Office stated that they did not act as insurers, but had arranged a facility with insurance underwriters. BWA contended that if insurance had been obtained, it was the insurers who would have paid the customers and not the Post Office. The only right of action that insurers would have had against BWA was a subrogation claim they would have had to bring in the name of Motorola, Burberrys or Wemyss Weavecraft. Any claim against BWA would have been in tort or under the terms of the 1967 order, but such a claim was barred by the provisions of s.29(3) of the Post Office Act. Thus, as insurers could not bring a claim against BWA, it could never have been intended that the Post Office should be entitled to bring a claim under its contract with BWA for sums paid “as compensation” where they had paid out on the basis of the insurance which they should have obtained.
In my view this argument is correct. Construing the agreement against the background known to the parties, I consider that clause 4 was directed at payments that the Post Office would make as compensation and not payments made because the Post Office had failed to obtain insurance. The parties would not have anticipated when they used the words “as compensation”, a payment made by the Post Office in lieu of the insurance that it should have obtained. If and insofar as the customers were insured, whether under their own policies or by a policy arranged by the Post Office, the insurers would have had no rights by way of subrogation against BWA because of the provisions of s.29(3) of the Post Office Act. Thus the parties would never have anticipated BWA being liable to pay in the event of loss or damage where the Post Office were bound to obtain insurance and had excluded their own liability. Thus where the Post Office paid out because it had not obtained insurance, then in my view that payment was not within the words “as compensation” in clause 4.
Thus, in the result, in my view on the assumed findings that have been agreed for the purpose of this preliminary issue, the Post Office are not entitled to recover the sums that have been paid to Motorola, Burberrys or Wemyss Weavecraft. However, if the sums paid to BT were not in fact paid solely on the basis that insurance had not been obtained under the Parcelforce 24/48 terms, but on the basis that the Post Office was or might have been liable for negligence under its contract with BT, the Post Office is entitled to recover the monies paid to BT subject to the per item limit.
“Subject to the liabilities imposed by the Carriage by Air Act 1961”
The limit of liability under the schemes is a limit per item. If the item under Article 22 of the Warsaw Convention was to be applicable as an individual limit, that would be a limit by reference to the weight of either the individual items (if known) or the overall weight of the cargo. It would, in my view, have been wholly uncommercial for the parties to have agreed a limit per item and then to have subjected that limit to yet a further limit calculated on a different basis Do the words used compel that result?
In my view they do not. The reference in this separate paragraph of clause 4 was to the liability imposed by the Carriage by Air Act. I agree with the submission made by the Post Office that these words referred to the general liabilities imposed by that regime and emphasised (just as clause 13 of the contract emphasised) the liability for mail carried. The sentence referring to the Carriage by Air Act did not refer to “limitations and exceptions” and, in my view, there is no need to read the sentence as referring to the limitations. Furthermore Article X of the Guadalajara Convention as applied by the 1967 Order made it clear that nothing in the Convention affected the rights between the carriers. Thus, in my view, the limit applicable to compensation payable was that in the schemes and it was not subject to the further limitation in Article 22.
The alternative claim under the 1967 Order
I find it difficult to see how the Post Office can have a separate claim under the 1967 Order as, in my view, it is clear that the parties intended their liabilities to be governed by the contract.
It was common ground, as I have said, that the contract was in substance and form a charter agreement; BWA provided space on the aircraft for the exclusive use of the Post Office. No freight was payable as the sum payable under the contract was payable irrespective of whether any mail was carried or not. The contract was not a contract for the carriage of a specific consignment by air; no way bills were issued. Furthermore, it is clear from Article X of the Guadalajara Convention, that the terms of that Convention did not affect the rights and obligations of the two carriers as between themselves.
All of these factors point, in my view, to the clear position that the rights and liabilities between BWA and the Post Office were governed exclusively by the contract and not by the terms of the statutory regime. Thus, insofar as the Post Office did not have a claim under the contract or such a claim is limited by the terms of the contract, the statutory regime did not provide it with an alternative cause of action.
In case I am wrong in that view I will briefly express my views on the claim put forward by the Post Office under the 1967 Order. This can be done under three headings:
(1) The manner in which the statutory regime applies
It is clear from the decisions of the House of Lords in Sidhu v British Airways Plc [1997] AC430 and Herd v Clyde Helicopters [1997] AC 534 that where the Conventions apply, they create an exclusive right of action and resort cannot be had to other forms of action. The claim is then governed by the terms set out in the Convention.
(2) Who can sue?
In 1988, Gatehouse J decided in Gatewhite v Iberia [1990] QB326 that there was nothing in the Conventions which required only the consignee or the consignor to sue and an action could be brought by the owner of the consignment. However , as a result of the two decisions at the House of Lords to which I have referred in the preceding paragraph, the question decided by Gatehouse J was reconsidered in 1999 by David Steel J in Western Digital Corporation v British Airways [1999] 2 Lloyd’s Rep 380. He decided that only the consignee or the consignor or the person entitled to delivery could sue. At the conclusion of his judgment he doubted whether the parties had benefited from a further exposition from another first instance court on this long standing issue. As the same issue arises only as an incidental point in this case, I certainly do not wish to add yet another exposition from a first instance judge, particularly as the appeal in Western Digital Corporation is due to be heard in the Court of Appeal shortly.
However it is not easy to apply the concept of consignee and consignor to the carriage of mail by BWA for the Post Office. There were no waybills in respect of the consignments.
Furthermore as far as the customers (Motorola, Burberrys, Wemyss Weavecraft or BT) were concerned, it was a matter entirely for the Post Office whether it sent their goods by air or by road or by rail. Thus it is rather difficult to fit the concepts of contracting carrier and actual carrier and consignee and consignor into carriage under this contract. I find it difficult to see how a customer such as Motorola could be looked on as the consignee or consignor for the purpose of carriage by air when they did not know that their goods would necessarily go by air; furthermore BWA had no relationship with the customer and did not know who they were. As far as BWA was concerned, they were simply carrying a consignment of mail for the Post Office. If anyone had to be regarded as the consignee, I would have taken the view, on the facts of this case, that it was the Post Office and that therefore the Post Office could sue, assuming of course that the 1967 Order applied.
(3) The scope of the liability under Article 18
Article 18 of the Warsaw Convention only imposed liability “if the occurrence which caused the damage so … took place during the carriage by air”. It was BWA’s argument that the claim made by the Post Office was for a loss which was not caused by an occurrence during the course of carriage by air; the claim was for a loss caused by the failure by the Post Office to obtain insurance.
I do not accept that argument. If there was liability under the statutory regime, and the Post Office was entitled to bring a claim, then the claim it was entitled to bring was in respect of the actual loss or damage sustained to the mail. Provided that the actual loss or damage took place during the carriage by air, then it was within Article 18. In my view the actual damage plainly so took place; the limitation in Article 18 is therefore inapplicable.
Conclusion
On the assumed facts for the purpose of the preliminary issue therefore:
( I hold that the Post Office was not entitled under the contract to recover the sums paid to Motorola, Burberrys or Wemyss Weavecraft as these were paid out in lieu of the insurance which it should have obtained.
( The Post Office might be entitled to recover the sums paid to BT, depending on the further elucidation of the facts; the claim was subject to a per item limit.
( I do not consider a claim could be brought under the 1967 Order.
Hennessey -v- Aer Lingus Ltd
[2012] IEHC 124
Hedigan J
1. The plaintiff/appellant (the plaintiff) resides at 17 Patrician Villas, Stillorgan, in the County of Dublin. The defendant/respondent (the defendant) is a limited liability company carrying on the business of an airline and with a registered address at Dublin Airport in the County of Dublin.
2. This case concerns an appeal from a ruling made on the 12th February, 2009 at Dublin Circuit Court. On that date a preliminary hearing was held in relation to the plaintiffs claim for personal injuries and loss under the Air Navigation and Transport Acts incorporating the Warsaw Convention, the Occupiers Liability Act, 1995 and the Equal Status Act, 2000. The preliminary issue before the Court was whether the plaintiff was confined to bringing his claim for personal injuries and loss under the Warsaw Convention exclusively or whether he was entitled to include provisions of Domestic Law in his claim. Judge Linnane determined that the Warsaw Convention provided an exclusive cause of action and the sole remedy for the plaintiff in respect of his claim and precluded any claim based on domestic law. In the within proceedings the plaintiff seeks to appeal against this determination of the preliminary issue.
Background Facts
3. 1 The facts which give rise to the plaintiffs claim are as follows; on the 15th February, 2002 the plaintiff, who is confined to a wheelchair, took a flight with the defendant airline from Dusseldorf to Dublin. The plaintiff’s motorised wheelchair was damaged in the cargo hold of the defendant’s plane. By letter dated the 2nd September, 2002, the defendant apologised to the plaintiff for the damage to his wheelchair and offered to compensate him for this damage in accordance with the terms of the Warsaw Convention. The plaintiff rejected the defendants offer and initiated proceedings seeking compensation for damage to his wheelchair. The plaintiff also claimed that he suffered personal injury because after the incident he was left without the use of his wheelchair, with the result that his health deteriorated and he become depressed. The plaintiff’s claim was brought in contract, negligence and breach of statutory duty pursuant to the Air Navigation and Transport Acts 1936-1998, the Occupiers Liability Act, 1995, and the Equal Status Act, 2000.
3.2 In its defence which was delivered on the 13th July, 2004, the defendant argued that the plaintiff’s claim could only be maintained insofar as permitted by the Warsaw Convention. The defendant pleaded that the Warsaw Convention provided the exclusive cause of action which arises in respect of international carriage by air. As the plaintiff failed to serve notice of trial, the defendant brought an application on the 26th February, 2008, to dismiss the proceedings on grounds of delay.
3.3 The County Registrar declined to dismiss the proceedings and instead directed that a preliminary issue be tried which related to the issue of the exclusivity of the Warsaw Convention. In the Circuit Court, Judge Linnane rejected the plaintiff’s argument that he was entitled to rely on domestic law. The Court stated at page 3:-
“I do not accept the plaintiff’s argument that a collateral contract came into being entitling him to bring claims under the Occupiers Liability Act or The Equal Status Act. These acts were not intended to amend the Warsaw Convention in this jurisdiction. If they had, Ireland would have been in contravention of its international obligations under the Convention. Article 24 clearly precludes a passenger from making concurrent claims under both the Warsaw Convention and domestic law.”
The plaintiff now seeks to appeal from this determination.
Plaintiffs Submissions
4.1 The plaintiff seeks to rely on the decision of the European Court of Justice in the Case 22/70 Commission v Council [1971] E.C.R 263 (the AETR case) where the ECJ held at paragraph 22 that:-
“to the extent to which (union) rules are promulgated for the attainment of the objectives of the Treaties, the Member States cannot, outside the framework of the (Union) institutions, assume obligations which might affect those rules or alter their scope.”
The plaintiff submits that this judgment read along with the European Community and European Union Legislation with respect to Passengers with Reduced Mobility overrides the Warsaw Convention insofar as it conflicts with the European Union Legislation thus giving passengers with reduced mobility protection against Airlines who breach European Union Laws in this area.
4.2 The plaintiff submits that the defendant has failed in commitments which it entered into in relation to persons with reduced mobility. These commitments are outlined in a letter of the 25th August, 2004 from one Fran Smyth of the Department of Transport to the plaintiff. Mr Smith wrote as follows:-
“I refer to your letter of 3rd August, 2004 to the Department of Transport regarding the legal rights and entitlements of disabled passengers while travelling by air. The regulatory system governing aviation interests stems from the European Union and the majority of Irish Legislation has been drafted to implement European wide legislation in order to enforce it in Ireland.
The Voluntary Passenger Service Commitments are a European initiative aimed at promoting a set of common customer standards among Europe’s airports and airlines. The Commitments were adopted during the European Civil Aviation Conference/EU dialogue with the European air transport industry in Lisbon on 10th May, 2001, and came into operation on the 14th February, 2002. Acceptance of the Commitments is voluntary… Aer Lingus is a signatory.
A special protocol entitled ‘Meeting the Needs of People with Reduced Mobility’ requires signatory airlines and airports to undertake certain commitments in relation to People with Reduced Mobility’ …
Among the commitments to People with Reduced Mobility is the requirement that…
…a signatory airline take all reasonable steps to avoid loss or damage to mobility equipment. If loss or damage does occur, the airline is committed to make appropriate arrangements to meet the individual’s immediate mobility needs….
The plaintiff points out that the commitments came into operation the day before his flight with the defendant. The plaintiff submits that due to the negligence of the defendant his motorized wheelchair was damaged with the result that his means of mobility was affected. The plaintiff further submits that the defendant failed to make appropriate arrangements to meet his immediate mobility needs in accordance with its commitments.
4.3 The plaintiff maintains that in order to secure medical treatment which is not available in Ireland he is required to travel abroad and he has no option but to travel by air. The plaintiff argues that his right as a European citizen to free movement within Europe has been interfered with by the defendants as on three occasions when he travelled with the defendant his motorised wheelchair has been damaged. The plaintiff submits that in addition to the defendant negligently damaging his wheelchair the defendant has also infringed his Human Rights by effectively depriving him of the opportunity to travel abroad for treatment. The defendant is acting in breach of inter alia Article 2 of the European Convention which protects the right to life and Article 5 of the Convention which protects the right to liberty and security. Finally the plaintiff submits the defendant by its actions has also breached its statutory duties to the plaintiff under the Occupiers liability Act, 1995 and the Equal Status Act, 2000.
Defendants Submissions
5.1 The defendant submits that at the time of the incident giving rise to these proceedings the Warsaw Convention, as amended, had the force of law in the State by virtue of Section 17(1) of the Air Navigation and Transport Act, 1936. The relevant provisions of the convention in this case are articles 17, 18, 22 and 24. Article 17 provides that:-
“The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.”
Article 18.1 provides that:-
“The carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.”
Article 22 contains prima facie limits of liability. In so far as damage to checked in baggage such as the plaintiff’s wheelchair, is concerned, Article 22.2 limits a carrier’s liability to 250 francs per kilogram unless a special declaration of interest was made at the time the baggage was handed over. This equates to approximately US$20 per kilogram, which formed the basis of the offer made by the defendant.
Article 24 provides that:-
“(1) In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in the present Convention.
(2) In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right of action and what are their respective rights.”
The defendant submits that it is clear that Article 24 precludes a passenger from making concurrent claims under both the Warsaw Convention and domestic law. The defendant further submits that the effect of this provision is that any claim in respect of personal injury allegedly sustained in the course of international carriage by air may only be brought insofar as is permitted by Article 17. Where such a claim does not satisfy the conditions for liability under the Convention the passenger is precluded from maintaining an action for personal injury damages under domestic law. The same situation applies in respect of damage to baggage which is governed by Article 18 alone. In other words, the Warsaw Convention provides the exclusive cause of action and sole remedy against an air carrier for injury, loss or damage sustained in the course of or as a result of international carriage by air and precludes claims based on domestic law.
5.2 The proper approach to the interpretation of the Warsaw Convention was considered by the Supreme Court in AHP Manufacturing v. DHL Worldwide Network [2001] 4 IR 531. Fennelly J. stated as follows at 541:-
“Although the Convention enjoys the force of law in the State by virtue of the Air Navigation and Transport Acts, it is an international agreement. As such, it should receive a purposive interpretation.”
The rationale for the convention was to bring harmonisation of the applicable laws. Before the convention came into force it was possible for passengers to claim under a variety of national laws and carriers were free to limit their liability to passengers by exception and limitation clauses. With the entry into force of the Convention certainty was brought to the law.
5.3 In Sidhu and Others v. British Airways PLC [1997] AC 430, a decision of the House of Lords, passengers on a flight from Kuwait were detained against their will on board an aircraft and subsequently made claims for damages under the common law. The House of Lords held that the passengers had no rights under the common law and the convention was their exclusive remedy. In El Al Israel Airlines Ltd. v Tsui Yuan Tseng (1999) 525 US 155, The United States Supreme Court reached the same conclusion in a case where a passenger sought to bring a state-law personal injury claim. The Court observed that to construe the Convention so as to allow passengers to pursue claims under local law when the Convention did not permit recovery could produce several anomalies. The Court noted that such a reading would scarcely advance the predictability that adherence to the Convention has achieved worldwide.
5.4 The issue of the exclusivity of the Warsaw Convention has been considered in a number of Irish Cases. In Smyth v Aer Turas Teoranta (Supreme Court, 3 February, 1997) the Supreme Court (per Blayney J) having considered an argument based on negligence in a case of carriage of goods went on to refer (obiter) to Sidhu and suggested that the effect of that decision might be that the Convention was an “exclusive and exhaustive code”, although the issue was left for another day as it had not been argued. When the Circuit Court was considering the preliminary issue in this case it found that the Warsaw Convention provided an exclusive cause of action and sole remedy for the plaintiff. In so doing the Court relied on the decisions in AHP Manufacturing, Sidhu and El Al. The same approach was taken by the Circuit Court in Nolan v. Aer Lingus Group PLC (Circuit Court, 9th November, 2009) where Judge Linnane concluded at page 7:-
‘The authorities show that in all questions relating to a carrier’s liability it is the provisions of the Convention which apply and a passenger does not have access to any other remedies…”
This issue has been recently determined by this Court in McAuley v. Aer Lingus Ltd. [2011] IEHC 89. In McAuley the plaintiff alleged slander arising from a complaint made by cabin staff to the police. The proceedings were struck out on the grounds that they had no prospect of success because liability for the wrongs alleged was excluded by the Montreal Convention (which contains effectively the same limitations as the Warsaw Convention). In its judgment, the Court set out the relevant provisions of the Montreal Convention and cited the decision in Sidhu. The Court then noted that Sidhu had been followed in Smyth and in Nolan. Noting that in Sidhu it had been held that where the Convention had not provided a remedy, no remedy was available either at common law or otherwise, the Court concluded (at paragraph 6.6):-
“On the basis of these authorities, it is quite clear that the plaintiff cannot succeed in relation to his claim that he was defamed while disembarking from the aircraft.”
Thus the defendant submits that the Irish courts have now expressly approved the approach of the House of Lords in Sidhu, i.e. that the Warsaw (or Montreal) Convention’s provide the only cause of action.
5.5 The plaintiffs claim is also based on an alleged failure of the defendant to comply with its statutory duties under the Occupiers Liability Act 1995 and the Equal Status Act 2000. As a matter of principle, the defendant submits that, having regard to the decisions referred to above, the same principles apply to a claim based on an alleged breach of statutory duty as apply to a claim based at common law. The desirability of uniformity of rules governing claims arising from international air transportation applies equally to statute based claims as it does to those based on common law principles of liability. In addition, the Oireachtas, in enacting the two statutes, can hardly be taken to have implicitly intended to amend the Air Navigation and Transport Acts, which would have brought the State into contravention of its international law obligations under the Warsaw Convention. Given the absence of clear contrary intention, it is clear that neither statute relied on by the plaintiff can apply to a case governed by the Warsaw Convention.
5.6 The plaintiff has sought to rely on a letter written to him on the 25th August, 2004 by the Department of Transport. The letter refers to Voluntary Passenger Service Commitments and in particular to commitments to People with Reduced Mobility. The Defendant is a signatory to these Commitments. The commitments however are expressly characterised at page one to be “non-legally binding commitments”. Thus the defendant submits that they do not provide the plaintiff with any cause of action.
Decision of the Court
6.1 On the 15th February, 2002 the plaintiff, who is confined to a wheelchair, took a flight with the defendant airline from Dusseldorf to Dublin. The plaintiff’s motorised wheelchair was damaged in the cargo hold of the defendant’s plane. The defendant apologised to the plaintiff for this damage by letter dated the 2nd September, 2002 and offered to compensate the plaintiff for this damage in accordance with the terms of the Warsaw Convention. The plaintiff rejected this offer and initiated proceedings seeking inter alia damages for negligence and personal injury. The plaintiff claimed that due to the defendant’s negligence his motorized wheelchair was damaged and that as a result of this he suffered personal injury as he was left without his means of mobility, with the result that his health deteriorated and he became depressed. The plaintiff also claimed that the defendant had breached its statutory duties to him under the Occupiers Liability Act, 1995 and the Equal Status Act, 2000. On the 13th July, 2004 the defendant delivered its defence, it pleaded that the plaintiffs claim could only be maintained insofar as permitted by the Warsaw Convention. On the 26th February, 2008, the defendant brought an application to dismiss the proceedings on grounds of delay as the plaintiff had failed to serve notice of trial. The County Registrar declined to dismiss the proceedings and instead directed that a preliminary issue be tried which related to the issue of the exclusivity of the Warsaw Convention. On the 12th February, 2009 Judge Linnane in the Circuit Court found that the Warsaw Convention provided an exclusive cause of action, was the sole remedy for the plaintiff and precluded any claim based on domestic law. In the within proceedings the plaintiff seeks to appeal this decision.
6.2 As provided for under section 38 of the Courts of Justice Act, 1936, this appeal from a decision of the Circuit Court to the High Court has proceeded by way of a full re-hearing of the decision. The decision of the Circuit Court was in relation to the preliminary matter of whether the Warsaw Convention provided an exclusive cause of action for the plaintiff. The Court is confined to considering this narrow issue and may presume for the purposes of this inquiry that the Plaintiff will be able to prove all the factual matters he alleges. The incident complained of in this case occurred on the 15th February, 2002. At that time the Warsaw Convention as amended, had the force of law in Ireland by virtue of Section 17(1) of the Air Navigation and Transport Act, 1936, which provides that:-
“The provisions of the Warsaw Convention as set out in the First Schedule to this Act shall … have the force of law in [the State] in relation to any carriage by air to which the Warsaw Convention applies, irrespective to the nationality of the aircraft performing the carriage.”
Article 1 of the Warsaw Convention provides that it:-
“…applies to all international carriage of persons, baggage or cargo performed by aircraft for reward”
I am satisfied that the Warsaw Convention applied to the carriage of the plaintiff by the defendant in the circumstances pleaded by him..
6.3 The plaintiff complains of damage to his wheelchair and also complains that this resulted in personal injury in that the loss of his mobility led to deterioration in his health. Personal injury and damage to property are covered by Article’s 17 and 18 of the Warsaw Convention. Article 17 provides that:-
“The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.”
Article 18.1 provides that:-
“The carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.”
In so far as damage to checked baggage is concerned, Article 22.2 limits a carrier’s liability to 250 francs per kilogram unless a special declaration of interest was made at the time the baggage was handed over. Article 24 provides that:-
“(1) In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in the present Convention.
(2) In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right of action and what are their respective rights.”
Articles 17 and 18 impose a form of strict liability which is to the benefit of passengers however Articles 22 and 24 provides a quid pro quo in that passengers are restricted in damages they can receive and the claims which they can bring by the conditions or limits set out in the convention.
6.4 The interpretation to be given to the Warsaw Convention was addressed by the Supreme Court in the case AHP Manufacturing v. DHL Worldwide Network [2001]4 IR 531. ln that case Fennelly J. held as follows at 541:-
“Although the Convention enjoys the force of law in the State by virtue of the Air Navigation and Transport Acts, it is an international agreement. As such, it should receive a purposive interpretation. On the other hand, it falls to be applied by the courts of each contracting state in accordance with its natural procedural rules and, in particular, the rules of evidence. There is no system or reference of questions of interpretation for rulings to bind the courts of the contracting states as there is under the Treaty of Rome. Hence, it falls to this court to interpret the Convention in accordance with its scheme and objects. It may of course, have regard to notions such as recklessness as they exist in common law, but terms in the Convention should receive, as far as practicable, an autonomous Convention meaning. It is desirable that such an international agreement be interpreted with reasonable consistency in the different contracting states. Inconsistent decisions could lead to forum shopping. Decisions of the courts of other contracting states are useful sources of guidance for that purpose.”
The purpose of the Warsaw Convention was to bring order to a fragmented system by a partial harmonisation of the applicable laws. Before it came into operation, passengers were free to claim under a diversity of applicable national laws, while carriers were free to limit their liability to passengers by exception and limitation clauses. The convention involves a form of quid pro quo. On the one hand, a form of strict liability is imposed on carriers, who surrender their freedom to limit or exclude liability, while on the other, passengers are restricted in the claims which they can bring in an action for damages by the conditions or limits set out in the convention.
6.5 In Sidhu and Others v. British Airways PLC [1997] AC 430, the House of Lords held that the passenger had no rights under the Common law and the Convention was their exclusive remedy. Lord Hope stated as follows:-
“The structure of [Article 23 and 24] seems to me therefore, to be this. On the one hand, the carrier surrenders his freedom to exclude or limit liability. On the other hand, the passenger or other party to the contract is restricted in the claims which he can bring in an action for damages by the conditions and limits set out by the Convention. The idea that an action for damages may be brought by a passenger against the carrier outside the Convention in the cases covered by Article 17, which is the issue in the present case, seems to be entirely contrary to the system which these two articles were designed to create.
The reference in the opening words of Article 24(2) to the ‘cases covered by Article 17 does, of course, invite the question whether Article 17 was intended to cover only those cases for which the carrier is liable in damages under that article. The answer to that question may indeed be said to lie at the heart of this case. In my opinion, the answer to it is to be found not by an exact analysis of the particular words used but by a consideration of the whole purpose of the article. In its context, the purpose seems to me to be to prescribe the circumstances, that is to say the only circumstances, in which a carrier will be liable in damages to the passenger for claims arising out of his international carriage by air”.
It is clear that Article 24 precludes a passenger from making concurrent claims under both the Warsaw Convention and Domestic Law, therefore a passenger is not entitled to pursue a claim against an airline for common law negligence or for an alleged breach of statutory duty.
6.6 Notwithstanding that the above finding is dispositive of this case, I feel that it would be appropriate to address a letter produced, for the first time, by the plaintiff at the hearing of this appeal. This letter was sent to the plaintiff on the 25th August, 2004 by the Department of Transport. The letter refers to Voluntary Passenger Service Commitments and there is a section dealing with commitments to People with Reduced Mobility. The Defendant is a signatory to these Commitments. I am satisfied however that the commitments do not give rise to any legally enforceable right on behalf of the plaintiff. The first page of the Commitments expressly states that they are “non-legally binding commitments”. Furthermore there is nothing in the document which suggests that it impacts on the exclusivity of the Warsaw Convention,which is the matter at issue in this appeal. Finally, I note that on the 7th February 2012, the date of the hearing in this case, the Court of Appeal of England and Wales affirmed the exclusive nature of the Warsaw and Montreal Conventions: see Hook v British Airways plc [2012] EWCA .. The English Court applied the Montreal Convention to exclude a claim for damages for an alleged failure by the airline to make reasonable efforts to meet the disabled plaintiff’s seating needs. This claim arose from an alleged breach of the UK implementation of Regulation (EC) No. 1107/2006 concerning the rights of disabled persons and persons of reduced mobility when travelling by air. That regulation incidentally post-dates the incident which is the subject of these proceedings. At paragraph 28 of its judgment, the Court rejected the submission that claims for damages based on fundamental or constitutional rights are an exception to the exclusivity principle, and concluded (at paragraph 35) that:-
“It is clear from the decisions of the House of Lords in Sidhu that there are no exceptions to the exclusivity of the Convention.”
Thus it can be seen that The Warsaw Convention provides the one and only way in which a passenger can maintain an action such as is herein pleaded. Upon this much litigated issue, the Supreme Court of Ireland, the High Court of Ireland, The House of Lords and the Court of Appeal of the United Kingdom and the Supreme Court of The United States are in agreement.
For all the above-mentioned reasons I must dismiss this appeal. The decision of the Circuit Court Judge on the preliminary issue was correct and is affirmed.
Fujitsu Computer Products Corp & Ors v Bax Global Inc & Ors
[2005] EWHC 2289
Clarke J
The history of the Convention
Prior to its amendment by the Hague Protocol 1955, the Warsaw Convention (“Unamended Warsaw”) contained in Article 8(q) the following provision:
“The air waybill shall contain the following particulars:
…
(q) a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention”.
As appears from the lettering of that sub-paragraph the statement was one of 17 matters particulars of which were required to be stated in the air waybill. Article 8 (q) was particularly troublesome to air carriers because whether or not the carriage was subject to Unamended Warsaw was not necessarily easy to decide. If the carriage was so subject, but the carrier failed to say that it was, Article 9 provided that the carrier was not entitled to avail himself of the limitation provisions of the Convention so a clerical error could have very serious consequences. A means of escaping from this dilemma would be to adopt a single form of air waybill which stated that the carriage was subject to the Convention – whether it was or not. That would, however, mean that, if the carriage was not so subject, the airway bill would be misleading.
That problem was met by the use of a condition in the following or similar form:
“Carriage hereunder is subject to the rules and limitations relating to liability established by [Unamended Warsaw] unless such carriage is not international carriage as defined by the Convention”.
In Seth v BOAC [1964] 1 Lloyd’s Rep 268, the US Court of Appeals, upholding the decision of the US District Court for the District of Massachusetts, held that this condition was a sufficient statement under Article 4 (3) (h) of Unamended Warsaw, which required “a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention”. The argument had been that the words “unless such carriage is not international carriage as defined by the Convention” meant that the statement was insufficiently categorical for the purposes of the Convention. In giving the judgment of the Court, Woodbury Ch. J said this:
“The statement on the ticket quoted above gives the passenger clear notice that limitations on the carrier’s liability for the loss of checked baggage are provided by the Warsaw Convention and that the carrier will avail itself of those limitations if it can. The ticket does not leave the passenger in the dark as to a hidden risk he might not appreciate. It gives him fair warning of the existence of limitations on the carrier’s liability which he can avoid only on showing that the carriage undertaken by the carrier is not “international carriage” as defined in the Warsaw Convention. This gives the passenger blunt warning to find out the nature of his carriage and if covered by the Warsaw Convention to declare excess value and pay the price for increased liability in the event his baggage is lost. We think this constitutes compliance with sub-par (h) of Art. 4 of the Warsaw Convention.”
In Samuel Montagu Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 the Court of Appeal considered an almost identical clause. In that case the plaintiff contended that the “unless” clause meant that the air waybill did not comply with Article 8 (q) of Unamended Warsaw, so that the Article 22 limitation on its right to receive the full value of four lost boxes of gold was inapplicable. Lord Denning disposed of that contention in these terms:
“I do not think we should give a strict interpretation to article 8 (q) in the Convention. We should not give it so rigid an interpretation as to hamper the conduct of business. I do not interpret the article as meaning that the waybill must contain the statement verbatim. It is sufficient if it contains a statement to the like effect. Moreover, the carriage cannot be subject to all the rules relating to liability established by the Convention: for some relate to goods, others to passengers, others to luggage. It follows that (q) is satisfied if the statement says that the carriage is subject to the rules so far as the same are applicable to the carriage. If that is sufficient, it must also be sufficient to say that the carriage is subject to the rules except in so far as the same are not applicable to the carriage. The next step is plain. If that is sufficient, it must also be sufficient to say that the carriage is subject to the rules except so far as it is not international carriage. Hence it is sufficient to say “unless such carriage is not international carriage as defined by the Convention”. It is just another way of saying that the carriage is subject to the rules so far as the same are applicable.
Another way of looking at the statement is to read it in conjunction with the carriage stated on the face of the document, which was London to Zurich. Everyone concerned with the waybill knew that carriage from London to Zurich was international carriage. To those persons (and no one else matters) the words “unless such carriage is not international carriage as defined by the Convention” were mere surplusage. They added nothing. They were inapplicable to the circumstances of this carriage and could be ignored.”
(Italics as original)
Warsaw-Hague
The amendments to the Warsaw Convention provided for by the Hague Protocol were the result of an international conference at The Hague in September 1955. The travaux for that conference indicate that various proposals were mooted. They included proposals that the Convention should not lay down any requirements for the content of documents of carriage; or that, if they did, there should be no sanction for failure to comply so far as cargo was concerned. These proposals were rejected. Instead the delegates adopted what became the provisions of Warsaw- Hague including those to which I have referred.
Montreal
Warsaw-Hague was further amended in 1975 in Montreal. In respect of cargo, the Convention, as there amended, no longer contains a provision that the air waybill shall say anything about the applicability or otherwise of the Convention. In addition it provides, in Article 9, that non compliance with its much more limited provisions about documentation relating to cargo:
“shall not affect the validity of the contract of carriage, which shall none the less be subject to the rules of this Convention including those relating to limitation of liability.”
The amendments made in Montreal have no application to the present case because, although the United Kingdom is, the Philippines are not, one of the High Contracting Parties to the Fourth Protocol agreed in Montreal.
The wording of the air waybill.
The HAWB contains on its face the words set out in paragraph 5 above.
It also indicates on its face that the goods are to be carried from Manila to Glasgow.
On the reverse of the Bill there is nothing that is described as a notice. What are set out are Conditions of Contract which read, so far as relevant as follows:
“1 As used in this contract “Convention” means the Convention for Unification of Certain Rules relating to International Carriage by Air, signed at Warsaw, 12th October 1929, or that Convention as amended by the Hague Protocol, 1955 whichever may be applicable to the carriage hereunder…
2.
a)
Carriage hereunder is subject to the rules relating to liability
established by the Convention, unless such carriage is not “international carriage” as defined by the Convention. (See Carrier’s tariffs and conditions of carriage for such definition).
b)
To the extent not in conflict with the foregoing, carriage hereunder
and other services performed by each Carrier are subject to (i) applicable laws (including national laws implementing the Convention), government regulations, order and requirement. (ii) provisions herein set forth, and applicable tariffs, rules, conditions of carriage, regulations and timetables (but not the times of departure and arrival therein) of such carrier, which are made part hereof and which may be inspected at any of its offices and airports from which it operates regular services.
c)
For the purpose of the Convention, the agreed stopping places (which may be altered by Carrier in case of necessity) are those places, except the place of departure and the place of destination, set forth on the face hereof or shown in Carrier’s timetables as scheduled stopping places for the route.
d)
In the case of carriage subject to the Convention, the shipper
acknowledges that he has been given an opportunity to make a special declaration of the value of the goods at delivery and that the sum entered on the face of the air waybill as “Shipper’s/Consignor’s Declared Value – For Carriage”, if in excess of $20.00 US currency per kilo, constitutes such special declaration of value.
……………
4
Except as the Convention or other applicable law may otherwise require:
a)
Carrier is not liable to the shipper or to any other person for any damage, delay or loss of whatsoever nature (herein collectively referred to as “damage”) arising out of or in connection with the carriage of the goods unless such damaged [sic] is proved to have been caused by the negligence or wilful fault of Carrier and there has been no contributory negligence of the shipper, consignee or other claimant;
…..
c)
The charges for carriage having been based upon the value declared by the shipper, it is agreed that any liability shall in no event exceed the shipper’s declared value for carriage stated on the face hereof, and in the absence of such declaration by shipper, liability of Carrier shall not exceed $20.00 US Currency per kilo of goods destroyed, lost, damaged or delayed, all claims shall be subject to proof of value.”
The approach to construction
Article 31 of the 1980 Vienna Convention on the Law of Treaties provides as follows:
” General rule of interpretation
1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of their object and purpose”
That Treaty does not have the force of law and was, in any event, prospective in its effect. But it represents, in my judgment, the correct approach to take to the interpretation of Warsaw-Hague. Both the claimants and the defendant invited me to take a purposive approach to the construction of the Treaty but differed as to what that purpose was and how it might affect that construction.
Does the HAWB contain a notice?
Mr Michael McLaren QC, for Bax submits that the basic purpose of Article
8 (c) is to ensure that the shipper should be aware that the Warsaw Convention might apply if the carriage was international and that, in such a case, the carrier would generally be able to limit its liability for loss of or damage to cargo. The words “a notice” should be construed so as to give effect to that purpose, and not so as to impose any further more specific requirement. He points out that there is nothing in Article 8 (c) which requires a notice (i) to employ any form of words; (ii) to be headed “Notice”; (iii) to be in any particular format; (iv) to be separate from any other text; or (v) not to have any other material with it as well. In those circumstances it is sufficient if the Conditions, read together with what appears on the face of the waybill, give the reader notification of the matters specified in the sub-paragraph. It does not matter whether the information appears in a single condition (or whereabouts that condition is to be found) or in several conditions. In the present case, as he points out, the HAWB purports, on its face, to contain a Notice (“The Shipper’s attention is drawn to the Notice concerning Carrier’s limitation of liability”) and the notice is to be found in the conditions on the back.
In my judgment Warsaw- Hague requires there to be what is recognizable as
“a notice”, i.e. a discrete form of words warning the reader of the potential applicability of the Convention and its effect, namely to govern and limit liability. The expression “a notice” is not the same as “a statement”, an “indication”, “notification” or even “notice”. It suggests something more defined than these. The words “a notice” are words of ordinary language and should be given the meaning that they would convey to the ordinary reader. I do not think that the ordinary reader of the HAWB would regard it as containing on the reverse the notice promised on its face, or as containing by a combination of the face and the reverse, something that he would describe as “a notice” and, when he had identified what it was, “the notice”. Nor do I accept that the airway bill is to be treated as containing a notice to the effect required because (if such be the case) it is possible to spell out of the wording of some of the conditions of the contract notification of the relevant requirements.
I am confirmed in my view by what seem to me to be a number of indications
in the Convention to that effect. The obvious purpose of Articles 3(1)(c), 4(1)(c) and 8 (c) is to provide a warning (as is apparent from the French “un avis”) to passengers and consignors that the Convention may apply, and govern and limit liability. A warning as to the potential effect of the Convention (which, if it applies, takes effect regardless of the Conditions of Carriage) is something different from the Conditions themselves, to which the Convention makes separate reference in Article 11 in this way:
“The air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo, and of the conditions of carriage”.
Further, in the case of passenger and baggage tickets, the warning may be given to persons with very little grasp of the meaning, significance or effect of the conditions of carriage. For that reason I do not believe that the Court should incline to a construction that allows the notice to be subsumed into and only derived from careful study of several conditions. Consignors of cargo are more likely, of course, to be well aware of the limitations of liability imposed by the Warsaw Convention in its various forms. That may well be a substantial policy reason for not requiring an Article 8 (c) notice in their case, or not disentitling the carrier from relying on the Convention’s limitations on liability if it is omitted in such cases. But that policy option was not adopted in The Hague, although it was in Montreal. Moreover, in view of the fact that the relevant wording is identical, it seems to me impossible to hold that it leads to different consequences according to whether or not it is applied to passenger tickets and baggage checks, on the one hand, or air waybills on the other. I do not accept Mr McLaren’s suggestion that the adoption of a purposive construction might lead to a different result as between the two cases.
Mr McLaren cited to me the case of Parker v Pan American Airways Inc 447 S.W.2d 731 in the Court of Civil Appeals of Texas, Fifth District, Dallas. In that case Pan Am were held to be entitled to rely on conditions on the back of Mrs Parker’s ticket as constituting sufficient notice under the Convention. I do not find this case of assistance since it relates to Unamended Warsaw where the requirement is for the ticket to contain a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention, which was exactly what the Conditions in that case said.
If there is a notice, is it to the required effect?
If I am wrong on this, and the conditions, or some part of them, taken with the words on the face of the bill, are to be regarded as the notice called for under Article 8 (c) the next question is whether the provisions relied on satisfy the requirements of the sub-Article. The first matter of which the notice must give notification is that, if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable. As to that, it is apparent on the face of the air waybill that the carriage is to be from one country, the Philippines, to another, the United Kingdom. The provision in Condition 2(a) that carriage is subject to the rules relating to liability established by the Convention, unless such carriage is not “international carriage” as defined by the Convention, is, in my judgment, to the effect that the Warsaw Convention may be applicable. The face and the reverse of the air waybill, taken together, indicate that if goods are being carried from Manila to Glasgow (in which case the ultimate destination is a country other than the country of departure) Warsaw- Hague may apply. It is not necessary for the bill to set out the definition of “international carriage” or the identity of the High Contracting Parties. Such a conclusion is consistent with that of the Court of Appeal in Samuel Montagu.
The second matter that requires to be notified is that Warsaw-Hague governs the
liability of the carrier. Since clause 2 (a) states that the carriage is subject to the rules relating to liability in the Unamended Warsaw or Warsaw-Hague Conventions, it amounts to saying that those Conventions govern the liability of the carrier.
The third matter to be included in the notice is that the Convention “in most
cases” (in the English translation) limits the liability of carriers. As to that the first question is whether the notice must indicate that, in either a numerical majority of cases, or more than such a majority, the Convention limits liability, or rather, as Bax submit to be the case, the notice must indicate that the general principle of the Convention is that liability will be limited, except in special cases e.g. where a special declaration is made. It seems to me inherently unlikely that the Convention sought to ensure that the consignor, or the passenger, was told that the number of cases where the Convention effectively limited liability exceeded, by whatever margin, those that did not – a statement which could, at least in theory, be inaccurate, depending on the pattern of reliance on special declarations, the meaning of the word “most”, and the incidence of cases in which the air waybill did not contain the required notice or to which Article 25 applied. It seems to me that what the notice was required to convey was that the way in which the Convention works is to establish a regime whereby limitation is the norm in the absence of exceptions. The English phrase “in most cases” does not fit entirely easily with that construction but the French phrase “en generalite” does; and it is the latter language that is to prevail.
That leaves the question whether the words on the face, taken with the
Conditions, do state that the Convention limits the liability of carriers. In considering whether they do it is not legitimate, in my view, to assume that the reader of the air waybill already knows that that is so. Unsurprisingly the Conditions of the HAWB are consistent with that being the position. But they do not, in fact, state that that is the Convention’s effect. The words on the face of the bill incorporate into the contract of carriage the conditions of contract on the reverse and draw attention to “the notice” concerning carrier’s limitation of liability. Nothing in those words indicates that the limitation is derived from the Convention rather than the conditions imposed by the carrier. On the reverse Condition 2(a) refers to the Convention rules relating to liability, but says nothing about limitation. Nor do Conditions 2(b) or 2(c). Condition 2(d) informs the consignor that where the Convention applies the shipper acknowledges that he has been given an opportunity to make a special declaration, and that, if the sum entered on the face of the bill exceeds $20 US per kilo, that sum is to be treated as the special declaration. Condition 4(c) then indicates that liability of the carrier shall not exceed $20 US per kilo unless there has been a declaration in which case liability shall not exceed the amount of the declared value.
But the Conditions do not state that the Convention contains any limit on recovery. In the absence of further explanation the reference on the face of the air waybill to the “carrier’s limitation of liability” means the limitation of liability imposed by the carrier under the conditions to which the contract of carriage is subject. Nothing on the reverse says anything about the limits imposed by the Convention, which are not the same as those contained in Condition 4 (c). The Conditions are entirely consistent with the Convention providing that, in cases to which it applies, it should be open to the consignor to make a special declaration of value, in which case any contractual limitation should only take effect to the extent that the value of the goods exceeds the declared value. In that case the Convention would not limit liability but expand it.
I am conscious that this analysis is itself technical. It falls to be made because Bax have omitted to take the simple course of including in their air waybill a notice in the form recommended by IATA and on occasion used by themselves. They are, thus, driven to extract from the Conditions of Contract, which it is reasonable to suppose were intended to be no more than what they are described as being, a notice as to the effect of the Convention, which it seems unlikely that the draftsman thought that he was drafting. Further, as it seems to me, the context in which the question arises does not justify interpretative generosity. The notice required by the Convention should be clear and directly informative – a result that is not difficult to achieve.
Mr McLaren further submitted that the conditions contained a notification that
there was a limit of liability under the Warsaw Convention of about $20 US per kilo in the following manner. The notice on the face of the waybill showed that there was a regime by which the carrier’s liability was limited. Condition 2 (a) indicated that the carriage was governed by Unamended Warsaw or Warsaw- Hague. Condition 2(b) showed that Unamended Warsaw or Warsaw- Hague prevailed over the Carrier’s own terms. Conditions 2(d) and 4(c) taken together state that, if there is no value declared, then the limit of liability is $20 US per kg. If the carrier’s limitation of liability was to have any application the Convention regime must be such as to impose on the carrier limits of liability at least as low as the contractual limitation – otherwise the higher limits in the Convention would prevent the contractual limits from ever coming into effect. So these clauses, read together, amount to notification that there is a limit of liability under Warsaw or Warsaw-Hague which is approximately as low as Bax’s $20 US per kg contractual limit – Article 8(c) did not require the notice to specify what the financial limit of liability is.
I do not accept this submission. First, as I have said, the notice on the face of the waybill seems to me, prima facie, to indicate that it is the carrier who has stipulated a limit of liability. Second, the proposition that “if the carrier’s limitation of liability was to have any application the Warsaw-Hague’s liability regime must be such as to impose on the carrier limits of liability at least as low as the contractual limitation” assumes that which the conditions do not state namely that Warsaw-Hague imposes limitations on liability. It is noticeable that Condition 2 (a) does not state – as it did in the Pan Am case – that the carriage was subject to the rules “and limitations” relating to liability in the Convention.
Lastly Mr McLaren submitted that clause 2(d) impliedly stated that the $20 figure was a Convention limit (or thereabouts) as did the opening words of Condition 4 “Except as the Convention or other applicable law may otherwise require” when taken with Condition 4(c). I reject this submission. Neither of those provisions states, expressly or by obvious implication, that the Convention limits the liability of carriers. They are provisions understandably inserted on that assumption, but that is a different matter.
I should add that the fact that Bax are driven to spell out the notice that they need from the Conditions in the way that they do, serves to confirm my conclusion on the first issue. I find it difficult to believe that the draftsman of the relevant Article intended that the passenger or consignor should discern a notice with the requisite effect from the conditions in such a recondite way.
Accordingly, I answer the question posed by the preliminary issue: “Yes”.
Kuwait Airways Corporation and Another v. Kuwait Insurance Company SAK and Others
[1999] UKHL 12
Lord Browne-Wilkinson
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hobhouse of Woodborough. For the most part I am in complete agreement with his conclusions and reasoning.
The only exception is in relation to question 3 where, unhappily, I disagree with him. Since the question raises a “one-off” point of construction it is pointless for me to consider the matter at any length. I will state my views very shortly. The aircraft and spares were covered by an all-risks policy. That policy excluded certain risks, including war risks. Those excluded risks were then covered to an extent by a separate war risks policy, section 1 of which provides:
“Subject to the terms, conditions and limitations set out below, this Policy covers loss of or damage to the Aircraft nominated in the Schedule against claims excluded from the Assured’s Hull ‘All Risks’ Policy as caused by:
(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power.
(b) Strikes, riots, civil commotions or labour disturbances.
(c) Any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional.
(d) Any malicious act or act of sabotage.
(e) Confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government (whether civil, military or de facto) or public or local authority.
(f) Hijacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight . . . made by any person or persons on board the Aircraft acting without the consent of the Assured.”
The War Risks Policy extended the indemnity provided by the policy to spare parts save in respect of the indemnity provided by paragraph (a).
At the outbreak of the Gulf War, the armed forces of Iraq took control of the airport in Kuwait including spare parts belonging to the airline. If the only ground under which such spare parts were covered was paragraph (a) above then the airline is not entitled to an indemnity in respect of the spare parts lost. If, on the other hand, the airline is entitled also to claim an indemnity under paragraph (e) above the airline is entitled to indemnity for the spare parts since all that was excluded was paragraph (a). The rest of your Lordships take the view that the case does fall within paragraph (e) as well as paragraph (a).
As I understand your Lordships’ reasoning it is that the word “seizure” has a normal and usual meaning. Having reached the view that what took place in Kuwait would fall within that meaning of the word seizure, your Lordships then look for some special reason why the word should have a more limited meaning in the present document and, not having found any such good reason for limiting its natural meaning, decided that the word seizure in paragraph (e) covers the present case.
My Lords, I am unable to adopt that method of construction. The word seizure does not have one meaning that it bears in all normal circumstances. Lord FitzGerald in Cory v. Burr 8 App. Cas. 393 at p. 405 said:
“‘Seizure’ seems to be a larger term than ‘capture’ and goes beyond it, and may reasonably be interpreted to embrace every act of taking forcible possession either by a lawful authority or by overpowering force.” (emphasis added)
Your Lordships take that as being a statement that the normal and usual meaning of seizure includes forcible capture. In my judgment it does not say that: what it says is that seizure as a word is capable of including such behaviour. Whether it does so or not must, in my view, depend upon the context in which the word is used, not starting with a presumption either way.
In the present case it seems to me clear that each sub-paragraph (a)-(f) of section 1 of the War Risks Policy was designed to deal with one particular type of peril, exclusively of perils dealt with by other paragraphs. Paragraph (a) deals with belligerent risks; paragraph (b) with risks caused by civilian gatherings and commotions; paragraph (c) with acts of terrorism and political unrest; paragraph (d) with deliberate damage to property not covered by other paragraphs; paragraph (e) losses from the assumption of control over property by the local government whether national or at a lower rank. To take a risk of a kind which is plainly a war risk and say that it is covered not only by the war risk clause (paragraph (a)) but also by another clause is, in my judgment, to give a false and unnatural meaning to the policy. If the approach adopted by your Lordships is right, I can see no reason why it should not be said that almost any event which occurs in war (and therefore covered by paragraph (a)) is also a “malicious act” within paragraph (d). This would mean that the exclusion from cover of risks under paragraph (a) would be wholly ineffective.
Therefore I differ from the majority of your Lordships on this point. I would hold that on question 3 the loss does not fall within paragraph (e) but only under paragraph (a) and accordingly I would dismiss the appeal. In all other respects I would make the orders proposed by Lord Hobhouse
LORD LLOYD OF BERWICK
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hobhouse of Woodborough. I agree with it and for the reasons he gives I would answer the questions in the way he proposes and allow the appeal to that extent.
LORD CLYDE
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hobhouse of Woodborough. For the reasons he gives I too would allow the appeal of the Airline upon the spares disputes. I agree that the questions should be answered in the way which he proposes.
LORD HUTTON
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hobhouse of Woodborough. I agree with it and for the reasons he gives I too would answer the questions in the way he proposes and allow the appeal to that extent.
LORD HOBHOUSE OF WOODBOROUGH
My Lords,
In the early hours of 2 August 1990 Iraq invaded the State of Kuwait. Meeting only slight resistance the Iraqi forces rapidly overran its territory and by the end of the day the Iraqi forces had effectively conquered the whole of Kuwait. The invasion was aimed at seizing Kuwait’s wealth for Iraq. This objective included appropriating the aircraft and spares and equipment which they would find in Kuwait and removing them to Iraq. All this was pre-planned. Thus, Kuwait Airport was one of the primary targets of the invading forces. They wished, as a strategic element in their invasion plans, to establish control of the civilian and military airfields. By 8 a.m. the Iraqi tanks had arrived at the airport. Shortly after 10.00 a.m. an Iraqi officer told the manager of the Airport that the airport was now part of a military zone. By that time Iraqi soldiers and tanks had completely surrounded the Airport as a whole including the terminals and other buildings.
On 2 August, The Kuwait Airways Corporation, which is the national airline of Kuwait and the primary plaintiff in the action, had 15 aircraft on the ground at the Airport and large quantities of spares and equipment. The value of the aircraft was about US $692m and of the spares etc. some US $300m. In accordance with their pre-arranged plan, the Iraqis started to remove aircraft from Kuwait to Iraq on 2 August (using civilian pilots to fly the aircraft). The removal of the aircraft was completed over the following days; one aircraft had to remain in Kuwait longer than the others as it was undergoing an overhaul at the time. Similarly, the spares and equipment were systematically removed and taken to Iraq either by air or by road over the ensuing days.
By these actions the Iraqi Government forcibly dispossessed the Airline of the aircraft and the spares. As will be apparent from the figures which I have already given this represented a very large financial loss to the Airline. At the time, the Airline was insured for war risks with a number of local insurance companies, led by the first defendant Kuwait Insurance Company S.A.K., which were, in their turn, reinsured upon the London market. The Airline claimed for its losses under the relevant insurance contract. It was not disputed that the Airline had suffered losses of the character of the total loss of the aircraft and spares; it does not matter for present purposes whether the total loss was to be treated as actual or constructive. In the following January (at a time when, it will be remembered, Iraq was still in occupation of Kuwait) the Underwriters paid to the Airline US$300m which the Underwriters contended was their maximum liability under the relevant contract of insurance. The Airline was not satisfied with this situation and by a writ issued on 30 July 1991 commenced proceedings in the Commercial Court here in London. The dispute between the parties raised a number of questions of fact and law which were initially tried before Rix J. in October and November 1995. The points of law were primarily questions of construction which arose on the insurance contract. There were also questions of law which arose in relation to subrogation rights and sue and labour. These latter points arose from the fact that, following the successful recapture of Kuwaitand the conclusion of the military campaign against Iraq, the Airline had been able by litigation and other means to recover some of the aircraft and to commence proceedings directed to their recovering some indemnity from third parties in respect of their losses. These latter questions have not been fully tried but have been dealt with so far on the basis of preliminary issues of law directed by the Commercial Judge.
Rix J. in a judgment reported at [1996] 1 Lloyd’s Rep. 664 made various findings of facts and decided the issues of law which arose upon them. On some questions of law he decided in favour of the Airline, on others in favour of the Underwriters. His overall conclusion was favourable to the Underwriters and effectively upheld the adequacy of the payment that had earlier been made before the action had been commenced. The Airline was dissatisfied with this outcome and appealed to the Court of Appeal challenging certain of the decisions of points of law of the Judge. The decision of the Court of Appeal, Lord Justices Staughton, Otton and Schiemann, (reported at [1997] 2 Lloyd’s Rep. 687) was not unanimous. They decided some of the legal issues differently to the Judge. However, the outcome was effectively the same as before. The Airline, with the leave of Your Lordship’s House, has appealed further on certain of the questions of law. The Underwriters have also argued before Your Lordships certain of the points on which they failed in the Court of Appeal.
The points which in my judgment your Lordships have to consider are all points of the construction of the insurance contract. They are mostly points upon which there has already been a difference of judicial opinion. They are all points which could easily have been avoided by the exercise of care in the preparation and drafting of the insurance contract. Very large sums of money are involved and it must be a matter of comment and concern that those involved on both sides of this transaction should have seen fit to set out their contractual intention in a way that is inadequately structured and expressed and so obviously capable of giving rise to dispute. Such disputes are unnecessary. They can be avoided, as has been repeatedly pointed out by those before whom such disputes come for determination, by the exercise of proper care in the drafting of the documents which create and define the relevant contractual obligations.
The demerits of such lack of precision and clarity are not confined to the uncertainty that it produces but extend to the wholly undesirable delay before the disputes between the parties are fully determined. This appeal has been heard in the latter part of 1998 but relates to a dispute which arose in 1990. This is not satisfactory either from a commercial point of view or for the purposes of administration of justice. It cannot be in the interests of any participant in the insurance market that there should be such uncertainties and delays. Nor can it be satisfactory that an assured should be left in such doubt about the extent of his cover or should have to wait for so long before receiving an indemnity or have to engage in costly litigation to ascertain and enforce his rights. Sometimes litigation may be inevitable, as where some wholly unforeseen event occurs; but that is not the case here. This is a contract of insurance: the disputes have arisen from matters which should have been well within the contemplation of those preparing a war risks contract.
The Insurance Contract: The anniversary date of the Airline’s cover was 1 July. At the time of the events in question no new contract of insurance for the period 1 July 1990 to 30 June 1991 had yet been drawn up; however, a renewal quotation dated 14 June 1990 had been obtained and accepted. This document is therefore the contractual document for the relevant year. It is an outline document in letter form which cross-refers to the expiring cover. It therefore has to be read with the expiring cover in order to understand what its effect is. The expiring cover is entitled “Aviation Hull and Spares War Risks and Allied Perils”. It is a contract which, in market terms, is written by Underwriters who are active in the war risks sector of the market. The general cover for the Airline is provided for in a separate contract of insurance which is as a matter of practice referred to as the “All Risks” policy.
The insurance of aviation risks has historically developed from the marine market as a distinct class of business. Much of the terminology and practices of the aviation market derive from the marine market and therefore need to be understood by reference to the equivalent terminology and practices of the marine market although there are differences between them, not least, that the marine market is governed by the codifying statute, the Marine Insurance Act 1906, whereas there is no similar statute governing the non-marine market (which includes aviation). The normal market practice is to insure risks in comprehensive terms in what is sometimes called an “All Risks” cover which is then cut down by exclusions; the excluded perils are then covered by more specific insurance contracts or extension clauses according to the needs of the relevant assured. There are no doubt market reasons for adopting this approach, not least to assist the structure of rating risks.
An example of this approach in the marine market is the treatment of war risks. Historically the “S G” policy (as scheduled to the 1906 Act) covers war risks but these risks are then excluded by the standard “FC&S” clause. This led to the practice in the market of insuring war risks defined as being the risks which were excluded by the FC&S clause. This approach over the years gave rise to many disputes many of which could have been avoided had a more direct approach been adopted. The historical approach has been departed from in many sectors but its influence is still to be observed in the contracts which your Lordship’s House has to consider on the present appeal.
The relevant All Risks policy in the present case is a relatively structured document as can be seen from the contents list with which it starts. It thus recognises much of what I have said earlier about the need for care in the preparation of documents of this character and importance. It covers both aircraft (clause 1.1) and spares and equipment (clause 1.2). It also covers various classes of liability risks. It is not necessary to go into the detail of this. The policy includes a General Exclusion expressed in these terms:
“This policy shall not apply to:
4.1 War and Allied Risks in accordance with the following war, hijacking and other perils exclusion clause (Aviation) AV48B (not applicable to spares and equipment and passenger entertainment systems whilst in transit as defined in the applicable Institute Clauses):-“
The policy then sets out the clause referred to–paragraphs (a) to (f)–which we find again set out in the war risks cover: see below. In respect of spares and equipment the geographical cover is comprehensive and not confined to spares in transit. It is however subject to express limits–US$10m any one item, US$30m any one sending, and US$150m any one location.
The All Risks Policy includes a number of clauses extending the cover provided. One is the “Extensions of Cover” clause 1.5:
“This section of the policy is also to cover:
1.5.1 ………
1.5.2 Sue, labour and costs and expenses and salvage charges and expenses incurred by on or on behalf of the assured in or about the defence, safety, preservation and recovery of the insured property and also [extraordinary general average sacrifice and expenditure] and costs and expenses arising out of all search and rescue operations. Provided always that these costs and expenses shall be included in computing the losses hereinbefore provided for, notwithstanding that the company may have paid for a total loss.”
A dispute has arisen as to the effect of this proviso.
The expiring war risks cover covers the interests set out in the schedule in section 6. The schedule identifies the assured, including the Airline. The aircraft insured are listed with agreed values ranging between US$5m and US$66m. It states: “newly acquired aircraft are automatically covered hereunder.” It then continues:
“The maximum agreed value any one aircraft shall not exceed US$80m–and the maximum sum insured in respect of ground risks is US$300m–any one occurrence, any one location applicable to this policy and policy number AV/HW/GK/256.”
It is thus a valued policy for the aircraft. The assured is given a liberty to add aircraft to the policy subject to their not being valued higher than US$80m. (The spares are dealt with in a separate wording which it would appear was attached to the war risks policy and to which I will revert.)
Continuing with the wording of the policy which applies to the hull risks (i.e. the aircraft), section 1 of the policy is headed “Loss of or damage to aircraft.” It provides:
“Subject to the terms, conditions and limitations set out below, this Policy covers loss of or damage to the Aircraft nominated in the Schedule against claims excluded from the Assured’s Hull ‘All Risks’ Policy as caused by:
(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power.
(b) Strikes, riots, civil commotions or labour disturbances.
(c) Any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional. (d) Any malicious act or act of sabotage.
(e) Confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government (whether civil military or de facto) or public or local authority.
(f) Hi-jacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the Assured.
“Furthermore this Policy covers claims excluded from the Hull Policy from occurrences whilst the Aircraft is outside the control of the Assured by reason of any of the above perils. The Aircraft shall be deemed to have been restored to the control of the Assured on the safe return of the Aircraft to the Assured at an airfield not excluded by the geographical limits of this Policy, and entirely suitable for the operation of the Aircraft (such safe return shall require that the Aircraft be parked with engines shut down and under no duress).”
This is the primary war risks cover. As will be appreciated it cross-refers to and quotes the war risks exclusion in the All Risks policy.
Section 2 of the policy extends the scope of the cover in connection with hi-jacking and extortion. Section 3 includes certain general exclusions which qualify the cover provided by section 1. Thus, wars between major powers are excluded as are all consequences of atomic or nuclear explosions. General exclusion (c) follows the wording of (e) of section 1 so as to exclude acts by or under the authority of any Government in clause 4 of the schedule to the policy, that is to say, the Government of registration. This must mean the registration of the insured aircraft; they were in fact all registered in Kuwait. Section 4 incorporates the terms and conditions of the All Risks policy (so far as appropriate). Section 5 gives the Underwriters the power on 7 days’ notice to cancel the policy on various dates or to vary the rate of premium or geographical limits. Nothing arises on these clauses which are usual in a war risks cover.
So far there has been no reference to spares. Spares are dealt with in an express clause which is unnumbered and appears simply to be an attachment to the policy like various other sets of standard clauses. It reads so far as material:
“AIRCRAFT SPARES AND EQUIPMENT EXTENSION
It is noted and agreed that the indemnity provided by this Policy other than Paragraph (a) of Section One is extended to include loss of or damage to Aircraft Spares and equipment which is the property of the Assured or for which they are responsible.
Subject to a limit of US$10,000,000 any one item, US$30,000,000 any one sending and US$150,000,000 any one location.
The maximum limit under this Policy for Hull War Risks and Spares Combined any one Aircraft is limited to US$80,000,000.
Nevertheless, paragraph (a) of Section One of this Policy shall apply in respect of spare parts and equipment whilst in transit by sea or air.
………
………
“Whenever the term ‘Aircraft’ is used in the Policy to which this extension applies the same will also be deemed to mean Aircraft spares and equipment.”
(It will be noticed as a curiosity that the cover in respect of spares whilst in transit has been duplicated with the cover in the All Risks policy.)
Points of construction arise in relation to the aircraft spares and equipment extension in conjunction with section 1 of the War Risks policy. Questions of construction also arises under paragraph (e) of section 1.
The final document to which I need to refer is the quotation letter of 14 June 1990. This letter is in summary form and sets out the terms of the quotation under various headings which correspond to those which one would expect to find on a slip presented by a broker to an underwriter. Thus the headings include “type”, “assured”, “period”, “interest”, “sum insured”, “situation”, “conditions”, and “information”. There is a general incorporation of all the existing terms of the expiring cover, subject of course to the variations set out in the letter. The only part of the letter which it is necessary for the purposes of this appeal to refer to is the entry opposite “sum insured”:
“Max. agreed value US$80,000,000 any one aircraft
Max. ground limit US$300,000,000
Spares/Equipment–not exceeding US$10,000,000 any one item/US$30,000,000 any one sending/US$150,000,000 any one location.”
The dispute which arises under this document relates to the application of the “max. ground limit”: whether it just applies to the aircraft or it also includes spares. Underwriters submit that it is an overriding limit on all losses that occur otherwise than in the air and that therefore, once they have paid out US$300m in respect of the loss of aircraft on the ground, there can be no scope for any further liability in respect of spares on the ground.
The Issues: The remaining questions which the parties have argued on this appeal have been formulated by them in the following terms.
Spares, Question 1: Does the ground limit of US$300m apply to a loss on the ground of aircraft and all spares, or only to a loss of aircraft? This question was answered by Rix J. in favour of the Underwriters and by the majority of the Court of Appeal in favour of the Airline.
Spares, Question 3: Was the loss of spares caused by a peril within section 1(a) alone or was it caused partly or wholly by a peril within (e)? The relevance of this question is that, if it was (a) alone, the Airline could not recover in respect of spares; if it was (e) alone the Airline could recover whatever the answer to Question 4; but if it was partly (a) and partly (e), the answer to Question 4 became critical. Question 3 was answered in favour of Underwriters by Rix J. and unanimously in favour of the Airline by the Court of Appeal.
Spares, Question 4: Is cover in respect of spares on the ground altogether excluded if the loss is by war, invasion, acts of foreign enemies, or hostilities, or can a claim nevertheless be based on some other peril such as seizure? This question was answered in favour of the Airline by Rix J. and in favour of Underwriters by a majority of the Court of Appeal. Schiemann L.J. agreed with the Judge on this question.
The other group of questions were those relating to sue and labour. Only the first of these questions raised a pure point of construction. This was:
“Are sue and labour expenses subject to the ground limit of US$300m or (when they are incurred to recover spares) subject to the US$150m limit for any one location?”
Both the Judge and the Court of Appeal decided this question in favour of the Airline and then went on to consider certain other questions of law which on that hypothesis arose for consideration. In my judgment the question should be answered in favour of the Underwriters and I therefore do not need to set out or express any view about any of the other questions relating to sue and labour which were discussed in the Court of Appeal and before Rix J.
The Surrounding Circumstances Relevant to the Construction of the Insurance Contract:
No surrounding circumstances were relied upon by either party beyond those which would be apparent from a general description of the parties, the character of the business of the Airline and the ordinary practices of the insurance market. There was however one additional aspect which was relied upon by Mr. Pollock QC on behalf of the Underwriters although it was not treated as significant by either of the courts below.
In 1982, having reconsidered the extent to which underwriters at Lloyds should be prepared to write war risks, clauses were prepared designed to limit the exposure of underwriters to war risks on goods. A general principle was to confine cover to goods in transit and to define what amounted to transit in narrow terms. Inter-underwriter agreements existed: the War Risk Waterborne Agreement, the War Risk Airborne Agreement. It can be seen that these agreements may have influenced the willingness of reinsurers to cover goods in transit more favourably than goods not in transit, as occurred in the present case. But they contemplate that cover will still be provided for goods not in transit subject to suitable safeguards, such as cancellation clauses. These documents are not persuasively favourable to the adoption of one construction of the relevant contracts with which Your Lordships are concerned in the present case rather than another. Further, such documents, which are essentially underwriters’ documents, cannot be relied upon by them to affect the rights of assureds under contracts of insurance unless those documents are incorporated into the insurance contracts themselves, which they were not. In fairness to Mr. Pollock, his argument recognised the very limited use that he could make of these documents. In my judgment they did not assist at all.
Spares: Question 1:
The argument of the Underwriters was that, looking at the quotation letter dated 14 June 1990, it was simply providing for an overall ground limit of US$300m. It was said that this was the fair reading of the words “max ground limit”. Leaving on one side for the moment whether this is a fair reading of the quotation letter in isolation, it is clearly not right to read it otherwise than in conjunction with the existing cover for which it was providing the renewal and to which it refers. When this is done it can be seen that the figures appearing under the rubric “Sum Insured” correspond to sums which are to be found in the expiring war risks cover. Thus the “Max. agreed value US$80,000,000 any one aircraft” relates to the provision in paragraph 2 of the schedule in section 6 relating to the maximum agreed value that any newly acquired aircraft can have if it is to be automatically covered by the policy. The “Max. ground limit US$300,000,000” relates to the words “the maximum sum insured in respect of ground risks is US$300,000,000–any one occurrence, any one location.” That is where the figure in the quotation (which happens to be unchanged) is to be inserted. Similarly, the three figures in the letter relating to spares/equipment relate to the figures to be inserted in the second paragraph of the “Aircraft Spares and Equipment Extension.” The clear import of the quotation letter is that the relevant figures in the expiring cover are to remain unchanged in the renewed cover.
The argument of the Underwriters on this question involves the submission that there has been a major reduction in the extent of the cover between the expiring policy and the renewal. There can be no serious doubt that in the expiring cover the US$300m figure applied only to aircraft and that the differently defined limits set out in the Spares Extension mean what they say and are additional to whatever recovery the assured may be entitled to in respect of the loss of aircraft on the ground or elsewhere.
Accordingly on this question I agree with the decision of the Judge and of the Court of Appeal.
Spares: Question 3
On this question the Court of Appeal unanimously reversed the decision of the Judge. It is not disputed that a cause of the loss of the aircraft and of the spares was an event falling within paragraph (a) in section 1 of the policy. It is accepted that the causes of the Airline’s loss included, for example, the invasion of Kuwait by Iraq and the acts of foreign enemies, that is to say, of Iraq. The issue is whether it can also be said that the Airline’s losses were caused by the seizure of the aircraft and spares by a government within the meaning of paragraph (e). The Airline submits that its loss was also caused by, indeed, most immediately caused by the seizure of the aircraft and spares by the Iraqi government.
The ordinary meaning of the word “seizure” is the act of “taking forcible possession either by a lawful authority or by overpowering force” and this is its ordinary meaning in an insurance policy. (Cory v. Burr 8 App. Cas. 393) The Judge confirmed that the word “seizure” was a “perfectly acceptable description of what happened to the aircraft on 2 August”. (p. 689) Notwithstanding that he accepted that this was the ordinary meaning of the word and that it had been recognised by authority, the Judge came to the conclusion that in the context of this clause a different interpretation must be adopted. He did not accept the Underwriters’ submission that section 1 was to be construed as containing a well-graduated “ladder” of risks but he does seem to have been inclined to treat the various paragraphs as exclusive of each other. He gave his reasons for deciding this point in favour of Underwriters at pp. 690-691 of the report of his judgment:
“. . . however, there is in my judgment force in [Underwriters’] submission that there is intended to be no overlap between paragraph (a) and paragraph (e). Paragraph(a) is dealing with war, foreign or civil, or other violent manifestations of large-scale internal disorder. Paragraph (e) is dealing with acts done by governments or other public authorities. It seems to me that prima facie the acts of such authorities are those done, presumably lawfully or at any rate under colour of law, within their own territories. That is to my mind strongly supported by the reference to ‘nationalisation’ and to ‘public or local authority’: for it is only within any nation that one would normally speak of the nationalisation of assets (by the government of that nation), and it would be unusual for a mere public or local authority to exercise powers outside its proper sphere or locality. Save in time of war, governments do not exercise power outside their territories, unless it be in international air space or on the high seas. Moreover, ‘seizure’ occurs immediately after ‘nationalisation’, which is hardly conducive to giving it a broad meaning embracing circumstances of large-scale and belligerent violence. It may also be noted that ‘capture’, i.e. belligerent seizure, is omitted from the long list of dispossessory perils mentioned in (e). Clause 4 of section six is also relevant here, for it excludes the operation of paragraph (e) in the case of the government of registration, viz. Kuwait. Thus paragraph (e) could not apply to any form of governmental confiscation, seizure or requisitioning arising out of internal disorder in Kuwait itself. What paragraph (e) therefore seems to have in mind is the danger which foreign governments or other foreign public authorities may pose to the possession of aircraft which make international flights outside the nation of their registration. There is finally the fact that the spares extension which I take it is designed to be used with the ‘RJM 1’ form containing the paragraphs of perils under discussion, distinguishes between paragraph (a) perils and the other paragraphs, extending cover under the former for spares only while in transit. If ‘seizure’ in (e) embraced seizure arising out of the belligerent or other violent disorders specified in (a), there would be the surprising result that cover was extended for ground risks in the case of the former but not in the case of the latter, an inconsistent result. Moreover, the commercial logic of the limited extension afforded by the spares extension would seem to be that Underwriters are willing to take the risk of aircraft being caught on the ground in time of war etc., but not spares: presumably because there will be a reasonable chance that highly mobile aircraft can be kept out of trouble, even in such perilous times, whereas spares cannot be. For all these reasons I accept the Underwriters submissions that on the facts of this case there was no loss under paragraph (e).”
The Court of Appeal unanimously took a different view. Like Rix J. they all started from the premise that what occurred was properly described as a seizure of the aircraft and spares by the Iraqi government. Staughton L.J. rejected the arguments based upon the context in paragraph (e) and that the word seizure must be confined to non-belligerent seizure. He recognised the force of the argument that there might be an intention to exclude the consequences of war and invasion in relation to spares when these overlap with the risks in the other paragraphs but he rejected the argument that this justified giving a meaning to those other paragraphs, themselves derived from the All Risks policy, other than their proper meaning. Thus, he did not accept the conclusion that the seizure must be peaceable. Schiemann L.J. agreed with Staughton L.J. on this point without adding reasons of his own.
Otton L.J. gave his reasons for agreeing with Staughton L.J. and disagreeing with the Judge. He commented upon the degree of overlap both internally within the various paragraphs and as between the various paragraphs. He referred to the Underwriters’ arguments. He said:
“I see no reason to construe the word narrowly, or to deprive the relevant peril of its usual meaning; the peril of ‘seizure’ within this policy has no different meaning from that which would normally be ascribed to it. The word has a well accepted commercial usage in the context of insurance . . . .”
“I am unable to accept that the paragraph (e) perils are limited to the acts of governments or other public authority within their own territories. The assets of an international corporation can be situated in many countries throughout the world. They are not necessarily all fixed assets. Thus one sovereign government might confiscate a fixed asset or restrain an aircraft of another national Airline lying within the territory and make a demand (usually in money) which must be certified before the aircraft will be released.”
He also rejected the argument based upon the exclusion of confiscation by the government of registration of the aircraft saying that it did not assist the Underwriters but rather confirmed that the reference to any government must be to a foreign government. He concluded that there was no justification for giving the word “seizure” in paragraph (e) a restricted interpretation:
“I am satisfied that ‘seizure’ is an appropriate peril to describe the events which have caused the loss of the aircraft and spares, i.e. forcible dispossession.”
Thus, the conclusion of Rix J. was that the whole of category (e) must be understood as relating to peaceable activities of a government occurring within the territorial jurisdiction of that government. The arguments in favour of this conclusion were said to be the contrast between paragraph (a) and paragraph (e) and the view that they should be construed so as not to overlap, the word “nationalisation” which occurs in (e) coupled with the omission of the word “capture” and the reference to “public or local authority” which, it was submitted, should colour the understanding of the paragraph as a whole and therefore exclude any belligerent activity and, specifically, “belligerent seizure”. It is argued that it should be inferred from the fact that, in relation to aircraft, the general exclusion of acts of the government of registration leads to the expectation that (e) would not in practice apply to aircraft while they were within Kuwait, that there should be a similar territorial exclusion in respect of spares–that (e) would not apply to spares whilst they were in Kuwait.
Effectively the same arguments were urged upon us by Mr. Pollock. It is convenient to take these arguments in the reverse order. The argument that the acts of the Kuwaitigovernment were not covered under this policy does not assist Underwriters. No one suggests that the Airline’s loss was caused by any act of the Kuwaiti government or that it was caused by anything other than the acts of the Iraqi government. The Iraqi government was on any view for the purposes of this policy a foreign government. Similarly, if it were the intention to exclude from the cover provided by this policy anything which occurred within the territorial boundaries of Kuwait, nothing would have been simpler than to say so. This contract contains no such exclusion.
As regards the relationship between paragraphs (a) and (e), (a) is not confined to acts of governments. It relates to situations which may or may not impact upon the assured or its property. Any effect of such situations upon the assured will be through some more specific consequence, typically the destruction or damaging of its property. The confiscation of property is not an ordinary incident of war whereas its destruction or damage is; and those ordinary incidents are the consequence of activities of the combatants. A contrast therefore already exists between the obvious contemplation of paragraph (a) and that of paragraph (e). Paragraph (e) deals with matters which affect the title to or possession of property–the actual loss of possession not some anterior situation which may or may not give rise to a loss. The reference to governments and other authorities in (e) distinguishes between the acts of individuals and the acts of governments. This was also one of the points stressed in Cory v. Burr (sup) where it was pointed out that seizure can include the taking of a ship by insurgent slaves: Kleinwort v. Shepard 1 E. & E. 447. Another illustration is the discussion of the point by Mustill J. in Spinney’s (1948) Ltd. v. Royal Insurance Co. Ltd. [1980] 1 Lloyd’s Rep. 406; he drew the distinction between looting by soldiers and other individuals in the course of hostilities or disorder or their aftermath and seizures by governments as occurred in the present case. Paragraph (e) is concerned with the latter, not the former.
The ordinary meaning of the word seizure as used in marine policies was the subject of the decision of your Lordships’ House in Cory v. Burr. It was argued that the word seizure was confined to belligerent seizure. Lord FitzGerald (in line with the opinions of the Earl of Selborne L.C., Lord Blackburn and Lord Bramwell) rejected this argument, saying at p. 405:
“‘Seizure’ seems to be a larger term than ‘capture’ and goes beyond it, and may reasonably be interpreted to embrace every act of taking forcible possession either by a lawful authority or by overpowering force.”
He is thus giving the word “seizure” an inclusive meaning. It includes both belligerent and non-belligerent forceable dispossession. That is its ordinary meaning.
Thus far there has been nothing to cut down the ordinary meaning of the word seizure. But it is argued that the list of perils in (e) leads to the conclusion that a more restricted use of the word is intended. It must be accepted that the word “nationalisation” is a word which has nothing to do with warlike activities and does connote some lawful or purportedly lawful act under a municipal legal power. But other words used in the paragraph carry, by contrast, an inference of some warlike or hostile situation. The word “restraint” is one which has historically appeared and still commonly appears in policies covering war risks. (See the SG policy annexed to the 1906 Act and rule 10 of the Rules for Construction.) The omission of the word “capture” is fully explained by the fact that it is an inappropriate word to use in aviation insurance as opposed to marine insurance where, historically, takings at sea had been covered and the subjects of marine insurance–ships and cargoes–were (and still are) properly treated as objects of war to be taken in prize or by way of reprisal: this was the meaning of the word capture in marine policies. (Anderson v. Martin [1907] 2 K.B. at 253).
The phrase “requisition for title or use” is strongly supportive of the normal meaning of the word seizure. Requisition is typically something which occurs in the time of war or hostilities involving an exercise of executive or military power. It is precisely analogous to the type of seizure which took place in the present case. From the point of view of the assured it would make no difference whether the aircraft (or spares) were requisitioned to assist the war effort of the foreign government, as, for example, by providing transport for their armed forces, or by way of outright seizure. The situations are directly analogous as are the consequences. The word “appropriation” is similarly unhelpful to the Underwriters’ argument as are the references to “military” and “de facto” governments.
Were the ordinary meaning of the word seizure confined to peaceful seizures, it could certainly be said that the context was not clear enough to widen that meaning so as to refer also to all forcible seizures. But where, as here, the ordinary meaning of the word is any forcible seizure, the context does not suffice to show that the word must have been used in some special or restricted sense. At the best from the point of view of the Underwriters, the context within paragraph (e) is neutral and does not suffice for their purpose. However, in my judgment, it is not neutral but supports the ordinary use of the word and the case of the Airline.
I therefore agree with the unanimous decision of the Court of Appeal that the word seizure is to be understood in its ordinary sense and it follows that the loss in this case comes within paragraph (e) as well as paragraph (a).
Spares: Question 4:
On this question the split of judicial opinion was between Rix J. and Schiemann L.J. on the one hand and Staughton L.J. and Otton L.J. on the other. The argument of the Underwriters addressed this question at two levels. The first type of argument was based upon the wording of the aircraft spares and equipment extension clause; the second type of argument was based upon rhetorical assertion that it would be commercially absurd for the Underwriters to have covered the spares whilst on the ground against risks consequent upon wars or other hostile activities: Staughton L.J. said “repugnant to common sense”. (p. 695).
It is not disputed in the present case, and it is the law, that where there are a number of perils covered by the policy it suffices for the assured to prove that his loss was proximately caused by any one of the perils covered. Similarly, if there is an exclusion, the assured is not entitled to recover under the policy if the excepted peril was a proximate cause of the loss. Thus, for present purposes the point at issue can be paraphrased as being the question whether the risks in paragraph (a) were simply omitted from the cover for spares when not in transit or were, on the true construction of the policy, excepted perils. In the former case the Airline succeeds; in the latter the Underwriters succeed.
The opening words of the extension are “it is noted and agreed that the indemnity provided by this Policy other than Paragraph (a) of Section One is extended to include loss of or damage to Aircraft Spares. . . .” It is therefore an extension clause providing for a qualified extension of the cover. It is not an exclusion clause. The relevant and only exclusion (as that term is properly understood) is to be found in the All Risks Policy. The language is plain. It means that the risks enumerated in paragraphs (b) to (f) are covered. The fact that the clause has been worded as extending the cover to all the paragraphs other than paragraph (a) has precisely the same effect. The language of the extension clause does not assist the Underwriters.
There is a technical argument which was included in the submissions of Mr. Pollock but not placed in the forefront of his case; it refers back to the traditional structure of marine cover and the inter-relation of the SG form, the F C & S clause, and the commonly used printed clauses whereby war risks are then covered. Whilst such arguments are not wholly alien to the construction of aviation policies which to an extent follow the same structure, the spares extension clause in the present contract is more simply drafted and does not necessitate or justify having resort to such methods of interpretation. Where the wording used is straightforward and has a plain meaning, that is the meaning which, save in exceptional circumstances, should be adopted.
This leads to the second way in which the Underwriters’ case was argued and which clearly was influential with the majority in the Court of Appeal. It is submitted that to construe the contract as providing cover for spares not in transit where a cause of the loss was the occurrence or existence of a war would produce exorbitant risks which, so it is said, cannot have been intended to be covered by this contract.
This argument, to which I hope I have done justice, is not one which should be readily accepted. The purpose of insurance, particularly war risks, insurance, is to cover against the exceptional catastrophes. The Underwriters’ position is already protected to some extent by the exclusion of wars between major powers and is further protected by clauses which give the Underwriters the right during the currency of the policy to restrict the scope of the cover by notice or, again by notice, to cancel the policy. It can also be commented that, however the first question was answered, there is a limit to the liability of the Underwriters. Their maximum exposure is known any one location. They are not accepting an unregulated or open-ended exposure. But it must in any event be stressed that it is not for the courts to tell the parties what contract they should have made nor, after the event, to evaluate the merits and demerits of their bargain. If, as here, the parties have used plain language to express their intention, that should be an end of it: the courts should enforce the contract in accordance with its terms.
Therefore I would answer the fourth question in favour of the Airline.
Spares: Conclusion
It follows that I would answer all of the three remaining questions relating to the cover for spares in this contract in favour of the Airline with the result that upon the agreed facts the Airline is entitled to recover from the Underwriters in respect of the loss of spares. The overall limit is, on this basis, agreed to be US$150m. We are not concerned with the question of subrogation rights or recoveries. The assumption of the parties is that they will not reduce the Airline’s loss below the US$150m figure. Any other questions remaining outstanding will have to be disposed of in the Commercial Court action.
The Sue and Labour Question:
As indicated earlier there were a number of questions, possibly hypothetical, which were argued before the Judge and the Court of Appeal concerning the right of the Airline to make some supplementary recovery over and above the US$300m and, as it now appears, the US$150m. Unless this question is decided in favour of the Airline, the other questions on sue and labour do not arise. Both Rix J. and the Court of Appeal did go on to express views about those further questions because they unanimously decided the first sue and labour question in favour of the Airline. The Underwriters on the appeal to your Lordship’s House have contended that the courts below were in error and that on the particular wording of this contract the right was subject to a limit.
It is not in contention that the ordinary purpose and understanding of a sue and labour clause is to authorise the assured to take reasonable steps to recover the insured property or reduce the extent of the insured damage or loss. Indeed it is ordinarily to be inferred that the assured has a duty to take these steps. The law was worked out in various 19th century decisions and codified in the Marine Insurance 1906 section 78. Section 78 (1) provides:
“Where the policy contains a suing and labouring clause, the engagement thereby entered into is deemed to be supplementary to the contract of insurance, and the assured may recover from the insurer any expenses properly incurred pursuant to the clause, notwithstanding that the insurer may have paid for a total loss, or that the subject matter may have been warranted free from particular average, either wholly or under a certain percentage.”
Just as the authority and obligation to sue and labour are supplementary to the contract of indemnity so also is the Underwriters’ liability to reimburse sue and labour expenses reasonably incurred. Provided those expenses have been reasonably incurred, it does not matter whether they were in the end successful or not. They may not succeed in averting a total loss of the subject matter of the insurance. But, having properly sued and laboured in accordance with authority given by the clause, the assured is entitled to look to the underwriter to reimburse him the expenses so incurred. The fact that the underwriter is also having to pay for a total loss does not alter this position.
Thus far the law is wholly in favour of the Airline but it is not possible to stop there because the sue and labour clause incorporated into this particular contract contains a proviso. This reads:
“Provided always that these costs and expenses shall be included in computing the losses hereinbefore provided for, notwithstanding that the Company may have paid for a total loss.”
Why the parties should have chosen to include this proviso is not something we can fathom. But it appears to be capable of having only one meaning. That meaning is that the limits on the liability of the Underwriters are to apply not only to the primary indemnity but also so as to include any sue and labour expenses incurred. The “losses hereinbefore provided for” must mean the losses in respect of the primary obligation to indemnify. The ordinary rule continues to apply that payment for a total loss does not exclude the right to recover sue and labour expenses. But this proviso requires that any sue and labour expenses be included with the primary losses for which cover is provided in the contract. It follows that, where there is a limit on the indemnity, that limit must be applied to the aggregate of the primary loss and the sue and labour expenses. We asked counsel for the Airline to say what was the effect of the proviso if it was not to be that which I have just stated. He was unable to suggest any alternative meaning. He submitted that the effect of the proviso was confined to allowing sue and labour expenses to be recovered in addition to the insured value of the relevant subject matter. However. as already pointed out this does not adequately or satisfactorily explain the proviso. Rix J. and the Court of Appeal seem to have had a similar difficulty in ascribing an acceptable meaning to the proviso and they chose to decline to give it any effect beyond that which would be implied by law in any event.
The proviso appears to be a one-off type of wording. I do not doubt that it has been used before but there is no suggestion that it is a standard wording nor is any plausible explanation given of it other than that which I have adopted. Here again, it is for the parties to define their respective rights and obligations in their contracts with an adequate degree of certainty. That this proviso should have given rise to a dispute is scarcely surprising. But, having done so, its language has to govern.
It follows that in my judgment the Underwriters succeed on this point. The right to add sue and labour expenses to their primary right to indemnity is subject to the same limits as their primary right. On the facts of this case those limits have already been exhausted and it follows that the Airline’s right to claim reimbursement of sue and labour expenses (if any) has also been exhausted.
Conclusions:
It follows that upon the spares disputes, the Appeal of the Airline should be allowed and Spares Question 4 be answered in favour of the Airline. Upon the sue and labour disputes, the appeal of the Airline should be dismissed and Sue and Labour Question 1 be answered in favour of the Underwriters. The Order of the Court of Appeal will be varied in accordance with your Lordships’ judgments and the order that the action of the plaintiffs against the first to fourth defendants be dismissed will be set aside.
Having considered the written submissions of the parties it should further be ordered that the Respondents shall pay the Appellants their costs before this House and two thirds of their costs in the Court of Appeal and one third of their costs before Rix J.
Western Digital Corporation & Ors v British Airways Plc
[2000] CLC 1276, [2000] EWCA Civ 153, [2001] 1 All ER 109, [2000] 2 Lloyd’s Rep 142, [2001] QB 733, [2000] 2 All ER (Comm) 647, [2000] 3 WLR 1855
Mance LJ
18. The Warsaw Convention
I turn to the central question which the judge determined. It is whether the Warsaw Convention permits suit against a contracting or actual carrier in respect of loss of or damage to cargo by anyone other than a person named in the air waybill as consignor or consignee or a person entitled to delivery under the air waybill.
19. The scope of the Convention is found in article 1. The Convention applies to all international carriage of persons, baggage and cargo performed by aircraft by air for reward, as well as to gratuitous carriage by aircraft performed by an air transport undertaking (article 1(1)), though not to carriage of mail or postal packets (article 2(2)). For its purposes “the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination” are within territories of different contracting states or are within the territory of a single contracting state but with “an agreed stopping place” within the territory of another state (article 1(2)). By article 1(3):
“Carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to be one undivided carriage if it has been regarded by the parties as a single operation, whether it had been agreed under the form of a single contract or of a series of contracts, and it does not lose its international character merely because one contract or a series of contracts is to be performed entirely within the territory of the same State.”
20. In parenthesis, article 30 regulating liability in cases of successive carriage further provides that a successive carrier
“is deemed to be one of the contracting parties to the contract of carriage in so far as the contract deals with that part of the carriage which is performed under his supervision”.
21. These provisions all contemplate the existence of an agreement, contract or contracts between parties for the relevant international carriage. Chapter II (articles 3 to 16) dealing with documents of carriage (passenger tickets, baggage checks and air waybills) does so likewise. The passenger ticket to be delivered by an air carrier under article 3(1) must contain inter alia
“(a) an indication of the places of departure and destination,
(b) ….
(c) a notice to the effect that, if the passenger’s journey involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect of loss of or damage to baggage”.
By article 3(2):
“The passenger ticket shall constitute prima facie evidence of the conclusion and conditions of the contract of carriage.”
though:
“The absence, irregularity or loss of the passenger ticket does not affect the existence or validity of the contract of carriage, which shall, none the less, be subject to the rules of this Convention. Nevertheless, if, with the consent of the carrier, the passenger embarks without a passenger ticket having been delivered, or if the ticket does not include the notice required by paragraph 1(c) of this Article, the carrier shall not be entitled to avail himself of the provisions of Article 22.”
Article 22(1) limits the carrier’s liability in the carriage of persons, but adds:
“Nevertheless, by special contract, the carrier and passenger may agree to a higher limit of liability.”
22 Article 4(1) provides for delivery of a baggage check containing a like indication and notice, mutatis mutandis, to that required for tickets under article 3(1). Under article 4(2) the baggage check “shall constitute prima facie evidence of the registration of the baggage and of the conditions of the contract of the carriage”. Its absence, irregularity or loss has a similar consequence to that provided in the case of a passenger ticket.
23. Under article 5(1), the carrier has the right to require the consignor to make out and every consignor has the right to require the carrier to accept an air waybill, although under article 5(2):
“The absence, irregularity or loss of this document does not affect the existence or the validity of the contract of carriage which shall, subject to the provisions of Article 9, be none the less governed by the rules of this Convention.”
24. Article 8 provides for an air waybill to contain a like indication and notice, mutatis mutandis, to that required for tickets and checks under articles 3(1) and 4(1). Article 9 removes the carrier’s entitlement to limit under article 22, if with its consent, cargo is loaded on board an aircraft without an air waybill or with an air waybill without the notice regarding limitation of liability required by article 8(c). By article 11:
“The air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and of the conditions of carriage.”
25. Under article 22(2)(a), the limit of the carrier’s liability in the carriage of registered baggage and cargo applies unless the passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest, in which case the carrier is liable to pay up to the declared sum, “unless it proves that that sum is greater than the passenger’s or consignor’s actual interest in delivery at destination”.
Article 12(1), (2) and (3) confer on the consignor and regulate rights of disposal during transit which are expressly “[s]ubject to his liability to carry out all his obligations under the contract of carriage”. Article 12(4) continues:
“The right conferred on the consignor ceases at the moment when that of the consignee begins in accordance with Article 13. Nevertheless, if the consignee declines to accept the waybill or the cargo, or if he cannot be communicated with, the consignor resumes the right of disposition.”
26. Article 13(1) provides that, except in circumstances where the consignor has exercised his right of disposal under article 12,
“the consignee is entitled, on arrival of the cargo at the place of destination, to require the consignor to hand over to him the air waybill and to deliver the cargo to him, on payment of the charges due and on complying with the conditions of carriage set out in the air waybill”
27. Article 13(2) requires the carrier to give notice to the consignee as soon as the cargo arrives, and article 13 provides:
“If the carrier admits the loss [perte in the French text] of the cargo, or if the cargo has not arrived at the expiration of seven days after the date on which it ought to have arrived, the consignee is entitled to put into force against the carrier the rights which flow from the contract of carriage”
28. Article 14 provides:
“The consignor and consignee can respectively enforce all the rights given them by Articles 12 and 13, each in his own name, whether he is acting in his own interest or in the interest of another, provided that he carries out the obligations imposed by the contract”.
29. Article 15(1) provides:
“Articles 12, 13 and 14 do not affect the relations of the consignor or consignee with each other or the mutual relations of third parties whose rights are derived from the consignor or consignee.”
30. By article 15(3) “Nothing in this Convention prevents the issue of a negotiable air waybill”.
31. The judge derived from the provisions of chapter II a provisional conclusion that the owner of a consignment who was not the consignor or consignee named in an air waybill (or a person to whom the consignor had ordered delivery to be effected under article 12) could not hold the carrier liable under the provisions of article 18 in chapter III. He based this on the emphasis placed in chapter II on the central role of the consignor and consignee and their special status vis-à-vis the carrier. Before considering this conclusion further, it is appropriate to look at chapter III.
32. The Convention deals separately in Chapter III with liability of the carrier. Articles 17, 18 and 19 provide for the three subjects of death/bodily injury, loss (perte) or damage (avarie) to baggage or cargo and delay. Article 20 provides a limited defence if the carrier “proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures”, while article 21 provides for damage (dommage) caused or contributed to by a claimant’s own fault. Article 22 is the limitation provision. Article 24, 25A, 26, 27, 28, 29 and 30 read as follows:
“ARTICLE 24
(1) In the cases covered by Article 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention.
(2) In the cases covered by Article 17, the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights.
ARTICLE 25
The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment.
ARTICLE 25A
(1) If an action is brought against a servant or agent of the carrier arising out of damage to which this Convention relates, such servant or agent, if he proves that he acted within the scope of his employment, shall be entitled to avail himself of the limits of liability which that carrier himself is entitled to invoke under Article 22.
(2) The aggregate of the amounts recoverable from the carrier, his servants and agents, in that case, shall not exceed the said limits.
(3) The provisions of paragraphs (I) and (2) of this Article shall not apply if it is proved that the damage resulted from an act or omission of the servant or agent done with intent to cause damage or recklessly and with knowledge that damage would probably result.
ARTICLE 26
(1) Receipt by the person entitled to delivery of baggage or cargo without complaint is prima facie evidence that the same has been delivered in good condition and in accordance with the document of carriage.
(2) In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of baggage and fourteen days from the date of receipt in the case of cargo. In the case of delay the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his disposal.
(3) Every complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the times aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.
ARTICLE 27
In the case of the death of the person liable, an action for damages lies in accordance with the terms of this Convention against those legally representing his estate.
ARTICLE 28
(1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties. either before the court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the court having jurisdiction at the place of destination.
(2) Questions of procedure shall be governed by the law of the court seised of the case.
ARTICLE 29
(1) The right to damages shall be extinguished if an action is not brought within two years reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.
(2) The method of calculating the period of limitation shall be determined by the law of the court seised of the case.
ARTICLE 30
(1) In the case of carriage to be performed by various successive carriers and falling within the definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage or cargo is subjected to the rules set out in this Convention, and is deemed to be one of the contracting parties to the contract of carriage in so far as the contract deals with that part of the carriage which is performed under his supervision.
(2) In the case of carriage of this nature, the passenger or his representative can take action only against the carrier who performed the carriage during which the accident or the delay occurred, save in the case where, by express agreement, the first carrier has assumed liability for the whole journey. (3) As regards baggage or cargo, the passenger or consignor will have a right of action against the first carrier, and the passenger or consignee who is entitled to delivery will have a right of action against the last carrier, and further, each may take action against the carrier who performed the carriage during which the destruction, loss, damage or delay took place. These carriers will be jointly and severally liable to the passenger or to the consignor or consignees.”
33. The Convention as a Code
That the Convention contains a code which supersedes common law rules relating to the nature and standard of liability is now clearly established. In Sidhu v. British Airways [1997] AC 430, the House of Lords was concerned with English and Scottish actions in respect of a scheduled airline flight from London to Kuala Lumpur which put down in Kuwait in the early hours of 2nd August 1990 some hours after the Iraqi invasion had begun. In the English action commenced on 30th July 1993 the plaintiffs claimed damages at common law for personal injuries and negligence. In the Scottish action the pursuer claimed damages for delay at common law for breach of a condition allegedly to be implied in her contract that the airline would take reasonable care for her safety. It was common ground that neither the English plaintiff nor the Scottish pursuer had suffered any “accident” on board the aircraft or in the course of embarking or disembarking, so that article 17 could not assist. (Further the Scots pursuer at least had not suffered any bodily injury). It was further common ground that, if a party had a claim under article 17, there could be no concurrent common law remedy. The House of Lords held, by parity of reasoning, that in the field of liability for personal injury, for baggage or cargo or for delay, where the circumstances are such that no claim exists under the provisions of Chapter III, the Convention excludes any common law claim: see per Lord Hope at pp. 448B-C and 453C-D:
“It would be largely destructive of the system which this chapter seems to have been designed to lay down if a passenger were to be able, for example, to maintain a claim for damages for non-bodily injury, for loss of or damage to the personal possessions which he had with him inside the aircraft or for economic loss, outside the conditions and limits set by the Convention while maintaining a claim under the Convention for the bodily injury.” (p.448B)
“The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive of any resort to the rules of common law.” (p.453D)
34. This approach was followed by the US Supreme Court in El Al Israel Airlines, Ltd. v. Tseng (1999) 26 Avi. 16,141, where a passenger claimed damages in tort under New York law for emotional injuries allegedly suffered as a result of an obtrusive security search at John F. Kennedy International Airport before a flight to Tel Aviv. There was no “accident” and no “bodily injury” within article 17. The court held that no such claim was possible, saying:
“Given the Convention’s comprehensive scheme of liability rules and its textual emphasis on uniformity, we would be hard put to conclude that the delegates at Warsaw meant to subject air carriers to the distinct nonuniform liability rules of the individual signatory nations.” (p.16,146)
35. The court also considered the Montreal Protocol No. 4, amending article 24 to read as follows:
“1. In the carriage of passengers and baggage, any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention, without prejudice to the question as to who are the persons who have the right to bring suit and what are their prospective rights.
2. In the carriage of cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and limits of liability set out in the Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. ….”
36. Focusing on the 28 words of amended article 24(1), the court said:
“Both parties agree that, under the amended Article 24, the Convention’s preemptive effect is clear: the treaty precludes passengers from bringing actions under local law when they cannot establish air carrier liability under the treaty. Revised Article 24, El Al urges and we agree, merely clarifies, it does not alter, the Convention’s rule of exclusivity.” (p.16,148; see also p.16,142)
37. This reference to the Montreal Protocol No. 4 highlights the difference between the issues before the courts in Sidhu and in El Al and the issue in the present case. It could subvert the Convention if air carriers were exposed to liability of a nature or cause not specified in the Convention. But title to sue in respect of such a liability is a different matter. The Montreal Protocol No. 4 goes on expressly to make clear that the exclusivity which it provides in respect of passenger, baggage and cargo claims is “without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights”. So, under the Montreal Protocol No. 4, the intention seems clear to reserve a significant role to national law when it comes to determining by whom the claims allowed by articles 17-19 may be brought. Previously this was explicitly stated in respect of passenger claims: see article 24(2) of the Warsaw Convention as amended by the Hague Protocol. Special emphasis on the rights of, for example, personal representatives and dependants in cases of passenger liability is understandable. But article 24(1) of the Warsaw Convention itself refers to “any action for damages, however founded”. The phrase “however founded” is capable of wide application, and suggests awareness of the possibility of non-contractual claims. Here too, the Montreal Protocol No. 4 may be clarificatory, rather than amendatory, in its effect.
38. In Sidhu and El Al the claimants were party to the relevant contract of air carriage. That is the typical situation which the draftsmen of the Convention took as their basic working model. The Convention has been described as operating by imposing statutory terms upon contracts of carriage: see Grein -v Imperial Airways Ltd [1937] 1 KB 50, 74-77 per Lord Greene MR and Holmes -v- Bangladesh Biman Corp. [1989] AC 1112, 1129 and 1141 per Lords Bridge and Jauncey. But examination of some not uncommon situations indicates that the Convention may operate more widely. Passenger tickets are frequently bought for persons who are either incapable of contracting for them ( e.g. very young infant members of a family) or for persons who do not contract for them (e.g. partners, or dependants for whom parents or grandparents pay), and luggage is frequently handed over on their behalf on the same basis. They must be passengers within the meaning of the Convention: see Chitty on Contracts 28th ed. paragraph 35 – 023. This is confirmed by Fellowes (or Herd) -v- Clyde Helicopters Ltd [1997] AC 534, where police officers carried on an aircraft chartered by a police authority were held within the equivalently worded schedule to the domestic Order (The Carriage by Air Act (Application of Provisions) Order 1967). In Fellowes (although it was not cited to us) the House of Lords held that the effect of the language of the Warsaw Conventionsupported by the terms of section 1 (one of the 1962 Act) was to introduce “general rules with regard to the liability of the carrier in respect of the contract of carriage” rather than “merely statutory contractual terms”: see page 543 E-G per Lord Mackay, with whom Lords Nicholls, Hoffman and Clyde agreed, and page 551 F-G and 553 E-G per Lord Hope.
39. The fact that the draughtsmen of the Convention worked, understandably, from a typical contractual model must not be allowed to detract from the role of the Convention as a code introducing certain general rules. It is easy to find in the text of the Convention formulations which, taken literally, would be inconsistent with a sensible set of rules. I can take two examples from the presently uncontroversial area of passengers:
(a) Article 22(1) refers to the carrier and the passenger agreeing by special contract to a higher limit of liability and Article 22(2) to the passenger making a special declaration of interest at the time the package was handed over to the carrier and paying any supplemental sum required. But a third party (for example, a parent, spouse or employer) must also be able to make a relevant special contract or declaration. The Convention must, like any code, be interpreted flexibly and analogically to cater for such situations: compare the provision in s.1-102(1) of the American Uniform Commercial Code that it should be liberally construed and applied to promote its underlying purposes and policies, and the commentary that this “consecrates the general process of development or unfolding of the code, so that it decides by analogy what it does not control by genuine development” (Mitchell Franklin in “On the Legal Method of the Uniform Commercial Code” (15) 16 Law and Contemporary Problems 330).
(b) Article 30 regulates the right of action of “the passenger or his representative”. It makes no reference to claims by dependants although by Article 24(2) the provisions of Article 17 apply “without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights”. Claims not merely by personal representatives, but also by dependants must be contemplated. Yet they are not mentioned expressly in Article 30(2) at all.
40. Flexibility is, I think, important if the Convention is to continue over time to fulfil its role as a set of general rules governing the rights and liabilities of the (in effect unlimited) categories of persons referred to in section 1(1) of the 1961 Act. As Lord Hope said in Fellowes at page 553 E:
“In my opinion the Convention agreed at Warsaw, as amended at the Hague, was intended to be, and is, capable of accommodating changes in the practice of airlines and aircraft operators with regard to the purposes of which aircraft are used to carry people and goods, and in the contractual arrangements in pursuance of which people and goods are carried by air for reward.”
41. Preliminary analysis of the Convention
While it is clear that in certain respects the Convention scheme provides general rules rather than merely statutory contractual terms, it is also clear that the draughtsmen had very much in mind as a premise to its application the existence of a relevant contract of carriage by air. Who may sue or be sued on such a contract are, on the face of it (and subject to any Convention provisions), matters for domestic law.
42. So far as both baggage and cargo were concerned, the typical model which the draftsmen had in mind was one under which the passenger in the case of baggage and the consignor in the case of cargo would be party to the contract of carriage. That is evident from, for example, Articles 4, 5, 10(2), 11(1), 12(1), 16(1) and 22(2a). An assumption that the person with whom the carrier deals on a principal-to-principal basis will be a party to the contract of carriage is entirely understandable. Even where such a party is obviously a forwarding agent, he will commonly be expected to incur personal liability (as IATA accredited agents expressly undertake). However, the Convention does not attempt to define or confine the concept of consignor and in its amended form does not even require the consignor’s identity to appear in any documentation. Further the air waybill is itself no more than prima facie evidence of the conclusion of the contract. None of this suggests a rigid approach to the concept of consignor. None of it suggests an intention to exclude from consideration any person who under domestic law would be a party to the contract through or in addition to a person named as consignor in the Air waybill.
43. The common law recognises that an agent, even though himself party to and entitled to sue or be sued on a contract under its terms or by custom (as often the case with forwarding agents), may at the same time be acting for a principal: see e.g. Chitty on Contracts, 28th ed. Vol. 2, Agency (written by Prof. Reynolds) paragraphs 32-083/5 and the extensive authority there cited. Further, under common law principles, not only a disclosed but also an undisclosed principal may sue or be sued on a contract made by his agent: see Chitty, paragraphs 32-087/8. The concept of an undisclosed principal has, it seems, no exact counterpart in civil law, although a similar result may often be achievable by other routes (see Bowstead and Reynolds on Agency 16th Ed. paragraphs 1-018 and 8-070; Zimmerman on The Law of Obligations Chap. 2 section II Agency). A note of caution appears appropriate in respect of any such generalisation, since (a) we were, understandably, not given the benefit of any comparative law material in this area and (b) as Lord Bingham of Cornhill L.C.J., speaking extra-judicially, has recently recalled, “the civil law as found in (say) France, Germany, Italy, Spain or The Netherlands is no more uniform than the common law as found in (say) England, the United States, Canada and Australia” (“A New Common Law for Europe”, published as one of The Clifford Chance Millennium Lectures, and in turn citing Cappelliti, New Perspectives for a Common Law of Europe (1978)). The references by Prof. Tosi to French maritime law in the commentary referred to later in this judgment also point towards the need for caution.
44. Under English Law and practice the right of suit in contract is commonly associated with ownership of the goods. If the person shipping or consigning goods is owner, he can sue. If he is acting for the owner, the owner can intervene and sue. In the case of a sale on terms that property and risk pass f.o.b. on shipment or consignment, the ordinary inference is that the shipper/consignor contracts with the carrier as agent for the consignee. A reservation of risk is however sufficient to establish loss for the purposes of a contractual claim, whether or not property may have passed. And a consignor who has parted with both property and risk may still make and sue on a “special contract” with the carrier, under which he can recover substantial damages, which he will then hold on trust for the person really interested: see The Albazero [1977] AC774, especially 842-4 per Lord Diplock. In some cases the circumstances in which delivery is made (for example against payment of freight) may also justify the inference of a contract with a consignee: see E G Brandt -v- Liverpool [1924] 1KB 575.
45. There is nothing in the Convention which expressly excludes the application of such principles. Indeed, Shawcross and Beaumont, Air Law 4th ed. (loose-leaf reissue) vol. 1 VII (188) (now VII (622)) cited by Lord Hope in Sidhu at page 450G states that the rule in civil law countries is that only a party to a contract of carriage, or a principal for whom he was acting, is regarded as the appropriate plaintiff, and it was submitted before us that the draughtsmen of the convention had, primarily, a civil law rather than common law, theory of contract in mind. Mr Crane also submits that the passage in Shawcross and Beaumont overlooks the possibility that under civil law systems a consignee may take the benefit of a contract of carriage as a third party. Interestingly, perhaps, although the recent Contracts (Rights of Third Parties) Act 1999 generally excluded contracts for carriage by air from its operation, the reason for such exclusion may very well be that the extent to which third parties are entitled to take such benefit is expressly governed by the Warsaw Convention. Again, however, it is to be observed that the Convention does not attempt to define or confine the concept of consignee, does not require the consignee to be named in any documentation and makes the Air waybill no more than prima facie evidence of the conclusion of the contract and the conditions of carriage.
46. Mr Shepherd submits that there is nevertheless to be derived from the scheme of the Convention and from, in particular, its frequent references to the consignor and the consignee, a conclusion that the only persons entitled to assert any rights, or under any liabilities, vis-a-vis the carrier, are those named as consignor or consignee in the Air waybill. This involves the review of the terms of, in particular, Chapters II and III, which led the judge to a provisional conclusion in favour of Mr Shepherd’s submission.
47. Mr Crane points out that chapter II is primarily concerned with regulating the relations between the two sides in respect of documentation and arrangements for receipt, carriage and delivery, and in that connection it is also natural that the chapter should confer rights and impose obligations on those actually dealing with each other as principals. In contrast, the subject of liability is dealt with in chapter III, and that focuses, in general, upon the carrier’s position, rather than upon the identity or characteristics of the “plaintiff” (see articles 22(4) and 28) to whom the carrier is or may be liable. In my judgment, this distinction has some force, but it is not entirely watertight. In chapter II, article 13(3) is on one view addressing the conditions under which a consignee may claim for loss of an entire consignment. In chapter III, article 22(2) assumes a passenger or consignor having an “actual interest in delivery at destination”, although this to my mind illustrates no more than the typical model on which the draughtsmen were working. Article 30 regulates successive carriage in terms requiring a passenger or his representative to “take action only against the carrier who performed the carriage during which the accident or delay occurred, save in cases where, by express agreement, the first carrier has assumed liability for the whole journey” (article 30(2)), and distributing the claims which a passenger or consignor or consignee may make regarding baggage and cargo between the first and last carrier and the carrier performing the carriage during which the destruction, loss, damage or delay took place (article 30(3)).
48. In Gatewhite Gatehouse J confined Article 13(3) (also Article 14) to the exercise of rights of disposal (i.e. under Article 13(1) and (2)). I myself see some difficulty about accepting this. Article 13(3) appears to me to be more a footnote (or proviso as the judge said) to Article 26. But, as such, I think it addresses the conditions for a claim for loss (perte) rather than the identity of the claimant. As to Article 30, which refers to the consignor and consignee in the context of Chapter III dealing with liability, that article is clearly focused upon a perceived need to regulate and distribute the rights of claim between two sides in the very specific situation of successive carriage, rather than being aimed at any identification or limitation of those entitled to present themselves either as, or through, the consignor or consignee. Article 14 underlines the role of the consignor and consignee as parties to the contract, but what is noticeable is the absence of any general rules of the Convention providing who may sue as “plaintiffs” for loss and damage or excluding others from maintaining such claims.
49. It may be said that the answer to the point made in the last sentence of this quotation lies in energetic or purposeful extrapolation, from other provisions of the Warsaw Conventionsuch as articles 13(3), 26(1) and (2) and 30(3), of some underlying intention to confer general rights of suit on consignors and consignees or persons to whom they may direct delivery. But, even assuming that this were done, the need for such extrapolation highlights the fact that the Convention does not expressly regulate certain key aspects of everyday liability claims. That being so, there is even less reason in my judgment to construe the Convention as intended not merely to confer rights of suit on consignors or consignees named as such in the air waybill (or on other persons entitled under article 12(1)), but also to exclude suit by those party to the relevant contract for air carriage as their principals.
50. There are, it seems to me, also some positive pointers in the language of the Convention, towards an entitlement on the part of others besides a named consignor or consignee to claim for loss or damage. I have referred to the phrase “however founded” in Article 24(1). The provisions of Article 14, confirming that the consignor or consignee can exercise the rights given by Articles 12 and 13 although acting in the interests of another, might be said to be unnecessary if other provisions of the Convention anyway confine attention to the consignor or consignee.
51. Moreover, article I(b) of the Guadalajara Convention defines contracting carrier as a person who as principal makes an agreement for carriage governed by the Warsaw Convention “with a passenger or consignor or with a person acting on behalf of the passenger or consignor”. That must in the case of a passenger embrace situations of a parent contracting with an airline “on behalf of” an infant child, although the only legally binding agreement is or can be between the parent and the airline. Equally, however, it must embrace a ticket agent who is required by the airline to accept personal liability on the contract for the ticket price, when making a contract to which the passenger also becomes party. In the case of cargo, this provision is capable of covering the situation of an agent acting for a disclosed principal, and incurring no liability on the contract. But it seems improbable that this was the reason for its insertion. It would, as it seems to me, cover the readily foreseeable case of the agent who acts for a principal but who, although he is an agent, is required to commit himself personally under the contract. I see no reason in this situation why it should then be restricted to cases where the agent discloses that he is so acting.
52. A reading of the Convention which restricts claims for loss of or damage to baggage or goods to the person named in the relevant documentation as consignor or consignee would have some odd consequences. Baggage checks for baggage delivered by a family at a check-in desk may, not uncommonly, be affixed en bloc by airlines to the ticket of any one member of the family, or distributed at random among the tickets of different family members. It seems unlikely that anyone contemplates by this practice that the only member of the family who can claim for loss, damage or delay is the passenger to whose ticket the baggage check happens to have been affixed, although he has no interest in the relevant baggage and did not even put it on the conveyor at check-in.
53. Pausing here, I am not therefore persuaded on a simple reading of the text of the Convention that its draughtsmen intended the limitation in respect of loss or damage claims for which British Airways contends. I have concentrated up until this point on claims brought under the Convention by principals of a named consignor or consignee in circumstances where, as a matter of domestic law and by the terms of the Convention, such consignor or consignee falls to be treated as party to the relevant contract of carriage. The other aspect of the general issue determined by David Steel J. concerns the possibility under English law of claims in the absence of any contractual relationship, based simply on ownership of the baggage or cargo lost or damaged in transit.
54. Common law (and I have little doubt at least some civil law) systems recognise that ownership of property (or it may be an immediate right to its possession) may give rise to a tortious or delictual claim against a person in whose possession such property is lost or damaged. Such claims have long been recognised at common law: see The Albazero at p.844 citing Hayn v. Culliford (1879) 4 CPD 182. In air carriage falling outside the scope of the Convention, they have been recognised as a basis for holding responsible a carrier from whose possession goods have been lost: see e.g. Moukataff v. BOAC [1967] 1 Ll.R. 396 (where at pp. 412-3 the argument was rejected that the statutes governing Crown proceedings and the Post Office excluded any tortious claim against an air carrier for loss of mails). To counter attempts by goods-owners to use this route to avoid contractual terms by pursuing claims against sub-bailees, the doctrine of bailment on terms has been developed and recognised: see The Pioneer Container [1994] 2 AC 324. In German law a similar doctrine to bailment on terms evidently exists (cf the response by Assessor Erich Schõnwerth and Dr Wolf Müller-Rostin in (1993) ZLW (Zeitschrift für Luft und Weltraumrecht) 21 to a previous article by Dr Robert Kuhn in (1989) 38 ZLW 21, both articles being cited in note 23 of paragraph VII/622 of Shawcross & Beaumont Air Law, 4th ed. issue 76).
55. The unamended Warsaw Convention referred to a carrier and not to his servants or agents. The Hague Protocol introduced amendments into Articles 25 and 25A to refer to “servants and agents”. Article 25 as amended, deals simply with the extent to which the carrier’s liability under Article 22 may be affected by acts or omissions of his servants or agents. Article 25A gives any servant or agent, acting within the scope of his employment by carrier, an entitlement to avail himself of the limits of liability which the carrier is entitled to invoke under Article 22. Nothing in Articles 17-21 or in Article 25A itself imposes any liability on a servant or agent. Following Sidhu the language of Article 25A (“damage to which this Conventionrelates”) may restrict the nature of the claim which may be made against any responsible servant or agent. But that is a different matter. Whether a servant or agent may be held liable at all must, on the face of it, be determined by domestic law; as to that, see Midland Silicones -v- Scruttons [1962] AC446 (while noting the discussion regarding the different United States position in Shawcross and Beaumont at paragraph VII (644, issue 76). Servants or agents do not have under the Convention the protection of other provisions, for example, the two year time limit in Article 29, although that is specifically provided under English law by section 5(1) of the 1961 Act. Accordingly, Article 25, appears specifically to contemplate and to regulate tort claims, which would necessarily be brought by the owner or person with an immediate right to possession of baggage or cargo. Whether Article 25 could extend protection to a sub-contractor (such as British Airways in the present case) may be open to debate. The Guadalajara Convention was on any view introduced in order specifically to protect such sub-contractors. It deals specifically with non-contractual claims. It extends to sub-contractors, in respect of the carriage they performed, the full liability and protection provided by the rules of the Warsaw Convention. British Airways seeks to read the Guadalajara Convention as substituting for their previous exposure to baggage and cargo owners a new exposure to no-one except consignors or consignees named in an Air waybill to which British Airways was never a party and which it may never have seen, and to do this even though such consignors or consignees may have suffered no actual loss at all. Other servants or agents would on any view continue liable under Article 25A to the persons really interested in the claim, that is the owners or persons immediately entitled to possession who suffered the loss. I would in these circumstances be disinclined to read into the Guadalajara Convention the intention for which British Airways contends unless compelled by other consideration. The Guadalajara Convention also extends the protection of the limits of liability in the Warsaw Convention to servants or agents of the actual carrier: see Articles V and VI. Once again, the exposure of servants or agents arises on its face under domestic law and will be to the owner or person entitled to immediate possession of the baggage or cargo lost or damaged.
56. Whilst considering the possibility of extra contractual claims, it is to be noted in parenthesis that the limit of liability for hand luggage in Article 22(3) is not matched by any provision providing for liability in respect of or regulating the standard of liability in respect of hand luggage. Either claims for hand luggage are regulated by domestic law (as the draughtsmen of the convention appear to have thought: see the initial report and opening address to the Second International Conference at Warsaw which led to the finalisation of the original Convention in 1929, by Mr Henri de Vos reported at pages 22 and 253 at the minutes) or the Convention provisions of Articles 17-21 must be extended analogically to cater for such claims. In either case there is nothing expressed in the Convention to prevent the owner of hand luggage suing whether or not he happens to be the passenger carrying it on board.
57. There remains the question whether a carrier by air who contracts for carriage under an Air waybill and actually carries (and loses or damages) the relevant cargo may incur not merely liability to the consignor or consignee or their principals based on the existence of the contract of carriage, but also extra contractual liability to an owner of such cargo who cannot claim to be such a principal. Bearing in mind the different status of a contracting carrier and an actual carrier, the answer is not inevitably the same in each case. Further, the question does not directly arises for consideration in the present case, since British Airways was simply an actual carrier under the Guadalajara Convention. I see cause, however, to be cautious about a proposition that the owner of baggage or cargo cannot ever claim for its loss or damage against a contracting carrier.
58. First, the Guadalajara Convention shows that the provisions of Chapter III are perfectly capable of operating between non-contracting parties. Secondly, the words “however founded” in Article 24(1) are wide enough to cover such claims. Thirdly, and more fundamentally, there are situations where an owner may be a complete stranger, not merely to the contract of carriage but to any suggestion or idea that his goods would be carried anywhere, as for example where his goods have been borrowed or stolen or taken by mistake and are without his knowledge or authority handed to a carrier for carriage to a consignee: see Chitty paragraph 36-050.
59. British Airways’ case involves the proposition that the only person able to claim their delivery up, or to claim in respect of their loss or damage, is the passenger carrying them or the person named as their consignor or consignee. Take the not uncommon situation of a stolen artefact or work of art. If it is shipped abroad by air, the only person who could direct or claim delivery up by the airline would be a thief, handler or dishonest forwarding agent, if such appeared as consignor and consignee. On British Airways’ case, these too would then also be the only persons who could sue the airline for any loss or damage. Mr Shepherd submitted that this was in effect the price the innocent world at large must pay for the benefit of air transport. It seems most improbable that the Convention was intended to have that effect. Here too, I prefer to view the Convention as establishing the general framework, including the nature and standard of liability, but to read its provisions as operating with some flexibility, and as allowing a role for the relevant domestic law, when identifying those entitled to sue in situations where the Convention is not in terms exclusive. The most that airlines could sensibly expect in situations such as these is that they would still enjoy in relation to the true owners the benefit of the internationally agreed and statutorily enacted scheme provided by Chapter III of the Warsaw Convention.
60. Previous authority on title to sue
I turn to authority specifically in point on the issue of title to sue. There is surprisingly little and the direction in which it points has changed. The judge examined many of the relevant authorities. We were shown further authorities together with a review of the jurisprudence “The Cargo Owner’s Right to Sue under the Warsaw Convention” (1992) 17 Annals ASL (II) 441 by Robert Wilkinson, a former partner in the applicants’ solicitors who wrote it well before the subject-matter of this case for an October 1991 meeting of the Aviation Law Association of Australia and New Zealand.
61. I start with European authority. A line of French authority restricts the right of suit to the consignor or consignee named in the air waybill. It is summarised in footnote 5 on page VII/303 of Shawcross and Beaumont’s Air Law (4th ed, issue 76), together with a decision of the Tribunal de Commerce of Brussels (15th May 1981) and the Cameroon Supreme Court (7th October 1982). The decisions are, as customary, briefly reasoned. They include three decisions in the French Cour de Cassation. In Ste. International Transit Transport v. Ste. Industrielle et Commerciale and Others (23rd February 1981) S.I.C. entrusted S.I.T.T. with arranging the carriage by air of electronic equipment from Paris to Ibadan. S.I.T.T. used Air France for the purpose. S.I.C. was not named as consignor or consignee on the air waybill. The Cour de Cassation upheld the Court of Appeal’s decision that S.I.C. could not sue under the contract of carriage, since it was not party to it, and referred for support to articles 18(1) and (2), 24(1) and 30(3) of the Warsaw Convention. This reasoning appears to treat the Warsaw Convention as defining, and limiting, by reference to the air waybill the agreement for carriage upon which its operation is predicated. In Cie. Iberia v. Cie d’Assurances La Concorde (23rd June 1987), the air waybill box headed “Consignee” was completed with the name of a bank (probably the bank issuing a letter of credit covering payment) under whose name also appeared the words “NOTIFY: Galerie Maison et Jardin”, the buyer. The Cour de Cassation adopted a slightly more relaxed attitude, upholding the Court of Appeal’s decision that Galerie Maison et Jardin was entitled to sue Cie. Iberia. In Ste. France Handling and Lufthansa v. Ste. Japan Time S.A. (14th May 1991) the Cour de Cassation overturned the lower court’s decision allowing Ste. Japan to sue as buyer and importer, in circumstances where, although it appeared on the relevant air waybills as “notify party”, the banks financing the transactions appeared as consignees. The Court referred to articles 12-15 and 30(3) of the Convention.
62. An article in Transport Aérien by Prof. J-P Tosi (professor at the University of Montpellier) considers the state of authority as at 1995. He points to the difference between the “very narrow limits” adopted by French jurisprudence and the approach taken in Gatewhite Ltd. v. Iberia Airlines Aereas de Espana Soc. [1989] 1 Ll.R. 160 (see below). He describes the French approach as based more on the consideration that “a certain formalism is necessary in view of the risk that a carrier runs of seeing itself pursued by different claimants in courts competent under article 28 but not situated in the same country” than “on very debatable textual arguments (the principal of which is based on article 30, which however only concerns successive carriers and which seems inspired more by practical than by juridical considerations)” In dealing with the consignor’s right of action under French law, he refers to authority establishing that entry on the waybill is a necessary but not sufficient condition of suit, on the basis that an fob seller has no interest after shipment and cannot be regarded as party to the contract of carriage, and questions whether this applies if the consignor can show that he has suffered loss. The consignee’s right of action is, he indicates, linked to the right of disposal and the right to take delivery, but, he continues, the rights of consignor and consignee must be regarded as alternative, although this question has not been addressed in the French jurisprudence. He summarises the state of French authority with respect to actions by a “real consignee”, not featuring on the waybill, pointing out that French authority only affords a right of action “in exceptional cases” and citing the Cour de Cassation’s decision of 23rd June 1987 as an example. He concludes his consideration of the position of a “real consignee” with reference to a further Cour de Cassation decision of 7th July 1992 (BTL 1992, p.638) recognising the right of a “a real” consignee to sue in a maritime context (i.e. the right of an owner to sue for damages he has suffered due to loss or damage to goods delivered against a bill of lading held and presented by a third company which did not declare itself to be acting for the owner). Prof. Tosi is evidently unconvinced by the current state of aviation authority, since he comments that it ought not to survive unchanged this extension of the right to claim to a real consignee in a maritime context. As to the “real consignor”, Prof. Tosi observes that in land transport French law allows a consignor who has contracted with a “commission agent” to sue the carrier, even though not appearing on the consignment note, but points out that this is based on an article in the French Commercial Code which is not applicable to air transport. Nevertheless, he continues by saying that “it is however excessive to refuse an action to the real consignor when he is the sole person to have suffered damage. Maritime law is evolving towards the recognition of a right of action in this case” and citing authority, before concluding: “Air law ought to move in the same direction”. A little later (and writing before Sidhu), he draws attention to the different approaches of French law and common law regarding delictual liability.
63. In N.V. Oregon v. Coop. Vereniging Nederlands Luchtvracht Groupage Centrum U.A. and Seeboard World Airlines Inc. (25th May 1971) the Court of Haarlem, First Chamber held that the right of suit for non-delivery was limited to the named consignor or, after the goods had arrived at the place of destination, to the named consignee, basing its conclusions that the rights were alternative on articles 12-14 and that they were exclusive on a contrario extrapolation from article 24(2).
64. Turning to United States authorities, it is to be noted that the United States has never enacted the Hague Protocol, so that they were decided under the unamended Warsaw Convention which requires the identity of the consignor and consignee to be declared in the “consignment note”. In Manhattan Novelty Corp. v. Seaboard & Western Airlines, Inc. (1957) 5 Avi. 17,229 (New York Supreme Court), a plaintiff not named as consignor or consignee was held unable to sue, “even though he has a proprietary interest in the goods shipped and even though the consignee may have been the plaintiff’s custom broker”. This was followed in the New York State City Court in Holzer Watch Co., Inc. v. Seaboard & Western Airlines, Inc. (1958) US and Can. Av. Rep. 142, with the statement that that it was reasonable that an air carrier should answer only to those it knowingly deals with, and in Pilgrim Apparel, Inc. v. Nat. Union Fire Ins. Co. (1959) 6 Avi. 17,733 (New York State City Court), with the statement that “others having an interest in the goods must look to the consignor or consignee”. In Parke, Davis & Co. v. B.O.A.C. (1958) US and Can. Av. Rep. 122 (New York State City Court), the Manhattan and Holzer cases were distinguished, on the ground that
“The carrier there was not on notice that the plaintiff in those cases was the real party in interest. Immediately following the name of the customs broker there appears “a/c Parke, Davis & Company, Detroit, Michigan”. Further, due to the necessity of having the shipment passed by U.S. Customs and U.S. Public Health Service, it was incumbent upon the real party in interest, Parke Davis & Company, to have the customs broker in New York, where the shipments first landed in this country, arrange these details.”
65. In 1979 in the Appellate Division of the Supreme Court of New York, it was held in Leon Bernstein Commercial Corp. v. Pan American World Airways 421 N.Y.S.2d 587, that an undisclosed principal of the named consignor or consignee could sue:
“Although there are authorities to the effect that only the consignor or consignee named in the air waybill may sue, we have held that the Convention is not to be so narrowly construed, if to do so would defeat the rights of the true owner. (American Banana Company, Inc. v. Venezolana Internacional De Aviacion S.A. (VIASA) 67 A. d. 2d 613, 411 N.Y.S. 2d 889). In that case VIASA urged that the consignee had no standing to sue because it was not the real party in interest. It has been held that the real party at interest has standing to sue although not the consignee named in the air waybill. (Parke, Davis & Co. v. BOAC ….).
66. In Johnson v. American Airlines (1987) 834 F.2d 721 (9th Cir.) a Federal Court reserved judgment on the question whether a principal has standing to sue whose agent was the consignor or consignee named in the consignment note. In the U.S. District Court in Rank Precision Ind. Ltd. v. Jardine Air Cargo (U.S.) Ltd. (1987) 20 Avi. 18,325, the court held that the right to bring suit was limited to the consignor or consignee, and that a reference to a company as “co-load” did not alter that result. Since the court cited as authority Parke, Davis, its decision on the latter point may merely mean that it regarded that reference as too obscure to constitute the notice of agency to which it was argued that it amounted.
67 Leon Bernstein was applied in BRI Coverage Corp. v. Air Canada (1989) 25 F. Supp. 133 (U.S. District Court of New York), where the undisclosed principal of both the consignor and the consignee was allowed to sue.
68. In Pan American World Airways Inc. v. SA Fire and Accident Insurance Co. Ltd. [1965] 3 SALR 150, the South African Appellate Division was again concerned with the unamended Warsaw Convention, and had before it, necessarily, only the older American cases on the Convention in that form. A diamond merchant had consigned a parcel to the Post Office for despatch to New York. The South African Postal Administration consigned it by air to the United States Postal Administration. The merchant sued the air carriers in delict for its loss. The case was argued on the pleadings. Four out of five judges considered that, where a consignment note had been issued, only the consignor and consignee could sue. But a different majority (composed of two of the four, Holmes J.A. and Potgieter J.A., and the fifth, Steyn C.J.) held that, in the absence of any plea that a consignment note had been issued, the action was maintainable. The restriction of suit to the consignor and consignee was treated as an exclusion or limitation of liability in the context of article 9. Holmes J.A., with whose judgment Potgieter J.A. concurred, voiced doubt about the assumption, which the court was required to make, that the Convention contemplated either Postal Administration as consignor or consignee.
69. The majority, in considering that, where there was a consignment note, the right of suit was limited to consignor or consignee, referred to the American cases of Parke Davis, Pilgrim Apparel and Manhattan Novelty. Ogilvie Thomson J.A. said that “If attainable without doing violence to the language of the Convention, uniformity is, in an international matter of this kind, manifestly desirable”. He also said that “Exactly what persons answer those descriptions [i.e. of consignor and consignee] need not be decided in this appeal”.
70. A similar division of opinion between a majority (Luckhoo J. with whose judgment on this point Bollers C.J. agreed) and minority (Sir Kenneth Stoby, Chancellor) appears in Bart v. British Indian Airways, Ltd. [1967] 1 Ll.R. 239. This too was a decision under the unamended Warsaw Convention. After citing Manhattan, Holzer Watch, Pilgrim Apparel and the South African case of Pan American Airways, Luckhoo J. referred to the statements in the House of Lords underlining the importance of uniformity in the construction of international conventions, and expressed himself to be “coerced” by the cumulative effect of the articles of the unamended Convention to conclude that only the consignor or consignee could sue. Sir Kenneth Stoby took the view that the Convention did not intend to remove the title to sue of either undisclosed principals or bailors, who had suffered the loss.
71. In Tasman Pulp & Paper Co. Ltd. v. Brambles JB O’Loghlen Ltd.[1981] NZLR 225, the plaintiff did not appear as either consignor or consignee on the air waybill, but claimed to sue the air carrier for damage to a package of fabric in contract and/or in tort as owner of the goods. The only issue actually decided was whether the plaintiff’s action against the air carrier should be struck out. But after a full review of the authorities as they then stood, Prichard J. made clear, in respect of the alternative claim, that he preferred the view taken by Steyn C.J. in Pan American and Stoby C. in Bart, namely that the owner of goods lost or damaged retained a common law right to sue. As to the claim based on breach of contract, it seems clear that he held a similar view with respect to any claim by those interested in goods to sue on a contract for air carriage as unnamed or undisclosed principals of the named consignor or consignee. This aspect was adjourned for the plaintiff to reconsider its pleadings with a view to alleging expressly that it was party, and upon what factual basis, to the contract for air carriage (page 236).
72. In reaching his decision Prichard J took into account the desirability of uniformity in the construction of an international Convention. He identified as “the real question, …. whether the Convention should be construed so as to abrogate the common law rights of the injured party”, particularly common law rights to sue for damages. To that extent, his reasoning may be vulnerable to criticism, in the light of Sidhu and El Al, for not recognising the respects in which the Convention scheme of responsibility does supersede common law principles of liability. But, in the particular area of title to sue, there is in my view force in both his approach and his reasoning. He pointed out that the emphasis on the positions of consignor and consignee in Chapter II is understandable in the context of a chapter dealing with matters of documentation and procedures for stoppage in transit and uplifting of cargo at destination (page 234); that article 14 is in terms restricted to the enforcement of rights under articles 12 and 13 (pages 227-8 and 233-4); and that if the intention had been to limit the right of suit for cargo damaged or destroyed to the consignor and consignee in all cases, one would have expected the Convention to provide for the consignor and/or consignee to have such rights in comprehensive and exclusive terms (pages 233-5). Above all, he was clearly reluctant to conclude that, in a common situation like that before him, the Convention confines title to sue to persons who have suffered no actual loss and puts the persons really interested and at risk in the hands of nominal claimants. I quote later in this judgment one particularly forceful passage from Prichard J’s judgment in this connection.
73. Polatex Trading Co. Pty. Ltd. v. Scandinavian Airlines System (11/12/84; District Court of New South Wales) is a pithily reasoned decision from the South West Pacific area (as the judge in Polatex identified it). The judge’s reasoning pays due regard to the considerations informing the House of Lords’ later decision in Sidhu. He was content to accept that “the entire scope of the parties’ rights and obligations are to be found in the contract evidenced in the air waybill and/or as found in the application of” the relevant Australian statute enacting the Convention, so that Polatex could not evade that scheme of liability. But he rejected the argument that the only person who could maintain an action to enforce that scheme of liability was a named consignor or consignee. The issue was narrow, whether the endorsee of a consignee could sue, but the judge’s observations have more general force:
“The word “consignee” is not defined in the Convention. Perhaps it does not need any definition. It means at least the person to whom the goods are consigned. Certainly Article 14 entitles that person to enforce whatever rights are conferred by Articles 12 and 13. But, as is pointed out in Shawcross [on Air Law], the words of Article 14 are enabling only and not exclusive. The argument that the carrier should know from the face of the air waybill the identity of the contracting parties is to me of superficial attraction only. In the modern commercial world of today and even as it existed in Warsaw in 1929 or in The Hague or in Mexico in later time, it is ever the fact that international trade was financed by banking houses and that the security for loans made for such a purpose might be the very goods to be transhipped. To effect that security, it is ever the fact that the lender would acquire some measure of title over the goods and to that end may well insist on being the named consignee. But all of that is in the knowledge that the consignee so nominated might endorse the bill to another.”
74. David Steel J. apparently thought that the only person other than the consignor or consignee named in the air waybill who could ever claim was someone to whom the consignor had under article 12(1) ordered delivery to be made in lieu of a named consignee (see the last sentence in his judgment, before the heading “Conclusion”). He also thought that this conclusion was supported by and consistent with the decision in Polatex. But in that case it was the consignee (Scholefield Goodman (Aust) Pty. Ltd.), not the shipper or consignor (“Bibazir C”) who endorsed the air waybill “On payment of all charges deliver to the order of Polatex Trading Co. Pty. Ltd.”, the actual owner of the goods during the transit, whose name also appeared as notify party on the air waybill. Neither article 12 nor article 13 provides expressly for a consignee to specify delivery to some other consignee, although it is possible that this might be implied.
75. In Gatewhite Ltd. v. Iberia Airlines Aereas de Espana Soc. [1989] 1 Ll.R. 160, decided in the English Commercial Court, Gatehouse J. undertook a full reconsideration of the issue. The second plaintiffs, growers of chrysanthemums in Grand Canary, had agreed to sell a quantity to the first plaintiffs, Gatewhite, under a contract under which property passed on their shipment by air. The second plaintiffs consigned the chrysanthemums via Iberia Airlines under an air waybill naming the first plaintiffs’ customs clearing agents, Perishables Transport, as consignees. The first plaintiffs only appeared on the waybill as notify party. There was delay in transit and the chrysanthemums were spoiled. The sole issue before Gatehouse J. was whether the first plaintiffs, as owners throughout the air carriage, had title to sue the airline. After a full review of the authorities he concluded that they did. He reminded himself of the need to avoid too parochial a view of an international convention (pages 163 and 165). He reminded himself of the desirability of uniform construction of international conventions,but pointed out that in 1989 there was “already a division of opinion on the issue, to be found not only in dissenting judgments but in actual decisions” (page 166, and see 164). He found in the Convention nothing to exclude the right of an owner to sue for damage to or loss of goods in carriage or to restrict such right to the consignor or consignee. He echoed the view, similar to that expressed by Prichard J., that
“it would be a curious and unfortunate situation if the right to sue had to depend on the ability and willingness of the consignee alone to take action against the carrier, when the consignee may be – and no doubt frequently is – merely a customs clearing agent, a forwarding agent or the buyer’s bank. It would seem artificial in the extreme to require a special contract in the air waybill itself under article 15(2) to provide the goods owner with a remedy in such a normal situation.” (page 166)
76. In the subsequent Hong Kong authority of Regalite International Ltd. v. Aircargo Consolidation Service (UK) Ltd. [1996] 3 HKLR 453, Mr Recorder Edward Chan Q.C. refused to follow the previous decision of Traynor J. in Cordial Manufacturing Co. Ltd. v. Hong Kong America Air Transport Ltd. [1976] HKLR 555. In Cordial the first plaintiff, an fob seller, had consigned goods under an air waybill which named the bank issuing a letter of credit on behalf of the second plaintiff, the buyer. Traynor J. held that the fob seller, although named in the air waybill as consignor, could not sue for loss of the goods (delivered to a lorry driver who produced forged documents), since he had parted with all interest in the goods on their shipment, had ceased under articles 13 and 14 to have any claim, had made no special contract with the air carrier, and had by shipping the goods simply brought such a contract into existence “between the carrier and another, be it the consignee (Irving Trust Inc.) or the second plaintiff” (page 584). He also held that the buyer, the second plaintiff, could not sue, on the basis that the scheme of the Convention, particularly articles 13 and 14, was to confine rights of action to the named consignor or, once the goods had arrived at destination, the named consignee.
77. In Regalite goods were delivered at destination by the air carrier to the notify party (their intended buyer), contrary to the seller/consignor’s instructions to deliver only to the named consignee, the buyer’s bank (Bank of America). In a detailed judgment Mr Recorder Chan said that the decision in Cordial was surprising and had given rise to great inconvenience in cases of goods consigned to banks under letters of credit or on cash (or acceptance of draft) against payment terms. On the facts before him, he found a special contract between the consignor and air carrier, enabling the former to sue for its loss, whether or not it was owner. He also held that the consignor had retained ownership and preferred Gatehouse J’s decision in Gatewhite to Trainor J’s in Cordial, saying:
“The proposition that the owner of goods could not bring an action against the carrier for loss and damage to his cargo during the course of carriage is a startling proposition. In the case where goods are consigned to a banker under D/P arrangements but are wrongfully released to someone else, usually the consignee banker would have no real interest in the goods. In the present case, the Bank of America would not even have any interest in the goods as security as his customer got the goods without any payment and hence the overwhelming probabilities would be that the Bank of America had not even lent the price against the security of the goods. In this situation, it is understandable that the consignee banker would have little incentive to be involved in any litigation against the carrier. It is also understandable that the plaintiff could not get the Bank of America to join as co-plaintiff as the Bank of America was basically the banker of [the buyer]”
78. In the Scottish courts in Sidhu the decision in Gatehouse was distinguished as dealing with a quite separate aspect of the Convention to that in issue in Sidhu (per Lord Marnoch in the Inner House), while Lord Clyde in the Inner House said that the area of title to sue was one where the Convention was not necessarily exhaustive: see (1996) SLT 529, 537B and 546E). In the House of Lords, at pp.450-1, Lord Hope cast some doubt upon the decision:
“This decision, however, does not sit easily with the idea that the object of the Convention, in the areas with which it deals, was to provide uniformity of application internationally. As Shawcross & Beaumont, Air Law, 4th ed. (Looseleaf reissue), vol. 1, VII (188) have observed, the rule in civil law countries is that only a party to a contract of carriage, or a principal for whom he was acting, is regarded as the appropriate plaintiff. In common law countries the proper plaintiff is the owner of the goods, whose right to sue depends on his interest in the goods, not on the fact that he may also be a party to the contract. It would seem to be more consistent with the purpose of the Convention to regard it as providing a uniform rule about who can sue for goods which are lost or damaged during carriage by air, with the result that the owner who is not a party to the contract has no right to sue in his own name.
We were not asked to review the Gatewhite case in detail however, and as the point was not fully argued I would not wish to cast further doubt on the decision which Gatehouse J reached. It is sufficient for present purposes to say that I am not persuaded that we should apply his reasoning to the question which is before us here, which is not concerned with the question of standing or title to sue but with the question whether a person who has an undoubted title to sue under the Convention can pursue a claim outside the Convention where the Convention itself does not provide him with a remedy.”
79. It is to be noted that Lord Hope’s reservation about Gatewhite related specifically to the possibility of suit by an owner not party to the contract of carriage. His reference in the context of civil law to “a party to a contract of carriage, or a principal for whom he was acting” is at least neutral in the context of the primary issue presented by the present case, which is whether a principal, for whom a person named as consignor or consignee is acting, may intervene.
80. Looking back over the whole body of authority which I have sought to review, it can be seen that a line of French authority from the 1970s to the 1990s, a Dutch authority (1971) and a Belgian case (1981) adopt the position for which British Airways contends (and the question-marks which Prof. Tosi writing in 1995 introduced in relation to the inevitability of this direction for future French law have not borne fruit, to date). Otherwise, however, the direction of international authority has swung from a refusal to recognise any right of suit in anyone but a consignor, consignee or other person entitled under article 12(1), towards a general readiness to recognise both the intervention of, firstly, (a) principals of whose existence notice was given (Parke, Davis in 1958), then, latterly, of (b) any, even undisclosed principals: see Leon Bernstein in 1979 and BRI Coverage in 1989 in the United States, though a contrary note appears in Rank Precision in 1987, as well as Tasman Pulp in 1981 in New Zealand and the reasoning in Polytex in 1984 in New South Wales, and Regalite in 1996 in Hong Kong. Thirdly, claims by (c) persons founding on their ownership of affected cargo were supported in Tasman Pulp in 1981 in New Zealand and Gatewhite in 1989 in England. The uniformity of international jurisprudential thinking which influenced the majority judges in Pan American in 1965 in South Africa and in Bart in 1967 in British Guyana has thus shifted markedly in an opposite sense.
81. Further analysis
I take separately the positions of (I) principals of the person named as consignor or consignee on any air waybill and (II) claimants relying simply on their ownership or right to immediate possession of cargo to claim against an actual carrier responsible for its loss or damage. Mr Crane’s submissions before us concentrated upon (I). This was understandable on the particular facts – and also no doubt because Lord Hope’s doubt about the correctness of Gatewhite related to (II). If permissible at all, a claim under (II) would also require the claimant to establish his own ownership (or the right to immediate possession) as well as possession on the part of the relevant carrier at the time of the loss or damage.
(I) Principals of a person named as consignor or consignee on any air waybill
1) Nothing in the Convention as amended requires the naming of a consignor or consignee in the air waybill or explicitly restricts the concept of consignor or consignee to someone so named.
2) The Convention takes as a working model international carriage by air under an agreement or contract to which the consignor and consignee would be or fall to be treated as party. But the Convention does not set out to define either consignor or consignee, or to exclude domestic contractual rules which would either define them or permit others to claim to be (or to be held liable as) their principals.
3) In the view I take, the Convention’s references to consignor and consignee should not therefore be read in an exclusive sense. The Convention assumes, and to some extent (e.g. in the context of articles 13(3) and 30(3)) imposes, a particular contractual model. But that model also allows for flexibility, both in the identification of the consignor or consignee and, more importantly, in the identification of the principals of persons named in the air waybill as consignor or consignee.
4) I adopt the view, taken by other courts which have considered this problem, that there are, in this respect, strong considerations of commercial sense in favour of an interpretation which recognises and gives effect to the underlying contractual structure, save in so far this is positively inconsistent with the Warsaw and Guadalajara Conventions. These considerations were well expressed by Prichard J. in Tasman Pulp & Paper Co. v. Brambles [1981] 2 NZLR 225, 235:
“The effect is that the owner of goods is put completely in the hands of a nominal consignee who, for a variety of reasons, may be incapable of or averse to instituting proceedings against an airline. The consignee may be a customs agent or forwarding agent who is insolvent or in liquidation. Or the consignee may be a bank, the directors of which might well refuse to embark on costly litigation on behalf of a customer – even though that customer offered to indemnify the bank for costs. And, finally, however willing and able he may be, the action may not be one which the consignee is empowered to bring – his right to sue being limited to the rights conferred on him by Article 13.”
It may be, as I have indicated earlier in this judgment, that the last point made in this extract can be answered by both interpreting article 13(3) as a condition to loss (perte) claims and by extrapolating a general underlying intention to confer rights of suit for loss (perte) or damage (avarie) on the consignor or consignee, irrespective of their interest and of any actual damage which they may have sustained. There is still no reason to infer an equally general and unstated exclusion of any right of suit by any principal of the consignor or consignee who has really sustained the relevant damage.
Further, the points made in the first three sentences of the passage from Prichard J’s judgment are valid in any event. Litigation is a costly and committing affair, and the analysis urged by British Airways would require named consignors and consignees to be prepared to litigate against air carriers at peril of liability for costs, in matters in which they had no real interest. Prichard J’s observations can, I think, be further reinforced by the consideration that, if an airline can insist upon restricting its sights to the particular named consignor, consignee or person entitled, it would, presumably, follow that it can set off, in the liquidation of any such consignor, consignee or person entitled, debts which it may be owed (e.g. for freight unpaid) arising out of mutual dealings with that person quite unconnected with the present carriage, even though such debts would be incapable of set off because the carrier was on notice or had been given notice of the interests of the goods-owner really concerned: see Bowstead and Reynolds on Agency 16th Ed. Article 83 (and, regarding the civil law position, the concluding sentence of paragraph 1-018).
5) I am not persuaded to a contrary view by the argument that a carrier must know in advance by whom he will be sued. There is no requirement even to identify any consignor or consignee in any document of carriage. Actual carriers are under the Guadalajara Convention exposed to suits by persons unknown relying on agreements to which actual carrier was not party. After any loss, damage or delay, it will become clear who is claiming, and it seems to me that there may even be potential advantages on both sides, if those with the incentive and information to mount a claim are at least able to do so. On any view, however, the considerations favouring a conclusion that cargo-interests should be able to intervene and to sue for loss and damage as a principal on a contract evidenced by an air waybill issued to his shipping or customs agent appear to me considerably to outweigh any argument based on the supposed inconvenience or uncertainty that this might involve for air carriers.
6) It is no answer to the claimants’ submissions that, if the claimants had raised their alternative case in time, they might have succeeded in relying on the LEP air waybill as evidencing a contract for air carriage with LEP and in holding British Airways liable under the Guadalajara Convention accordingly. This was an alternative case which would be inapplicable if the claimants are right on their primary case. On their primary case, deriving from their analysis of LEP’s conditions and of the contractual position, the LEP air waybill does not evidence any contract for air carriage. Rather, it evidences an agency, and the issue is whether the claimants are entitled to assert LEP’s agency on their behalf in relation to the making of the contract for air carriage with Qantas. As I have indicated, nothing suggests that agency situations are uncommon in the consignment of goods by air and the fact that they have arisen for consideration in a number of prior cases indicates that they are not.
7) The interests of international uniformity no longer point towards a restriction of the right of suit to any named consignor, consignee or person entitled under article 12(1). The new magnetic pole of international jurisprudence draws quite strongly towards conclusions that there is no such general restriction in the Convention, and that, at least under systems which recognise the rights of unnamed or even undisclosed principals, there is nothing in the Conventions to prevent such principals of the named consignor or consignee intervening and suing (or being sued) in reliance on the relevant contract for carriage by air. As principals they will necessarily be subject to any limitations on suit which the Convention imposes on their consignor or consignee agents.
8) The amendments to article 24 under the Montreal Protocol No.4, although not in force in respect of this carriage, suggest strongly that there is no inconsistency between (on the one hand) detailed provisions such as those in Chapter II or article 30(3), regulating a consignor’s or consignee’s right of suit, and (on the other hand) claims by others, particularly principals of a consignor or consignee permitted under domestic law rules to sue on the relevant contract. In this field also, I prefer to view the Montreal Protocol No.4 as clarificatory, rather than amendatory (see the words of the United States Supreme Court in the El Al case, cited above).
9) I would add that, even on the view adopted by some United States courts that only disclosed principals should be allowed to sue, the claimants in the present case have a properly arguable case that LEP’s alleged agency on their behalf was disclosed, as a result of the combination of the reference on the Qantas air waybill of the information “Freight prepaid a/c of Western Digital (S) Pte Ltd” and the manifest consisting of the relevant LEP air waybills which are said (though there is a factual issue about this) to have been attached to or to have accompanied the Qantas air waybill: see generally Bowstead and Reynolds on Agency 16th Ed. paragraph 8-110. The fact that LEP acted as issuing agents in respect of the Qantas air waybill may reinforce this argument, although consideration would require to be given to the significance of LEP’s dual capacity on the attribution to Qantas of any knowledge which LEP had.
10) For these reasons, I consider that Western Digital Singapore or (if Western Digital Singapore as fob seller proves to have acted as agent for its buyers) Western Digital Nederlands had a properly arguable claim with a real prospect of success against British Airways, on the basis that (a) it was a principal of the consignor or consignee named in the air waybill issued by Qantas and (b) British Airways performed the carriage the subject of that air waybill and is liable accordingly for the short delivery of the cargo under the Guadalajara Convention. I would set aside the declaration made by the judge in paragraph 2 of his Order dated 14th July 1999, in so far as he held that the claimants were not entitled to pursue any such claim under article 18 of the Convention.
(II) Claimants relying on their ownership (or right to immediate possession) of cargo to claim against an actual carrier responsible for its loss or damage.
1) I find this a more difficult point to resolve. A possible view of the Convention is that its provisions only contemplate liability claims based upon or at least ancillary to an underlying contractual relationship (whether this derives from the relevant governing law or is imposed by the specific provisions of the Convention). On this view, articles 17 to 21 cannot fix the nature or standard of any duty owed other than to a party to such a contract. If this view is correct, then on the basis of Sidhu and El Al, any possibility of any non-contractual claim would appear to be superseded and excluded by the Convention. But I have come to the conclusion that this is not the preferable view and that the scheme of the Warsaw and Guadalajara Conventions is to read as permitting such claims, where they would be allowed under the relevant domestic law.
2) Firstly, the extension of the Convention scheme to an actual carrier by the Guadalajara Convention illustrates that the provisions of the Warsaw Convention are fully capable of operating between non-contracting parties, and the Conventions contain provisions which contemplate parallel non-contractual claims, particularly against servants or agents, which depend on ownership or a right to immediate possession.
3) Secondly, the phrase “however founded” in article 24(1) itself suggests the possibility of extra-contractual claims in respect of baggage or cargo under article 18. In this respect, as I have said, I would prefer to view the Montreal Protocol No.4 amendments as clarificatory. The fuller wording used in article 24(2) does not justify a contrary conclusion, and appears explicable by reference to the special considerations governing dependency claims in personal injury cases.
4) If the owner of cargo has a claim against an actual carrier responsible for its loss or damage, the provisions of Chapter III are fully capable of regulating that claim. The claim will be based and restricted accordingly. Domestic law may establish title to sue, while the Convention, as the House of Lords held in Sidhu, will regulate the nature and standard of responsibility. Neither the detailed provisions of Chapter II nor the presence of article 30(3) regulating specific aspects of the carrier’s position in relation to the consignor and consignee are, in my view, inconsistent with this.
5) The amendments to article 24 by the Montreal Protocol No.4 confirm the consistency – by elaborating the phrase “however founded” to make clear that it embraces tort-based claims and adding the phrase “without prejudice to the question who are the persons who have the right to bring suit and what are their respective rights”. Similar confirmation is found if one looks at a parallel convention in the same family as the Warsaw Convention – that is, the Convention on the Contract for the Carriage of Goods by Road (“CMR”) enacted by the Carriage of Goods by Road Act 1965. Chapter III of CMR corresponds closely to Chapter II of the Warsaw Convention, while Chapter VI of CMR contains provisions regulating successive carriage. Yet article 28(1) in Chapter IV of CMR expressly contemplates extra-contractual claims.
6) The two common law authorities in point, Tasman Pulp and Gatewhite, favour recognition of claims on such a basis, although they predate Sidhu which casts doubt upon them in this respect. The practical considerations identified by Prichard J. in Tasman Pulp all militate in favour of recognising that non-contractual actions may be brought against actual carriers by the persons really interested, that is by the relevant baggage or cargo owner (or person entitled to immediate possession). Again I find the contrary considerations of simplicity and uniformity uncompelling, and, in the case of an actual carrier facing a non-contractual claim, the argument that he must be entitled to know where he stands lacks virtually any force. As the present case confirms, even where the relevant documents are obtained, there may be considerable room for argument which evidences the relevant contract of carriage, who are the parties to it, and who is the consignor or consignee.
7) That Chapter III of the Convention would govern such non-contractual claims, if admissible at all, is clear under English law from Sidhu. I note also, in parenthesis, that, in their article on the German legal position (referred to above), Schönwerth and Müller-Rostin conclude that extra-contractual claims by a third party owner (e.g. a cargo-owner not party to the contract of carriage in the air waybill or an individual asking a passenger to take items for him) would – at least in circumstances where the owner knew or could have contemplated that his goods would be carried by air – be subject to the scheme of liability prescribed by articles 17-21 of the Convention.
8) Apart from straightforward cases of carriage in circumstances contemplated by those owning or having the right to immediate possession of the relevant baggage and cargo, the entirely foreseeable case of goods consigned without the knowledge or authority of those owning or having the right to their immediate possession suggests that the Convention cannot confer on carriers by air any absolute immunity to claims by such persons.
9) Despite the unfavourable dictum in Sidhu, I would therefore conclude that the Conventions do not exclude claims against an actual carrier based on title to the relevant baggage or cargo, but subsume them within the Convention scheme of liability in Chapter III of the Warsaw Conventon. Thus, although the nature and standard of any liability on British Airways’ part is regulated by the Warsaw and Guadalajara Conventions, title to sue is determined by the law governing extra-contractual claims. In this case, it is not suggested that such law, whichever it may be, does not permit an owner of goods lost in possession of a carrier by air to claim against that carrier in respect of such loss, apart from the Convention. I would therefore also set aside the judge’s declaration in paragraph 2 of his Order dated 14th July 1999, to the extent that he held the contrary as a matter of principle.
82. The cross-appeal – complaint under article 26(2)
I turn to the cross-appeal. Mr Shepherd for British Airways submits that the judge erred both in the test he applied and in his approach to the facts. What is required under article 26(2), in the case of damage (avarie), is that “the person entitled to delivery must complain to the carrier forthwith after discovery of the damage, at the latest, within …. fourteen days from the date of receipt in the case of cargo”. Failing complaint within such time, no action lies against the carrier (article 26(4)). The claimants rely on the two letters dated 28th June 1996 as sufficient notice. Mr Shepherd submits, first of all, that any notice which these letters gave was not given by the person entitled to delivery, the consignee, Express Cargo Forwarding Ltd., but was given by Irish Express Cargo Limited for whom they were signed. Since the former’s name appeared at their letter-head with a note at the foot that the former were a division of the latter, I see no force in this. Irish Express Cargo Limited must be taken to have been acting for and with the authority of Express Cargo Forwarding Ltd., the actual named consignee.
83. Much more significantly, it is submitted that the letters did not amount to a complaint, still less a complaint in relation to the subject matter of the claimant’s primary case, that is the partial loss of packages from the larger consignment being carried by British Airways. Each letter related to an identified part of that consignment and that identified part had as a matter of fact been wholly lost. Yet each letter advised that the identified part “was received” but was “in a condition which obliges us to reserve the right to claim against you as carriers”. Mr Crane argues subtly that, on the authority of Fothergill v. Monarch Airlines Ltd. [1981] AC 251, the word “damage” (avarie) in article 26(2) covers partial loss of baggage or cargo, so that advice of a claim in respect of the “condition” of goods on arrival must be treated as covering both physical damage and partial loss. That appears to me specious. Letters relating to the condition of two sets of identified goods received cannot amount to a claim that those goods have not been received, even though in terms of the Convention those sets of goods may constitute part of a larger consignment, in which context their loss would involve a partial loss or avarie, rather than a total loss or perte.
84. Lord Wilberforce said in Fothergill that the purpose of article 26(2) appeared “reasonably clear”:
“It is (1) to enable the airline to check the nature of the “damage”; (2) to enable it to make inquiries how and when it occurred; (3) to enable it to assess its possible liability; to make provision in its accounts and if necessary to claim on its insurers; (4) to enable it to ensure that relevant documents (for example the baggage checks or passenger ticket, or the air waybill) are retained until the issue of liability is disposed of.
If one then enquires whether these considerations are relevant to a case of partial loss of objects contained in baggage, the answer cannot be doubtful: they clearly are. Moreover, prompt notification may give the airline the opportunity of recovering the objects lost.”
85. In Fothergill the plaintiff had on arrival home from holiday found that his suitcase was damaged, and he completed a “property irregularity report” (“p.i.r.”) which under the heading “Nature of Damage” stated “Side seam completely parted from the case. [Damage] occurred on the homebound flight.” On arrival home he discovered items were missing from the case, but no further complaint was made within the time limit. His action failed. The p.i.r.
“said nothing about the contents of the baggage and it was totally insufficient for the purpose for which it was required …. One need only figure a case in which the objects lost were valuable jewellery to see the necessity for a specific complaint of the loss.” (per Lord Wilberforce at page 278G).
86. Lord Fraser at page 289G agreed:
“It gave no hint that such loss [of contents] had occurred, and indeed, by referring only to damage to the suitcase, it implied that that was the only matter of complaint. I entirely agree with the opinion of Kerr J. [1978] QB 108, 120:
“…. the complaint must relate to the claim which the passenger is seeking to enforce. It must give sufficient details to the carrier to enable him to make the relevant enquiries.”
87. Lords Scarman and Roskill agreed with Kerr J’s reasoning (pages 296B and 302D-E).
88. Lord Wilberforce’s listing of the purposes of article 26(2) cannot, I accept, be read as suggesting that all such purposes can or must be satisfied merely by the notice required under that article. It is clear, as Kerr J’s reasoning also confirms, that many of them would involve and could only be satisfied as a result of follow-up activity. I would also agree that a complaint under article 26(2) need only be in general terms. Nevertheless, there must be within the time stated a complaint, which must at least embrace the damage to which the subsequent action relates. In this case, such complaint as was made within the relevant time was specifically limited to physical damage to identified items and did not embrace the loss of such items the subject of this action. It indicated a problem about the condition of the identified items, not about their arrival. No doubt this could have been cured if, as contemplated by the form, the “brief details” promised had been “mentioned below” on the letters. But they were not. It follows in my view that article 26(2) was not complied with and the claimants’ action falls to be dismissed on that ground.
89. The judge considered that the objective adequacy of the complaint was not the test. What mattered was whether it had in fact enabled British Airways to investigate the position. He considered that it had not been shown that it did not. He cited Schmoldt v. Pan American World Airways Inc. (1989) 21 Avi. 17,974 and BVI Coverage (above). The former case does not assist. In the latter case, a claim in March 1985 that goods did not arrive “in tact” and that the airline would be held responsible for the missing goods was held a sufficient complaint to permit an action for damage found on the goods when they were belatedly located and delivered in May 1985. The judgment places reliance on the investigation which the airline was able to make after the initial complaint. I do not find the reasoning or the result easy to follow, and on no view are the present facts analogous as to the course of events. Here, although the judge seemed to place the onus of proof on the airline to show that it did not make full investigations, there is nothing to show that it did so or that it entered into any sort of discussion with the consignees or with anyone interested in cargo which could have led them to consider that no further complaint was required. On the material available, British Airways’ first response was to a later complaint (dated we understand 23rd July 1996) made after the time limit had expired, and no reliance is placed on that response as debarring them from invoking article 26(2). In my judgment, the test under article 26(2) is an objective one. British Airways is right in its submission that no relevant complaint was made under that article within the relevant time. If the claimants were to avoid the natural consequence of the failure to make any timely complaint on any basis, the onus was upon them to do so. They have not done so.
90. Finally, Mr Crane submitted that Qantas had “waived” or, more accurately, varied the period of notice required in respect of any claim for partial non-delivery, so as to extend it to 120 days. On this basis, Mr Crane relied on the later complaint dated 23rd July 1996 as within the prescribed time limit. This point was not pleaded or argued before David Steel J., or indeed included in the appellant’s notice of appeal. But it was raised, very briefly, both in Mr Crane’s skeleton, answered equally briefly by Mr Shepherd’s, and in oral submissions. It did not appear to have merit at the time, and was unfortunately overlooked when preparing this judgment for handing down. We therefore received further written submissions from both sides, which set out the point more fully. The point still appears to me to lack merit, and I now state its nature and my reasons for this conclusion.
The point turns on clause 12 of the terms and conditions on the reverse of Qantas’s air waybill, reading:
“12.1 The person entitled to delivery must make a complaint to the Carrier in writing in the case
12.1.1 of visible damage to the goods, immediately after discovery of the damage and at the latest within 14 days from receipt of the goods,
12.1.2 of other damage of the goods, within 14 days from the date of receipt of the goods,
12.1.3 of delay, within 21 days of the date the goods are placed at his disposal, and
12.1.4 of non-delivery of the goods, within 120 days from the date of the issue of the Air Waybill;
12.2 for the purpose of Subparagraph 12.1 above complaint may be made to the Carrier or to the last Carrier or to the Carrier who performed the transportation during which the loss, damage or delay took place;
12.3 any rights to damages against Carrier shall be extinguished unless an action is brought within two years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped.”
91. Mr Crane suggests that, since the Warsaw Convention prescribes no period for any complaint in respect of non-delivery, clause 12.1.4 would be ineffective if it referred to total non-delivery. It must therefore include partial non-delivery. However, it seems to me clear that Qantas’s terms and conditions of carriage follow, carefully, the language and concepts which are familiar in air carriage. “Damage” in the sense of avarie is covered by clause 12.1.1 and 12.1.2, which adopt the same time limits as expressed in the first sentence of article 26(2) of the Warsaw Convention. The subject-matter moves to delay in clause 12.1.3, which adopts the same time limit as in the second sentence of article 26(2). Clause 12.1.4 deals with non-delivery, in relation to which it purports to introduce a 120 day time limit. Clause 12.2 appears to have been drafted with articles 26 and 29 of the Warsaw Convention and article IV of the Guadalajara Convention in mind. Clause 12.3 provides for a two year limit for litigation, mirroring article 29(1).
92. As regards clause 12.1.4, it is true that the Warsaw Convention does not contain, or therefore under article 23 permit, in respect of international air carriage within its scope any such time limit in respect of total non-delivery (perte). But that cannot mean (and Mr Crane does not, as I read his skeleton dated 11th May 2000, suggest that it does mean), that clause 12.1.4 can be read as confined to partial non-delivery. Qanta’s terms and conditions are elaborately drafted. If Qantas had had in mind a scheme so confusing and using terminology so differently from the Conventions, the draftsman could and would surely have made this expressly clear. It follows that clause 12.1.4 must in circumstances of non-delivery (perte) be ineffective – at least in cases of international air carriage within the relevant international conventions. But there is equally no reason in those circumstances to attempt to give clause 12.1.4 artificial partial validity by treating it as covering cases of partial non-delivery. On any ordinary canon of construction in the present aviation context, partial non-delivery must have been envisaged, and must be treated, as falling within clause 12.1.1 and 12.1.2 (avarie): see the extensive discussion of the internationally accepted scope of the concept of “damage” (avarie), in relation to the time limit for complaint, in Fothergill v. Monarch Airlines Ltd. (above) (and also, now, in the English context, s.4A of the Carriage by Air Act 1961).
93. The claimants’ action in respect of the international carriage by air is thus barred, and falls to be dismissed. The cross-appeal succeeds accordingly.
94. Conclusion
In the result, the claimants are entitled to have paragraph 2, but not paragraph 3, of the David Steel J’s Order dated 14th July 1999 set aside and the respondent is entitled to have paragraph 1 of that Order set aside. The result is that the claimants’ action in respect of the international carriage by air must fail for want of any timely complaint. I consider that we should hear counsel on the appropriate form of order to give effect to such conclusions.
MR JUSTICE HARRISON: I agree.
LORD JUSTICE MORRITT: I also agree.
Western Digital Corporation & Ors v British Airways Plc
[2000] CLC 1276, [2000] EWCA Civ 153, [2001] 1 All ER 109, [2000] 2 Lloyd’s Rep 142, [2001] QB 733, [2000] 2 All ER (Comm) 647, [2000] 3 WLR 1855
Mance LJ
18. The Warsaw Convention
I turn to the central question which the judge determined. It is whether the Warsaw Convention permits suit against a contracting or actual carrier in respect of loss of or damage to cargo by anyone other than a person named in the air waybill as consignor or consignee or a person entitled to delivery under the air waybill.
19. The scope of the Convention is found in article 1. The Convention applies to all international carriage of persons, baggage and cargo performed by aircraft by air for reward, as well as to gratuitous carriage by aircraft performed by an air transport undertaking (article 1(1)), though not to carriage of mail or postal packets (article 2(2)). For its purposes “the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination” are within territories of different contracting states or are within the territory of a single contracting state but with “an agreed stopping place” within the territory of another state (article 1(2)). By article 1(3):
“Carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to be one undivided carriage if it has been regarded by the parties as a single operation, whether it had been agreed under the form of a single contract or of a series of contracts, and it does not lose its international character merely because one contract or a series of contracts is to be performed entirely within the territory of the same State.”
20. In parenthesis, article 30 regulating liability in cases of successive carriage further provides that a successive carrier
“is deemed to be one of the contracting parties to the contract of carriage in so far as the contract deals with that part of the carriage which is performed under his supervision”.
21. These provisions all contemplate the existence of an agreement, contract or contracts between parties for the relevant international carriage. Chapter II (articles 3 to 16) dealing with documents of carriage (passenger tickets, baggage checks and air waybills) does so likewise. The passenger ticket to be delivered by an air carrier under article 3(1) must contain inter alia
“(a) an indication of the places of departure and destination,
(b) ….
(c) a notice to the effect that, if the passenger’s journey involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect of loss of or damage to baggage”.
By article 3(2):
“The passenger ticket shall constitute prima facie evidence of the conclusion and conditions of the contract of carriage.”
though:
“The absence, irregularity or loss of the passenger ticket does not affect the existence or validity of the contract of carriage, which shall, none the less, be subject to the rules of this Convention. Nevertheless, if, with the consent of the carrier, the passenger embarks without a passenger ticket having been delivered, or if the ticket does not include the notice required by paragraph 1(c) of this Article, the carrier shall not be entitled to avail himself of the provisions of Article 22.”
Article 22(1) limits the carrier’s liability in the carriage of persons, but adds:
“Nevertheless, by special contract, the carrier and passenger may agree to a higher limit of liability.”
22 Article 4(1) provides for delivery of a baggage check containing a like indication and notice, mutatis mutandis, to that required for tickets under article 3(1). Under article 4(2) the baggage check “shall constitute prima facie evidence of the registration of the baggage and of the conditions of the contract of the carriage”. Its absence, irregularity or loss has a similar consequence to that provided in the case of a passenger ticket.
23. Under article 5(1), the carrier has the right to require the consignor to make out and every consignor has the right to require the carrier to accept an air waybill, although under article 5(2):
“The absence, irregularity or loss of this document does not affect the existence or the validity of the contract of carriage which shall, subject to the provisions of Article 9, be none the less governed by the rules of this Convention.”
24. Article 8 provides for an air waybill to contain a like indication and notice, mutatis mutandis, to that required for tickets and checks under articles 3(1) and 4(1). Article 9 removes the carrier’s entitlement to limit under article 22, if with its consent, cargo is loaded on board an aircraft without an air waybill or with an air waybill without the notice regarding limitation of liability required by article 8(c). By article 11:
“The air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and of the conditions of carriage.”
25. Under article 22(2)(a), the limit of the carrier’s liability in the carriage of registered baggage and cargo applies unless the passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest, in which case the carrier is liable to pay up to the declared sum, “unless it proves that that sum is greater than the passenger’s or consignor’s actual interest in delivery at destination”.
Article 12(1), (2) and (3) confer on the consignor and regulate rights of disposal during transit which are expressly “[s]ubject to his liability to carry out all his obligations under the contract of carriage”. Article 12(4) continues:
“The right conferred on the consignor ceases at the moment when that of the consignee begins in accordance with Article 13. Nevertheless, if the consignee declines to accept the waybill or the cargo, or if he cannot be communicated with, the consignor resumes the right of disposition.”
26. Article 13(1) provides that, except in circumstances where the consignor has exercised his right of disposal under article 12,
“the consignee is entitled, on arrival of the cargo at the place of destination, to require the consignor to hand over to him the air waybill and to deliver the cargo to him, on payment of the charges due and on complying with the conditions of carriage set out in the air waybill”
27. Article 13(2) requires the carrier to give notice to the consignee as soon as the cargo arrives, and article 13 provides:
“If the carrier admits the loss [perte in the French text] of the cargo, or if the cargo has not arrived at the expiration of seven days after the date on which it ought to have arrived, the consignee is entitled to put into force against the carrier the rights which flow from the contract of carriage”
28. Article 14 provides:
“The consignor and consignee can respectively enforce all the rights given them by Articles 12 and 13, each in his own name, whether he is acting in his own interest or in the interest of another, provided that he carries out the obligations imposed by the contract”.
29. Article 15(1) provides:
“Articles 12, 13 and 14 do not affect the relations of the consignor or consignee with each other or the mutual relations of third parties whose rights are derived from the consignor or consignee.”
30. By article 15(3) “Nothing in this Convention prevents the issue of a negotiable air waybill”.
31. The judge derived from the provisions of chapter II a provisional conclusion that the owner of a consignment who was not the consignor or consignee named in an air waybill (or a person to whom the consignor had ordered delivery to be effected under article 12) could not hold the carrier liable under the provisions of article 18 in chapter III. He based this on the emphasis placed in chapter II on the central role of the consignor and consignee and their special status vis-à-vis the carrier. Before considering this conclusion further, it is appropriate to look at chapter III.
32. The Convention deals separately in Chapter III with liability of the carrier. Articles 17, 18 and 19 provide for the three subjects of death/bodily injury, loss (perte) or damage (avarie) to baggage or cargo and delay. Article 20 provides a limited defence if the carrier “proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures”, while article 21 provides for damage (dommage) caused or contributed to by a claimant’s own fault. Article 22 is the limitation provision. Article 24, 25A, 26, 27, 28, 29 and 30 read as follows:
“ARTICLE 24
(1) In the cases covered by Article 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention.
(2) In the cases covered by Article 17, the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights.
ARTICLE 25
The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment.
ARTICLE 25A
(1) If an action is brought against a servant or agent of the carrier arising out of damage to which this Convention relates, such servant or agent, if he proves that he acted within the scope of his employment, shall be entitled to avail himself of the limits of liability which that carrier himself is entitled to invoke under Article 22.
(2) The aggregate of the amounts recoverable from the carrier, his servants and agents, in that case, shall not exceed the said limits.
(3) The provisions of paragraphs (I) and (2) of this Article shall not apply if it is proved that the damage resulted from an act or omission of the servant or agent done with intent to cause damage or recklessly and with knowledge that damage would probably result.
ARTICLE 26
(1) Receipt by the person entitled to delivery of baggage or cargo without complaint is prima facie evidence that the same has been delivered in good condition and in accordance with the document of carriage.
(2) In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of baggage and fourteen days from the date of receipt in the case of cargo. In the case of delay the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his disposal.
(3) Every complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the times aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.
ARTICLE 27
In the case of the death of the person liable, an action for damages lies in accordance with the terms of this Convention against those legally representing his estate.
ARTICLE 28
(1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties. either before the court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the court having jurisdiction at the place of destination.
(2) Questions of procedure shall be governed by the law of the court seised of the case.
ARTICLE 29
(1) The right to damages shall be extinguished if an action is not brought within two years reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.
(2) The method of calculating the period of limitation shall be determined by the law of the court seised of the case.
ARTICLE 30
(1) In the case of carriage to be performed by various successive carriers and falling within the definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage or cargo is subjected to the rules set out in this Convention, and is deemed to be one of the contracting parties to the contract of carriage in so far as the contract deals with that part of the carriage which is performed under his supervision.
(2) In the case of carriage of this nature, the passenger or his representative can take action only against the carrier who performed the carriage during which the accident or the delay occurred, save in the case where, by express agreement, the first carrier has assumed liability for the whole journey. (3) As regards baggage or cargo, the passenger or consignor will have a right of action against the first carrier, and the passenger or consignee who is entitled to delivery will have a right of action against the last carrier, and further, each may take action against the carrier who performed the carriage during which the destruction, loss, damage or delay took place. These carriers will be jointly and severally liable to the passenger or to the consignor or consignees.”
33. The Convention as a Code
That the Convention contains a code which supersedes common law rules relating to the nature and standard of liability is now clearly established. In Sidhu v. British Airways [1997] AC 430, the House of Lords was concerned with English and Scottish actions in respect of a scheduled airline flight from London to Kuala Lumpur which put down in Kuwait in the early hours of 2nd August 1990 some hours after the Iraqi invasion had begun. In the English action commenced on 30th July 1993 the plaintiffs claimed damages at common law for personal injuries and negligence. In the Scottish action the pursuer claimed damages for delay at common law for breach of a condition allegedly to be implied in her contract that the airline would take reasonable care for her safety. It was common ground that neither the English plaintiff nor the Scottish pursuer had suffered any “accident” on board the aircraft or in the course of embarking or disembarking, so that article 17 could not assist. (Further the Scots pursuer at least had not suffered any bodily injury). It was further common ground that, if a party had a claim under article 17, there could be no concurrent common law remedy. The House of Lords held, by parity of reasoning, that in the field of liability for personal injury, for baggage or cargo or for delay, where the circumstances are such that no claim exists under the provisions of Chapter III, the Convention excludes any common law claim: see per Lord Hope at pp. 448B-C and 453C-D:
“It would be largely destructive of the system which this chapter seems to have been designed to lay down if a passenger were to be able, for example, to maintain a claim for damages for non-bodily injury, for loss of or damage to the personal possessions which he had with him inside the aircraft or for economic loss, outside the conditions and limits set by the Convention while maintaining a claim under the Convention for the bodily injury.” (p.448B)
“The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive of any resort to the rules of common law.” (p.453D)
34. This approach was followed by the US Supreme Court in El Al Israel Airlines, Ltd. v. Tseng (1999) 26 Avi. 16,141, where a passenger claimed damages in tort under New York law for emotional injuries allegedly suffered as a result of an obtrusive security search at John F. Kennedy International Airport before a flight to Tel Aviv. There was no “accident” and no “bodily injury” within article 17. The court held that no such claim was possible, saying:
“Given the Convention’s comprehensive scheme of liability rules and its textual emphasis on uniformity, we would be hard put to conclude that the delegates at Warsaw meant to subject air carriers to the distinct nonuniform liability rules of the individual signatory nations.” (p.16,146)
35. The court also considered the Montreal Protocol No. 4, amending article 24 to read as follows:
“1. In the carriage of passengers and baggage, any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention, without prejudice to the question as to who are the persons who have the right to bring suit and what are their prospective rights.
2. In the carriage of cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and limits of liability set out in the Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. ….”
36. Focusing on the 28 words of amended article 24(1), the court said:
“Both parties agree that, under the amended Article 24, the Convention’s preemptive effect is clear: the treaty precludes passengers from bringing actions under local law when they cannot establish air carrier liability under the treaty. Revised Article 24, El Al urges and we agree, merely clarifies, it does not alter, the Convention’s rule of exclusivity.” (p.16,148; see also p.16,142)
37. This reference to the Montreal Protocol No. 4 highlights the difference between the issues before the courts in Sidhu and in El Al and the issue in the present case. It could subvert the Convention if air carriers were exposed to liability of a nature or cause not specified in the Convention. But title to sue in respect of such a liability is a different matter. The Montreal Protocol No. 4 goes on expressly to make clear that the exclusivity which it provides in respect of passenger, baggage and cargo claims is “without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights”. So, under the Montreal Protocol No. 4, the intention seems clear to reserve a significant role to national law when it comes to determining by whom the claims allowed by articles 17-19 may be brought. Previously this was explicitly stated in respect of passenger claims: see article 24(2) of the Warsaw Convention as amended by the Hague Protocol. Special emphasis on the rights of, for example, personal representatives and dependants in cases of passenger liability is understandable. But article 24(1) of the Warsaw Convention itself refers to “any action for damages, however founded”. The phrase “however founded” is capable of wide application, and suggests awareness of the possibility of non-contractual claims. Here too, the Montreal Protocol No. 4 may be clarificatory, rather than amendatory, in its effect.
38. In Sidhu and El Al the claimants were party to the relevant contract of air carriage. That is the typical situation which the draftsmen of the Convention took as their basic working model. The Convention has been described as operating by imposing statutory terms upon contracts of carriage: see Grein -v Imperial Airways Ltd [1937] 1 KB 50, 74-77 per Lord Greene MR and Holmes -v- Bangladesh Biman Corp. [1989] AC 1112, 1129 and 1141 per Lords Bridge and Jauncey. But examination of some not uncommon situations indicates that the Convention may operate more widely. Passenger tickets are frequently bought for persons who are either incapable of contracting for them ( e.g. very young infant members of a family) or for persons who do not contract for them (e.g. partners, or dependants for whom parents or grandparents pay), and luggage is frequently handed over on their behalf on the same basis. They must be passengers within the meaning of the Convention: see Chitty on Contracts 28th ed. paragraph 35 – 023. This is confirmed by Fellowes (or Herd) -v- Clyde Helicopters Ltd [1997] AC 534, where police officers carried on an aircraft chartered by a police authority were held within the equivalently worded schedule to the domestic Order (The Carriage by Air Act (Application of Provisions) Order 1967). In Fellowes (although it was not cited to us) the House of Lords held that the effect of the language of the Warsaw Conventionsupported by the terms of section 1 (one of the 1962 Act) was to introduce “general rules with regard to the liability of the carrier in respect of the contract of carriage” rather than “merely statutory contractual terms”: see page 543 E-G per Lord Mackay, with whom Lords Nicholls, Hoffman and Clyde agreed, and page 551 F-G and 553 E-G per Lord Hope.
39. The fact that the draughtsmen of the Convention worked, understandably, from a typical contractual model must not be allowed to detract from the role of the Convention as a code introducing certain general rules. It is easy to find in the text of the Convention formulations which, taken literally, would be inconsistent with a sensible set of rules. I can take two examples from the presently uncontroversial area of passengers:
(a) Article 22(1) refers to the carrier and the passenger agreeing by special contract to a higher limit of liability and Article 22(2) to the passenger making a special declaration of interest at the time the package was handed over to the carrier and paying any supplemental sum required. But a third party (for example, a parent, spouse or employer) must also be able to make a relevant special contract or declaration. The Convention must, like any code, be interpreted flexibly and analogically to cater for such situations: compare the provision in s.1-102(1) of the American Uniform Commercial Code that it should be liberally construed and applied to promote its underlying purposes and policies, and the commentary that this “consecrates the general process of development or unfolding of the code, so that it decides by analogy what it does not control by genuine development” (Mitchell Franklin in “On the Legal Method of the Uniform Commercial Code” (15) 16 Law and Contemporary Problems 330).
(b) Article 30 regulates the right of action of “the passenger or his representative”. It makes no reference to claims by dependants although by Article 24(2) the provisions of Article 17 apply “without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights”. Claims not merely by personal representatives, but also by dependants must be contemplated. Yet they are not mentioned expressly in Article 30(2) at all.
40. Flexibility is, I think, important if the Convention is to continue over time to fulfil its role as a set of general rules governing the rights and liabilities of the (in effect unlimited) categories of persons referred to in section 1(1) of the 1961 Act. As Lord Hope said in Fellowes at page 553 E:
“In my opinion the Convention agreed at Warsaw, as amended at the Hague, was intended to be, and is, capable of accommodating changes in the practice of airlines and aircraft operators with regard to the purposes of which aircraft are used to carry people and goods, and in the contractual arrangements in pursuance of which people and goods are carried by air for reward.”
41. Preliminary analysis of the Convention
While it is clear that in certain respects the Convention scheme provides general rules rather than merely statutory contractual terms, it is also clear that the draughtsmen had very much in mind as a premise to its application the existence of a relevant contract of carriage by air. Who may sue or be sued on such a contract are, on the face of it (and subject to any Convention provisions), matters for domestic law.
42. So far as both baggage and cargo were concerned, the typical model which the draftsmen had in mind was one under which the passenger in the case of baggage and the consignor in the case of cargo would be party to the contract of carriage. That is evident from, for example, Articles 4, 5, 10(2), 11(1), 12(1), 16(1) and 22(2a). An assumption that the person with whom the carrier deals on a principal-to-principal basis will be a party to the contract of carriage is entirely understandable. Even where such a party is obviously a forwarding agent, he will commonly be expected to incur personal liability (as IATA accredited agents expressly undertake). However, the Convention does not attempt to define or confine the concept of consignor and in its amended form does not even require the consignor’s identity to appear in any documentation. Further the air waybill is itself no more than prima facie evidence of the conclusion of the contract. None of this suggests a rigid approach to the concept of consignor. None of it suggests an intention to exclude from consideration any person who under domestic law would be a party to the contract through or in addition to a person named as consignor in the Air waybill.
43. The common law recognises that an agent, even though himself party to and entitled to sue or be sued on a contract under its terms or by custom (as often the case with forwarding agents), may at the same time be acting for a principal: see e.g. Chitty on Contracts, 28th ed. Vol. 2, Agency (written by Prof. Reynolds) paragraphs 32-083/5 and the extensive authority there cited. Further, under common law principles, not only a disclosed but also an undisclosed principal may sue or be sued on a contract made by his agent: see Chitty, paragraphs 32-087/8. The concept of an undisclosed principal has, it seems, no exact counterpart in civil law, although a similar result may often be achievable by other routes (see Bowstead and Reynolds on Agency 16th Ed. paragraphs 1-018 and 8-070; Zimmerman on The Law of Obligations Chap. 2 section II Agency). A note of caution appears appropriate in respect of any such generalisation, since (a) we were, understandably, not given the benefit of any comparative law material in this area and (b) as Lord Bingham of Cornhill L.C.J., speaking extra-judicially, has recently recalled, “the civil law as found in (say) France, Germany, Italy, Spain or The Netherlands is no more uniform than the common law as found in (say) England, the United States, Canada and Australia” (“A New Common Law for Europe”, published as one of The Clifford Chance Millennium Lectures, and in turn citing Cappelliti, New Perspectives for a Common Law of Europe (1978)). The references by Prof. Tosi to French maritime law in the commentary referred to later in this judgment also point towards the need for caution.
44. Under English Law and practice the right of suit in contract is commonly associated with ownership of the goods. If the person shipping or consigning goods is owner, he can sue. If he is acting for the owner, the owner can intervene and sue. In the case of a sale on terms that property and risk pass f.o.b. on shipment or consignment, the ordinary inference is that the shipper/consignor contracts with the carrier as agent for the consignee. A reservation of risk is however sufficient to establish loss for the purposes of a contractual claim, whether or not property may have passed. And a consignor who has parted with both property and risk may still make and sue on a “special contract” with the carrier, under which he can recover substantial damages, which he will then hold on trust for the person really interested: see The Albazero [1977] AC774, especially 842-4 per Lord Diplock. In some cases the circumstances in which delivery is made (for example against payment of freight) may also justify the inference of a contract with a consignee: see E G Brandt -v- Liverpool [1924] 1KB 575.
45. There is nothing in the Convention which expressly excludes the application of such principles. Indeed, Shawcross and Beaumont, Air Law 4th ed. (loose-leaf reissue) vol. 1 VII (188) (now VII (622)) cited by Lord Hope in Sidhu at page 450G states that the rule in civil law countries is that only a party to a contract of carriage, or a principal for whom he was acting, is regarded as the appropriate plaintiff, and it was submitted before us that the draughtsmen of the convention had, primarily, a civil law rather than common law, theory of contract in mind. Mr Crane also submits that the passage in Shawcross and Beaumont overlooks the possibility that under civil law systems a consignee may take the benefit of a contract of carriage as a third party. Interestingly, perhaps, although the recent Contracts (Rights of Third Parties) Act 1999 generally excluded contracts for carriage by air from its operation, the reason for such exclusion may very well be that the extent to which third parties are entitled to take such benefit is expressly governed by the Warsaw Convention. Again, however, it is to be observed that the Convention does not attempt to define or confine the concept of consignee, does not require the consignee to be named in any documentation and makes the Air waybill no more than prima facie evidence of the conclusion of the contract and the conditions of carriage.
46. Mr Shepherd submits that there is nevertheless to be derived from the scheme of the Convention and from, in particular, its frequent references to the consignor and the consignee, a conclusion that the only persons entitled to assert any rights, or under any liabilities, vis-a-vis the carrier, are those named as consignor or consignee in the Air waybill. This involves the review of the terms of, in particular, Chapters II and III, which led the judge to a provisional conclusion in favour of Mr Shepherd’s submission.
47. Mr Crane points out that chapter II is primarily concerned with regulating the relations between the two sides in respect of documentation and arrangements for receipt, carriage and delivery, and in that connection it is also natural that the chapter should confer rights and impose obligations on those actually dealing with each other as principals. In contrast, the subject of liability is dealt with in chapter III, and that focuses, in general, upon the carrier’s position, rather than upon the identity or characteristics of the “plaintiff” (see articles 22(4) and 28) to whom the carrier is or may be liable. In my judgment, this distinction has some force, but it is not entirely watertight. In chapter II, article 13(3) is on one view addressing the conditions under which a consignee may claim for loss of an entire consignment. In chapter III, article 22(2) assumes a passenger or consignor having an “actual interest in delivery at destination”, although this to my mind illustrates no more than the typical model on which the draughtsmen were working. Article 30 regulates successive carriage in terms requiring a passenger or his representative to “take action only against the carrier who performed the carriage during which the accident or delay occurred, save in cases where, by express agreement, the first carrier has assumed liability for the whole journey” (article 30(2)), and distributing the claims which a passenger or consignor or consignee may make regarding baggage and cargo between the first and last carrier and the carrier performing the carriage during which the destruction, loss, damage or delay took place (article 30(3)).
48. In Gatewhite Gatehouse J confined Article 13(3) (also Article 14) to the exercise of rights of disposal (i.e. under Article 13(1) and (2)). I myself see some difficulty about accepting this. Article 13(3) appears to me to be more a footnote (or proviso as the judge said) to Article 26. But, as such, I think it addresses the conditions for a claim for loss (perte) rather than the identity of the claimant. As to Article 30, which refers to the consignor and consignee in the context of Chapter III dealing with liability, that article is clearly focused upon a perceived need to regulate and distribute the rights of claim between two sides in the very specific situation of successive carriage, rather than being aimed at any identification or limitation of those entitled to present themselves either as, or through, the consignor or consignee. Article 14 underlines the role of the consignor and consignee as parties to the contract, but what is noticeable is the absence of any general rules of the Convention providing who may sue as “plaintiffs” for loss and damage or excluding others from maintaining such claims.
49. It may be said that the answer to the point made in the last sentence of this quotation lies in energetic or purposeful extrapolation, from other provisions of the Warsaw Conventionsuch as articles 13(3), 26(1) and (2) and 30(3), of some underlying intention to confer general rights of suit on consignors and consignees or persons to whom they may direct delivery. But, even assuming that this were done, the need for such extrapolation highlights the fact that the Convention does not expressly regulate certain key aspects of everyday liability claims. That being so, there is even less reason in my judgment to construe the Convention as intended not merely to confer rights of suit on consignors or consignees named as such in the air waybill (or on other persons entitled under article 12(1)), but also to exclude suit by those party to the relevant contract for air carriage as their principals.
50. There are, it seems to me, also some positive pointers in the language of the Convention, towards an entitlement on the part of others besides a named consignor or consignee to claim for loss or damage. I have referred to the phrase “however founded” in Article 24(1). The provisions of Article 14, confirming that the consignor or consignee can exercise the rights given by Articles 12 and 13 although acting in the interests of another, might be said to be unnecessary if other provisions of the Convention anyway confine attention to the consignor or consignee.
51. Moreover, article I(b) of the Guadalajara Convention defines contracting carrier as a person who as principal makes an agreement for carriage governed by the Warsaw Convention “with a passenger or consignor or with a person acting on behalf of the passenger or consignor”. That must in the case of a passenger embrace situations of a parent contracting with an airline “on behalf of” an infant child, although the only legally binding agreement is or can be between the parent and the airline. Equally, however, it must embrace a ticket agent who is required by the airline to accept personal liability on the contract for the ticket price, when making a contract to which the passenger also becomes party. In the case of cargo, this provision is capable of covering the situation of an agent acting for a disclosed principal, and incurring no liability on the contract. But it seems improbable that this was the reason for its insertion. It would, as it seems to me, cover the readily foreseeable case of the agent who acts for a principal but who, although he is an agent, is required to commit himself personally under the contract. I see no reason in this situation why it should then be restricted to cases where the agent discloses that he is so acting.
52. A reading of the Convention which restricts claims for loss of or damage to baggage or goods to the person named in the relevant documentation as consignor or consignee would have some odd consequences. Baggage checks for baggage delivered by a family at a check-in desk may, not uncommonly, be affixed en bloc by airlines to the ticket of any one member of the family, or distributed at random among the tickets of different family members. It seems unlikely that anyone contemplates by this practice that the only member of the family who can claim for loss, damage or delay is the passenger to whose ticket the baggage check happens to have been affixed, although he has no interest in the relevant baggage and did not even put it on the conveyor at check-in.
53. Pausing here, I am not therefore persuaded on a simple reading of the text of the Convention that its draughtsmen intended the limitation in respect of loss or damage claims for which British Airways contends. I have concentrated up until this point on claims brought under the Convention by principals of a named consignor or consignee in circumstances where, as a matter of domestic law and by the terms of the Convention, such consignor or consignee falls to be treated as party to the relevant contract of carriage. The other aspect of the general issue determined by David Steel J. concerns the possibility under English law of claims in the absence of any contractual relationship, based simply on ownership of the baggage or cargo lost or damaged in transit.
54. Common law (and I have little doubt at least some civil law) systems recognise that ownership of property (or it may be an immediate right to its possession) may give rise to a tortious or delictual claim against a person in whose possession such property is lost or damaged. Such claims have long been recognised at common law: see The Albazero at p.844 citing Hayn v. Culliford (1879) 4 CPD 182. In air carriage falling outside the scope of the Convention, they have been recognised as a basis for holding responsible a carrier from whose possession goods have been lost: see e.g. Moukataff v. BOAC [1967] 1 Ll.R. 396 (where at pp. 412-3 the argument was rejected that the statutes governing Crown proceedings and the Post Office excluded any tortious claim against an air carrier for loss of mails). To counter attempts by goods-owners to use this route to avoid contractual terms by pursuing claims against sub-bailees, the doctrine of bailment on terms has been developed and recognised: see The Pioneer Container [1994] 2 AC 324. In German law a similar doctrine to bailment on terms evidently exists (cf the response by Assessor Erich Schõnwerth and Dr Wolf Müller-Rostin in (1993) ZLW (Zeitschrift für Luft und Weltraumrecht) 21 to a previous article by Dr Robert Kuhn in (1989) 38 ZLW 21, both articles being cited in note 23 of paragraph VII/622 of Shawcross & Beaumont Air Law, 4th ed. issue 76).
55. The unamended Warsaw Convention referred to a carrier and not to his servants or agents. The Hague Protocol introduced amendments into Articles 25 and 25A to refer to “servants and agents”. Article 25 as amended, deals simply with the extent to which the carrier’s liability under Article 22 may be affected by acts or omissions of his servants or agents. Article 25A gives any servant or agent, acting within the scope of his employment by carrier, an entitlement to avail himself of the limits of liability which the carrier is entitled to invoke under Article 22. Nothing in Articles 17-21 or in Article 25A itself imposes any liability on a servant or agent. Following Sidhu the language of Article 25A (“damage to which this Conventionrelates”) may restrict the nature of the claim which may be made against any responsible servant or agent. But that is a different matter. Whether a servant or agent may be held liable at all must, on the face of it, be determined by domestic law; as to that, see Midland Silicones -v- Scruttons [1962] AC446 (while noting the discussion regarding the different United States position in Shawcross and Beaumont at paragraph VII (644, issue 76). Servants or agents do not have under the Convention the protection of other provisions, for example, the two year time limit in Article 29, although that is specifically provided under English law by section 5(1) of the 1961 Act. Accordingly, Article 25, appears specifically to contemplate and to regulate tort claims, which would necessarily be brought by the owner or person with an immediate right to possession of baggage or cargo. Whether Article 25 could extend protection to a sub-contractor (such as British Airways in the present case) may be open to debate. The Guadalajara Convention was on any view introduced in order specifically to protect such sub-contractors. It deals specifically with non-contractual claims. It extends to sub-contractors, in respect of the carriage they performed, the full liability and protection provided by the rules of the Warsaw Convention. British Airways seeks to read the Guadalajara Convention as substituting for their previous exposure to baggage and cargo owners a new exposure to no-one except consignors or consignees named in an Air waybill to which British Airways was never a party and which it may never have seen, and to do this even though such consignors or consignees may have suffered no actual loss at all. Other servants or agents would on any view continue liable under Article 25A to the persons really interested in the claim, that is the owners or persons immediately entitled to possession who suffered the loss. I would in these circumstances be disinclined to read into the Guadalajara Convention the intention for which British Airways contends unless compelled by other consideration. The Guadalajara Convention also extends the protection of the limits of liability in the Warsaw Convention to servants or agents of the actual carrier: see Articles V and VI. Once again, the exposure of servants or agents arises on its face under domestic law and will be to the owner or person entitled to immediate possession of the baggage or cargo lost or damaged.
56. Whilst considering the possibility of extra contractual claims, it is to be noted in parenthesis that the limit of liability for hand luggage in Article 22(3) is not matched by any provision providing for liability in respect of or regulating the standard of liability in respect of hand luggage. Either claims for hand luggage are regulated by domestic law (as the draughtsmen of the convention appear to have thought: see the initial report and opening address to the Second International Conference at Warsaw which led to the finalisation of the original Convention in 1929, by Mr Henri de Vos reported at pages 22 and 253 at the minutes) or the Convention provisions of Articles 17-21 must be extended analogically to cater for such claims. In either case there is nothing expressed in the Convention to prevent the owner of hand luggage suing whether or not he happens to be the passenger carrying it on board.
57. There remains the question whether a carrier by air who contracts for carriage under an Air waybill and actually carries (and loses or damages) the relevant cargo may incur not merely liability to the consignor or consignee or their principals based on the existence of the contract of carriage, but also extra contractual liability to an owner of such cargo who cannot claim to be such a principal. Bearing in mind the different status of a contracting carrier and an actual carrier, the answer is not inevitably the same in each case. Further, the question does not directly arises for consideration in the present case, since British Airways was simply an actual carrier under the Guadalajara Convention. I see cause, however, to be cautious about a proposition that the owner of baggage or cargo cannot ever claim for its loss or damage against a contracting carrier.
58. First, the Guadalajara Convention shows that the provisions of Chapter III are perfectly capable of operating between non-contracting parties. Secondly, the words “however founded” in Article 24(1) are wide enough to cover such claims. Thirdly, and more fundamentally, there are situations where an owner may be a complete stranger, not merely to the contract of carriage but to any suggestion or idea that his goods would be carried anywhere, as for example where his goods have been borrowed or stolen or taken by mistake and are without his knowledge or authority handed to a carrier for carriage to a consignee: see Chitty paragraph 36-050.
59. British Airways’ case involves the proposition that the only person able to claim their delivery up, or to claim in respect of their loss or damage, is the passenger carrying them or the person named as their consignor or consignee. Take the not uncommon situation of a stolen artefact or work of art. If it is shipped abroad by air, the only person who could direct or claim delivery up by the airline would be a thief, handler or dishonest forwarding agent, if such appeared as consignor and consignee. On British Airways’ case, these too would then also be the only persons who could sue the airline for any loss or damage. Mr Shepherd submitted that this was in effect the price the innocent world at large must pay for the benefit of air transport. It seems most improbable that the Convention was intended to have that effect. Here too, I prefer to view the Convention as establishing the general framework, including the nature and standard of liability, but to read its provisions as operating with some flexibility, and as allowing a role for the relevant domestic law, when identifying those entitled to sue in situations where the Convention is not in terms exclusive. The most that airlines could sensibly expect in situations such as these is that they would still enjoy in relation to the true owners the benefit of the internationally agreed and statutorily enacted scheme provided by Chapter III of the Warsaw Convention.
60. Previous authority on title to sue
I turn to authority specifically in point on the issue of title to sue. There is surprisingly little and the direction in which it points has changed. The judge examined many of the relevant authorities. We were shown further authorities together with a review of the jurisprudence “The Cargo Owner’s Right to Sue under the Warsaw Convention” (1992) 17 Annals ASL (II) 441 by Robert Wilkinson, a former partner in the applicants’ solicitors who wrote it well before the subject-matter of this case for an October 1991 meeting of the Aviation Law Association of Australia and New Zealand.
61. I start with European authority. A line of French authority restricts the right of suit to the consignor or consignee named in the air waybill. It is summarised in footnote 5 on page VII/303 of Shawcross and Beaumont’s Air Law (4th ed, issue 76), together with a decision of the Tribunal de Commerce of Brussels (15th May 1981) and the Cameroon Supreme Court (7th October 1982). The decisions are, as customary, briefly reasoned. They include three decisions in the French Cour de Cassation. In Ste. International Transit Transport v. Ste. Industrielle et Commerciale and Others (23rd February 1981) S.I.C. entrusted S.I.T.T. with arranging the carriage by air of electronic equipment from Paris to Ibadan. S.I.T.T. used Air France for the purpose. S.I.C. was not named as consignor or consignee on the air waybill. The Cour de Cassation upheld the Court of Appeal’s decision that S.I.C. could not sue under the contract of carriage, since it was not party to it, and referred for support to articles 18(1) and (2), 24(1) and 30(3) of the Warsaw Convention. This reasoning appears to treat the Warsaw Convention as defining, and limiting, by reference to the air waybill the agreement for carriage upon which its operation is predicated. In Cie. Iberia v. Cie d’Assurances La Concorde (23rd June 1987), the air waybill box headed “Consignee” was completed with the name of a bank (probably the bank issuing a letter of credit covering payment) under whose name also appeared the words “NOTIFY: Galerie Maison et Jardin”, the buyer. The Cour de Cassation adopted a slightly more relaxed attitude, upholding the Court of Appeal’s decision that Galerie Maison et Jardin was entitled to sue Cie. Iberia. In Ste. France Handling and Lufthansa v. Ste. Japan Time S.A. (14th May 1991) the Cour de Cassation overturned the lower court’s decision allowing Ste. Japan to sue as buyer and importer, in circumstances where, although it appeared on the relevant air waybills as “notify party”, the banks financing the transactions appeared as consignees. The Court referred to articles 12-15 and 30(3) of the Convention.
62. An article in Transport Aérien by Prof. J-P Tosi (professor at the University of Montpellier) considers the state of authority as at 1995. He points to the difference between the “very narrow limits” adopted by French jurisprudence and the approach taken in Gatewhite Ltd. v. Iberia Airlines Aereas de Espana Soc. [1989] 1 Ll.R. 160 (see below). He describes the French approach as based more on the consideration that “a certain formalism is necessary in view of the risk that a carrier runs of seeing itself pursued by different claimants in courts competent under article 28 but not situated in the same country” than “on very debatable textual arguments (the principal of which is based on article 30, which however only concerns successive carriers and which seems inspired more by practical than by juridical considerations)” In dealing with the consignor’s right of action under French law, he refers to authority establishing that entry on the waybill is a necessary but not sufficient condition of suit, on the basis that an fob seller has no interest after shipment and cannot be regarded as party to the contract of carriage, and questions whether this applies if the consignor can show that he has suffered loss. The consignee’s right of action is, he indicates, linked to the right of disposal and the right to take delivery, but, he continues, the rights of consignor and consignee must be regarded as alternative, although this question has not been addressed in the French jurisprudence. He summarises the state of French authority with respect to actions by a “real consignee”, not featuring on the waybill, pointing out that French authority only affords a right of action “in exceptional cases” and citing the Cour de Cassation’s decision of 23rd June 1987 as an example. He concludes his consideration of the position of a “real consignee” with reference to a further Cour de Cassation decision of 7th July 1992 (BTL 1992, p.638) recognising the right of a “a real” consignee to sue in a maritime context (i.e. the right of an owner to sue for damages he has suffered due to loss or damage to goods delivered against a bill of lading held and presented by a third company which did not declare itself to be acting for the owner). Prof. Tosi is evidently unconvinced by the current state of aviation authority, since he comments that it ought not to survive unchanged this extension of the right to claim to a real consignee in a maritime context. As to the “real consignor”, Prof. Tosi observes that in land transport French law allows a consignor who has contracted with a “commission agent” to sue the carrier, even though not appearing on the consignment note, but points out that this is based on an article in the French Commercial Code which is not applicable to air transport. Nevertheless, he continues by saying that “it is however excessive to refuse an action to the real consignor when he is the sole person to have suffered damage. Maritime law is evolving towards the recognition of a right of action in this case” and citing authority, before concluding: “Air law ought to move in the same direction”. A little later (and writing before Sidhu), he draws attention to the different approaches of French law and common law regarding delictual liability.
63. In N.V. Oregon v. Coop. Vereniging Nederlands Luchtvracht Groupage Centrum U.A. and Seeboard World Airlines Inc. (25th May 1971) the Court of Haarlem, First Chamber held that the right of suit for non-delivery was limited to the named consignor or, after the goods had arrived at the place of destination, to the named consignee, basing its conclusions that the rights were alternative on articles 12-14 and that they were exclusive on a contrario extrapolation from article 24(2).
64. Turning to United States authorities, it is to be noted that the United States has never enacted the Hague Protocol, so that they were decided under the unamended Warsaw Convention which requires the identity of the consignor and consignee to be declared in the “consignment note”. In Manhattan Novelty Corp. v. Seaboard & Western Airlines, Inc. (1957) 5 Avi. 17,229 (New York Supreme Court), a plaintiff not named as consignor or consignee was held unable to sue, “even though he has a proprietary interest in the goods shipped and even though the consignee may have been the plaintiff’s custom broker”. This was followed in the New York State City Court in Holzer Watch Co., Inc. v. Seaboard & Western Airlines, Inc. (1958) US and Can. Av. Rep. 142, with the statement that that it was reasonable that an air carrier should answer only to those it knowingly deals with, and in Pilgrim Apparel, Inc. v. Nat. Union Fire Ins. Co. (1959) 6 Avi. 17,733 (New York State City Court), with the statement that “others having an interest in the goods must look to the consignor or consignee”. In Parke, Davis & Co. v. B.O.A.C. (1958) US and Can. Av. Rep. 122 (New York State City Court), the Manhattan and Holzer cases were distinguished, on the ground that
“The carrier there was not on notice that the plaintiff in those cases was the real party in interest. Immediately following the name of the customs broker there appears “a/c Parke, Davis & Company, Detroit, Michigan”. Further, due to the necessity of having the shipment passed by U.S. Customs and U.S. Public Health Service, it was incumbent upon the real party in interest, Parke Davis & Company, to have the customs broker in New York, where the shipments first landed in this country, arrange these details.”
65. In 1979 in the Appellate Division of the Supreme Court of New York, it was held in Leon Bernstein Commercial Corp. v. Pan American World Airways 421 N.Y.S.2d 587, that an undisclosed principal of the named consignor or consignee could sue:
“Although there are authorities to the effect that only the consignor or consignee named in the air waybill may sue, we have held that the Convention is not to be so narrowly construed, if to do so would defeat the rights of the true owner. (American Banana Company, Inc. v. Venezolana Internacional De Aviacion S.A. (VIASA) 67 A. d. 2d 613, 411 N.Y.S. 2d 889). In that case VIASA urged that the consignee had no standing to sue because it was not the real party in interest. It has been held that the real party at interest has standing to sue although not the consignee named in the air waybill. (Parke, Davis & Co. v. BOAC ….).
66. In Johnson v. American Airlines (1987) 834 F.2d 721 (9th Cir.) a Federal Court reserved judgment on the question whether a principal has standing to sue whose agent was the consignor or consignee named in the consignment note. In the U.S. District Court in Rank Precision Ind. Ltd. v. Jardine Air Cargo (U.S.) Ltd. (1987) 20 Avi. 18,325, the court held that the right to bring suit was limited to the consignor or consignee, and that a reference to a company as “co-load” did not alter that result. Since the court cited as authority Parke, Davis, its decision on the latter point may merely mean that it regarded that reference as too obscure to constitute the notice of agency to which it was argued that it amounted.
67 Leon Bernstein was applied in BRI Coverage Corp. v. Air Canada (1989) 25 F. Supp. 133 (U.S. District Court of New York), where the undisclosed principal of both the consignor and the consignee was allowed to sue.
68. In Pan American World Airways Inc. v. SA Fire and Accident Insurance Co. Ltd. [1965] 3 SALR 150, the South African Appellate Division was again concerned with the unamended Warsaw Convention, and had before it, necessarily, only the older American cases on the Convention in that form. A diamond merchant had consigned a parcel to the Post Office for despatch to New York. The South African Postal Administration consigned it by air to the United States Postal Administration. The merchant sued the air carriers in delict for its loss. The case was argued on the pleadings. Four out of five judges considered that, where a consignment note had been issued, only the consignor and consignee could sue. But a different majority (composed of two of the four, Holmes J.A. and Potgieter J.A., and the fifth, Steyn C.J.) held that, in the absence of any plea that a consignment note had been issued, the action was maintainable. The restriction of suit to the consignor and consignee was treated as an exclusion or limitation of liability in the context of article 9. Holmes J.A., with whose judgment Potgieter J.A. concurred, voiced doubt about the assumption, which the court was required to make, that the Convention contemplated either Postal Administration as consignor or consignee.
69. The majority, in considering that, where there was a consignment note, the right of suit was limited to consignor or consignee, referred to the American cases of Parke Davis, Pilgrim Apparel and Manhattan Novelty. Ogilvie Thomson J.A. said that “If attainable without doing violence to the language of the Convention, uniformity is, in an international matter of this kind, manifestly desirable”. He also said that “Exactly what persons answer those descriptions [i.e. of consignor and consignee] need not be decided in this appeal”.
70. A similar division of opinion between a majority (Luckhoo J. with whose judgment on this point Bollers C.J. agreed) and minority (Sir Kenneth Stoby, Chancellor) appears in Bart v. British Indian Airways, Ltd. [1967] 1 Ll.R. 239. This too was a decision under the unamended Warsaw Convention. After citing Manhattan, Holzer Watch, Pilgrim Apparel and the South African case of Pan American Airways, Luckhoo J. referred to the statements in the House of Lords underlining the importance of uniformity in the construction of international conventions, and expressed himself to be “coerced” by the cumulative effect of the articles of the unamended Convention to conclude that only the consignor or consignee could sue. Sir Kenneth Stoby took the view that the Convention did not intend to remove the title to sue of either undisclosed principals or bailors, who had suffered the loss.
71. In Tasman Pulp & Paper Co. Ltd. v. Brambles JB O’Loghlen Ltd.[1981] NZLR 225, the plaintiff did not appear as either consignor or consignee on the air waybill, but claimed to sue the air carrier for damage to a package of fabric in contract and/or in tort as owner of the goods. The only issue actually decided was whether the plaintiff’s action against the air carrier should be struck out. But after a full review of the authorities as they then stood, Prichard J. made clear, in respect of the alternative claim, that he preferred the view taken by Steyn C.J. in Pan American and Stoby C. in Bart, namely that the owner of goods lost or damaged retained a common law right to sue. As to the claim based on breach of contract, it seems clear that he held a similar view with respect to any claim by those interested in goods to sue on a contract for air carriage as unnamed or undisclosed principals of the named consignor or consignee. This aspect was adjourned for the plaintiff to reconsider its pleadings with a view to alleging expressly that it was party, and upon what factual basis, to the contract for air carriage (page 236).
72. In reaching his decision Prichard J took into account the desirability of uniformity in the construction of an international Convention. He identified as “the real question, …. whether the Convention should be construed so as to abrogate the common law rights of the injured party”, particularly common law rights to sue for damages. To that extent, his reasoning may be vulnerable to criticism, in the light of Sidhu and El Al, for not recognising the respects in which the Convention scheme of responsibility does supersede common law principles of liability. But, in the particular area of title to sue, there is in my view force in both his approach and his reasoning. He pointed out that the emphasis on the positions of consignor and consignee in Chapter II is understandable in the context of a chapter dealing with matters of documentation and procedures for stoppage in transit and uplifting of cargo at destination (page 234); that article 14 is in terms restricted to the enforcement of rights under articles 12 and 13 (pages 227-8 and 233-4); and that if the intention had been to limit the right of suit for cargo damaged or destroyed to the consignor and consignee in all cases, one would have expected the Convention to provide for the consignor and/or consignee to have such rights in comprehensive and exclusive terms (pages 233-5). Above all, he was clearly reluctant to conclude that, in a common situation like that before him, the Convention confines title to sue to persons who have suffered no actual loss and puts the persons really interested and at risk in the hands of nominal claimants. I quote later in this judgment one particularly forceful passage from Prichard J’s judgment in this connection.
73. Polatex Trading Co. Pty. Ltd. v. Scandinavian Airlines System (11/12/84; District Court of New South Wales) is a pithily reasoned decision from the South West Pacific area (as the judge in Polatex identified it). The judge’s reasoning pays due regard to the considerations informing the House of Lords’ later decision in Sidhu. He was content to accept that “the entire scope of the parties’ rights and obligations are to be found in the contract evidenced in the air waybill and/or as found in the application of” the relevant Australian statute enacting the Convention, so that Polatex could not evade that scheme of liability. But he rejected the argument that the only person who could maintain an action to enforce that scheme of liability was a named consignor or consignee. The issue was narrow, whether the endorsee of a consignee could sue, but the judge’s observations have more general force:
“The word “consignee” is not defined in the Convention. Perhaps it does not need any definition. It means at least the person to whom the goods are consigned. Certainly Article 14 entitles that person to enforce whatever rights are conferred by Articles 12 and 13. But, as is pointed out in Shawcross [on Air Law], the words of Article 14 are enabling only and not exclusive. The argument that the carrier should know from the face of the air waybill the identity of the contracting parties is to me of superficial attraction only. In the modern commercial world of today and even as it existed in Warsaw in 1929 or in The Hague or in Mexico in later time, it is ever the fact that international trade was financed by banking houses and that the security for loans made for such a purpose might be the very goods to be transhipped. To effect that security, it is ever the fact that the lender would acquire some measure of title over the goods and to that end may well insist on being the named consignee. But all of that is in the knowledge that the consignee so nominated might endorse the bill to another.”
74. David Steel J. apparently thought that the only person other than the consignor or consignee named in the air waybill who could ever claim was someone to whom the consignor had under article 12(1) ordered delivery to be made in lieu of a named consignee (see the last sentence in his judgment, before the heading “Conclusion”). He also thought that this conclusion was supported by and consistent with the decision in Polatex. But in that case it was the consignee (Scholefield Goodman (Aust) Pty. Ltd.), not the shipper or consignor (“Bibazir C”) who endorsed the air waybill “On payment of all charges deliver to the order of Polatex Trading Co. Pty. Ltd.”, the actual owner of the goods during the transit, whose name also appeared as notify party on the air waybill. Neither article 12 nor article 13 provides expressly for a consignee to specify delivery to some other consignee, although it is possible that this might be implied.
75. In Gatewhite Ltd. v. Iberia Airlines Aereas de Espana Soc. [1989] 1 Ll.R. 160, decided in the English Commercial Court, Gatehouse J. undertook a full reconsideration of the issue. The second plaintiffs, growers of chrysanthemums in Grand Canary, had agreed to sell a quantity to the first plaintiffs, Gatewhite, under a contract under which property passed on their shipment by air. The second plaintiffs consigned the chrysanthemums via Iberia Airlines under an air waybill naming the first plaintiffs’ customs clearing agents, Perishables Transport, as consignees. The first plaintiffs only appeared on the waybill as notify party. There was delay in transit and the chrysanthemums were spoiled. The sole issue before Gatehouse J. was whether the first plaintiffs, as owners throughout the air carriage, had title to sue the airline. After a full review of the authorities he concluded that they did. He reminded himself of the need to avoid too parochial a view of an international convention (pages 163 and 165). He reminded himself of the desirability of uniform construction of international conventions,but pointed out that in 1989 there was “already a division of opinion on the issue, to be found not only in dissenting judgments but in actual decisions” (page 166, and see 164). He found in the Convention nothing to exclude the right of an owner to sue for damage to or loss of goods in carriage or to restrict such right to the consignor or consignee. He echoed the view, similar to that expressed by Prichard J., that
“it would be a curious and unfortunate situation if the right to sue had to depend on the ability and willingness of the consignee alone to take action against the carrier, when the consignee may be – and no doubt frequently is – merely a customs clearing agent, a forwarding agent or the buyer’s bank. It would seem artificial in the extreme to require a special contract in the air waybill itself under article 15(2) to provide the goods owner with a remedy in such a normal situation.” (page 166)
76. In the subsequent Hong Kong authority of Regalite International Ltd. v. Aircargo Consolidation Service (UK) Ltd. [1996] 3 HKLR 453, Mr Recorder Edward Chan Q.C. refused to follow the previous decision of Traynor J. in Cordial Manufacturing Co. Ltd. v. Hong Kong America Air Transport Ltd. [1976] HKLR 555. In Cordial the first plaintiff, an fob seller, had consigned goods under an air waybill which named the bank issuing a letter of credit on behalf of the second plaintiff, the buyer. Traynor J. held that the fob seller, although named in the air waybill as consignor, could not sue for loss of the goods (delivered to a lorry driver who produced forged documents), since he had parted with all interest in the goods on their shipment, had ceased under articles 13 and 14 to have any claim, had made no special contract with the air carrier, and had by shipping the goods simply brought such a contract into existence “between the carrier and another, be it the consignee (Irving Trust Inc.) or the second plaintiff” (page 584). He also held that the buyer, the second plaintiff, could not sue, on the basis that the scheme of the Convention, particularly articles 13 and 14, was to confine rights of action to the named consignor or, once the goods had arrived at destination, the named consignee.
77. In Regalite goods were delivered at destination by the air carrier to the notify party (their intended buyer), contrary to the seller/consignor’s instructions to deliver only to the named consignee, the buyer’s bank (Bank of America). In a detailed judgment Mr Recorder Chan said that the decision in Cordial was surprising and had given rise to great inconvenience in cases of goods consigned to banks under letters of credit or on cash (or acceptance of draft) against payment terms. On the facts before him, he found a special contract between the consignor and air carrier, enabling the former to sue for its loss, whether or not it was owner. He also held that the consignor had retained ownership and preferred Gatehouse J’s decision in Gatewhite to Trainor J’s in Cordial, saying:
“The proposition that the owner of goods could not bring an action against the carrier for loss and damage to his cargo during the course of carriage is a startling proposition. In the case where goods are consigned to a banker under D/P arrangements but are wrongfully released to someone else, usually the consignee banker would have no real interest in the goods. In the present case, the Bank of America would not even have any interest in the goods as security as his customer got the goods without any payment and hence the overwhelming probabilities would be that the Bank of America had not even lent the price against the security of the goods. In this situation, it is understandable that the consignee banker would have little incentive to be involved in any litigation against the carrier. It is also understandable that the plaintiff could not get the Bank of America to join as co-plaintiff as the Bank of America was basically the banker of [the buyer]”
78. In the Scottish courts in Sidhu the decision in Gatehouse was distinguished as dealing with a quite separate aspect of the Convention to that in issue in Sidhu (per Lord Marnoch in the Inner House), while Lord Clyde in the Inner House said that the area of title to sue was one where the Convention was not necessarily exhaustive: see (1996) SLT 529, 537B and 546E). In the House of Lords, at pp.450-1, Lord Hope cast some doubt upon the decision:
“This decision, however, does not sit easily with the idea that the object of the Convention, in the areas with which it deals, was to provide uniformity of application internationally. As Shawcross & Beaumont, Air Law, 4th ed. (Looseleaf reissue), vol. 1, VII (188) have observed, the rule in civil law countries is that only a party to a contract of carriage, or a principal for whom he was acting, is regarded as the appropriate plaintiff. In common law countries the proper plaintiff is the owner of the goods, whose right to sue depends on his interest in the goods, not on the fact that he may also be a party to the contract. It would seem to be more consistent with the purpose of the Convention to regard it as providing a uniform rule about who can sue for goods which are lost or damaged during carriage by air, with the result that the owner who is not a party to the contract has no right to sue in his own name.
We were not asked to review the Gatewhite case in detail however, and as the point was not fully argued I would not wish to cast further doubt on the decision which Gatehouse J reached. It is sufficient for present purposes to say that I am not persuaded that we should apply his reasoning to the question which is before us here, which is not concerned with the question of standing or title to sue but with the question whether a person who has an undoubted title to sue under the Convention can pursue a claim outside the Convention where the Convention itself does not provide him with a remedy.”
79. It is to be noted that Lord Hope’s reservation about Gatewhite related specifically to the possibility of suit by an owner not party to the contract of carriage. His reference in the context of civil law to “a party to a contract of carriage, or a principal for whom he was acting” is at least neutral in the context of the primary issue presented by the present case, which is whether a principal, for whom a person named as consignor or consignee is acting, may intervene.
80. Looking back over the whole body of authority which I have sought to review, it can be seen that a line of French authority from the 1970s to the 1990s, a Dutch authority (1971) and a Belgian case (1981) adopt the position for which British Airways contends (and the question-marks which Prof. Tosi writing in 1995 introduced in relation to the inevitability of this direction for future French law have not borne fruit, to date). Otherwise, however, the direction of international authority has swung from a refusal to recognise any right of suit in anyone but a consignor, consignee or other person entitled under article 12(1), towards a general readiness to recognise both the intervention of, firstly, (a) principals of whose existence notice was given (Parke, Davis in 1958), then, latterly, of (b) any, even undisclosed principals: see Leon Bernstein in 1979 and BRI Coverage in 1989 in the United States, though a contrary note appears in Rank Precision in 1987, as well as Tasman Pulp in 1981 in New Zealand and the reasoning in Polytex in 1984 in New South Wales, and Regalite in 1996 in Hong Kong. Thirdly, claims by (c) persons founding on their ownership of affected cargo were supported in Tasman Pulp in 1981 in New Zealand and Gatewhite in 1989 in England. The uniformity of international jurisprudential thinking which influenced the majority judges in Pan American in 1965 in South Africa and in Bart in 1967 in British Guyana has thus shifted markedly in an opposite sense.
81. Further analysis
I take separately the positions of (I) principals of the person named as consignor or consignee on any air waybill and (II) claimants relying simply on their ownership or right to immediate possession of cargo to claim against an actual carrier responsible for its loss or damage. Mr Crane’s submissions before us concentrated upon (I). This was understandable on the particular facts – and also no doubt because Lord Hope’s doubt about the correctness of Gatewhite related to (II). If permissible at all, a claim under (II) would also require the claimant to establish his own ownership (or the right to immediate possession) as well as possession on the part of the relevant carrier at the time of the loss or damage.
(I) Principals of a person named as consignor or consignee on any air waybill
1) Nothing in the Convention as amended requires the naming of a consignor or consignee in the air waybill or explicitly restricts the concept of consignor or consignee to someone so named.
2) The Convention takes as a working model international carriage by air under an agreement or contract to which the consignor and consignee would be or fall to be treated as party. But the Convention does not set out to define either consignor or consignee, or to exclude domestic contractual rules which would either define them or permit others to claim to be (or to be held liable as) their principals.
3) In the view I take, the Convention’s references to consignor and consignee should not therefore be read in an exclusive sense. The Convention assumes, and to some extent (e.g. in the context of articles 13(3) and 30(3)) imposes, a particular contractual model. But that model also allows for flexibility, both in the identification of the consignor or consignee and, more importantly, in the identification of the principals of persons named in the air waybill as consignor or consignee.
4) I adopt the view, taken by other courts which have considered this problem, that there are, in this respect, strong considerations of commercial sense in favour of an interpretation which recognises and gives effect to the underlying contractual structure, save in so far this is positively inconsistent with the Warsaw and Guadalajara Conventions. These considerations were well expressed by Prichard J. in Tasman Pulp & Paper Co. v. Brambles [1981] 2 NZLR 225, 235:
“The effect is that the owner of goods is put completely in the hands of a nominal consignee who, for a variety of reasons, may be incapable of or averse to instituting proceedings against an airline. The consignee may be a customs agent or forwarding agent who is insolvent or in liquidation. Or the consignee may be a bank, the directors of which might well refuse to embark on costly litigation on behalf of a customer – even though that customer offered to indemnify the bank for costs. And, finally, however willing and able he may be, the action may not be one which the consignee is empowered to bring – his right to sue being limited to the rights conferred on him by Article 13.”
It may be, as I have indicated earlier in this judgment, that the last point made in this extract can be answered by both interpreting article 13(3) as a condition to loss (perte) claims and by extrapolating a general underlying intention to confer rights of suit for loss (perte) or damage (avarie) on the consignor or consignee, irrespective of their interest and of any actual damage which they may have sustained. There is still no reason to infer an equally general and unstated exclusion of any right of suit by any principal of the consignor or consignee who has really sustained the relevant damage.
Further, the points made in the first three sentences of the passage from Prichard J’s judgment are valid in any event. Litigation is a costly and committing affair, and the analysis urged by British Airways would require named consignors and consignees to be prepared to litigate against air carriers at peril of liability for costs, in matters in which they had no real interest. Prichard J’s observations can, I think, be further reinforced by the consideration that, if an airline can insist upon restricting its sights to the particular named consignor, consignee or person entitled, it would, presumably, follow that it can set off, in the liquidation of any such consignor, consignee or person entitled, debts which it may be owed (e.g. for freight unpaid) arising out of mutual dealings with that person quite unconnected with the present carriage, even though such debts would be incapable of set off because the carrier was on notice or had been given notice of the interests of the goods-owner really concerned: see Bowstead and Reynolds on Agency 16th Ed. Article 83 (and, regarding the civil law position, the concluding sentence of paragraph 1-018).
5) I am not persuaded to a contrary view by the argument that a carrier must know in advance by whom he will be sued. There is no requirement even to identify any consignor or consignee in any document of carriage. Actual carriers are under the Guadalajara Convention exposed to suits by persons unknown relying on agreements to which actual carrier was not party. After any loss, damage or delay, it will become clear who is claiming, and it seems to me that there may even be potential advantages on both sides, if those with the incentive and information to mount a claim are at least able to do so. On any view, however, the considerations favouring a conclusion that cargo-interests should be able to intervene and to sue for loss and damage as a principal on a contract evidenced by an air waybill issued to his shipping or customs agent appear to me considerably to outweigh any argument based on the supposed inconvenience or uncertainty that this might involve for air carriers.
6) It is no answer to the claimants’ submissions that, if the claimants had raised their alternative case in time, they might have succeeded in relying on the LEP air waybill as evidencing a contract for air carriage with LEP and in holding British Airways liable under the Guadalajara Convention accordingly. This was an alternative case which would be inapplicable if the claimants are right on their primary case. On their primary case, deriving from their analysis of LEP’s conditions and of the contractual position, the LEP air waybill does not evidence any contract for air carriage. Rather, it evidences an agency, and the issue is whether the claimants are entitled to assert LEP’s agency on their behalf in relation to the making of the contract for air carriage with Qantas. As I have indicated, nothing suggests that agency situations are uncommon in the consignment of goods by air and the fact that they have arisen for consideration in a number of prior cases indicates that they are not.
7) The interests of international uniformity no longer point towards a restriction of the right of suit to any named consignor, consignee or person entitled under article 12(1). The new magnetic pole of international jurisprudence draws quite strongly towards conclusions that there is no such general restriction in the Convention, and that, at least under systems which recognise the rights of unnamed or even undisclosed principals, there is nothing in the Conventions to prevent such principals of the named consignor or consignee intervening and suing (or being sued) in reliance on the relevant contract for carriage by air. As principals they will necessarily be subject to any limitations on suit which the Convention imposes on their consignor or consignee agents.
8) The amendments to article 24 under the Montreal Protocol No.4, although not in force in respect of this carriage, suggest strongly that there is no inconsistency between (on the one hand) detailed provisions such as those in Chapter II or article 30(3), regulating a consignor’s or consignee’s right of suit, and (on the other hand) claims by others, particularly principals of a consignor or consignee permitted under domestic law rules to sue on the relevant contract. In this field also, I prefer to view the Montreal Protocol No.4 as clarificatory, rather than amendatory (see the words of the United States Supreme Court in the El Al case, cited above).
9) I would add that, even on the view adopted by some United States courts that only disclosed principals should be allowed to sue, the claimants in the present case have a properly arguable case that LEP’s alleged agency on their behalf was disclosed, as a result of the combination of the reference on the Qantas air waybill of the information “Freight prepaid a/c of Western Digital (S) Pte Ltd” and the manifest consisting of the relevant LEP air waybills which are said (though there is a factual issue about this) to have been attached to or to have accompanied the Qantas air waybill: see generally Bowstead and Reynolds on Agency 16th Ed. paragraph 8-110. The fact that LEP acted as issuing agents in respect of the Qantas air waybill may reinforce this argument, although consideration would require to be given to the significance of LEP’s dual capacity on the attribution to Qantas of any knowledge which LEP had.
10) For these reasons, I consider that Western Digital Singapore or (if Western Digital Singapore as fob seller proves to have acted as agent for its buyers) Western Digital Nederlands had a properly arguable claim with a real prospect of success against British Airways, on the basis that (a) it was a principal of the consignor or consignee named in the air waybill issued by Qantas and (b) British Airways performed the carriage the subject of that air waybill and is liable accordingly for the short delivery of the cargo under the Guadalajara Convention. I would set aside the declaration made by the judge in paragraph 2 of his Order dated 14th July 1999, in so far as he held that the claimants were not entitled to pursue any such claim under article 18 of the Convention.
(II) Claimants relying on their ownership (or right to immediate possession) of cargo to claim against an actual carrier responsible for its loss or damage.
1) I find this a more difficult point to resolve. A possible view of the Convention is that its provisions only contemplate liability claims based upon or at least ancillary to an underlying contractual relationship (whether this derives from the relevant governing law or is imposed by the specific provisions of the Convention). On this view, articles 17 to 21 cannot fix the nature or standard of any duty owed other than to a party to such a contract. If this view is correct, then on the basis of Sidhu and El Al, any possibility of any non-contractual claim would appear to be superseded and excluded by the Convention. But I have come to the conclusion that this is not the preferable view and that the scheme of the Warsaw and Guadalajara Conventions is to read as permitting such claims, where they would be allowed under the relevant domestic law.
2) Firstly, the extension of the Convention scheme to an actual carrier by the Guadalajara Convention illustrates that the provisions of the Warsaw Convention are fully capable of operating between non-contracting parties, and the Conventions contain provisions which contemplate parallel non-contractual claims, particularly against servants or agents, which depend on ownership or a right to immediate possession.
3) Secondly, the phrase “however founded” in article 24(1) itself suggests the possibility of extra-contractual claims in respect of baggage or cargo under article 18. In this respect, as I have said, I would prefer to view the Montreal Protocol No.4 amendments as clarificatory. The fuller wording used in article 24(2) does not justify a contrary conclusion, and appears explicable by reference to the special considerations governing dependency claims in personal injury cases.
4) If the owner of cargo has a claim against an actual carrier responsible for its loss or damage, the provisions of Chapter III are fully capable of regulating that claim. The claim will be based and restricted accordingly. Domestic law may establish title to sue, while the Convention, as the House of Lords held in Sidhu, will regulate the nature and standard of responsibility. Neither the detailed provisions of Chapter II nor the presence of article 30(3) regulating specific aspects of the carrier’s position in relation to the consignor and consignee are, in my view, inconsistent with this.
5) The amendments to article 24 by the Montreal Protocol No.4 confirm the consistency – by elaborating the phrase “however founded” to make clear that it embraces tort-based claims and adding the phrase “without prejudice to the question who are the persons who have the right to bring suit and what are their respective rights”. Similar confirmation is found if one looks at a parallel convention in the same family as the Warsaw Convention – that is, the Convention on the Contract for the Carriage of Goods by Road (“CMR”) enacted by the Carriage of Goods by Road Act 1965. Chapter III of CMR corresponds closely to Chapter II of the Warsaw Convention, while Chapter VI of CMR contains provisions regulating successive carriage. Yet article 28(1) in Chapter IV of CMR expressly contemplates extra-contractual claims.
6) The two common law authorities in point, Tasman Pulp and Gatewhite, favour recognition of claims on such a basis, although they predate Sidhu which casts doubt upon them in this respect. The practical considerations identified by Prichard J. in Tasman Pulp all militate in favour of recognising that non-contractual actions may be brought against actual carriers by the persons really interested, that is by the relevant baggage or cargo owner (or person entitled to immediate possession). Again I find the contrary considerations of simplicity and uniformity uncompelling, and, in the case of an actual carrier facing a non-contractual claim, the argument that he must be entitled to know where he stands lacks virtually any force. As the present case confirms, even where the relevant documents are obtained, there may be considerable room for argument which evidences the relevant contract of carriage, who are the parties to it, and who is the consignor or consignee.
7) That Chapter III of the Convention would govern such non-contractual claims, if admissible at all, is clear under English law from Sidhu. I note also, in parenthesis, that, in their article on the German legal position (referred to above), Schönwerth and Müller-Rostin conclude that extra-contractual claims by a third party owner (e.g. a cargo-owner not party to the contract of carriage in the air waybill or an individual asking a passenger to take items for him) would – at least in circumstances where the owner knew or could have contemplated that his goods would be carried by air – be subject to the scheme of liability prescribed by articles 17-21 of the Convention.
8) Apart from straightforward cases of carriage in circumstances contemplated by those owning or having the right to immediate possession of the relevant baggage and cargo, the entirely foreseeable case of goods consigned without the knowledge or authority of those owning or having the right to their immediate possession suggests that the Convention cannot confer on carriers by air any absolute immunity to claims by such persons.
9) Despite the unfavourable dictum in Sidhu, I would therefore conclude that the Conventions do not exclude claims against an actual carrier based on title to the relevant baggage or cargo, but subsume them within the Convention scheme of liability in Chapter III of the Warsaw Conventon. Thus, although the nature and standard of any liability on British Airways’ part is regulated by the Warsaw and Guadalajara Conventions, title to sue is determined by the law governing extra-contractual claims. In this case, it is not suggested that such law, whichever it may be, does not permit an owner of goods lost in possession of a carrier by air to claim against that carrier in respect of such loss, apart from the Convention. I would therefore also set aside the judge’s declaration in paragraph 2 of his Order dated 14th July 1999, to the extent that he held the contrary as a matter of principle.
82. The cross-appeal – complaint under article 26(2)
I turn to the cross-appeal. Mr Shepherd for British Airways submits that the judge erred both in the test he applied and in his approach to the facts. What is required under article 26(2), in the case of damage (avarie), is that “the person entitled to delivery must complain to the carrier forthwith after discovery of the damage, at the latest, within …. fourteen days from the date of receipt in the case of cargo”. Failing complaint within such time, no action lies against the carrier (article 26(4)). The claimants rely on the two letters dated 28th June 1996 as sufficient notice. Mr Shepherd submits, first of all, that any notice which these letters gave was not given by the person entitled to delivery, the consignee, Express Cargo Forwarding Ltd., but was given by Irish Express Cargo Limited for whom they were signed. Since the former’s name appeared at their letter-head with a note at the foot that the former were a division of the latter, I see no force in this. Irish Express Cargo Limited must be taken to have been acting for and with the authority of Express Cargo Forwarding Ltd., the actual named consignee.
83. Much more significantly, it is submitted that the letters did not amount to a complaint, still less a complaint in relation to the subject matter of the claimant’s primary case, that is the partial loss of packages from the larger consignment being carried by British Airways. Each letter related to an identified part of that consignment and that identified part had as a matter of fact been wholly lost. Yet each letter advised that the identified part “was received” but was “in a condition which obliges us to reserve the right to claim against you as carriers”. Mr Crane argues subtly that, on the authority of Fothergill v. Monarch Airlines Ltd. [1981] AC 251, the word “damage” (avarie) in article 26(2) covers partial loss of baggage or cargo, so that advice of a claim in respect of the “condition” of goods on arrival must be treated as covering both physical damage and partial loss. That appears to me specious. Letters relating to the condition of two sets of identified goods received cannot amount to a claim that those goods have not been received, even though in terms of the Convention those sets of goods may constitute part of a larger consignment, in which context their loss would involve a partial loss or avarie, rather than a total loss or perte.
84. Lord Wilberforce said in Fothergill that the purpose of article 26(2) appeared “reasonably clear”:
“It is (1) to enable the airline to check the nature of the “damage”; (2) to enable it to make inquiries how and when it occurred; (3) to enable it to assess its possible liability; to make provision in its accounts and if necessary to claim on its insurers; (4) to enable it to ensure that relevant documents (for example the baggage checks or passenger ticket, or the air waybill) are retained until the issue of liability is disposed of.
If one then enquires whether these considerations are relevant to a case of partial loss of objects contained in baggage, the answer cannot be doubtful: they clearly are. Moreover, prompt notification may give the airline the opportunity of recovering the objects lost.”
85. In Fothergill the plaintiff had on arrival home from holiday found that his suitcase was damaged, and he completed a “property irregularity report” (“p.i.r.”) which under the heading “Nature of Damage” stated “Side seam completely parted from the case. [Damage] occurred on the homebound flight.” On arrival home he discovered items were missing from the case, but no further complaint was made within the time limit. His action failed. The p.i.r.
“said nothing about the contents of the baggage and it was totally insufficient for the purpose for which it was required …. One need only figure a case in which the objects lost were valuable jewellery to see the necessity for a specific complaint of the loss.” (per Lord Wilberforce at page 278G).
86. Lord Fraser at page 289G agreed:
“It gave no hint that such loss [of contents] had occurred, and indeed, by referring only to damage to the suitcase, it implied that that was the only matter of complaint. I entirely agree with the opinion of Kerr J. [1978] QB 108, 120:
“…. the complaint must relate to the claim which the passenger is seeking to enforce. It must give sufficient details to the carrier to enable him to make the relevant enquiries.”
87. Lords Scarman and Roskill agreed with Kerr J’s reasoning (pages 296B and 302D-E).
88. Lord Wilberforce’s listing of the purposes of article 26(2) cannot, I accept, be read as suggesting that all such purposes can or must be satisfied merely by the notice required under that article. It is clear, as Kerr J’s reasoning also confirms, that many of them would involve and could only be satisfied as a result of follow-up activity. I would also agree that a complaint under article 26(2) need only be in general terms. Nevertheless, there must be within the time stated a complaint, which must at least embrace the damage to which the subsequent action relates. In this case, such complaint as was made within the relevant time was specifically limited to physical damage to identified items and did not embrace the loss of such items the subject of this action. It indicated a problem about the condition of the identified items, not about their arrival. No doubt this could have been cured if, as contemplated by the form, the “brief details” promised had been “mentioned below” on the letters. But they were not. It follows in my view that article 26(2) was not complied with and the claimants’ action falls to be dismissed on that ground.
89. The judge considered that the objective adequacy of the complaint was not the test. What mattered was whether it had in fact enabled British Airways to investigate the position. He considered that it had not been shown that it did not. He cited Schmoldt v. Pan American World Airways Inc. (1989) 21 Avi. 17,974 and BVI Coverage (above). The former case does not assist. In the latter case, a claim in March 1985 that goods did not arrive “in tact” and that the airline would be held responsible for the missing goods was held a sufficient complaint to permit an action for damage found on the goods when they were belatedly located and delivered in May 1985. The judgment places reliance on the investigation which the airline was able to make after the initial complaint. I do not find the reasoning or the result easy to follow, and on no view are the present facts analogous as to the course of events. Here, although the judge seemed to place the onus of proof on the airline to show that it did not make full investigations, there is nothing to show that it did so or that it entered into any sort of discussion with the consignees or with anyone interested in cargo which could have led them to consider that no further complaint was required. On the material available, British Airways’ first response was to a later complaint (dated we understand 23rd July 1996) made after the time limit had expired, and no reliance is placed on that response as debarring them from invoking article 26(2). In my judgment, the test under article 26(2) is an objective one. British Airways is right in its submission that no relevant complaint was made under that article within the relevant time. If the claimants were to avoid the natural consequence of the failure to make any timely complaint on any basis, the onus was upon them to do so. They have not done so.
90. Finally, Mr Crane submitted that Qantas had “waived” or, more accurately, varied the period of notice required in respect of any claim for partial non-delivery, so as to extend it to 120 days. On this basis, Mr Crane relied on the later complaint dated 23rd July 1996 as within the prescribed time limit. This point was not pleaded or argued before David Steel J., or indeed included in the appellant’s notice of appeal. But it was raised, very briefly, both in Mr Crane’s skeleton, answered equally briefly by Mr Shepherd’s, and in oral submissions. It did not appear to have merit at the time, and was unfortunately overlooked when preparing this judgment for handing down. We therefore received further written submissions from both sides, which set out the point more fully. The point still appears to me to lack merit, and I now state its nature and my reasons for this conclusion.
The point turns on clause 12 of the terms and conditions on the reverse of Qantas’s air waybill, reading:
“12.1 The person entitled to delivery must make a complaint to the Carrier in writing in the case
12.1.1 of visible damage to the goods, immediately after discovery of the damage and at the latest within 14 days from receipt of the goods,
12.1.2 of other damage of the goods, within 14 days from the date of receipt of the goods,
12.1.3 of delay, within 21 days of the date the goods are placed at his disposal, and
12.1.4 of non-delivery of the goods, within 120 days from the date of the issue of the Air Waybill;
12.2 for the purpose of Subparagraph 12.1 above complaint may be made to the Carrier or to the last Carrier or to the Carrier who performed the transportation during which the loss, damage or delay took place;
12.3 any rights to damages against Carrier shall be extinguished unless an action is brought within two years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped.”
91. Mr Crane suggests that, since the Warsaw Convention prescribes no period for any complaint in respect of non-delivery, clause 12.1.4 would be ineffective if it referred to total non-delivery. It must therefore include partial non-delivery. However, it seems to me clear that Qantas’s terms and conditions of carriage follow, carefully, the language and concepts which are familiar in air carriage. “Damage” in the sense of avarie is covered by clause 12.1.1 and 12.1.2, which adopt the same time limits as expressed in the first sentence of article 26(2) of the Warsaw Convention. The subject-matter moves to delay in clause 12.1.3, which adopts the same time limit as in the second sentence of article 26(2). Clause 12.1.4 deals with non-delivery, in relation to which it purports to introduce a 120 day time limit. Clause 12.2 appears to have been drafted with articles 26 and 29 of the Warsaw Convention and article IV of the Guadalajara Convention in mind. Clause 12.3 provides for a two year limit for litigation, mirroring article 29(1).
92. As regards clause 12.1.4, it is true that the Warsaw Convention does not contain, or therefore under article 23 permit, in respect of international air carriage within its scope any such time limit in respect of total non-delivery (perte). But that cannot mean (and Mr Crane does not, as I read his skeleton dated 11th May 2000, suggest that it does mean), that clause 12.1.4 can be read as confined to partial non-delivery. Qanta’s terms and conditions are elaborately drafted. If Qantas had had in mind a scheme so confusing and using terminology so differently from the Conventions, the draftsman could and would surely have made this expressly clear. It follows that clause 12.1.4 must in circumstances of non-delivery (perte) be ineffective – at least in cases of international air carriage within the relevant international conventions. But there is equally no reason in those circumstances to attempt to give clause 12.1.4 artificial partial validity by treating it as covering cases of partial non-delivery. On any ordinary canon of construction in the present aviation context, partial non-delivery must have been envisaged, and must be treated, as falling within clause 12.1.1 and 12.1.2 (avarie): see the extensive discussion of the internationally accepted scope of the concept of “damage” (avarie), in relation to the time limit for complaint, in Fothergill v. Monarch Airlines Ltd. (above) (and also, now, in the English context, s.4A of the Carriage by Air Act 1961).
93. The claimants’ action in respect of the international carriage by air is thus barred, and falls to be dismissed. The cross-appeal succeeds accordingly.
94. Conclusion
In the result, the claimants are entitled to have paragraph 2, but not paragraph 3, of the David Steel J’s Order dated 14th July 1999 set aside and the respondent is entitled to have paragraph 1 of that Order set aside. The result is that the claimants’ action in respect of the international carriage by air must fail for want of any timely complaint. I consider that we should hear counsel on the appropriate form of order to give effect to such conclusions.
MR JUSTICE HARRISON: I agree.
LORD JUSTICE MORRITT: I also agree.