Claims & Liability
Cases
Rosewood Trucking Ltd. v Balaam
[2005] EWCA Civ 1461
LORD JUSTICE TUCKEY: This appeal raises a question as to the meaning and effect of Article 37 of the Convention on the Contract for the International Carriage of Goods by Road, better known as the CMR. This Article entitles one of successive carriers who has paid compensation “in compliance with the provisions” of the CMR to recover such compensation from the carrier responsible for the loss. It is a carrier who has simply paid compensation under the terms of his contract with another carrier, paid it in compliance with the convention so as to entitle him to recover it from the carrier responsible for the loss. Mr Recorder Pooles QC, sitting in the Norwich Crown Court, decided that he had not, but gave permission to appeal so that this court could consider whether he had answered the question correctly.
The facts are not now in dispute and can be stated shortly. P&O Ferrymasters contracted with consignors, described in the CMR as “the sender”, to carry a consignment of television sets from Spain to England. The CMR applied to the contract and P&O issued a consignment note which was signed by the sender but did not contain all the particulars required by Article 6, although nothing turns on that omission. The entire carriage was sub-contracted by P&O to the claimant, Rosewood Trucking Ltd, by the claimant to another carrier and by the latter to the defendant, Brian Balaam. The consignment was collected in Spain by the defendant’s driver, who signed the consignment note as the carrier on 25th April 2002. However, before delivery was made to the consignee in England, the television sets were lost when the defendant’s truck, trailer and its entire contents were stolen from a yard near Norwich.
The defendant was the carrier solely responsible for the loss and the Judge held that he could not have relieved himself of liability under Article 17.2 on the ground that the loss was caused through circumstances he could not avoid.
The sub-contract between P&O and the claimant prohibited further sub-contracting without consent, but provided that in any event the claimant would remain liable to P&O “as if it had itself performed or failed to perform the carriage”.
In due course, P&O paid the sender’s claim for its loss and the claimant indemnified P&O, as it was bound to do under the terms of the sub-contract. In doing so, it did not take any assignment of any claim which P&O might have had and it is not contended that it became subrogated to any such claim. It simply sought recovery from the defendant of what it had paid P&O under Article 37.
The CMR became part of English law under the Carriage of Goods by Road Act 1965. Section 5(1) of that Act has the effect that where the CMR applies claims for contribution between carriers under what is now the Civil Liability Contribution Act 1978 are not possible. Chapter 6 of the CMR contains the provisions relating to carriage performed by successive carriers. Article 34 provides that in such a case, where the carriage was governed by a single contract, each carrier is responsible for the performance of the whole operation. The second and each succeeding carrier become parties to the contract of carriage on the terms of the consignment note on acceptance of the goods and the consignment note.
In our case, only one carrier, the defendant, actually carried the goods, but in Ulster-Swift Ltd v Taunton Meat Haulage [1977] 1 Lloyds Rep 346, this court approved a decision of Donaldson J reported at [1975] 2 Lloyd’s Rep 502 that in such a situation the carrier who contracts with the sender is the first carrier, even if he does not undertake any stage of the carriage himself. The same reasoning must apply to sub and sub-sub-contractors of the first carrier who do not actually carry the goods, as in this case. The defendant was a sub-sub-sub-contractor of the first carrier, P&O, and was also therefore a successive carrier. Here also the carriage was governed under the single contract contained in the consignment notice.
Article 36 provides that the sender may only take legal proceedings against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss occurred. That meant in this case that the sender could only have sued P&O or the defendant. The full text of the relevant part of Article 37 is as follows:
“A carrier who has paid compensation in compliance with the provisions of this Convention, shall be entitled to recover such compensation, together with interest thereon and all costs and expenses incurred by reason of the claim, from the other carriers who have taken part in the carriage, subject to the following provisions:
(a) the carrier responsible for the loss or damage shall be solely liable for the compensation whether paid by himself or by another carrier.”
Sub-paragraphs (b) and (c) deal with the position where the loss has been caused by the action of two or more carriers and Article 38 with the position where one of the carriers is insolvent.
The only other directly relevant provision is Article 40, which says:
“Carriers shall be free to agree among themselves on provisions other than those laid down in articles 37 and 38.”
After referring to a number of authorities, the Judge correctly observed that chapter 6 of the CMR establishes what is intended to be a complete regime in which a statutory quasi-contractual nexus is established between the sender and each of the carriers and their rights against one another are defined.
The defendant’s argument was simple: the claimant could not have been sued by the sender because Article 36 proscribes such proceedings. P&O could have been sued and would have been liable for the sender’s loss (Article 17 and 34), but under the Convention, P&O could only have claimed over against the defendant as the only carriers responsible for the loss (Article 37(a)). The compensation paid by the claimant to P&O was not therefore paid in compliance with the provisions of the Convention and could not therefore be claimed against the defendant with whom it had no privity of contract. Rather, its payment was made under its contract with P&O, which it was entitled to make (Article 40), but which contained terms which were different from those in Article 37. The Judge somewhat reluctantly accepted this argument.
Mr Bradley submits that the Judge was wrong. The CMR, he says, provides that where there are successive carriers, the carrier responsible for the loss should pay either the sender directly (Article 36) or the carrier who is not responsible for the loss but has had to pay it, as the claimant had to do in this case. Article 40, he submits, permits carriers to make contracts such as that between P&O and the claimant. Its payment to P&O was therefore in compliance with the provisions of the Convention because it was compelled to make payment in accordance with a scheme which was permitted by the Convention. On this analysis, Article 37 does not have the effect of preventing the claimant from recovering from the defendant, the person responsible for the loss.
I do not accept these submissions. Simply as a matter of language, the claimant did not pay P&O “compensation in compliance with the provisions of the Convention” but in compliance with the obligations it had assumed under its sub-contract with P&O. To allow the claimant to pass on that contractual liability would be doing something outside the scheme of the CMR, which is obviously intended to be self- contained. Under that scheme the claimant had no liability, either to the sender or to P&O. What is more, the liability which the claimant seeks to pass on to the defendant is under a contract to which he was not a party. The wording of Article 40 says nothing about this; it merely permits carriers to contract with one another on terms which differ from those contained in Articles 37 and 38.
Whilst I accept that it is unfortunate that the claimant is unable to pass on what it has paid to the defendant, who would have been liable to and have to pay had he been sued by the sender or P&O, the claimant could have protected itself by its own contract with its sub-contractor, by taking an assignment of P&O’s claim against the defendant, or possibly, although this was not fully explored in argument, by way of subrogation. As it did none of these things, it is stuck with the loss, but that is not a reason for construing the CMR in a way which its language will not bear. For those reasons, I would dismiss this appeal.
LORD JUSTICE NEUBERGER: Mr Bradley, in his admirably clear and concise submissions, does not contend that the words “in compliance with the provisions of this Convention” in Article 37 only govern the word “compensation”. In other words, he accepts that the Recorder was correct to proceed on the basis that the words govern the phrase “paid compensation” in that Article. On that basis, it seems to me it would be very difficult to say that a payment made pursuant to a provision such as clause 3.4 of the contract between P&O and the claimant was made “in compliance with the provisions of this Convention”.
In agreement with my Lord, Tuckey LJ, I consider that such a construction would involve too great a straining of the words of Article 37, unless perhaps it resulted in a construction which was plainly required to give effect to the purpose of the Convention. In practice, there would have been various ways, as my Lord said, in which a party in the position of the claimant in this case could have protected itself, for instance, by the terms of its contract with its sub-contractor, LB Shipping, or by getting P&O to sue and joining other parties, or by taking an assignment of P&O’s claim in return for payment, or, quite possibly, by claiming to be subrogated to P&O’s claim, especially in the light of the terms of clause 3.4.
Returning to the wording of the Convention, the notion that, because Article 40 permits contracting out of Articles 37 and 38, payment of a contractually due sum, such as that paid by the claimant in the present case to P&O, falls within the opening words of Article 37, does not seem to me to meet the point as a matter of language or as a matter of principle. The fact that one can contract out of Article 37 does not mean that the payment made pursuant to such contracting out can be said to have been paid in compliance with the provisions of this Convention. Further, given that Article 40 expressly permits contracting out of Article 37, it is rather strange, at least on the face of it, to conclude that, having contracted out of Article 37, one can nonetheless rely, as the claimant seeks to do in this case, on the very Article out of which the parties have contracted.
Mr Bradley was, in my view, rightly minded to accept that, if P&O and Rosewood had in their original contract expressly contracted out of Article 37 in its entirety, then the claimant’s present claim could not have been made. While perhaps a somewhat indirect point, I think it throws some light on the issue which the learned Recorder had to decide. In these circumstances, essentially for the same reasons as my Lord, I agree that this appeal should be dismissed.
(Costs assessed in the sum of £5,750, the reduction made as to the solicitors’ rather than counsel’s fees.)
Royal & Sun Alliance Insurance Plc & Anor v MK Digital Fze (Cyprus) Ltd. & Ors
[2006] EWCA Civ 629
Rix LJ
“Now that the CMR is not applicable, as it is a commissionnaire de transport (even if before the English courts, where the concept of commission de transport is unknown, that of contractual carrier holding sway instead, it had to refer to this Convention), Exel emphasises, however, as a secondary consideration, that its article 31.2 does not help to resolve the difficulties resulting from a lis alibi pendens.”
On the appeal before us, Hi-Tec seeks to use Exel’s submissions before the Cour d’Appel as undermining Exel’s contention, and the judge’s finding below, that Exel had a good arguable case for a CMR contract giving rise to article 31.1 jurisdiction in London. In response, Mr Stephen Kenny on behalf of Exel, made a series of submissions as to the merely contingent nature of Exel’s argument to the Cour d’Appel. But in the end, he was constrained to accept, as he did, that Exel’s French advocate had indeed told the Cour d’Appel that Exel did not rely on a CMR contract, and that the only reason that it had put its case in England on such a basis was that, since the English court would not recognise the status of a commissionnaire de transport, it was forced to refer to CMR. Mr Kenny very candidly explained the logic of this submission. The French advocate was concerned with the counter-arguments that were being raised against Exel based on CMR: that under article 71 of the Judgments Regulation, article 31 would prevail over articles 27/30 of the Judgments Regulation; and that article 31 would have the effect of giving priority to Hi-Tec’s French action. Therefore, Exel’s tactics in the Cour d’Appel were to run away from CMR as far as they possibly could. But, Mr Kenny submitted, his submission to us remained what it had been to the judge below, namely that Exel did rely on article 31.1 of CMR as providing jurisdiction in England on the basis of a CMR contract directly between Exel and Hi-Tec. We will revert to these matters when considering Hi-Tec’s appeal that the judge was wrong to find a good arguable case in favour of such a CMR contract.
In the event, the Cour d’Appel accepted Exel’s primary argument relating to the Judgments Regulation. As a claimant in France, Hi-Tec, although Danish, was bound by the Judgments Regulation. Article 30 gave priority to the English action. Both English and French actions were concerned with the same contract and had the same objective, namely to determine Exel’s liability for the loss of the phones. Therefore, article 27 of the Judgments Regulation required the stay of Hi-Tec’s action pending the decision of the English court of appeal.
As for CMR’s article 31, the Cour d’Appel said that it was “not necessary” to decide whether CMR was applicable to the parties’ contract, since article 31.2 did not in any event apply to provide a solution in this case of “the simultaneous conduct of two lawsuits before the courts of two different countries”.
Issue 1. Was the judge wrong to find that there was a good arguable case in favour of a CMR contract for delivery of the phones in England?
I am now in a position to consider this first issue. I describe it in these terms because, on appeal, the question is whether the judge erred. In the absence of any error in principle, or any material error of fact, this court is unlikely to be ready to interfere on a question of “good arguable case” decided in the commercial court. I have in mind the relevant observations of Saville LJ in IP Metal v. Ruote [1994] 2 Lloyd’s Rep 560 at 566. Indeed, since this appeal originally came before us as an adjourned application for permission to appeal, we have heard argument from Exel that we should not even give such permission. However, we indicated at the hearing that permission would be given, on all issues argued before us.
The judge found a good arguable case in favour of a CMR contract for delivery in England on the following basis. As for the test of “good arguable case”, he referred to the judgment of Waller LJ in Canada Trust v. Stolzenburg (No 2) [1998] 1 WLR 547 at 555 and said that “The essence of the test is that the court must be satisfied that it is right for the court to take jurisdiction”, but that the court must not be seen to pre-empt the decision at trial (at para 33). He next asked himself whether the nature of the contractual relationship between the parties was that of CMR or “of a freight forwarder or transport intermediary contract” (at para 37). For these purposes he adopted the five tests listed by Mance J in Aqualon (UK) Ltd v. Vallana Shipping Corporation [1994] 1 Lloyd’s Rep 669 at 674 and approved by the court of appeal in Lukoil-Kaliningradmorneft plc v. Tata Ltd & Global Marine Transportation Inc [1999] 2 Lloyd’s Rep 129 at 137. These are (a) the terms used by the parties in making their contract; (b) any description adopted in relation to a party’s role; (c) the course of any prior dealings; (d) the nature and basis of charging; and (e) the terms of any CMR note. The judge found of particular importance the witness statement evidence from Mr Rashid and (at second hand through his solicitor, Mr Reynolds) from Mr Thomsen relating to their initial telephone conversation. He said “That evidence strongly suggests that the contract was one for the carriage of the goods”. He found everything else – Exel’s letter to TRS Univers dated 10 November 2004, the previous course of dealing in October 2004, including the invoices relating to that transaction (there was no invoice relating to the stolen phones), to be equivocal, and the CMR note itself to be of little help, being drawn up by Exel unilaterally after the contract had already been made on the telephone. He concluded:
“46. I agree with that submission. Overall I think that the balance of the factors, but most particularly the evidence on what was agreed between Mr Rashid and Mr Thomsen, supports a good arguable case that the contract between Exel and Hi-Tec was one for the international carriage of goods by road, not one to act as a freight forwarder.”
Mr Charles Graham QC on behalf of Hi-Tec and Mr Kenny on behalf of Exel have gone through this ground again. What has emerged, and emerged clearly, is that the judge erred in two important aspects, and did not know of a third important matter which only occurred after his judgment.
The first important aspect, I take it first because the judge did himself, is that in my judgment he overplayed the significance of the witness statements regarding the telephone conversation between Mr Rashid and Mr Thomsen. The relevant evidence is set out at paras 15/16 above. Mr Kenny was constrained to accept that (save as to destination) there was no evidence as to the actual terms of their conversation, nor any evidence to enable a distinction to be made between a contract of carriage and of freight forwarding. As Mr Rashid said: “I did not draw a distinction between the two options in my mind at the time”. Mr Thomsen, in Mr Reynolds’s statement, says he was told by Mr Rashid of a consignment of phones “to be collected…and carried to…Interken”. The judge relied on the word “carried”. However, one would expect some such reference to carriage in any event. Moreover, in circumstances where the French commissionnaire de transport guarantees safe arrival of the goods, unlike a mere agent in English law, it would take close attention to particular words used to be able to draw a distinction on which one could safely rely. In this connection, English authorities on which Mr Kenny sought to rely to indicate that the acceptance of personal liability was more consistent with a contract of carriage than with a freight forwarding relationship were wholly beside the point, and distracting. The fact is, the actual words used on the telephone have been lost. Neither party made a note of the conversation. What one is left with is the CMR note which was drawn up on the morning of 4 November, by Mr Thomsen, who was one of the two parties to that conversation, to be seen in the overall context of the parties’ business dealings.
The second important aspect on which I consider the judge erred, closely related to the first for it is in a sense the other side of the same coin, is the significance of the CMR note itself. The judge accepted the submission that the consignment note was of little help. Perhaps he was influenced by the fact that it came as only fifth and last of the Aqualon factors. However, article 9.1 of CMR provides:
“The consignment note shall be prima facie evidence of the making of the contract of carriage, the conditions of the contract and the receipt of the goods by the carrier.”
Therefore, the CMR note of 4 November 2004 was prima facie evidence which had to be displaced. In truth, given the absence of any note of the telephone conversation and the absence of any direct evidence in the witness statements of the actual words used, the CMR note, drawn up by one of the parties to the telephone conversation, is the best evidence we have of their contract. The judge made no reference to article 9.1. In Aqualon, however, it played an important role (at 676). Before Aikens J Mr Kenny accepted that the CMR note supported Hi-Tec’s submission that Exel regarded itself as acting as commissionnaire, not carrier (see the judgment below at para 45). This was because Exel signed the note for Hi-Tec as sender, and TRS Univers (not Exel) was named as carrier (see para 18 above). Before this court, Mr Kenny submitted, differently, that the CMR note was evidence not of the principal CMR contract, but of a CMR sub-contract between Exel and TRS Univers. On that basis there was no CMR note in existence directly between Exel and Hi-Tec. If so, however, then Mr Thomsen, although conscious of making a CMR contract with Exel’s client, Hi-Tec, omitted to sign as carrier a CMR note evidencing that contract, although it was his obligation to do so (see articles 4/5 of CMR), while at the same time diligently drawing up a sub-contract CMR note. And even if the CMR note were of a sub-contract (although it is expressed in terms of a direct contract between Hi-Tec as sender and TRS Univers as carrier), then that would itself be consistent with the relationship between Hi-Tec and Exel as being that of a commission de transport.
The effect of the CMR note in respect of the transport in question is, in my judgment, supported by the course of dealing reflected in the October 2004 CMR notes. Those were drawn up in the same way, signed by Exel for Hi-Tec as sender with others signing as carriers. It is significant that all the notes follow the same pattern. Moreover, copies of the October notes were returned to Hi-Tec, so that it had knowledge of their form and did not object that they had been drawn up inappropriately.
The invoices for the October transports were also consistent with Exel being a commissionnaire de transport. Thus they had three lines of separate charges: (i) “TRS INT’L” (international transport); (ii) “HANDLING”; (iii) “CONTROL”. The first charge was by far the biggest. We do not know what the actual carriers charged. Presumably Exel could have presented that evidence. These charges are consistent with Exel passing on to Hi-Tec the charges of the carriers, and adding its own handling and control charges. That would reflect the way a commissionnaire would presumably charge. If, however, Exel was a carrier itself, it might have been thought that there would be only one set of charges. It may be that ultimately, in the absence of further evidence about these charges, the invoices are, as the judge described them, equivocal. But Exel has to make out a good arguable case, and if the invoices are equivocal, then they do not aid its case. On balance, I would have thought their form to be marginally in favour of Hi-Tec’s case.
In my judgment it is impossible on this evidence to say that Exel has made out a good arguable case for a CMR contractual relationship, as distinct from a commissionnaire de transport relationship. That is even before I come to the third factor, of which the judge did not know, for it occurred at the Cour d’Appel hearing subsequent to his judgment. That is the evidence, referred to at paras 48/49 above, that Exel’s French advocate told the Cour d’Appel that Exel accepted that it acted as a commissionnaire de transport and explained that it had claimed in England on a CMR contract only because English law did not recognise the French concept. Mr Kenny, while himself rejecting such an analysis, says that the French advocate was expressing himself thus for tactical reasons. Of course, it is open to a party before the English courts to put his case on the basis of a foreign contract governed by its own idiosyncratic foreign law. Mr Kenny may have put the matter in this way in the belief that a merely tactical adoption of a particular factual position could be easily repudiated. In my judgment, however, the position adopted before the Cour d’Appel fundamentally undermines Exel’s position here. It might be different if Exel’s case in favour of a CMR contract was indisputable or at least very cogent. Even then, I do not see why, in such a situation, an admission made to the French court is very different from one made to the English court. If Exel had admitted to the English court that it accepted that it was a commissionnaire, it would need leave to withdraw that concession. But even without putting the matter on a formal level where leave would be required, it seems to me to be close to abusive to be running one case in France, and another inconsistent case in England, and to be doing so for tactical reasons in a situation of conflict over respective challenges to the jurisdiction of the two courts. Where the English court has to be satisfied, on the basis of a good arguable case, that it is proper for it to accept jurisdiction here, on the basis of CMR’s article 31.1, in a situation of conflict over the proper analysis of the parties’ contractual relationship, I do not see how Exel can succeed when it has adopted Hi-Tec’s contractual analysis which excludes the possibility of invoking CMR’s article 31.1.
For all these reasons, I would hold that in this respect Hi-Tec’s appeal succeeds: Exel has failed to show a good arguable case for a CMR contract bringing with it CMR’s article 31.1 jurisdiction code.
I have come to this conclusion irrespective of the precise gloss to be put on the requirement of a good arguable case. The judge referred to Waller LJ’s judgment in Canada Trust, where he formulated the gloss of “a much better argument” (at 555). There were detailed submissions before us, of considerable interest, as to whether the test applied by the judge was consistent with either Waller LJ’s test (for the judge did not expressly mention “a much better argument”), and in any event as to whether the obiter remarks of this court in the subsequent case of Konkola Copper Mines Plc v. Coromin Limited [2006] EWCA Civ 5, [2006] 1 All ER (Comm) 437 (see at paras 61 and 74/96) were applicable. Mr Graham submitted that the issue as to the correct contractual relationship of the parties was a fundamental question which went to the heart of the ultimate merits of the parties’ dispute (see Konkola at para 76) so as to render it necessary to adopt the Konkola approach, where both parties have made out a good arguable case, of saying that the party with the burden of proof or persuasion fails. Ultimately, as it seemed to me, the parties’ submissions ended up not very far apart. It was accepted that the burden of persuasion lay on Exel. If the Waller LJ gloss was the right approach, then the burden was the difficult one of showing “a much better argument”. If the Konkola approach was applicable, then, as it seems to me, Hi-Tec’s case in favour of the parties’ contractual relationship being that of a commission de transport was at least as good as Exel’s case in favour of a CMR regime. On either basis, it seems to me that, to adopt the words of the judge but in respectful disagreement with him as to the outcome, Exel has failed to show “that it is right for the court to take jurisdiction” on this issue.
In the circumstances, I would be loath to say more than is necessary to resolve the interlocutory issue of jurisdiction. If it be thought that I have gone into the facts above in a way which might seem to suggest a view of the ultimate merits, I would wish to state that I have not intended to. It is simply that, in a case where an appeal judge is required to show why he disagrees with the conclusion of the judge below, it is necessary to be involved in the particulars of the argument.
Thus it is unnecessary to deal in any length with the separate issue of whether the contract was to arrange for the transportation of the phones to England or to Italy. Of course, even if there was a CMR contract, article 31.1 would not provide jurisdiction in England if the agreed destination was Italy. The judge said that there was a good arguable case that the agreed destination was England, and I agree, essentially for the reasons given by the judge. In brief, England was the destination entered in the CMR note by Mr Thomsen. It was where previous Hi-Tec consignments had been delivered. It was where Mr Thomsen (giving evidence through Mr Reynolds) said that it had been agreed that the phones in question would be delivered. It was where Mr Thomsen in fact sent the phones in the arrangements he made on the morning of 4 November prior to the receipt of the two faxes at 13.31 hours. The evidence to the contrary is that of Mr Rashid, who says that Italy was spoken of as the country of destination in his initial telephone conversation with Mr Thomsen; and that of the two faxes of 13.31 hours on 4 November, which give “Nuovo Suono” as the destination. However, there are so many question-marks hanging over the identification of “Nuovo Suono” of Trafoi as the buyer and consignee of the phones, that in my view the judge was right not to place reliance on those faxes, which in any event speak oddly of “Allocation for Stock” and “Frankfurt Airport”. This is despite what Mr Graham submits to disparage Exel’s evidence about leaving unread the very faxes which came in response to Mr Thomsen’s own request for paperwork (see at paras 19/20 above), and his plea that the court should accept those faxes at face value and set at nought its concerns that the false use of “Nuovo Suono” and a fictitious address were part of a fraudulent VAT scheme. However, whatever be the explanation of these mysteries, and I agree that the court can hardly form a view about them at this interlocutory stage, they are an inevitably flimsy and unreliable basis on which to dispute the hard evidence that the phones were in fact dispatched to Interken in England. There is also evidence that Interken was expecting the consignment of the phones and that Interken personnel attended a meeting at Exel’s premises on 5 November to discuss the loss; whereas “Nuovo Suono” only appears on the scene after the loss in the form of faxes from “Pedro”. Even Mr Rashid’s first fax to Exel (Mr Thomsen) after the loss, dated 5 November but apparently sent late on 6 November, while asking for confirmation concerning insurance, does not complain that the phones were on route in the wrong direction at the time of their loss.
I would therefore have been prepared to agree with the judge that there was a good arguable case for the agreed destination for the transport of the phones being in England. Nevertheless, the sole basis on which the judge found in favour of jurisdiction in England, namely article 31.1 of CMR, is in my judgment in any event flawed. In the circumstances it is unnecessary to resolve the lis
Hatzl & Anor v XL Insurance Company Ltd
[2009] EWCA Civ 223 [2010] WLR 470, [2009] 1 CLC 360, [2010] 1 WLR 470, [2010] Bus LR 50, [2009] 1 Lloyd’s Rep 555, [2009] 3 All ER 617, [2009] EWCA Civ 223 Collins LJ
Interpretation of the CMR
The starting point for the interpretation of international conventions is to consider the natural meaning of the language of the provision in question. But it is necessary to consider the convention as a whole and give it a purposive interpretation. The language of an international convention should be interpreted unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation. The court may have regard to the decisions of foreign courts on the convention and the prevailing current of foreign opinion on its application: see, in particular, James Buchanan & Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, 152-154, 160-161; Fothergill v Monarch Airlines Ltd [1981] AC 251, 272-274, 281-282, 290-291; Re Deep Vein Thrombosis and Air Travel Group Litigation [2005] UKHL 72, [2006] 1 AC 495, at [11] and [54].
As I have said, by section 1 of the 1965 Act, the provisions of the CMR as set out in the Schedule are to have the force of law in the United Kingdom. The Schedule sets out the English text of the CMR. The execution clause of the CMR provides that the English and French texts are equally authentic. Although the execution clause is not reproduced in the Schedule to the 1965 Act, resort to the French text is a legitimate tool in the process of interpretation: cf James Buchanan & Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, at 152, per Lord Wilberforce and 161, per Lord Salmon; Hill and Messent, CMR: Contracts for the International Carriage of Goods by Road (3rd ed 2000), para 0.15.
The question of construction
The question whether the expression “the defendant” in Article 31(1)(a) of the CMR applies to an assignee of a sender or a consignee is not the subject of any reported authority. None of the English textbooks dealing with the CMR addresses the issue: Clarke, International Carriage of Goods by Road: CMR (4th ed 2003); Clarke and Yates, Contracts of Carriage by Land and Air (2nd ed 2008); Hill and Messent, CMR: Contracts for the International Carriage of Goods by Road (3rd ed 2000). Professor Loewe’s 1975 commentary on the CMR does not deal with it, and there is no reason to believe that there are any travaux préparatoires which are likely to assist.
Provisions such as Article 31 of the CMR provide a self-contained code within which a claimant must found his assertion of jurisdiction: Arctic Electronics Co (UK) Ltd v McGregor Sea & Air Services Limited [1985] 2 Lloyd’s Rep 510, 514 (Hobhouse J) (CMR); Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corp [1981] QB 368, 385 (CA); Milor Srl v British Airways plc [1996] QB 702, 708 (CA) (Warsaw Convention).
The solution adopted by the judge, and which the claimants support, is that Article 31(1)(a) must be read literally and that this case is plainly within the phrase “the defendant .. has his principal place of business” because XL accepts that its principal place of business is in London.
In my judgment, although I am not able to accept all of XL’s arguments, the interpretation for which it contends is the right one, and the English court does not have jurisdiction.
I do not accept XL’s argument that the literal or natural meaning of Article 31(1)(a) is to restrict its application to actions against carriers. There is no basis for that interpretation in Article 31 or in the CMR as a whole. The passages in the 1975 Commentary on the CMR by Professor Loewe (para 243) and Clarke, International Carriage of Goods by Road: CMR (4th ed 2003), para 1.233, which may be taken to suggest that Article 31(1)(a) is so restricted, are only talking about the normal case of an action against a carrier and are not expressing the view that the jurisdiction is limited to actions against carriers. There are a number of cases under the CMR in which a carrier may have a money or damages claim against the sender (Articles 10, 11(2), 16(1), 22(2)) or 16(1)) or consignee (Article 21), and I accept the argument for the claimants that it make no sense to restrict the meaning of defendant to carriers.
Nor can I accept XL’s purely linguistic analysis based on the words “through which the contract was made.”
It is common ground that something has gone wrong with the grammar or translation of Article 31(1)(a). The French text is:
“… le demandeur peut saisir ….les juridictions du pays sur le territoire duquel: …. Le défendeur a sa résidence habituelle, son siège principal ou la succursale ou l’agence par l’intermédiaire de laquelle le contrat de transport a été conclu…”
It is clear that the word “has” needs to be inserted before “the branch or agency” (or the words “has his” in place of “the”). In the normal case where the carrier is the defendant there is some doubt as to whether this means that the agency must belong to the carrier (Clarke and Yates, para 1.91; Clarke, para 46b(iii)) and also as to whether the branch or agency may be a branch or agency of the consignor (Hill and Messent, para 10.31). Neither of these questions arises in the present case.
The closing words are: “or the branch or agency through which the contract of carriage was made.” In my judgment the words “through which the contract of carriage was made” do not qualify all references to “defendant” in Article 31(1)(a). Both the English text and the French text point strongly to the conclusion that those words qualify “branch or agency”. Consequently, those words themselves do not lend support to the contention that an insurer would not be a “defendant” for the purposes of Article 31(1)(a).
But even if a linguistic analysis of Article 31(1)(a) does not obviously lead to the conclusion that XL is right, I consider that a broad and purposive approach to Article 31(1)(a) does, however, lead to the conclusion that insurers/assignees are not included within the expression “the defendant.” That a purely literal approach is not necessarily the appropriate one is illustrated by the decision at first instance in Arctic Electronics Co (UK) Ltd v McGregor Sea & Air Services Limited [1985] 2 Lloyd’s Rep 510, 514, where Hobhouse J held that Article 39(2) of the CMR provides for a compulsory and exclusive jurisdiction in actions between carriers, even though (a) Article 39(2) provides that a carrier “may” make his claim before the designated courts and (b) Article 39(2) does not contain the phrase “and in no other courts or tribunals” found in Article 31(1))
The context of Article 31(1)(a) and its place within the CMR strongly support the view that it is primarily, and perhaps exclusively, concerned with jurisdiction in actions between the parties to whom the CMR ascribes, or is to be taken to ascribe, rights and/or liabilities.
The persons to whom the CMR primarily ascribes rights and duties are the carrier (including successive carriers) (Articles 2, 3, 5, 7, 8, 10, 11, 12, 13, 14, 16, 17-29, 34-40) and the sender (Articles 5, 7, 8, 10, 11, 12, 15, 21, 22, 26), and (to a lesser extent) the consignee (Articles 12, 13, 15). There can be no doubt that the CMR is primarily concerned with claims by senders and consignees against carriers (and vice versa) and by carriers against carriers: cf Frans Maas Logistics (UK) Ltd v CDR Trucking BV [1999] 2 Lloyd’s Rep 179, 183.
It is true that the CMR’s provisions are not limited to those persons. Articles 7(3), 14(2), and 16(2) refer to “the person entitled to dispose” of the goods. Articles 12(7) and 20(1) (and, by reference, Articles 20(2) and (3)) refer to “the person entitled to make a claim.” Article 15(3) treats as a consignee “another person” to whom the consignee has given instructions for the goods to be delivered. Articles 17 and 23(5) refer to claims by a “claimant” against the carrier. In addition, it is accepted outside the United Kingdom that the person entitled to sue the carrier, in addition to the consignor and consignee, may include the person with the right to dispose of the goods (in Germany, only the person with the right to dispose); and perhaps also in common law countries the owner of the goods (because of a presumption that it is the owner of the goods who has contracted with the carrier) may have a right of action: Clarke and Yates, Contracts of Carriage by Land and Air (2nd ed 2008), paras 1.85-1.86; Clarke, International Carriage of Goods by Road: CMR(4th ed 2003), paras 41-42.
The purpose of Article 31(1) is to confer jurisdiction on the courts of a country which has some relationship with the dispute. In Milor SRL v British Airways plc [1996] QB 702, at 710, Phillips LJ said of the Warsaw Convention: “There is something to be said for a regime which restricts the choice of forum in a manner which excludes those which are likely to be inappropriate, but which does not otherwise permit the plaintiff’s choice to be challenged.” See also Royal & Sun Alliance Insurance plc v MK Digital FZE (Cyprus) Ltd [2005] 2 Lloyd’s Rep 679, at [73], reversed on other grounds [2006] 2 Lloyd’s Rep 110 (CA).
There is no express reference to actions by assignees against carriers. There can be no doubt, of course, that rights of action may be assigned. Section 14(2)(e) of the 1965 Act expressly names assignees among those who are persons concerned in the carriage of goods by road under contract to which the CMR applies. But it does not follow from a right of assignment, or from the fact that the 1965 Act recognises that assignees may be concerned in the carriage, that Article 31(1)(a) confers jurisdiction on the residence or place of business of the assignee.
I accept the argument for XL that if the expression “the defendant” in Article 31(1)(a) were to be understood as including an assignee of an original contracting party then the purpose of Article 31 would be frustrated. England has, apart from being the principal place of business of XL, absolutely no connection with any of the matters in dispute. I also accept XL’s argument that the judge’s interpretation of Article 31(1) raises the possibility that there might be additional available jurisdictions in the same number as there are named cargo interests where the insurers of each are domiciled in different jurisdictions. There is also nothing to stop rights of suit being assigned by cargo interests to a party other than an insurer. That would give rise to the possibility that cargo interests faced with a carrier issuing a claim form for a declaration of non-liability in an unfavourable jurisdiction to them could assign rights of suit to a third party with its principal place of business in a favourable jurisdiction.
Consequently I am therefore unable to accept the claimants’ argument that “the defendant” in Article 31 is to be understood in a purely procedural sense to encompass any person who might be sued (including the case of an action for a negative declaration) in any capacity. There is no doubt, of course, that “defendant” in Article 31(1)(a) will extend to the parties to the contract, and probably also to those other parties to whom the CMR ascribes rights and duties. It is not necessary to consider the precise limits of the expression, because I am satisfied that, however far it goes, it does not extend to an action against an insurer or assignee. In my judgment such a literal interpretation of Article 31(1)(a) would frustrate the object of the provision.
For the sake of completeness I turn to XL’s final argument, which is that it must have, as assignee, the entitlement and right only to be sued in the same places as its assignors and is entitled to exercise that right as against the claimants. XL relies by analogy in this regard with a line of cases which make clear that an insurer who is assigned rights of suit from an assured takes the assigned right with both the benefit and burden of an arbitration clause or an exclusive jurisdiction clause: Detlev von Appen GmbH v Voest Alpine Intertrading GmbH [1997] 2 Lloyd’s Rep 279, 285-286 (CA) (arbitration clause), applied in Glencore International AG v Metro Trading International Inc [1999] 2 Lloyd’s Rep 632, 645 (Moore-Bick J) (jurisdiction clause). Accordingly, according to XL, either: (1) Article 31(1) of the CMR when applied to an assignee must be construed consistently with the fact that assignees are in no better (or different) position than the position of their assignors; or (2) the rights under the contract of carriage subject to the CMR that Triumph Austria and Triumph Italy assigned to XL were subject to an entitlement or right that it could only be sued in those places where Triumph Austria and Triumph Italy could be sued.
The argument can be supported by the fact that it has been said that the provisions of the CMR become terms of the contract: Clarke and Yates, Contracts of Carriage by Land and Air (2nd ed 2008) para 1.4, citing James Buchanan & Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, 152, where Lord Wilberforce said that “… the contract of carriage seems to have incorporated contractually the English text.” See also Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corp [1981] QB 368, at 383-384.
There is some force in the argument for the claimants that a statutory jurisdiction regime is not an equity. It is simply a mechanism for directing claims towards certain defined jurisdictions. It may be said that XL’s argument on this point begs the question, and assumes that Article 31(1)(a) does not apply to assignees. Although I incline to the view expressed by Rix LJ and supported by Jacob LJ that XL is right on this point, I prefer to express no concluded view on this part of XL’s argument.
But for the reasons given above, I would allow the appeal.
British American Tobacco Switzerland SA & Ors v Exel Europe Ltd & Ors
[2012] EWHC 694 (Comm) [2012] WLR(D) 98, [2012] 1 CLC 549, [2012] EWHC 694 (Comm), [2013] 1 WLR 397, [2012] 2 Lloyd’s Rep 1
Cooke J
The Issues
The question of jurisdiction turns upon the construction of Article 31 of CMR and its relationship with Articles 34, 36 and 39, the structure of CMR, and the inter-relationship between CMR and the Regulation which imposes a jurisdiction and enforcement scheme as a matter of EU Law and has direct effect in Member States such as the United Kingdom.
BAT submits that the scheme of CMR requires that, where a claimant can commence proceedings against any one carrier in accordance with the provisions of Article 31, it can also sue any other carrier which it is entitled to sue under Article 36, in the same action, in that jurisdiction. This is said to arise from the terms of those Articles and the policy which underlies Article 39 – the need to avoid multiple proceedings and the risk of inconsistent judgments by different courts in different jurisdictions. Alternatively, the wording of Article 31 must be construed flexibly to achieve this result, when considering “the branch or agency through which the contract of carriage is made” or “the court…designated by agreement between the parties”. Ultimately, if the desired result cannot be achieved by construction, then the Court should apply the Regulation and the principles which underlie it to make good the deficiency in CMR in order to ensure the sound administration of justice, the minimisation of the risk of concurrent proceedings and the possibility of inconsistent judgments.
The argument based upon the Judgment the Regulation raises questions of policy which apply to all BAT’s submissions in relation to the provisions of CMR. It was accepted that the Regulation could not influence the construction of CMR but it was suggested that the underlying policy was the same as that of CMR, and that policy should be reflected in the construction of CMR. If the construction advanced by BAT is wrong, then it contends that the Regulation must be applied.
The approach to interpretation of CMR
It is common ground between the parties that a purposive construction must be given to the provisions of an international convention such as CMR. |I was referred to the decision of the Court of Appeal in Hatzl v XL Insurance Co Ltd [2010] 1 WLR 470, where the construction of CMR was in issue. Lawrence Collins LJ (as he then was) at paras 33 and 34 stated that the starting point for the interpretation of international conventions was to consider the natural meaning of the language of the provision in question, but that it was also necessary to consider the convention as a whole and give it a purposive interpretation. Its language should be interpreted unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation. The court may have regard to the decisions of foreign courts on the convention and the prevailing current of foreign opinion on its application. The French text is a legitimate tool in the process of interpretation as the French and English texts of CMR carry equal weight.
Mr Priday for BAT submits that, bearing in mind these considerations, the Court must be flexible in construing the language of Article 31, because it specifically covers the position of a defendant, but does not expressly deal with the position of multiple defendants sued by a goods owner, whether sender or consignee.
The Structure of CMR
The structure of CMR has been the subject of comment in a number of authorities, including Cummins Engine Co v Davis Freight Forwarding [1981] 2 Lloyd’s Rep 402, to which reference needs to be made, because the analysis of Brandon LJ, as he then was, was relied on by BAT, (as also cited by Bingham LJ in ITT Schaub–Lorenz v Birkart Johann Internationale Spedition G.m.b.H & Co. K.G [1988] 1 Lloyd’s Rep. 487), whilst Essers and Kazemier pointed to the judgement of O’Connor LJ in Cummins as correctly stating the position.
Subject to the provisions of Article 17.2 in Chapter IV, a carrier is liable for the total or partial loss of goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery. Under Article 3, for the purposes of CMR, the carrier is responsible for the acts and omissions of his agents and servants and of any other persons of whose services he makes use for the performance of the carriage. The original carrier who contracts to effect the CMR carriage is therefore responsible to the sender/ consignee for his subcontractors, if he chooses to subcontract the whole or any leg of the carriage. There may thus be a succession of carriers.
The structure of CMR envisages a CMR Consignment Note (see Article 4). Although the absence of such a Consignment Note does not affect the existence or the validity of the contract of carriage which is still subject to CMR, Article 5 envisages three copies of such a Consignment Note, one of which is handed by the first carrier to the sender, the second of which accompanies the goods and the third is retained by the first carrier. The copy which accompanies the goods is to be handed over by each carrier to his successive carrier and then handed over at final delivery to the consignee (see Articles 13 and 35). Article 6.1 sets out the particulars which must be included in the Consignment Note whilst Article 6.2 sets out those particulars which should also be contained, where applicable. Article 6.3 provides that the parties may enter in the Consignment Note any other particulars which they consider useful. The Consignment Note is to be prima facie evidence of the making of the contract of carriage, the conditions of the contract and the receipt of the goods by the carrier (Article 9) and the absence of notation on the Consignment Notes of any damage constitutes prima facie evidence of the condition of the goods at the time the relevant Consignment Note is handed over with the goods to another carrier (Article 8 and Article 9.2). The consignee is not only able to sue the carrier in his own name in respect of the statutory contract of carriage constituted or evidenced by the Consignment Note but is also liable to pay any charges shown to be due in that Note.
In the context of successive carriers Article 34 is the key provision of CMR. Each succeeding carrier is responsible for the performance of the whole operation covered by the original contract contained in the Consignment Note, which details the collection point and designated place for delivery. Each successive carrier, by the terms of Article 34 becomes a party to the contract of carriage “under the terms of the Consignment Note, by reason of his acceptance of the goods and the Consignment Note”.
Furthermore, Article 36 provides that an action can be brought by the sender/consignee for loss or damage to the goods against the first carrier, the last carrier and the carrier who was performing that part of the carriage during which the event occurred which caused the loss or damage, and recovery can be made in full from any one of them.
Where CMR refers to “the contract of carriage” it must be taken, generally, to refer to the statutory contract contained in the Consignment Note to which the sender, the first carrier, all successive carriers and consignee become parties. It does not have in mind, in the ordinary way, the terms of the contract between the goods owner and the primary carrier, save and insofar as those terms may be contained in the CMR Consignment Note. Nor does it have in mind the terms of any particular subcontract between carriers, save in so far as those terms appear in the Consignment Note.
The authorities recognise that CMR distinguishes two types of claim, namely that of the sender/ consignee against a carrier on the one hand, and that of a carrier against other carriers on the other. What CMR envisages is an action by those interested in the goods, under Article 36, against the first carrier, the last carrier or the carrier who was performing that part of the carriage when the event causing the loss or damage occurred, or against all such carriers who arguably fall into those categories. If the claim succeeds, this is to be followed by a claim under Article 37 between carriers to establish the carrier responsible for the loss or damage, if that has not been established in the action by the goods interests (because of success against, for example the first or last carrier).
The relevant Articles of CMR provides as follows:-
Article 31
“1 In legal proceedings arising out of carriage under this Convention, the plaintiff may bring an action in any court or tribunal of a contracting country designated by agreement between the parties and, in addition, in the courts or tribunals of a country within whose territory
(a) the defendant is ordinarily resident, or has his principal place of business, or the branch or agency through which the contract of carriage was made, or
(b) the place where the goods were taken over by the carrier or the place designated for delivery is situated,
and in no other courts or tribunals.
Article 34
If carriage governed by a single contract is performed by successive road carriers, each of them shall be responsible for the performance of the whole operation, the second carrier and each succeeding carrier becoming a party to the contract of carriage, under the terms of the consignment note, by reason of his acceptance of the goods and the consignment note.
Article 36
Except in the case of a counter-claim or a set-off raised in an action concerning a claim based on the same contract of carriage, legal proceedings in respect of liability for loss, damage or delay may only be brought against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred; an action may be brought at the same time against several of these carriers.
Article 39
1 No carrier against whom a claim is made under articles 37 and 38 shall be entitled to dispute the validity of the payment made by the carrier making the claim if the amount of the compensation was determined by judicial authority after the first mentioned carrier had been given due notice of the proceedings and afforded an opportunity of entering an appearance.
2 A carrier wishing to take proceedings to enforce his right of recovery may make his claim before the competent court or tribunal of the country in which one of the carriers concerned is ordinarily resident, or has his principal place of business or the branch or agency through which the contract of carriage was made. All the carriers concerned may be made defendants in the same action.”
Article 31, the key Article on which argument centred, comprises part of Chapter V of CMR which deals with claims and actions in respect of the liability of the carrier, which is dealt with in Chapter IV. Chapter VI of CMR contains “provisions relating to carriage performed by successive carriers” and includes Articles 34, 36 and 39.
Article 31 places a restriction on the courts where an action can be brought against a defendant, without specifying the identity or role of the defendant in question. It is plainly apt to cover any claim made against a sender or consignee in respect of freight due or expenses incurred in carrying dangerous cargo as well as a claim by a sender or consignee against a carrier. Articles 34, 36 and 39 specifically relate to the position where successive carriers are involved in the haulage, but it is Article 39.2 which sets out the courts in which one carrier may pursue another. The jurisdiction for the two types of claim (goods interests against carrier on the one hand and carrier against carrier on the other) are therefore catered for separately in CMR.
It was common ground between the parties that, when Article 31.1(b) referred to “the place where the goods were taken over by the carrier or the place designated for delivery”, what was meant was the place of collection and the designated place of delivery of the goods for the complete CMR carriage for which the sender had contracted. There are two decisions of German Courts to this effect and O’Connor LJ specifically states in Cummins at p408 that this is the position, by reference to Article 1 of CMR, which provides that CMR is to apply “when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries of which at least one is a Contracting State”. BAT accepts that it cannot bring itself within Article 31.1(b) since neither “the place where the goods were taken over by the carrier”, nor “the place designated for delivery”, was in England for either consignment.
Neither subcontracting defendant, Essers or Kazemier is ordinarily resident in England nor did either have a principal place of business or a branch or agency of its own in England through which the contract of carriage was made. They each submit that England is not a country designated by agreement between BAT and itself and, in these circumstances, BAT is not entitled to invoke the English court’s jurisdiction against it.
BAT contends that because Article 34 provides for joint and several liability of successive carriers and Article 36 provides expressly that an action can be brought against specified carriers at the same time (the first, last or actual carrier at the time of damage), it must be enough to establish jurisdiction against one such defendant under Article 31. If that is done, all other defendants arguably or actually falling within Article 36 can be sued in that jurisdiction, even if the jurisdiction requirements of Article 31 cannot be satisfied by reference to their own individual situations. Thus BAT contends that jurisdiction can be established in England for its claims against the subcontractors Essers and Kazemier because Article 31 entitles it to bring legal proceedings in respect of loss or damage against the first carrier, Exel. It is said to follow that, if the court has jurisdiction over one carrier, other successive carriers can be joined in the same proceedings. It is submitted that, when Articles 31, 34 and 36 are read together, an action can be brought against several successive carriers in the forum where any one of them may be sued in accordance with the provisions of Article 31.1(a). Since Exel, the first carrier has its principal place of business in England, a single action can be brought against it and the successive carriers, which Essers and Kazemier undoubtedly are.
In support of this submission, BAT relies upon the decision of the Court of Appeal in Cummins Engine v Davis Freight Forwarding [1981] 2 Lloyds’ Rep. 402 and in particular a dictum of Brandon LJ at page 406 which reads as follows:-
“Where successive carriers are involved, the effect of Article 31.1, combined with Article 34, is that the plaintiff can bring a single action against one, more than one, or all the carriers concerned. Article 31.1 further requires him to bring his action in certain courts only. Those courts are, first, any court of any contracting state which has been agreed between the parties; second, the courts of the country where any of the carriers sued is ordinarily resident or has his principal place of business, or the branch or agency through which the contract of carriage was made; and third, the courts of the place where the goods were taken over for the carriage or the place where they were to be delivered.”
This dictum appears in a case relating to jurisdiction in what Brandon LJ referred to as the “second kind of legal proceedings which CMR contemplates”, namely proceedings as between successive carriers. The court was concerned there with Article 39.2 and held that a carrier who wished to take proceedings to enforce his right of recovery against other carriers could make his claim before the competent court of a country in which one of the other carriers concerned had its principal place of business but not in the country where the pursuing carrier, who had already been found liable, had its place of business.
O’Connor LJ, at page 409 construed the words “the defendant” in Article 31.1(a) to mean “the defendants” in the plural, from which it seems that he considered that jurisdiction could be established only against a particular defendant in the place where it was ordinarily resident or had its principal place of business. It was not possible to establish jurisdiction against all defendants on the basis of the principal place of business of one of them. He stated that Cummins was limited to bringing its action either in England, in respect of Davis, or in Holland, in respect of the other three, these being the territories in which Davis and the other three companies were based.
It is right to say that part of the judgment of Brandon LJ in Cummins was quoted with approval by Bingham LJ in ITT Schaub-Lorenz v Birkart Johann [1988] 1 Lloyds Rep. 487 at 494. The larger quotation includes the dictum of Lord Justice Brandon referred to above, although the issue in the ITT case was whether CMR prevented the bringing of proceedings as between successive carriers before the claimant carrier had paid the compensation which he was seeking to recover. An analysis of the issues raised in this action was not there required.
As Colman J pointed out in Frans Maas Logistics (UK) Ltd v CDR Trucking B.V. [1999] 2 Lloyd’s Rep 179, Brandon LJ’s analysis is not entirely full nor accurate, though he did not comment on the particular element with which I am concerned. Neither party suggested that the dictum of Brandon LJ was binding upon me. It is not part of the ratio of the Cummins decision and does not appear to me to consider the matter fully, and certainly not in the context of the issue which arises here.
Essers and Kazemier submit that there is no good argument that Article 31.1(a) can be construed so as to allow the sender or consignee to bring a single set of proceedings against all carriers on the footing that one defendant is ordinarily resident, or has its principal place of business, in England. Where Article 31.1(a) refers to “the defendant”, it must mean the defendant in question, against whom the claimant is seeking to invoke the jurisdiction of the Court. The Article, it is submitted, is focused on the convenience of the defendant rather than the convenience of the claimant. Any potential inconvenience to the claimant caused by Article 31.1(a) could be resolved, if the claimant chose to do so, by bringing proceedings in accordance with Article 31.1(b) against all defendants in either action in the place where the goods were taken over by the carrier or the place which was designated for delivery, namely Switzerland or Holland in the Essers action or Hungary or Denmark in the Kazemier action.
Essers and Kazemier also rely upon Article 39 of CMR which, in their submission, is to be contrasted with Article 31, because it does make express provision for proceedings between one carrier and all other carriers to take place in a single jurisdiction in which any of the carriers concerned is ordinarily resident or has its principal place of business or where the branch or agency is located through which the contract of carriage was made. All carriers concerned can expressly be made defendants in the same action in these circumstances, even though some may have no such connection with the jurisdiction, as long as one such carrier does. The draftsmen of CMR drew a clear distinction between the jurisdictional provisions for goods owners suing carriers in Article 31 and those relating to claims between carriers in Article 39.
The cross-reference in Article 39.1 to Article 37 is said also to be significant. Under Article 37, a carrier who has paid compensation in compliance with the provisions of CMR is entitled to recover such compensation (together with interests and costs) from other carriers who have taken part in the carriage. The carrier responsible for the loss or damage is to be solely liable for the compensation paid and where the loss or damage is caused by the action of two or more carriers, each is to bear a proportionate share of the liability. If it is impossible to apportion liability, every carrier is liable in proportion to the share of payment for the carriage which is due to it. Article 39.1 makes it plain that, where a carrier is sued in one jurisdiction and then seeks to recover from other carriers subsequently, those other carriers are not entitled to dispute the validity of the payment made by the suing carrier if the amount of compensation has been determined by judicial authority in circumstances where the paying carrier has given notice of the proceedings to the other carriers and afforded them an opportunity of entering an appearance in the action in question. Thus, if Exel gave Essers or Kazemier such notice, so that they had the opportunity voluntarily to join in the proceedings in England, it would not be open to them to object to the quantum of the claim fixed by the court. Of course if Exel joined Essers or Kazemier, seeking a declaration of entitlement to indemnity (as the Court of Appeal decision in ITT Schaub–Lorenz (ibid) 487 permits them to do, subject to jurisdictional issues) they would in any event be bound by any judgment in the action.
Article 39 however envisages that a carrier is found liable to a goods owner under CMR in one jurisdiction and then will take proceedings to enforce his right of recovery against one or more carriers subsequently. He is, by Article 39.2, entitled to take proceedings to enforce that right of recovery in a competent court of any country in which any one of the carriers concerned has his principal place of business and can join all other carriers in that action, regardless of their places of business. Contrary to the submissions of BAT, the structure of CMR therefore weighs against their argument. Article 31, which contains no such provision enabling a claimant to bring proceedings against multiple defendants, located in various countries, in the jurisdiction where only one of them has its principal place of business, cannot be construed to allow that.
Essers and Kazemier also rely on two text books on the point. Hill and Messent in CMR: Contracts for the International Carriage of Goods by Road 3rd Edition at para 11.36 and Haak: The Liability of the Carrier under the CMR at page 114 both state that the provisions of Article 36 say nothing about jurisdiction, when specifying that specific carriers can be sued in the same court. The requirements of Article 31 still need to be satisfied in relation to each defendant.
In my judgment, as a matter of straightforward construction of Article 31 and Article 39, Esser’s and Kazemier’s submissions are unanswerable. The contrast between Article 31 on the one hand and Article 39 on the other is striking and its effect cannot be countermanded. Article 31 expressly limits the courts in which a claim can be brought by a plaintiff (whether a goods owner or a carrier, against a defendant) whilst Article 39 makes express provision for the position where a carrier brings a claim against other carriers. Whilst Article 36 sets out the carriers against whom a goods owner can make a claim, it says nothing at all about the courts in which such a claim can be pursued. By Article 36 the goods owner can only proceed against the first carrier, the last carrier or the responsible carrier and although an action can be brought at the same time against several of these carriers, there is nothing in Article 36 which entitles the claimant goods owner to do so in one and the same jurisdiction when Article 31 specifically limits the courts in which he can pursue any such defendant.
There is no room for construing Article 31.1(a) in accordance with the principles underlying Article 39, when Article 31.1(a) is in such different terms from Article 39 and Article 31.1(b) does provide a place where the goods owner can sue all Article 36 carriers in the same jurisdiction. As Article 31.1(b), it is accepted, refers to the place where goods are first collected from the sender and the place where they are delivered to the consignee, there is no limitation relating to the location of any particular Article 36 carrier whom the goods owner may wish to join. The goods owner always has the option of suing in one of those jurisdictions where he can join all Article 36 carriers or to sue in another jurisdiction under Article 31.1(a) where he must establish the connection of any carrier he wishes to join in accordance with the terms of that subparagraph.
Article 31.1(a) – “An action … in the courts … of a country within whose territory … the branch or agency through which the contract of carriage was made”.
BAT contends that, if contrary to its primary submission, the jurisdiction requirements of Article 31.1(a) must be read as applying to every successive carrier, the reference to “the contract of carriage made through a “branch or agency” must refer to the primary contract of carriage between the consignor and the first carrier. It is said that this must be the case because Article 34 only refers to carriage governed by a single contract, which is performed by successive road carriers. The contract of carriage in Article 31.1(a) cannot therefore refer to a subcontract, such as that between Exel and Essers on the one hand or Exel and Kazemier on the other. In consequence it is argued that jurisdiction can be founded against a successive carrier in a country in which the branch or agency of the primary carrier was located, through which the primary contract of carriage was made – here Exel’s office in England.
It is said that the only way to make sense of a “branch or agency through which the contract of carriage [the single contract performed by successive carriers] is made” is to treat the first carrier who entered into that contract as the “intermediary” between the consignor and subsequent successive carriers. It is suggested that the French text of CMR supports that argument, but it does not, as both the English and French texts mean the same (la succursale ou l’agence par l’intermédiaire de laquelle le contrat de transport a été conclu,). There is no reference to the noun, “intermediary”, in either text, but only to the branch or agency through the intermediation of which the contract was concluded. However it is said that the contract made by the first carrier is binding upon the later carriers and to adopt any other interpretation, such as to say that the “branch or agency” must be that of the successive carrier, would be wrong since Article 34 does not refer to the subcontract.
The difficulty with BAT’s argument as to “branch or agency” is much the same as that which it faces in relation to its argument about the interrelationship of Articles 31, 34 and 36. Article 31 is directed to the basic position where a claimant wishes to bring an action against a particular defendant. The goods owner is limited by Article 36 to suing the first carrier, the last carrier or the responsible carrier, but what Article 31 has in mind is the defendant in question, against whom the claimant wishes to bring the action. It is the ordinary residence and the location of the principal place of business of that defendant which matters for Article 31.1(a) and equally it must be the branch or agency of that defendant that is relevant when considering whether “the contract of carriage” was made by it in any particular country. “The contract of carriage” in that provision can therefore only refer to the contract to which that defendant is a party and the branch or agency can only refer to its own branch or agency, which was authorised to enter into the contract on its behalf. It cannot refer to the office of another carrier with whom it made a contract as successive carrier, nor to the primary contract of carriage made by that earlier carrier with the goods owner. It can only refer to a contract of carriage to which it was party and the branch or agency which was authorised to commit it to that contract. The contract itself can only therefore be its subcontract with the earlier carrier. (The statutory contract on the terms of the consignment note only comes into being “by reason of his acceptance of the goods and the Consignment Note” and could not be made through a branch or agency.) The only contract which can therefore be concluded through a branch or agency is the contract between carriers.
Article 31.1 – “An action in any court of a contracting country designated by agreement between the parties”
BAT submits that, because later successive carriers become party to the single original contract of carriage under Article 34 by operation of law, it follows that they are bound by the same terms as the first carrier since any other interpretation would lead to successive carriers becoming party to a single contract, but each having different terms applicable to them. It is pointed out that there is no requirement or qualification in Article 34 to the effect that the successive carrier is bound only by those terms of which he had knowledge. Thus, it is said that each successive carrier in the chain for the two consignments in issue would be bound by the exclusive jurisdiction clause contained in the primary contract between BAT and Exel, whether or not the successive carrier had knowledge of that exclusive jurisdiction agreement and without any consent on its part.
This argument founders on the express words of Article 34 since the contract to which each successive carrier becomes a party is the contract set out in the Consignment Note. The Article expressly says that each succeeding carrier becomes a party to the contract of carriage “under the terms of the Consignment Note” on acceptance of the goods and the Note. If the Consignment Note contained an exclusive jurisdiction clause, which it could if the sender and the first carrier incorporated such a provision in it, as they are able to do under the terms of Article 6.3, then that clause would be binding upon all successive carriers who accepted the goods and the Consignment Note. If no such clause appears in the Consignment Note, it is not part of the contract of carriage to which the successive carriers are party.
Any other result would be entirely contrary to principle because a carrier cannot be bound by an exclusive jurisdiction clause to which he has not agreed and the wording of Article 31.1 requires there to be a “court … designated by agreement between the parties”. There would be no such court designated by agreement between the parties, where one of the relevant parties had not agreed to designation.
It would be contrary to principle for any carrier to be subject to a jurisdiction clause to which he did not agree and of which he had no notice, both as a matter of English law and European law, as Article 23 of the Regulation shows. The policy which underlies the conferring of jurisdiction on a country which is “designated by agreement” between the parties, self-evidently requires there to be an agreement between the parties in question to that jurisdiction and in European and civil law there is a greater emphasis on “consensus” in the sense in which such law understands the concept.
As expressed by Rix LJ in Hatzl at para 64, the natural place to find an agreement of this kind, to which all carriers are parties, is in the contract of carriage itself and the box in the Consignment Note which is headed “special agreements”/ “conventions particuliers”. Then each successive carrier would become a party to the terms of that agreement, as a term of the Consignment Note, under Article 34, by reason of acceptance of the goods and the Consignment Note.
Otherwise, as suggested by Clarke in International Carriage of Goods by Road 5th Edition at para 46c and the French decisions referred to there, neither a consignee nor another carrier could be bound by a jurisdiction clause agreed between the sender and the primary carrier. Hill and Messent in CMR: Contracts for the Carriage of Goods by Road 3rd edition at paras 10.26-28 and 11.67, suggest that it might bind a consignee whose rights are derived from the sender, even if not in the Consignment Note, but that it could not, absent inclusion in the Note, bind a carrier. Prof Loewe in his Commentary on the Convention at paras 235-282, differs on this, suggesting that both consignee and carriers would be bound but that a carrier who did not know of the jurisdiction agreement and did not consent to it would have a remedy against the first carrier, but no adequate reasoning is given for this and it is, in my judgment, contrary to principle. Article 13 provides that a consignee can enforce in his own name, against the carrier, “any rights deriving from the contract of carriage”, but although the Consignment Note is only evidence of that contract as between sender and primary carrier, a consignee who has no notice of the jurisdiction agreement and cannot be taken to have consented to it, cannot, in my judgment, be bound by it. It is not however necessary for me to decide the position as between consignee and carrier. It is possible to draw a distinction between the position of the consignee and that of the carriers who only become party to the statutory CMR contract “under the terms of the Consignment Note”, but in my judgment it is clear that the successive carrier cannot be bound by a jurisdiction clause to which it cannot be said individually to have given its consent, by acceptance of a Consignment Note with such a clause in it, or otherwise.
The Brussels Judgement Regulation
BAT relied upon the premises which underlie the Regulation, as set out in paragraphs 6, 10, 11, 12, 15 and 16 of the preamble. These read as follows :-
‘(6) In order to obtain the objective of free movement of judgments in civil and commercial matters, it is necessary and appropriate that the rules governing jurisdiction and the recognition and enforcement of judgements be governed by a Community legal instrument which is binding and directly applicable.
(10) For the purposes of free movement of judgments, judgments given in the Member State bound by this Regulation should be recognised and enforced in another Member State bound by this Regulation, even if the judgment debtor is domiciled in a third state.
(11) The rules for jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction.
(12) In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice.
(15) In the interest of harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing form national differences as to determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously.
(16) Mutual trust in the administration of justice in the Community justifies judgments given in a Member State being recognised automatically without the need for any procedure except in cases of dispute.
Article 71 of the Regulation provides that it is not to ‘affect any conventions to which Member States are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments.’
The position is, therefore, that the jurisdiction provisions set out in CMR govern actions relating to the international carriage of goods by road, save insofar as there is any gap within those provisions, which can be made good by reference to the Regulation , or to the extent that the provisions of CMR are in conflict with the policy of the Regulation. This emerges from the decisions of the ECJ in the Maciej Rataj (commonly known as The Tatry), Case C-406/92 [1994] ECR 1 – 5439 and TNT Express v Axa Case C-533/08 [2011] R.T.R.11.
The Tatry was concerned with the interrelationship of the 1968 Arrest Convention and the predecessor to the Regulation, the Brussels Convention. The court held that the specialised Arrest Convention applied to all those circumstances for which it made express provision but, where there were gaps in the specialised code provided, those deficiencies could be made good by reference to the more general Brussels Convention (now the Regulation).
It has been held that there is such a gap in the jurisdiction provisions of CMR in relation to “related actions” within the meaning of Article 28 of the Regulation. Article 27 of the Regulation deals with ‘proceedings involving the same cause of action between the same parties’ and requires a stay to be imposed by the court which is not first seised of the matter. CMR contains its own code in relation to an ‘action .. between the same parties on the same grounds’. Article 31.2 of CMR provides that where an action is pending before a competent court under Article 31.1, ‘no new action shall be started between the same parties on the same grounds’ save in limited circumstances. In Sony Computer Entertainment Limited v R H Freight Services Limited [2007] 2 Lloyd’s Rep 463, Simon J stated that CMR ‘provides all of the answers in relation to the same claims but none of the answers in relation to similar claims’. When an application was made to the English court to stay such similar claims (as opposed to a claim on the same grounds between the same parties) the English court then had to apply Article 28 of the Regulation because that filled the gap.
In the TNT decision, the paramountcy of the Regulation was affirmed at paragraphs 42- 56. At paragraph 49 the court stated :-
‘While it is apparent from the foregoing considerations that art.71 of Regulation 44/2001 provides, in relation to matters governed by specialised conventions, for the application of those conventions, for the fact remains that their application cannot compromise the principles which underlie judicial cooperation in civil and commercial matters in the European Union, such as the principles , recorded in recitals 6, 11, 12 and 15 to 17 in the preamble to Regulation 44/2001, of free movement of judgments in civil and commercial matters, predictability as to the courts having jurisdiction and therefore legal certainty for litigants, sound administration of justice, minimisation of the risk of concurrent proceedings, and mutual trust in the administration of justice in the European Union.’
In Mr Priday’s submission, if the proper construction of Article 31.1(a) of CMR cuts across the sound administration of justice, the minimisation of the risk of concurrent proceedings and creates the possibility of inconsistent judgments, the terms of CMR are superseded by the terms of the Regulation, since Article 71 of the regulation, which otherwise gives priority to CMR, cannot be interpreted to create a conflict between CMR and the principles which underlie the Regulation. As stated in paragraph 53 in the TNT judgment, the rules governing jurisdiction set out in the specialised conventions (including CMR) can only be applied to the extent that they fit with the recitals in the preamble of the Regulation.
It is then contended by BAT that the construction of Article 31.1(a) advanced by Mr Passmore for the subcontractors does create a conflict with the underlying premises and policy of the Regulation, because it requires BAT to bring proceedings in multiple jurisdictions with the risk of inconsistent judgments and consequent damage to the sound administration of justice. The terms of Article 6.1 of the Regulation allowing for a claim brought against one defendant also to be brought against other defendants who are, in English terms, “necessary or proper parties”, should be applied. However, as Mr Passmore points out, on the construction which he advances and which I accept, BAT had a choice. It could either bring proceedings under Article 31.1 against Exel in the jurisdiction designated by agreement between them, namely England, or it could bring proceedings under Article 31.1(b) in the country where the goods were taken over by the carrier or of the place designated for delivery. In such jurisdictions, in relation to each consignment, all of the relevant carriers, alleged to be liable under Article 36, could have been sued. In my judgment that is the complete answer to BAT’s submission. The jurisdiction provisions in CMR do not in any way conflict with the premises upon which the Regulation is based and there is therefore no need to look to Article 6.1 of the Regulation as Mr Priday submits. There is no need to create a ‘necessary or proper parties’ rule by reference to that Article in order to allow all carriers to be sued in the same jurisdiction, when the claimant is already given that option by the terms of CMR itself.
BAT is not obliged to bring proceedings against Exel in England under CMR because no agreement between the parties can derogate from the terms of CMR, including an exclusive jurisdiction agreement. Article 31.1 gives options to a claimant as to where to sue and the exclusive jurisdiction clause agreed between BAT and Exel takes effect as providing for one jurisdiction (designated by agreement between the parties) in addition to those others which are listed in Article 31.1 (a) and (b). The choice lies with the claimant and if it chooses to sue in a jurisdiction where it can only meet the requirements of Article 31.1(a) in respect of one defendant, as opposed to suing in a jurisdiction falling within Article 31.1(b), where it could join all carriers, it cannot validly complain about the effect of its own choice.
Conclusion
In these circumstances, Essers and Kazemier are entitled to the relief that they seek. None of the arguments put forward for jurisdiction against them by BAT succeeds. The provisions of CMR are apt to provide for a number of different jurisdictions in which BAT could bring claims, including some jurisdictions where they could bring claims against all carriers. If however, as they did, they elect to sue Exel in England, that is not sufficient to bring other carriers within the reach of the court, without being able to satisfy the requirements of Article 31.1 in relation to each such defendant. Moreover the CMR code is sufficient and does not conflict or give a result less favourable than the Regulation and the premises in relation to which it falls to be interpreted.
For these reasons the service of the claim forms on Essers and Kazemier respectively must be set aside and, absent any special features, upon which the parties can, if necessary, address me, costs must follow the event.
British American Tobacco Denmark A/S v Kazemier BV
[2015] UKSC 65: [2015] WLR(D) 430, [2015] 3 WLR 1173, [2015] UKSC 65, [2016] RTR 1, [2016] AC 262
LORD MANCE: ( with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Reed agree)
Introduction
1. Cigarettes attract smokers, smugglers and thieves. In the two appeals now before the court, one container load was allegedly hi-jacked in Belgium en route between Switzerland and The Netherlands in September 2011, while another allegedly lost 756 of its original 1386 cartons while parked overnight contrary to express instructions near Copenhagen en route between Hungary and Vallensbaek, Denmark.
2. The consignors are claiming against English main contractors who undertook responsibility for the carriage and against sub-contractors in whose hands the cigarettes were when the alleged losses occurred. The carriage was subject to the Convention on the Contract for the International Carriage of Goods by Road1956 (“CMR”), given the force of law in the United Kingdom by the Carriage of Goods by Road Act 1965.
3. Although the Act only incorporates the English language version, CMR was agreed at an international level in English and French, each text being equally authentic. Lord Wilberforce said this about the proper approach to its interpretation in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141, 152D-F:
“I think that the correct approach is to interpret the English text, which after all is likely to be used by many others than British businessmen, in a normal manner, appropriate for the interpretation of an international convention, unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation: Stag Line Ltd v Foscolo, Mango and Co Ltd·[1932] AC 328, per Lord Macmillan, at p 350. Moreover, it is perfectly legitimate in my opinion to look for assistance, if assistance is needed, to the French text. This is often put in the form that resort may be had to the foreign text if (and only if) the English text is ambiguous, but I think this states the rule too technically. As Lord Diplock recently said in this House the inherent flexibility of the English (and, one may add, any) language may make it necessary for the interpreter to have recourse to a variety of aids: Carter v Bradbeer [1975] 1 WLR 1204, 1206. There is no need to impose a preliminary test of ambiguity.”
It appears that some 55 states have ratified, or acceded or succeeded to participation in CMR, of which half are states not members of the European Union, including states as wide-spread as Azerbaijan, Kazakhstan, Kyrgystan, Jordan, Mongolia, Moldova, Morocco, Syria, Tajikistan, the former Yugoslav Republic of Macedonia and Uzbekistan. There is no international court to which national courts may refer issues of interpretation of CMR.
4. The present appeals each involve the issue whether the consignors can found jurisdiction in England not only against the main contractors but also against sub-contractors as successive carriers within the meaning of CMR, by relying on the presence here of, and the proceedings brought against, the main contractors and/or upon a provision in the main contract for English jurisdiction. The goods had a high value, put in the case of the first container at €624,000 plus €2.9m duty and/or taxes demanded by Belgian Customs, and in the case of the cartons missing from the second container at €30,000 plus over €500,000m duty and/or taxes. English law and English jurisdiction are said to offer the advantage that such duty and/or taxes are recoverable in a CMR claim against carriers, which is not the case in some other jurisdictions. Joinder of all carriers in English proceedings is said to have the advantage that it will ensure that all parties concerned and their witnesses will be involved in the same proceedings, in which the consignors intend to seek to establish wilful misconduct, so preventing any carrier liable from availing itself of the limit of liability otherwise provided under Chapter IV of CMR (see articles 23 and 29).
5. In a clearly reasoned judgment, given on 23 March 2012 within a week of the hearing before him, the judge (Cooke J) held that the consignors could not succeed in doing this, and set aside the proceedings against the sub-contractors: [2010] EWHC 694 (Comm); [2013] 1 WLR 397. The Court of Appeal (McFarlane LJ, Sir Bernard Rix and Sir Timothy Lloyd) heard argument over two days on 5-6 February 2013, and in a detailed judgment given by Sir Bernard Rix on 30 October 2013 reached the opposite conclusion: [2013] EWCA Civ 1319; [2014] 1 WLR 4526. The matter now comes to this court with our permission.
The circumstances in greater detail
6. The two consignors were companies in the British American Tobacco group. They are respondents on the appeal and have been referred to together as “BAT”. The transport of the container loads took place under a framework agreement made by British American Tobacco (Supply Chain WE) Ltd (“BAT SCWE”) and a local agreement made by British American Tobacco (Holdings) Ltd (“BAT Holdings”) with the first defendants Exel Europe Ltd (Exel”), who have played no part on these appeals.
7. The appellants are in the first appeal H Essers Security Logistics BV (“Essers Security”) and H Essers Transport Co Nederland BV (“Essers Transport”), referred to collectively as “Essers”, and in the second appeal Kazemier Transport BV (“Kazemier”). All the appellants are ordinarily resident in and have their principal place of business in the Netherlands. Essers Security was engaged by Exel to carry the first container, and maintains that it in turn engaged Essers Transport to do this. Kazemier was engaged by Exel to carry the second container.
8. Two CMR consignment notes are before the court. In relation to the first container, we have the consignor’s copy issued in Switzerland on 2 September 2011, showing the relevant BAT company as consignor and Maersk Shipping Lines as intended consignee and signed simply by “Essers” as carriers. In relation to the second container, we have the carrier’s copy issued in Hungary on 15 September 2011 showing the relevant BAT company as consignor, an associated Danish company as consignee and Kazemier as carrier. It is signed by a chauffeur, presumably Kazemier’s driver, and, on receipt of the container at destination on 20 September 2011, by the Danish company with a notation regarding the missing cartons.
The common ground about the CMR position
9. There is much common ground between the parties. First, the two BAT companies who are consignors have been treated as parties to the framework and/or local agreement, each of which provides that it is governed by English law, and that “each party irrevocably submits to the exclusive jurisdiction of the English courts in relation to all matters arising out of or in connection” with it. I note in parenthesis that the sub-contracts made by Exel with respectively Essers Security and Kazemier also contained identical provisions, regarding choice of law and court. Second, the arrangements between each BAT consignor and Exel constituted a contract for carriage by Exel within the meaning of CMR. Third, under the provisions of Chapter VI of the Convention relating to carriage performed by successive carriers, Exel was the first carrier, while one or other of the Essers companies was the last carrier and the carrier performing the carriage at the time of the loss of the first container, and Kazemier was the last carrier and the carrier performing the carriage at the time of the loss of the second container.
10. Chapter VI of the Convention commences with article 34, providing:
“If carriage governed by a single contract is performed by successive road carriers, each of them shall be responsible for the performance of the whole operation, the second carrier and each succeeding carrier becoming a party to the contract of carriage, under the terms of the consignment note, by reason of his acceptance of the goods and the consignment note.”
In the French version (equally authentic at an international level), that reads:
“Si un transport régi par un contrat unique est executé par des transporteurs routiers successifs, chacun de ceux-ci assume la responsabilité de exécution du transport total, le second transporteur et chacun des transporteurs suivants devenant, de par leur acceptation de la marchandise et de la lettre de voiture, parties au contrat, aux conditions de la lettre de voiture.”
11. Article 35 gives a further indication as to how this system is envisaged as working. It provides:
“1. A carrier accepting the goods from a previous carrier shall give the latter a dated and signed receipt. He shall enter his name and address on the second copy of the consignment note. Where applicable, he shall enter on the second copy of the consignment note and on the receipt reservations of the kind provided for in article 8, paragraph 2.
2. The provisions of article 9 shall apply to the relations between successive carriers.”
12. The common ground between the parties in the present case involves necessarily their acceptance that one or other of the Essers companies in the case of the first container and Kazemier in the case of the second was a successive carrier within article 34. In this connection, the present parties are content to proceed on the basis, said in Professor Malcolm Clarke’s work International Carriage of Goods by Road: CMR, 6th ed (2014), para 50a(i) to be “disputed” but accepted by both Donaldson J and the Court of Appeal in Ulster-Swift v Taunton Meat Haulage [1975] 2 Lloyd’s Rep 502, 507 and [1977] 1 Lloyd’s Rep 346, 358-361 and by other national courts, that, where (as here) a company contracts to carry goods, but sub-contracts the whole performance, the first company is for CMR purposes the first carrier, while the second becomes a successive carrier. Further, although article 4 of CMR provides that “The contract of carriage shall be confirmed by the making out of a consignment note”, it continues by saying that
“The absence, irregularity or loss of the consignment note shall not affect the existence or the validity of the contract of carriage which shall remain subject to the provisions of this Convention.”
13. However, article 34 provides that a second or succeeding carrier only becomes a successive carrier by “becoming a party to the contract of carriage, under the terms of the consignment note, by reason of his acceptance of the goods and the consignment note”. At this point, therefore, it might seem that the existence of a CMRnote was of importance, and Professor Loewe, in a “Commentary on the Convention of 19 May 1956 on the Contract for the International Carriage of Goods by Road (CMR)”, prepared for the United Nations in 1975 and expressed at paragraph 16 to be “based on the preparatory work, on personal notes and recollections of the negotiations, and on the logic and spirit of the Convention itself”, indicates at paragraph 275 that the language of article 34 was directed to ensuring that successive carriers were made aware through the consignment note that the carriage which they were undertaking (perhaps only for one part, and possibly even within only one country’s territory) was international carriage subject to the provisions of CMR. There appears in the present cases at least a real possibility that the two CMRconsignment notes only came into existence at the time when the relevant Essers company and Kazemier collected the respective consignments and signed the relevant CMR consignment notes. Whether article 34 can apply to such a case is a point which we can however leave open, since the parties are prepared without further examination to proceed on the basis that these appeals both concern successive carriage, by the relevant Essers company or companies and by Kazemier, within the terms of article 34.
Further provisions of CMR
14. The appeals raise a number of particular issues, to address which it is necessary to set out further provisions of CMR:
“CHAPTER II
PERSONS FOR WHOM THE CARRIER IS RESPONSIBLE
Article 3. For the purposes of this Convention the carrier shall be responsible for the acts and omissions of his agents and servants and of any other persons of whose services he makes use for the performance of the carriage, when such agents, servants or other persons are acting within the scope of their employment, as if such acts or omissions were his own.
CHAPTER III
CONCLUSION AND PERFORMANCE OF THE CONTRACT OF CARRIAGE
Article 4. [See above, para 12]
…
Article 5. The consignment note shall be made out in three original copies signed by the sender and the carrier. …
Article 6.1. The consignment note shall contain the following particulars:
(a) the date of the consignment note and the place at which it is made out;
(b) the name and address of the sender;
(c) the name and address of the carrier;
(d) the place and the date of taking over of the goods and the place designated for delivery;
(e) the name and address of the consignee;
(f) the description in common use of the nature of the goods and the method of packing, and, in the case of dangerous goods, their generally recognised description;
(g) the number of packages and their special marks and numbers;
(h) the gross weight of the goods or their quantity otherwise expressed;
(i) charges relating to the carriage (carriage charges, supplementary charges, customs duties and other charges incurred from the making of the contract to the time of delivery);
(j) the requisite instructions for Customs and other formalities;
(k) a statement that the carriage is subject, notwithstanding any clause to the contrary, to the provisions of this Convention.
2. Where applicable, the consignment note shall also contain the following particulars:
(a) a statement that transhipment is not allowed;
(b) the charges which the sender undertakes to pay;
(c) the amount of ‘cash on delivery’ charges;
(d) a declaration of the value of the goods and the amount representing special interest in delivery;
(e) the sender’s instructions to the carrier regarding insurance of the goods;
(f) the agreed time-limit within which the carriage is to be carried out;
(g) a list of the documents handed to the carrier.
3. The parties may enter in the consignment note any other particulars which they may deem useful.
…
Article 8.1. On taking over the goods, the carrier shall check:
(a) the accuracy of the statements in the consignment note as to the number of packages and their marks and numbers, and
(b) the apparent condition of the goods and their packaging.
2. Where the carrier has no reasonable means of checking the accuracy of the statements referred to in paragraph l(a) of this article, he shall enter his reservations in the consignment note together with the grounds on which they are based. He shall likewise specify the grounds for any reservations which he makes with regard to the apparent condition of the goods and their packaging. Such reservations shall not bind the sender unless he has expressly agreed to be bound by them in the consignment note. …
Article 9.1. The consignment note shall be prima facie evidence of the making of the contract of carriage, the conditions of the contract and the receipt of the goods by the carrier.
…
Article 13.1. After arrival of the goods at the place designated for delivery, the consignee shall be entitled to require the carrier to deliver to him, against a receipt, the second copy of the consignment note and the goods. If the loss of the goods is established or if the goods have not arrived after the expiry of the period provided for in article 19, the consignee shall be entitled to enforce in his own name against the carrier any rights arising from the contract of carriage.
…
CHAPTER V
CLAIMS AND ACTIONS
Article 30.1 [Deals with checking of the goods by the consignee]
30.2. When the condition of the goods has been duly checked by the consignee and the carrier, evidence contradicting the result of this checking shall only be admissible in the case of loss or damage which is not apparent and provided that the consignee has duly sent reservations in writing to the carrier within seven days, Sundays and public holidays excepted, from the date of checking.
3. No compensation shall be payable for delay in delivery unless a reservation has been sent in writing to the carrier, within 21 days from the time that the goods were placed at the disposal of the consignee.
…
5. The carrier and the consignee shall give each other every reasonable facility for making the requisite investigations and checks.
Article 31.1
1. In legal proceedings arising out of carriage under this Convention, the plaintiff may bring an action in any court or tribunal of a contracting country designated by agreement between the parties and in addition, in the courts or tribunals of a country within whose territory
(a) the defendant is ordinarily resident, or has his principal place of business, or the branch or agency through which the contract of carriage was made, or
(b) the place where the goods were taken over by the carrier or the place designated for delivery is situated,
and in no other courts or tribunals.
2. Where in respect of a claim referred to in paragraph 1 of this article an action is pending before a court or tribunal competent under that paragraph, or where in respect of such a claim a judgment has been entered by such a court or tribunal no new action shall be started between the same parties on the same grounds unless the judgment of the court or tribunal before which the first action was brought is not enforceable in the country in which the fresh proceedings are brought.
…
Article 32: The period of limitation for an action arising out of carriage under this Convention shall be one year. Nevertheless, in the case of wilful misconduct, or such default as in accordance with the law of the court or tribunal seised of the case, is considered as equivalent to wilful misconduct, the period of limitation shall be three years.
…
Article 33. The contract of carriage may contain a clause conferring competence on an arbitration tribunal if the clause conferring competence on the tribunal provides that the tribunal shall apply this Convention.
CHAPTER VI
PROVISIONS RELATING TO CARRIAGE PERFORMED BY SUCCESSIVE CARRIERS
Articles 34 and 35 [See above, paras 10 and 11]
…
Article 36. Except in the case of a counter-claim or a set-off raised in an action concerning a claim based on the same contract of carriage, legal proceedings in respect of liability for loss, damage or delay may only be brought against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred; an action may be brought at the same time against several of these carriers.
Article 37. A carrier who has paid compensation in compliance with the provisions of this Convention, shall be entitled to recover such compensation, together with interest thereon and all costs and expenses incurred by reason of the claim, from the other carriers who have taken part in the carriage, subject to the following provisions:
(a) the carrier responsible for the loss or damage shall be solely liable for the compensation whether paid by himself or by another carrier;
(b) when the loss or damage has been caused by the action of two or more carriers, each of them shall pay an amount proportionate to his share of liability; should it be impossible to apportion the liability, each carrier shall be liable in proportion to the share of the payment for the carriagewhich is due to him;
(c) if it cannot be ascertained to which carriers liability is attributable for the loss or damage, the amount of the compensation shall be apportioned between all the carriers as laid down in (b) above.
Article 38. If one of the carriers is insolvent, the share of the compensation due from him and unpaid by him shall be divided among the other carriers in proportion to the share of the payment for the carriage due to them.
Article 39.1. No carrier against whom a claim is made under articles 37 and 38 shall be entitled to dispute the validity of the payment made by the carrier making the claim if the amount of the compensation was determined by judicial authority after the first mentioned carrier had been given due notice of the proceedings and afforded an opportunity of entering an appearance.
2. A carrier wishing to take proceedings to enforce his right of recovery may make his claim before the competent court or tribunal of the country in which one of the carriers concerned is ordinarily resident, or has his principal place of business or the branch or agency through which the contract of carriagewas made. All the carriers concerned may be made defendants in the same action.”
The issues
15. The following particular issues arise:
(i) First, can article 31 and 36 be read together, so that, once a claimant has established jurisdiction against one defendant under article 31.1(a), it can then bring into that jurisdiction any other successive carrier potentially liable under article 36?
(ii) Second, is it under article 31 sufficient to enable the BAT companies to sue Essers and Kazemier as successive carriers in England that the English courts were designated by agreement in the carriage contracts made between such BAT companies and Exel?
(iii) Third, can the BAT companies sue Essers and Kazemier in the English courts, on the basis that “the branch or agency through which the contract of carriagewas made” was in England?
(iv) Fourth, do the provisions or principles of the Brussels I Convention on Civil Jurisdiction and Judgments, Council Regulation (EC) No 44/2001 of 22 December 2000 (OJ 2001 L12, p 1) either enable jurisdiction to be established over Essers and Kazemier or inform or dictate the answer to any of the previous questions?
16. The answers to the first three questions all require a proper understanding of the significance of article 31, in a context where there are successive carriers. Each side has also submitted that the fourth question may bear on jurisdiction generally or at least on the first two questions. I will therefore start by outlining how they have submitted that this may be so. Article 6(1) of the Brussels Regulation provides:
“A person domiciled in a member state may also be sued: …
where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; …”
A similar provision exists, of course, in a non-Union context in Practice Direction 6B para 3.1(3) governing the heads of English and Welsh jurisdiction. BAT submit that this reflects a principle of general international acceptance that should inform the interpretation of articles 31 and 36 of CMR, and so the answer to the first question. Alternatively, they submit that, if CMR has otherwise no like provision, there is a lacuna, which falls to be filled by article 6(1) of the Brussels Regulation. In Frans Maas Logistics (UK) Ltd v CDR Trucking BV [1999] 1 All ER (Comm) 737; [1999] 2 Lloyd’s Rep 179, Colman J held article 31.2 of CMR to be limited to proceedings brought by same claimant against the same defendant, and that, on that basis, the lis pendens provisions of articles 21 and 22 of the Brussels Convention should be applied to preclude a mirror image claim in England raising the same issues, but with the parties’ positions as claimant and defendant reversed, to those raised in prior Dutch proceedings. Colman J’s decision limiting article 31.2 to claims by the same claimant against the same defendant was overruled by the Court of Appeal in Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 All ER (Comm) 883; [2001] 1 Lloyd’s Rep 490, though this does not of itself necessarily mean that Colman J was wrong to identify as a possibility gap-filling, by reference to for example article 22 of the Brussels Regulation.
17. As to the second question, Essers and Kazemier rely on the principle, which I have no difficulty in accepting, that jurisdiction clauses generally derive their validity from agreement between the parties (or their privies). This principle is clearly enshrined in article 25 of the recast Brussels Regulation ((EU) No 1215/2012 of 12 December 2012) (OJ 2012 L351, p 1):
“1. If the parties, regardless of their domicile, have agreed that a court or the courts of a member state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that member state. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:
(a) in writing or evidenced in writing;
(b) in a form which accords with practices which the parties have established between themselves; or
(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.”
Accordingly, Essers and Kazemier submit that, in so far as the BAT companies seek to rely against them upon jurisdiction clauses which were contained in the contract between BAT and Exel and to which they did not agree, CMR cannot and should not be interpreted as binding them by such clauses. The fact that, as it happened, the sub-contracts made by Exel with Essers Security and Kazemier were also subject to English choice of law and court clauses must, I accept, be legally irrelevant in this connection, however much it might be thought to diminish the attractiveness in non-legal terms of Essers’ and Kazemier’s position.
18. In the further alternative, BAT submit that, if CMR positively precludes the recognition or application of article 6(1) or of a similar principle, then CMR would “lead to results which are less favourable for achieving sound operation of the internal market than those resulting from the provisions” of the Brussels Regulation, and in particular inconsistent with “observance of the aim of minimising the risk of concurrent proceedings which is … one of the objectives and principles which underlie judicial cooperation in civil and commercial matters in the European Union”, and that its provisions must to that extent be over-ridden by the provisions of, or the principle behind, article 6(1). The quotations are from the Court of Justice’s judgments in Nipponkoa Insurance Co (Europe) Ltd v Inter-Zuid Transport BV (DTC Surhuisterveen BV intervening) (Case C-452/12) EU:C:2013:858; [2014] 1 All ER (Comm) 288, paras 37 and 44; see also TNT Express Nederland BV v Axa Versicherung AG (Case C-533/08) EU:C:2010:243; [2011] RTR 136, paras 51 and 53.
Article 31.1 – general
19. I turn to consider article 31.1. A significant element of the Court of Appeal’s reasoning was that, looking at the overall structure of CMR, article 31 was “primarily concerned only with, on the one side, cargo interests in the form of the sender or consignee, and, on the other side, ‘the carrier'” and “[p]rima facie, therefore, in its place, … is not addressed to the position of a successive carrier, who only becomes a party to the single contract of carriage by accepting the goods and the consignment note (article 34)” under what “has been called … a special statutory contract” (para 61). On that basis, the Court of Appeal approached article 31 as “not addressing the possibility of multiple carrier defendants”, successive carriers being only introduced in the later Chapter VI (para 62). Article 31.1 thus balanced the interests of cargo interests and the original CMR carrier, by providing in paragraph (a) for jurisdictions looking to the interests of defendants and in paragraph (b) for jurisdictions looking to the interests of claimants (para 63). The Court of Appeal’s approach in this regard led into its view that it was natural to treat the last sentence of article 36 as a further jurisdictional provision directed to the position of successive carriers who had only been introduced in article 34.
20. The difficulty I have with this approach is that, firstly, CMR must have been conceived as a whole and cannot be read as a series of sequential provisions, each unconscious of what was to follow. Even the Court of Appeal’s use of words “primarily” and “prima facie” contain a limited recognition of that truth. Secondly, the provisions of Chapter V, including article 31, must, on analysis, apply not only to disputes arising between cargo interests and the original CMR carrier, but also to situations where a successive carrier is involved. That is clearly true of article 30, dealing with checking and time limits for making reservations. It is also true of article 32 dealing with the one-year limitation period for actions. It must also be true of the provisions regarding lis pendens, enforceability, and security for costs in paras 2-5 of article 31. Article 31.1 must equally apply and have been envisaged as covering cases of successive carriage. Mr Charles Priday in his submissions for BAT recognised this by his submission that what article 31 envisaged in such a case was that the claimant would establish jurisdiction against at least one of the relevant carriers identified in article 36 (ie the first or last carrier or the carrier performing the carriage at the time of the loss, damage of delay) whereupon the last sentence of article 36 would give jurisdiction over the other relevant carrier[s]. Mr John Passmore QC’s response for Essers and Kazemier is that this analysis effectively undermines and opens up the careful scheme of article 31.
Article 31.1 – jurisdiction designated by agreement
21. Rather than take the questions which the parties have identified in the order they have addressed them, I think that it is helpful to go through the various heads of jurisdiction contained in article 31 in the order in which they appear. The opening provision of article 31.1 is that “the plaintiff may bring an action in any court or tribunal of a contracting country designated by agreement between the parties”. It is unnecessary on these appeals to decide whether that means between the parties to the carriagecontract or the parties to the litigation. But I am of the view that it should be interpreted as meaning the latter. Article 31.1 is a provision dealing with jurisdiction to bring legal proceedings. Any agreement on jurisdiction between the parties to such proceedings is one for which one would naturally expect a Convention like CMR to cater. When article 31.2 goes on to preclude any “new action … between the same parties”, it is also referring to the parties to the litigation. On this point, therefore, I would endorse Rix LJ’s view in Hatzl v XL Insurance Co Ltd [2009] EWCA Civ 223, [2010] 1 WLR 470, para 64.
22. Whatever the position in that respect, however, the opening provision of article 31.1 clearly applies as between BAT and Exel. It provides one ground of jurisdiction for suing Exel in England (at least one other being, under paragraph (a), that Exel’s principal place of business is here). The words “and, in addition” in article 31 qualify the operation of the jurisdiction clause agreed between BAT and Exel only to the extent that the clause is not under CMR exclusive. So BAT could, if they had wished, have sued in one of the other jurisdictions provided by paragraphs (a) and (b) of article 31.1. But it is common ground that they were as against Exel entitled to take advantage of the English jurisdiction clause.
23. Since it is also common ground on these appeals that Essers Security and/or Essers Transport in respect of the first container and Kazemier in respect of the second were successive carriers, it follows that they must, under article 34, have become party to the respective contract or contracts of carriage made between BAT and Exel. If the matter stopped there, that would on the face of it mean party to those contracts whatever their terms. But article 34 qualifies the position, by adding that a successive carrier becomes party to the contract of carriage “under the terms of the consignment note, by reason of his acceptance of the goods and the consignment note”, or in French becomes “par leur acceptation de la marchandise et de la lettre de voiture, parties au contrat, aux conditions de la lettre de voiture”. These references to the terms or conditions of the consignment note are general. They clearly refer to something different from any reservations which the first carrier may have entered regarding the number, marks, numbers, condition or packaging of the goods taken over under article 8.1, or which a successive carrier may have entered on his acceptance of the goods under article 35.1. Such reservations are not terms or conditions by which anyone is bound. Equally, since the consignment note is intended to confirm the contract of carriage (article 4) and is prima facie evidence of both its making and its conditions (article 9.1), it is difficult to understand the purpose of the reference to terms or conditions in article 34, unless it is intended to mean that a successive carrier is bound by the original contract in so far as its terms or conditions are set out in the consignment note. CMR in a number of places refers to carriage, liability or conduct “under the terms of” or “in accordance with” a Convention, contract, article or law, and these also envisage that the former will be measured or controlled by reference to the latter.
24. Article 6 contains a full list of particulars which are required to appear in a consignment note and by their nature will disclose core terms of the main carriagecontract. But neither article 6 nor the present consignment notes make mention of any choice of law or court clause or agreement. Particulars of any such clause or agreement might have been added as contemplated by article 6.3 of CMR in the boxes entitled Conventions particulières or Besondere Vereinbarungen on the consignment note. But these boxes were in each case left empty. There is of course nothing unusual about either a choice of law and court clause, or a clause providing for dispute resolution before an arbitration tribunal. Both are common enough in international trade. Article 31 contemplates that a contract of carriage may contain either, and the latter is for good measure also expressly permitted by article 33. But that does not mean that CMR necessarily intended that a successive carrier should become party to such a clause, without having any notice of it or the express opportunity to decline to carry on its terms.
25. BAT rely on the fact that neither article 6.1 nor article 6.2 of CMR requires a CMR consignment note to state the existence of a choice of law or court clause. But that to my mind tends to confirm that the transposition of application of such a clause to the relationship between the consignor or consignee and a successive carrier depends on agreement, and here in particular upon the use of the boxes provided pursuant to article 6.3. Had it been contemplated that a successive carrier would automatically be bound by such a clause, one would have expected the existence of such a clause to have been among the particulars required by these paragraphs to appear in the consignment note – for the very purpose of giving the successive carrier notice of them. That is one obvious reason why, alongside basic details relating to the parties, the carriage and the goods (including in the case of dangerous goods their generally recognised description), the consignment note is required also to include for example, a statement that the carriage is subject to CMR, and further details such as any “cash on delivery” charges, any special interest in delivery, and instructions regarding insurance, and any agreed time-limit for the carriage. These are all matters in relation to which a successive carrier would be expected to be bound and would accordingly need to know. A choice of court clause is, on the contrary, a particular which the parties to a consignment note (particularly the consignors as the most likely claimant against a successive carrier) might consider it appropriate to identify in the relevant box, Conventions particulières, if they wished to bind a successive carrier by it. It would fall within article 6.3. But there is no reason why they should be bound to do this.
26. At a more fundamental level, I am now also persuaded that it would be contrary to general principle to hold a successive carrier bound by a choice of court clause, or any other contractual clause not evidenced by the consignment note, of which he had no express notice. To do so would involve an unfamiliar and undesirable invasion of the general principle that contract depends on agreement. It is true that CMR itself provides that a successive carrier becomes a party to the original carriage contract by acceptance of the goods and the consignment note. But that is the published and, by now at least, familiar scheme of CMR, which any road carrier carrying on business within the CMR states may be taken to know, and of which the consignment note is also required to give express notice. To hold a successive carrier liable by reference to terms or conditions not mentioned in the consignment note would be a quite different matter. The consignor and a first carrier may have agreed all sorts of onerous obligations by which it would be most unfair to hold a successive carrier bound. In the present case, it is alleged that Exel had been specifically instructed not to park the second container overnight. No such instruction was recorded on the consignment note. While we heard no argument on this specific point, it seems difficult to suggest that any such instruction could bind anyone contractually other than Exel. To attempt to distinguish between specific instructions of a usual and an unusual nature would, in my view, be to make bricks without straw. CMR neither contains nor hints at any such distinction. Article 34 makes the straightforward point that successive carriers take over the goods and become parties to the original contract on the terms or conditions of the consignment note. On that basis, I have ultimately reached the clear conclusion that there is no basis upon which Essers or Kazemier can have become bound by an English jurisdiction clause in the original contract or contracts to which they became party, but which was not identified in the terms or conditions of the CMR consignment note.
27. I note that Professor Loewe takes a different view in para 282 of the paper to which I have already referred, considering that a successive carrier who on his view becomes bound by a jurisdiction clause of which he had no notice in the consignment note could bring an action for damages against the first carrier. This view is not based on any reference to negotiations preceding CMR, and is stated in simple conclusionary terms. Why and how a successive carrier could or would have any claim for damages against a first carrier, who had no duty to identify the jurisdiction clause on the consignment note, is also unexplained. Other commentators have not accepted Professor Loewe’s view on this point, though their reasoning varies. In Hill and Messent’s CMR: Contracts for the International Carriage of Goods by Road 3rd ed (2000), paras 11.37 and 11.67 take the view which I have expressed. At the same time, paras 10.27 and 10.28 suggest that a consignee may (like a privy or assignee) be bound by a jurisdiction clause, even though it is not mentioned in the consignment note. But, if that is correct (on which I need express no concluded view), it does not undermine paras 11.37 and 11.67; rather it is because under article 13 a consignee stands, without more, in the same position as the consignor with regard to the enforcement of “any rights arising from the contract of carriage”, and, unlike the position under article 34, there is no qualification that the consignee is only entitled or bound under the terms or conditions of the consignment note.
28. In contrast, Professor Malcolm Clarke in his work, cited above, para 46c suggests that “the designation of a court or tribunal by agreement between sender and carrier will not bind the consignee or a successive carrier unless the latter [sic] has notice of the designation”. But he does so on a basis which makes no reference to the language of article 34 and relies on two French decisions: one by the Court of Appeal of Paris dated 14 November 1969, the other by the Court of Appeal of Colmar dated 26 November 2001. In the former, a French consignee suing in France was held not bound by any German jurisdiction clause, firstly because none had been proved even between the German consignor and the carrier, and secondly because the only document of a contractual nature evidencing the carriage terms which the consignee ever saw and accepted was a receipt which (it appears) made no mention of any jurisdiction clause.
29. In the latter case, the French consignor (“Amural”) was claiming, firstly, against the German buyer/consignee (“Neuendorf”) of frozen duck fillets for withholding 15% of the invoice amount on account of the high temperature of the fillets on arrival and, secondly or alternatively, against the carriers (“TAC Transports”) and sub-carriers (“Transport Michel”) for having caused any damage. There was clearly French jurisdiction against both carriers under article 31.1(a) and (b), but there was an internal issue as to whether the Regional Court of Mulhouse had been chosen by agreement between Amural and TAC Transports or whether, failing such choice and as the court held, the Commercial Court of Meaux was the court assigned by the New French Code of Civil Procedure. Neuendorf as buyer/consignee accepted that CMR governed his relationship with Amural. This seems very strange in respect of a claim by Amural which appears to have been, as against Neuendorf, for the balance of the unpaid price of goods. But, on the basis that CMR applied, Neuendorf contended that he could only be sued in Bochum, Germany as the place where he resided and the place of delivery. This suggestion was summarily rejected by the court on the ground that article 31 conferred jurisdiction on France. As against Neuendorf, and on the apparently odd assumption that CMR regulated its sale of goods relationship with Amural, this was presumably on the basis that France was where the goods were taken over for carriage.
30. Neither of the French cases cited by Professor Clarke seems to me therefore to offer any real guidance as to the proper approach to the application of an agreed jurisdiction clause as against a successive carrier. However, in the light of the other considerations which I have set out, and contrary to my initial reaction, I have come the clear conclusion that the qualifying phrase in article 34 has the effect that a successive carrier will not be bound by a jurisdiction clause agreed between the consignor and the first carrier unless it is identified in the consignment note (or unless of course the successive carrier binds himself to it by agreement in some other way).
Article 31.1 – further provisions
31. I move accordingly to the further provisions of article 31.1. It is common ground, and in any event clearly correct, that paragraph (b) refers to the places of taking over by the carrier and designated for delivery under the CMR contract made between the consignor and the first carrier. The only caveat that may be appropriate is that, as regards a successive carrier, the position could (again in the light of article 34) be different if the CMR consignment note failed correctly to reflect the place of taking over or the place designated for delivery actually agreed between the consignor and first carrier. That, hopefully rare, case does not require further consideration here. The effect of paragraph (b) is that any carrier against whom proceedings can be brought under article 36 can be sued in either the place where the goods were taken over or the place designated for their delivery.
32. Paragraph (a) of article 31.1 is on the other hand concerned with the position of the particular defendant under consideration, whether or not there are other co-defendants. In so far as it refers to the country where that defendant is ordinarily resident, or has his principal place of business, it is capable of applying in relation to any successive carrier, or, indeed, in the case of an action by a carrier in relation to any consignor or consignee sued by such a carrier. But the reference to “the branch or agency through which the contract of carriage was made” is much less obviously apt to apply as against anyone other than one of the original parties to the carriage contract, that is basically the consignor (and perhaps the consignee, if the consignor was acting as his agent) and the first carrier. Mr Priday submits that that is wrong, and that, as successive carriers, Essers and Kazemier can be regarded as having contracted through the branch or agency of Exel because Exel made the framework and local agreement with BAT, to which Essers and Kazemier became parties under article 34. That I regard as distorting the plain purpose and effect of the relevant provisions of CMR. Essers and Kazemier are as successive carriers party to the original carriage contract under the terms of the consignment note not because anyone made a contract with them through any branch or agency, but simply because CMR makes them a party by statute in consequence of their accepting the goods and the consignment note.
33. It follows that article 31.1 contains a variety of provisions:
(i) a provision enabling the enforcement of any jurisdiction clause in favour of the court or tribunal of a contracting state which was (a) agreed between the parties to the original carriage contract, or (b) to be taken, in the light of article 34, to be agreed as between the original goods interests and any successive carrier becoming party to that original contract on terms in the consignment note incorporating the jurisdiction clause, or (d) agreed in some other way between the parties to the litigation.
(ii) provisions in paragraph (a) regarding ordinary residence and a principal place of business which can be relied upon as against any carrier or successive carrier liable to suit under article 36, as well as by a carrier bringing proceedings arising out of carriage under CMR against a consignor or consignee,
(iii) a further provision in paragraph (a) which can only sensibly apply in proceedings between original parties to the carriage contract,
(iv) further provisions in paragraph (b) which open up jurisdiction in any claim arising out of CMR carriage to cover the courts or tribunals of the place of taking over or designated for delivery of the goods.
The important corollary of these provisions is that, under the final words of article 31.1, a claimant may not bring an action arising out of carriage under CMR in any other courts or tribunals.
The relationship of articles 31.1, 36 and 39
34. BAT’s case is that, once jurisdiction is established over one carrier under article 31.1 in any of the jurisdictions provided by that article, then the last sentence of article 36 opens up the further possibility of joining in the same proceedings any other carrier or carriers potentially liable under article 36, even though proceedings against them, viewed by themselves, cannot be brought within article 31.1. The alternative view of the last sentence of article 36, advocated by Essers and Kazemier, is that it is there to make clear that the liability of the first, last carrier and performing carriers under article 36 is joint and several, and not alternative as might otherwise have been capable of being suggested in view of article 36’s reference to proceedings being “brought against the first carrier, the last carrier or the [performing] carrier”. The provision that an action may be brought against several of these carriers “at the same time”, or in the French “à la fois”, is on this alternative view merely confirming or emphasising that there is no need to pursue them sequentially.
35. On BAT’s case, a jurisdiction clause agreed between the consignor and first carrier, but not mentioned in the CMR consignment note accepted by a successive carrier, would nonetheless enable the successive carrier to be added to the proceedings commenced against the first carrier in the court or tribunal of the place assigned by the jurisdiction clause. Likewise, the ability to rely on any of the heads of jurisdiction provided by paragraph (a) of article 31.1 as against any relevant carrier (first, last or performing) would open up the same jurisdiction against any other of such carriers in relation to whom article 31.1 would not otherwise provide any ground of jurisdiction. As BAT contend on the present appeals, the principal place of business of any carrier (even though it was outside any contracting state) would suffice to ground jurisdiction against all relevant carriers, even though it has no connection with the physical carriage. On the face of it, such extensions of the carefully delineated jurisdiction provided by article 31.1 seem unlikely to have been intended. The interests of claimants are, as the Court of Appeal observed at para 63, served by paragraph (b). That paragraph enables all carriers potentially liable under article 36 to be joined in one forum. The opening up of the heads of jurisdiction specified in article 31.1 which on BAT’s case follows from the last sentence of article 36 sits uneasily with the final words of article 31.1 “and in no other courts or tribunals”.
36. BAT submit that the interpretation of the last sentence of article 36 which they advance brings symmetry and order to CMR’s treatment of claims involving multiple defendants. In a cargo claim, jurisdiction can be achieved against all by establishing it against one. That they submit is also what article 39.2 provides. The problem with this submission is that article 39.2 states this explicitly, by providing that a carrier who has paid compensation may seek recourse by making “his claim before the competent court or tribunal of the country in which one of the carriers concerned is ordinarily resident, or has his principal place of business or the branch or agency through which the contract of carriage was made” and that “all the carriers concerned may be made defendants in the same action”. In contrast, article 31.1(a) in terms only confers jurisdiction against the individual defendant whose ordinary residence, principal place of business or branch or agency is relied upon. As to BAT’s submission that the last sentence of article 39.2 deals, as between carriers, with jurisdiction, and must have been seen as paralleling, also in relation to jurisdiction but here as between cargo interests and carriers, the last sentence of article 36, I do not consider that either sentence necessarily or clearly refers to jurisdiction. Both are well capable of being read as emphasising or confirming no more than that all or several carriers liable may be sued at the same time.
37. BAT’s submission regarding symmetry also faces the objection that the claims covered by article 39.2 differ significantly in content and structure from those covered by article 31.1:
(i) Article 31.1 does not only offer a claimant the jurisdiction of any individual defendant’s ordinary residence, principal place of business or branch or agency. It offers the additional advantage of jurisdiction against all carriers potentially liable under article 36 (the first, the last and the performing carriers) in the place either of taking over or designated for delivery of the goods. No such jurisdiction is available under article 39.2 to a carrier seeking recourse from another carrier.
(ii) Article 39.2 concerns recourse claims which fall under articles 37 and 38 to be divided pro rata, potentially between all carriers and not just the first, last or performing carrier. This is so, having regard to the specific provisions covering cases where more than one carrier was responsible for the loss or damage, or where it cannot be ascertained who was responsible or where a carrier otherwise liable to contribute is insolvent. There is an obvious imperative under article 39.2 to enable a claimant to bring all such claims in one jurisdiction. The same imperative does not exist under article 31.1, since cargo interests are under article 36 entitled to look to any one of the relevant carriers (first, last or performing) to meet their full claim, each being liable 100%. Further, in so far as cargo interests do wish to pursue all such relevant carriers together, they are able to do so in the place either of taking over or designated for delivery as stated in point (i).
38. BAT rely on dicta in two Court of Appeal cases: Cummins Engine Co Ltd v Davis Freight Forwarding (Hull) Ltd [1981] 1 WLR 1363 and ITT Schaub-Lorenz Vertriebsgesellschaft mbH v Birkart Johann lnternationale Spedition GmbH & Co KG [1988] 1 Lloyd’s Rep 487. Both cases concerned recourse claims between carriers. In Cummins, Cummins as consignor had contracted with Davis, another English company, for the carriage of engines from England to Amsterdam. Davis instructed Charterway to undertake the leg from Rotterdam to Amsterdam, and Charterway in turn asked Graaf, who asked Boers to do this. Charterway, Graaf and Boers were all Dutch firms and all successive carriers under CMR. Cummins issued a writ in England against all four, but served only Davis. Davis issued third party proceedings to join and seek recourse from Charterway, Graaf and Boers, who applied, successfully, to have the third party proceedings set aside on the basis that under article 39.2 any recourse proceedings against them could only be in Holland. But at p 1371 Brandon LJ made the following general statement regarding jurisdiction in the main proceedings:
“It is clear from the provisions of CMR contained in Chapters V and VI that it contemplates two kinds of legal proceedings arising out of a contract of carriage. The first kind of legal proceedings which it contemplates are actions brought by a sender or consignee of goods against one or more carriers. Where successive carriers are involved, the effect of article 31, paragraph 1, combined with article 34, is that the plaintiff can bring a single action against one, more than one, or all the carriers concerned. Article 31, paragraph 1, further requires him to bring his action in certain courts only. These courts are, first, any court of a contracting state which has been agreed between the parties; secondly, the courts of the country where any of the carriers sued is ordinarily resident, or has his principal place of business, or the branch or agency through which the contract of carriage was made; and, thirdly, the courts of the place where the goods were taken over for the carriage or the place where they were to be delivered.
It is on the basis of these provisions that, in the present case, Cummins issued a writ against four parties, Davis, Charterway, Graaf and Boers, although they have only served such writ on Davis.”
39. Brandon LJ went on specifically to address the recourse claims. In ITT Schaub-Lorenz, at p 494, Bingham LJ quoted the above passage and its continuation, and said that, although it could not be regarded as “having more than persuasive authority, … I think (with respect) that it is plainly right”.
40. Neither Cummins nor ITT Schaub-Lorenz required any precise examination of the accuracy of Brandon LJ’s statement that article 31.1 combined with article 34 allows a plaintiff to bring a single action against one, more than one, or all the carriers concerned in the courts of the country where any of the carriers concerned is ordinarily resident or has his principal place of business or the branch or agency through which the carriage contract was made. Further, it is unclear by what reasoning Brandon LJ derived his summary from articles 31 and 34, the only articles which he cited. Article 31.1(a) does not on any view confer jurisdiction over one carrier concerned, simply because “any” of the other carriers concerned is ordinarily resident or has his principal place of business or relevant branch or agency in the country where proceedings are brought. It confers jurisdiction against a carrier who has such residence, place or branch or agency. It is only the last sentence of article 36 – which Brandon LJ did not mention at all – that arguably extends this jurisdiction to enable other carriers to be added to the proceedings against the carrier defendant who satisfies article 31.1(a).
41. Further, in Cummins at pp 1374-1375 O’Connor LJ also described the scheme of CMR in terms which were, I think, both more specific on the present issue and significantly different in effect from those used by Brandon LJ. He said:
“It will be seen that the scheme of the Convention, starting in article 31, is that normally, unless the parties otherwise agree, any legal proceedings are to be originated in the jurisdiction of ‘the defendant’ (article 31, paragraph 1(a)), and I am content, under the ordinary rules of interpretation, to read ‘defendant’ for ‘defendants’. The only alternative there given is the place where the goods were taken over or the place designated for delivery. The place where the goods were taken over by the carrier, in my judgment, refers to the place where the contract of carriage commenced (see article 1 of the Convention) and cannot be repeated down the line where successive carriers have participated in the carriage at various stages. That in the present case was Scotland and the place of delivery was Holland. Therefore, Cummins were limited to bringing the action, as far as the jurisdiction of the defendant was concerned, either in England (Davis) or in Holland the other three.”
It is clear from this passage that O’Connor LJ did not accept that Cummins could under CMR properly bring English proceedings against any defendant other than Davis, which alone fell within article 31.1(a). That corresponds with the case advanced by Essers and Kazemier on these appeals.
42. Academic commentary also supports Essers’ and Kazemier’s position on this point: see Professor Loewe’s paper, para 281, Hill & Messent, para 11.67 and KF Haak in The Liability of the Carrier under the CMR (Stichting Vervoeradres – The Hague – 1986), p 114, para 2, where the requirement to bring each successive carrier held liable under article 36 within the scope of article 31.1 is explained as a practical restriction on the severity of the joint and several liability imposed by the last sentence of article 36 on, in particular, the last carrier.
The desirability of joining all possible defendants
43. This brings me to a fundamental element of BAT’s case, the desirability of, and suggested imperative to arrive at, an interpretation or solution enabling all claims by goods interests against all carriers to be resolved in one place and one set of proceedings. That this can be a relevant approach is certainly borne out by article 6(1) of the Brussels Regulation, as well as, domestically, by Practice Direction 6B para 3.1(3): see para 16 above. But it is not an invariable approach, and it is not the approach taken in the Warsaw Convention 1929 (for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on 12 October 1929), the language of which the relevant provisions of CMR to a large degree reflect. The Warsaw Convention provided:
“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.
…
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 1, each carrier who accepts passengers, luggage or goods 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.
…
3. As regards luggage or goods, 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 consignee.”
44. Under the Warsaw Convention, it is clear that article 28 defines jurisdiction, while the last sentence of article 30.3 deals, like the rest of that article, with liability by emphasising that all potentially liable carriers are jointly and severally liable for loss, damage or delay in respect of goods and luggage. CMR rephrases the last sentence of article 36, but not in a way which suggests that it is now intended to have the fundamentally different purpose of addressing not liability (like the rest of article 36), but jurisdiction.
45. Viewing the position more generally, article 31.1 of CMR affords clearly defined heads of jurisdiction additional to those provided by the Warsaw Convention – in particular jurisdiction based on any agreement between the parties to a court or tribunal in a contracting state, and jurisdiction at the place of taking over of the goods (and not merely at the place designated for their delivery). As to the Brussels Regulation, there are, unsurprisingly, parallels between some of its provisions and those of CMR.A defendant’s domicile in a member state is the general head of jurisdiction under article 2.1 of the Brussels Regulation, while article 5.5 provides a special head as regards disputes arising out of the operations of a branch or agency. These heads broadly parallel the heads found in article 31.1(a) of CMR. In other respects, there are however differences in both directions in the jurisdictions available under CMR and the Brussels Regulation. Article 5.1 of the Brussels Regulation offers as special heads “the place of performance of the obligation in question” in a contract claim or the place where the harmful event occurred in a tort claim. Article 31.1(b) of CMR offers in contrast the place designated for delivery, which may correspond with the place for performance of the obligation in question, if the relevant law enables suit against a carrier on the basis of a failure to deliver or to deliver in good condition at destination. Finally, the Brussels Regulation does not offer any general head of jurisdiction paralleling the right to sue at the place of taking over the goods conferred by article 31.1(b).
46. On the other hand, coming to the nub of BAT’s case on this point, the Brussels Regulation contains the further special head that:
“A person domiciled in a member state may also be sued, where he is one of a number of defendants, in the courts for the place where any one of them is domiciled ….”
On Essers’ and Kazemier’s case, CMR contains no such provision. On BAT’s case, the last sentence of article 36 of CMR has an effect which is similar – similar, but necessarily wider since it would expose any successive carrier potentially liable under article 36 to being sued by cargo interests in any jurisdiction anywhere in the world which happened to be that of the principal place of business of any other such successive carrier, or which happened to be that of the branch or agency through which the first carrier happened to make the carriage contract. A lesser point, not without all practical relevance, is that BAT’s reading of the last sentence of article 36 would also provide an automatic ground of jurisdiction against any such carrier without the qualifying condition inserted into article 6.1 of the Brussels Regulation, that the claims should be “so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. The absence of such a qualification could be significant if, for example, a claim was brought against a first carrier based on a special term included in the original carriage contract, but not binding on a successive carrier because it was not included in the consignment note.
47. In these circumstances, I do not consider that the desirability in some contexts of a provision such as article 6.1 of the Brussels Regulation or Practice Direction 6B para 3.1(1) can affect or impact on the interpretation of articles 31, 34 and 36 of CMR in any significant way. Equally, I do not see how it can be said that there is any gap that article 6.1 should be called upon to fill, even assuming that gap-filling by reference to the Brussels Regulation is admissible and required, in a European Union context, as Colman J thought in Frans Maas Logistics. The scheme of CMR appears to me to be deliberate and comprehensive. For better or for worse, and starting with the model of the Warsaw Convention, it elected for a generous range of heads of jurisdiction. There is no gap in it, as a matter of construction, merely a considered decision that the heads provided would reflect an appropriate balance between the interests of all concerned, potential claimants and potential defendants.
Does article 6.1 of the Brussels Regulation prevail over article 31.1 of CMR?
48. That leaves BAT’s last and perhaps most far-reaching submission, that, if all else fails, European Union law, in particular article 6.1 of the Brussels Regulation or the principle behind it, must prevail over the scheme of CMR to enable the joinder of all carriers potentially liable under article 36 in any court or tribunal in which jurisdiction can be established under article 31.1(a) on the basis of any one of such carrier’s principal place of business or branch or agency. I have already outlined statements of principle made by the Court of Justice on which BAT rely (para 18 above). The starting point, however, must be the European Treaties. CMR was concluded before 1 January 1958 between states half of which are, even today, not member states of the European Union. Article 351 TFEU provides:
“The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding states, before the date of their accession, between one or more member states on the one hand, and one or more third countries on the other, shall not be affected by the provisions of the Treaties.
To the extent that such agreements are not compatible with the Treaties, the member state or states concerned shall take all appropriate steps to eliminate the incompatibilities established. Member states shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude.
In applying the agreements referred to in the first paragraph, member states shall take into account the fact that the advantages accorded under the Treaties by each member state form an integral part of the establishment of the Union and are thereby inseparably linked with the creation of common institutions, the conferring of powers upon them and the granting of the same advantages by all the other member states.”
49. Reflecting article 351 TFEU, article 71 of the Brussels Regulation provides:
“1. This Regulation shall not affect any conventions to which the member states are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments.
2. With a view to its uniform interpretation, paragraph 1 shall be applied in the following manner:
(a) this Regulation shall not prevent a court of a member state, which is a party to a convention on a particular matter, from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in another member state which is not a party to that convention. The court hearing the action shall, in any event, apply article 26 of this Regulation;
(b) judgments given in a member state by a court in the exercise of jurisdiction provided for in a convention on a particular matter shall be recognised and enforced in the other member states in accordance with this Regulation.
Where a convention on a particular matter to which both the member state of origin and the member state addressed are parties lays down conditions for the recognition or enforcement of judgments, those conditions shall apply. In any event, the provisions of this Regulation which concern the procedure for recognition and enforcement of judgments may be applied.”
50. On the face of it, article 351 establishes a clear position. The Court of Justice has, however, interpreted article 315. In its famous decision in Kadi v Council of the European Union (Joined Cases C-402/05P and C-415/05P) [2009] AC 1225, the court in considering the relationship between a European sanctions measure and the obligations imposed on member states under the United Nations Charter and general international law to give effect to UN Security Council asset freezing orders under Chapter VII of the UN Charter, said this:
“300. What is more, such immunity from jurisdiction for a Community measure like the contested regulation, as a corollary of the principle of the primacy at the level of international law of obligations under the Charter of the United Nations, especially those relating to the implementation of resolutions of the Security Council adopted under Chapter VII of the Charter, cannot find a basis in the EC Treaty.
301. Admittedly, the court has previously recognised that article 234 of the EC Treaty (now, after amendment, article 307EC) could, if the conditions for application have been satisfied, allow derogations even from primary law, for example from article 113 of the EC Treaty on the common commercial policy: see, to that effect, the Centro-Com case [1997] QB 683, paras 56-61).
302. It is true also that article 297EC implicitly permits obstacles to the operation of the common market when they are caused by measures taken by a member state to carry out the international obligations it has accepted for the purpose of maintaining international peace and security.
303. Those provisions cannot, however, be understood to authorise any derogation from the principles of liberty, democracy and respect for human rights and fundamental freedoms enshrined in article 6(1) EU as a foundation of the Union.
304. Article 307EC may in no circumstances permit any challenge to the principles that form part of the very foundations of the Community legal order, one of which is the protection of fundamental rights, including the review by the Community judicature of the lawfulness of Community measures as regards their consistency with those fundamental rights.”
Article 351 TFEU is the successor to article 307EC.
51. Kadi was a decision at a high level of importance for individual freedoms. It is, in one sense, a surprise to find its thinking extended to the tarmacadam of the world’s roads. But in TNT Express para 51, and Nipponkoa, para 37, referred to in para 18 above, the court stated that:
“Article 71 of Regulation 44/2001 cannot have a purport that conflicts with the principles underlying the legislation of which it is part. Accordingly, that article cannot be interpreted as meaning that, in a field covered by the Regulation, such as the carriage of goods by road, a specialised convention, such as the CMR, may lead to results which are less favourable for achieving sound operation of the internal market than the results to which the Regulation’s provisions lead.”
The court did not refer to article 307EC or article 351 TFEU, and the court’s reasoning is essentially circular. It is the purpose of article 307EC, now 351 TFEU, to derogate from not only Regulations such as (EC) 44/2001, but also from the Treaties themselves.
52. As Judge Allan Rosas, not a member of the court in TNT or Nipponkoa, explained extra-judicially in “The Status in EU Law of International Agreements Concluded by EU member states” (Fordham International Law Journal vol 34, Issue 5 (2011) article 7), at p 1321:
“Article 351(1) TFEU allows a derogation from the principle of primacy of EU law but only in relation to agreements concluded prior to EU membership and, in principle, only to treaty relations between member states and third states (category 1 above). According to settled case law, the purpose of the provision is to establish that the application of EU law does ‘not affect the duty of the member state concerned to respect the rights of non-member countries under a prior agreement and to perform its obligations thereunder’. The court has also recognized that article 351(1) TFEU may allow derogations from not only Union’s secondary law but also its primary law, such as provisions of the TEU and the TFEU. The court has added that the provision would not achieve its purpose if it did not imply a duty on the part of the Union institutions not to impede the performance of the obligations of member states that stem from a prior agreement.
These propositions are borne out by the prior authorities which Judge Rosas cited in their support, particularly Attorney General v Burgoa (Case C-812/79) [1980] ECR 2787, para 8 et seq.
53. At a high level, preservation of the internal market is of course fundamental to the Union. But the court in both TNT para 49 and Nipponkoa para 36 endorsed the more detailed statements that, although article 71 of Regulation 44/2001 provides, in relation to matters governed by specialised conventions such as CMR, for the application of those conventions:
“the fact remains that their application cannot compromise the principles which underlie judicial cooperation in civil and commercial matters in the European Union, such as the principles, recalled in recitals 6, 11, 12 and 15 to 17 in the preamble to Regulation 44/2001, of free movement of judgments in civil and commercial matters, predictability as to the courts having jurisdiction and therefore legal certainty for litigants, sound administration of justice, minimisation of the risk of concurrent proceedings, and mutual trust in the administration of justice in the European Union.”
In TNT the court added:
“50. Observance of each of those principles is necessary for the sound operation of the internal market, which, as is apparent from recital 1 in the preamble, constitutes the raison d’être of Regulation 44/2001.”
54. The context in which these statements were made and applied is however important. Both cases concerned competing proceedings between the same parties in different member states. Both concerned the free movement of judgments and mutual trust in the administration of justice. In TNT, AXA as cargo-insurer was seeking to enforce in the Netherlands a German judgment obtained against TNT, the CMR carriers, who were seeking in the Netherlands to contest the German court’s jurisdiction to give the German judgment on the basis that there existed prior Netherlands proceedings in which TNT were seeking a declaration of non-liability. The Hoge Raad referred the matter to the Court of Justice, which, after citing its familiar case law on mutual trust (including West Tankers Inc v Allianz SpA (formerly RAS Riunione Adriatica di Sicurtà SpA) (Case C-185/07) EU:C:2009:69; [2009] AC 1138, para 24) held:
“55. Having regard to the principle of mutual trust referred to above, the court has stated that the court of the state addressed is never in a better position than the court of the state of origin to determine whether the latter has jurisdiction. Accordingly, Regulation 44/2001, apart from a few limited exceptions, does not authorise the jurisdiction of a court of a member state to be reviewed by a court in another member state ( Allianz SpA, at para 29 and the case law cited). Therefore, article 31(3) of the CMR can be applied in the European Union only if it enables the objectives of the free movement of judgments in civil and commercial matters and of mutual trust in the administration of justice in the European Union to be achieved under conditions at least as favourable as those resulting from the application of Regulation 44/2001.”
55. Nipponkoa also concerned competing sets of proceedings. These were Dutch proceedings in which the carriers had successfully limited their liability to the CMRlimit and German proceedings in which cargo insurers were seeking to establish wilful misconduct. On a reference by the Landgericht Krefeld, the Court of Justice held that article 71 of the Brussels Regulation precluded an interpretation of article 31(2) of CMR whereby an action for a declaration of non- or limited liability did not involve the same cause of action as a positive claim for damages in respect of the same alleged loss. This slightly surprising way of putting the matter (in terms of the proper interpretation of CMR) contrasts with the court’s confirmation in TNT, paras 58-63, that it has no jurisdiction under article 267 TFEU to interpret international agreements concluded between member states and non-member countries or, specifically, to interpret article 31 of CMR. It is however possible to understand the decision in Nipponkoa on the basis that what the court was really doing was treating Union law in the relevant area, particularly that covered by article 29.1 of the Brussels Regulation and Owners of cargo lately laden on board the ship Tatry v Owners of the ship Maciej Rataj (Case C-406/92) (Note) EU:C:1994:400; [1999] QB 515; [1995] 1 Lloyd’s Rep 302, as over-riding any different regime contained in CMR. How close such reasoning and decisions may be to the thinking of the European legislators when they agreed article 351 TFEU and article 71 of the Brussels Regulation is a different matter.
56. The present case does not concern or present any risk of competing judgments involving the same parties. BAT is under CMR unquestionably entitled to look to Exel for the whole of any loss which BAT can prove. At highest, BAT may have to pursue Essers and Kazemier in different jurisdictions, if they continue to wish to expand their target beyond Exel. In so far as BAT’s wish to do this is based on a belief that their evidential position, in seeking to show wilful misconduct, may be improved if they can join Essers and Kazemier, I cannot associate an evidential aim of this nature with any fundamental principle of Union law in the field of jurisdiction or justice. I add that, in so far as BAT suggest that it may not be possible to sue Essers and Kazemier elsewhere on the same basis as here, since the courts in the Netherlands would decline to recognise Exel as first carrier (since it did not actually carry the goods anywhere), the point cuts both ways, as well as leaving open both a possibility that Essers and Kazemier should then themselves be regarded as first carriers and that if, on its face surprisingly, the Dutch courts would not regard the carriage as subject to CMR at all, Essers and Kazemier would be liable under the general law.
57. More fundamentally, as discussed in paras 44-47 above, CMR represents a balanced jurisdictional régime adopted across a wide-range of some 55 states, only half of which are Union member states. I cannot regard its tailored balance as impinging on any of the principles of Union law which have been explained by the Court of Justice in the authorities discussed above, and which it is for us to apply. I conclude that nothing in Union law prevents effect being given to article 31.1 of CMR, under which it is clear that neither Essers nor Kazemier can be sued here.
58. I add, though it is unnecessary for my decision, that I cannot believe that it is wholly inadmissible under Union law to bear in mind the interests of those third party states in a régime which operates with some certain degree of consistency across all member states. Restrictions under Union law on the ordinary application of an international convention like CMR potentially undermine the uniformity and predictability that are the aim of such conventions. This tends to suggest that any over-riding interests of Union law should be relatively narrowly confined.
Conclusion
59. It follows from the above that I would allow this appeal, and restore Cooke J’s order setting aside the service of the claim forms on Essers and Kazemier.
Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH
[2001] EWCA Civ [2002] ILPr 26, [2001] 1 LLR 490, [2001] EWCA Civ 61, [2001] CLC 643, [2001] 1 Lloyd’s Rep 490, [2001] 1 All ER (Comm) 883
Rix LJ
CMR and its interpretation
Before turning to the issues themselves, I should say something about CMR. It has entered English law as a Schedule to the Carriage of Goods by Road Act 1965. Since the Civil Jurisdiction and Judgments Act 1982, which brought the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters of 1968 (the “Brussels Convention”) into English law, the English courts have become familiar with articles 21 and 22 of that Convention, with their concepts of “first seised” and “the same cause of action”, and also with the jurisprudence of both the European Court of Justice and the English courts on the nature of such concepts. It is worth reminding oneself, therefore, that CMR, whose date is 1956, predates the Brussels Convention by 12 years, and was sponsored not by the European nations which first signed the Treaty of Rome but by the United Nations. The learning of the Brussels Convention is therefore an uncertain guide to difficulties of construction under article 31 of CMR. Nevertheless the contracting parties are confined to states within Europe, with the exceptions of Russia and Turkey whose borders extend beyond Europe. Its genesis was largely the work of a committee set up by a Working Party on Legal Questions, a subsidiary organ of the Inland Transport Committee of the United Nations Economic Commission for Europe. The negotiations were conducted mostly in French. The only authentic languages of the text are French and English. The working papers, in French and English, are deposited in the Library of the United Nations at Geneva.
The leading case on the interpretation of CMR in English law is Buchanan v. Babco. The House of Lords there applied the famous statement of Lord Macmillan in Stag Line Ltd v. Foscolo, Mango & Co Ltd [1932] AC 328 at 350 as to the correct approach to the construction of the Hague Rules. Lord Wilberforce said (at 152E/F):
“I think that the correct approach is to interpret the English text, which after all is likely to be used by many others than British businessmen, in a normal manner, appropriate for the interpretation of an international convention, unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptance: Stag Line Ltd. v. Foscolo, Mango and Co. Ltd. [1932] A.C. 328, per Lord Macmillan, at page 350. Moreover, it is perfectly legitimate in my opinion to look for assistance, if assistance is needed, to the French text. This is often put in the form that resort may be had to the foreign text if (and only if) the English text is ambiguous, but I think this states the rule too technically. As Lord Diplock recently said in this House the inherent flexibility of the English (and, one may add, any) language may make it necessary for the interpreter to have recourse to a variety of aids: Carter v. Bradbeer [1975] 1 W.L.R. 1204, 1206. There is no need to impose a preliminary test of ambiguity.”
Lord Salmon spoke to similar effect (at 161B, G/H). Lord Dilhorne was more sceptical (at 156F) in particular as to the propriety or utility of consulting the French text (at 158F). Lord Edmund-Davies and Lord Fraser of Tullybelton, who were in the minority, were also sceptical of the utility of consulting the French text, at any rate unaided, but agreed with Lord Wilberforce about the propriety of doing so, provided however that the English version is ambiguous (at 166G/167C, 170C). I cannot help feeling that, over 20 years later, some of that scepticism would be moderated.
In Fothergill v. Monarch Airlines Ltd [1981] AC 251, a case on the Warsaw Convention, the House of Lords held that, in consulting the French text of a convention, there was no need of qualified experts and the court could use its own knowledge of the foreign language. It also held that cautious use of the travaux préparatoires of such conventionscould be made, provided three conditions were met: there was an ambiguity to be resolved, the material involved is public and accessible, and it must clearly and indisputably point to a definite legislative intention.
There is a dispute in this court as to whether it is appropriate to look at certain material under the guidance of that ruling. Hill & Messent, CMR : Contracts for the International Carriage of Goods by Road, 3rd ed, 2000, at para 0.21 states that there are no travaux préparatoires available in relation to CMR in the sense spoken of in Fothergill, and at footnote 66 cites an opinion of the Dutch supreme court (29.6.90 (1990) 25 ETL 589, 627) that it is not possible to have regard to the drafting history of CMR since no travaux préparatoires have been published or made available for public consultation.
Unlike the Brussels Convention, there is no European Court of Justice to ensure a uniform approach throughout the contracting states to the interpretation of CMR. The doctrine of an “autonomous meaning”, familiar from the jurisprudence of the Brussels Convention, therefore has uncertain status. There is a fair body of academic opinion, however, that, as far as possible, uniform law such as CMR should be autonomous and interpreted only by reference to itself (see Clarke, International Carriage of Goods by Road: CMR, 3rd ed, 1997, at 15/16, and Haak, The CMR – Interpretation, at 224/7 of Theunis, International Carriage of Goods (CMR), 1987). Nevertheless, since CMR is not a complete and self-contained code, foreign courts have frequently resorted to national law, at any rate where CMR is perceived as silent. It might be said that Buchanan v. Babco is not so much an authority in favour of the autonomous approach, as an approach which respects the objective of uniformity. But perhaps that is a distinction without a difference: see in any event In re H (Abduction: Acquiescence) [1998] AC 72 at 87, and R v. Secretary of State for the Home Department, ex parte Adan (HL, 19.12.00 at 12, 30). The jurisprudence on the Brussels Convention indicates that, even in the case of a code as self-contained as that, not everything is given an autonomous meaning. The parties in this court have wavered in their submissions on this question.
No decisions of foreign courts as to the interpretation or application of article 31(2) have been cited to the court on this appeal.
I turn now to the issues, beginning with issue (ii).
Issue (ii): Was the Austrian action “pending” when commenced but not yet served?
It is to be observed that articles 31(1) and (2) speak in terms of bringing an action (“the plaintiff may bring an action” (article 31(1)), “the court or tribunal before which the first action was brought…the country in which the fresh proceedings are brought” (article 31(2)), of starting an action (“no new action shall be started” (article 31(2)), and of an action being pending (“Where…an action is pending before a court…” (article 31(2)). The French text also uses three different expressions, but not in quite the same way: thus “bring” in article 31(1) is matched by the expression saisir (“le demandeur peut saisir…les jurisdictions…”), whereas in article 31(2) “brought” is matched by intentée (“la jurisdiction devant laquelle la première action a été intentée…le pays où la nouvelle action est intentée”) which is the same expression as is used to match the word “started” in the same paragraph (“il ne peut être intenté aucune nouvelle action”); and the expression “pending” is matched by en instance (“une action est en instance”).
On this basis there is room for the view that article 31 distinguishes between starting or bringing an action on the one hand (être intenté), and an action being pending on the other hand (être en instance). Otherwise, there appears to be no reason why the same expression could not be used throughout, viz start or bring (être intenté).
On the other hand, Mr Mildon on behalf of Leitner submits that the juxtaposition in article 31(2) between the pending of the first action and the start (or bringing) of the second (or new or fresh) action indicates that the same concept, despite the change of language in both the English and the French texts, is and must be at work. And indeed the point can be made that, if an action can only be pending once service has been effected, then the prohibition on bringing a new action only operates after service of the first action brought (“Where…an action is pending…no new action shall be started…”). On that basis, if the second action is brought before service of the first action, there is nothing to prohibit the bringing of the second action, and both actions, albeit between the same parties on the same grounds, are permitted to continue. Therefore, it is said, the concept of pending is fulfilled as soon as the action is brought.
It is well known that English law distinguishes between the issue and service of a claim form, and that traditionally it is issue which marks the commencement or start or bringing of the proceedings, not service. Thus for limitation purposes it is the issue of the claim form which is critical, not service (provided of course there is due service in the proper course of events). On the other hand, the establishment of jurisdiction depends on service: if, therefore, the claim form has to be served out of the jurisdiction, then, save in the case of jurisdiction which is already provided for by the Brussels-Lugano Conventions, permission has to be obtained from the court even to issue a claim form for service out of the jurisdiction and in any event to serve such a claim form when once obtained. And it is only after service that the defendant is called upon to state whether he challenges the jurisdiction of the English court.
When, then, is an action pending under English law (if it is a question of English law, rather than a matter of an autonomous meaning, or even a matter for Austrian law)? That question was considered in Dresser UK Ltd v. Falcongate Freight Management Ltd [1992] 1 QB 502 for the purposes of article 22 of the Brussels Convention. Article 22 provides (emphasis added):
“Where related actions are brought in the courts of different contracting states, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings…”
Article 21 similarly speaks in terms of “the court first seised”. What does that expression mean? In Zelger v. Salinitri (Case 129/83) [1984] ECR 2397 the European Court of Justice had to answer that question. It did so by glossing the expression as meaning “the [court] before which the requirements for proceedings to become definitively pending are first fulfilled” (emphasis added), and continued “such requirements to be determined in accordance with the national law of each of the courts concerned” (para 16 at 2408).
The European Court explained the reasoning by which it arrived at this decision in the following paragraphs (at 2407/8):
“10. It should be pointed out that the rules of procedure of the various Contracting States are not identical as regards determining the date at which the courts are seised.
“11. It appears from information on comparative law placed before the Court that in France, Italy, Luxembourg and the Netherlands the action is considered to be pending before the court from the moment at which the document initiating the proceedings is served upon the defendant. In Belgium the court is seised when the action is registered on its general roll, such registration implying in principle prior service of the writ of summons on the defendant.
“12. In the Federal Republic of Germany the action is brought, according to Paragraph 253 (1) of the Zivilprozeßordnung, when the document initiating the proceedings has been served on the defendant. Service is effected of its own motion by the court to which the document has been submitted. The procedural stage between the lodging of the document at the registry of the court and service is called “Anhängigkeit”. The lodging of the document initiating the proceedings plays a role as regards limitation periods and compliance with procedural time-limits but in no way determines the moment at which the action becomes pending. It is clear from the aforementioned Paragraph 253, read together with Paragraph 261 (1) of the Zivilprozeßordnung, that an action becomes pending once the document initiating the proceedings has been served on the defendant.
“13. It follows from the comparison of the legislation mentioned above that a common concept of lis pendens cannot be arrived at by a rapprochement of the various relevant national provisions. A fortiori, therefore, it is not possible to extend to all the contracting parties, as is proposed by the plaintiff in the main action, a concept which is peculiar to German law and which, because of its characteristics, cannot be transposed to the other legal systems concerned…
“15. Since the object of the Convention is not to unify those formalities, which are closely linked to the organization of judicial procedure in the various States, the question as to the moment at which the conditions for definitive seisin for the purposes of Article 21 are met must be appraised and resolved, in the case of each court, according to the rules of its own national law. That method allows each court to establish with a sufficient degree of certainty, by reference to its own national law, as regards itself, and by reference to the national law of any other court which has been seised, as regards that court, the order or priority in time of several actions brought within the conditions laid down by the Convention.”
Thus in Dresser v. Falcongate the court of appeal had to determine when under English law an English action becomes definitively pending. In that case the competition was between an action in the Commercial Court in London (where the writ was issued on 15 July 1988 but not served until 13 July 1989) and an action in the District Court in Rotterdam (where the proceedings were instituted on 21 February 1989). The court of appeal held that in English law the English action, although begun by the issue of the writ, did not become definitively pending until service. Thus the English court was not seised of the action until 13 July 1989. The case was remitted to the Commercial Court for it to find whether the Rotterdam court was seised of the matter before or after that date.
Bingham LJ said (at 522E/523C):
“Although (as recognised in Zelger v. Salinitri [1984] ECR 2397) practice on the Continent of Europe varies from country to country, Mr. Leggatt accepted that courts in those countries would not ordinarily regards themselves as seised of proceedings until (at earliest) the proceedings had actually been served on and thus brought to the attention of the defendant. But he pointed out that service and notice were not in all cases coincident. Thus under Dutch procedure, for example, a defendant resident abroad is treated as served when a copy of the proceedings is served on the officier van justitie for the issuing court, and the French procedure provides in similar circumstances that service is complete when the huissier delivers the proceedings to the ministère public. While grateful to be told of these departures from the ordinary rule, it does not affect my conclusion. We are concerned to analyse and apply English procedure, and we will review that of other countries only when an issue under the Convention falls to be decided. We must then accept their interpretation of their procedural law. It may, however, be that in other countries as well as this procedural rules will call for reconsideration in the light of the Convention.
“Mr. Leggatt urged that it would be contrary to the ratio of the Zelger decision to force English procedure into a straightjacket of European design. I agree. But the procedural idiosyncrasy is not (like national costume or regional cuisine) to be nurtured for its own sake and in answering the question before us we must have regard to the realities of litigation in this country and the purpose of the Convention, not to tradition, nomenclature or rules developed for other purposes. Despite the length of my approach to it the question is, at root, quite a short one.
“With genuine respect to the contrary opinions of Hirst J. and Hobhouse J., it is in my judgment artificial, far-fetched and wrong to hold that the English court is seised of proceedings, or that proceedings are decisively, conclusively, finally or definitively pending before it, upon mere issue of proceedings, when at that stage (1) the court’s involvement has been confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiff’s claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve the writ or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiff’s claim in any way, and not entitled to do so save by calling on the plaintiff to serve or discontinue; (6) the court cannot exercise any powers which, on appropriate facts, it could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the court.”
It will be observed that for these purposes the requirement was not merely that the proceedings be pending, but that they should be “definitively” pending, a matter remarked on by Bingham LJ at various points of his judgment, viz 519G/520D and 523A.
In Molins Plc v. GD SpA [2000] 1 WLR 1741, the court of appeal had to apply the Dresser v. Falcongate decision to a case where the competing jurisdictions were England and Italy. The English claim form was served on the defendant in Italy on 30 July 1999. Ten days earlier, on 20 July 1999, the defendant in Italy served the English claimant with an Italian writ by fax: under Italian law permission to serve by fax had to be obtained (and was obtained), but under the relevant bilateral treaty between England and Italy for the service of legal proceedings, service in England had to be in accordance with the rules for service in England, and they required that service by fax was only good service where the defendant had previously indicated his willingness to be served by fax, which was not the case. The court of appeal therefore found that the Italian court was not definitively seised, because (a) Italian law required service for an Italian court to be definitively seised, and (b) that would not occur under Italian law until the irregularity of the service by fax had been validated. That case is a good example, for the purpose of the test under the Brussels Convention, of how it is necessary to look at the requirements of both English law and the law of the competing foreign jurisdiction in order to decide whether one court had been seised earlier than the other, or in other words whether one action was already definitively pending before the other had become so.
For these purposes, it will be noted that the test is not whether one action had become definitively pending before the other action was brought, but which of the competing actions had first become definitively pending in its respective jurisdiction. This analogy, and it is no more than that, supports Mr Mildon’s submission that in principle one would expect to find that the comparison in article 31(2) is between the same concepts, not different ones.
The evidence before the court is that Austrian law similarly distinguishes between the issue and service of proceedings For these purposes expert evidence was provided (in writing) by Dr Peter Csoklich on behalf of Leitner and by Dr Rainer Kornfeld on behalf of Merzario, both Viennese lawyers. They were in agreement as to the following:
(a) that the Viennese action was filed on 16 July 1999, received by the Viennese Commercial Court on 19 July 1999, subject to a ruling by the Austrian Supreme Court that the case came under Austrian jurisdiction pursuant to article 31 of CMR and assigned to the Viennese Commercial Court on 1 September 1999, and served on Merzario on 22 December 1999;
(b) that Austrian law distinguishes between two phases, the first phase starting with filing of the proceedings and going down to service (“Gerichtsanhängigkeit” or legal pendency), and the second phase beginning with service (“Streitanhängigkeit” or dispute pendency);
(c) that a subsequent claim is only barred by the Austrian doctrine of lis pendens after the first claim has been served upon the defendant;
(d) that there are no decisions in Austrian law whether for the purposes of article 31(2) of CMR the concept of “pending” corresponds to the Austrian concepts of Gerichtsanhängigkeit or Streitanhängigkeit respectively;
(e) that Austrian courts hold that the provisions of CMR should be interpreted autonomously, without recourse to national law, in order to ensure a uniform interpretation, (unless, adds Dr Kornfeld, there is a gap in the Convention which has to be filled up by national law); and
(f) that German law similarly distinguishes between Anhängigkeit (“pending” simpliciter) and “Rechtsanhängigkeit” (the German equivalent of Austria’s Streitanhängigkeit), with similar effect.
There, however, agreement ends.
Thus Dr Csoklich derives assistance from the German text of CMR (not of course an authentic text, but one which apparently was coordinated between Germany, Austria and Switzerland), which translates article 31(2)’s “pending” as simply anhängig: and on this basis he refers to writers, such as Basedow (in Münchener Kommentar zum HGB, Art 31 CMR, Note 32) and Demuth (in Thume, Kommentar zum CMR, Article 31, note 53), as support for the opinion that proceedings are “pending” from the date of filing. He also expresses the view that there is no gap in article 31 such as to permit reference to national law, and that Basedow has supplied an autonomous meaning for article 31, which would therefore be adopted by the Austrian courts, in his view that the adoption of the simple “anhängig” is a deliberate preference for the concept of pendency upon filing.
Dr Kornfeld on the other hand disputes the relevance of the German text, as being unauthentic, and points out that Löwe (in TranspR 1988, 309, 313, found translated into English in Theunis at 145, 152) implies that the contracting states could not reach agreement as to whether the pendency of an action should be judged by domestic or foreign procedural law. An intentional gap was therefore left in CMR for each state to resolve according to its lex fori (Fremuth/Thume in Frachtrecht Art 31 CMR, Note 17). (Dr Roland Löwe was the Austrian negotiator for CMR and in 1975 published, under the auspices of the UN, a lengthy Commentary on CMR. I shall need to refer to Löwe’s Commentary below.) Dr Kornfeld’s view is that, despite the tendency of Austrian courts to be influenced by German court decisions where the law is the same, in the instant case Austria would be guided by its own Civil Procedure Code. He also cites Herber/Piper, CMR Art 31 Note 24, for the view, contrary to Basedow, that an action is pending only after service.
Seeing the reliance placed by Dr Csoklich on Basedow, I set out the passage referred to:
“The text [of article 31(2)] does not provide any indications enabling the precise point in time to be determined. In similar circumstances the European Court of Justice ruled in Article 21 of the European Court’s constitutional charter that the point in time which counts would be decided by the lex fori of the court dealing with the case at issue; this principle is also to be followed for the CMR. If therefore, it is accepted before a German court that the same case is already pending at the Commercial Court in Zürich, the respective point in time of pendency, and therefore the chronological sequence, will consequently be determined in accordance with the law of civil procedure in Zürich and the German law of civil procedure. In so far as German law is applied, the point in time at which the statement of claim is submitted to the court will be instrumental, and not the date on which the statement of claim is delivered to the respondent as stated in § 261 of the (German) Code of Civil Procedure. The discrepancy in the German translation in that it does not include Rechtsanhängigkeit as a requirement is deliberate and prevents the petitioner in a German court from losing the race.”
I do not share Dr Csoklich’s view of this passage. It is true that Basedow expresses the opinion that the deliberate omission of the concept of Rechtsanhängigkeit from the German text “prevents the petitioner in the German court from losing the race”. However, this is not because he was formulating an autonomous meaning for the word “pending” (“en instance”) which German courts would adopt, but, on the contrary, because in his opinion, as in the case of the Brussels Convention, the courts would have to decide whether an action was pending or not by reference to national law (and in particular the lex fori). Therefore, in German courts the claimant would have an advantage because the word “anhängig” pointed in the direction of pendency upon mere filing. That is of no assistance to an English court which, by parity of reasoning, would have to apply English law (the lex fori) guided by the authentic English text. At most, Prof Basedow’s view might permit the inference that an Austrian court, applying Austrian lex fori, would, by analogy with German law, also regard an Austrian action as pending upon filing. On the other hand, I can well imagine that the word anhängig was used in the German translation, in circumstances where different expressions are used in Germany and Austria (I am not sure what the position is in Switzerland), as the most neutral possible word, without the taking up of any deliberate position as to the correct construction of the authentic text of article 31(2).
As it is, despite the lack of Austrian (or apparently German or Swiss) decisions on the point, it so happens that in this very case the judge in the Viennese Commercial Court (Judge Kaiser) has indicated her understanding that “pending” is to be understood in the sense of Streitanhängigkeit rather than Gerichtsanhängigkeit. Thus on 15 June 1999 she wrote to the Austrian Ministry of Justice, stating (inter alia) that in Austria Anhängigkeit under article 31(2) is to be understood as Streitanhängigkeit (Für Österreich bedeutet diese Rechtsansicht, dass unter Anhängigkeit im Sinne des Art 31 Abs 2 Streitanhängigkeit zu verstehen ist.”).
To revert to Zelger v. Salinitri: it will be recalled that there, in paragraph 12 of its judgment (cited above at para 31 of my judgment), the European Court of Justice expressed the view that in German law the concept of Anhängigkeit initiated by the filing of the action “plays a role as regards limitation periods and compliance with procedural time-limits but in no way determines the moment at which the action becomes pending…an action becomes pending once the document initiating the proceedings has been served on the defendant.” Further light is thrown on this finding in the Opinion in that case of Advocate General Mancini (at 2410ff). He pointed out (at 2411) that the German text of article 21 of the Brussels Convention (also) makes use of the concept of Anhängigkeit (in fact the word “anhängig” is used to translate what in the English text is the word “brought”, as in “Where proceedings involving the same cause of action and between the same parties are brought in the courts of different states…”). He continued –
In the terminology of German legal writing on the law of procedure and of German case-law, that term designates pendency deriving from lodgment (and capable of producing certain effects, such as causing time to cease to run for the purposes of limitation periods Zivilprozeßordnung (Code of Civil Procedure) whereas pendency which derives from service and removes jurisdiction from a court later seised is defined as Rechtsanhängigkeit. The national court suggests that it can be deduced from the foregoing that Article 21 was intended to make priority dependent on the simple lodging of the document initiating the proceedings…
“Let me say straight away that Article 21 cannot be interpreted as the national court proposes…Let us leave aside for the moment the obviously marginal argument derived from the German text of the Convention. A problem such as the one before the Court can only be resolved by (a) ascertaining what is meant by lis pendens in the context of Article 21, and (b) examining the six legal systems to see if they provide a uniform rule in this case, and, therefore, if a uniform rule of law can be found in Article 21.”
The European Court did not follow the Opinion of Advocate General Mancini in his search for and discovery of a uniform rule, and it is not for that purpose that I cite this passage. It is clear, nevertheless, that despite the German text of the Convention (there an authentic text), Mr Mancini advised and the European Court thought that an action only becomes pending in Germany, in at any rate any meaningful sense for the purpose of the doctrine of lis pendens, after service. Moreover in saying this, the European Court was expressing a view as to German law, not as to the meaning of article 21, which it had not yet reached.
For these reasons, despite the evidence of Dr Csoklich and the writings of Basedow, and while I remain fully conscious that I am concerned with article 31(2) of CMR and not article 21 of the later Brussels Convention, I believe that I am entitled to find that both under German law and under Austrian law, but at the very least under Austrian law (see the letter of Judge Kaiser), an action is pending under article 31(2), for the purposes of the doctrine of lis pendens, only upon service of the initiating document. After all, the Austrian term Streitanhängig means lis pendens.
The question remains, however, what an English court, applying the English text of article 31(2), with such assistance as is appropriate from the French text, should hold is the meaning of “pending” (“en instance”). I have already cited Dresser v. Falcongate, a decision that, for the purposes of the Brussels Convention’s article 21/22 test of “definitively pending”, an action is pending in English law only from the date of service. Nevertheless, that decision recognised that the traditional view of English law had previously been that an action was pending once it was brought and brought once the writ was issued, and it was that traditional view that had been applied at first instance, in Kloeckner & Co AG v. Gatoil Overseas Inc [1990] 1 Lloyd’s Rep 177 (Hirst J) and in Dresser v. Falcongate itself (Hobhouse J), even to articles 21/22: see at 515/519. Nevertheless, aided by the considerations that the test to be applied was “definitively” pending (at 519G), but also that “In determining the effect of national law for purposes of the [Brussels] Convention we must, I think, have regard to the international purpose which the Convention was made to achieve” (at 515A), Bingham LJ arrived at the conclusion, which I have already cited above, that a new rule was required to define the time when the English court is seised of proceedings.
The opinions of commentators are not of any particular assistance. There is nothing in Löwe’s 1975 Commentary which comments on the issue (see para 246). Löwe’s chapter in Theunis says nothing more than to raise the question whether the issue is to be decided under domestic or foreign law (at 152, para 22). Clarke is silent about the problem (at 188/9). Only Hill & Messent ventures a more positive comment (at para 10.38), pointing out that
“The specific reference to “before a court or tribunal” must mean that at least some step in the action has been taken. The French text makes the position clearer, stating that the subsequent claim must be suspended when “une action est en instance devant une jurisdiction compétente”. In England, an action commences once the writ is issued, which must therefore be the earliest point at which an action could be considered to be pending. However, a similar question has arisen before the English courts in the context of the Brussels Convention. While not strictly directly relevant to CMR, the underlying considerations which underpin the current position of the English courts in that context would seem to have equal relevance to the proper interpretation of CMR.”
It is now time for me to state my conclusions on the issue. In my judgment, “pending” in article 31(2) should be understood in a sense which does justice, in an international context, to the concept of lis pendens, and so understood it points to a view that English proceedings should not be regarded as pending until they are served. Whether that is to give “pending” an autonomous meaning, or to interpret the expression under English law for the purposes of an international convention, or both, I leave for others to decide. That is not, however, to say that it is for English law, or for an English court, to decide for a foreign court and for a foreign law whether it would adopt the same test. Austria might decide to give another meaning to article 31(2) and it is for Austrian law to determine when under its own law an Austrian action is “pending”. Nevertheless, an English court which is asked to determine an application under article 31(2) to stay or dismiss an English action on the ground that a foreign action was already “pending” when the English action was “started”, is entitled to determine the test, to find, with the aid of evidence about the foreign law in question, whether the foreign action has reached a state of pendency under its own law, and to determine whether that was before or after the English action was started or itself reached a state of pendency. I come to these conclusions for the following reasons.
First, as a matter of the language of article 31(2), there is a contrast between the concept of an action being pending before a court and the concept of an action being started in or brought before a court. Otherwise, I do not see why the same language should not have been adopted throughout, viz the language of starting or bringing an action: so that the article could have provided – “Where…an action has been started in [or brought in or before] a court…” The same distinction is found in the French text, where the contrast is between être intenté and être en instance. These do not appear to be French legal terms of art, but they are fairly translated by the concepts of being started and of being pending. Thus the Concise Oxford – Hachette French Dictionary gives the meanings of intenter as to bring (specifically in a legal setting, as in “intenter une action contre”) and en instance as pending (as in “l’affaire est en instance”); see also “être en instance de divorce” (“to be engaged in divorce proceedings”)).
Secondly, while recognising the argument of Mr Mildon that the very competition between an action which is pending in one jurisdiction and started in another might suggest that the concepts of “pending” and “started” should be harmonised rather than contrasted, I find that the sense of contrast prevails. If that means, where the pending action has priority but the second action has been started before such priority has been achieved, that the words “no new action shall be started” is to be understood to mean “no new action shall be started or continued”, I would regard that as preferable to finding that the contrasted language is to be construed to mean the same thing. Alternatively, but in my view less satisfactorily, one would conclude that the second action which has been started before the pending action reaches priority simply escapes the bar which would have been achieved if the pending action had reached priority before the second action had even been started.
Thirdly, all the learning about the continental concept of lis pendens which has emerged from Zelger v. Salinitri is that it is the time of service rather than the time of the initiation of proceedings which is dominant, or at any rate that service is a necessary condition of pendency (see at paras 11/12 of the judgment and Dresser v. Falcongate at 522E). Given the desirability of finding an approach to the construction of article 31(2) which will fulfil its role in an international convention, and given also the reasoning of Dresser v. Falcongate in favour of a rule even in English law as to pendency as at the time of service (see especially at 523A/C), it is in my view preferable to adopt service as the time of pendency, while recognising, as does German and Austrian law and perhaps most continental jurisdictions, that the commencement of litigation is valid to mark limitation and perhaps other concepts. I recognise of course that Dresser v. Falcongate is addressing the concept of definitively pending in the differently worded Brussels Convention: but I do not regard the prospect of applying a different rule in English law to two international conventions, both of them essentially European conventions, as attractive. (This is despite the prospect that the situation may yet change again: amendments to the Brussels-Lugano Conventions are currently being negotiated and/or enacted whereby the concept of seisure there may revert, expressly, to the time of issue or rather the time of filing of the claim document with the court.)
Fourthly, I regard the evidence of Austrian law which is before the court as showing that an Austrian court would regard its own proceedings as “pending” for the purposes of article 31(2) only after service. It follows that both when the English proceedings were started and when they were served, the Austrian action had not yet become “pending” under Austrian law. In the meantime the English proceedings have been served and thus have on any view become pending for the purposes of article 31(2) in English law.
It follows that the application to bar, stay or dismiss the English proceedings must fail. In the circumstances, this appeal will be dismissed, irrespective of the answers to the third and fourth issues. It will be a matter for the Austrian court to determine what should happen to Leitner’s proceedings in the Viennese Commercial Court: but whatever it makes of article 31(2) of CMR, it will also presumably be called upon to consider articles 21 and 22 of the Lugano Convention. In this court it is common ground between the parties that the Austrian court could not be regarded as the first seised under the Lugano Convention.
Issue (iii): Is an action for a negative declaration such an action within article 31(2) as may bar a later action?
This is the issue which Colman J decided in Frans Maas with the answer “No”, on the ground that only substantive claims leading to monetary judgments which could be enforced in the strict sense could bar a subsequent action. In that case the carrier had claimed a declaration of non-liability in proceedings in Utrecht. A year later, the cargo owner’s assignee had made a substantive claim against the carrier in England. Colman J refused to dismiss the English action under article 31(2). However, he did stay it under articles 21 and 22 of the Brussels Convention.
Colman J reasoned as follows (at 183/4):
“Article 31.2 is designed to prevent multiplicity of proceedings in respect of the contract of carriage. “A claim referred to in paragraph 1 of this article” clearly means any claim advanced “arising out of carriage under this convention” in par. 1, whether advanced by a goods owner or carrier. The words “an action is pending before a court or tribunal competent under (paragraph 1)” means that legal proceedings in which a claim of the kind described in par. 1 (arising out of carriage under CMR) is advanced are in progress before a court identified as an appropriate venue under par. 1.
“Article 31.2 recognizes that, although an action may have been started in the appropriate venue, a judgment yet to be obtained or already obtained in the Court or tribunal in question may not be enforceable in another country which is also an appropriate venue. Clearly the judgment contemplated is one in respect of which enforcement proceedings would be applicable, namely a judgment for damages or other remedy properly the subject of such proceedings. That must be the correct construction because nobody would start new proceedings to achieve enforcement in a particular jurisdiction if all that they were after was a judgment for a negative declaration of which they sought recognition for defensive purposes as distinct from enforcement in that other jurisdiction. Consequently, in art. 31.2 the pending action or the judgment obtained, as the case may be, and the new action contemplated as being started in another jurisdiction must all involve claims for enforceable relief as distinct from a declaration of non-liability, which might be expected to be enforced. Moreover, the bringing of an action “on the same grounds” contemplates duplication of a claim so as to suggest that this paragraph is indeed aimed at protecting the nemo debit bis vexari principle and is not concerned with preventing defensive cross-claims. This construction is also supported by the contents of pars. 3 and 4 of art. 31 which strongly suggest that when the article refers to an enforceable judgment, it means one capable of being the subject of enforcement proceedings.”
The option of staying Merzario’s English action under the Brussels Convention in these proceedings is not open, since in this case the Austrian court is not the court “first seised” for the purposes of that Convention’s articles 21/22. That is because the English proceedings were served first: see Dresser v. Falcongate.
Mr Mildon submits that on this issue Frans Maas was wrongly decided. He submits that the most obvious manifestation of the problem of parallel proceedings is the case where A seeks declaratory relief against B in one action and B seeks monetary relief against A in the other action, and that the authors of CMR must have wished to deal with such a case. He submits that it is well recognised that claims for negative declaratory relief have always been common on the continent: see para 23 of the Opinion of Advocate General Tesauro in The Tatry [1994] ECR I-5439, [1999] QB 515, where he said:
“It should also be borne in mind that the bringing of proceedings to obtain a negative finding, which is generally allowed under the various national procedural laws and is entirely legitimate in every respect, is an appropriate way of dealing with genuine needs on the part of the person who brings them. For example, he may have an interest, where the other party is temporizing, in securing a prompt judicial determination – if doubts exist or objections are raised – of the rights, obligations or responsibilities deriving from a given contractual relationship.”
In The Tatry the European Court of Justice held that for the purposes of article 21 of the Brussels Convention a claim for a declaration that the claimant is not liable under a contract had the same cause of action and the same object as a later action for damages under the same contract. Although at one stage English courts may have viewed claims for negative declarations with suspicion or even hostility, the modern approach is more open minded: see New Hampshire Insurance Co v. Phillips Electronics North America Corporation [1998] CLC 1062, Messier Dowty Ltd v. Sabena SA [2000] 1 Lloyd’s Rep 428.
Mr Mildon submitted, moreover, that Colman J’s reason for finding a restrictive interpretation of the scope of article 31(2) in the concept of enforcement was not well founded. The proviso at the end of article 31(2) (“unless the judgment of the court or tribunal before which the first action was brought is not enforceable in the country in which the fresh proceedings are brought”) was only inserted because it is open under article 31(1) to found jurisdiction in the courts of a non-contracting state, as a result of which the judgments of that court would not be automatically enforceable under the provision of article 31(3) that the judgments of the courts of all contracting states, when enforceable under the lex fori, “shall also become enforceable in each of the other contracting States”. In such circumstances “enforceable” should be given a broad meaning to include the concept of recognition. In this connection Mr Mildon relied on Löwe’s 1975 Commentary, where (at paras 248/254) he spoke in the same breath of enforcement and recognition, and (at para 246) referred specifically to an action for a negative declaration in the following passage:
“The action must be the same action, ie it must relate to the same claim but it is not necessary that in the fresh proceedings the same parties should appear as plaintiff and defendant respectively. Thus, where payment is required of the defendant in one State, the defendant cannot refer to the court or tribunal of another State for the purpose of having that court or tribunal establish that payment is not due to the plaintiff of the earlier proceedings.”
Mr Mildon also relied on that passage as throwing doubt on Colman J’s second reason for confining the scope of article 31(2) to cases where the same monetary claim is made in the two jurisdictions (issue (iv) below). In this connection he wished to be able to rely on material, which he submitted could properly be consulted as travaux préparatoires, to show that whereas an earlier draft of article 31(2) would have supported Colman J’s reasoning (“The plaintiff may choose between the courts available to him in accordance with paragraph 1 above; but he may not bring proceedings on the same grounds against the same party before more than one court”), the ultimate draft in contrast was plainly intended to have a wider scope.
Mr Bright on the other hand sought to support Colman J’s reasoning by emphasising that the concept of enforcement found in both article 31(2) and article 31(3) is to be clearly contrasted to that of recognition. Thus he referred to section 4 of the Carriage of Goods by Road Act 1965, which provides that any judgment in any action pursuant to article 31(1) of a court within any of the other contracting states can be registered and enforced in accordance with Part I of the Foreign Judgment (Reciprocal Enforcement) Act 1933 (the “1933 Act”). In that connection Mr Bright points out, correctly, that only monetary judgments can be registered and enforced under Part I of the 1933 Act – see section 1(2)(b) which speaks of a “a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty”. He also sought to support his submission by reference to the well recognised distinction between enforcement and recognition, exemplified for instance in the treatment of those concepts in Dicey & Morris, The Conflict of Laws, 13th ed, 2000, at chapter 14, and in the Brussels Convention at articles 26/30 (headed “Recognition”) and 31/45 (headed “Enforcement”). Mr Bright went on to submit that the limited scope of article 31(2) was of no great concern, despite what he too recognised was the widespread continental use of actions for negative declarations, because of traditional means of giving effect to foreign judgments, and the lis pendens provisions of the Brussels-Lugano Conventions.
As for Mr Mildon’s travaux préparatoires, Mr Bright submitted that they did not fall within the necessary conditions laid down in Fothergill v. Monarch Airlines. In that submission he appears to have the support of Hill & Messent (see at para 21 above). At most this material could be said to show that article 31(2) was intended to have a wider scope than duplication of claims. It does not, in my judgment, otherwise point to a definite legislative intention on the disputed issue.
As to that issue, I do not think it is easily resolved. Apart from Löwe’s Commentary, there is no assistance in the text-books. For myself I would express the considerations as follows. First, I do not think that article 31(2) is limited to duplication of claims. Quite apart from the factor that in my view the qualification “on the same grounds” does not exclude the case of a negative declaration which mirrors a substantive claim (see under issue (iv) below), it seems to me that it would be unrealistic to think that the example given by Löwe in his Commentary, of a substantive claim in one jurisdiction followed by a claim for a negative declaration in another jurisdiction, should not be within the scope of a lis pendens provision such as article 31(2). This may be especially the case given the ready acknowledgment of the utility of the negative declaration in continental jurisprudence. I do not take account of the legislative history relied on by Mr Mildon, but certainly if account were taken of it, the intention to proceed beyond the duplication of claims would be indicated.
Secondly, however, it seems to me that the language of enforceability which pervades article 31(2) and (3) is not easily put aside. It is a fair point that enforcement and recognition are different concepts. The French text uses the language of “susceptible d’être exécutée” (article 31(2)) and “exécutée” (article 31(3) and (4)), which similarly reflects the language of enforcement (exécution) as distinct from recognition (reconnaissance) – see Titre III of the Nouveau Code de Procédure Civile. The language in article 31(3) – “as soon as the formalities required in the country concerned have been required with” – appears to point to enforcement in the strict sense. The reference to a judgment for costs against a plaintiff who fails in his action (in article 31(4)) is again a reference to enforcement in its strict sense. It also seems to be the case that the English draftsman of the 1965 Act thought that enforcement referred to the strict enforcement of a money judgment dealt with by Part I of the 1933 Act. That cannot affect the meaning of the convention wording, but it gives one pause. So what is the basis upon which “enforceable” wherever it appears is to be given the meaning of “enforceable or recognisable”? Of course, if one begins with the premise that article 31(2) is designed to give primacy to a claim for a negative declaration which is “pending” before a second claim is started, then it becomes necessary to give the word “enforceable” an extended meaning. But is that premise a justifiable assumption? It seems to me that it may not be, and if it is not, the assumption on which the need to extend the meaning of “enforceable” goes. The fact that negative declarations are a common feature of continental jurisprudence, and the further fact that, in the example given by Löwe in his Commentary, a second action for a negative declaration will be barred by a pending action for a substantive claim, do not mean that the reverse situation is necessarily intended to be covered. If it had been, it would have been more to the point for Löwe to have given the example of an action for monetary relief which is started after an action for a negative declaration has become pending. But he did not.
Thirdly, I therefore ask myself whether it may make sense as a matter of construction and of principle for a pending action for a negative declaration to be denied a barring effect on a subsequent action for a substantive claim. If so, the word “enforceable” can be given its proper effect. As for construction, the points made above suggest that “enforceable” should be given its proper meaning. I shall consider other points below. As for principle, there seems little reason why in the context of CMR a claim for a negative declaration should be given any primacy. Most claims will be by a goods owner against a carrier for loss or damage arising out of the carriage –or by one carrier against another for an indemnity as in this case. Claims by a carrier will be more or less confined to claims for freight. However, a claim for freight cannot be a claim “on the same grounds” as a counter-claim for loss or damage arising out of the carriage, for there is no set off against freight: see R H & D International Ltd v. IAS Animal Air Services Ltd [1984] 1 WLR 573, applying Aries Tanker Corporation v. Total Transport Ltd [1977] 1 WLR 185. It is I suppose possible that a different rule applies in other jurisdictions, although there is no evidence to that effect: but even if I assume that is so, I do not think that a claim for freight and a claim for damage to goods are “on the same grounds” (see further below under issue (iv)), and I note that Löwe in para 246 of his Commentary says that the actions “must relate to the same claim”. The question then arises, what is the virtue of giving an action for a negative declaration, if commenced first and pending, a primacy over another action raising the same issue, but in positive form as a claim for monetary relief? It must be remembered that the periods of limitation under CMR are strict. They are dealt with in article 32.
Save in the case of “wilful misconduct” in which case the time limit is extended to three years, there is a one year time limit for everything (article 32(1)). There are complex provisions, however, as to the date from which the one year commences to run. A written claim will suspend the period of limitation until such date as the carrier rejects the claim by notification in writing and returns the documents of claim (article 32(2)). Then in article 32(4) there is the important provision –
“A right of action which has become barred by lapse of time may not be exercised by way of counter-claim or set off.”
Such a provision is closely connected with the concept of parallel proceedings and lis pendens, because, where there are cross-claims which fall within the qualification “between the same parties on the same grounds”, what one party raises in one action in one jurisdiction and the other party raises in another action in another jurisdiction will have to be put into a single action in a single jurisdiction if the second action is to be barred by the pendency of the first. What then is to happen if the carrier begins an action for a negative declaration close to the end of the period of limitation and the goods owner similarly begins his action for a claim for loss or damage to his goods close to the end of the limitation period, and the action for a negative declaration achieves priority (whatever the test of that may be). The goods owner’s action will be barred, and his claim has to be canalised into the action of the carrier in the form of a counter-claim. That is the purpose of article 31(2), to canalise all actions “between the same parties on the same grounds” into one action, that with priority. However, by the time that the goods owner discovers that his action, which he commenced in time, is barred by the carrier’s action, it is too late for him to counter-claim in the carrier’s action. That would be a disgrace. How is such an unjust result to be avoided?
One possibility could be that the court which is required to bar or stay the second action, does so on terms that the counter-claim should be treated as being in time in the jurisdiction of the first action. Such a discretion is often exercised in English law, as part of the doctrine of forum non conveniens: see The Spiliada [1987] AC 460 and Baghlaf Al Safer Factory Co BR for Industry Ltd v. Pakistan National Shipping Co [1998] CLC 716. The difficulty with that approach, however, is that (a) the requirement of article 31(2)’s “no new action shall be started” does not appear to allow for that discretion; (b) whereas article 32(3) appears to contemplate that the question of an extension of the period of limitation shall be governed by “the law of the court or tribunal seised of the case”, that would appear to be a reference to the court in which the action with priority will continue, rather than a reference to the court which is required to bar or stay the second action; and (c) even the court in which the action with priority will continue appears to be barred by article 32(4) from extending time in order to allow a right of action which has become time barred to be raised by way of counter-claim or even set-off. That is confirmed, as a matter of English law, by Impex Transport Aktieselskabet v. A G Thames Holdings Ltd [1981] 2 Lloyd’s Rep 566. There Robert Goff J held that the normal English rule whereby a counter-claim is deemed to have been brought at the time of the issue of the original proceedings was ousted by article 32(4).
These considerations suggest to my mind that this court should be cautious before holding for the purposes of article 31(2) that a pending action for a negative declaration can bar a subsequent action for substantive relief. It is perhaps not impossible that some solution could be found to the limitation difficulties I have drawn attention to. But if one asks what is the importance of permitting such a bar, the most that can be said is that an action for a negative declaration is a well recognised form of action with the potential virtue of which Advocate General Tesauro spoke in The Tatry. But he said nothing more than that such an action was an “appropriate way of dealing with genuine needs…an interest, where the other party is temporizing, in securing a prompt judicial determination…” Where, however, time limits are short, as under CMR, it may be doubted whether the example of the carrier anxious to bring the goods owner to court, in the absence of a claim from that goods owner, should elicit much interest or sympathy. Much more likely, such a carrier is simply forum shopping. I do not think that the draftsmen of CMR had such a case in mind when they drafted article 31(2). The fact that Löwe spoke rather of the substantive action followed by the action for a negative declaration sufficiently demonstrates, in my view, what the draftsmen did have in mind. And the fact that this case is, apart from Frans Maas, the first time that this problem appears to have arisen in the context of CMR, and the fact that no other case from any foreign jurisdiction has been cited on the scope of article 31(2), all suggest that the action for a negative declaration has not been a vital tool to litigation under CMR, and that there will be no great loss to future litigants if such an action cannot by reason of that article gain priority over an action for substantive relief. Such a conclusion has the merit of being consistent with giving to the concept of enforcement its proper, but no more than its proper, scope.
For these reasons I would for my part be inclined to uphold the conclusion of Colman J in Frans Maas, but on the grounds of the partly different reasoning contained in this judgment. Thus I do not think that a second action for a negative declaration can be permitted to proceed in the face of a pending action for substantive relief between the same parties on the same grounds. However, not all of my reasoning was fully explored in argument in this court. I did raise the difficulty under article 32(4) in outline during the hearing, but there was little discussion of it. Therefore, because this appeal can be decided on issue (ii) alone, I would prefer to say that this part of my judgment reflects my opinion rather than my decision.
Issue (iv): Were the Austrian and English actions in any event “on the same grounds”?
Colman J held that they were not, but, in my judgment, where an action for a declaration of non-liability and an action for damages for breach arise out of the same contract and raise a mirror-image of the same claim, both actions may properly be said to be on the same grounds. The French translation of “on the same grounds” is “pour la même cause”. In article 21 of the Brussels Convention the English text speaks of “the same cause of action” and the French text speaks of “le même objet et la même cause”. In Gubisch Maschinenfabrick KG v. Guilio Palumbo (Case 144/86) [1987] ECR 4861 the European Court of Justice (at para 14) referred to objet as standing for “subject-matter” and cause as standing for “cause of action”. In The Maciej Rataj (Case C-406/92) [1994] ECR I-5439, [1995] 1 Lloyd’s Rep 302, the European Court of Justice further defined cause as comprising “the facts and the rule of law relied on as the basis of the action” (at para 39). In Haji-Ioannou v. Frangos [1999] 2 Lloyd’s Rep 337 at 351 the English court of appeal confirmed that “actions have the same cause if they have the same facts and rule of law as their basis”. Although these are all cases on the Brussels Convention, it seems to me that the definition of cause, whether as “cause of action” or as “the facts and the rule of law relied on as the basis of the action”, is entirely suitable for the English words of article 31(2) – “the same grounds”. I note that Löwe in Theunis at 152 and Hill & Messent at para 10.39 both suggest that “the same grounds” only refers to the same facts, but even if that were so, it would catch the mirror-image case of the action for a declaration of non-liability and the action for substantive relief for breach; and for myself I do not see why, whether as a matter of the English (“the same grounds”) or as a matter of the French (“la même cause”), the view of the European Court of Justice cannot be applied satisfactorily to article 31(2). Thus The Maciej Rataj was itself a case of such a mirror-image and the European Court of Justice found the requirements of article 21 fulfilled. So also in Haji-Ioannou v. Frangos, where the same plaintiffs brought proceedings on the same agreement and factual basis in Greece and England, Sir Thomas Bingham MR said (at 351) –
“…Although in England the plaintiffs are asserting that the same underlying agreement gave rise to different legal consequences from which different obligations and, therefore, different legal remedies flowed, the cause would appear to be the same in both countries.”
For these reasons, I would conclude, in respectful disagreement with Colman J in Frans Maas, that the Austrian and English proceedings were brought “on the same grounds”.
Conclusion
In conclusion, in my judgment this appeal should be dismissed. There is no longer any objection to CMR jurisdiction being properly founded in England (issue (i)). The concept of “pending” in article 31(2) under English law requires service of the proceedings, and on the evidence that is also the position under Austrian law: thus the Austrian action had not become pending under Austrian law before the English action had been served and so became, in my view, pending under English law. Issue (ii) is therefore to be resolved in favour of Merzario. In the circumstances, issues (iii) and (iv) are not decisive. I would, however, resolve issue (iv) in favour of Leitner on the basis that both actions were on the same grounds. And I would be inclined, without deciding, to resolve issue (iii) in favour of Merzario, on the basis that it was not intended that an action for a negative declaration should have priority under article 31(2) on becoming pending: because it cannot be enforced and would lead to limitation difficulties in connection with the canalisation of substantive claims.
LORD JUSTICE CHADWICK:
Although this is an appeal against an order made on 30 June 2000 by Mr Justice Longmore, the only issue which the judge was asked to decide – whether Article 31(1)(b) of the Convention on the Contract for the International Carriage of Goods by Road (“the CMR Convention”) permits a claimant to bring an action in the courts of England and Wales in circumstances where the goods were taken over by the carrier in Scotland – is no longer in dispute. The judge held that the relevant “country” for the purposes of the qualifying condition in Article 31(1):