CMR Carriage
Cases
Royal & Sun Alliance Insurance Plc & Anor v MK Digital Fze (Cyprus) Ltd. & Ors
[2006] EWCA Civ 629
Rix LJ
The judgment in England
In the event, the judgment of the English court, given by Aikens J in draft on 21 June 2005, just anticipated the judgment of the French court, which was expected on 23 June but in fact emerged on 7 July. Aikens J referred in his judgment to the desire of both parties before him to have his judgment in advance of that of the French court: otherwise, he said, he would have preferred to take more time to set out the reasons for his decision.
Aikens J held: (1) that Exel’s claim form was concerned with a CMR contract, for delivery in England; (2) that, despite what Hi-Tec had to say about the contract really being a commission de transport, for delivery in Italy, Exel had a good arguable case for the CMR contract which it alleged; (3) that article 31.1 of CMR prima facie therefore gave Exel jurisdiction in England for its claim, since that contract designated England as the place for delivery; (4) that the lis alibi pendens provision in article 31.2 of CMR did not bar Exel’s claim even though Hi-Tec’s French action had obtained priority for the purposes of CMR (issue plus service) before Exel’s English claim form had been served; (5) that priority (first seisure) was therefore achieved by the mere issue of Exel’s claim form, by virtue of the rule now contained in article 30 of the Judgments Regulation; (6) that Hi-Tec’s claim in France involved “the same cause of action” for the purposes of article 27 of the Judgments Regulation; and (7) that the English court did not have power to stay the English proceedings on grounds of forum non conveniens.
Aikens J thus dismissed Hi-Tec’s challenge to jurisdiction in the English courts. In doing so the judge did not need to reach other arguments placed before him by Exel, such as that it had alternative (non-CMR) bases of jurisdiction under articles 2 and/or 5.1 of the Brussels Convention. He presumably decided the article 27 (“the same cause of action”) point at the request of the parties, even though under the Judgments Regulation that decision is really for the court second seised, viz (on the judge’s view) the French court.
Article 31 of CMR
Before turning to the judgments in France, I need to set out article 31 of CMR and explain the lis alibi pendens dispute between the parties which arises out of article 31.2.
Article 31 provides:
“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 31 was considered by this court in Andrea Merzario Ltd v. Internationale Spedition Leitner Gesellschaft GmbH [2001] EWCA Civ 61, [2001] 1 Lloyd’s Rep 490. It was there held that for the purposes of CMR an action becomes “pending” and thus gains the priority of the article 31.2 bar (“no new action shall be started between the same parties on the same grounds”) only when it has been served as well as issued (“issue (ii)” at paras 25/52, 77/79, 101). The same rule, requiring service as well as issue in order to obtain the priority of first seisure, applied under article 22 of the (later) Brussels Convention: Dresser UK Ltd v. Falcongate Freight Management Ltd [1992] 1 QB 502. This rule of article 22 has since been changed under article 30 of the Judgments Regulation, under which only issue is now needed to obtain first seisure priority.
In the present case, Hi-Tec’s French action only became “pending” for the purposes of article 31.2 after Exel’s claim form had been issued. Is that enough for an article 31.2 bar? I made a passing (obiter) comment about such a situation in my judgment in Andrea Merzario at para 49:
“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 otherwise have been achieved if the pending action had reached priority before the second action had even been started.”
Chadwick LJ preferred my alternative suggestion and doubted my primary solution, saying (at para 79):
“For my part, I doubt whether the answer is to be found in art 31(2) of the CMR Convention.”
Below, Aikens J similarly preferred the alternative solution. Before this court, we have been treated to powerful but contrasting arguments on this issue. We only need to reach it if the judge’s finding that a good arguable case for a CMR claim within article 31.1 is upheld, and we will therefore revert to it below. However, it has been necessary to refer to this issue at this stage to make sense of events in the French proceedings, events which it is argued themselves bear directly on the prior issue of a good arguable case for a CMR claim within article 31.1.
Thus, the effect of article 31 of CMR was debated before the tribunal de commerce. Its judgment dated 7 July 2005 is elliptical, but it appears to have agreed that, for the purposes of article 31, French law is the same as English law (sc as stated in Andrea Merzario), namely “that proceedings are pending when the writ has been served on the defendant”. Therefore, Exel’s English action was not lis alibi pendens and constituted no bar to Exel’s French action. It did not go on, however, to consider whether articles 27 and 30 of the Judgments Regulation may have had the effect of giving the English action priority. It does not make explicit why that is so: but possibly because it thought that CMR’s article 31, being preserved by article 71 of the Judgments Regulation, was decisive. It therefore confirmed jurisdiction in France, but nevertheless stayed the proceedings at the request of Exel on the entirely separate ground that the criminal proceedings at Bobigny should take precedence. For these purposes it had cited Exel’s submission, which it appears to have accepted, in these terms:
Quantum Corporation Inc. & Ors v Plane Trucking Ltd. & Anor
[2002] EWCA Civ 350 [2002] 2 All ER (Comm) 392, [2003] 1 All ER 873, [2002] 1 WLR 2678, [2002] 2 Lloyd’s Rep 25, [2002] WLR 2678, [2002] 2 LLR 25, [2002] EWCA Civ 350
Lord Justice Mance:
Introduction
This appeal raises a point of principle regarding the applicability of the CMR Convention (“CMR”), scheduled to the Carriage of Goods by Road Act 1965, in circumstances where a contract embraces more than one type of carriage. Tomlinson J concluded that the correct approach was to characterise the contract as a whole, and that, unless the contract as a whole could be said to be for carriage by road internationally, any road carriage which it embraced fell outside the terms of the Convention. He gave permission to appeal, because of the general importance of the point.
The dispute arises between the four claimants/appellants and the second defendants, Air France. The four claimants are Quantum Corporation Inc., a Californian corporation, Quantum Peripheral Products (Ireland) Ltd. of Eire (“Quantum Ireland”), Expeditors (S) Pte Ltd. of Singapore (“Expeditors Singapore”) and Expeditors Sea Sky (Dublin) Ltd. of Eire (“Expeditors Ireland”). The last two companies were freight forwarders. The claim relates to the loss in transit between Singapore and Dublin of a consignment of 11,520 hard disks. Expeditors Singapore on 21st September 1998 issued its own house air waybill no. 4710119916 naming Quantum Asia Pacific Pte Ltd. as consignor and Quantum Ireland as consignee. For the purposes of the actual carriage, it consolidated the consignment with another (apparently also consisting of computer parts originating with one or other Quantum company), and, as agent for Air France, also issued a master air waybill no. 057-52326621 on 21st September 1998 naming itself as consignor and Expeditors Ireland as consignee.
Air France had no direct flight from Singapore to Dublin. The master air waybill thus recorded that the goods were to be carried in two stages. The first was to be from Singapore to Charles de Gaulle airport, Roissy, Paris by Air France, and the second (from there) to Dublin by Air France. Two corresponding entries appeared in a further box, each under a heading “Flight/Date”, namely “AF6753/22” and “AF9408/22”. It is common ground that these identify, firstly, an Air France flight from Singapore to Charles de Gaulle in France, and secondly a trucking service used by Air France to carry goods from Charles de Gaulle to Dublin airport, followed in each case by the date of intended carriage thereby (22nd, that is of September 1998). The present consignment was one of a large number of similar consignments involving the same parties which had been carried in the same way, daily or almost so, during 1998. Its carriage by road on a roll-on, roll-off basis from Charles de Gaulle to Dublin was sub-contracted by Air France to the first defendant, Plane Trucking, now insolvent. The consignment of hard disks (alleged to have been worth some US $1.5 million) was lost in North Wales by a pretended “hi-jack” in which the truck driver and one of Plane Trucking’s supervisors were involved as conspirators – each pleaded guilty and each has been sentenced to three years and nine months imprisonment.
The application before Tomlinson J was for judgment under Part 24 for damages to be assessed against both defendants. Although Air France’s pleadings had raised issues as to which claimant had any claim, counsel’s skeleton before the judge acknowledged that “Air France’s liability to the Claimant [sic] is not in issue”. The (limited) judgment that the judge gave was in favour of the claimants/appellants generally, and it has not been suggested before us that this was wrong. Counsel’s skeleton before the judge went on to identify as fundamental issues (a) whether the CMR Convention applied to the trucking leg from Charles de Gaulle to Dublin and (b) if so, whether the circumstances of the theft were such as to amount to wilful default within the meaning of CMR (cf article 29). We are only concerned with the former issue. If the second arises, it has been agreed to refer it back to the Commercial Court for resolution.
Under article 17 of CMR, a carrier is liable for total or partial loss occurring between the time he takes over the goods and the time of delivery, the only relevant exception for present purposes being if the loss was caused “through circumstances which the carrier could not avoid and the consequences of which he was unable to prevent”. Article 23(3) limits compensation to 8.33 units of account per kilogram of gross weight short. But, if the damage was caused by wilful default – by the international road carrier or by its servants or agents or any other persons of whose services it makes use for the performance of the carriage – article 29 prevents the carrier from limiting its liability.
Air France’s case, which the judge accepted, is that carriage by air subject to the Warsaw Convention ended at Charles de Gaulle, and that its liability thereafter fell to be measured by reference to its own terms and conditions, to which reference was made on the air waybill. Those conditions limited any liability on Air France’s part to 17 Special Drawing Rights per kilogramme of cargo lost – a more generous limit than the basic CMR limit. However, in respect of carriage not subject to the Warsaw Convention in any of its variants, they contained less favourable provisions regarding the standard and onus of proof of liability and, more importantly, no provision paralleling article 29 of CMR or disentitling Air France from relying on the limit of 17 Drawing Rights in the event of wilful default.
More specifically, Air France’s conditions provided as follows:
ARTICLE 1 –DEFINITIONS
“1.3 Applicable Convention: means whichever of the following instruments is applicable to the contract of carriage; [there followed a list consisting of the Warsaw Convention and four of its variants]” ….
ARTICLE 2 – APPLICABILITY
2.1 General:
These Conditions shall apply to all carriage of cargo, including all services incidental thereto, performed by or on behalf of Carrier; provided however that if such carriage is “international carriage” as defined in the applicable Convention (see Article 1: Definitions, under “Applicable Convention”) such carriage shall be subject to the provisions of the applicable Convention and to these Conditions to the extent that these Conditions are not inconsistent with the provisions of the Convention.”
“ARTICLE 11 – CARRIER’S LIABILITY
11.1 Carrier is liable to the shipper, consignee or any other person for damage sustained in the event of destruction or loss of, or damage to, or delay in the carriage of cargo only if the occurrence which caused the damage so sustained took place during the carriage by air. For the purposes of this Article carriage by air shall comprise the period during which the cargo is in the charge of the carrier, or in the charge or its agent.
11.2 Except as may be otherwise provided in any applicable Convention, Carrier is not liable to the shipper, consignee or any other person for any damage, delay or loss of whatsoever nature arising out of or in connection with the carriage of cargo or other services performed by the Carrier, unless such damage, delay or loss is proved to have been caused by the negligence or wilful default of Carrier and there has been no contributory negligence on the part of the shipper, consignee or other claimant ….
….
11.7 Unless the carrier has made a special declaration of value for carriage and has paid the supplementary sum applicable, liability of Carrier shall not exceed the applicable Convention limit or, if no Convention applies, 17 Special Drawing Rights, per kilogramme of cargo destroyed, lost, damaged or delayed. …”
Articles 11.1, 11.2 and 11.7 are thus relied upon by Air France in this case to limit their liability to 17 Special Drawing Rights per kilogramme. The practical effect is to restrict it in this case to £116,057.56, for which sum the judge gave judgment against Air France.
S.1 of the 1965 Act provides that the provisions of CMR “shall have the force of law so far as they relate to the rights and liabilities of persons concerned in the carriage of goods by road under a contract to which the Convention applies”. Chapter I of the Convention, consisting of articles 1 and 2, is entitled “Scope of Application”. It provides as follows:
“Article 1
1. This Convention shall apply to every contract for the carriage of goods by road in vehicles for reward, 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 country, irrespective of the place of residence and the nationality of the parties.
2. For the purposes of this Convention, “vehicles” means motor vehicles, articulated vehicles, trailers and semi-trailers as defined in article 4 of the Convention on Road Traffic dated 19th September 1949.
3. This Convention shall apply also where carriage coming within its scope is carried out by States or by governmental institutions or organisations.
4. This Convention shall not apply:
(a) to carriage performed under the terms of any international postal convention;
(b) to funeral consignments;
(c) to furniture removal.
5. The Contracting Parties agree not to vary any of the provisions of this Convention by special agreements between two or more of them, except to make it inapplicable to their frontier traffic or to authorise the use in transport operations entirely confined to their territory of consignment notes representing a title to the goods.
Article 2
1. Where the vehicle containing the goods is carried over part of the journey by sea, rail, inland waterways or air, and, except where the provisions of article 14 are applicable, the goods are not unloaded from the vehicle, this Convention shall nevertheless apply to the whole of the carriage. Provided that to the extent that it is proved that any loss, damage or delay in delivery of the goods which occurs during the carriage by the other means of transport was not caused by an act or omission of the carrier by road, but by some event which could only have occurred in the course of and by reason of the carriage by that other means of transport, the liability of the carrier by road shall be determined not by this Convention but in the manner in which the liability of the carrier by the other means of transport would have been determined if a contract for the carriage of the goods alone had been made by the sender with the carrier by the other means of transport in accordance with the conditions prescribed by law for the carriage of goods by that means of transport. If, however, there are no such prescribed conditions, the liability of the carrier by road shall be determined by this Convention.
2. If the carrier by road is also himself the carrier by the other means of transport, his liability shall also be determined in accordance with the provisions of paragraph 1 of this article, but as if, in his capacities as carrier by road and as carrier by the other means of transport, he were two separate persons.”
The basic issue that we have to address is, therefore, what constitutes a “contract for the carriage of goods by road in vehicles for reward” within the meaning of article 1(1). In addressing it, it is necessary to bear in mind the geographical pre-condition to the application of CMR which article 1(1) also introduces, namely that “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 country. The appellants’ case is simply and solely that, although there was only one contract, by it Air France contracted, firstly, for the carriage of goods by air to Charles de Gaulle and thence, secondly, for their carriage by truck to Dublin.
The judge addressed the Part 24 application on the basis that, although carriage by road from Paris to Dublin was Air France’s intended mode of performance, “Air France was not contractually obliged to carry the goods in that manner, and might if they had so wished have carried the goods on that leg by air”. We can, it seems to me, proceed on the same assumption. The evidence given on the subject by Air France’s solicitor, Mr Rosen, was as follows:
“It is correct that the contract of carriage recorded that it was Air France’s intention to truck the goods between Paris and Dublin, having flown them from Singapore to Paris; and that such intention was notified to the Claimants or their agents. Both the “house” air waybill No. 4710119916 issued by Expeditors International (page 1 of “AJP 1”) and the air waybill No. 057-52326621 issued by Air France (page 3 of “AJP 1”) refer to flights AF6753/22 and AF9408/22. I am told by Mr. Humphries that the former is the number of the relevant flight from Singapore to Paris CDG, and the latter is the number of the relevant truckingservice operated by Air France between Paris CDG and Manchester airport. However, although it was Air France’s intention to truck the goods from Paris CDG to Dublin, Air France contends that it was not contractually obliged to do so. Air France was contractually permitted to fly the goods on that leg if it had chosen to do so; see, for example, clause 6.3 of the Air France Conditions (page 53 of “AJP 5”).”
Clause 6.3 of Air France’s conditions provides:
“6.3.2 Carrier may without notice substitute alternate carriers or other means of carriage”.
Mr Rosen was thus accepting what seems to me the clear reality, that the contract recorded in the air waybill was for two legs, the first to be performed by air, the second a trucking leg – unless of course Air France elected to substitute some other means of transport in either case under clause 6.3.2. I add that condition 11.1 itself acknowledges the possibility that Air France might have goods in its possession for purposes other than carriage by air – otherwise there would have been no need for the expanded definition of what “carriage by air” should be taken to comprise for the purposes of that article. Here, the air waybill, by its description of the two contractual stages of transport, and by the identification of the second by its number as the trucking stage, expressly provided for the second stage to be by road. Before us, Mr McLaren said that Air France acknowledged that it was the intention or contemplation to carry by road from Paris to Dublin, and that it did not require the exercise of any option under clause 6.3.2 to do so, but submitted that the contract was for carriage by air to Paris and for carriage in any way that Air France liked from Paris to Dublin. There seems to me no basis for that submission. The position, as I have said, is that there was a contract providing for transport in two stages, one by air, the other by road. That the contract was reflected in an air waybill (a matter referred to in the respondents’ notice) does not affect this conclusion, when the air waybill itself records the two different stages.
For completeness, I add two points. First, the evidence shows that Quantum Ireland and Air France had in early 1998 communicated regarding, and on 13th May 1998 met with Expeditors Ireland at this last company’s Dublin premises to discuss, the trucking leg and Quantum Ireland’s dissatisfaction with Plane Trucking. There is an issue whether Air France actually agreed to use other truckers, but, however that may be, this evidence confirms Mr Rosen’s statement that, unless some other option was chosen, the present contractual arrangement contemplated and provided for carriage by road. It does not support the unreal suggestion that Air France was during 1998 repeatedly contracting to carry by air from Paris to Dublin, but was on each occasion electing under clause 6.3.2 to change the means of carriage or Mr McLaren’s submission that the mode of carriage over this leg was simply open. Secondly, CMR governed Air France’s contract with Plane Trucking (although Air France also required Plane Trucking to accept increased liability, basically up to the Warsaw Convention limits which Air France undertook towards those using its services: cf condition 11.1 of Air France’s conditions above).
Analysis
Two questions present themselves when considering article 1. The first is to what extent the application of the Convention depends upon a carrier having obliged itself contractually to carry by road (and by no other means). This depends upon the force, in context, of the word “for” in the reference in article 1 of the Convention to a “contract for the carriage of goods by road”. The second is to what extent (if at all) a contract can be both for the carriage of goods by road, within article 1, and for some other means of carriage, to which CMR does not apply.
Taking the first question, attention can for a moment be confined to a simple contract for carriage from A to B, without any unloading from the trailer. There is a range of possibilities, each of which may actually lead to goods being carried by road internationally: Thus: (a) the carrier may have promised unconditionally to carry by road and on the trailer, (b) the carrier may have promised this, but reserved either a general or a limited option to elect for some other means of carriage for all or part of the way, (c) the carrier may have left the means of transport open, either entirely or as between a number of possibilities at least one of them being carriage by road, or (d) the carrier may have undertaken to carry by some other means, but reserved either a general or a limited option to carry by road.
In case (a), the contract is on any view “for” carriage by road within article 1. If one were to confine the application of article 1 to case (a), that would, probably, mean that there was a reasonably clear-cut distinction between cases where the Convention would and cases where it would not apply. However, I would not for my part regard that as at all a satisfactory or likely interpretation of article 1. Many, if not most, carriage contracts contain options as to alternative modes of performance, whether general or related to specific emergencies. In case (b), the contract was also “for” such carriage, unless and until the carrier elected otherwise under such an option, which it never did. The mere inclusion of an (uninvoked) option in such a contract cannot sensibly be decisive to the application of CMR. In case (c), the contract never promised, but it permitted and the carrier elected for carriage by road. There seems on the face of it good reason to treat such a contract as being a contract “for” – in the sense of “providing for” or “permitting” – the carriage of goods by road which actually occurred under its terms.
A further point is that, if the carrier had elected to carry internationally by air, there would have been no doubt about the application of the otherwise applicable Convention on air carriage. Although the trigger to the application of CMR is the contract for carriage by road, it seems to me desirable to interpret that phrase in a manner which dove-tails the application of the two regimes as far as possible.
Finally, there is case (d). This is the case in which the prospect of carriage by road was the most remote, as far as those interested in the goods and contracting for the carriage were concerned. A possible divergence of view about its treatment emerges in the continental authority to which I shall come. I start however with the initial impression that it would be difficult to draw any very clear or satisfactory distinction between case (d) and the previous cases. If they are all within CMR, there seems to me much to be said for treating case (d) as also within CMR. Carriage by road contrary to the terms of a contract would raise different considerations.
Air France emphasises that CMR, in contrast with for example the Warsaw Convention, focuses on “the contract for the carriage of goods by road”, and not on the carriage. So it does, although it is worth noting that the Warsaw Convention also contemplates an agreement: see in particular article 1(2) (whereby “the expression international carriage means any carriage in which, according to the agreement between the parties, ….”) and article 5(2) (whereby the absence, etc. of an air waybill “does not affect the existence or validity of the contract of carriage which shall …. be none the less governed by the rules of this Convention”); and see generally Fellowes (or Herd) v. Clyde Helicopters Ltd. [1997] AC 534 and Western Digital Corp. v. British Airways plc [2000] 2 Ll.R. 142, esp. paragraph 42 (“Whilst it is clear that in certain respects the Convention scheme provides general rules rather than merely statutory contractual terms, it is also clear that the draughtsmen had very much in mind as a premise to its application the existence of a relevant contract of carriage”).
The truism that CMR focuses on the contractual position does not answer the question: on what aspect of the contractual position and as at what date does it focus? Air France’s case appears to stand for this, that the application of CMR depends upon examining the contract terms at the first moment when the contract is entered into, and that the actual operation of the contract terms is irrelevant. In my judgment, there is attraction in an alternative approach, according to which the application of CMR depends upon the occurrence of international carriage of goods by road pursuant to contract. The (somewhat stilted) reference in article 1(1) to “the contract for the carriage of goods by road”, which must derive by literal translation from the original French version of the Convention, appears to me quite capable of being so read.
In this connection, I note that the rights and liabilities which the Convention regulates are those arising out of actual carriage by road under a contract to which the Convention applies (cf. not merely article 1 of CMR and section 1 of the 1965 Act, but all the detailed provisions of CMR). It is not surprising, in this light, that the Convention in a number of places even switches emphasis to carriage or “traffic” as the object of its application: see e.g. articles 2, 31(1) and 32 and the Protocol of Signature at its end. (Indeed, the language of article 2 positively suggests that the application of CMR to roll-on, roll-off carriage on an agreed sea, rail, inland waterway or air leg does not depend upon whether such roll-on, roll-off carriage was agreed from the outset, but upon whether it actually occurred under the contract.) Secondly, I note that article 4 provides that “the contract of carriage shall be confirmed by the making out of a consignment note”, that article 6 provides for a consignment note to contain a number of particulars which would commonly only be known once such actual carriage begins and that article 9 provides that “the consignment note shall be prima facie evidence of the making of the contract of carriage, [and] the conditions of the contract …..” (although by article 4 it is also provided that the absence or irregularity of the consignment note shall not affect the existence or validity of the contract of carriage). Far from focusing on any initial or previous contractual arrangement or any optional methods of carriage which it may have contained, these provisions contemplate that whether there is a contract for carriage and on what conditions can be determined by reference to a document which will necessarily reflect the reality that the contract has now become, by agreement or election, one for carriage by road. I see no difficulty therefore in concluding that the determination whether there exists a contract for the carriage of goods by road within article 1 should take into account the actual operation of the contract under its terms. Nor does this conclusion in my viewinvolve any inadmissible circularity as suggested in the article, Combined Transport and the CMR Convention [1968] JBL 311, by P. F. Fitzpatrick (now Prof. Fitzpatrick of Birkbeck University) to which the judge referred. All it does is to adopt an appropriately larger perspective when making the relevant assessment.
The judge was right to state (paragraph 21 of his judgment) that “the purpose of the Convention was to standardise conditions under which international carriage by road is undertaken”. If express confirmation of this obvious object is necessary, it is also found in the preamble to the international convention. But standardisation would be incomplete and potentially capricious, if the application of CMR depended upon whether the carrier could be said to have contracted unconditionally and at the very outset to carry by road.
As I read paragraphs 18, 24 and 25 of his judgment, the judge did attach some significance to his conclusion that Air France was not contractually obliged to carry by road. It is not clear to me into which of cases (b), (c) and (d) he would have regarded Air France’s right to truck the goods over the Paris-Dublin leg as falling. In my view, and on the basis of the air waybill and Mr Rosen’s evidence, it fell within case (b). The judge’s own attention was, I think, focused on a different question, namely: once it was established that Air France had no absolute obligation to carry by road from Paris to Dublin, could the contract as a whole be characterised as one for carriage by road?
The judge considered that article 1 required any contract for carriage to be characterised as a whole. On this basis, the instant contract could not in his view properly be described as a contract for carriage of goods by road. It was in his view pre-dominantly for carriage by air. Underpinning his conclusion was, he said, the circumstance that the place of taking over could only be Singapore. But he added that, even if Air France could (implausibly, in his view) be treated as obliged to carry by road from Paris to Dublin, the contract would at most be a contract for carriage by both air and road, not a contract within article 1; and, even if that problem could be overcome, the only place of taking over could be Singapore, which would be “both absurd and contrary to the Warsaw Convention”.
It was in the judge’s view irrelevant to consider what might be the position under a reverse situation (for example, an initial trucking leg followed by air carriage). Even if, in such a case, the contract overall could be characterised as being for carriage by road (with the consequence, in the judge’s view, that CMR might apply to the road leg, although, by necessary inference from article 2, not to the air leg), that was not this case.
Before us, Mr McLaren for Air France advanced the test of overall characterisation only as a secondary case. His primary submission was that CMR only applies to a contract providing for carriage by road from start for finish, with the single exception being that contained in article 2. However, this submission would mean that a contract for carriage by road from Stockholm to Naples would be subject to CMR; that a contract for carriage from Stockholm to (say) Capri would also be subject to CMR, if the goods remained on their trailer for the short sea passage from Naples to Capri; but that no part of a contract for carriage by road from Stockholm to Naples and sea from Naples to Capri would be subject to CMR. Other, similar results can readily be envisaged, e.g. in respect of contracts for carriage from Spain to a Channel port in France or across the Channel into this country or from Eire to Marseilles (by roll-on, roll-off transport) with a possible final sea leg to Corsica.. I do not think that either the drafters of CMR or participants in the international carriage of goods would regard it as sensible that rights and responsibilities for the long international trucking legs in such cases should depend upon whether a carrier by road does or does not undertake the final sea leg, or, if it does undertake it, upon whether or not it transports the goods on their trailer during it.
Reference was made before us to a part of the Protocol not repeated in the schedule to the 1965 Act, providing that the signatories to the Convention “undertake to negotiate conventions covering contracts for …. combined carriage”. Mr McLaren suggested that this indicated that the signatories would have excluded the application of CMR to the international road leg of a carriage contract like the present. I do not agree that there is any such inference. I agree here with Prof. Fitzpatrick that “all the parties to CMR may be and probably are saying is that they undertake a Convention which will apply to a contract for combined transport as a whole, which Convention will go beyond the extent of agreement reached in article 2 and will supersede the various Conventions or national laws applying to each part”. A Convention covering combined or multimodal transport would, in other words, have addressed the thorny issue of the appropriate overall basis and single standard of liability for such transport, with the possibility that there might have to be different standards for different combinations of modes of transport. That endeavour has never been completed, if it has even been attempted. But that has no bearing on the present issue, which is whether CMR is potentially applicable to an international road leg of a larger carriage contract, as the Warsaw Convention is to the air leg.
Mr McLaren opened up the possibility of a “clash of conventions” if the Warsaw Convention could apply to air carriage while CMR applied to a prior or ensuing road carriage leg. This clash related to goods in an airport in the charge of the air carrier after it had also taken them over for road carriage, or possibly while he was completing road carriage. The point seems to me too esoteric in any event to serve as any reliable guide to the scope of article 1(1) of CMR. But, however that may be, I am confident that it could and would be resolved when it arose, either by recognising the difference in capacity in which the goods were held, or, if both Conventions really could apply at the same time, by recognising that nothing in either prevents the carrier from undertaking a higher responsibility (see article 41 of CMR and article 32 of the Warsaw Convention). As will appear, it has not as yet caused any problem or reported litigation in any of the jurisdictions accepting the application of CMR to international road carriage under a combined or multimodal contract.
The express provisions of article 2 make CMR applicable for the whole of the carriage, where the vehicle carrying the goods is carried over part of the journey by means other than road. It is possible to argue that the force of the word “nevertheless” is to suggest that, apart from article 2, the Convention would at least have applied to the international carriage by road. On the other hand, the word may have been introduced to point a contrast with a situation where no part of the Convention would otherwise apply. In my view, article 2 is not inconsistent with a view that article 1 can apply where a contract is in part for one form and in part for another form of carriage; on the other hand, it is not conclusive either way. I do, however, note that the drafters of article 2 found no difficulty in speaking throughout of “the carrier by road”, when describing that aspect of the functions of a carrier with a dual responsibility, split between carriage by road and carriage by some other means.
The judge pointed, as did Prof. Fitzpatrick in his article, to article 31 of the Warsaw Convention as a potential precedent on which the parties to CMR could have drawn in order to clarify the application of CMR to combined transport. However, they could not simply have incorporated article 31 into CMR, because of article 2. It remains true that the drafters could have dealt more specifically with the international road legs of combined carriage contracts, but I do not find that a very persuasive indication as to whether or not CMR applies to such legs.
Where some other means of carriage occurs, in circumstances not falling within article 2, it may be that there will be an initial or final leg of road carriage which is purely domestic. Although we do not have to decide the position in relation to such a leg in this case, there would also seem to me no incongruity if it were to be concluded that an initial or final domestic leg falls outside CMR, like any other domestic carriage. An example would be any road haulage within Capri, or within England or Corsica, in the hypothetical situations taken in paragraph 25.
I add a further word at this point on the respondents’ notice, which maintains that the judge’s conclusions should if necessary be upheld in the light of the fact that no CMR note was ever contemplated or issued. That is true, but is no answer to the application of CMR when on a true analysis the contract, which was recorded in the air waybill, was within article 1 of CMR so far as it provided for road carriage from Paris to Dublin. Article 4 caters specifically for the application of CMR to cases (not I think uncommon, for example in relation to forwarding agents contracting as carriers) where no CMR note is ever issued to record a contract for carriage by road.
Thus far, therefore, I see both attraction and force in a conclusion that article 1 may be read as applying CMR to the international road carriage element of a “mixed” or “multimodal” contract providing for two different means of carriage. But this leaves aside the pre-condition to the Convention’s application, constituted by the further words of article 1: “when the place of taking over 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 country….”. Looking at the terms of article 1, I would not regard this pre-condition as difficult to reconcile with a conclusion that CMR may apply to the international road carriage element of a mixed or multimodal contract. The place of taking over and the place designated for delivery, as specified in the contract, can – at least in article 1 – be read as referring to the places which the contract specifies for the taking over and delivery by the carrier in its capacity as international road carrier. The prime function of this pre-condition is, moreover, not to define what is meant by a “contract for the carriage of goods by road”. It is to delimit geographically the classes of contract for carriage by road to which CMR applies, that is those involving international carriage from or to a Contracting country. That is not to say that the pre-condition may not throw other, indirect light on the scope of application of CMR, but I think that one should be cautious about treating it as undermining or precluding what would otherwise be a possible and preferable construction.
It is said, however, that further provisions of the Convention buttress the conclusion that “the place of taking over of the goods and the place designated for delivery, as specified in the contract” can only refer to the first moment when the relevant carrier receives and the last moment when he parts with goods in any capacity. Particular reference is made to provisions in Chapter III of CMR (dealing with “conclusion and performance of the contract of carriage”), such as (i) article 4, requiring a contract for road carriage to be confirmed by the making out of a consignment note, (ii) article 5(1), contemplating that the “sender” and carrier shall sign or stamp this and (iii) article 8(1), providing for the carrier to check the statements in the consignment note and the apparent condition of the goods on taking them over and enter any reservations in the consignment note. These articles have of course to be read in the light of the further provision of article 4, that “the absence, irregularity or loss of the consignment note shall not affect the existence or validity of the contract of carriage, which shall remain subject to the Convention”. Further, there would be nothing to prevent a carrier, like Air France, performing a road trucking leg, from issuing a consignment note, to cover the road carriage from Paris to Dublin. This would have been largely back to back with the consignment note, which Place Trucking should have issued, and may in fact have issued, to Air France in respect of the same road carriage. Any CMR note that Air France issued should have been signed and completed under articles 5 and 6, but it does not seem to me necessary to consider precisely in what capacity or terms, since I have no doubt that workable answers can be given in one way or another. Air France would either be sender itself for the purposes of the road leg from Paris to Dublin or (as may well be) acting on behalf of the sender. Article 7(2) itself contemplates that a carrier may complete the particulars in a consignment note on behalf of a sender.
In the context of delivery, Air France also refers to (iv) article 13, entitling the consignee, after the arrival of the goods at the place designated for delivery, to require the carrier to deliver to him against a receipt the second copy of the consignment note and the goods and (v) articles 14, 15 and 16, dealing with circumstance in which it becomes impossible to carry out the contract before the goods reach the place designated for delivery or circumstances prevent delivery.
It is true that all these articles are most easily understood as addressing the simple situation, of a contract performed by road throughout (or falling within article 2). But I think that one should be cautious about treating them as necessary guides to the correct interpretation of the scope of the Convention under article 1. It is understandable that the detailed articles of Chapter III should focus on core or typical situations. But that does not necessarily mean that the Convention is to be limited to those situations.
English authority
It is appropriate before reaching any conclusion to consider how the matter stands in terms of authority, domestic and other European. It is accepted that no English authority is directly in point. As the judge rightly said, no assistance is to be gained from the decision in Arctic Electronics Co. UK Ltd. v. McGregor Sea and Air Services Ltd. [1985] 2 LL.R. 510. As to the correct general approach, we were referred to Buchanan & Co. Ltd. v. Buchanan Forwarding & Shipping (U.K.) Ltd. [1978] AC 141, where statements are to be found both that “the correct approach is to construe 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” (p.152D, per Lord Wilberforce), but, on the other hand to further cautions by Lord Wilberforce, Visc. Dilhorne and Lord Salmon at pp.153C-F, 156F and 161H against any general assumption that English methods of interpretation are inferior to, or even different from continental methods. We were also referred to pungent comments in this court in Ulster-Swift Ltd. v. Taunton Meat Haulage Ltd. [1997] 1 WLR 625, 631, on the inutility of citation of continental authority, which (in that case) revealed that courts in six member states had produced 12 different interpretations of particular provisions on CMR.
It is, however, clear from the speeches of both Lord Wilberforce (p.153E-F) and Lord Salmon (p.161E-G), and as a matter of general principle, that the English court should try to harmonise interpretation of CMR, as any other international convention, with any recognisable body of foreign law that has developed. The importance of this consideration is underlined in the case of CMR, when article 31 allows a claimant considerable scope for choosing between different forums (particularly those of the defendant’s residence, the place where the contract was made, the place of taking over and the place designated for delivery). Further, we should take note in relation to CMR, as much as the Warsaw Convention, words of Lord Hope in Fellowes (or Herd), above, at p.553D-G:
“In my opinion the Convention agreed at Warsaw, as amended at the Hague, was intended to be, and is, capable of accommodating changes in the practice of airlines and aircraft operators with regard to the purposes of which aircraft are used to carry people and goods, and in the contractual arrangements in pursuance of which people and goods are carried by air for reward. For this reason I think that it is proper to read Lord Bridge’s discussion in Holmes v. Bangladesh Biman Corporation [1989] AC 1112 and Greene L.J.’s judgment in Grein v. Imperial Airways Ltd.[1937] 1 KB 50 from which he quoted as having been framed with reference to the particular subject matter with which they were dealing at the time. In each of these cases the subject matter was carriage by air of the ordinary kind in pursuance of a contract between the airline and the passenger by which places of departure and destination had been agreed. It seems to me, that when regard is had to the desire to lay down a uniform international code which would achieve equity between the carrier and the user of his services, there is no necessary conflict between what they said in these cases and the wider interpretation of the phrase “carriage by air” for which the respondents contend in this case.”
Other European authority
Against this background, I turn to authorities from other European countries. We were referred to a number of authorities (including two in the German Supreme Court, the BGH) to which the judge’s attention was not drawn. Taking first the question to what extent the application of the Convention depends upon a carrier having obliged itself contractually to carry by road (and by no other means), the Belgian and Dutch courts have treated case (c) (described in paragraph 15 above) as falling within CMR in The Atlas Assurance Cy Ltd. v. Ocean Transport and Trading Ltd. (Antwerp Commercial Court; 23/9/75) [1976] 11 ETL 279, The Atlas Assurance Cy Ltd.v. Peninsular Oriental Steam Navigation (The “Osaka Bay”) (Antwerp Commercial Court; 4/1/77) [1977] 12 ETL 843 and International Marine Insurance Agency Ltd. v. P & O Containers Ltd. (The “Resolution Bay”) (Rotterdam Rechtbank; 28/10/99).
In the first Belgian case, the combined transport bill of lading covered carriage from loading in Hong Kong to Antwerp, with the port of discharge being specified as Rotterdam, and no specification of the method of carriage between Rotterdam and Antwerp. As the report recites: “The latter section of the combined transport could be done either by using another vessel calling at the port of Antwerp either by barge or lighter, or by road transport, or even by rail, the choice not being fixed and being left to the decision of the carrier”. Ocean Trading and Transport had in fact chosen to carry by road, and the court held that, since it had “instituted a road transport from Rotterdam to Antwerp, [it] is, as far as this transport is concerned, and whether [it] likes it or not, subject to the mandatory regulations applicable in the matter”. CMR was thus applied to the leg from Rotterdam to Antwerp. There is no indication that this resulted from anything other than the mandatory application of CMR in Belgium, as in the United Kingdom.
The second Belgian case also concerned carriage under a combined transport bill of lading from Hong Kong to Antwerp, with Rotterdam being named as the discharge port. The short report does not go further into the contractual terms, but simply records that CMR was held to apply to the leg from Rotterdam to Antwerp which was performed by road.
The third (Dutch) case again concerned carriage under a combined transport bill of lading from Port Chalmers, New Zealand to Antwerp as the “place of delivery” with Rotterdam being named as the “port of discharge”, with no statement in this document as to by which means of transport the leg from Rotterdam to Antwerp was to be carried out. The court held that:
“4.3 Since under the combined transport of goods P & O has opted to arrange part of the transport, i.e. from Rotterdam to Antwerp, by truck/by road whereas the contract, as contained in the CT document allows it to do so, the place where P & O and/or [its] representative …. took delivery for transport by road, i.e. Rotterdam, counts [i.e. geldt in the Dutch] as the place of receipt stated in the contract for the purpose of art. 1 para. 1 of CMR.”
The court accordingly held CMR to apply to the leg from Rotterdam to Antwerp: paragraph 4.4. Turning in the same paragraph to article 31 of CMR, according to which a plaintiff may found jurisdiction in the courts of a country within whose territory “the place where the goods were taken over by the carrier …. is situated”, the court went on:
“Since in the meaning of this [article] the ”place of receipt of the goods” must be considered to be the place where P & O and/or the third party called in [i.e. the actual haulier] took delivery of the container for transport by road, in that case the Dutch judge has international jurisdiction ….”
The German Supreme Court (“BGH”) has also stated that CMR would apply in a like manner. In its judgment of 17th May 1989 (I ZR 211/87), it was concerned with the forwarding of electronic components by A (to whose insurers any cause of action had passed), under an air waybill which identified Stuttgart as the departure point, Algiers as the destination and the second defendants, a member of IATA, as first air carriers. The second defendants entrusted to a German airline the carriage by air from Stuttgart to Algiers. The latter engaged sub-contractors to carry the goods by road from Stuttgart to Frankfurt, in order that they could be carried thence by air to Algiers. The goods were however destroyed by fire after an accident during the road journey.
Paragraphs I and II(1) of the BGH’s judgment make clear that the case proceeded both below and before the BGH on the assumption that the contract between A and the second defendants was for air freight (carriage by air). However, the BGH said that this has no bearing on its decision, and that it was also unnecessary to consider whether the actual carriage of goods by road from Stuttgart to Frankfurt was permitted to the second defendants under this air freight contract, whether upon its true interpretation or because of its incorporation of an IATA-Resolution (507 B). It said that an air carrier was liable in any event, according to whatever were the rules applicable to the carriage by road, for transit damage suffered by air freight in the course of carriage by road – whether or not in accordance with the contract (“order”). It cited as potentially relevant rules the German Commercial Code (“HGB”) para. 429 et seq., the Kraftverkehrsordnung (“KVO”) or from 15th May 1989 GFT (Tariff for the Long-Distance Transportation of Goods, para. 29 et seq. and CMR, article 17 et seq.).
The BGH’s at first sight puzzling reference to liability under such rules in the event of carriage by road contrary to the provisions of a contract for carriage by air is explained in subsequent paragraphs. In the immediately following paragraph, the BGH dealt with the position on the assumption that the contract of air carriage entitled the second defendants to perform a leg from Stuttgart to Frankfurt by road instead of air. On that basis, the court said, the carriage by road constituted contractual performance (“amounts to a contractual service”), and was governed by the relevant rules, which were (this being carriage by road within Germany) those of the KVO. In the paragraph thereafter, the BGH considered the position on the opposite hypothesis, namely that the carriage by road was uncontractual, and said that in that event, the second defendants were liable for transit damage at least to the same extent. A breach of the contract for air freight could not improve the second defendants’ position. A party in breach of such a contract must at least accept the transport risk associated with the means of transport selected in breach of contract and the system of liability (here the KVO) thereby entered into. The BGH added however that it was not necessary to decide whether, and in accordance with what rules, the carrier might be further liable in the case of a breach of the air freight contract consisting of carriage of goods by road contrary to the contract.
It is therefore clear that, if the relevant road carriage had extended from Stuttgart to an airport outside Germany (for example Charles de Gaulle) from whence the goods were to be forwarded by air to Algiers, the BGH would have held (1) that CMR applied to the road carriage from Stuttgart to Paris, if the air carrier was under the air freight contract permitted so to perform and that (2) if the air carrier was not so permitted, then the air carrier’s minimum responsibility would have been that imposed by CMR, but that it would be open to argument (since the BGH did not need to determine the point in the case before it) that further, higher liability should flow from the breach of the air freight contract. Thus, the highest German court has adopted the view that CMR applies even in case (d) to which I have referred in paragraph 15 above.
In an earlier decision dated 24th June 1987 (I ZR 127/85), the BGH was concerned with a counterclaim for loss of part of a container load of goods during carriage from the Saar to Portadown in Northern Ireland. The contract covered two consignments, one to travel by low loader, the other in a container. The container was carried by road to Rotterdam, where it was shipped without trailer to Belfast. In Belfast the plaintiff carrier terminated the carriage, because of a dispute about payment of the carriage charges. As to the nature of the contract, the BGH said (paragraph 2(aa)) that
“It cannot be assumed from the findings as stated that the container was to be carried on a roll-on, roll-off basis (cf art. 2 CMR). Neither was the container in fact carried in this manner. As the Appeal Court correctly found, the container was shipped to Belfast without a trailer. The Appeal Court denied that the parties had agreed on the applicability of the CMR for the transport from Rotterdam onwards. This is not the subject of any legal reservations, at least for the section of the route by sea.”
In its judgment, the BGH considered a previous line of authority relating to situations in which a carrier or forwarding agent had undertaken to carry by road from A to B, but had then “pleaded that the damage occurred prior to or after the transportation of the goods, or at another place in respect of which the carrier [could contract out of its liability]”. In that previous line of authority, the court had developed the theory of “overall consideration” (Gesamtbetrachtung – an overall consideration or examination), so as to hold the carrier liable as a carrier by road throughout. But in case I ZR 127/85 the BGH held this theory inapplicable. It said, first, that this theory had no application to cases where the subject of the transport was a priori (i.e. from the outset) the transport of goods using various means of transport (in the case before it, the carriage by truck and by ship of the container which became lost). It said secondly that
“The same applies when different regulations on liability – e.g. the CMR and the Warsaw Agreement – are specified as mandatory with regard to the means of transport used for the various sections of the route”.
The court then reverted to the first point:
“But even when this is not the case, the viewpoint of the overall consideration cannot be taken as authoritative where different means of transport are used to carry out the transport of the goods. According to the line of precedents …. referred to above, in the assessment of a transport as an overall transport with a single set of regulations on liability the decisive consideration is whether it can be assumed from the order, viewed from the overall [i.e. viewed overall], that the transport is a uniform long distance goods traffic transport, using motor vehicles. ….. However, this is not possible with combined (multimodal) transport, as here. Although here also the subject of the order is the transport of the goods over the entire route from the place of despatch to the place of delivery to the recipient, nevertheless this transport, in respect of which it was clear between the parties from the start [that it was] a transport to be carried out by combining by a combining a variety of means, was to be undertaken in various stages and with different means of transport”
In the result the BGH accepted the Stuttgart regional court of appeal’s view that CMR only applied to the carriage of the container from the Saar to Rotterdam. It held that, while CMR itself contained no provision regulating the burden of proof as to whether any loss or damage occurred when the goods were in the care of the CMR carrier or on some other occasion, as a matter of general German law the burden of proof in respect of the place of damage lay on the carrier.
The primary reasoning of the BGH thus concerns either case (a), or – if there was some, unmentioned and unutilised, contractual liberty to carry from the Saar to Rotterdam by means other than road – case (b), identified in paragraph 15 above. But the second reason given by the BGH (see paragraph 46 above) contemplates that CMR may have a wider, overriding application, in other cases. The later decision of the BGH dated 17th May 1989 (I ZR 211/87) indicates that this is so, and that CMR applies in all of cases (a), (b), (c) and (d).
We were referred to an earlier decision of the regional court of appeal of Frankfurt am Main, dated 11th November 1981 (VersR 1982 Vol. 28 p.697), in which the court expressed the view, in the context of a contract for air freight from Germany to France, that the exercise of a mere liberty under IATA condition 507B to carry by road (because of a shortage of aircraft hold space) without informing the consignor, did not make CMR applicable – and that the Warsaw Convention was equally inapplicable because there had been no actual air carriage. So the actual contract was governed solely by the carrier’s own conditions. Although the court said that IATA condition 507B allowed the carrier to comply with its contractual obligation by using road transport, it went on to refer to “the absence of a relevant contractual obligation”. It also reasoned that any other solution “would be unreasonable and lead to considerable legal uncertainty”, since it would enable a carrier to select whichever means of carriage provided the most favourable liability regime. However, the net result was that neither Convention applied to international carriage, and that the carrier could simply impose whatever contractual terms it wished, which I would have thought was a far more unreasonable result. The reasoning in this case appears to me unpersuasive and to have been overtaken by the BGH’s more analytical judgments, to which I have referred. Dr Ruhwedel’s work on Air Transport Law, to which we were referred, and which refers to the Frankfurt am Main decision, was published in 1987, and so makes no reference to either of the BGH’s decisions.
I turn to two cases, arising out of the same accident, decided by the tribunal de commerce of Bobigny in France. They are Cie General Accident Fire and Life Assurance Corp. v. Sté Saga Air Mory on 24th September 1994 and Les Mutuelles du Mans v. Transport Assistance Services on 24th November 1995. Various consignors entrusted DAS with the carriage of goods from Roissy in France to Nigeria. DAS engaged the services of its local representative, TAS, which in turn engaged VAS to carry the consolidated cargo from Roissy to Gatwick, for carriage by a DAS aircraft from Gatwick to Nigeria. VAS used as trucker Plane Trucking, whose vehicle caught fire on the way (evidently while still in France), destroying most of the cargo. In each case, the parties in interest asked the court to determine whether the loss was regulated by the Warsaw or CMR Convention. The contract between consignor and DAS was “made concrete” by an air waybill. This provided by condition 2.1 that the carriage performed by virtue of its conditions “is subject to the liability rules laid down by the Warsaw Convention”; and by condition 8.1 that “the carrier …. may with advance notice and taking account of the consignor’s interests, consign the goods by other means of carriage”. In each case, the court said:
“…. thus it has been clearly agreed between the parties to the contract of carriage that:
on the one hand, the carriage would be subject, with regard to liability rules, to those of the Warsaw Convention,
on the other hand, that, in order to perform the carriage, the carrier may, at his discretion, in the interest of the consignor, consign the goods by other means of transport;
Whereas thus the fact that DAS decided to route the goods by road between Roissy CDG and Gatwick falls within the parties’ agreements and does not alter the basic nature of the carriage, that is, carriage by air, at least with regard to the application of liability rules;
That thus the provisions of the Warsaw Convention must be applied to relations between the consignor and the air carrier, DAS, on the subject of the carrier’s liability.”
The court went on in each case to hold that the liability of all concerned in the carriage (DAS, TAS, VAS and Plane Trucking) was therefore governed by the Warsaw Convention. A note to the second report observes that a comparison of the two contractual clauses on which the court relied
“leads one to conclude that in the case of the use of the route by road, the [Warsaw Convention] alone is applicable, by virtue of the theory of outward appearance with regard to the consignor and its clear and precise terms. The notion of proxy being excluded, the air carrier who takes on the goods under an AWB is obliged to consign them according to the agreed conditions: if he contests same, one may reproach him, at least for failure in his duty to advise (need to advise the consignor of any [the possible] consequence[s] … of changing the method), or even worse (fraud[1]).”
Neither judgment makes any reference to any carrier having given notice to the consignor of the change of method of transport (despite the requirement in condition 8.1), and this note suggests that there may have been no such notice. Against this, on the other hand, the tribunal de commerce expressly referred in each case to the carriage of road between Roissy and Gatwick as having fallen “within the parties’ agreement”. Taking the tribunal’s statement literally, the decisions therefore concerned facts falling within case (d), considered in paragraph 15 above; and, on this basis, the French court’s attitude, contrary to that of the BGH, was to apply the Warsaw Convention throughout, rather than to apply the Warsaw Convention to the air leg and CMR to the road leg. However, it is clear, from both the court’s reasoning and the commentator’s note, that the French court’s decision is only applicable in the narrow sphere of case (d).
The first question – summary
The European authority on the first question can thus be summarised as follows. The Belgian, Dutch and German courts have all held that CMR can apply to carriage by road internationally in case (d), as well as necessarily in cases (a), (b) and (c). The French court (the tribunal de commerce of Bobigny) has reached what appears, from its reasoning, to be the opposite conclusion, although there is some room for doubt about this, bearing in mind, firstly, the absence in its judgments of any reference to “advance notice” of the changed means of carriage having been given as required by condition 8.1 and, secondly, the terms of the commentator’s note. Assuming that the tribunal’s decision does stand for an opposite conclusion to that reached in Belgium, the Netherlands and Germany, it is clear that its reasoning can only apply in case (d), and not cases (a), (b) and (c) described in paragraph 15 above. The present case falls, I have concluded, within case (b). So all such European authority as has been produced suggests that CMR should be applied to the carriage by road from Paris to Dublin, subject to the answer to the second question. This confirms the answer that I would give to the first question, without the benefit of any authority (see paragraphs 15-22 above).
The second question
The second question is to what extent (if at all) a contract can be both for the carriage of goods by road, within article 1, and for some other means of carriage, to which CMR does not apply. In terms of other European authority, this question can be readily answered. The Belgian, Dutch and German cases all unequivocally accept that CMR can apply to the road leg of a larger contract for carriage, involving different methods of transport. The Dutch court expressly addressed the reference in article 1(1) of CMR to the “place of taking over” or “receipt” as specified in the contract, and found no difficulty in treating this as Rotterdam, where the second road leg succeeded the initial sea leg, and the defendants assumed the capacity of road carriers. Other European courts cannot have seen any difficulty worth mentioning in adopting the same analysis. Hence, CMR’s application in the Belgian and Dutch cases to the final Rotterdam-Antwerp legs of contracts starting with long sea legs from the Far East or New Zealand. Hence, the German Supreme Court’s indication in its judgment of 17th May 1989 (I ZR 211/87) that CMR could apply to the initial road leg of a larger contract, and its decision on 24th June 1987 (I ZR 127/85) that it applied to the road leg from the Saar to Rotterdam under a contract covering carriage of a container (not on a roll-on, roll-off basis) from the Saar to Portadown in Northern Ireland. (I repeat that the judge left open a possibility that CMR might apply to an initial, but not a final, road leg of a larger multimodal contract, but, whatever the scope of CMR may be, I do not consider that it can or should sensibly be construed to draw any such distinction.) I can also mention briefly in this context another consistent earlier decision, by the Oberlandesgericht (regional court of appeal) of Düsseldorf on 8th May 1969, [1970] 5 ETL 446. It had to consider the carriage of cars from Bochum to Newark in the USA, performed by road to Antwerp and thence by sea. The relevant damage occurred during the road carriage. The court said that it was unnecessary to decide (it was “by the way”) whether the vehicles were consigned on the basis of a uniform freight order (i.e. one covering the whole transport from Bochum to Newark) or whether the consignors placed several freight orders (i.e. including a distinct order for the leg from Bochum to Antwerp), and it went on to apply CMR to determine liability for damage occurring during the Bochum-Antwerp leg.
Finally, nothing in the decisions of the tribunal de commerce of Bobigny points to any other answer to the second question. If anything, the tribunal’s reasoning indicates that CMR can apply to a single leg of a larger contract, unless “the basic nature of the contract” is for some other method of carriage. Otherwise, the tribunal would have been able to give another and shorter answer to the suggestion before it that CMR applied to the leg from Roissy to Gatwick. In respect of a contract involving two distinct legs, one by air, the second by road within case (a) or (b), if one asks, in the tribunal’s terms, what was “the basic nature of the contract”, the answer would have to be road carriage as regards the road leg. Even if the second leg fell within case (c), its nature would be open, so that, in that case too, CMR could apply to the second leg, if it was performed by road.
The weight of the European authority is thus firmly in favour of a conclusion that CMR is applicable to an international road leg of a larger contract in cases (a), (b) and (c) mentioned in paragraph 15. While I see the force of the objections suggested by Prof. Fitzpatrick and accepted by the judge, my own inclination, apart from authority, would have been in the same sense. As it is, and with the benefit of such authority, I have no real hesitation about adopting the conclusion which other European countries have reached. For my part, I would also favour the German Supreme Court’s view that CMR is applicable in case (d). I reach these conclusions on the basis that the concept of a contract for the carriage of goods by road embraces a contract providing for or permitting the carriage of goods by road on one leg, when such carriage actually takes place under such contract. The place of taking over and delivery of the goods under article 1(1) are to be read as referring to the start and end of the contractually provided or permitted road leg. Detailed provisions, such as articles 4, 5(1), 6(1), 8(1) and 13-16 of CMR fall to be operated with the carrier (or its representatives) so far as necessary putting itself in the position of the consignor or consignee when taking over goods at the start of a road leg, which is not the first leg in the overall carriage, or when delivering up the goods at the end of a road leg, which is not the last leg in the overall carriage.
Overall characterisation?
I return to say a further word about the judge’s primary ground of decision and Mr McLaren’s secondary submission supporting it. The judge considered that article 1(1) of CMR requires that it should be possible to characterise the relevant contract overall as a contract for the carriage of goods by road internationally. If that were so, then prima facie it would appear that CMR should apply throughout to all aspects of carriage under any contract which could, overall, be classified as being for carriage by road. The short sea legs could, for example, be ignored in the examples previously taken of carriage from Stockholm to Capri or Spain to London, even though the goods did not remain on a trailer for them. That would amount to saying that the parties to CMR did achieve a true multimodal convention, whilst disclaiming having done so. Further, it would not fit with article 2. CMR would be potentially applicable to the sea legs despite the absence of any equivalent provisions to article 2(1), second sentence, and article 2(2). It would also be left unclear whether article 2 also operated as a tacit exception to the (unstated) rule that CMR only applied if the contract could be characterised overall as being for carriage by road. The judge avoided these problems, by his further conclusion (on the second question above) that CMR is incapable of applying to a contract for carriage by road unless the whole contract is for carriage by road or article 2 applies. In effect, he required, as the key to the application of CMR under article 1(1), both an overall characterisation of the whole contract and (save to the extent provided in article 2) an individual characterisation of each leg as involving carriage by road. Once one introduces both requirements under CMR, the former requirement is in reality subsumed within and overtaken by the latter.
An approach which took as the key to the application of CMR simply the overall characterisation of the whole contract would have the flavour of the (now substantially discarded) German doctrine of Gesamtbetrachtung (see the discussion in the BGH decision of 24th June 1987), as well as of the tribunal de commerce of Bobigny’s reasoning based on “the basic nature of the contract”, in the context of a contract for carriage by air subject to an option to elect for some other means. But the BGH’s doctrine and the tribunal’s reasoning were used to hold that a whole contract was subject to the rules regulating the transport that was characteristic of the contract. Tomlinson J expressly declined to adopt a like approach, since, having held that the present contract was characteristically for air carriage, he held that the carriage from Charles de Gaulle to Dublin was not subject mandatorily to the Warsaw Convention; rather, it was subject to Air France’s conditions – and thus only subject to the terms of that Convention to the extent that Air France had chosen to apply them contractually.
Under CMR, for reasons already given, neither the German doctrine of Gesamtbetrachtung nor the decisions of the tribunal de commerce of Bobigny lend any possible support to the judge’s approach in any but case (d), which is not this case. Nor do I see attraction for the judge’s approach under CMR on any other basis. To recapitulate points that I have already covered, its logic as a separate point would appear to be that CMR should apply to the whole of any multimodal transport, regardless whether any not-road leg was conducted by roll-on, roll-off transport. Secondly, its effect would be to take agreed international carriage by road outside any Convention (Warsaw or CMR) in circumstances where the contract overall could not be characterised as primarily for road carriage. Thirdly, it would be inconsistent with the general European approach in the cases I have described, which (in the case of Germany since the BGH decisions) undertake no such process of identification and show that it is no obstacle to the application of CMR that the contract was pre-dominantly for some means of carriage other than road (cf e.g. the facts of the Belgian and Dutch cases and the BGH decision of 17th May 1989). Fourthly, it would open up a prospect of metaphysical arguments about the essence of a multimodal contract. Why should a contract for carriage have only one characteristic? The judge’s conclusion that the present contract was pre-dominantly for carriage by air reflects the comparative distances, as well as the physical obstacles, that had to be overcome between Singapore and Dublin. But there would be other cases where comparisons of time and space, and the physical obstacles that carriage was designed to overcome, would lead to no very obvious result. How would one characterise a contract for carriage by road from Stuttgart to Paris and thence by air to Gatwick? Viewed overall, contracts can by their nature or terms have two separate aspects, and the present, despite the length of the air leg, was in my view just such a contract. The real question is thus that with which I have already dealt as the second question in paragraphs 56-58 above.
Academic writing
Like the judge, we were referred to considerable academic writing, particularly to what the judge rightly described as Prof. Fitzpatrick’s penetrating article, Combined Transport and the CMR Convention [1968] JBL 311, to which I have already referred, and Prof. Malcolm Clarke’s well-known standard text on International Carriage of Goods by Road: CMR (3rd ed; 1997) as well as an article written by Prof. Clarke critical of Tomlinson J’s conclusions, Carriage by Road [2002] JBL 210. I have found these helpful in identifying the issues and considerations. They take different views on the central issues, Prof. Fitzpatrick (writing in the very early days of CMR without the benefit of any authority) took the view that the place of taking over and delivery in article 1(1) can only refer to the initial taking over and final delivery at the start and end of any contract for carriage and that the force of the word “for” in that article is less than either I or subsequent European authorities consider. Prof. Clarke in his book refers to and argues for the viewstaken by the Belgian and Düsseldorf courts, and in his article draws attention to the German Supreme Court decisions, which I have considered. If I say no more about these writings, it is not because I have not found them valuable, but because I have already covered the main points in this judgment.
I would only record that Mr McLaren did not seek to support before us Prof. Fitzpatrick’s final suggestion that the exclusion (in the part of the Protocol of Signature set out at the end of the Convention as scheduled to the 1965 Act) of the application of CMR “to traffic between” the UK and Northern Ireland and the Republic of Ireland
“would seem to imply that the exclusion is not confined to a carriage originating in either country. Hence the exclusion would cover the situation where such traffic is part of a larger contract of carriage and in such case the Convention is apparently meant not to apply pro tanto”.
If that had been right, another metaphysical question would have arisen, bearing in mind the present loss in North Wales – namely at what point, in the course of roll-on, roll-off carriage from Paris to Dublin, do goods cease to be “traffic between” France and the UK and become “traffic between” the UK and Eire, and whether there is any intermediate period over which the goods can be said to be simply traffic within the UK. Mercifully, no such question arises.
I would therefore conclude that the present contract was for carriage by road within article 1(1) of CMR in relation to the roll-on, roll-off leg from Charles de Gaulle, Paris to Dublin, and that Air France’s own conditions are to the extent that they would limit Air France’s liability overridden accordingly. It is thus open to the claimants to seek to show under article 29 of CMR that there was wilful misconduct or equivalent default, disentitling Air France to limit its liability for the loss which occurred during the road transit. It has been however agreed between counsel that this issue should be remitted to the Commercial Court to be dealt with there.
Lord Justice Latham:
I agree.
Lord Justice Aldous:
I also agree.
Order: Appeal allowed; the order to be in the terms of the agreed order; permission to appeal to the House of Lords refused.
(Order not part of approved judgment)
T Comedy (UK) Ltd v Easy Managed Transport Ltd
[2007] EWHC 611
Hirst QC
The issues
Against the background of these facts, Mr Cameron Maxwell Lewis, for TCL, submitted that the RHA conditions were not incorporated into any agreement with Bates or Whisper. Even if they were, TCL were the owners of the garments and at best EMT had a particular lien for the carriage charges on the consignments carried by road. TCL had offered payment of those charges but the offer had been refused. Moreover, a general lien was contrary to the CMR Convention. So TCL should not be required to make any payment to EMT. Further, TCL had a good claim for damages for wrongful interference with the goods.
Mr Dominic Happé for EMT submitted to the contrary that the RHA conditions of carriage were incorporated in the contracts. At the time the lien was exercised, title in the goods transported by road was vested in Bates and title in the air-freighted goods was vested in Whisper. Alternatively title was vested in Next. It followed that EMT had a general lien over the road-freighted goods for all sums owing by Bates and over the air-freighted goods for all sums owing by Whisper. Further, TCL had no title to sue in respect of the garments. So the Court should enforce the cross-undertaking and require TCL to pay the outstanding sums due from Bates and Whisper which he put at £86,526.09 and £7,698.82 respectively.
The critical issues are therefore:
i) Were the RHA Conditions incorporated into any contracts between EMT on the one hand and Bates and/or Whisper on the other?
ii) Whose property were the garments at the time the lien was invoked? – the candidates being Bates and Whisper, TCL, or Next.
iii) Are the RHA conditions creating contractual rights of general and particular lien consistent with the CMR Convention?
iv) If EMT did not have a general lien, did it have a particular lien, and if so for what?
Incorporation of RHA Conditions
But for the terms of the official agreement between EMT, Bates and Whisper, it could not really be in doubt that the RHA Conditions were incorporated into the carriage contracts. At the outset of the relationship, Mr Mehmet probably did produce a brochure which referred to the RHA conditions applying, although I doubt that this point was drawn to the attention of Mr Kaya and Mr Boyraz at the time or that they appreciated it. More significantly EMT’s delivery notes and invoices all stated in clear terms that the RHA conditions applied. That would be generally be sufficient notice of the conditions for them to be incorporated in the contracts of carriage and storage (if any), whether or not Mr Kaya and Mr Boyraz ever took the trouble to read them, as I am sure they did not.
However, in this case the parties made an “official” written agreement setting out the terms they had agreed. The agreement recorded that it was EMT that had put forward the terms. It could easily have referred to the RHA Conditions, but it did not. That is not really surprising. The reality was, as the parties were well aware, that each carriage by road was international and would be subject to the CMR Convention – both the United Kingdom and Turkey are signatories to the Convention, although it would be enough under Article 1.1 that one country was. CMR leaves little room for the application of the RHA rules. I find it impossible to construe the official agreement as incorporating the RHA conditions, nor can they be incorporated by necessary implication.
A possibility is that, although the official agreement did not incorporate the conditions, the parties are to be treated as having varied the agreement to incorporate them. The witnesses agreed that there were some variations in the course of the agreement relating to the level of the carriage charges, but these were expressly agreed on a case by case basis. For a variation to be effected there needs to be a mutual agreement between the parties. In my judgment, it cannot be inferred from standard form statements made by one party on invoices and delivery notes, that the other party was agreeing to vary an existing agreement. The position is substantially different from that where there is no existing agreement. A mere unilateral notification by one party to the other, in the absence of agreement, cannot constitute a variation of the contract: Chitty on Contracts (29th ed.) Vol.1 §22-032 and Cowey v. Liberian Operations Ltd [1966] 2 Lloyd’s Reps 45.
Mr Happé argued that, even if the RHA conditions did not apply during the term of the official agreement, once it expired on 26 June 2006, the RHA conditions did apply. Whilst I think he is strictly right that the term of the agreement expired on 26 June, even though it had not actually been in existence for a year, it is a matter of inference as to what the parties intended the position to be thereafter. I doubt that either party actually realised that it had expired and, strikingly, neither asserted at the time that the terms of the agreement no longer applied. In my judgment it is highly improbable that the parties intended there to be a radically different contractual regime. The inference I draw is that, pending a new agreement or express abandonment of the old, the parties intended the terms of the old agreement to continue in effect.
So in my judgment, the RHA conditions of carriage did not apply to the carriage of goods between London and Turkey. However, the official agreement was concerned with the carriage of goods, not the storage of goods once they reached EMT’s warehouse. Once they were discharged into the warehouse to be stored by EMT, the official agreement ceased to have any application. The storage arrangements were made between EMT and Whisper. In my judgment, EMT had given sufficient notice that the RHA Conditions of Storage applied to the storage of goods in the warehouse and those conditions applied in the case of goods accepted into storage, but not before that point was reached.
Property in the garments
Mr Maxwell Lewis argued that TCL had supplied all the materials and accessories for the garments and that it was never intended by TCL, Bates, Whisper or the other factories that title should be transferred to the factory. On the contrary the whole scheme for the make up of garments in Turkey proceeded on the basis that title in the materials and accessories and then the finished product remained vested in TCL. This was strongly disputed by Mr Happé who argued that once the materials and accessories were used in the manufacturing process, they lost their individual identity and became the property of the factory. He also relied heavily of the terms of the invoices issued by Bates to Whisper.
One possibility is that title in the materials and accessories sent out from England was transferred to Whisper when they were delivered to the EMT warehouse for export to Turkey. But the goods were not being sold to Whisper, which made no payment for them. I can see no basis for inferring that there was an intention to transfer title to Whisper. It would have been contrary to the well established practice of the rag-trade in this country, which is clearly evidenced by Control Notes for the Clothing and Fashion Industry V1-37, part of which has been published by HM Customs & Excise:
“3.1 Manufacturers
The use of the title manufacturer[1] in the Rag Trade can be misleading, as more often than not, they do not actually manufacture the garments. Instead they act as middle men responsible for the design, production of samples, costing and commissioning of the garment to order.
…
They buy the cloth and trimmings, stipulate a making price governed by the margin allowed by their customer, or potential customers, and raise a work docket, containing all the instructions for the factory to make the garment. The manufacturer then sells the completed garments to retail chains, or other manufacturers or wholesalers.
Cut, Make and Trim (CMTs)
Factories generally work to a main manufacturer (principal). They provide the services of cutting cloth, sewing material together and producing a finished garment.
Specific tasks in this process are also sub-contracted to home workers (depending on the type of garment) who work on piece rates from home. Cloth and dockets, detailing numbers of garments, styles, sizes and specific requirements are normally supplied by the manufacturer, who retains ownership. Increasingly, this work is sub-contracted overseas, where unit costs are lower. [my emphasis]
So I am satisfied that title in the materials and accessories sourced in the United Kingdom was not transferred to Whisper.
The transfer of possession of the materials and accessories and the manufacture of the garments to Bates and its sub-contractors all took place in Turkey. The issue as to whether the result was to transfer title in the moveables to Bates or (where there was a sub-contract) to the factory is obviously a matter for the law of Turkey as the lex situs under ordinary principles of conflicts of law: Dicey, Morris & Collins on The Conflict of Laws (14th ed.) Vol. 2 Rule 124. As Maugham J. said in Re Anziani [1930] 1 Ch 407, 420:
“I do not think that anyone can doubt that, with regard to the transfer of goods, the law applicable must be the lex situs. Business could not be carried on if that were not so”
Moore-Bick J. made the same point in Glencore International AG v. Metro Trading International Inc [2001] 1 Lloyd’s Reps 284 at §32.
Judge Mackie gave both parties permission to file written evidence of Turkish law but not to call the witnesses to give oral evidence. TCL filed a joint report from Professor Dr Oguz Atalay and Advocate Serhat Kaypakoglu. EMT filed a report from Izzet J. Hatem OBE. From their CV’s it is apparent that both sets of experts were well qualified to assist the Court.
In order to understand the Turkish law evidence, it is necessary to say more about the “cut and make” industry in Turkey. This is a major industry based in two free zones, of which Bursa, where Bates is based, is one. Under Turkish customs regulations, materials and accessories can be imported into one of the free zones to be manufactured into garments without payment of import duty, taxes and other import charges as long as they are re-exported once made up. This fiscal advantage is obviously critical to the economics of the business. In order to obtain what is called outward processing relief (“OPR”), the importer (in these cases Bates) must make an OPR declaration to the Turkish Customs. The goods are then treated as being imported only temporarily into Turkey. The importer must itself re-export the goods – no-one else can do so – and failure to do so is treated as criminal tax evasion.
Both experts referred to a report from Devrim Haciibrahimoglu of Dinamik who explained the regulatory background in Turkey. The author referred to the terms of the invoices issued by Whisper to Bates in connection with the fabric and accessories which stated “Above goods are to be processed and returned to the UK. No commercial value, for customs purposes only.” He explained that Article 2 of the Domestic Processing Regime Communiqué no 2005/1[2] allows for customs-exempted import of goods for processing, and the goods when imported are treated as being of no commercial value – hence the declaration in the invoices. Under the domestic processing permission the goods are temporarily imported and held to be processed. They would have to be re-exported by Bates to Whisper within the time permitted by the permission. The report expressed the opinion, adopted by Prof. Atalay and Adv. Kaypakoglu, that “it is out of the question that the owner of the items covered by the … invoices which are processed and exported … is Bates which performed the processing.”
On the basis of the facts they fairly summarise, Prof. Atalay and Adv. Kaypakoglu express the opinion that the arrangement between TCL and Whisper and Whisper and Bates, and the ordering, manufacturing and delivery procedures, rule out the application of the Turkish law on purchases of goods. This was not an arrangement by which a seller agreed to transfer title to a buyer. Instead the relation between TCL and Whisper/Bates was a locatio conductio operis or a manufacturing contract, as defined in article 355 of the Turkish Law on Obligations:
“The “Manufacturing Contract” is a contract where one of the parties (the Contractor) undertakes the production of goods in exchange for the price that the other side (the Employer) undertakes to pay.”
Article 357 provides, inter alia, as follows:
“The Contractor guarantees the quality of the materials used in the production and is answerable to the Employer in case they are of poor quality, in the same way as a seller would be answerable (to a buyer).
If the material is provided by the Employer, the Contractor is obliged to use this material with due care and is accountable for its use. He is also obliged to return the unused material back to the Employer … “
Article 368 also provides that if the product is accidentally destroyed before delivery, “the owner of the materials used in the construction bears the damage”.
Prof. Atalay and Adv. Kaypakoglu quote from a text book, the Law of Obligations, Special Contractual Relationships – Borclor Hukuku, Ozel Borc Illiskileri by Professor Dr Haluk Tandogan, Vol II (3rd ed.) published in Ankara in 1987:
“If the goods, delivery of which is undertaken, do exist at the time the contract is made, the characteristic of the contract is obviously a sale (or purchase). If the thing that is to be delivered is not ready at that time and would be produced by using the material the person that placed the order would give, then the [arrangement] can easilyqualify as a manufacturing contract”.
They express the clear view on the basis of the facts they summarise that, in Turkish law, TCL has always been the owner of the goods – the components parts and the finished product – even when in the possession of the other parties.
Mr Hatem takes a radically different approach. He relies on the invoices issued by Bates to Whisper which bear the annotations CIF and “Cash against goods”. He concludes that these show that sales have been performed on a CIF basis. He treats the CMR consignment notes and the air waybills as equivalent to a bill of lading and, relying on article 1140 of the Turkish Code of Commerce No. 6762, which provides that transfer of property takes place with endorsement and surrender of the bill of lading which represents the goods, concludes title in the goods remained vested in Bates. As to the report by Dinamik, he states:
“Likewise, the system of temporary import of the material to Turkey in order to be manufactured and returned to England, … and consequently the commercial relations between TCL, Bates, Whisper and Next, in relation to the ownership of the fabrics/finishings/trimmings do not affect the carrier EMT’s rights as they do not concern the goods [viz as I understand him the finished garments] under the invoices issued by Bates to Whisper… ” .
This point was emphasised in his supplementary report, where he observed that the raw materials had lost their identity when used to manufacture the garments, and no ownership (title) can have passed to the manufactured goods.
I did not find Mr Hatem’s reliance on the invoices issued by Bates to Whisper at all persuasive. The invoices were for make-up charges only; there were no charges for the supply of materials. They do not evidence a sale of goods and I do not think that the draftsman of the invoices was intending to give any indication of where title lay. Further, the invoices, which were between Bates and Whisper, are of no assistance whatever as to whether Bates ever obtained title in the first place. In my judgment, Mr Hatem’s report fails to grapple with the underlying facts and the regulatory background in Turkey or the Turkish Code on Manufacturing Contracts. Article 357 of the Code strongly points to title in the finished product being vested in the Employer where he has supplied the materials, as was the case here, with de minimis exceptions. Overall, I found the reasoning advanced by Prof. Atalay and Adv. Kaypakoglu convincing.
There was also considerable oral evidence of TCL, Whisper and Bates, given by Mr Erkaslan, Mr Kaya and Mr Boyraz, as to their contemporary understanding. They were unanimous that it was always their understanding that title in the garments was vested in TCL and that Bates and Whisper at no time obtained title. That evidence was criticised by Mr Happé on the basis that it was a sort of “mantra”, by which I understood him to mean that they had put their heads together to produce false testimony. That was not, however, my impression of the evidence. In my judgment, it accurately reflected the custom and practice of the rag trade, here and in Turkey. It also makes good commercial sense. It would be surprising if TCL (or any other so called manufacturer) was willing to surrender title in the goods to a factory, where it had supplied all the materials and accessories, with trivial exceptions, and was receiving no payment for them from the factory.
I should add that there was some debate as to whether Roman Law – especially Book II (Of Things) Title II of Justinian’s Institutes – was of assistance. I was referred particularly to the following paragraphs[3]:
25. Suppose one man makes something out of another’s materials. Who is it reasonable to see as owner, the maker or the owner of the materials? Suppose, for example, that one man makes wine, oil, or grain from another’s grapes, olives, or corn; or a pot of some kind from another’s gold, silver or bronze; or mead from another’s wine and honey; or a plaster or ointment from another’s medicines; or clothes from another’s wool; or a ship, a chest, or a chair from another’s timber. Debates between Sabinians and Proculians left this unresolved. A middle view has been upheld: If the thing can be turned back into its materials, its owner is the one who owned the materials; if not, the maker. The completed pot can be turned back into a raw ingot of bronze, or silver, or gold; wine, or oil, or grain cannot be made back into grapes, olives, or corn, and even mead cannot be turned back into wine and honey. If someone makes something partly out of his own material and partly out of another’s – mead from his wine and another’s honey, or a plaster or ointment from some medicines belonging to himself and others belonging to someone else, or clothes out of his own and someone else’s wool – ownership vests, without a doubt, in the maker. He contributes not only his work but also even part of the material.
26. Suppose someone weaves another’s purple thread into his own garment. It merges with the garment by succession, even if the thread is more valuablethan all the rest. The former owner of the thread then has the action for theft and the action of debt against the taker, whether he was the one who made the clothes or not. When something has ceased to exist it is no longer possible to bring a vindication, but the action of debt can still be used against thieves and certain other types of possessor.
It is not easy to reconcile paragraphs 25 and 26 and ultimately I am not persuaded that whatever Roman law might be provides much help in resolving the issues of Turkish law in this case. I shall leave the resolution of the point in Roman law to the scholars.
I was also shown a number of English cases, including Bordern (U.K.) Ltd v. Scottish Timber Products Limited [1981] 1 Ch 25, In Re Peachdart [1984] 1 WLR 131 and Clough Mill Limited v. Martin [1985] 1 WLR 111. Whilst I consider that English law would reach the same conclusion on these facts, that is irrelevant because England is not the lex situs.
Mr Happé advanced an alternative that title to the garments had become vested in Next. This was based on clause 10 of a set of Next’s Terms and Conditions of Purchase which provides:
“10.1 Risk in the Products shall pass to Next at the time when the Products are received by Next. The Seller will not exercise any lien over the Products.
10.2 … title and ownership in the Products shall pass to Next as soon as the Products have been separately identified and set aside for Next”
Mr Happé argued that the garments had been separately identified and set aside for Next when they were manufactured in Turkey with Next labels sewn in and placed on Next hangers[4].
This argument collapsed when it emerged on the last day of trial that both counsel had been provided with the wrong set of Next conditions. This set was not introduced until the summer of 2006. All the contracts with Next were on a previous set of conditions which did not contain clause 10, or anything equivalent. I should add that I am very doubtful that the garments had really been set aside for Next when they were in Turkey. I do not consider that happened until (at the earliest) the goods were assembled in England, checked and put in the correct order for delivery to Next, as and when Next called for delivery.
Without clause 10, it could not be plausibly suggested that title passed to Next prior to actual delivery to the carriers instructed to deliver the garments to Next – see section 18, rule 5(2) of the Sale of Goods Act 1979. There had been no prior unconditional appropriation to the contract of the garments in a deliverable state with the assent (express or implied) of Next.
So, in my judgment, at the time EMT received the garments for carriage by road to London and at the time it sought to exercise a lien, title was vested in TCL. The air-freighted goods were the property of TCL when they arrived at EMT’s warehouse.
Are the RHA conditions creating general and particular liens consistent with the CMR Convention?
The CMR Convention, as set out in the Schedule to the Carriage of Goods by Road Act 1965, provides as follows:
“Chapter III.
CONCLUSION AND PERFORMANCE OF THE CONTRACT OF CARRIAGE
Article 6
1. The consignment note shall contain the following particulars:
…
(i) charges relating to the carriage (carriage charges, supplementary charges, customs duties, and other charges incurred from making of the contract to the time of delivery);
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. …
2. The consignee who avails himself of the rights granted to him under paragraph 1 of this article shall pay the charges shown to be due on the consignment note, but in the event of dispute on this matter the carrier shall not be required to deliver the goods unless security has been furnished by the consignee.
Chapter VII.
NULLITY OF STIPULATIONS CONTRARY TO THE CONVENTION
Article 41
Subject to the provisions of Article 40[5], any stipulation which would directly or indirectly derogate from the Provisions of this Convention shall be null and void. The nullity of such a stipulation shall not involve the nullity of the other provisions of the contract”.
Article 13.2 gives the consignee, in this case Whisper, the right to delivery of the goods on payment of the charges shown to be due on the consignment note. Mr Maxwell Lewis submitted that clause 14 of the RHA conditions of carriage which enabled the carrier to exercise a general lien for all outstanding charges, not just the charges due on the consignment, was inconsistent with the consignee’s right to immediate delivery of the goods on payment of the charges shown to be due on the consignment note, and therefore null and void under Article 41.
Mr Happé drew my attention to §106 of Professor Malcolm Clarke’s book on International Carriage of Goods by Road: CMR (4th ed.), where the author states:
“The Carrier’s Lien
Article 13.2 provides that, if the consignee requires delivery of the goods “he shall pay the charges shown to be due on the consignment note, but in the event of dispute on this matter the carrier shall not be required to deliver the goods unless security has been furnished by the carrier”. Subject to this, the CMR is silent on rights of retention available to the carrier and any such rights under national law will remain effective.”
I did not find this reasoning in the last sentence easy to understand. It does not take into account Article 41 of CMR. In my judgment, Article 13.2 of the CMR Convention creates a self-contained Code whereby the consignee has the right to require delivery of the goods on payment of the charges shown to be due on the consignment note – coupled with the 1965 Act it creates a statutory lien for the carriage charges. A general lien would derogate from the consignees’ right of delivery on payment of the charges, because the consignee could only obtain delivery on payment of additional sums due in respect of other carriages. So, in my judgment, a general lien is null and void under Article 41 of CMR.
By parity of reasoning, to the extent that the particular lien granted by the RHA conditions of carriage is wider than that granted by Art. 13.1 of CMR, it is null and void. The carrier’s rights are confined to those granted by the Convention.
If EMT did not have a general lien, did it have a particular lien, and if so for what?
The consequences of my findings so far are that EMT did not have a general lien for carriage charges because the RHA conditions of carriage were not incorporated and, even if they had been (1) the garments were not owned by Bates or Whisper and (2) a general lien is void under CMR.
That leaves open the issue whether EMT had a particular lien under CMR for the carriage charges, and a particular lien under the RHA conditions of storage for anything else.
Article 13.2 of CMR gives the carrier a particular lien, enforceable against the consignee, for the charges shown to be due on the consignment note. The difficulty that arises is that, contrary to Art. 6(1)(i), the consignment notes in this case left the box for entry of the carriage charges blank. Was it still open to EMT to exercise a particular lien, or put the other way, is it fatal to a particular lien that the consignment note contained no particulars of the charges relating to the carriage?
Mr Maxwell Lewis submitted that it was on the clear wording of the Convention. Mr Happé submitted that the consignment note was only evidence of the contract. Under Art. 4 of CMR, any irregularity would not affect the existence or validity of the contract of carriage. Both Bates and Whisper were well aware of the carriage charges due. The consignment note was not determinative of either party’s rights. I agree with Mr Happé’s submission as far as it goes. He is right that the failure to state the amount of carriage charges in the consignment note will not affect the carrier’s underlying contractual right to recover the charges, in this case from Bates and Whisper under the terms of their official agreement. But, that leaves open the separate question whether it affects the right of lien over the goods.
There is some assistance in international Carriage of Goods by Road (CMR) edited by Jan Theunis, published under the auspices of the International Road Transport Union in 1987. In his contribution, M.H. Claringbould states (at p.212):
“It should be stressed that the right to retain the goods at the moment of delivery is only available to the carrier when the consignment note clearly indicates that there is still freight due to the carrier (Helm, JG, Frachtrecht, Walter de Gruyter, Berlin, 1979. p. D 461, anm. 4)
In practice it is only seldom that the consignment note mentions anything at all about freight and costs, even though according to Article 6(1)(i) of the CMR the charges relating to the carriage have to be mentioned in this note.
The learned writers, if they comment at all on Article 13.2 of the CMR, agree that this Article does not in general entitle the carrier to retain goods, but only gives a restricted right against the consignee. The writers all turn to their national law to decide whether a carrier has a right to retain the goods … “
Clarke does not deal with the point expressly, but he cites at §24 on p.54 conflicting decisions of the German Courts (BGH 10.2.82 (1983 18 ETL 32, 39), OLG Stuttgart 24.1.67 (1968 NJW 1054) and OLG Hamm. 12.11.73 (1974 ULR II 212)).
In my judgment the scheme of the Convention is clear:
(1) Under Art. 6(1)(i) the consignment note must contain particulars of the charges relating to the carriage. The note is to be signed by the sender and the carrier. It may be that it is rare for consignment notes to comply with this requirement – certainly they did not do so here – but that cannot alter the principle laid down by the Convention. Obviously the exact figure for some charges, for instance customs duties and some supplementary charges such as waiting time, may not be known at the time but the consignment note can easily make a general reference to these. It is not difficult for the carrier to ensure that the consignment note complies with the Convention.
(2) Article 13.2 only allows the carrier to retain the goods against payment of the carriage charges shown to be due on the consignment note. This ties in with Article 6(1)(i). The reference to the charges shown to be due on the consignment note cannot be ignored. The commercial purpose is to give certainty as to what must be paid to secure release of the goods, at a time when decisions may have to be made urgently and on the basis of limited information. In the early 1960’s, when the Convention was negotiated, difficulties of communication would have been greater than today. If the carrier chooses not to record the carriage charges in the consignment note, then he will lose the right to exercise a lien. It cannot be relevant that, in this case, the consignee was well aware of the correct position. That will often not be so, and the proper interpretation of the Convention cannot depend on the facts of a particular case.
Here nothing was recorded in the consignment note about the carriage charges, and it follows that EMT had no lien under Article 13.2 for any outstanding carriage charges.
That leaves the particular lien under the RHA conditions for storage. In the case of the goods transported by road and the air-freighted goods, EMT sought to exercise a lien on arrival of the goods at their depot/warehouse. Mr Maxwell Lewis argued that EMT had gained possession of the air-freighted garments by stealth, and even deceit. I reject that argument. The address given for delivery to Whisper’s was at EMT’s warehouse. In reality, Whisper only had a small office within the warehouse and it had no means of receiving and holding the garments. It was inevitable that EMT would have to receive the garments, and that is what Whisper intended and expected. Whisper may not have anticipated that EMT would seek to exercise a lien over these garments, but Mr Mehmet never promised not to do so, whether expressly or impliedly.
A lienee has no right to recover expenses incurred by him in maintaining his security: Somes v. Directors of British Empire Shipping Co. (1860) 8 HL Cas. 338, China Pacific S.A. v. Food Corporation of India [1982] AC 939, 962-3 and Morris v. Beaconsfield Motors (CA) [2001] EWCA Civ 1322. So there could be no right to recover storage charges. But I do consider that EMT would have had a right to exercise a lien for its charges for preparing the goods for delivery to Next – for instance taking the air-freighted garments off the hanging strings and putting them on hangers and sorting and checking both sets of garments. In their invoices 21182, 21223 and 21265, EMT charged a total of £2,979.52 (incl. VAT) for the services rendered in relation to the air-freighted goods. For the goods carried by road, there was a charge of £626.09. TCL, with the support of Mr Kaya and Mr Boyraz, challenged these invoices, but I consider that they were in principle justified for work actually done, but the charges for the air-freighted cargo are over-stated. They would have been less if there had been a single movement from vehicle to vehicle, as would have been the case if no lien had been asserted, and I think there has been an (understandable) desire to maximise what is payable to EMT. Doing the best I can, I think EMT was entitled to £2,000 (incl. VAT) for the work done in respect of the air-freighted garments. I find the figure of £626.09 reasonable for the garments carried by road.
I should add that, if I had upheld the claim to a general lien, I would have found that EMT was owed £86,526.09 by Bates (guaranteed by Whisper) and additionally £6,719.30 by Whisper and could exercise a general lien for these sums. If I had upheld a particular lien for the road carriage charges in respect of this consignment, I would have held that £9,100 was due for waiting time, an extra driver and carriage, as recorded in invoice 21161.
The cross-undertaking
TCL was not party to the contracts of carriage or the storage contracts. However, it consigned the materials and accessories to Whisper for carriage out to Turkey and knew and intended that Bates would bail the goods to EMT for carriage of the finished product back to London. TCL must be treated as having consented to the goods being bailed to EMT for carriage both ways, and on the usual CMR terms which include a right of lien against the consignee for the carriage charges. It also consented to the goods being handled at EMT’s warehouse on usual terms, which would include the RHA conditions of storage. It follows from general principles established in Morris v. C.W. Martin & Sons [1966] 1 QB 716, The Pioneer Container (PC) [1994] 2 AC 324 and East West Corporation v. DKBS A/S (CA) [2003] EWCA Civ 83 [2003] QB 1509 that, insofar as EMT was entitled as against Bates or Whisper to exercise a particular lien on the garments, it was also entitled to do so as against TCL. So in my judgment, in accordance with its cross-undertaking in damages, TCL ought to pay £2,626.09 to EMT – it is fair to observe that this is a considerably lower sum than it offered on 7 August 2006.
Damages
TCL pleaded a claim for damages against EMT for wrongful interference with the goods, on the basis that they had been wrongfully detained. No particulars were given of this claim until the first day of the trial when TCL sought to plead two heads of loss:
(1) Increased transport charges: £600
(2) Loss of repeat orders from Next in respect of garments manufactured from the red dogstooth cloth, which meant that TCL was left with a liability to pay £14,250 to Ipekis for pre-ordered cloth not used in repeat orders.
I allowed the first head to be pleaded. I declined to allow the second head to be pleaded because it was too late for EMT to be able to investigate the claim properly, and because (having heard Mr Erkaslan’s evidence on this topic de bene esse) there was no evidence that Next had decided not to place a repeat order for garments made from this cloth due to late delivery of the original order, as opposed (for instance) to general lack of customer demand for the product. I would add that it would not follow anyway that the cloth did not retain a substantial value.
As to the claim for £600, this was the additional charge for demurrage and waiting paid to OK Transport Limited who were the hauliers used by TCL to transport the garments from Beckton to Next’s distribution centre in West Yorkshire on 16 August 2006. Mr Erkaslan explained that, because of the urgency, TCL had kept the carrier on standby so that, when EMT finally released the goods, they could be collected and taken to Next without any further delay. Mr Mehmet challenged this evidence on the basis that the trucks were not actually waiting in his yard but were on call. That may be so, but it does not affect the overall reasonableness of the claim. I accept Mr Erlaslan’s evidence. EMT had been wrongfully detaining the garments for some time. It was becoming very urgent indeed that they were delivered to Next; there was an ever increasing risk that Next would reject them, and if that had occurred the losses would have been very considerable. I accept that these charges were reasonably incurred as a result of EMT’s continuing wrongful interference and I uphold the claim for £600 damages.
So the net figure payable by TCL is £2,026.09. I will hear counsel on what consequential orders need to be made, including releasing the security of £25,000.
Note 1 In this case, TCL. [Back]
Note 2 As published in the Official Gazette attached to a resolution by the Council of Ministers adopted on 17 January 2005 under no. 2005/8391 [Back]
Note 3 Translated by Peter Birks and Grant McLeod. [Back]
Note 4 It should be made clear that the labels and hangers were purchased and supplied by TCL, not Next. [Back]
Note 5 Which deals with carriers’ freedom to agree on the sharing of compensation amongst themselves. [Back]
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URL: http://www.bailii.org/ew/cases/EWHC/Comm/2007/611.htmlQuantum Corporation Inc. & Ors v Plane Trucking Ltd. & Anor [2002] EWCA Civ 350 (27th March, 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/350.html
Cite as: [2002] 2 All ER (Comm) 392, [2003] 1 All ER 873, [2002] 1 WLR 2678, [2002] 2 Lloyd’s Rep 25, [2002] WLR 2678, [2002] 2 LLR 25, [2002] EWCA Civ 350 Mance LJ
Under article 17 of CMR, a carrier is liable for total or partial loss occurring between the time he takes over the goods and the time of delivery, the only relevant exception for present purposes being if the loss was caused “through circumstances which the carrier could not avoid and the consequences of which he was unable to prevent”. Article 23(3) limits compensation to 8.33 units of account per kilogram of gross weight short. But, if the damage was caused by wilful default – by the international road carrier or by its servants or agents or any other persons of whose services it makes use for the performance of the carriage – article 29 prevents the carrier from limiting its liability.
Air France’s case, which the judge accepted, is that carriage by air subject to the Warsaw Convention ended at Charles de Gaulle, and that its liability thereafter fell to be measured by reference to its own terms and conditions, to which reference was made on the air waybill. Those conditions limited any liability on Air France’s part to 17 Special Drawing Rights per kilogramme of cargo lost – a more generous limit than the basic CMR limit. However, in respect of carriage not subject to the Warsaw Conventionin any of its variants, they contained less favourable provisions regarding the standard and onus of proof of liability and, more importantly, no provision paralleling article 29 of CMR or disentitling Air France from relying on the limit of 17 Drawing Rights in the event of wilful default.
More specifically, Air France’s conditions provided as follows:
ARTICLE 1 –DEFINITIONS
“1.3 Applicable Convention: means whichever of the following instruments is applicable to the contract of carriage; [there followed a list consisting of the Warsaw Convention and four of its variants]” ….
ARTICLE 2 – APPLICABILITY
2.1 General:
These Conditions shall apply to all carriage of cargo, including all services incidental thereto, performed by or on behalf of Carrier; provided however that if such carriage is “international carriage” as defined in the applicable Convention (see Article 1: Definitions, under “Applicable Convention”) such carriage shall be subject to the provisions of the applicable Convention and to these Conditions to the extent that these Conditions are not inconsistent with the provisions of the Convention.”
“ARTICLE 11 – CARRIER’S LIABILITY
11.1 Carrier is liable to the shipper, consignee or any other person for damage sustained in the event of destruction or loss of, or damage to, or delay in the carriageof cargo only if the occurrence which caused the damage so sustained took place during the carriage by air. For the purposes of this Article carriage by air shall comprise the period during which the cargo is in the charge of the carrier, or in the charge or its agent.
11.2 Except as may be otherwise provided in any applicable Convention, Carrier is not liable to the shipper, consignee or any other person for any damage, delay or loss of whatsoever nature arising out of or in connection with the carriage of cargo or other services performed by the Carrier, unless such damage, delay or loss is proved to have been caused by the negligence or wilful default of Carrier and there has been no contributory negligence on the part of the shipper, consignee or other claimant ….
….
11.7 Unless the carrier has made a special declaration of value for carriage and has paid the supplementary sum applicable, liability of Carrier shall not exceed the applicable Convention limit or, if no Convention applies, 17 Special Drawing Rights, per kilogramme of cargo destroyed, lost, damaged or delayed. …”
Articles 11.1, 11.2 and 11.7 are thus relied upon by Air France in this case to limit their liability to 17 Special Drawing Rights per kilogramme. The practical effect is to restrict it in this case to £116,057.56, for which sum the judge gave judgment against Air France.
S.1 of the 1965 Act provides that the provisions of CMR “shall have the force of law so far as they relate to the rights and liabilities of persons concerned in the carriage of goods by road under a contract to which the Convention applies”. Chapter I of the Convention, consisting of articles 1 and 2, is entitled “Scope of Application”. It provides as follows:
“Article 1
1. This Convention shall apply to every contract for the carriage of goods by road in vehicles for reward, 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 country, irrespective of the place of residence and the nationality of the parties.
2. For the purposes of this Convention, “vehicles” means motor vehicles, articulated vehicles, trailers and semi-trailers as defined in article 4 of the Conventionon Road Traffic dated 19th September 1949.
3. This Convention shall apply also where carriage coming within its scope is carried out by States or by governmental institutions or organisations.
4. This Convention shall not apply:
(a) to carriage performed under the terms of any international postal convention;
(b) to funeral consignments;
(c) to furniture removal.
5. The Contracting Parties agree not to vary any of the provisions of this Convention by special agreements between two or more of them, except to make it inapplicable to their frontier traffic or to authorise the use in transport operations entirely confined to their territory of consignment notes representing a title to the goods.
Article 2
1. Where the vehicle containing the goods is carried over part of the journey by sea, rail, inland waterways or air, and, except where the provisions of article 14 are applicable, the goods are not unloaded from the vehicle, this Convention shall nevertheless apply to the whole of the carriage. Provided that to the extent that it is proved that any loss, damage or delay in delivery of the goods which occurs during the carriage by the other means of transport was not caused by an act or omission of the carrier by road, but by some event which could only have occurred in the course of and by reason of the carriage by that other means of transport, the liability of the carrier by road shall be determined not by this Convention but in the manner in which the liability of the carrier by the other means of transport would have been determined if a contract for the carriage of the goods alone had been made by the sender with the carrier by the other means of transport in accordance with the conditions prescribed by law for the carriage of goods by that means of transport. If, however, there are no such prescribed conditions, the liability of the carrier by road shall be determined by this Convention.
2. If the carrier by road is also himself the carrier by the other means of transport, his liability shall also be determined in accordance with the provisions of paragraph 1 of this article, but as if, in his capacities as carrier by road and as carrier by the other means of transport, he were two separate persons.”
The basic issue that we have to address is, therefore, what constitutes a “contract for the carriage of goods by road in vehicles for reward” within the meaning of article 1(1). In addressing it, it is necessary to bear in mind the geographical pre-condition to the application of CMR which article 1(1) also introduces, namely that “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 country. The appellants’ case is simply and solely that, although there was only one contract, by it Air France contracted, firstly, for the carriage of goods by air to Charles de Gaulle and thence, secondly, for their carriage by truck to Dublin.
The judge addressed the Part 24 application on the basis that, although carriage by road from Paris to Dublin was Air France’s intended mode of performance, “Air France was not contractually obliged to carry the goods in that manner, and might if they had so wished have carried the goods on that leg by air”. We can, it seems to me, proceed on the same assumption. The evidence given on the subject by Air France’s solicitor, Mr Rosen, was as follows:
“It is correct that the contract of carriage recorded that it was Air France’s intention to truck the goods between Paris and Dublin, having flown them from Singapore to Paris; and that such intention was notified to the Claimants or their agents. Both the “house” air waybill No. 4710119916 issued by Expeditors International (page 1 of “AJP 1”) and the air waybill No. 057-52326621 issued by Air France (page 3 of “AJP 1”) refer to flights AF6753/22 and AF9408/22. I am told by Mr. Humphries that the former is the number of the relevant flight from Singapore to Paris CDG, and the latter is the number of the relevant trucking service operated by Air France between Paris CDG and Manchester airport. However, although it was Air France’s intention to truck the goods from Paris CDG to Dublin, Air France contends that it was not contractually obliged to do so. Air France was contractually permitted to fly the goods on that leg if it had chosen to do so; see, for example, clause 6.3 of the Air France Conditions (page 53 of “AJP 5”).”
Clause 6.3 of Air France’s conditions provides:
“6.3.2 Carrier may without notice substitute alternate carriers or other means of carriage”.
Mr Rosen was thus accepting what seems to me the clear reality, that the contract recorded in the air waybill was for two legs, the first to be performed by air, the second a trucking leg – unless of course Air France elected to substitute some other means of transport in either case under clause 6.3.2. I add that condition 11.1 itself acknowledges the possibility that Air France might have goods in its possession for purposes other than carriage by air – otherwise there would have been no need for the expanded definition of what “carriage by air” should be taken to comprise for the purposes of that article. Here, the air waybill, by its description of the two contractual stages of transport, and by the identification of the second by its number as the trucking stage, expressly provided for the second stage to be by road. Before us, Mr McLaren said that Air France acknowledged that it was the intention or contemplation to carry by road from Paris to Dublin, and that it did not require the exercise of any option under clause 6.3.2 to do so, but submitted that the contract was for carriage by air to Paris and for carriage in any way that Air France liked from Paris to Dublin. There seems to me no basis for that submission. The position, as I have said, is that there was a contract providing for transport in two stages, one by air, the other by road. That the contract was reflected in an air waybill (a matter referred to in the respondents’ notice) does not affect this conclusion, when the air waybill itself records the two different stages.
For completeness, I add two points. First, the evidence shows that Quantum Ireland and Air France had in early 1998 communicated regarding, and on 13th May 1998 met with Expeditors Ireland at this last company’s Dublin premises to discuss, the trucking leg and Quantum Ireland’s dissatisfaction with Plane Trucking. There is an issue whether Air France actually agreed to use other truckers, but, however that may be, this evidence confirms Mr Rosen’s statement that, unless some other option was chosen, the present contractual arrangement contemplated and provided for carriage by road. It does not support the unreal suggestion that Air France was during 1998 repeatedly contracting to carry by air from Paris to Dublin, but was on each occasion electing under clause 6.3.2 to change the means of carriage or Mr McLaren’s submission that the mode of carriage over this leg was simply open. Secondly, CMR governed Air France’s contract with Plane Trucking (although Air France also required Plane Trucking to accept increased liability, basically up to the Warsaw Convention limits which Air France undertook towards those using its services: cf condition 11.1 of Air France’s conditions above).
Analysis
Two questions present themselves when considering article 1. The first is to what extent the application of the Convention depends upon a carrier having obliged itself contractually to carry by road (and by no other means). This depends upon the force, in context, of the word “for” in the reference in article 1 of the Convention to a “contract for the carriage of goods by road”. The second is to what extent (if at all) a contract can be both for the carriage of goods by road, within article 1, and for some other means of carriage, to which CMR does not apply.
Taking the first question, attention can for a moment be confined to a simple contract for carriage from A to B, without any unloading from the trailer. There is a range of possibilities, each of which may actually lead to goods being carried by road internationally: Thus: (a) the carrier may have promised unconditionally to carry by road and on the trailer, (b) the carrier may have promised this, but reserved either a general or a limited option to elect for some other means of carriage for all or part of the way, (c) the carrier may have left the means of transport open, either entirely or as between a number of possibilities at least one of them being carriage by road, or (d) the carrier may have undertaken to carry by some other means, but reserved either a general or a limited option to carry by road.
In case (a), the contract is on any view “for” carriage by road within article 1. If one were to confine the application of article 1 to case (a), that would, probably, mean that there was a reasonably clear-cut distinction between cases where the Convention would and cases where it would not apply. However, I would not for my part regard that as at all a satisfactory or likely interpretation of article 1. Many, if not most, carriage contracts contain options as to alternative modes of performance, whether general or related to specific emergencies. In case (b), the contract was also “for” such carriage, unless and until the carrier elected otherwise under such an option, which it never did. The mere inclusion of an (uninvoked) option in such a contract cannot sensibly be decisive to the application of CMR. In case (c), the contract never promised, but it permitted and the carrier elected for carriage by road. There seems on the face of it good reason to treat such a contract as being a contract “for” – in the sense of “providing for” or “permitting” – the carriage of goods by road which actually occurred under its terms.
A further point is that, if the carrier had elected to carry internationally by air, there would have been no doubt about the application of the otherwise applicable Convention on air carriage. Although the trigger to the application of CMR is the contract for carriage by road, it seems to me desirable to interpret that phrase in a manner which dove-tails the application of the two regimes as far as possible.
Finally, there is case (d). This is the case in which the prospect of carriage by road was the most remote, as far as those interested in the goods and contracting for the carriage were concerned. A possible divergence of view about its treatment emerges in the continental authority to which I shall come. I start however with the initial impression that it would be difficult to draw any very clear or satisfactory distinction between case (d) and the previous cases. If they are all within CMR, there seems to me much to be said for treating case (d) as also within CMR. Carriage by road contrary to the terms of a contract would raise different considerations.
Air France emphasises that CMR, in contrast with for example the Warsaw Convention, focuses on “the contract for the carriage of goods by road”, and not on the carriage. So it does, although it is worth noting that the Warsaw Convention also contemplates an agreement: see in particular article 1(2) (whereby “the expression international carriage means any carriage in which, according to the agreement between the parties, ….”) and article 5(2) (whereby the absence, etc. of an air waybill “does not affect the existence or validity of the contract of carriage which shall …. be none the less governed by the rules of this Convention”); and see generally Fellowes (or Herd) v. Clyde Helicopters Ltd. [1997] AC 534 and Western Digital Corp. v. British Airways plc [2000] 2 Ll.R. 142, esp. paragraph 42 (“Whilst it is clear that in certain respects the Convention scheme provides general rules rather than merely statutory contractual terms, it is also clear that the draughtsmen had very much in mind as a premise to its application the existence of a relevant contract of carriage”).
The truism that CMR focuses on the contractual position does not answer the question: on what aspect of the contractual position and as at what date does it focus? Air France’s case appears to stand for this, that the application of CMR depends upon examining the contract terms at the first moment when the contract is entered into, and that the actual operation of the contract terms is irrelevant. In my judgment, there is attraction in an alternative approach, according to which the application of CMR depends upon the occurrence of international carriage of goods by road pursuant to contract. The (somewhat stilted) reference in article 1(1) to “the contract for the carriage of goods by road”, which must derive by literal translation from the original French version of the Convention, appears to me quite capable of being so read.
In this connection, I note that the rights and liabilities which the Convention regulates are those arising out of actual carriage by road under a contract to which the Convention applies (cf. not merely article 1 of CMR and section 1 of the 1965 Act, but all the detailed provisions of CMR). It is not surprising, in this light, that the Convention in a number of places even switches emphasis to carriage or “traffic” as the object of its application: see e.g. articles 2, 31(1) and 32 and the Protocol of Signature at its end. (Indeed, the language of article 2 positively suggests that the application of CMR to roll-on, roll-off carriage on an agreed sea, rail, inland waterway or air leg does not depend upon whether such roll-on, roll-off carriage was agreed from the outset, but upon whether it actually occurred under the contract.) Secondly, I note that article 4 provides that “the contract of carriage shall be confirmed by the making out of a consignment note”, that article 6 provides for a consignment note to contain a number of particulars which would commonly only be known once such actual carriage begins and that article 9 provides that “the consignment note shall be prima facie evidence of the making of the contract of carriage, [and] the conditions of the contract …..” (although by article 4 it is also provided that the absence or irregularity of the consignment note shall not affect the existence or validity of the contract of carriage). Far from focusing on any initial or previous contractual arrangement or any optional methods of carriage which it may have contained, these provisions contemplate that whether there is a contract for carriage and on what conditions can be determined by reference to a document which will necessarily reflect the reality that the contract has now become, by agreement or election, one for carriage by road. I see no difficulty therefore in concluding that the determination whether there exists a contract for the carriage of goods by road within article 1 should take into account the actual operation of the contract under its terms. Nor does this conclusion in my view involve any inadmissible circularity as suggested in the article, Combined Transport and the CMR Convention [1968] JBL 311, by P. F. Fitzpatrick (now Prof. Fitzpatrick of Birkbeck University) to which the judge referred. All it does is to adopt an appropriately larger perspective when making the relevant assessment.
The judge was right to state (paragraph 21 of his judgment) that “the purpose of the Convention was to standardise conditions under which international carriage by road is undertaken”. If express confirmation of this obvious object is necessary, it is also found in the preamble to the international convention. But standardisation would be incomplete and potentially capricious, if the application of CMR depended upon whether the carrier could be said to have contracted unconditionally and at the very outset to carry by road.
As I read paragraphs 18, 24 and 25 of his judgment, the judge did attach some significance to his conclusion that Air France was not contractually obliged to carry by road. It is not clear to me into which of cases (b), (c) and (d) he would have regarded Air France’s right to truck the goods over the Paris-Dublin leg as falling. In my view, and on the basis of the air waybill and Mr Rosen’s evidence, it fell within case (b). The judge’s own attention was, I think, focused on a different question, namely: once it was established that Air France had no absolute obligation to carry by road from Paris to Dublin, could the contract as a whole be characterised as one for carriage by road?
The judge considered that article 1 required any contract for carriage to be characterised as a whole. On this basis, the instant contract could not in his view properly be described as a contract for carriage of goods by road. It was in his view pre-dominantly for carriage by air. Underpinning his conclusion was, he said, the circumstance that the place of taking over could only be Singapore. But he added that, even if Air France could (implausibly, in his view) be treated as obliged to carry by road from Paris to Dublin, the contract would at most be a contract for carriage by both air and road, not a contract within article 1; and, even if that problem could be overcome, the only place of taking over could be Singapore, which would be “both absurd and contrary to the Warsaw Convention”.
It was in the judge’s view irrelevant to consider what might be the position under a reverse situation (for example, an initial trucking leg followed by air carriage). Even if, in such a case, the contract overall could be characterised as being for carriage by road (with the consequence, in the judge’s view, that CMR might apply to the roadleg, although, by necessary inference from article 2, not to the air leg), that was not this case.
Before us, Mr McLaren for Air France advanced the test of overall characterisation only as a secondary case. His primary submission was that CMR only applies to a contract providing for carriage by road from start for finish, with the single exception being that contained in article 2. However, this submission would mean that a contract for carriage by road from Stockholm to Naples would be subject to CMR; that a contract for carriage from Stockholm to (say) Capri would also be subject to CMR, if the goods remained on their trailer for the short sea passage from Naples to Capri; but that no part of a contract for carriage by road from Stockholm to Naples and sea from Naples to Capri would be subject to CMR. Other, similar results can readily be envisaged, e.g. in respect of contracts for carriage from Spain to a Channel port in France or across the Channel into this country or from Eire to Marseilles (by roll-on, roll-off transport) with a possible final sea leg to Corsica.. I do not think that either the drafters of CMR or participants in the international carriage of goods would regard it as sensible that rights and responsibilities for the long international trucking legs in such cases should depend upon whether a carrier by road does or does not undertake the final sea leg, or, if it does undertake it, upon whether or not it transports the goods on their trailer during it.
Reference was made before us to a part of the Protocol not repeated in the schedule to the 1965 Act, providing that the signatories to the Convention “undertake to negotiate conventions covering contracts for …. combined carriage”. Mr McLaren suggested that this indicated that the signatories would have excluded the application of CMR to the international road leg of a carriage contract like the present. I do not agree that there is any such inference. I agree here with Prof. Fitzpatrick that “all the parties to CMR may be and probably are saying is that they undertake a Convention which will apply to a contract for combined transport as a whole, which Convention will go beyond the extent of agreement reached in article 2 and will supersede the various Conventions or national laws applying to each part”. A Convention covering combined or multimodal transport would, in other words, have addressed the thorny issue of the appropriate overall basis and single standard of liability for such transport, with the possibility that there might have to be different standards for different combinations of modes of transport. That endeavour has never been completed, if it has even been attempted. But that has no bearing on the present issue, which is whether CMR is potentially applicable to an international road leg of a larger carriage contract, as the Warsaw Convention is to the air leg.
Mr McLaren opened up the possibility of a “clash of conventions” if the Warsaw Convention could apply to air carriage while CMR applied to a prior or ensuing road carriage leg. This clash related to goods in an airport in the charge of the air carrier after it had also taken them over for road carriage, or possibly while he was completing road carriage. The point seems to me too esoteric in any event to serve as any reliable guide to the scope of article 1(1) of CMR. But, however that may be, I am confident that it could and would be resolved when it arose, either by recognising the difference in capacity in which the goods were held, or, if both Conventions really could apply at the same time, by recognising that nothing in either prevents the carrier from undertaking a higher responsibility (see article 41 of CMR and article 32 of the Warsaw Convention). As will appear, it has not as yet caused any problem or reported litigation in any of the jurisdictions accepting the application of CMR to international road carriage under a combined or multimodal contract.
The express provisions of article 2 make CMR applicable for the whole of the carriage, where the vehicle carrying the goods is carried over part of the journey by means other than road. It is possible to argue that the force of the word “nevertheless” is to suggest that, apart from article 2, the Convention would at least have applied to the international carriage by road. On the other hand, the word may have been introduced to point a contrast with a situation where no part of the Convention would otherwise apply. In my view, article 2 is not inconsistent with a view that article 1 can apply where a contract is in part for one form and in part for another form of carriage;on the other hand, it is not conclusive either way. I do, however, note that the drafters of article 2 found no difficulty in speaking throughout of “the carrier by road”, when describing that aspect of the functions of a carrier with a dual responsibility, split between carriage by road and carriage by some other means.
The judge pointed, as did Prof. Fitzpatrick in his article, to article 31 of the Warsaw Convention as a potential precedent on which the parties to CMR could have drawn in order to clarify the application of CMR to combined transport. However, they could not simply have incorporated article 31 into CMR, because of article 2. It remains true that the drafters could have dealt more specifically with the international road legs of combined carriage contracts, but I do not find that a very persuasive indication as to whether or not CMR applies to such legs.
Where some other means of carriage occurs, in circumstances not falling within article 2, it may be that there will be an initial or final leg of road carriage which is purely domestic. Although we do not have to decide the position in relation to such a leg in this case, there would also seem to me no incongruity if it were to be concluded that an initial or final domestic leg falls outside CMR, like any other domestic carriage. An example would be any road haulage within Capri, or within England or Corsica, in the hypothetical situations taken in paragraph 25.
I add a further word at this point on the respondents’ notice, which maintains that the judge’s conclusions should if necessary be upheld in the light of the fact that no CMRnote was ever contemplated or issued. That is true, but is no answer to the application of CMR when on a true analysis the contract, which was recorded in the air waybill, was within article 1 of CMR so far as it provided for road carriage from Paris to Dublin. Article 4 caters specifically for the application of CMR to cases (not I think uncommon, for example in relation to forwarding agents contracting as carriers) where no CMR note is ever issued to record a contract for carriage by road.
Thus far, therefore, I see both attraction and force in a conclusion that article 1 may be read as applying CMR to the international road carriage element of a “mixed” or “multimodal” contract providing for two different means of carriage. But this leaves aside the pre-condition to the Convention’s application, constituted by the further words of article 1: “when the place of taking over 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 country….”. Looking at the terms of article 1, I would not regard this pre-condition as difficult to reconcile with a conclusion that CMR may apply to the international road carriage element of a mixed or multimodal contract. The place of taking over and the place designated for delivery, as specified in the contract, can – at least in article 1 – be read as referring to the places which the contract specifies for the taking over and delivery by the carrier in its capacity as international road carrier. The prime function of this pre-condition is, moreover, not to define what is meant by a “contract for the carriage of goods by road”. It is to delimit geographically the classes of contract for carriage by road to which CMR applies, that is those involving international carriage from or to a Contracting country. That is not to say that the pre-condition may not throw other, indirect light on the scope of application of CMR, but I think that one should be cautious about treating it as undermining or precluding what would otherwise be a possible and preferable construction.
It is said, however, that further provisions of the Convention buttress the conclusion that “the place of taking over of the goods and the place designated for delivery, as specified in the contract” can only refer to the first moment when the relevant carrier receives and the last moment when he parts with goods in any capacity. Particular reference is made to provisions in Chapter III of CMR (dealing with “conclusion and performance of the contract of carriage”), such as (i) article 4, requiring a contract for road carriage to be confirmed by the making out of a consignment note, (ii) article 5(1), contemplating that the “sender” and carrier shall sign or stamp this and (iii) article 8(1), providing for the carrier to check the statements in the consignment note and the apparent condition of the goods on taking them over and enter any reservations in the consignment note. These articles have of course to be read in the light of the further provision of article 4, that “the absence, irregularity or loss of the consignment note shall not affect the existence or validity of the contract of carriage, which shall remain subject to the Convention”. Further, there would be nothing to prevent a carrier, like Air France, performing a road trucking leg, from issuing a consignment note, to cover the road carriage from Paris to Dublin. This would have been largely back to back with the consignment note, which Place Trucking should have issued, and may in fact have issued, to Air France in respect of the same road carriage. Any CMR note that Air France issued should have been signed and completed under articles 5 and 6, but it does not seem to me necessary to consider precisely in what capacity or terms, since I have no doubt that workable answers can be given in one way or another. Air France would either be sender itself for the purposes of the road leg from Paris to Dublin or (as may well be) acting on behalf of the sender. Article 7(2) itself contemplates that a carrier may complete the particulars in a consignment note on behalf of a sender.
In the context of delivery, Air France also refers to (iv) article 13, entitling the consignee, after the arrival of the goods at the place designated for delivery, to require the carrier to deliver to him against a receipt the second copy of the consignment note and the goods and (v) articles 14, 15 and 16, dealing with circumstance in which it becomes impossible to carry out the contract before the goods reach the place designated for delivery or circumstances prevent delivery.
It is true that all these articles are most easily understood as addressing the simple situation, of a contract performed by road throughout (or falling within article 2). But I think that one should be cautious about treating them as necessary guides to the correct interpretation of the scope of the Convention under article 1. It is understandable that the detailed articles of Chapter III should focus on core or typical situations. But that does not necessarily mean that the Convention is to be limited to those situations.
English authority
It is appropriate before reaching any conclusion to consider how the matter stands in terms of authority, domestic and other European. It is accepted that no English authority is directly in point. As the judge rightly said, no assistance is to be gained from the decision in Arctic Electronics Co. UK Ltd. v. McGregor Sea and Air Services Ltd. [1985] 2 LL.R. 510. As to the correct general approach, we were referred to Buchanan & Co. Ltd. v. Buchanan Forwarding & Shipping (U.K.) Ltd. [1978] AC 141, where statements are to be found both that “the correct approach is to construe 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” (p.152D, per Lord Wilberforce), but, on the other hand to further cautions by Lord Wilberforce, Visc. Dilhorne and Lord Salmon at pp.153C-F, 156F and 161H against any general assumption that English methods of interpretation are inferior to, or even different from continental methods. We were also referred to pungent comments in this court in Ulster-Swift Ltd. v. Taunton Meat Haulage Ltd. [1997] 1 WLR 625, 631, on the inutility of citation of continental authority, which (in that case) revealed that courts in six member states had produced 12 different interpretations of particular provisions on CMR.
It is, however, clear from the speeches of both Lord Wilberforce (p.153E-F) and Lord Salmon (p.161E-G), and as a matter of general principle, that the English court should try to harmonise interpretation of CMR, as any other international convention, with any recognisable body of foreign law that has developed. The importance of this consideration is underlined in the case of CMR, when article 31 allows a claimant considerable scope for choosing between different forums (particularly those of the defendant’s residence, the place where the contract was made, the place of taking over and the place designated for delivery). Further, we should take note in relation to CMR,as much as the Warsaw Convention, words of Lord Hope in Fellowes (or Herd), above, at p.553D-G:
“In my opinion the Convention agreed at Warsaw, as amended at the Hague, was intended to be, and is, capable of accommodating changes in the practice of airlines and aircraft operators with regard to the purposes of which aircraft are used to carry people and goods, and in the contractual arrangements in pursuance of which people and goods are carried by air for reward. For this reason I think that it is proper to read Lord Bridge’s discussion in Holmes v. Bangladesh Biman Corporation [1989] AC 1112 and Greene L.J.’s judgment in Grein v. Imperial Airways Ltd.[1937] 1 KB 50 from which he quoted as having been framed with reference to the particular subject matter with which they were dealing at the time. In each of these cases the subject matter was carriage by air of the ordinary kind in pursuance of a contract between the airline and the passenger by which places of departure and destination had been agreed. It seems to me, that when regard is had to the desire to lay down a uniform international code which would achieve equity between the carrier and the user of his services, there is no necessary conflict between what they said in these cases and the wider interpretation of the phrase “carriage by air” for which the respondents contend in this case.”
Other European authority
Against this background, I turn to authorities from other European countries. We were referred to a number of authorities (including two in the German Supreme Court, the BGH) to which the judge’s attention was not drawn. Taking first the question to what extent the application of the Convention depends upon a carrier having obliged itself contractually to carry by road (and by no other means), the Belgian and Dutch courts have treated case (c) (described in paragraph 15 above) as falling within CMR in The Atlas Assurance Cy Ltd. v. Ocean Transport and Trading Ltd. (Antwerp Commercial Court; 23/9/75) [1976] 11 ETL 279, The Atlas Assurance Cy Ltd.v. Peninsular Oriental Steam Navigation (The “Osaka Bay”) (Antwerp Commercial Court; 4/1/77) [1977] 12 ETL 843 and International Marine Insurance Agency Ltd. v. P & O Containers Ltd. (The “Resolution Bay”) (Rotterdam Rechtbank; 28/10/99).
In the first Belgian case, the combined transport bill of lading covered carriage from loading in Hong Kong to Antwerp, with the port of discharge being specified as Rotterdam, and no specification of the method of carriage between Rotterdam and Antwerp. As the report recites: “The latter section of the combined transport could be done either by using another vessel calling at the port of Antwerp either by barge or lighter, or by road transport, or even by rail, the choice not being fixed and being left to the decision of the carrier”. Ocean Trading and Transport had in fact chosen to carry by road, and the court held that, since it had “instituted a road transport from Rotterdam to Antwerp, [it] is, as far as this transport is concerned, and whether [it] likes it or not, subject to the mandatory regulations applicable in the matter”. CMR was thus applied to the leg from Rotterdam to Antwerp. There is no indication that this resulted from anything other than the mandatory application of CMR in Belgium, as in the United Kingdom.
The second Belgian case also concerned carriage under a combined transport bill of lading from Hong Kong to Antwerp, with Rotterdam being named as the discharge port. The short report does not go further into the contractual terms, but simply records that CMR was held to apply to the leg from Rotterdam to Antwerp which was performed by road.
The third (Dutch) case again concerned carriage under a combined transport bill of lading from Port Chalmers, New Zealand to Antwerp as the “place of delivery” with Rotterdam being named as the “port of discharge”, with no statement in this document as to by which means of transport the leg from Rotterdam to Antwerp was to be carried out. The court held that:
“4.3 Since under the combined transport of goods P & O has opted to arrange part of the transport, i.e. from Rotterdam to Antwerp, by truck/by road whereas the contract, as contained in the CT document allows it to do so, the place where P & O and/or [its] representative …. took delivery for transport by road, i.e. Rotterdam, counts [i.e. geldt in the Dutch] as the place of receipt stated in the contract for the purpose of art. 1 para. 1 of CMR.”
The court accordingly held CMR to apply to the leg from Rotterdam to Antwerp: paragraph 4.4. Turning in the same paragraph to article 31 of CMR, according to which a plaintiff may found jurisdiction in the courts of a country within whose territory “the place where the goods were taken over by the carrier …. is situated”, the court went on:
“Since in the meaning of this [article] the ”place of receipt of the goods” must be considered to be the place where P & O and/or the third party called in [i.e. the actual haulier] took delivery of the container for transport by road, in that case the Dutch judge has international jurisdiction ….”
The German Supreme Court (“BGH”) has also stated that CMR would apply in a like manner. In its judgment of 17th May 1989 (I ZR 211/87), it was concerned with the forwarding of electronic components by A (to whose insurers any cause of action had passed), under an air waybill which identified Stuttgart as the departure point, Algiers as the destination and the second defendants, a member of IATA, as first air carriers. The second defendants entrusted to a German airline the carriage by air from Stuttgart to Algiers. The latter engaged sub-contractors to carry the goods by road from Stuttgart to Frankfurt, in order that they could be carried thence by air to Algiers. The goods were however destroyed by fire after an accident during the road journey.
Paragraphs I and II(1) of the BGH’s judgment make clear that the case proceeded both below and before the BGH on the assumption that the contract between A and the second defendants was for air freight (carriage by air). However, the BGH said that this has no bearing on its decision, and that it was also unnecessary to consider whether the actual carriage of goods by road from Stuttgart to Frankfurt was permitted to the second defendants under this air freight contract, whether upon its true interpretation or because of its incorporation of an IATA-Resolution (507 B). It said that an air carrier was liable in any event, according to whatever were the rules applicable to the carriage by road, for transit damage suffered by air freight in the course of carriage by road – whether or not in accordance with the contract (“order”). It cited as potentially relevant rules the German Commercial Code (“HGB”) para. 429 et seq., the Kraftverkehrsordnung (“KVO”) or from 15th May 1989 GFT (Tariff for the Long-Distance Transportation of Goods, para. 29 et seq. and CMR, article 17 et seq.).
The BGH’s at first sight puzzling reference to liability under such rules in the event of carriage by road contrary to the provisions of a contract for carriage by air is explained in subsequent paragraphs. In the immediately following paragraph, the BGH dealt with the position on the assumption that the contract of air carriage entitled the second defendants to perform a leg from Stuttgart to Frankfurt by road instead of air. On that basis, the court said, the carriage by road constituted contractual performance (“amounts to a contractual service”), and was governed by the relevant rules, which were (this being carriage by road within Germany) those of the KVO. In the paragraph thereafter, the BGH considered the position on the opposite hypothesis, namely that the carriage by road was uncontractual, and said that in that event, the second defendants were liable for transit damage at least to the same extent. A breach of the contract for air freight could not improve the second defendants’ position. A party in breach of such a contract must at least accept the transport risk associated with the means of transport selected in breach of contract and the system of liability (here the KVO) thereby entered into. The BGH added however that it was not necessary to decide whether, and in accordance with what rules, the carrier might be further liable in the case of a breach of the air freight contract consisting of carriage of goods by road contrary to the contract.
It is therefore clear that, if the relevant road carriage had extended from Stuttgart to an airport outside Germany (for example Charles de Gaulle) from whence the goods were to be forwarded by air to Algiers, the BGH would have held (1) that CMR applied to the road carriage from Stuttgart to Paris, if the air carrier was under the air freight contract permitted so to perform and that (2) if the air carrier was not so permitted, then the air carrier’s minimum responsibility would have been that imposed by CMR, but that it would be open to argument (since the BGH did not need to determine the point in the case before it) that further, higher liability should flow from the breach of the air freight contract. Thus, the highest German court has adopted the view that CMR applies even in case (d) to which I have referred in paragraph 15 above.
In an earlier decision dated 24th June 1987 (I ZR 127/85), the BGH was concerned with a counterclaim for loss of part of a container load of goods during carriage from the Saar to Portadown in Northern Ireland. The contract covered two consignments, one to travel by low loader, the other in a container. The container was carried by road to Rotterdam, where it was shipped without trailer to Belfast. In Belfast the plaintiff carrier terminated the carriage, because of a dispute about payment of the carriagecharges. As to the nature of the contract, the BGH said (paragraph 2(aa)) that
“It cannot be assumed from the findings as stated that the container was to be carried on a roll-on, roll-off basis (cf art. 2 CMR). Neither was the container in fact carried in this manner. As the Appeal Court correctly found, the container was shipped to Belfast without a trailer. The Appeal Court denied that the parties had agreed on the applicability of the CMR for the transport from Rotterdam onwards. This is not the subject of any legal reservations, at least for the section of the route by sea.”
In its judgment, the BGH considered a previous line of authority relating to situations in which a carrier or forwarding agent had undertaken to carry by road from A to B, but had then “pleaded that the damage occurred prior to or after the transportation of the goods, or at another place in respect of which the carrier [could contract out of its liability]”. In that previous line of authority, the court had developed the theory of “overall consideration” (Gesamtbetrachtung – an overall consideration or examination), so as to hold the carrier liable as a carrier by road throughout. But in case I ZR 127/85 the BGH held this theory inapplicable. It said, first, that this theory had no application to cases where the subject of the transport was a priori (i.e. from the outset) the transport of goods using various means of transport (in the case before it, the carriage by truck and by ship of the container which became lost). It said secondly that
“The same applies when different regulations on liability – e.g. the CMR and the Warsaw Agreement – are specified as mandatory with regard to the means of transport used for the various sections of the route”.
The court then reverted to the first point:
“But even when this is not the case, the viewpoint of the overall consideration cannot be taken as authoritative where different means of transport are used to carry out the transport of the goods. According to the line of precedents …. referred to above, in the assessment of a transport as an overall transport with a single set of regulations on liability the decisive consideration is whether it can be assumed from the order, viewed from the overall [i.e. viewed overall], that the transport is a uniform long distance goods traffic transport, using motor vehicles. ….. However, this is not possible with combined (multimodal) transport, as here. Although here also the subject of the order is the transport of the goods over the entire route from the place of despatch to the place of delivery to the recipient, nevertheless this transport, in respect of which it was clear between the parties from the start [that it was] a transport to be carried out by combining by a combining a variety of means, was to be undertaken in various stages and with different means of transport”
In the result the BGH accepted the Stuttgart regional court of appeal’s view that CMR only applied to the carriage of the container from the Saar to Rotterdam. It held that, while CMR itself contained no provision regulating the burden of proof as to whether any loss or damage occurred when the goods were in the care of the CMR carrier or on some other occasion, as a matter of general German law the burden of proof in respect of the place of damage lay on the carrier.
The primary reasoning of the BGH thus concerns either case (a), or – if there was some, unmentioned and unutilised, contractual liberty to carry from the Saar to Rotterdam by means other than road – case (b), identified in paragraph 15 above. But the second reason given by the BGH (see paragraph 46 above) contemplates that CMR may have a wider, overriding application, in other cases. The later decision of the BGH dated 17th May 1989 (I ZR 211/87) indicates that this is so, and that CMR applies in all of cases (a), (b), (c) and (d).
We were referred to an earlier decision of the regional court of appeal of Frankfurt am Main, dated 11th November 1981 (VersR 1982 Vol. 28 p.697), in which the court expressed the view, in the context of a contract for air freight from Germany to France, that the exercise of a mere liberty under IATA condition 507B to carry by road (because of a shortage of aircraft hold space) without informing the consignor, did not make CMR applicable – and that the Warsaw Convention was equally inapplicable because there had been no actual air carriage. So the actual contract was governed solely by the carrier’s own conditions. Although the court said that IATA condition 507B allowed the carrier to comply with its contractual obligation by using road transport, it went on to refer to “the absence of a relevant contractual obligation”. It also reasoned that any other solution “would be unreasonable and lead to considerable legal uncertainty”, since it would enable a carrier to select whichever means of carriage provided the most favourable liability regime. However, the net result was that neither Convention applied to international carriage, and that the carrier could simply impose whatever contractual terms it wished, which I would have thought was a far more unreasonable result. The reasoning in this case appears to me unpersuasive and to have been overtaken by the BGH’s more analytical judgments, to which I have referred. Dr Ruhwedel’s work on Air Transport Law, to which we were referred, and which refers to the Frankfurt am Main decision, was published in 1987, and so makes no reference to either of the BGH’s decisions.
I turn to two cases, arising out of the same accident, decided by the tribunal de commerce of Bobigny in France. They are Cie General Accident Fire and Life Assurance Corp. v. Sté Saga Air Mory on 24th September 1994 and Les Mutuelles du Mans v. Transport Assistance Services on 24th November 1995. Various consignors entrusted DAS with the carriage of goods from Roissy in France to Nigeria. DAS engaged the services of its local representative, TAS, which in turn engaged VAS to carry the consolidated cargo from Roissy to Gatwick, for carriage by a DAS aircraft from Gatwick to Nigeria. VAS used as trucker Plane Trucking, whose vehicle caught fire on the way (evidently while still in France), destroying most of the cargo. In each case, the parties in interest asked the court to determine whether the loss was regulated by the Warsaw or CMR Convention.The contract between consignor and DAS was “made concrete” by an air waybill. This provided by condition 2.1 that the carriage performed by virtue of its conditions “is subject to the liability rules laid down by the Warsaw Convention”; and by condition 8.1 that “the carrier …. may with advance notice and taking account of the consignor’s interests, consign the goods by other means of carriage”. In each case, the court said:
“…. thus it has been clearly agreed between the parties to the contract of carriage that:
on the one hand, the carriage would be subject, with regard to liability rules, to those of the Warsaw Convention,
on the other hand, that, in order to perform the carriage, the carrier may, at his discretion, in the interest of the consignor, consign the goods by other means of transport;
Whereas thus the fact that DAS decided to route the goods by road between Roissy CDG and Gatwick falls within the parties’ agreements and does not alter the basic nature of the carriage, that is, carriage by air, at least with regard to the application of liability rules;
That thus the provisions of the Warsaw Convention must be applied to relations between the consignor and the air carrier, DAS, on the subject of the carrier’s liability.”
The court went on in each case to hold that the liability of all concerned in the carriage (DAS, TAS, VAS and Plane Trucking) was therefore governed by the Warsaw Convention. A note to the second report observes that a comparison of the two contractual clauses on which the court relied
“leads one to conclude that in the case of the use of the route by road, the [Warsaw Convention] alone is applicable, by virtue of the theory of outward appearance with regard to the consignor and its clear and precise terms. The notion of proxy being excluded, the air carrier who takes on the goods under an AWB is obliged to consign them according to the agreed conditions: if he contests same, one may reproach him, at least for failure in his duty to advise (need to advise the consignor of any [the possible] consequence[s] … of changing the method), or even worse (fraud[1]).”
Neither judgment makes any reference to any carrier having given notice to the consignor of the change of method of transport (despite the requirement in condition 8.1), and this note suggests that there may have been no such notice. Against this, on the other hand, the tribunal de commerce expressly referred in each case to the carriage of roadbetween Roissy and Gatwick as having fallen “within the parties’ agreement”. Taking the tribunal’s statement literally, the decisions therefore concerned facts falling within case (d), considered in paragraph 15 above; and, on this basis, the French court’s attitude, contrary to that of the BGH, was to apply the Warsaw Convention throughout, rather than to apply the Warsaw Convention to the air leg and CMR to the road leg. However, it is clear, from both the court’s reasoning and the commentator’s note, that the French court’s decision is only applicable in the narrow sphere of case (d).
The first question – summary
The European authority on the first question can thus be summarised as follows. The Belgian, Dutch and German courts have all held that CMR can apply to carriage by road internationally in case (d), as well as necessarily in cases (a), (b) and (c). The French court (the tribunal de commerce of Bobigny) has reached what appears, from its reasoning, to be the opposite conclusion, although there is some room for doubt about this, bearing in mind, firstly, the absence in its judgments of any reference to “advance notice” of the changed means of carriage having been given as required by condition 8.1 and, secondly, the terms of the commentator’s note. Assuming that the tribunal’s decision does stand for an opposite conclusion to that reached in Belgium, the Netherlands and Germany, it is clear that its reasoning can only apply in case (d), and not cases (a), (b) and (c) described in paragraph 15 above. The present case falls, I have concluded, within case (b). So all such European authority as has been produced suggests that CMRshould be applied to the carriage by road from Paris to Dublin, subject to the answer to the second question. This confirms the answer that I would give to the first question, without the benefit of any authority (see paragraphs 15-22 above).
The second question
The second question is to what extent (if at all) a contract can be both for the carriage of goods by road, within article 1, and for some other means of carriage, to which CMR does not apply. In terms of other European authority, this question can be readily answered. The Belgian, Dutch and German cases all unequivocally accept that CMRcan apply to the road leg of a larger contract for carriage, involving different methods of transport. The Dutch court expressly addressed the reference in article 1(1) of CMR to the “place of taking over” or “receipt” as specified in the contract, and found no difficulty in treating this as Rotterdam, where the second road leg succeeded the initial sea leg, and the defendants assumed the capacity of road carriers. Other European courts cannot have seen any difficulty worth mentioning in adopting the same analysis. Hence, CMR’s application in the Belgian and Dutch cases to the final Rotterdam-Antwerp legs of contracts starting with long sea legs from the Far East or New Zealand. Hence, the German Supreme Court’s indication in its judgment of 17th May 1989 (I ZR 211/87) that CMR could apply to the initial road leg of a larger contract, and its decision on 24th June 1987 (I ZR 127/85) that it applied to the road leg from the Saar to Rotterdam under a contract covering carriage of a container (not on a roll-on, roll-off basis) from the Saar to Portadown in Northern Ireland. (I repeat that the judge left open a possibility that CMR might apply to an initial, but not a final, road leg of a larger multimodal contract, but, whatever the scope of CMR may be, I do not consider that it can or should sensibly be construed to draw any such distinction.) I can also mention briefly in this context another consistent earlier decision, by the Oberlandesgericht (regional court of appeal) of Düsseldorf on 8th May 1969, [1970] 5 ETL 446. It had to consider the carriage of cars from Bochum to Newark in the USA, performed by road to Antwerp and thence by sea. The relevant damage occurred during the road carriage. The court said that it was unnecessary to decide (it was “by the way”) whether the vehicles were consigned on the basis of a uniform freight order (i.e. one covering the whole transport from Bochum to Newark) or whether the consignors placed several freight orders (i.e. including a distinct order for the leg from Bochum to Antwerp), and it went on to apply CMR to determine liability for damage occurring during the Bochum-Antwerp leg.
Finally, nothing in the decisions of the tribunal de commerce of Bobigny points to any other answer to the second question. If anything, the tribunal’s reasoning indicates that CMR can apply to a single leg of a larger contract, unless “the basic nature of the contract” is for some other method of carriage. Otherwise, the tribunal would have been able to give another and shorter answer to the suggestion before it that CMR applied to the leg from Roissy to Gatwick. In respect of a contract involving two distinct legs, one by air, the second by road within case (a) or (b), if one asks, in the tribunal’s terms, what was “the basic nature of the contract”, the answer would have to be road carriage as regards the road leg. Even if the second leg fell within case (c), its nature would be open, so that, in that case too, CMR could apply to the second leg, if it was performed by road.
The weight of the European authority is thus firmly in favour of a conclusion that CMR is applicable to an international road leg of a larger contract in cases (a), (b) and (c) mentioned in paragraph 15. While I see the force of the objections suggested by Prof. Fitzpatrick and accepted by the judge, my own inclination, apart from authority, would have been in the same sense. As it is, and with the benefit of such authority, I have no real hesitation about adopting the conclusion which other European countries have reached. For my part, I would also favour the German Supreme Court’s view that CMR is applicable in case (d). I reach these conclusions on the basis that the concept of a contract for the carriage of goods by road embraces a contract providing for or permitting the carriage of goods by road on one leg, when such carriage actually takes place under such contract. The place of taking over and delivery of the goods under article 1(1) are to be read as referring to the start and end of the contractually provided or permitted road leg. Detailed provisions, such as articles 4, 5(1), 6(1), 8(1) and 13-16 of CMR fall to be operated with the carrier (or its representatives) so far as necessary putting itself in the position of the consignor or consignee when taking over goods at the start of a road leg, which is not the first leg in the overall carriage, or when delivering up the goods at the end of a road leg, which is not the last leg in the overall carriage.
Overall characterisation?
I return to say a further word about the judge’s primary ground of decision and Mr McLaren’s secondary submission supporting it. The judge considered that article 1(1) of CMR requires that it should be possible to characterise the relevant contract overall as a contract for the carriage of goods by road internationally. If that were so, then prima facie it would appear that CMR should apply throughout to all aspects of carriage under any contract which could, overall, be classified as being for carriage by road. The short sea legs could, for example, be ignored in the examples previously taken of carriage from Stockholm to Capri or Spain to London, even though the goods did not remain on a trailer for them. That would amount to saying that the parties to CMR did achieve a true multimodal convention, whilst disclaiming having done so. Further, it would not fit with article 2. CMR would be potentially applicable to the sea legs despite the absence of any equivalent provisions to article 2(1), second sentence, and article 2(2). It would also be left unclear whether article 2 also operated as a tacit exception to the (unstated) rule that CMR only applied if the contract could be characterised overall as being for carriage by road. The judge avoided these problems, by his further conclusion (on the second question above) that CMR is incapable of applying to a contract for carriage by road unless the whole contract is for carriage by road or article 2 applies. In effect, he required, as the key to the application of CMR under article 1(1), both an overall characterisation of the whole contract and (save to the extent provided in article 2) an individual characterisation of each leg as involving carriage by road. Once one introduces both requirements under CMR, the former requirement is in reality subsumed within and overtaken by the latter.
An approach which took as the key to the application of CMR simply the overall characterisation of the whole contract would have the flavour of the (now substantially discarded) German doctrine of Gesamtbetrachtung (see the discussion in the BGH decision of 24th June 1987), as well as of the tribunal de commerce of Bobigny’s reasoning based on “the basic nature of the contract”, in the context of a contract for carriage by air subject to an option to elect for some other means. But the BGH’s doctrine and the tribunal’s reasoning were used to hold that a whole contract was subject to the rules regulating the transport that was characteristic of the contract. Tomlinson J expressly declined to adopt a like approach, since, having held that the present contract was characteristically for air carriage, he held that the carriage from Charles de Gaulle to Dublin was not subject mandatorily to the Warsaw Convention; rather, it was subject to Air France’s conditions – and thus only subject to the terms of that Convention to the extent that Air France had chosen to apply them contractually.
Under CMR, for reasons already given, neither the German doctrine of Gesamtbetrachtung nor the decisions of the tribunal de commerce of Bobigny lend any possible support to the judge’s approach in any but case (d), which is not this case. Nor do I see attraction for the judge’s approach under CMR on any other basis. To recapitulate points that I have already covered, its logic as a separate point would appear to be that CMR should apply to the whole of any multimodal transport, regardless whether any not-road leg was conducted by roll-on, roll-off transport. Secondly, its effect would be to take agreed international carriage by road outside any Convention (Warsaw or CMR) in circumstances where the contract overall could not be characterised as primarily for road carriage. Thirdly, it would be inconsistent with the general European approach in the cases I have described, which (in the case of Germany since the BGH decisions) undertake no such process of identification and show that it is no obstacle to the application of CMR that the contract was pre-dominantly for some means of carriage other than road (cf e.g. the facts of the Belgian and Dutch cases and the BGH decision of 17th May 1989). Fourthly, it would open up a prospect of metaphysical arguments about the essence of a multimodal contract. Why should a contract for carriage have only one characteristic? The judge’s conclusion that the present contract was pre-dominantly for carriage by air reflects the comparative distances, as well as the physical obstacles, that had to be overcome between Singapore and Dublin. But there would be other cases where comparisons of time and space, and the physical obstacles that carriage was designed to overcome, would lead to no very obvious result. How would one characterise a contract for carriage by road from Stuttgart to Paris and thence by air to Gatwick? Viewed overall, contracts can by their nature or terms have two separate aspects, and the present, despite the length of the air leg, was in my view just such a contract. The real question is thus that with which I have already dealt as the second question in paragraphs 56-58 above.
Academic writing
Like the judge, we were referred to considerable academic writing, particularly to what the judge rightly described as Prof. Fitzpatrick’s penetrating article, Combined Transport and the CMR Convention [1968] JBL 311, to which I have already referred, and Prof. Malcolm Clarke’s well-known standard text on International Carriage of Goods by Road: CMR (3rd ed; 1997) as well as an article written by Prof. Clarke critical of Tomlinson J’s conclusions, Carriage by Road [2002] JBL 210. I have found these helpful in identifying the issues and considerations. They take different views on the central issues, Prof. Fitzpatrick (writing in the very early days of CMR without the benefit of any authority) took the view that the place of taking over and delivery in article 1(1) can only refer to the initial taking over and final delivery at the start and end of any contract for carriage and that the force of the word “for” in that article is less than either I or subsequent European authorities consider. Prof. Clarke in his book refers to and argues for the views taken by the Belgian and Düsseldorf courts, and in his article draws attention to the German Supreme Court decisions, which I have considered. If I say no more about these writings, it is not because I have not found them valuable, but because I have already covered the main points in this judgment.
I would only record that Mr McLaren did not seek to support before us Prof. Fitzpatrick’s final suggestion that the exclusion (in the part of the Protocol of Signature set out at the end of the Convention as scheduled to the 1965 Act) of the application of CMR “to traffic between” the UK and Northern Ireland and the Republic of Ireland
“would seem to imply that the exclusion is not confined to a carriage originating in either country. Hence the exclusion would cover the situation where such traffic is part of a larger contract of carriage and in such case the Convention is apparently meant not to apply pro tanto”.
If that had been right, another metaphysical question would have arisen, bearing in mind the present loss in North Wales – namely at what point, in the course of roll-on, roll-off carriage from Paris to Dublin, do goods cease to be “traffic between” France and the UK and become “traffic between” the UK and Eire, and whether there is any intermediate period over which the goods can be said to be simply traffic within the UK. Mercifully, no such question arises.
I would therefore conclude that the present contract was for carriage by road within article 1(1) of CMR in relation to the roll-on, roll-off leg from Charles de Gaulle, Paris to Dublin, and that Air France’s own conditions are to the extent that they would limit Air France’s liability overridden accordingly. It is thus open to the claimants to seek to show under article 29 of CMR that there was wilful misconduct or equivalent default, disentitling Air France to limit its liability for the loss which occurred during the road transit. It has been however agreed between counsel that this issue should be remitted to the Commercial Court to be dealt with there.
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 alibi pendens issue under article 31.2.
G Bosman (Transport) Ltd v LKW Walter International Transportorganisation AG
[2002] EWCA Civ 850
Longmore LJ
The CMR convention
It is, in my view, impossible for Mr Ghaffar to contend now that the CMR convention does apply after all. Bosman has always said that the convention did not apply to the particular contract relating to the consignments of high pressure machines. The judge held that it would be wrong to give judgment against them on the basis that CMR applied. To that extent, Bosman succeeded in showing that they had an arguable defence. They cannot now turn round and say that CMR might apply after all. The whole case proceeds on the footing that there is a dispute about the application of CMR. If Bosman had wanted to say that CMR did apply and that they had a defence pursuant to CMR, that should have been put before the judge together with an indication of what that defence might be. That was never done and it is too late for Bosman to seek to change tack when the case is opened on their behalf in the Court of Appeal.
In these circumstances the judge was quite right to proceed on the basis that the CMR did not apply and turn to the secondary way of putting the case.
2. Gratuitous bailee
The judge dealt with this argument extremely shortly. I agree with him that the argument is hopeless. The contract is evidenced by a fax from Mr Rene Haselbacher of LKW to Mr Chris Bosman in the following terms:
“Hey Chris,
As spoken by telephone I will send you following trailers on your yard.”
There are then set out three trailers as identified, including the Panschick trailer, the cargo is described and the unloading base at Runcorn is specified.
“Please see that you deliver this stuff on the following dates I give you – as there are fix[ed] bookings in Runcorn.”
The timings for delivery of the specific consignments are then set out.
“Please advise your driver to be in Runcorn approx. half an hour before booking time and they have to tell the person there booking numbers.
Rate: British £300 per trailer. Thanks and regards. Rene.”
That confirms an arrangement already made on the telephone and, as it seems to me, constitutes the best evidence of a contract for receiving, keeping and in due course carrying the goods for the rate of £300 Stg per trailer.
The idea that Bosman were gratuitous bailees from Friday afternoon to Sunday evening or Monday morning but then became bailees for reward once the load started moving towards Runcorn is, with respect to Mr Ghaffar, little short of absurd.
3. Absence of investigation of facts leading to the finding of negligence
The judge dealt with the question of negligence in the following way. He said that, in support of LKW’s allegation that Bosman failed to take reasonable care of the goods –
” ….. reliance is placed on a letter from the claimant’s former solicitors, which recites some substantial inadequacies in the operation of the security systems at the claimant’s premises in Ditton. The purpose of that letter, when it was written, was to explain why the claimant itself asserted a right to indemnity from the company which installed and operated the security system.”
Then, omitting immaterial parts, he said:
“The onus is on the claimant to prove that the goods were not lost by a failure on its part to take reasonable care of them. That is not an absolute duty expressed in those terms. The evidence is that the claimant had arranged the installation of a security system at its premises which, if it had been working and operated properly, would have been at least arguably sufficient to discharge that duty. Equally, the solicitor’s letter to which I have referred makes it clear that the conduct of the contractors whose duty it was to monitor the system was seriously inadequate.”
The solicitor’s letter referred to by the judge is a letter of 6th June 2000 written to Bosman’s loss adjusters, and produced by them to support their assertion that they had spent a great deal of money on a sophisticated closed circuit television alarm system provided by a company called Event Security Systems Ltd. The alarm system operated by infra-red beams set at strategic points across the premises. If the beams were broken or the cameras showed unauthorised personnel on the property, alarm bells would ring at an off-site private monitoring company which would then take appropriate action. The letter did indeed support that assertion. It said further as follows:
“Event Security Ltd set up a monitoring service contract direct with Visual Verification Ltd and charged for that service. That service was in breach of contract and/or negligent in that there were several activations of the system at central control during the theft but none were acted upon. At 20:58:06 hours the alarm call was first received and a link established at central control and at 21:02:50 hours one of the thieves could be seen in the picture and yet clearly this was not acted upon by the controller. The controller terminated the link at 21:05:45 hours without taking any action.
At 21:20:38 hours a further alarm was received and the link was established. In two separate frames during 21:21 hours, two thieves could be seen walking as a pair across the screen. Again, both of these frames were missed by the controller who terminated the link at 21:27:57 hours without any action being taken.”
The letter continues in a similar vein, itemising the faults on the part of the monitor. The conclusion is as follows:
“The thieves were on site three times in one evening and actually drove into the main yard area once in their own small vehicle and then a second time with their own motive unit. They had time to separate the trailer from the motive unit of Bosman Transport forcibly and then attach their own motive unit and leave. There was plenty of time to note all this movement and act upon it but due to inadequacies in the setting up and installation of the system and due to Visual Verification’s negligent monitoring, they took no steps whatsoever to act upon the alarm calls received ….. “
The letter as a whole contains more in the stated vein and, in my judgment, the letter amply justifies the admission of inaction on the part of the security company in the draft reply and counterclaim before the judge.
It is not sufficient for Mr Ghaffar to say there has been insufficient investigation of the facts of the case when it is clear from the evidence Bosman themselves have produced that there was negligence, and that but for that negligence the loss could have been averted, subject always to Mr Ghaffar’s point which is that Bosman are not responsible for faults on the part of the security company monitoring the safety system. The judge’sconclusion that the claimant cannot hope to discharge the onus upon it of showing that the goods were lost without any negligence is, in my judgment, fully justified.
4. Is Bosman responsible in law for negligence on the part of the monitoring company?
Here Mr Ghaffar has difficulty with the previous decision of this court in British Road Services and Another v Crutchley & Co Ltd [1968] All ER 811. In that case a lorry load of whisky was stolen from a warehouse operated by the defendants. The court, reversing the trial judge, held that the defendants’ system of protection was inadequate and that they had failed to discharge the burden that was upon them of proving that the loss was not due to any negligence on their part. The claimants had also argued that there had been negligence on the part of a security patrol for the supply of which the defendants had contracted with a company called Factory Guards Ltd. In the event, the court did not have to determine as a matter of decision whether the defendants were liable for the negligence of the patrol man supplied by Factory Guards. But the matter was fully argued.
Lord Pearson expressed his view at page 820 D of the report as follows:
“Although there can be a bailment without a contract, there usually is and was in this case a contract, and the obligation of the bailee can be formulated as an implied term of the contract. This may help to bring out clearly the nature of the obligation. The bailor could not reasonably be expected to be content with a contractual promise of the bailee to take proper care of the goods or engage a competent contractor to do so. If that were the contractual promise, then in the event of default by a competent contractor duly selected by the bailee, the bailor would have no remedy against the bailee and would have to rely on the possibility of an action of tort against the contractor. To give business efficacy to the contract, the bailee’s implied promise should be that he will himself or through his servants or agents take proper care of the goods.”
Lord Justice Danckwerts agreed with the judgment given by Lord Pearson. Lord Justice Sachs also agreed, saying at page 824 H:
“Turning now to the failure of the third parties, Factory Guards, Ltd., to keep a reasonable watch on the night in question, I am in full agreement with the view expressed by Lord Pearson and by the trial judge, that the defendants must accept responsibility for the negligence of the third parties in the same way as if the patrolmen had been the defendants’ own employees. The bailee is responsible for proper care being taken of the goods and to my mind he cannot escape from that liability merely by employing sub-contractors for that purpose, however reasonable may be his confidence in them. Any contrary decision would make a serious and unjustifiable inroad on the rights of bailors, and for this inroad there does not appear to me to be any authority.”
Mr Ghaffar submitted that these remarks of Lord Pearson and Lord Justice Sachs were obiter and should not be followed except in the case where the sub-contractor had himself been entrusted with possession of relevant goods. For this purpose he referred us to
Coggs v Bernard (1703) 2 Ld Raym 909 and Morris v Martin & Sons Ltd [1966] 1 QB 716, particularly for that part at the end of the judgment of Lord Justice Diplock in which he said he based his decision –
“on the ground that the fur was stolen by the very servant whom the defendants as bailees had employed to take care of it ….. “
For my part, I do not derive any assistance from Coggs v Bernard since time has moved on considerably – 300 years – since it was decided. Nor do I consider Morris v Martin helps in this case since the claim was there a claim in tort directly against a sub-bailee.
The present case is a case of contract. The question is whether the contractual obligation is to take care of the goods only by oneself and one’s servants or whether the obligation is to take care by whoever may be employed to discharge that duty.
I respectfully agree with Lord Pearson for the reasons that he gives that the bailee’s promise is that he will himself or through his servants or agents take proper care of the goods. I am not aware of any judicial criticism of this formulation, and I am myself more than content to adopt it. It has moreover the virtue that contracts of carriage of goods by road and contracts of simple bailment will be interpreted in the same way as contracts of carriage of goods by sea. There, the contractual obligations to exercise due diligence to make a vessel seaworthy and properly and carefully to carry, keep and care for the goods have been held to be inescapable personal obligations (see Scrutton on Charterparties 20th Edn pages 429 to 431, citing Riverstone Meat Co v Lancashire Shipping Co [1961] AC 807). What has been for many years the case for carriage of goods by sea must, in my view, also apply to the carriage of goods by land unless there is a good reason to decide otherwise. There is no such reason.
I would dismiss this appeal.
LORD JUSTICE JONATHAN PARKER: I agree.
THE VICE CHANCELLOR: I also agree.