UK Supreme Court Blog

EDITORS: Dan Tench, Emma Cross, Zainab Hodgson, Francesca Knight, James Warshaw and Natalie Haefner (CMS)
Hugh Tomlinson KC, Matthew Ryder KC, Nandini Bulchandani and Daniel Rudd (Matrix)

In a recent judgment, the Supreme Court brought welcome clarification to the proper interpretation of certain provisions of the Contract for the International Carriage of Goods by Road 1965 (CMR). Overturning the decision of the Court of Appeal, the court held that English courts have no jurisdiction over disputes involving successive carriers of cargo which are subject to the CMR.

Background facts

The claimants in both appeals were companies belonging to British American Tobacco (BAT). BAT entered into a contract with Exel for the international transport of containers containing cigarettes to be delivered to Denmark and Switzerland. Exel entered into a contract with two subcontractors – H Esser Security and Kazemier Transport. It was stipulated within the contract that the provisions set out under the CMR were applicable. En route to their destinations, the first container was allegedly hijacked in Belgium, whilst the majority of the cigarette cartons in the second container had 18 pallets worth of tobacco stolen while the vehicle was parked.

BAT commenced proceedings as a result against all three carriers. There was no dispute that the courts had jurisdiction to try the case against Exel under English jurisdiction. However, the successive carriers challenged the claimants’ bringing of proceedings under English law on the basis that the CMR jurisdiction provision ought to overrule the framework agreement for the English proceedings against Esser and Kazemier.

At first instance, the Commercial Court held that it had no jurisdiction over Esser and Kazemier. On appeal, the Court of Appeal concluded the opposite and decided that the successive carriers could be sued in English proceedings. The Supreme Court has now reversed the decision and upheld the Commercial Courts’ order to set aside the claim against the successive carriers on the basis that English courts have no jurisdiction.

Supreme Court decision

The Supreme Court studied the wording of all articles of the CMR that were being disputed by both parties: articles 31, 34 and 36.

In relation to article 31, it was established that the article’s intended purpose is to deal with disputes where a successive carrier is involved. The Supreme Court gave the article its literal meaning and concluded that it only confers jurisdiction on the courts or tribunals on the basis of:

1. agreement between the parties
2. where the defendant is ordinarily resident, or has his principal place of business, or the branch through which the contract was made
3. the place of assignment or delivery

The court ruled that in order to find jurisdiction in England, the respondents would have to bring their claim on the basis that it was under one of the three criteria set out in the article 31. In this case, none of the criteria applied.

Under article 34 CMR, acceptance of goods through a consignment note enables the second carrier to become a successive carrier and become a party to the contract of carriage. As a result, BAT argued that the successive carriers had become a party to the proceedings under the terms of the consignment note by accepting the goods. The Supreme Court disagreed. The consignment note did not have a jurisdiction clause. Therefore, the court stated that it would be unjust to hold a party liable to terms and conditions to which they did not agree. As a result, they struck out BAT’s argument based on article 34 of the CMR.

BAT’s argument in relation to article 36 was to be read in conjunction with their argument on article 31. BAT stated that they could bring a claim against the successive carrier under article 31. Consequently, on the basis of article 36, they could hold the successive carrier jointly and severally liable, as article 36 serves the purpose of tying in first, last and performing carriers liable. Seeing as the court was not prepared to accept BAT’s arguments as regards article 31, they quickly rejected any arguments based on article 36.

Having rejected BAT’s submissions on articles 31, 34 and 36, the court concluded that the Brussels Regulation did not provide any other basis for jurisdiction over Esser and Kazemier or otherwise act as an aid to the interpretation of the CMR.

Finally, the Court considered the desirability of all the related claims to be resolved in one set of proceedings. BAT sought to rely on the provisions of the Brussels Regulation that ensure all claims that are closely connected ought to be heard together in order to avoid any risks of inconsistent judgments. The Supreme Court disagreed and stated that there were no provisions in the CMR that state that all closely connected claims must be brought under one set of proceedings. The court ruled against BAT’s argument, on the basis that The Brussels Regulation does not provide any other basis for jurisdiction over Esser and Kazemeir or otherwise acts as an aid to the interpretation of the CMR.

Comment

It is clear that the joinder of all the carriers in English proceedings would have ensured that the case was disposed of in an efficient and time costly manner, promoting consistency of judgments. Nonetheless, the court’s approach to the legal issues involved in the case have highlighted that  it would be unfair to oblige a party to litigate their case in a jurisdiction to which they did not want to conform. The Supreme Court judgment informs us that the articles defined in the Contract for the International Carriage of Goods by Road 1956 ought to be applied with caution; with little scope for different interpretations or diverse application.