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Ellie_Ismaili_phThis case concerns the interpretation of an exclusive jurisdiction clause in favour of England and its proper interaction with the relevant provisions in the Convention on the Contract for the International Carriage of Goods by Road 1956 (the “CMR”).

Background

The claimants contracted with the defendants for the transportation of two cargos of tobacco. One cargo was scheduled to be transported from Switzerland to Rotterdam and the other cargo from Hungary to Denmark. The agreement between the claimants and the first defendant, Excel, contemplated the use of successive carriers for the purpose of transporting the cargo. In addition, the contract also stated that all proceedings were to be brought in England.

Excel entered into a contract with two subcontractors, H Esser Security, to carry out the cargo transport from Switzerland; and Kazemier Transport B.V., to carry out the Denmark cargo transport. The first cargo from Switzerland was allegedly stolen in an armed robbery, and the second cargo from Hungary had 18 pallets worth of tobacco stolen whilst the vehicle was parked.

Consequently, the claimants brought proceedings in the English High Court against the defendants in two different proceedings for losses suffered as a result of the stolen cargos during transportation.

H Esser and Kazemeir challenged the claimants’ bringing of proceedings under English jurisdiction. They argued that, under Article 31 of the CMR, the claimant could not bring proceedings in England.

Decision at First Instance

The Commercial Court found in favour of the defendants, accepting their challenge regarding jurisdiction. The court was convinced that arguments brought forward by the defendants were consistent with Article 31 of the CMR, which provides:

“In the legal proceedings arising out of carriage under this Convention, the plaintiff may bring 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.”

In this instance the defendants stated that the literal reading of Article 31 meant that the claimants could only bring proceedings in:

a) the country where the defendant’s business is based;

b) the country of expected delivery; or

c) the country from where the goods were allegedly taken.

The second defendants submitted that whilst the claimants had entered into a contract with the primary carrier under which there was a contractual term to bring proceedings in the English jurisdiction, they were not bound by the aforementioned term as their contract with the primary carrier did not contain an exclusive jurisdiction clause and they were not bound by the same contractual obligation to which the first defendant had agreed.

Court of Appeal decision

The Court of Appeal ruled in favour of the claimants and allowed the appeal. The court’s agreement with the first argument brought forward by the claimants was on the basis that the articles of the CMR should be read purposively, in conjunction with the other articles within the CMR, rather than separately. This was due to the fact that Article 31 did not address the issue of successive carriers; the CMR only discusses the principles regarding successive carriers from Article 34 onwards. The court ruled that Article 31 should not be given its literal meaning but should be read with the rest of the articles in order to understand the principles stated within.

Other articles within the CMR provide provisions for carriers to bring actions against multiple carriers once they have established/accepted to bring an action on a jurisdiction over one of the carriers. Consequently, a cargo owner should have the same ability.

The second argument raised by the claimants concerned the Council Regulation (EC) No 44/2001 (previously the Brussels Convention) under whose principles they argued that all proceedings against various carriers should be brought under the same jurisdiction in order to avoid differing judgments. The Court of Appeal held that where any conflict existed between the CMR and the Regulation, the Regulation took precedent and should be read at all times in conjunction with the CMR.

Supreme Court

The appeal was heard before the Supreme Court on 29 June before Lord Neuberger, Lord Mance, Lord Clarke, Lord Sumption and Lord Reed. It is expected that the court’s judgment will clarify the correct interpretation of the CMR in order to settle which jurisdiction each dispute should be submitted to.