British American Tobacco & Ors v Exel Europe
British American Tobacco Switzerland SA v Exel Europe Ltd; British American Tobacco Denmark A/S v Exel Europe Ltd
Court of Appeal: McFarlane L.J.; Sir Bernard Rix; Sir Timothy Lloyd:  EWCA Civ 1319: 30 October 2013
Charles Priday, instructed by Gateley LLP, for the appellant cargo interests
John Passmore, instructed by Holman Fenwick Willan LLP, for the respondent carriers
CARRIAGE OF GOODS BY ROAD: CMR CONVENTION: CARGO LOSS: ESTABLISHING JURISDICTION AGAINST SUCCESSIVE CARRIERS: WHETHER CLAIMANT THAT HAS ESTABLISHED JURISDICTION UNDER ART.31.1 AGAINST ONE CARRIER CAN RELY ON THAT JURISDICTION TO JOIN SUCCESSIVE CARRIERS
This note is based on a note on the case prepared by Christopher Chatfield, a partner in Waltons & Morse LLP, a firm of solicitors based in London, United Kingdom
The Court of Appeal decided in this case that, if a Claimant can establish jurisdiction under Article 31.1 of the CMR Convention (fn.1) against one of the carriers identified in Article 36 (successive carriers), the Claimant can rely upon the jurisdiction against that carrier then to join the other carriers identified in Article 36 to the same action. Accordingly, the Claimant does not need to establish jurisdiction under Article 31.1 separately against each of the carriers against which it wishes to bring the proceedings.
British American Tobacco (BAT) contracted with Exel for the provision of freight forwarding services (including carriage) of their goods across their distribution network. Exel’s contract with BAT included a law and jurisdiction clause conferring jurisdiction on the English courts. Exel was based in England. As commonly occurs in such agreements, Exel would often subcontract the carriage to selected and pre-approved hauliers. Two such hauliers were the Defendants in these cases, Essers and Kazemier. Exel had sub-contracts with both Essers and Kazemier which provided for English law and jurisdiction. However, it was disputed by Kazemier and Essers that they were aware of the English law and jurisdiction clause in BAT’s contract with Exel.
During the course of two carriages, considerable quantities of cigarettes were stolen. In addition to the loss of the cigarettes, BAT had to settle claims from various customs authorities for the duty payable upon those cigarettes. The duty turned out to be by far the largest element of the claim.
Duty is an element of loss which gives rise to forum shopping. As the law currently stands in England (see James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd  1 Lloyd’s Rep 119), duty is recoverable in full in addition to other damages recoverable under Article 23 of the CMR. Other jurisdictions, however, take a very different view and the duty element of the loss will be restricted by the weight limit in Article 23.3. Consequently, BAT identified a very practical reason for the proceedings to be brought in England.
BAT brought two sets of proceedings against Exel - one in relation to each theft. In both cases, BAT established jurisdiction against Exel under Article 31.1 on the basis that Exel is ordinarily resident in England and has its principal place of business here. Furthermore, BAT established jurisdiction against Exel in England as a “contracting country designated by agreement between the parties”.
Having established jurisdiction on this basis against Exel, BAT issued their proceedings against Kazemier (in one action) and Essers (in the other) on the basis that they were “the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred”. Unsurprisingly (in view of the Buchanan decision), both Essers and Kazemier sought to avoid being joined into the English proceedings.
The questions which arose were these:
If a Claimant can establish jurisdiction under Article 31.1 against one of the carriers identified in Article 36, can the Claimant rely upon the jurisdiction against that carrier to then join the other carriers identified in Article 36 to the same action? Alternatively, must the Claimant establish jurisdiction under Article 31.1 separately against each of the carriers against which it wishes to bring the proceedings?
The relevant Articles of the CMR read as follows:
“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”.
This Article confers jurisdiction on a number of potential states in relation to claims brought by cargo interests (either the sender or the consignee) against carriers (there are separate jurisdiction provisions in Article 39 concerning actions brought between carriers).
“Except in the case of a counter-claim or a set-off raised in an action concerning a claim based on the same contract of carriage, legal proceedings in respect of liability for loss, damage or delay may only be brought against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred; an action may be brought at the same time against several of these carriers”.
If, as is frequently the case in road haulage movements, several carriers are involved in the carriage, this Article determines the carriers against whom cargo interests can bring a claim.
The first instance Judge found in favour of Essers and Kazemier by taking a very literal interpretation to both Articles 36 and 31. Article 31 talks in terms of “the defendant” when considering the ordinary residence. Mr Justice Cooke considered that this must apply to each individual defendant and that Article 31 jurisdiction has to be established separately.
It was pointed out to Mr Justice Cooke that Article 36 states “an action may be brought at the same time against several of these carriers”. His answer to this point was to agree that if proceedings were brought in a jurisdiction where, for example, the goods were taken over or delivery was designated, jurisdiction could be established in the relevant country against all of the potential defendants identified by Article 36 and they could all be joined to the same action. He distinguished, however, circumstances where jurisdiction is based upon an agreement to which the other carriers are not party or, alternatively, where jurisdiction is established on the basis of one of the defendant’s place of residence.
There is a considerable body of academic support for such a position. Authors such as Haak “The Liability of the Carrier under the CMR” 1986, Professor Loewe in his commentary for the purposes of UNIDRIOT, and Hill & Messent “CMR: Contracts for the International Carriage of Goods by Road”, 3rd Edition 2000 (LLP) suggest that proceedings can only be brought against each of the potential defendants identified in Article 36 if jurisdiction can be established on the basis of Article 31.1 against each of those separate defendants.
These academic commentaries rely on a very literal interpretation of the wording and are based on the premise that Article 36 has nothing to say about jurisdiction.
However, these academic conclusions do not appear to take into consideration (at least in this context) English jurisprudence on the issue. This includes the obiter comments of Lord Justice Brandon in Cummins Engine Co Ltd v Davis Freight Forwarding (Hull) Ltd (Fn.3). Furthermore, BAT’s position also received support from the Court of Appeal decision in ITT Schaub-Lorenz Vertriebsgesellschaft mbH v Birkart Johann Internationale Spedition mbH  1 Lloyd’s Rep 487.
Sir Bernard Rix, in the leading judgment, gave a very detailed and reasoned consideration of these two arguments and concluded that the judicial approach was the correct one. He explained and adopted a purposive approach to the scheme of the CMR - which happens to be supported by both the structure of the wording and judicial precedent.
As BAT was able to establish jurisdiction against Exel (being the first contracting carrier), the Court of Appeal considered that the successive carriers identified in Article 36 (including Kazemier and Exel) could be joined to the same action by BAT. As such, the Court of Appeal considered that the English Court had jurisdiction to hear the claims against Kazemier and Essers. The appeal was, therefore, allowed.
Sir Bernard Rix noted the fact that Article 31 precedes the successive carriage provisions in Chapter VI of the CMR. That Chapter, and particularly Article 36, then provides a scheme not only for claims between successive carriers but also concerning claims by cargo interests against successive carriers. Thus, Chapter VI introduces the idea that several carriers may be sued by cargo interests. The question is then posed as to whether they can be sued in the same action or whether separate actions have to be brought. Article 36 appears to answer this by saying: “an action may be brought at the same time against several of these carriers”. This wording very clearly indicates that one action can be brought and it does not suggest that separate actions are required.
Sir Bernard Rix derived support from Article 39.2 (dealing with jurisdiction as between successive carriers) which allows all of the carriers concerned to be made defendants in the same action - and uses clear language to this effect. There seemed no reason why a similar pragmatic approach should not be adopted in relation to Article 31 and Article 36. This does beg the question as to why such clear language was not used for claims by cargo interests against carriers. However, in Sir Bernard’s view, such a literal interpretation of the language was not appropriate when construing international conventions. Often, conventions are the result of compromise and negotiation with several drafters contributing to the final product. This is one of the reasons why the purposive approach has been endorsed by English courts as the method by which to interpret international conventions.
Sir Bernard Rix rejected the premise adopted by the academic commentators that Article 31.1 jurisdiction has to be met separately by each and every successive carrier sued under Article 36. Once this premise is rejected, the structure of the CMR and the wording of Article 36 suggest that jurisdiction against one defendant is sufficient.
The Court of Appeal considered that jurisdiction could, therefore, be established on the basis of the residence of Exel. It also, however, considered that jurisdiction could be established against all of the carriers by reason of the jurisdiction clause within Exel’s contract with BAT. It was argued by the sub-contractors that they had not been subject to that contract because they were not aware of its terms. Here, however, the Court of Appeal found support in Professor Loewe’s commentary in which he concluded that a successive carrier joins himself to the principal contract of carriage by taking over the goods and the consignment note and this includes jurisdiction clauses within that contract.
Sir Bernard Rix stated “in effect, I consider that a successive carrier is always liable to be sued in a jurisdiction in which the primary carrier can be and has been sued”.
It is respectfully submitted that the decision should be welcomed as a clarification of the law with considerable practical advantages. The problem addressed is a common issue arising from road haulage due to the contractual chains concerned.
Cargo interests are usually faced with conflicting claims about the role played by various parties. There are frequently arguments as to the identity of the first contracting carrier as well as disputes as to which carrier was responsible for the loss. Cargo interests (particularly consignees) often do not have sufficient information at the outset of litigation to be able to decide which of the competing allegations is correct. As a consequence (and as a very sensible precaution) they will often need to bring proceedings against several of the carriers identified in Article 36. This can also have a practical advantage if the financial position of any of the carriers is uncertain. Indeed, these considerations seem to form at least part of the rationale upon which the claimant is entitled to bring proceedings against several carriers at once under Article 36.
If cargo interests have to commence such proceedings in a variety of different jurisdictions, this would substantially increase the costs and duplication of actions. This, in turn, would give rise to a very real risk of inconsistent judgments. Such duplication has the potential to disrupt significantly the impact of Chapter VI and the scheme of the CMR. The Court of Appeal’s decision in BAT -v- Exel substantially reduces such risk.
The decision must also be welcomed by those representing at least some successive carriers. As the decision in Cummins Engine Co Ltd v Davis Freight Forwarding (Hull) Ltd confirms, a carrier who has paid cargo interests and seeks an indemnity from successive carriers must bring those proceedings in the jurisdictions allocated by Article 39.2. This often confines a carrier seeking an indemnity to pursue its claim in a different jurisdiction from that in which the principal claim was pursued under Article 31.1.
It would, however, appear from both this decision and Lord Justice Brandon’s comments in Cummins that, where a cargo interest joins several successive carriers into one action, it is quite permissible for one of those defendants to use the court’s procedural apparatus (such as third party claims under Part 18 of the CPR) to bring a claim against the other defendants. Having the entire action (i.e. both the principal claim and the indemnity actions between carriers) governed by and disposed of within one set of proceedings has very significant benefits for intermediary carriers.
In conclusion, therefore, the decision offers very practical benefits to both cargo interests and intermediary carriers. It substantially reduces the risk of inconsistent judgments and reduces the opportunities for carriers to take advantage of the wording of the CMR to avoid proceedings to which they should properly be joined.
Fn.1 Convention on the Contract for the International Carriage of Goods by Road, enacted into English law by the Carriage of Goods by Road Act 1965
Fn.2 Namely, “the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred.”
Fn.3  2 Lloyd’s Rep 402