British American Tobacco Switzerland S.A. and Others v. (1) Exel Europe Ltd; (2) H Essers Security Logistics B.V. and others; British American Tobacco Denmark A/S and Others v. (1) Exel Europe Ltd; (2) Kazemier Transport B.V. [2013] EWCA Civ 1319

The Court of Appeal has held that a cargo owner who had entered into a CMR contract of carriage with a carrier based in England, and who had agreed exclusive English jurisdiction for disputes arising out of the contract of carriage, could bring proceedings in England not only against that carrier, but also against successive carriers to whom the primary carrier had delegated the responsibility of the carriage in question. Those proceedings could be brought in England notwithstanding that the successive carriers were not parties to the contract of carriage between the cargo owner and the primary carrier, and notwithstanding that they had no connection with England, and notwithstanding that the cargo had no connection with England.

The background facts

The Claimants/Appellants were British American Tobacco Switzerland A/S and British American Tobacco Denmark A/S (together “BAT”). BAT contracted with Exel Europe Limited (“Exel”) to carry cargoes of tobacco around Europe by road. In the present case, BAT Switzerland A/S contracted with Exel to move tobacco from Switzerland to Rotterdam, and BAT Denmark A/S contracted with Exel to move tobacco from Hungary to Denmark. The agreement contemplated that the CMR would apply to the movements.  The agreement further provided that Exel – although primary carriers – could subcontract some or all of the movements to approved sub-contractors (or “successive carriers” using the wording of the CMR). Finally, the agreement expressly provided that all disputes arising out of the agreement would be subject to English law and to the jurisdiction of the English High Court.

In the event, Exel did sub-contract both movements. The Switzerland-Rotterdam movement was sub-contracted to H Essers Security Logistics B.V. and subsidiaries (together “Essers”), and the Hungary-Denmark movement was subcontracted to Kazemier Transport B.V. (“Kazemier”). The Switzerland-Rotterdam tobacco was loaded in Switzerland on 2 September 2011, and was allegedly stolen in an armed robbery on a motorway in Belgium the next day. The Hungary-Denmark tobacco was loaded in Hungary on 15 September 2011, and 18 pallets were stolen while the vehicle was parked overnight (it is alleged that instructions had been given that drivers were not to use overnight parking areas).

BAT duly commenced proceedings in the English High Court against Exel and Essers for losses suffered as a result of the Switzerland-Rotterdam movement robbery, and against Exel and Kazemier for losses suffered as a result of the Hungary-Denmark theft. Exel duly accepted proceedings, not least because of the English High Court jurisdiction provision contained in the BAT/Exel agreement. However, both Essers and Kazemier –although accepting that the CMR gave BAT the right to sue them directly – challenged the jurisdiction of the English High Court, on the basis of the jurisdiction provisions of the CMR.

In particular, Essers and Kazemier challenged jurisdiction on the basis of Article 31 of the CMR, which provides 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.”

Essers and Kazemier argued that in accordance with Article 31, BAT could sue them either where they were present (both in Holland), or where the goods were taken over (Switzerland or Hungary respectively), or where the goods were due to be delivered (Holland or Denmark respectively), but nowhere else, and in particular not in England.  The Commercial Court agreed with Essers’ and Kazemier’s argument.

The Court of Appeal Decision

BAT made two arguments against the position adopted by Essers and Kazemier, which found favour with the Court of Appeal. The first was that Article 31 had to be read together with Article 36, which provides as follows:

“Except in the case of a counterclaim or a setoff 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.” [our emphasis]

BAT argued that the effect of the two Articles when read together was that – once jurisdiction had been established over one of the carriers in accordance with Article 31 – then an action could be brought at the same time (and in the same place) against the relevant successive carriers also, in accordance with Article 36. Lord Justice Rix, who gave the leading Court of Appeal Judgment, agreed with BAT. 

Lord Justice Rix’s starting point was that it was necessary to consider the Convention as a whole and give it a purposive interpretation, rather than to give each Article a narrow and literal interpretation. With the purposive approach in mind, Lord Justice Rix noted that the concept of “successive carriers” had not yet been introduced into the Convention by Article 31, and that the concept was only addressed from Article 34 onwards. As such, Lord Justice Rix took the view that Article 31 was silent on how successive carriers should be dealt with, and that the successive carrier articles were required to understand how the jurisdiction of successive carriers should be dealt with. On the basis that the successive carrier articles allowed one carrier to sue multiple other carriers in any jurisdiction where they were able to establish jurisdiction over one of the carriers, Lord Justice Rix held that the same principle should apply to cargo owners suing multiple carriers.

The second argument run by BAT which found favour with the Court of Appeal was that the Convention should be interpreted to promote rather than to undermine the principles of the European “Judgment Regulation” (the regulation dealing with rules regarding the jurisdiction of courts in civil and commercial matters). One of the principles of the Judgment Regulation is that dual proceedings in more than one jurisdiction should be avoided in order to avoid potentially inconsistent judgments. 

After reviewing the authorities, His Lordship held that the CMR (or any specialist convention for that matter) should be construed purposively to bring it as far as possible into line with the Judgment Regulation principles, and that in the event of a conflict between the CMR principles and the Judgment Regulation principles, the CMR must give way to the Judgment Regulation. On the basis that he found that the CMR should be construed to allow multiple carriers to be sued by a cargo owner in any place where the cargo owner is able to establish jurisdiction (in accordance with the rules of Article 31) over any one of them, Lord Justice Rix held that the CMR could be construed in accordance with the Judgment Regulation principles.

Comment

Cargo owners have always been entitled to sue the party they contracted with to carry their cargo by road in the jurisdiction agreed between the parties (i.e. the primary carrier), even where that party did not actually cause the loss or damage to the cargo.  This case provides the welcome clarification for cargo owners that if, for whatever reason, they consider it to be advantageous to also sue one or more of the successive carriers at the same time as the primary carrier, then they can sue those successive carriers in the same jurisdiction as the primary carrier.