British American Tobacco Denmark A/S v Kazemier BV [2015] UKSC 65

Two consignments of cigarettes were lost during international road carriage subject to the CMR Convention. BAT sought to sue Dutch sub-contractor successive carriers in England alongside the English main carrier. The Supreme Court held English jurisdiction could not be established against the successive carriers under CMR.

Facts

The case concerned two consignments of cigarettes carried under the Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR), given force of law in the UK by the Carriage of Goods by Road Act 1965. One container was allegedly hi-jacked in Belgium en route from Switzerland to the Netherlands in September 2011. Another lost 756 of its 1,386 cartons when parked overnight near Copenhagen, contrary to express instructions, en route from Hungary to Denmark.

British American Tobacco (BAT) had contracted with Exel Europe Ltd, an English main contractor, under a framework agreement governed by English law and containing an English exclusive jurisdiction clause. Exel sub-contracted the actual carriage to Dutch companies: H Essers Security Logistics BV / H Essers Transport Co Nederland BV (for the first container) and Kazemier Transport BV (for the second). BAT sought to sue both Exel and the Dutch sub-contractors in England, the latter as successive carriers under CMR.

The high-value claims (including duty and taxes of around €2.9m and over €500,000 respectively) made English jurisdiction commercially attractive, as such duties are recoverable in CMR claims in England, and joinder would aid in proving wilful misconduct under articles 23 and 29.

Cooke J set aside service on the sub-contractors. The Court of Appeal reversed. The sub-contractors appealed to the Supreme Court.

Issues

The Supreme Court identified four particular issues:

1. Whether articles 31 and 36 can be read together so that, having established jurisdiction over one defendant under article 31.1, a claimant may bring into that jurisdiction any other successive carrier potentially liable under article 36.
2. Whether under article 31 it is sufficient that the English courts were designated by agreement between BAT and Exel, so as to bind successive carriers.
3. Whether BAT could sue the sub-contractors on the basis that the ‘branch or agency through which the contract of carriage was made’ was in England.
4. Whether the Brussels I Regulation (Council Regulation (EC) No 44/2001), particularly article 6(1), either provides jurisdiction or informs the interpretation of CMR.

Arguments

BAT (Respondents)

BAT argued that once jurisdiction was properly established over one carrier under article 31.1, the last sentence of article 36 (‘an action may be brought at the same time against several of these carriers’) opened up jurisdiction against all relevant successive carriers. They submitted that article 31.1’s reference to jurisdiction agreements bound successive carriers through their accession under article 34, and that Exel constituted the ‘branch or agency’ through which the contract was made. Alternatively, they relied on article 6(1) of the Brussels Regulation or the principle behind it to fill any gap or override CMR, citing TNT Express and Nipponkoa.

Essers and Kazemier (Appellants)

The appellants submitted that article 31.1 contains a comprehensive code, with the closing words ‘and in no other courts or tribunals’ precluding extension. Jurisdiction agreements derive validity from agreement of the parties and cannot bind a successive carrier who had no notice of, or did not consent to, the clause – particularly where it was not recorded in the consignment note. The ‘branch or agency’ provision could not apply where the successive carrier became party only by statutory operation of article 34.

Judgment

The Supreme Court unanimously allowed the appeal and restored Cooke J’s order. Lord Mance delivered the leading judgment, with which the other Justices agreed; Lord Sumption gave a concurring judgment.

Interpretation of article 31.1

Lord Mance held that article 31.1 must be read as applying to all CMR claims, including against successive carriers. However, its various heads of jurisdiction are carefully delineated, ending with the restrictive words ‘and in no other courts or tribunals’.

Jurisdiction clauses and successive carriers

Although article 34 provides that successive carriers become party to the contract of carriage by acceptance of the goods and consignment note, this is qualified by the words ‘under the terms of the consignment note’. A successive carrier is bound by the original contract only insofar as its terms are set out in the consignment note. Article 6.3 permits special terms (including jurisdiction clauses) to be entered in the relevant boxes (Conventions particulières), but these were left empty in both cases. To hold a successive carrier bound by terms of which it had no notice would constitute an unfamiliar and undesirable invasion of the general principle that contract depends on agreement.

Branch or agency

The reference in article 31.1(a) to ‘the branch or agency through which the contract of carriage was made’ refers to a branch or agency of the relevant defendant, not the main contractor. Successive carriers become party to the contract by statutory operation of article 34, not through any branch or agency.

Article 36’s last sentence

The words ‘an action may be brought at the same time against several of these carriers’ do not confer jurisdiction. They merely confirm that liability is joint and several, and that there is no prescribed order for proceedings. The Court rejected reliance on dicta in Cummins Engine Co Ltd v Davis Freight Forwarding (Hull) Ltd [1981] 1 WLR 1363 and ITT Schaub-Lorenz v Birkart Johann [1988] 1 Lloyd’s Rep 487 as not having required precise examination of the issue, and preferred the more specific analysis of O’Connor LJ in Cummins. Academic commentary (Loewe, Hill & Messent, Haak) supported the appellants’ position.

Brussels Regulation

Article 351 TFEU and article 71 of the Brussels Regulation preserve the application of CMR. The Court of Justice’s decisions in TNT Express (Case C-533/08) and Nipponkoa (Case C-452/12) concerning the principles underlying judicial cooperation must be understood in their context (competing proceedings between the same parties raising free movement of judgments and mutual trust). The present case raised no such risk of competing judgments. CMR represents a balanced jurisdictional régime adopted across some 55 states, half of which are non-EU members, and its tailored balance does not impinge on Union law principles.

Lord Sumption’s concurrence

Lord Sumption agreed, holding that article 31.1 is a complete code. The place-based jurisdictions in sub-paragraph (b) accommodate joinder of all carriers; the defendant-specific jurisdictions in sub-paragraph (a) and jurisdiction by agreement do not. The only terms to which a successive carrier accedes are those recorded in the consignment note, namely the Convention’s terms and any special conditions entered in Box 20. Lord Clarke noted his initial agreement with the Court of Appeal but was persuaded by Lord Mance’s analysis.

Implications

The decision establishes, as a matter of CMR interpretation as applied in English law, that:

• A successive carrier under article 34 becomes party to the original carriage contract only on the terms recorded in the consignment note. Jurisdiction clauses, choice of law clauses or unusual instructions not entered in the consignment note (for instance in the Conventions particulières box) do not bind successive carriers.
• The closing words of article 31.1 (‘and in no other courts or tribunals’) exclude additional heads of jurisdiction. The last sentence of article 36 does not provide a jurisdictional gateway permitting joinder of successive carriers in jurisdictions otherwise lacking a basis under article 31.1.
• The ‘branch or agency’ head in article 31.1(a) refers to a branch or agency of the defendant in question, not of another carrier in the chain.
• Article 6(1) of the Brussels Regulation does not override or fill any gap in CMR’s jurisdictional scheme, which is regarded as comprehensive and deliberate.

Practically, cargo interests wishing to join all potentially liable carriers in one set of proceedings under CMR must do so in the place where the goods were taken over or designated for delivery (article 31.1(b)), which provides a forum effective against any carrier liable under article 36. Otherwise, claimants face the prospect of pursuing successive carriers in separate jurisdictions.

The decision is significant for international road carriage practice, freight forwarding, and cargo claims handling. It reinforces the importance of accurately recording all material terms on the CMR consignment note if they are intended to bind successive carriers. It also illustrates judicial restraint in allowing EU law to override the carefully balanced regime of a multilateral convention adopted by states well beyond the EU. The Court left open the question whether article 34 can apply where the consignment note only comes into existence on collection by the successive carrier, and made no concluded finding on whether a consignee is bound by jurisdiction clauses not in the consignment note.

Verdict: Appeal allowed. Cooke J’s order setting aside service of the claim forms on Essers and Kazemier was restored. The English courts had no jurisdiction under CMR over the Dutch successive carriers.

Source: British American Tobacco Denmark A/S v Kazemier BV [2015] UKSC 65