JTI POLSKA Sp. Z o.o. & Ors v Jakubowski & Ors [2023] UKSC 19

A road carrier transported cigarettes from Poland to England under the CMR Convention. Thieves stole 289 cases during transit, triggering excise duty liability of £449,557 on the cargo owner. The Supreme Court upheld the Buchanan precedent, ruling that excise duty is recoverable under article 23.4 as 'other charges incurred in respect of the carriage'.

Facts

The appellants, Polish road hauliers, contracted to carry 1,429 cases of cigarettes from Poland to England for the respondents, companies in the Japan Tobacco International group. The carriage was subject to the Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR). On 8 March 2019, whilst the vehicle was parked at Clacket Lane Services on the M25, thieves stole 289 cases of cigarettes worth £72,512. HMRC subsequently assessed the second respondent as liable for excise duty of £449,557, as the stolen cigarettes were deemed to have entered UK circulation following the theft.

Issues

The central issue was whether the road carrier was liable under article 23.4 of the CMR for excise duty levied on goods stolen in transit. Article 23.4 provides that ‘carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods shall be refunded’ in case of loss. The appellants contended that the House of Lords decision in James Buchanan & Co. Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141 was wrongly decided and should be departed from under the 1966 Practice Statement.

The Competing Interpretations

The ‘broad interpretation’ holds that article 23.4 encompasses charges incurred because of how goods were actually carried and lost, including excise duty on stolen goods. The ‘narrow interpretation’ limits recovery to charges that would have been incurred if carriage had been performed without incident.

Judgment

The Supreme Court unanimously dismissed the appeal, declining to depart from Buchanan. Lord Hamblen, delivering the judgment with which all Justices agreed, applied the principles of the 1966 Practice Statement.

The Approach to Interpretation

The Court confirmed that international conventions should be interpreted applying ‘broad principles of general acceptation’, including the rules in articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969. Lord Hamblen stated:

Article 31 focuses on seeking to ascertain the ordinary meaning of the relevant terms of the treaty having regard to their context and the object and purpose of the treaty.

The 1966 Practice Statement

The Court emphasised that departing from precedent requires more than showing the decision was wrong. Lord Hamblen noted:

A previous decision on interpretation will not be departed from if it reflects a tenable view.

The appellants accepted they had to show Buchanan was ‘untenable or manifestly wrong’.

Assessment of Buchanan

The Court found the broad interpretation tenable, supported by Supreme Court decisions in Denmark, Czech Republic, Lithuania and arguably Belgium. Lord Hamblen observed:

‘In respect of’ is commonly understood as equating to ‘in connection with’. As a matter of language it is very difficult to say that a loss which occurs during the course of road carriage and as a result of the way in which that carriage is performed is not connected with that carriage.

The Court rejected arguments that Buchanan produced manifestly unjust results or worked unsatisfactorily in the marketplace. Insurance practice already accounted for potential liability, and there was no international consensus favouring the narrow interpretation.

Implications

This decision confirms that under English law, road carriers may be liable under article 23.4 CMR for excise duty levied on excisable goods stolen during transit. The judgment provides important guidance on when the Supreme Court will depart from precedent on questions of interpretation, emphasising that a tenable interpretation will not be overturned merely because another view might be preferred. The case also demonstrates the Court’s reluctance to create further disuniformity in the interpretation of international conventions where no consensus exists among contracting states.

Verdict: Appeal dismissed. The Supreme Court upheld the Buchanan decision, holding that excise duty of £449,557 was recoverable under article 23.4 of the CMR as ‘other charges incurred in respect of the carriage of the goods’.

Source: JTI POLSKA Sp. Z o.o. & Ors v Jakubowski & Ors [2023] UKSC 19