CMR issues – where do you sue?

In the case of British American Tobacco (BAT) and others against Exel Europe and others [2012] EWHC 694 (Comm),the High Court addressed this issue in two similar cases.

The facts were as follows. BAT had a long-term framework contract in place with Exel Europe Limited (Exel), an English-registered company, for the provision of warehousing and the distribution of its products in Europe. The framework agreement imposed various liabilities on Exel in relation to the loss of goods, as well as dealing with issues of security and the standard of care to be adopted. The framework agreement recognised that CMR should apply unless there was a direct conflict between the agreement and CMR. The framework agreement also provided for English law and jurisdiction to apply. There was a local sub­contract between Exel and another company, Essers Security, where the contractual terms were much more confused. The Court accepted that Exel’s transport terms and conditions applied to that contract and that they contained an English law and jurisdiction clause.

In the first case, a CMR note was issued for a consignment of tobacco which showed BAT Switzerland as consignor, Maersk Shipping Lines as consignee and the carrier as Essers. The consignment was loaded in Switzerland on September 2,2011. It was allegedly stolen in an armed robbery on a motorway in Belgium on September 3,2011 while on its way to Rotterdam.

In the second case the contractual nexus was almost identical. Exel sub­contracted to Kazemier on its transportation terms and conditions, which included an English law and jurisdiction clause. The CMR note named BAT Pecsi Dohanygyar KFT as consigner, BAT A/S as consignee and Kazemier as carrier.

A substantial quantity of cigarettes “disappeared” in the course of carriage from Hungary to Denmark by road in September 2011. In that case the driver (in breach of his written instructions) used an overnight parking area that was not approved; there was an allegation of wilful

misconduct in relation to that loss under Article 29 of CMR.

In both cases, BAT had a direct contract with Exel and Exel had a separate contract with Essers and Kazemier as carriers – with all these contracts containing an English law and jurisdiction clause. Essers and Kazemier had no direct contract with BAT, which included an agreed jurisdiction clause.

BAT issued two sets of legal proceedings in England against Exel and then joined Essers and Kazemier as defendants respectively in each case. Essers and Kazemier objected to being joined to the English proceedings. The Court recognised that it had been convenient for BAT to sue Exel and the other defendants in the same jurisdiction. BAT, however, had no direct contract itself with either Essers or Kazemier and no jurisdiction agreement with them. The point was made by BAT that to issue proceedings against the carriers, who were not subject to English law in another jurisdiction, might result in conflicting legal decisions.

Jurisdictions

There was no dispute that CMR applied to both consignments. The question of jurisdiction was covered by the scheme of the CMR and Articles 31, 34, 36 and 39 of CMR, as viewed against the backdrop of European law. BAT asserted that the scheme of the CMR required that a claimant could commence proceedings against any one carrier in accordance with Article 31.

It could also sue any other carrier under Article 36 – in the same action, in that jurisdiction. BAT accepted that, though it had started legal proceedings in England, this was neither the place where the goods were taken over by the carrier nor the place designated for delivery as required by Article 31.1.1 (b).

Essers and Kazemier argued they were not resident in England, nor did either have a principal place of business or a branch/agency in England. In addition, BAT had no country designated by agreement between the parties. Therefore BAT could not join them to the English Court proceedings. Article 31.1.1 (a) could not be construed so as to allow the

consignee to bring a single set of proceedings against all carriers on the basis that one defendant was ordinarily resident or had its principal place of business in England.

The place to bring the proceedings against them was either the place the goods were taken over by the carrier or the place designated for delivery, i.e. Switzerland or Holland in Esser’s action, or Hungary or Denmark in the Kazemier action. This relied on Articles 39 and 37, which made express provision for proceedings between different carriers.

The Court was not persuaded that the position adopted by Essers and Kazemier would result in BAT having to bring proceedings in multiple jurisdictions with the risk of inconsistent judgements and “consequent damage to the sound administration of justice”. Essers and Kazemier argued that BAT had not been bound to have started legal proceedings against Exel in England (notwithstanding its contract terms with that company). This was a CMR case and BAT could have pursued all of the defendants in the jurisdiction where the goods had been taken on both occasions.

In these circumstances, the Court decided that Essers/ Kazemier were entitled to have the claim forms in England that had been served upon them set aside.