Hatzl v XL Insurance Company Ltd

JurisdictionEngland & Wales
JudgeLawrence Collins L JJ,Jacob,Rix
Judgment Date19 March 2009
Neutral Citation[2009] EWCA Civ 223
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2008/1770
Date19 March 2009

[2009] EWCA Civ 223





CASE NO: 8BM40028


Lord Justice Rix

Lord Justice Jacob and

Lord Justice Lawrence Collins

Case No: A3/2008/1770

(1) Emmerich Hatzl
(2) Leopold Baumgartner
XL Insurance Company Limited

Mr Paul Toms (instructed by XL Services UK Limited) for the Appellant

Mr John Kimbell (instructed by Cobbetts LLP) for the Respondents

Hearing date: February 24, 2009

Lord Justice Lawrence Collins

Lord Justice Lawrence Collins:

I Introduction


In 1967 the United Kingdom acceded to the Convention on the Contract for the International Carriage of Goods by Road (“the CMR”), which was signed at Geneva in 1956. The CMR is given the force of law in the United Kingdom by virtue of section 1 of the Carriage of Goods By Road Act 1965 (“the 1965 Act”), which came into force in October 1967.


Article 31 contains an exclusive code of jurisdictional provisions for claims under the CMR (other than claims between carriers, which are dealt with by Article 39(2)) . The question on this appeal is whether the provisions apply only to those who are the natural defendants in a CMR claim, such as the carrier, the consignee and the consignor, or whether they also have the effect that a carrier may bring an action for a declaration that it is not liable in the courts of the residence or principal place of business of an insurer who has taken an assignment of the claims of the consignor and consignee. It is another in a long line of cases in which an action for a negative declaration has been used as a tool for forum-shopping.


In late May/early June 2007 37 boxes of women's clothing were in transit by road from the premises of the first defendant, Triumph International AG (“Triumph Austria”, an Austrian company) in Wiener Neustadt, Austria, to the premises of the second defendant, Triumph International Rome SpA (“Triumph Italy”, an Italian company) in Trescore Balneario, near Bergamo, Italy. Triumph Austria and Triumph Italy are both part of the Triumph International Group, whose business includes the manufacture and sale of women's clothing. XL Insurance Company Limited (“XL”), which is incorporated under the Companies Act 1985 with its registered office in England, is the insurer of Triumph Austria and Triumph Italy.


Mr Emmerich Hatzl, the first claimant, is an Austrian individual operating a road haulage business under the name Emmerich Hatzl Internationale Transporte (“Hatzl”). The second claimant, Mr Baumgartner, an Austrian, was the driver. I shall refer to them together as “the claimants.” Hatzl contracted with Triumph Austria to carry the goods by road. In the CMR consignment note the sender is named as Triumph Austria and the consignee is Triumph Italy. Some of the goods were stolen while the driver was asleep at a parking place on a motorway in Italy. Hatzl as carrier is liable to the sender and/or consignee of the goods (Triumph Austria and Triumph Italy) under Article 17 of the CMR for the loss of the goods.


By letters of assignment dated December 23, 2007 and May 28, 2008 respectively, Triumph Italy and Triumph Austria assigned to XL “all our rights in respect of loss and/or damage to the above mentioned consignment, including all rights of claim against [Hatzl] and third parties or others.” On January 29, 2008 XL sought payment from Hatzl's brokers of €137,000 euros, consisting of the amount paid to the insured and (it seems) the excess which the insured carried.

II The CMR Convention and the judgment below


Article 31 of the CMR provides for the courts in which claims in respect of proceedings arising out of road carriage under the CMR may be brought:

“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.

2. Where in respect of a claim referred to in paragraph 1 of this article an action is pending before a court or tribunal competent under that paragraph … no new action shall be started between the same parties on the same grounds. ..”


Article 34 of the CMR provides that successive road carriers become parties to the contract of carriage under the terms of the consignment note by reason of acceptance of the goods and the consignment note. Article 39(2) provides that a carrier who wishes to enforce his right of recovery against other carriers may make a claim in the courts of the country in which one of the carriers concerned is ordinarily resident, or has his principal place of business or the branch or agency through which the contract of carriage was made; and all the carriers concerned may be made defendants in the same action.


By section 1 of the 1965 Act, the provisions of the CMR, as set out in the Schedule, are to have the force of law in the United Kingdom so far as they relate to the rights and liabilities of “persons concerned in the carriage of goods under a contract to which the Convention applies.” By section 14(2) those persons are (a) the sender; (b) the consignee; (c) any carrier who, in accordance with Article 34 or otherwise, is a party to the contract of carriage; (d) any person for whom such a carrier is responsible by Article 3 (agents, servants, sub-contractors etc); and “(e) any person to whom the rights and liabilities of any of the persons referred to in paragraphs (a) to (d) … have passed (whether by assignment or assignation or by operation of law).”


By a claim form issued on April 1, 2008 the claimants issued proceedings in England against Triumph Austria, Triumph Italy and XL claiming a declaration that the claimants were not liable to the defendants in respect of the alleged loss resulting from the theft. XL has subsequently commenced proceedings in Austria but this court was not given any information about that action.


All defendants contested the jurisdiction of the English court. XL's position was that the CMR did not give the English court jurisdiction simply because it was sued in England and was resident or had its principal place of business in England. It argued that Article 31(1)(a) did not apply to a defendant which was sued purely as assignee of the rights of the consignor or consignee. The claimants' position was that the plain meaning of Article 31(1)(a) led to the conclusion that the English court had jurisdiction over any defendant (including an assignee) which was resident or had its principal place of business in England. If that were wrong the claimants argued that XL had submitted to the jurisdiction.


On July 2, 2008, HH Judge Simon Brown QC, sitting as a designated Mercantile Judge in the Birmingham District Registry, accepted the argument for the claimants and dismissed XL's application for a declaration that the English court had no jurisdiction and held that the court had jurisdiction by virtue of Article 31(1)(a). The application by Triumph Austria and Triumph Italy was adjourned generally.


The judge decided that: (a) assignees were among the persons who were persons concerned in the carriage of goods by road (1965 Act, section 14(2)); (b) the expressions “plaintiff” and “defendant” referred to the people who were litigating and were not confined to the parties to the contract of carriage, and included assignees; (c) XL had by assignment stepped into the shoes of the Triumph companies, was ordinarily resident in England, and was under Article 31(1)(a) entitled to be regarded as within the jurisdiction. The judge also rejected the claimants' argument that XL had submitted to the jurisdiction, but that is not an issue on this appeal.

III The arguments on appeal

A XL's arguments


XL's argument is as follows. On a purposive approach, Article 31(1)(a) should not be interpreted to apply to a defendant against whom a declaration of non-liability is sought in its capacity as an assignee of the “sender” and the “consignee” within the meaning of the CMR. Article 31(1)(a) does not apply to a party which was neither an original party to the contract of carriage nor is designated by the CMR as being entitled to enforce in its own name rights arising from the contract of carriage.


The natural meaning of Article 31(1)(a) is that the defendant referred to may only be an entity who had been an original party to the contract of carriage. Article 31(1)(a) can only make sense if the words “through which the contract of carriage was made” qualify all references to “the defendant.” The wording is intended to establish that a defendant who was a party to the original contract of carriage can be sued in three places namely where he/it is ordinarily resident, or where it has its principal place of business or the place where it had a branch or agency through which the contract of carriage was made when (implicitly) that is in a jurisdiction different from the jurisdiction where he/it is ordinary resident or has its principal place of business. Article 31(1)(a) is directed only to establishing the jurisdiction for claims by cargo interests against carriers, the latter...

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