DMC Category Rating: Developed

Background
The dispute arose out of the theft of 90 pallets of mobile telephones en route from Paris to Calais. The consignment, worth about £3.5 million, was sold by MK Digital, a Cyprus company, to Hi-Tec, a company incorporated in Denmark, to be delivered FOB Larnaca airport, Cyprus on 4 November 2004. MK Digital arranged to fly the goods to France and Hi-Tec engaged Exel Logistique (a French company) to arrange for onward carriage from Paris. Exel contracted with TRS Univers Lines to provide road transport, but since TRS did not have the right sort of trailer, it was agreed that the job could be sub-contracted to AMS. Exel prepared a consignment note and provided an escort driver.

Unfortunately, the loaded truck disappeared, never to be seen again, leaving the escort driver stranded at a service station on the A1 to Calais.

On 11 November 2004, Exel and its insurers issued proceedings in the English court, claiming declarations that the dispute was governed by the Convention on the International Carriage of Goods by Road (CMR) as enacted by the Carriage of Goods by Road Act 1965, and for declarations of non-liability or limited liability and claiming an indemnity or contribution from TRS and AMS. The claim form contained the statement that "no proceedings involving the same cause of action are pending between the parties in… any other Convention territory of any contracting state…".

On 2 December 2004 (after the English proceedings had been issued but before they were served) Hi-Tec began proceedings in France. Exel objected to the French court hearing the matter on the basis that the English court was the court "first seised" under article 30 of the European Jurisdiction Regulation 44/2001. The English proceedings were served on Hi-Tec on 4 February 2005 and Hi-Tec issued an application challenging the English court's jurisdiction.

Which regime?
It was a matter of contention whether, under the contract, the ultimate destination of the goods was Italy (as Hi-Tec alleged) or the UK (according to Exel). There was also a dispute over the nature of the contract itself. Exel claimed it was for carriage from Paris to Middlesex and that the contract was governed by CMR. Hi-Tec, however, said the contract was outside CMR because Exel was engaged as a freight forwarder or, in French legal terminology a "Commissionnaire de Transport".

The nature of the contract affected where the dispute could be heard. Exel relied on article 31(1) of CMR, which allows a plaintiff to bring its action in the courts of the place designated for delivery - in other words, England. Article 31(2) prevents a new action being started if another action is "pending" in a court of competent jurisdiction. Exel argued that its English proceedings were "pending" because they had been issued first, even if they had not been served by the time the French action was begun. Since there were concurrent proceedings in England and France, the court should apply article 30 of the Jurisdiction Regulation, which states that the court first seised should determine the issue. In this case, that was the English court.

Hi-Tec, however, said the contract was outside CMR so the court should apply the Brussels Convention (because Denmark is not a party to the Jurisdiction Regulation). The English court did not have jurisdiction because Hi-Tec was domiciled in Denmark (article 2) and the place of performance of the contract was France (article 5). Even if it was the court first seised, the English court had to decline jurisdiction because jurisdiction could not be established in England under the Brussels Convention regime.

Even if CMR applied, Hi-Tec argued that the English court did not have jurisdiction because the place designated for delivery was Italy not the UK. In any event, there was an action "pending" in the French court so the English action should not be permitted to continue under article 31(2). Lastly, if all else failed, the English court was not the appropriate forum for hearing the dispute since the case was centred in France and had hardly any connection with England.

At first instance, the judge held that English court had jurisdiction. There was a good arguable case that Exel and Hi-Tec were parties to a CMR contract for delivery and so jurisdiction was established by article 31.1. In respect of concurrent proceedings in England and France, the Jurisdiction Regulation applied. Under article 30 of that Regulation, the English court was the court first seised of the action. Hi-Tec appealed.

Concession
By the time this appeal was heard, the French appeal court, applying the Jurisdiction Regulation, had stayed the French proceedings to await the decision of the English court on jurisdiction.

During that French appeal, however, Exel had conceded that it acted as a Commissionnaire de Transport, explaining that it put forward the CMR argument in the English action because English law did not recognise the French concept. Exel now maintained the concession had been made for tactical reasons, but Hi-Tec relied on it to challenge the English judge's finding that there was a good arguable case that CMR applied.

CMR
The Court of Appeal agreed with Hi-Tec that the judge had been wrong to hold there was a good arguable case that CMR applied. He had overplayed the importance of parts of the evidence before him and failed to take sufficient account of previous dealings between the parties consistent with Exel being a Commissionnaire.

The deciding factor, however, was Exel's concession before the French court that it acted as Commissionaire. It was close to an abuse of the court for Exel to be running one case in France and another, inconsistent one in England and to be doing so for tactical reasons.

Although the Court of Appeal agreed that it was probable that the agreed destination was England, not Italy, Exel had failed to show a good arguable case for this being a contract subject to CMR. Consequently, article 31 could have no application.

Domicile
Hi-Tec was incorporated and registered in Denmark. Exel, however, said the company was run from Rochdale, England, where the directors lived, and so was domiciled in England for the purposes of article 2 of the Brussels Convention.

The Court of Appeal disagreed. A corporation has its seat in the United Kingdom if it was incorporated or formed there or "its central management and control is exercised in the United Kingdom" (Section 42 of the Civil Jurisdiction and Judgments Acts 1982). But there was no evidence at all that Hi-Tec's business was run from Rochdale. The company was registered for VAT in Denmark and all its business correspondence came to and from its Denmark office.

Place of performance
What was the obligation in question? If, as Exel argued, the obligation was to deliver the phones to England, then the place of performance was England and jurisdiction would be established under article 5.1 of the Convention. If, however, the obligation was to carry the phones carefully and safely, then that obligation was breached in France.

For the purpose of article 5.1, the relevant obligation is the one the claimant has made central to its claim. It is not necessarily the obligation that might be thought to be characteristic of the contract (Custom Made Commercial Ltd v Stawa Metallbau GmbH (Case C-288/92) [1994] ECR I-2913).

Exel's claim form was for a declaration of non-liability in respect of the theft of the phones while in the care, custody or control of Exel's sub-contractor. The obligation central to the claim was, therefore, responsibility in respect of the theft of the phones and the relevant place of performance was France, where the theft took place.

Exel had failed to make out a good arguable case that the English court had jurisdiction under any ground and the claim form was set aside.

Comment
The Court of Appeal's decision on CMR meant that it did not have to consider whether proceedings that have been issued but not served are "pending" for the purpose of article 31.2 or how this fits in with the idea of the "court first seised" in article 30 of the Jurisdiction Regulation.

It has been held that under CMR, proceedings become pending only once served (Andrea Merzario Limited v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 Lloyd's Rep 490). A similar requirement for service was included in the "court first seised" rule under article 22 of the Brussels Convention (Dresser UK Ltd v Falcongate Freight Management Ltd [1992] 1 QB 502.

But under article 30 of the Jurisdiction Regulation (which supersedes the Brussels Convention for contracting states), a court is deemed to be seised when the document instituting the proceedings is lodged with the court, provided the plaintiff has not subsequently failed to take any steps he is required to take to effect service.

In this case, the first instance judge found that Exel was still within the time limits for serving the English proceedings when the French proceedings were issued, so it could not be said to have failed to take any necessary steps.

It remains to be seen if these apparent inconsistencies will be resolved.

Meanwhile, Denmark recently entered into an agreement with the European Community to extend the application of the Jurisdiction Regulation in relations between Denmark and the rest of the EC "to arrive at a uniform application and interpretation". The agreement, however, is not yet in force.

Back to Top