Facts
In September 1998 Air France issued to the claimants, Quantum Corporation, an air waybill in Singapore, providing for the carriage of hard disk drives - to the claimed value of US$1.5 million - from Singapore to Dublin. The intended routeing was by air from Singapore to Paris and then from Paris to Dublin by road and sea over the Irish Sea. This was recorded in the master air waybill. A large number of similar consignments involving the same parties had been carried in this way previously.

For the trucking leg, the carriage was performed by regular contractors of Air France, Plane Trucking. Whilst the cargo was in the UK, in the custody of Plane Trucking, it was stolen by their employees. Plane Trucking admitted liability for the theft but was in liquidation at the time of the proceedings. Plane Trucking’s liability insurers had purported to avoid the policy. Air France also accepted liability.

Arguments
Whilst Air France accepted liability, it claimed entitlement to limit its liability to the amount of SDRs 17 per kilo, in accordance with its General Conditions of Carriage by Air for Cargo. Air France maintained that its General Conditions were incorporated into the contract of carriage by means of terms in the air waybill. Under Article 11.7 of the Air France conditions, its liability was limited to the amount of SDRs 17 per kilo. Unlike the Warsaw Convention, the conditions did not disentitle Air France from relying on the per kilo limitation in the event that the loss ‘resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage, or recklessly and with knowledge that damage would probably result…. (Warsaw Convention, Art.25)

Claimants maintained that Air France’s liability, in relation to the Paris-Dublin leg, was subject to the Convention on the Contract for the International Carriage of Goods by Road (‘CMR’). Article 1 of that Convention provided that the Convention applied to
‘every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a Contracting country.’ France is a contracting country to the CMR Convention

For the purposes of Article 6(1)(d)) of the Convention (‘The consignment note shall contain the following particulars… the place and date of taking over delivery….’), the claimants submitted that the goods were taken over in Paris. Under Article 23 of the Convention, the carrier may limit its liability to SDRs 8.33 per kilo of the goods lost or damaged. Under Article 29 of the Convention, however, the carrier is not entitled to take advantage of the limit set out in Article 23, where the loss or damage was caused by its wilful misconduct or that of ‘the agents or servants of the carrier, or [of] any other persons of whose services [the carrier] makes use for the performance of the carriage’.

Judgment
Mance LJ delivered the judgment of the court. He defined the issue to be addressed as "what constitutes a ‘contract for the carriage of goods by road’ within the meaning of Art.1 of CMR .He accepted that the issue could be approached on the assumption that although carriage by road from Paris to Dublin was Air France’s intended mode of performance, Air France were not contractually obliged to carry the goods in that manner and, might, if they had so wished, have carried the goods on that leg by air. The contract recorded in the air waybill was clearly for two legs, the first to be performed by air, the second a trucking leg, unless Air France elected to substitute some other means of transport – as their Conditions permitted.

Two questions arose for decision:

1. to what extent the application of CMR depends upon a carrier having obliged itself contractually to carry goods by road (and by no other means). This depends upon the force, in context, of the word ‘for’ in the reference to a ‘contract for the carriage of goods by road’;
2. to what extent (if at all) a contract can be both for the carriage of goods by road, within Art.1 and for some other means of carriage, to which CMR does not apply?

As regards 1), Mance LJ identified four possibilities, each of which might actually lead to goods being carried by road internationally:
a) The carrier may have promised unconditionally to carry by road;
b) The carrier may have promised this but reserved either a general or a limited option to elect for some other means of carriage for all or part of the way;
c) The carrier may have left the means of transport open, either entirely or as between a number of possibilities, at least one of them being carriage by road;
d) The carrier may have undertaken to carry by some other means, but reserved either a general or a limited option to carry by road.

On any view, he continued, case (a) is within Art.1. "If one were to confine the application of Art.1 to case (a), that would, probably, mean that there was a reasonably clear-cut distinction between cases where the Convention would and cases where it would not apply. However… I would not regard that as at all a satisfactory or likely interpretation of Art.1. Many, if not most, carriage contracts contain options as to alternative modes of performance… In case (b), the contract was also "for" such carriage, unless and until the carrier elected otherwise under such an option, which [in this case] it never did. The mere inclusion of an (uninvoked) option in such a contract cannot sensibly be decisive to the application of CMR. In case (c), the contract never promised, but it permitted and the carrier elected for carriage by road. There seems on the face of it good reason to treat such a contract as being a contract "for" – in the sense of "providing for" or "permitting" – the carriage of goods by road which actually occurred under its terms… Finally, there is case (d)…. I start with the initial impression that it would be difficult to draw any very clear or satisfactory distinction between case (d) and the previous cases. If they are all within CMR, there seems to me much to be said for treating case (d) as also within CMR. Carriage by road contrary to the terms of a contract would raise different considerations." The court held that the present case fell within case (b).

The argument of Air France amounted, in the court’s view, to the proposition that the application of CMR depended upon examining the contract terms at the first moment when the contract is entered into, and that the actual operation of the contract is irrelevant. The court felt there was attraction in the alternative approach, according to which the application of CMR depends upon the occurrence of international carriage of goods by road pursuant to contract. 

The court rejected the argument of Air France to the effect that CMR only applies to a contract providing for carriage by road from start to finish (with the single exception contained in Art.2) and not to the international road element of a contract which provided for carriage by means other than road at a given stage of the journey. The court believed that any problems that might arise from a clash of conventions  could be easliy resolved. 

The court did not see difficulty in reconciling its view with the requirement in Art.1 that the place of taking over and the place designated for delivery of the goods – as specified in the contract - be situated in two different countries. This provision could be read as referring to the places which the contract specified for the taking over and delivery by the carrier in its capacity as international road carrier. In similar vein, the court believed that other provisions of the CMR Convention, relating for example to the issue of a consignment note and its signature by the ‘sender’ and the carrier, should not necessarily be treated as guides to the correct interpretation of the scope of the Convention under Art.1. Workable answers could be given to the interpretation of these provisions, in that Air France could either be the ‘sender’ itself for the purposes of CMR, or be regarded as acting on behalf of the sender, if the sender were regarded as the party which contracted for the overall carriage. In this regard the court concluded: "It is understandable that the detailed articles of [the Convention] should focus on core or typical situations. But that does not necessarily mean that the Convention is to be limited to those situations."

Having reached the conclusion, from an examination of first principles, that "there is attraction and force in a conclusion that Art.1 may be read as applying CRM to the international road carriage element of a "mixed" or "multimodal" contract providing for two different means of carriage", the court went on to consider the relevant authorities. Although there was no English authority directly in point, there were precedents in Belgium, the Netherlands, and in Germany at the level of the Supreme Court, for applying CMR in each of the four cases (a), (b), (c) and (d) above.

On the second question, whether a contract can be both for the carriage of goods by road, within Art.1, and for some other means of carriage, to which CMR does not apply, the court found a ready answer in terms of European authority. "The Belgian, Dutch and German cases all unequivocally accept that CMR can apply to the road leg of a larger contract for carriage, involving different methods of transport". With the benefit of such authority, the court reached a similar conclusion, on the basis that "the concept of a contract for the carriage of goods by road embraces a contract for providing for or permitting the carriage of goods by road on one leg, when such carriage actually takes place under such contract. The place of taking over and delivery of the goods under Art.1 are to be read as referring to the start and end of the contractually provided or permitted road leg. Detailed provisions of [the CMR] fall to be operated with the carrier (or its representatives) so far as necessary putting itself into the position of the consignor or consignee when taking over goods at the start of a road leg, which is not the first leg in the overall carriage, or when delivering up the goods at the end of a road leg, which is not the last leg in the overall carriage."

The contract in the present case was, therefore, a contract for the carriage by road within Art.1 of the CMR in relation to the roll-on/roll-off leg from Paris to Dublin. Accordingly, Air France’s conditions were – to the extent that they would limit its liability – overridden. It was therefore open to the claimants to show, under Art.29 of CMR, that there was wilful misconduct or equivalent default, disentitling Air France to limit its liability for the loss which occurred during the road transit. That issue, counsel for the parties had agreed, should be remitted to the Commercial Court to be dealt with there.