Marek Jakubowksi, a sole trader also trading under other names, was transporting the cigarettes on behalf of respondents JTI Polska Sp Zoo. He argued that a 3:2 House of Lords decision from 1978 obliging the High Court judge to hold that the excise duty was recoverable was wrong and should be departed from.

The appeal was heard by Lord Reed, Lord Hodge, Lord Briggs, Lord Sales, Lord Hamblen, Lady Rose, and Lord Richards. John Kimball KC and Maya Chilaeva appeared for the appellants and Stewart Buckingham KC and Ben Gardner for the respondents.

Criticised from the outset

The cigarettes were transported by road from Poland to England, subject to the Convention on the Contract for the International Carriage of Goods by Road 1956. During a stop at a service station on the M25 motorway, 289 cases of cigarettes were stolen from the vehicle, carrying a market value of £72,512. As a result of the theft, the respondents incurred an excise duty of £449,557 as the cigarettes were deemed to have been released for commercial consumption in the UK.

The respondents claimed compensation from the appellants under the CMR and the claim was settled save as to the excise duty, which the respondents claimed under article 23.4 of the CMR. Following the judgment of the House of Lords in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd (1978), article 23.4 was to be read as allowing a cargo claimant to claim for charges incurred because of the way that the goods were carried and lost.

Before the High Court, the appellants accepted that following Buchanan the judge was bound to hold that the excise duty was recoverable but sought a direct appeal to the Supreme Court on the basis that Buchanan had been wrongly decided. Counsel highlighted that the decision had been criticised from the outset, and it had been observed that the test of the majority in the HoL could extend the scope of the carrier’s potential liability beyond that of normal common law rules of remoteness.

It was argued by the appellants that it was appropriate to depart from Buchanan in light of decisions in other CMR jurisdictions which had adopted a narrower interpretation to clause 23.4, including Denmark, the Czech Republic, Lithuania, and Belgium. This interpretation was supported by the context, and by the aims of the CMR in general not to seek to restore the claimant to the financial position they would have been in had the goods not been lost or damaged.

Not a real-world problem

In a judgment with which the other six judges agreed, Lord Hamblen said of the broad interpretation per Buchanan: “As Lord Wilberforce acknowledged in Buchanan, there are powerful arguments in favour of the narrow interpretation. In particular, I consider that there is considerable force in the arguments based on the object and purpose of chapter IV and the structure of the compensation scheme for loss of goods under the CMR. I find it impossible to hold, however, that the broad interpretation is not tenable.”

He continued: “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. By contrast, the narrow interpretation invariably involves importing words to explain its meaning.”

Addressing the criticisms of the broad approach, Lord Hamblen said: “As the respondents pointed out, other than Sandeman Coprimar SA v Transitos y Transportes Integrales SL (2003) there is no case cited by either party in the history of the CMR in any jurisdiction in which a charge that was not reasonably foreseeable has either been recovered under article 23.4 or rejected on remoteness grounds. That is a good indication that this is not a real-world problem.”

He concluded: “The strongest case for reconsideration of Buchanan would have been if an international consensus in favour of the narrow interpretation had emerged since the decision so that it was now an outlier. In the interests of uniformity that might well have justified a different view being taken. That is not, however, what has happened. If anything, the lack of consensus has grown. It is no doubt desirable that there be a uniform view as to the proper interpretation of article 23.4. Reversing Buchanan is not going to achieve that.”

The appeal was therefore unanimously refused.