Royal & Sun Alliance Insurance Plc & Anor v MK Digital Fze (Cyprus) Ltd. & Ors [2006] EWCA Civ 629

Case No A3/2005/1422[2006] EWCA Civ 629
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
[2005] EWHC 1408 (Comm)
ON APPEAL FROM QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
MR JUSTICE AIKENS
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Wednesday 17 May 2006
Before
LORD JUSTICE AULDLORD JUSTICE RIXLORD JUSTICE MAURICE KAY
Between
(1) ROYAL & SUN ALLIANCE INSURANCE PLCRespondents/ Claimants(2) EXEL LOGISTIQUE SARespondent
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Charles Graham QC (instructed by Messrs Hassan Khan & Co) for AppellantMr Stephen Kenny (instructed by Messrs Hill Dickinson Llp) for Respondent
Judgment

Introduction

[1]On 4 November 2004 a consignment of 18,000 Nokia mobile phones, loaded in a container, and on route from Charles de Gaulle airport, near Paris, to Calais in anticipation of carriage on to England, were stolen. Their transport was last seen near the Ressons motorway service station at about 6.30 to 6.45 pm that evening. Lorry, drivers, container and phones have disappeared. A further driver escorting the lorry in a separate vehicle was shaken off when the tyres of his vehicle were slashed during a motorway stop. The phones are said to have been worth some £3.3 million. They may have been uninsured.[2]The theft has led to legal proceedings both in England and in France between, among others, the owners of the phones, a Danish company called Hi-Tec Electronics A/S (“Hi-Tec”), and a French company charged with their carriage or with arranging it, called Exel Logistique SA (“Exel”). In England Exel is claimant and Hi-Tec defendant. In France Hi-Tec is claimant and Exel defendant. Exel claims here a declaration of non-liability. In France Hi-Tec claims to be indemnified against the loss of its phones. Exel’s English claim form was issued on 11 November 2004, and served on Hi-Tec in Denmark on 4 February 2005. Meanwhile Hi-Tec’s French action was issued and served on 2 December 2004. Thus Exel’s English claim was issued first, but Hi-Tec’s French action was served first.[3]There is a dislocation between the contract respectively alleged by Exel and by Hi-Tec. Here in England, Exel alleges that the contract between them is one for the international carriage of goods governed by the Geneva Convention on the Contract for the International Carriage of Goods by Road (“CMR”) for delivery of the phones in England. In France, Hi-Tec alleges that the contractual relationship is that arising from Exel’s role as a commissionnaire de transport,or what we would call a freight forwarder, instructed to arrange for the transport of the phones not to England but to Italy. It is to be noted, however, that unlike an English freight forwarder who may well be an agent only, a French commissionnaire undertakes personal liability and guarantees the safe delivery of the goods. It has not been suggested by either party that a commissionnaire can also be a CMR carrier. On the contrary, the parties have accepted that a commission de transport, the contract made by a commissionnaire with his principal, is not governed by CMR but by the relevant domestic French law.[4]This appeal is about whether the legal proceedings are to continue in England or France. In the meantime, the French proceedings have been stayed by the Cour d’Appel at Lyon, applying Council Regulation (EC) No 44/2001 (the “Judgments Regulation”) on the basis that the French court was second seised, to await the outcome of this appeal. Here in the commercial court, Aikens J has held that there is jurisdiction in England under CMR (incorporated into English law by the Carriage of Goods by Road Act 1965) and that these proceedings have priority, under article 30 of the Judgments Regulation, on the basis that the court here was first seised upon issue of Exel’s claim form.[5]The essential issue which has been argued before us is whether there is jurisdiction in England in respect of Exel’s claim here against Hi-Tec for a declaration of non-liability in respect of the theft of the phones.[6]Exel has put its case on jurisdiction on three alternative bases. First, it submits that there is jurisdiction under CMR in that the phones were to be delivered in England, to a firm called Interken Freighters (UK) Limited (“Interken”) based at Southall in Middlesex. Article 31.1 of CMR provides that the courts of the country within whose territory “the place designated for delivery” is to be found have jurisdiction. However, it is disputed whether Exel has a good arguable case that a CMR contract governs the parties’ relationship. Secondly, Exel submits that there is jurisdiction under article 2 of the Brussels Convention (the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, Brussels, 27 September 1968) on the basis that Hi-Tec, although incorporated in Denmark, also has a domicile in England through its directors, who reside in Rochdale. Hi-Tec disputes any domicile in England. Thirdly, Exel submits that there is jurisdiction under article 5.1 of the Brussels Convention on the basis that England is “the place of performance of the obligation in question”, viz the obligation to deliver the goods to Interken in Southall. Hi-Tec submits that delivery was to be in Italy; that the obligation in question related to the safe carriage of the phones up to the time of their theft and not to non-delivery at destination; and that in any event, if there was no good arguable case for a CMR contract, no relevant obligation under the commissionnaire de transport contract arose in these proceedings such as could amount to an “obligation in question”.[7]Aikens J held that there was a good arguable case that Exel and Hi-Tec were parties to a CMR contract for delivery in England and that jurisdiction was therefore established by virtue of article 31.1 of CMR. He then applied article 30 of the Judgments Regulation to hold that Exel’s claim had priority as the first proceedings to be issued. He did not reach, and given his view did not need to reach, the arguments about articles 2 and 5.1 of the Brussels Convention.[8]On the present appeal Hi-Tec has challenged the judge’s conclusion about CMR and has gone on to seek to rebut Exel’s reliance, under its respondent’s notice, on articles 2 and 5.1 of the Brussels Convention.[9]This appeal is complicated by the fact that the legal relationship between the parties has been addressed in different terms in the English and French claim forms; and by the fact that although England and France are parties to the Judgments Regulation, which supersedes the Brussels Convention, Denmark is not. Of course all three countries remain parties to the Brussels Convention.[10]Thus three international conventions are in issue: CMR, the Brussels Convention and the Judgments Regulation. CMR contains its own jurisdictional code in its article 31, which is preserved by article 57 of the Brussels Convention and by article 71 of the Judgments Regulation. The Brussels Convention is in issue because Denmark remains a party to it, but has not joined up to the Judgments Regulation. This appeal has therefore been argued on the basis, in the main, that the Brussels Convention applies to questions whether, outside article 31 of CMR, Hi-Tec can be brought before the English courts, for instance under articles 2 and/or 5.1. Thirdly, the parties have been at common ground in arguing questions of lis alibi pendens - ie first seizure, prorogation of jurisdiction, stay etc - under the Judgments Regulation, on the basis that, although a Danish party, Hi-Tec, may be involved, nevertheless any issue as to the competing jurisdictions of France and England, any issue as to whether the English or French courts are first seised, and the consequences of such first seizure, are now for the Judgments Regulation, to which both France and the UK are party, even if Denmark is not.[11]The appeal is also complicated by a certain mystery surrounding the sale and transport of the phones, as will emerge below. However, I think that what I have stated so far is sufficient for present purposes to introduce the problems of the appeal to the reader.

Some further facts about the parties and the phones

[12]Hi-Tec is a relatively new company. It was incorporated in Denmark on 5 March 2004. It trades in wholesale markets for electronic components including mobile phones. Its principal manager is Mr Arif Rashid, who, together with his two brothers, Adil and Asif, make up its board of directors. All three brothers reside at an address in Rochdale. Arif also has a home in Denmark.[13]Hi-Tec’s first dealings with Exel were in October 2004. On 14 October 2004 Exel arranged three transports, using two different carriers, of mobile phones to Interken. Three CMR notes were issued by Exel in which Hi-Tec was described as the sender, and the actual transporters, TRS Univers Lines and TRS Chauvet, were described as carriers. Exel issued the notes under a box (box 22) calling for the “Signature and stamp of the sender” and subscribed their own. On 28 October 2004 Exel arranged a further two transports for Hi-Tec, again using two carriers, and issuing two CMR notes in similar form. Copies of these CMR notes were returned to Hi-Tec.[14]The consignment of 18,000 phones in question come on the scene as a sale to Hi-Tec by MK Digital FZE (Cyprus) Ltd (“Digital”). Digital is also a defendant to these proceedings, but it is not necessary to consider its position as such further. On 28 October 2004 there is a purchase order from Hi-Tec to Digital and a commercial invoice from Digital to Hi-Tec for the phones for delivery “FOB Larnaca basis” at a price of £3,254,000. On the same day Hi-Tec sold the phones on to “Nuovo Suono” of Trafoi in Italy. That firm is named in inverted commas because the real Nuovo Suono SARL is not to be found in Trafoi, a little village in the Italian Alps, and had nothing to do with any of these events. Its name and VAT registration number were being illegitimately used for purposes which at present remain a mystery, but may have something to do with a VAT fraud. That sale is evidenced by a purchase order dated 28 October 2004 from “Nuovo Suono” in the sum of £3,299,000 (a turn, gross, of £45,000 or 1.38%). There is also a proforma invoice of the same date from Hi-Tec to “Nuovo Suono” in the sum of £3,299,000 which states “Dlvery: EXEL LOGISTIQUE, PARIS, FRANCE”. The purchase order had contained no terms save for a description of the goods and the price.[15]It was arranged for the phones to be flown from Cyprus to Paris: it is not clear why, if they were to go on to Italy. At any rate, either on 28/29 October (Exel’s evidence) or on 3 November 2004 (Hi-Tec’s evidence) there had been a telephone conversation between Arif Rashid and Mr Jens Thomsen, formerly Exel’s transport manager at its Rungis office (near Orly), but now no longer with Exel. It was Mr Thomsen who, says Mr Rashid, had introduced “Nuovo Suono” to him and Hi-Tec. In that telephone conversation there was a discussion of the onwards transportation of the phones from Paris. In his evidence Mr Rashid does not give the actual terms of that conversation, other than to say that the agreed destination was to be Italy, but comments as follows (first witness statement, para 11):
“I have been asked whether the contract was a contract for Exel to transport the Goods to Italy themselves or a contract to arrange for the transportation of the Goods to Italy using some third party as carrier. I did not draw a distinction between these two options in my mind at the time.”
[16]Exel’s evidence is given by its solicitor, Mr Justin Reynolds, who states (second witness statement, paras 8 and 10) that Hi-Tec had been introduced to Mr Thomsen by an existing contact, a Pakistani man called “Joe”, and that Mr Rashid had called – “to advise of a future consignment of mobile phones coming from Cyprus, to be collected from Roissy CDG and carried to the premises of Interken in Southall.”[17]Thus Hi-Tec’s evidence is that the oral conversation concerned a transport to Italy, while Exel’s evidence is that the oral conversation concerned a transport to England.[18]The phones were flown from Cyprus to Paris on 3 November. Exel’s evidence is that on 4 November Mr Thomsen took steps to arrange the transport of the phones to England. He telephoned TRS Univers, one of his regular hauliers, but was told that it did not have a suitable vehicle available: TRS Univers therefore proposed to use a sub-contractor, AMS, which was acceptable. However, as an additional security measure, since Mr Thomsen knew that mobile phones presented a high risk of theft, he arranged for the transport to be accompanied by Mr Chauvet, another haulier regularly used by Exel, driving his own van. (It was Mr Chauvet’s van whose tyres were subsequently slashed to prevent him keeping up with the transport.) Mr Thomsen then made out a CMR note in the form which I have already described above, naming Hi-Tec as the sender and TRS Univers as the carrier and putting Exel’s own stamp and signature in the box (box 22) which called for the stamp and signature of the “sender”.[19]At some point that morning Mr Thomsen asked his secretary, Jenila, to telephone Hi-Tec to get confirmatory paperwork for the job. She spoke to someone at Hi-Tec’s number and was promised what was requested. Later, she heard the fax machine “beep” and noticed that two faxes had come through from Hi-Tec. However, she did not read them, but put them in Mr Thomsen’s in-tray. Mr Thomsen did not read them either until the next day.[20]At 13.31 hours on the afternoon of 4 November Hi-Tec did in fact send through to Exel two faxes. One, dated 3 November, signed “Rash” and directed for the attention of Mr Thomsen, was headed “Allocation for Stock” and asked for the allocation of the 18,000 phones “to our customer…in ITALY Nuovo Suono”, and there followed the false address in the Alpine village but no other details. The other fax, dated 4 November, and headed “Shipping Instructions”, also signed “Rash” and directed for Mr Thomsen’s attention, said “Please could you ship From Frankfurt Airport (FOB) and deliver it [the phones] to my customer…NUOVO SUONO” and there again followed the Alpine village address but no other details. This fax ended “I would like 100% insurance cover for the above goods”. Mr Rashid says that the reference to Frankfurt Airport was just a mistake. Hi-Tec relies upon these faxes to support its submission that Italy had always been and remained the agreed destination of the goods. It submits that it is simply incredible to think that Exel requested paperwork, received it by fax, but then did not read it until the next day. Exel says that Italy was never mentioned, that the faxes were not read, and that Mr Thomsen would never have agreed to arrange a transport for Italy, where theft of mobile phones in transit was notorious. Moreover, Exel’s evidence is that the arrangements for the transport to England had already been made, and the CMR note specifying the consignee as Interken in Southall, Middlesex, had already been drawn up, in both cases by Mr Thomsen, before the faxes were sent. Thus that evidence is that the CMR note was handed to Mr Chauvet, to take to the airport, where he would meet the AMS personnel, and that Mr Chauvet left for the airport at 13.15.[21]Hi-Tec says that many of these circumstances are deeply suspicious, but that it did not know that Nuovo Suono’s name and VAT registration number were being misused, and that it is the victim of fraud. Exel, on the other hand, accuses Hi-Tec of being either the orchestrator or knowing participant in a well-known kind of VAT fraud known as “carousel VAT fraud”, the essence of which is that high value goods are traded within the EU community free of VAT between a chain of traders until unidentifiable fraudsters pocket the VAT which is charged to consumers. It is impossible to take these counter-allegations further, save to say that the circumstances as a whole are indeed odd and suspicious, and that the theft of the phones is the subject of a criminal investigation by the French court at Bobigny.

The English proceedings

[22]Exel and its insurers, Royal & Sun Alliance Insurance plc (RSA), issued their proceedings in England on 11 November 2004, only one week after the theft. Their defendants are Digital, Hi-Tec, TRS Univers, and (by subsequent amendment) AMS. On this appeal, as below, the court is only concerned with the position of Hi-Tec. RSA has been joined as claimant because of the danger that it could, under French law, be made the object of a direct claim from Hi-Tec. It is not necessary to refer to it again.[23]The English claim had been preceded by some correspondence between the parties. On 6 November Hi-Tec faxed Exel to express its shock at news of the loss, and to say that full insurance had been requested both over the telephone and in its shipping instructions (ie the fax of 4 November). On 8 November, Hi-Tec chased Exel for a reply. On 10 November, Exel wrote to TRS Univers to say that it had “entrusted” that firm with the transport of the phones (“nous vous avions confié le transport”), made reference to a presumption of liability pursuant to L133-1 of the French Commercial Code, said that it had been caused a loss of £3.25 million, and called upon TRS Univers to pay within 15 days, after which it would proceed to court without further notice. It is said by Maître Carole Boy, Hi-Tec’s French lawyer, that the language of this letter strongly suggested that Exel was acting for Hi-Tec as a forwarding agent (commissionnaire de transport) and not as a carrier.[24]However, it was Exel that was first into the field by issuing its claim form on 11 November. The brief details of the claim entered on the claim form stated as follows (I have added paragraph numbers for the sake of clarity):
“[1] On or about the 4th November 2004 [Exel] was contracted by [Hi-Tec] to carry a consignment of 90 pallets of mobile telephones from France to the United Kingdom. Such contract was subject to the International Convention on the Carriage of Goods by Road (CMR)… [2] [Exel] sub-contracted the carriage of the consignment to [TRS Univers]. Such consignment was subject to CMR. [3] The consignment was at all material times in the care, custody and control of [TRS Univers], its servants, agents or subcontractors on or about the 4th November 2004. The consignment was stolen while in the care, custody or control of [TRS Univers], its servants, agents or subcontractors. [4] [RSA] and [Exel] claim a declaration against [Digital] and/or [Hi-Tec] or any other parties interested in the consignment that they have no liability for the loss sustained in respect of the theft (none being admitted) or in the alternative that any such liability is limited by virtue by article 23 of CMR. [5] [RSA] and [Exel] seek damages as against [TRS Univers] for breach of contract and/or breach of duty and/or negligence in or about the care, custody, carriage and delivery of the consignment. [6] In the alternative [RSA] and [Exel] seek an indemnity and/or contribution from [TRS Univers] in respect of any damages, interest and/or costs which they have to pay to [Digital] and/or [Hi-Tec] or any other person interested in the consignment.”
[25]There is no evidence that at that time Hi-Tec had formulated any claim against Exel as a claim under CMR, or, for that matter, in any specific way.[26]Jurisdiction was claimed, or intended to be claimed, by virtue of article 57 of the Brussels Convention, section 1(3) of the Civil Jurisdiction and Judgments Act 1982, and CMR, viz by virtue of article 31.1 of CMR. Thus the claim form contained the following certificate:
“We certify that the High Court of England and Wales has the power to hear and determine the Claimants’ claims against the Defendants by virtue of Article 57 of the Civil Jurisdiction Judgments Act 1991 [sic] and the Convention on the International Carriage of Goods by Road (CMR) enacted in the Carriage of Goods by Road Act 1965 and that no proceedings involving the same cause of action are pending between the parties in Scotland, Northern Ireland, or any other Convention territory of any contracting state, as defined by Section 1(3) of the Civil Jurisdiction Judgments Act 1982 as amended by section 2(5) of the Civil Jurisdiction and Judgments Act 1991.”
[27]It was true at the time of issue of the English proceedings that no proceedings involving the same cause of action were pending between the same parties in any Convention territory, but that was not true, or arguably not true, by the time that the English claim form came to be served, for the French proceedings had by then been both issued and served. No reference was made to the Judgments Regulation.[28]In fact, nothing was done about the service of this claim form until 16 December 2004, when Exel’s solicitors arranged for its claim form to be translated into French and Danish. On 4 January 2005 Exel’s solicitors lodged with the High Court the papers necessary to effect service of the English proceedings on Digital and Hi-Tec. The proceedings were served on Hi-Tec, in Denmark, on 4 February 2005.

The French proceedings

[29]In the meantime, Hi-Tec’s French proceedings had been issued and served on Exel on 2 December 2004. At that time, Exel knew about its own and Hi-Tec’s proceedings, but Hi-Tec did not yet know of Exel’s English proceedings.[30]The essence of Hi-Tec’s particularised, documented, and legally argued statement of claim or summons in France was that Exel had been entrusted, as a commissionnaire de transport, with arranging the carriage of the phones to Italy; and that in that capacity was responsible as guarantor both for its own personal acts and for the acts of carriers and other intermediaries by whom the execution of the carriage had been carried out. Reference was made to articles L.132-4/6 of the Code de Commerce. Jurisdiction over Exel was asserted by reason of article 5.1 of the Judgments Regulation (“Exel…was responsible for ensuring their transportation over the French territory to the country of destination”). It is not clear to me why specific reference to article 2 (Exel’s domicile in France) was not explicitly mentioned. I speculate that it may not be necessary to do so in the case of a French company.[31]It is common ground (and for present purposes it is probably sufficient to state) that under the French law of the commissionnaire de transport, the commissionnaire guarantees the arrival of the goods at destination (subject to force majeure), and is personally responsible for all aspects of their carriage. If he is personally at fault, he is liable without limitation. If, however, the fault is that of the actual carriers or other intermediaries through whom he has arranged the transport, then he is entitled to rely on any exclusions or limitations of liability to which such contractors are entitled. See Lamy Transport, Tome 2, 2005, at chapter 38. Thus a commissionnaire without personal fault who has arranged transport on CMR terms will be entitled to rely on CMR terms excluding or limiting liability.[32]Thus, unlike an English freight forwarding agent, who prima facie contracts only as an agent so far as the actual carriage is concerned, the French commissionnaire de transport is an agent who contracts with personal liability throughout.[33]On 10 December 2004 Exel issued its own summons in France against TRS Univers, its insurers Helvetia Assurances, AMS and Mr Chauvet, so as to join them as third parties to Hi-Tec’s proceedings. It did so without protesting jurisdiction in France on the basis of its own prior English proceedings. The French court made the orders sought by Exel and gave a return date of 16 December to coincide with the return date already given on Hi-Tec’s summons against Exel. Hi-Tec now seeks to rely on those events as an appearance and submission by Exel to the French court, pursuant to article 24 of the Judgments Regulation, giving to that court exclusive jurisdiction; alternatively, as an abuse of process giving to the English court the ability, in its inherent powers, of declining jurisdiction in England for Exel’s otherwise prior proceedings and first seisure here.[34]On 16 December 2004, the first hearing of Hi-Tec’s summons against Exel came before the tribunal de commerce at Villefranche, but was adjourned without a substantive hearing to 13 January 2005. It was on this occasion that Hi-Tec learned of Exel’s English claim. However, there was still no challenge by Exel to jurisdiction in France. It was not until 12 January 2005, the day before the adjourned hearing, that Exel served on Hi-Tec’s French lawyer, Maitre Boy, submissions in support of an application by Exel for a stay of the French proceedings on the ground that the English court was first seised. That led to a further adjournment of the 13 January 2005 hearing, this time to 27 January. There was a further adjournment on that day, when the French court gave directions for the resolution of Exel’s challenge to the jurisdiction.

The judgment in England

[35]In the event, the judgment of the English court, given by Aikens J in draft on 21 June 2005, just anticipated the judgment of the French court, which was expected on 23 June but in fact emerged on 7 July. Aikens J referred in his judgment to the desire of both parties before him to have his judgment in advance of that of the French court: otherwise, he said, he would have preferred to take more time to set out the reasons for his decision.[36]Aikens J held:(1) that Exel’s claim form was concerned with a CMR contract, for delivery in England;(2) that, despite what Hi-Tec had to say about the contract really being a commission de transport, for delivery in Italy, Exel had a good arguable case for the CMR contract which it alleged;(3) that article31.1 of CMR prima facie therefore gave Exel jurisdiction in England for its claim, since that contract designated England as the place for delivery;(4) that the lis alibi pendens provision in article31.2 of CMR did not bar Exel’s claim even though Hi-Tec’s French action had obtained priority for the purposes of CMR (issue plus service) before Exel’s English claim form had been served;(5) that priority (first seisure) was therefore achieved by the mere issue of Exel’s claim form, by virtue of the rule now contained in article 30 of the Judgments Regulation;(6) that Hi-Tec’s claim in France involved “the same cause of action” for the purposes of article 27 of the Judgments Regulation; and(7) that the English court did not have power to stay the English proceedings on grounds of forum non conveniens.[37]Aikens J thus dismissed Hi-Tec’s challenge to jurisdiction in the English courts. In doing so the judge did not need to reach other arguments placed before him by Exel, such as that it had alternative (non-CMR) bases of jurisdiction under articles 2 and/or 5.1 of the Brussels Convention. He presumably decided the article 27 (“the same cause of action”) point at the request of the parties, even though under the Judgments Regulation that decision is really for the court second seised, viz (on the judge’s view) the French court.

Article 31 of CMR

[38]Before turning to the judgments in France, I need to set out article 31 of CMR and explain the lis alibi pendens dispute between the parties which arises out of article 31.2.[39]Article 31 provides: “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, or where in respect of such a claim a judgment has been entered by such a court or tribunal no new action shall be started between the same parties on the same grounds unless the judgment of the court or tribunal before which the first action was brought is not enforceable in the country in which the fresh proceedings are brought.” (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,[40]Article 31 was considered by this court in Andrea Merzario Ltd v. Internationale Spedition Leitner Gesellschaft GmbH [2001] EWCA Civ 61, [2001] 1 Lloyd’s Rep 490. It was there held that for the purposes of CMR an action becomes “pending” and thus gains the priority of the article 31.2 bar (“no new action shall be started between the same parties on the same grounds”) only when it has been served as well as issued (“issue (ii)” at paras 25/52, 77/79, 101). The same rule, requiring service as well as issue in order to obtain the priority of first seisure, applied under article 22 of the (later) Brussels Convention: Dresser UK Ltd v. Falcongate Freight Management Ltd [1992] 1 QB 502. This rule of article 22 has since been changed under article 30 of the Judgments Regulation, under which only issue is now needed to obtain first seisure priority.[41]In the present case, Hi-Tec’s French action only became “pending” for the purposes of article 31.2 after Exel’s claim form had been issued. Is that enough for an article 31.2 bar? I made a passing (obiter) comment about such a situation in my judgment in Andrea Merzario at para 49:
“Secondly, while recognising the argument of Mr Mildon that the very competition between an action which is pending in one jurisdiction and started in another might suggest that the concepts of “pending” and “started” should be harmonised rather than contrasted, I find that the sense of contrast prevails. If that means, where the pending action has priority but the second action has been started before such priority has been achieved, that the words “no new action shall be started” is to be understood to mean “no new action shall be started or continued”, I would regard that as preferable to finding that the contrasted language is to be construed to mean the same thing. Alternatively, but in my view less satisfactorily, one would conclude that the second action which has been started before the pending action reaches priority simply escapes the bar which would otherwise have been achieved if the pending action had reached priority before the second action had even been started.”
[42]Chadwick LJ preferred my alternative suggestion and doubted my primary solution, saying (at para 79):
“For my part, I doubt whether the answer is to be found in art 31(2) of the CMR Convention.”
[43]Below, Aikens J similarly preferred the alternative solution. Before this court, we have been treated to powerful but contrasting arguments on this issue. We only need to reach it if the judge’s finding that a good arguable case for a CMR claim within article 31.1 is upheld, and we will therefore revert to it below. However, it has been necessary to refer to this issue at this stage to make sense of events in the French proceedings, events which it is argued themselves bear directly on the prior issue of a good arguable case for a CMR claim within article 31.1.[44]Thus, the effect of article 31 of CMR was debated before the tribunal de commerce. Its judgment dated 7 July 2005 is elliptical, but it appears to have agreed that, for the purposes of article 31, French law is the same as English law (sc as stated in Andrea Merzario), namely “that proceedings are pending when the writ has been served on the defendant”. Therefore, Exel’s English action was not lis alibi pendens and constituted no bar to Exel’s French action. It did not go on, however, to consider whether articles 27 and 30 of the Judgments Regulation may have had the effect of giving the English action priority. It does not make explicit why that is so: but possibly because it thought that CMR’s article 31, being preserved by article 71 of the Judgments Regulation, was decisive. It therefore confirmed jurisdiction in France, but nevertheless stayed the proceedings at the request of Exel on the entirely separate ground that the criminal proceedings at Bobigny should take precedence. For these purposes it had cited Exel’s submission, which it appears to have accepted, in these terms:
“Furthermore, [Exel] requests a stay of proceedings based on the principle “the criminal prevails over the civil as the case stands”, since it made a complaint on 8 November 2004 at the SDPJ in Bobigny following the occurrence of the theft on 4 November 2004. It supplemented its complaint on 4 January 2005 by filing a claim for damages with the Senior Investigating Judge at the Regional Court in Bobigny.”
[45]Although Exel thus succeeded in staying Hi-Tec’s French action until the conclusion of the criminal proceedings, it was not satisfied with the tribunal de commerce’s judgment on the question of lis alibi pendens. It therefore appealed to the Cour d’Appel de Lyon, whose judgment was handed down on 19 January 2006.[46]For these purposes it requested the Cour d’Appel in addition to stay Hi-Tec’s action pursuant to article 27 of the Judgments Regulation. It complained that the tribunal de commerce had based itself on the provisions of article 31.2 of CMR, whereas that was inapplicable, and that the only relevant provisions were those of the Judgments Regulation.[47]In response, Hi-Tec submitted inter alia that the Judgments Regulation did not apply to it, as a Danish party; that neither did CMR since Exel was a commissionnaire de transport and had not entered into a CMR contract; that in consequence, Exel, which had served Hi-Tec without the leave of the English court only on the basis of a CMR contract, in fact required the leave of the English court to effect service and so should not be regarded as having effected proper service; alternatively that, if, for the sake of argument, CMR was assumed to apply, as Exel had claimed in its English claim form, then article 31.2 provided that Hi-Tec’s French action, having been served first, had priority; and that for these purposes it believed that “it is justified nonetheless in claiming the provisions of the CMR, as Exel is invoking them before the English courts”.[48]In its submissions in reply, Exel accepted that it was a commissionnaire de transport and on that ground said that article 31 was irrelevant. The judgment recalls its submission in these terms:
“Now that the CMR is not applicable, as it is a commissionnaire de transport (even if before the English courts, where the concept of commission de transport is unknown, that of contractual carrier holding sway instead, it had to refer to this Convention), Exel emphasises, however, as a secondary consideration, that its article 31.2 does not help to resolve the difficulties resulting from a lis alibi pendens.”
[49]On the appeal before us, Hi-Tec seeks to use Exel’s submissions before the Cour d’Appel as undermining Exel’s contention, and the judge’s finding below, that Exel had a good arguable case for a CMR contract giving rise to article 31.1 jurisdiction in London. In response, Mr Stephen Kenny on behalf of Exel, made a series of submissions as to the merely contingent nature of Exel’s argument to the Cour d’Appel. But in the end, he was constrained to accept, as he did, that Exel’s French advocate had indeed told the Cour d’Appel that Exel did not rely on a CMR contract, and that the only reason that it had put its case in England on such a basis was that, since the English court would not recognise the status of a commissionnaire de transport, it was forced to refer to CMR. Mr Kenny very candidly explained the logic of this submission. The French advocate was concerned with the counter-arguments that were being raised against Exel based on CMR: that under article 71 of the Judgments Regulation, article 31 would prevail over articles 27/30 of the Judgments Regulation; and that article 31 would have the effect of giving priority to Hi-Tec’s French action. Therefore, Exel’s tactics in the Cour d’Appel were to run away from CMR as far as they possibly could. But, Mr Kenny submitted, his submission to us remained what it had been to the judge below, namely that Exel did rely on article 31.1 of CMR as providing jurisdiction in England on the basis of a CMR contract directly between Exel and Hi-Tec. We will revert to these matters when considering Hi-Tec’s appeal that the judge was wrong to find a good arguable case in favour of such a CMR contract.[50]In the event, the Cour d’Appel accepted Exel’s primary argument relating to the Judgments Regulation. As a claimant in France, Hi-Tec, although Danish, was bound by the Judgments Regulation. Article 30 gave priority to the English action. Both English and French actions were concerned with the same contract and had the same objective, namely to determine Exel’s liability for the loss of the phones. Therefore, article 27 of the Judgments Regulation required the stay of Hi-Tec’s action pending the decision of the English court of appeal.[51]As for CMR’s article 31, the Cour d’Appel said that it was “not necessary” to decide whether CMR was applicable to the parties’ contract, since article 31.2 did not in any event apply to provide a solution in this case of “the simultaneous conduct of two lawsuits before the courts of two different countries”.[52]I am now in a position to consider this first issue. I describe it in these terms because, on appeal, the question is whether the judge erred. In the absence of any error in principle, or any material error of fact, this court is unlikely to be ready to interfere on a question of “good arguable case” decided in the commercial court. I have in mind the relevant observations of Saville LJ in IP Metal v. Ruote [1994] 2 Lloyd’s Rep 560 at 566. Indeed, since this appeal originally came before us as an adjourned application for permission to appeal, we have heard argument from Exel that we should not even give such permission. However, we indicated at the hearing that permission would be given, on all issues argued before us.[53]The judge found a good arguable case in favour of a CMR contract for delivery in England on the following basis. As for the test of “good arguable case”, he referred to the judgment of Waller LJ in Canada Trust v. Stolzenburg (No 2) [1998] 1 WLR 547 at 555 and said that “The essence of the test is that the court must be satisfied that it is right for the court to take jurisdiction”, but that the court must not be seen to pre-empt the decision at trial (at para 33). He next asked himself whether the nature of the contractual relationship between the parties was that of CMR or “of a freight forwarder or transport intermediary contract” (at para 37). For these purposes he adopted the five tests listed by Mance J in Aqualon (UK) Ltd v. Vallana Shipping Corporation [1994] 1 Lloyd’s Rep 669 at 674 and approved by the court of appeal in Lukoil-Kaliningradmorneft plc v. Tata Ltd & Global Marine Transportation Inc [1999] 2 Lloyd’s Rep 129 at 137. These are(a) the terms used by the parties in making their contract;(b) any description adopted in relation to a party’s role;(c) the course of any prior dealings;(d) the nature and basis of charging; and(e) the terms of any CMR note. The judge found of particular importance the witness statement evidence from Mr Rashid and (at second hand through his solicitor, Mr Reynolds) from Mr Thomsen relating to their initial telephone conversation. He said “That evidence strongly suggests that the contract was one for the carriage of the goods”. He found everything else – Exel’s letter to TRS Univers dated 10 November 2004, the previous course of dealing in October 2004, including the invoices relating to that transaction (there was no invoice relating to the stolen phones), to be equivocal, and the CMR note itself to be of little help, being drawn up by Exel unilaterally after the contract had already been made on the telephone. He concluded:
“46. I agree with that submission. Overall I think that the balance of the factors, but most particularly the evidence on what was agreed between Mr Rashid and Mr Thomsen, supports a good arguable case that the contract between Exel and Hi-Tec was one for the international carriage of goods by road, not one to act as a freight forwarder.”
[54]Mr Charles Graham QC on behalf of Hi-Tec and Mr Kenny on behalf of Exel have gone through this ground again. What has emerged, and emerged clearly, is that the judge erred in two important aspects, and did not know of a third important matter which only occurred after his judgment.[55]The first important aspect, I take it first because the judge did himself, is that in my judgment he overplayed the significance of the witness statements regarding the telephone conversation between Mr Rashid and Mr Thomsen. The relevant evidence is set out at paras 15/16 above. Mr Kenny was constrained to accept that (save as to destination) there was no evidence as to the actual terms of their conversation, nor any evidence to enable a distinction to be made between a contract of carriage and of freight forwarding. As Mr Rashid said:
“I did not draw a distinction between the two options in my mind at the time”
. Mr Thomsen, in Mr Reynolds’s statement, says he was told by Mr Rashid of a consignment of phones “to be collected…and carried to…Interken”. The judge relied on the word “carried”. However, one would expect some such reference to carriage in any event. Moreover, in circumstances where the French commissionnaire de transport guarantees safe arrival of the goods, unlike a mere agent in English law, it would take close attention to particular words used to be able to draw a distinction on which one could safely rely. In this connection, English authorities on which Mr Kenny sought to rely to indicate that the acceptance of personal liability was more consistent with a contract of carriage than with a freight forwarding relationship were wholly beside the point, and distracting. The fact is, the actual words used on the telephone have been lost. Neither party made a note of the conversation. What one is left with is the CMR note which was drawn up on the morning of 4 November, by Mr Thomsen, who was one of the two parties to that conversation, to be seen in the overall context of the parties’ business dealings.[56]The second important aspect on which I consider the judge erred, closely related to the first for it is in a sense the other side of the same coin, is the significance of the CMR note itself. The judge accepted the submission that the consignment note was of little help. Perhaps he was influenced by the fact that it came as only fifth and last of the Aqualon factors. However, article 9.1 of CMR provides:
“The consignment note shall be prima facie evidence of the making of the contract of carriage, the conditions of the contract and the receipt of the goods by the carrier.”
[57]Therefore, the CMR note of 4 November 2004 was prima facie evidence which had to be displaced. In truth, given the absence of any note of the telephone conversation and the absence of any direct evidence in the witness statements of the actual words used, the CMR note, drawn up by one of the parties to the telephone conversation, is the best evidence we have of their contract. The judge made no reference to article 9.1. In Aqualon, however, it played an important role (at 676). Before Aikens J Mr Kenny accepted that the CMR note supported Hi-Tec’s submission that Exel regarded itself as acting as commissionnaire, not carrier (see the judgment below at para 45). This was because Exel signed the note for Hi-Tec as sender, and TRS Univers (not Exel) was named as carrier (see para 18 above). Before this court, Mr Kenny submitted, differently, that the CMR note was evidence not of the principal CMR contract, but of a CMR sub-contract between Exel and TRS Univers. On that basis there was no CMR note in existence directly between Exel and Hi-Tec. If so, however, then Mr Thomsen, although conscious of making a CMR contract with Exel’s client, Hi-Tec, omitted to sign as carrier a CMR note evidencing that contract, although it was his obligation to do so (see articles 4/5 of CMR), while at the same time diligently drawing up a sub-contract CMR note. And even if the CMR note were of a sub-contract (although it is expressed in terms of a direct contract between Hi-Tec as sender and TRS Univers as carrier), then that would itself be consistent with the relationship between Hi-Tec and Exel as being that of a commission de transport.[58]The effect of the CMR note in respect of the transport in question is, in my judgment, supported by the course of dealing reflected in the October 2004 CMR notes. Those were drawn up in the same way, signed by Exel for Hi-Tec as sender with others signing as carriers. It is significant that all the notes follow the same pattern. Moreover, copies of the October notes were returned to Hi-Tec, so that it had knowledge of their form and did not object that they had been drawn up inappropriately.[59]The invoices for the October transports were also consistent with Exel being a commissionnaire de transport. Thus they had three lines of separate charges:(i) “TRS INT’L” (international transport);(ii) “HANDLING”;(iii) “CONTROL”. The first charge was by far the biggest. We do not know what the actual carriers charged. Presumably Exel could have presented that evidence. These charges are consistent with Exel passing on to Hi-Tec the charges of the carriers, and adding its own handling and control charges. That would reflect the way a commissionnaire would presumably charge. If, however, Exel was a carrier itself, it might have been thought that there would be only one set of charges. It may be that ultimately, in the absence of further evidence about these charges, the invoices are, as the judge described them, equivocal. But Exel has to make out a good arguable case, and if the invoices are equivocal, then they do not aid its case. On balance, I would have thought their form to be marginally in favour of Hi-Tec’s case.[60]In my judgment it is impossible on this evidence to say that Exel has made out a good arguable case for a CMR contractual relationship, as distinct from a commissionnaire de transport relationship. That is even before I come to the third factor, of which the judge did not know, for it occurred at the Cour d’Appel hearing subsequent to his judgment. That is the evidence, referred to at paras 48/49 above, that Exel’s French advocate told the Cour d’Appel that Exel accepted that it acted as a commissionnaire de transport and explained that it had claimed in England on a CMR contract only because English law did not recognise the French concept. Mr Kenny, while himself rejecting such an analysis, says that the French advocate was expressing himself thus for tactical reasons. Of course, it is open to a party before the English courts to put his case on the basis of a foreign contract governed by its own idiosyncratic foreign law. Mr Kenny may have put the matter in this way in the belief that a merely tactical adoption of a particular factual position could be easily repudiated. In my judgment, however, the position adopted before the Cour d’Appel fundamentally undermines Exel’s position here. It might be different if Exel’s case in favour of a CMR contract was indisputable or at least very cogent. Even then, I do not see why, in such a situation, an admission made to the French court is very different from one made to the English court. If Exel had admitted to the English court that it accepted that it was a commissionnaire, it would need leave to withdraw that concession. But even without putting the matter on a formal level where leave would be required, it seems to me to be close to abusive to be running one case in France, and another inconsistent case in England, and to be doing so for tactical reasons in a situation of conflict over respective challenges to the jurisdiction of the two courts. Where the English court has to be satisfied, on the basis of a good arguable case, that it is proper for it to accept jurisdiction here, on the basis of CMR’s article 31.1, in a situation of conflict over the proper analysis of the parties’ contractual relationship, I do not see how Exel can succeed when it has adopted Hi-Tec’s contractual analysis which excludes the possibility of invoking CMR’s article 31.1.[61]For all these reasons, I would hold that in this respect Hi-Tec’s appeal succeeds: Exel has failed to show a good arguable case for a CMR contract bringing with it CMR’s article 31.1 jurisdiction code.[62]I have come to this conclusion irrespective of the precise gloss to be put on the requirement of a good arguable case. The judge referred to Waller LJ’s judgment in Canada Trust, where he formulated the gloss of “a much better argument” (at 555). There were detailed submissions before us, of considerable interest, as to whether the test applied by the judge was consistent with either Waller LJ’s test (for the judge did not expressly mention “a much better argument”), and in any event as to whether the obiter remarks of this court in the subsequent case of Konkola Copper Mines Plc v. Coromin Limited [2006] EWCA Civ 5, [2006] 1 All ER (Comm) 437 (see at paras 61 and 74/96) were applicable. Mr Graham submitted that the issue as to the correct contractual relationship of the parties was a fundamental question which went to the heart of the ultimate merits of the parties’ dispute (see Konkola at para 76) so as to render it necessary to adopt the Konkola approach, where both parties have made out a good arguable case, of saying that the party with the burden of proof or persuasion fails. Ultimately, as it seemed to me, the parties’ submissions ended up not very far apart. It was accepted that the burden of persuasion lay on Exel. If the Waller LJ gloss was the right approach, then the burden was the difficult one of showing “a much better argument”. If the Konkola approach was applicable, then, as it seems to me, Hi-Tec’s case in favour of the parties’ contractual relationship being that of a commission de transport was at least as good as Exel’s case in favour of a CMR regime. On either basis, it seems to me that, to adopt the words of the judge but in respectful disagreement with him as to the outcome, Exel has failed to show “that it is right for the court to take jurisdiction” on this issue.[63]In the circumstances, I would be loath to say more than is necessary to resolve the interlocutory issue of jurisdiction. If it be thought that I have gone into the facts above in a way which might seem to suggest a view of the ultimate merits, I would wish to state that I have not intended to. It is simply that, in a case where an appeal judge is required to show why he disagrees with the conclusion of the judge below, it is necessary to be involved in the particulars of the argument.[64]Thus it is unnecessary to deal in any length with the separate issue of whether the contract was to arrange for the transportation of the phones to England or to Italy. Of course, even if there was a CMR contract, article 31.1 would not provide jurisdiction in England if the agreed destination was Italy. The judge said that there was a good arguable case that the agreed destination was England, and I agree, essentially for the reasons given by the judge. In brief, England was the destination entered in the CMR note by Mr Thomsen. It was where previous Hi-Tec consignments had been delivered. It was where Mr Thomsen (giving evidence through Mr Reynolds) said that it had been agreed that the phones in question would be delivered. It was where Mr Thomsen in fact sent the phones in the arrangements he made on the morning of 4 November prior to the receipt of the two faxes at 13.31 hours. The evidence to the contrary is that of Mr Rashid, who says that Italy was spoken of as the country of destination in his initial telephone conversation with Mr Thomsen; and that of the two faxes of 13.31 hours on 4 November, which give “Nuovo Suono” as the destination. However, there are so many question-marks hanging over the identification of “Nuovo Suono” of Trafoi as the buyer and consignee of the phones, that in my view the judge was right not to place reliance on those faxes, which in any event speak oddly of “Allocation for Stock” and “Frankfurt Airport”. This is despite what Mr Graham submits to disparage Exel’s evidence about leaving unread the very faxes which came in response to Mr Thomsen’s own request for paperwork (see at paras 19/20 above), and his plea that the court should accept those faxes at face value and set at nought its concerns that the false use of “Nuovo Suono” and a fictitious address were part of a fraudulent VAT scheme. However, whatever be the explanation of these mysteries, and I agree that the court can hardly form a view about them at this interlocutory stage, they are an inevitably flimsy and unreliable basis on which to dispute the hard evidence that the phones were in fact dispatched to Interken in England. There is also evidence that Interken was expecting the consignment of the phones and that Interken personnel attended a meeting at Exel’s premises on 5 November to discuss the loss; whereas “Nuovo Suono” only appears on the scene after the loss in the form of faxes from “Pedro”. Even Mr Rashid’s first fax to Exel (Mr Thomsen) after the loss, dated 5 November but apparently sent late on 6 November, while asking for confirmation concerning insurance, does not complain that the phones were on route in the wrong direction at the time of their loss.[65]I would therefore have been prepared to agree with the judge that there was a good arguable case for the agreed destination for the transport of the phones being in England. Nevertheless, the sole basis on which the judge found in favour of jurisdiction in England, namely article 31.1 of CMR, is in my judgment in any event flawed. In the circumstances it is unnecessary to resolve the lis alibi pendens issue under article 31.2.[66]Aikens J heard submissions below from Exel to the effect that, as an alternative to English jurisdiction founded on article 31.1 of CMR, there was jurisdiction under articles 2 and/or 5.1 of the Brussels Convention. The judge did not proceed, and did not need to proceed, to deal with those alternative submissions. This court, however, has been asked by Exel to do so, pursuant to its respondent’s notice. These alternative bases of jurisdiction are put forward not as supporting Exel’s case to be heard in England on its CMR claim, but on the hypothesis that its contract with Hi-Tec is not a CMR contract but a commission de transport.[67]On that hypothesis, Mr Graham for Hi-Tec has submitted that these alternative bases for jurisdiction fail on their own merits, that is to say that Exel cannot show a good arguable case for establishing jurisdiction here under either of those articles, and I shall deal with the merits of the parties’ respective submissions below. However, there are two prior points which concern me. The first is whether a claim form issued and served on one basis (article 31.1 jurisdiction) can go forward for consideration on another basis, where, if that other basis is well founded, no permission would have been needed for the issue (or service) of the claim form concerned. The second, which perhaps logically is even the prior of the two points, is whether Exel’s claim form can in any event stand as a claim form concerning a contract of commission de transport when it has been drafted in terms of a CMR contract.[68]As for the first of those points, the court has heard competing submissions on CPR 6.19 as to whether Exel has properly brought itself within that rule regulating service out of the jurisdiction where the permission of the court is not required. I will return to those submissions below. In essence, however, Hi-Tec submitted that, because by the time of service of Exel’s claim form Hi-Tec’s French claim had been issued and had therefore become “pending” under the Judgments Regulation, therefore Exel could not properly bring itself within Part 6.19 and required the court’s permission to serve its claim form, which it did not have. However, Hi-Tec did not submit, by reference to Part 6.19(3), that Exel had failed at the time of issue of its claim form to include in it reliance on articles 2 and/or 5.1. Part 6.19(3) provides:
“Where a claim form is to be served out of the jurisdiction under this rule, it must contain a statement of the grounds on which the claimant is entitled to serve it out of the jurisdiction.”
[69]Therefore, any Part 6.19(3) issue, to which my first point of concern is closely related, does not arise on this appeal. It would seem at first blush that any defect in the certificate would not affect the formal validity of the issue of the claim form itself, for which permission is not needed, but whether it might be relevant to an assertion of first seisure merely upon issue is perhaps another matter. However, as such questions have not been raised between the parties, I shall leave them there.[70]The second point which concerns me at the outset of Exel’s alternative submissions was touched upon by Mr Graham, but only lightly, because he was somewhat uncertain whether it suited him tactically to say that Exel’s claim form did or did not contain an alternative claim relating to a contract in the form of a commission de transport. The judge had held that the claim form only dealt with a CMR contract (at para 64: “the Claim Form contains (and only contains) a claim arising out of carriage under the CMR”). Ultimately, Mr Graham did not concede that the judge was wrong so to hold. Mr Kenny, on the other hand, at no time really faced up to the initial difficulty that Exel’s claim form was framed in terms of a CMR contract and not a commission de transport. It seems to me that the judge’s ruling, which is not challenged in Exel’s respondent’s notice, is in this respect right and that one consequence of it may be that there can be no good arguable case in respect of any other contract to support Exel’s alternative arguments on jurisdiction. It seems to me that that is an entirely separate ground upon which Exel’s respondent’s notice may very well fail at the outset.[71]Mr Graham did have a subsidiary submission which is somewhat related to this point, to the effect that a claim form based upon a CMR contract, and not extending to include a claim for a declaration of non-liability in the event of the contract between the parties being found to be a commission de transport,was ineffective and would not serve any useful purpose and therefore should be set aside as a matter of the court’s discretion: relying on Messier-Dowty Ltd v. Sabena SA [2000] 1 WLR 2040 at 2050/1. That, however, “is not a matter of jurisdiction. It is a matter of discretion” (at 2050H). As such, I do not think it is a point in limine. Moreover, if there is jurisdiction within the Brussels Convention, then I am doubtful whether the claim can be declined in this way on a discretionary basis.[72]I prefer to regard the point that concerns me as relating to a question of good arguable case and therefore initial jurisdiction. If there is no good arguable case for a CMR contract, is there anything left in the claim form which can found jurisdiction and obtain priority for Exel under the Judgments Regulation? I am inclined to think not. However, as this point has not been squarely taken by Hi-Tec, I will not so hold, and do not decide Exel’s alternative case on this basis.[73]Similarly, Mr Kenny had a submission related to this point but tied to article 5.1’s “obligation in question”, to the effect that an obligation within a contract of commission de transport was the “obligation in question” once it emerged on Hi-Tec’s side that it placed reliance on such a contract. I will deal with that submission in the context of article 5.1 below.[74]I therefore proceed to consider Exel’s first alternative case for jurisdiction, under article 2.[75]There was initial uncertainty on Exel’s part as to whether to found its article 2 case on the Brussels Convention or on the Judgments Regulation. There is a difference in the rules relating to domicile under the two instruments: contrast article 53 of the Brussels Convention and article 60 of the Judgments Regulation. Hi-Tec is incorporated and registered in Denmark and Denmark is a party to the Brussels Convention but is not bound by the Judgments Regulation. However, the UK and France are bound by the Judgments Regulation, which, as between those nations, supersedes the Brussels Convention and governs relations between them. At one stage Exel wished to argue that if Hi-Tec was domiciled in the UK as well as in Denmark – and it is clear at any rate that a company may for the purpose of the rules contained in article 2 have more than one domicile – then it must be the Judgments Regulation which applied. In the end, however, Mr Kenny relied on article 2 (and therefore on article 53) of only the Brussels Convention. It seems to me that that is likely to be right: whether the UK is obliged to found jurisdiction against a Danish domiciliary in the UK on the ground of its additional English domicile – or any other ground – is not, I think, a matter for the Judgments Regulation, but for the Brussels Convention. It is not as if English domicile would oust Hi-Tec’s undisputed Danish domicile: it would merely be additional. Moreover, paragraph (9) of the preamble to the Judgments Regulation states:
“A defendant not domiciled in a Member State is in general subject to national rules of jurisdiction applicable to the territory of the Member State of the court seised, and a defendant domiciled in a Member State not bound by this Regulation must remain subject to the Brussels Convention.”
See also paragraphs (21) and (22) of the preamble.[76]In as much as Mr Graham may have been disposed to submit that it was articles 2 and 60 of the Judgments Regulation which provided the relevant rules, such an alternative became redundant once Mr Kenny on behalf of Exel made it clear that he relied only on the Brussels Convention and abjured reliance on the Judgments Regulation.[77]So the question is whether there is a good arguable case in favour of Hi-Tec’s domicile in England under articles 2 and 53 of the Brussels Convention, which provide – “Article 2 Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State… Article 53 For the purposes of this Convention, the seat of a company or other legal person or association of natural or legal persons shall be treated as its domicile. However, in order to determine that seat, the court shall apply its rules of private international law.” Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State… Article 53 For the purposes of this Convention, the seat of a company or other legal person or association of natural or legal persons shall be treated as its domicile. However, in order to determine that seat, the court shall apply its rules of private international law.”[78]For these purposes section 42 of the Civil Jurisdiction and Judgments Act 1982 provides the applicable rules of domestic law, as follows:
“(3) A corporation or association has its seat in the United Kingdom if and only if – (a) it was incorporated or formed under the law of a part of the United Kingdom and has its registered office or some other official address in the United Kingdom; or (b) its central management and control is exercised in the United Kingdom. (4) A corporation or association has its seat in a particular part of the United Kingdom if and only if it has its seat in the United Kingdom and – (a) it has its registered office or some other official address in that part; or (b) its central management and control is exercised in that part; or (c) it has a place of business in that part.”
[79]Mr Kenny therefore sought to demonstrate that on the evidence before the court there is a good arguable case that Hi-Tec had, in addition to its domicile in Denmark, a domicile in England by virtue of its central management and control being exercised here.[80]For these purposes the relevant time is 11 November 2004, when Exel’s claim form was issued.[81]Mr Kenny submitted that Hi-Tec’s central management and control was exercised at an address in Rochdale which Mr Arif Rashid and his two brother directors give as their address in Hi-Tec’s Danish company register. In the same document Arif Rashid gives his own name and the same address as those of Hi-Tec’s “Direktion” or “Management”. He gave the same address on his witness statements in these proceedings. It is presumably his home address and residence, as it is stated to be in a separate document he prepared for the French proceedings. He there described his family’s business activities. Each brother concentrates on a separate business, but all three are equal partners in all their companies. Hi-Tec’s Danish address, on the other hand, at “c/o Hellerup Business Center A/S, Suite 5” in Hellerup, has every appearance, submits Mr Kenny, of being a mere address of convenience. It is, says Mr Reynolds after making inquiries, “little more than a staffed telephone and fax forwarding centre, located in a four story house in a suburb of Hellerup”. Mr Kenny submits that Hellerup Business Centre is in essence a “brass plate” and that it is Rochdale that is Hi-Tec’s “nerve centre”.[82]Hi-Tec’s evidence is that it was incorporated on 5 March 2004. Its sole place of business is at Hellerup. It has no branch or office in the UK. It is registered for VAT in Denmark. Its business correspondence comes to and from its office in Hellerup, as the documents in this case demonstrate. At the Business Centre, Hi-Tec has exclusive use of its own office, Suite No 5. The office has been manned by a full-time employee, Mr Sajid Abbas Minhas, who had collected Exel’s documents of service from the local police station. A letter from the Business Centre saying that Hi-Tec had “rented space” there since 15 May 2004 and “still have an office” there is exhibited. Hi-Tec has Danish auditors and book-keepers. Mr Rashid has a Danish home in Charlottenlund, and spends the majority of his time there. He has applied for permanent residency. However, there is no evidence that he had acquired that home before March 2005. Mr Kenny submits that post-issue attempts to improve the position in Denmark are irrelevant.[83]Mr Kenny relied on The Deichland [1990] 1 QB 361 and The Rewia [1991] 2 Lloyd’s Rep 325 as leading modern authorities on section 42. The Deichland concerned a chartering company which was incorporated in Panama but whose central management and control was not disputed to be in Germany. This court said (at 375E) that for the purposes of article 53 (and section 42(6)) such a company could have more than one domicile or seat: as could a company incorporated abroad whose central management and control was in England (see section 42(3)). Therefore the company had to be sued in Germany rather than England, where her ship had been arrested. However, there was no issue in that case as to where central management and control was. It is simply authority for the possibility of there being more than one domicile or seat.[84]The Rewia concerned a one ship Liberian company whose central management and control was found by the judge to be in Germany, although day to day management was exercised from Hong Kong. The bill of lading provided for jurisdiction in the carrier’s “principal place of business”. The issue was whether that was in Germany (requiring application of the Brussels Convention) or in Hong Kong. It was held that it was in Germany, even though a physical “place of business” could be identified in Hong Kong but not in Germany. However, it was not in dispute that central management and control was in Germany, and the issue was about “principal place of business”: therefore, the decision in this court, relied on by Mr Kenny, is not determinative. The most that can be said is that Leggatt LJ (at 334) cited earlier authorities for the concept that a test of residence (for income tax purposes) was where “the real business” is carried on, viz “where central management and control actually abides” (De Beers Consolidated Mines Ltd v. Howe [1906] AC 455 at 458), and that in Daimler Co v. Continental Tyre and Rubber Co (Great Britain) [1916] 2 AC 307 at 319 Lord Atkinson spoke of “the real business centre” as that “from which the governing and directing minds of the company operated”.[85]I do not find such authorities of great assistance in the present case. There is in truth no evidence at all that anything happened in Rochdale other than that Arif Rashid and his brothers lived there and that Hi-Tec’s “Direktion” was ascribed to Arif. There is no evidence of any board meetings of Hi-Tec having taken place at Rochdale, or even of any particular business decisions originating there; no evidence of funds originating from or being paid to England; or of any particular activity: compare the very strong facts upon which The Rewia was based (at 334). Mr Kenny’s case is essentially founded on inference, from the mere presence of Arif and his co-directors in Rochdale. In this respect it is to my mind also relevant that Hi-Tec was a start-up company. There is no evidence of any business dealings before October 2004; and the claim form was issued in November. In such a case it may take a little time for such a company’s central management and control to become established. There is, of course, no necessity that a company should have a seat or domicile outside its country of incorporation, although it may have. It may always be sued in the country of its incorporation. It is not as though, in its business dealings, Hi-Tec showed or represented itself to the world as operating from the UK.[86]In my judgment, Exel has failed to show a good arguable case that Hi-Tec was domiciled in England for the purposes of articles 2 and 53 of the Brussels Convention and section 42(3) of the 1982 Act. In connection with article 2, Canada Trust with its gloss on “good arguable case” requiring “a much better argument” applies directly and with full force, since domicile will not be investigated at trial and therefore concern about prejudging the issues at trial fades into the background.[87]For these purposes I am content to accept (see above at para 65) that there is a good arguable case that Exel’s contract was to arrange for the phones to be carried to and delivered in England.[88]Article 5.1 of the Brussels Convention and of the Judgments Regulation are again not in identical terms. I am concerned, however, only with the former, which provides:
“A person domiciled in a Contracting State may, in another Contracting State, be sued – 1. In matters relating to a contract, in the courts for the place of performance of the obligation in question…”
[89]What is the “obligation in question”? If it is to deliver the phones in England, then jurisdiction would be established. Mr Kenny submits that that is the obligation in question. He emphasises in this respect the guarantee of due arrival at destination that a commissionnaire de transport undertakes (see para 31 above). Mr Graham, however, submits that the obligation in question is the failure to carry carefully and safely in respect of the theft of the phones, and that all took place in France. If Exel was liable, or not liable (as Exel claims), in respect of the loss of the phones, its liability or otherwise was already a fait accompli while the phones were still in France. Nothing that could or would have happened after their loss was of any relevance.[90]In this connection, it has to be recalled that there is clear jurisprudence that the “obligation in question” depends on the obligation which the claimant has made the focus of his claim, and is not to be identified by searching for what might be thought of as the “characteristic” obligation of the contract.[91]The basic rule of the Brussels Convention is that persons domiciled in a convention state must be sued in the courts of that state (article 2). The “special jurisdictions” such as article 5 must be interpreted restrictively: Kalfelis v. Bankhaus Schröder Münchmeyer Hengst and Co (Case 189/87) [1988] ECR 556, Kleinwort Benson Ltd v. Glasgow City Council [1999] 1 AC 153 at 167B and generally at 163-166. The “obligation in question” “…cannot be interpreted as referring to any obligation whatsoever arising under the contract in question, but is rather that which corresponds to the contractual right on which the plaintiff’s action is based” see Custom Made Commercial Ltd v. Stawa Metallbau GmbH (Case C-288/92) [1994] ECR I-2913, 2957 (at para 23), reaffirming Ets A de Bloos Sprl v. Société en commandité par actions Bowyer (Case 14/76) [1976] ECR 1497.[92]Thus in Shenavai v. Kreischer (Case 266/85) [1987] ECR 239 the European Court declined to apply generally, as too uncertain, a doctrine that had been applied to contracts of employment, that it is the obligation which characterises the contract that is the obligation in question. Instead it emphasised (at para 18):
“On the other hand, no such uncertainty exists for most contracts if regard is had solely to the contractual obligation whose performance is sought in the judicial proceedings. The place in which that obligation is to be performed usually constitutes the closest connecting factor which explains why, in contractual matters, it is the court of the place of performance of the obligation which has jurisdiction.”
[93]Where a number of obligations are in issue, the court will be guided by the maxim accessorium sequitur principale, so that the principal obligation (of those in question) will determine jurisdiction (ibid at para 19).[94]These principles can be seen being worked out in two English cases concerned with the carriage of goods. Thus in Union Transport plc v. Continental Lines SA [1992] 1 WLR 15 (HL) the shipowner refused to nominate a vessel under his charter, as a result of which no vessel ever arrived to lift the cargo. The obligation to nominate was to be performed in London, but the vessel once nominated was to load in Florida. Of course, the obligation to load was more characteristic of the charter than the obligation to nominate, but it was the latter that was the “obligation in question”. It was “the principal ground of complaint” or “real ground of complaint” (at 22G, 23B) and not merely contrived for the purpose of jurisdiction.[95]In The Sea Maas [1999] 2 Lloyd’s Rep 281, the loss occurred during the carriage, but possibly because of insufficient precautions taken before it began, and the result was a failure to deliver the goods in the same good order and condition as when shipped. Consignees of a cargo of steel coils, which had been shipped in Wales for carriage to Italy, claimed in respect of damage by seawater during the voyage. The claimants submitted that the obligation in question was the failure to provide a seaworthy ship, which had occurred at the start of the voyage, within this jurisdiction. The counter-argument was that the breach of the obligation in question occurred in Italy, where the goods were delivered in damaged condition. On that hypothesis, the claimants would have had to sue the shipowners in Holland, where they were domiciled.[96]I said (at 284):
“Mr Hill’s support for a single rule in favour of the discharge port as being the place of performance of the obligation in question seems to me to be an attempt to find the place of performance of an obligation which is characteristic of the contract, and therefore to suffer from the same error as that referred to by Lord Goff in Union Transport v. Continental Lines. In other words, Mr Hill’s rule ignores the requirement of the cases in the European Court that the obligation in question must reflect “the contractual right on which the plaintiff’s action is based”… “It follows, as it seems to me, that everything will depend on the nature of the bill of lading holder’s claim. If the shipowner has misdelivered the goods at destination, then the place of performance of the obligation in question may well be at the port of discharge. If the ship is seaworthy, but the alleged failure of due diligence is some lack of care during the voyage, eg a failure to tighten the lashing as needed, or to maintain reefer temperatures at the appropriate level, then the place of performance of the obligation in question, viz the obligation to carry and care for the goods with due diligence, may well have occurred on the high seas, in which case there will be no special jurisdiction within art 5(1) and the matter must rest with art 2. If, however, the fundamental matter of complaint is that the shipowner never provided a seaworthy vessel, then the place of performance of the obligation in question would seem to me to be at the port of loading.”
[97]I concluded (at 285):
“If, therefore, looking at the pleadings, I had to say what the “principal or substantial failure” or “principal” or “real ground of complaint” was (to pick up the language used in Union Transport v. Continental Lines), or, in the language of art 5(1) itself, what the “obligation in question” upon which the plaintiffs’ claim was based was, I should say it was the failure to use due diligence to provide a seaworthy ship. Everything else is subordinate or accessory.”
[98]So here, it is necessary to identify the contractual right on which Exel’s claim is based. To do that, one must look at Exel’s claim form, which has been set out in para 24 above. The first matter to be observed is that nothing whatsoever is said there about a contract of commission de transport. Let it be assumed for the sake of argument, however, that the claim form had referred to such a contract instead of to a contract subject to CMR. The question still arises, what is the obligation in question? The matter is somewhat back to front, of course, because Exel is not alleging a breach of some specified obligation, but alleging non-liability. Even so, it is alleging non-liability in respect of an obligation which, the claim form implies, is being used as the basis of an assertion of liability against it. That obligation is identified twice in the claim form, viz in the following words:(i) by referring to the occasion of the loss in question in the third paragraph’s “The consignment was stolen while in the care, custody or control” of Exel’s subcontractor, TRS Univers;(ii) by the express claim (in the fourth paragraph) of non-liability for that loss “sustained in respect of the theft (none being admitted)” etc. There is nothing there to identify the obligation in question as being the delivery of the goods in the UK, even though that destination had been adverted to in the claim form’s first paragraph, but, as it emerges, only for the purpose of describing the contract and supplying the basis of article 31 jurisdiction. The point that the obligation in question is responsibility in respect of the theft of the phones is emphasised again in the fifth paragraph, albeit in connection with a claim against TRS Univers, where Exel claims damages “for breach of contract and/or breach of duty and/or negligence in and about the care, custody, carriage and delivery of the consignment”, and the final reference to delivery is only incidental to the rest.[99]In my judgment, this case shares aspects of Union Transport and The Sea Maas. As in both those cases, the fundamental obligation in issue, or the principal or real ground of complaint, was whether or not there is liability (not so much for the consequence of non-delivery at destination, but) for loss or damage during the carriage. That this is the conclusion to which article 5.1 looks in this case is also confirmed by reference to the purpose of the rule there laid down, which is to find in the place of performance of the obligation in question the appropriate connecting factor to the forum of jurisdiction (see Shenavai at para 18, cited at para 92 above). In this case, the relevant place of performance is in no way at destination in England, but in France.[100]If article 5.1 were in this case to mandate jurisdiction in England, a rule, designed to allocate jurisdiction to the courts of a country which, territorially speaking, is the focus of the parties’ dispute, would be seen on this occasion to have misallocated. This can happen, but proper adherence to the requirement to focus on the obligation on which the claimant’s case is based should in most cases avoid that unfortunate result.[101]Mr Kenny nevertheless has submitted that such a conclusion is contrary to the learning to be derived from Boss Group Ltd v. Boss France SA [1997] 1 WLR 351. There, Boss France commenced proceedings in France against Boss Group alleging breach of an exclusive distribution agreement. Boss Group responded by commencing proceedings in England against Boss France, seeking a declaration that there was no such agreement. The question was whether Boss Group could assert article 5.1 jurisdiction against Boss France in England. This court found a good arguable case that the primary obligations of Boss Group under such a contract, if one existed, would fall for performance in England. The real jurisdictional issue in the case, however, was not in identifying the obligation the question, but in whether it could be said that article 5.1 (which begins, “In matters relating to a contract”) could be relied on at all by a claimant, Boss Group, who was asserting that there was no contract. It was held that it could. Saville LJ said (at 357B/C):
“To my mind, in a case such as the present, the plaintiffs establish a good arguable case that there is a matter relating to a contract by relying on the fact that this is what the defendants are contending against them. Unless the defendants withdraw their contentions (which they have not done) it seems to me that they cannot challenge the jurisdiction on the basis that they should not be sued here because there is (contrary to those contentions) no contract. Once one removes the self-contradictory stance taken up by the defendants, it seems to me that it is self-evident that there are matters “relating to a contract” between the parties.”
[102]In the present case, however, the dispute is not whether or not there is a contract, for it is common ground that there is a contract between the parties, but what the nature of the contract is. It remains the case that it is necessary to consider the obligation in question by reference to Exel’s claim against Hi-Tec in this jurisdiction. Irrespective of the parties’ dispute as to the nature of the contract, the matter on which they are at odds with one another is whether Exel is liable for the loss of the goods in France. Indeed, if one considers Hi-Tec’s fax to Exel prior to Exel’s issue of its claim form in England, that dated 5 November 2004, it says nothing about delivery or non-delivery in England but complained of news that “the goods are missing” and that insurance was required. And even if one considers Hi-Tec’s French claim form – albeit that was after the issue of Exel’s English claim form – for any inference to be drawn from the former as to what Hi-Tec was alleging against Exel, the essence of it was that the goods had disappeared in France and jurisdiction was claimed against Exel in France under article 5.1 since Exel – “was called upon to provide its services on the French soil; it took over responsibility for the goods at ROISSY and was responsible for ensuring their transportation over French territory to the country of destination. Its provision was intended to take place in France.”[103]In any event, I do not think it is legitimate for Exel to ask for its claim form to be assumed to include a claim for non-liability under a contract of commission de transport simply on the basis that that is what has emerged as the critical issue between the parties. That involves three leaps. One is that the parties were, as of 11 November 2004, the date of Exel’s claim form, already at issue as to the form of their contract. There is no evidence that that was so. The second is that Exel’s claim form can be construed to include a claim in respect of a contract of commission de transport. I have already said that I agree with Aikens J in thinking that that is not possible. The third is that, even when those first two leaps have been made, the obligation in question is delivery in England. I have already stated my reasons for rejecting that submission.[104]In effect, Mr Kenny’s submission is that a claim form which asserts non-liability can be expanded, sub silentio, to embrace a repudiation of any liability of any kind which could possibly be asserted against the claimant and to insist that the obligation in question can be found accordingly. In my judgment, if that was so, it would entirely undermine the logic and purpose of article 5.1. It would enable any party to rush to court to make a claim for a declaration of non-liability in the widest possible form and then seek to find in such a claim form support for first seisure by means of an ex post facto rationalisation of the obligation in question.[105]In sum, I would conclude that there is no good arguable case for the assertion of jurisdiction in England over Hi-Tec on the basis of article 5.1 of the Brussels Convention.[106]It follows that Hi-Tec’s challenge to the jurisdiction of the English court must succeed.

Other matters

[107]In these circumstances, it is unnecessary to consider certain other matters which were disputed at some stage or other of the proceedings. In particular, there were interesting and intricate submissions regarding article 24 of the Judgments Regulation and the detailed provisions of CPR 6.19(1) and (1A).[108]As to article 24, Mr Graham relied on Exel’s application in Hi-Tec’s French proceedings to join the carriers and their insurers as third parties as a waiver of any challenge to French jurisdiction (see paras 33/34 above). The question here, it seems to me, is whether that step amounted, under French law, to an “appearance”, as defined in Elefanten Schuh GmbH v Pierre Jacqmain (Case 150/80) [1981] ECR 1671, where the European Court of Justice seems (at para 17) to contrast such an appearance with a challenge to the jurisdiction which “does not occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised”. However, such a question could not be determined without evidence of French law, which this court does not have, since the point is new to these proceedings. In these circumstances, I do not think the point is open to Hi-Tec, but in any event it has no need of it.[109]As to CPR 6.19, Mr Graham sought to show that, at the time of service of Exel’s claim form, it could no longer say that no proceedings between the parties concerning the same claim were pending in France, with the result that service without permission was no longer possible. On the other hand, Mr Kenny sought to show that these provisions did not fit or cover the particular case of a claim against a Danish party (domiciled in a “Convention territory”, see CPR 6.18(d)) and other proceedings pending in a “Regulation state” (see CPR 6.18(k)): since CPR 6.19(1) assumed that both defendant and any possible pending proceedings were both covered by the Brussels Convention, while CPR 6.19(1A) assumed that both defendant and any possible pending proceedings were both covered by the Judgments Regulation. It may be that these provisions will have to be given some further attention by the rule making bodies.

Conclusion

[110]In sum, for the reasons given above, in my judgment this appeal must be allowed. Exel has failed to make out a good arguable case under either CMR article 31.1, or under articles 2 or 5.1 of the Brussels Convention. Exel’s claim form will have to be set aside.[111]I agree.[112]I agree that the appeal should be allowed for all the reasons given by Rix LJ.

Cited in 6 later judgments