ANDREA MERZARIO LTD. v. INTERNATIONALE SPEDITION LEITNER GESELLSCHAFT G.m.b.H. [2001] EWCA Civ 61

For the purposes of article 31(2) of the Convention for the International Carriage of Goods by Road 1956, an action becomes pending upon service of the originating process, rather than its mere issue or filing. Whether foreign proceedings have reached that stage is determined with the assistance of evidence about the relevant foreign law.

A claim for a declaration of non-liability and its mirror-image claim for damages arise on the same grounds when they rest on the same facts and rule of law. The majority further considered that a pending negative-declaration action can engage article 31(2). In that context, an enforceable judgment means one capable of being given effect, including through recognition. Those latter conclusions were not necessary to the disposition.

A contracting carrier engaged an Austrian company as subcontractor for the carriage of whisky from Scotland to Vienna. The whisky was stolen before leaving the United Kingdom. Having paid for the loss, the contracting carrier commenced an English claim for damages, an indemnity or a contribution under the Convention for the International Carriage of Goods by Road 1956.

The Austrian subcontractor had previously filed proceedings in Vienna for a declaration of non-liability. Those proceedings were filed before the English claim but served after the English claim had been issued and served. Longmore J held that the English court was competent under article 31(1)(b). The subcontractor abandoned its challenge to that ruling but contended on appeal that article 31(2) barred the English proceedings.

The central questions were when the Austrian action became pending, whether a negative-declaration action could bar a later claim for substantive relief, and whether the two actions were on the same grounds.

1. Appeal dismissed unanimously. All three members of the court held that the Austrian action was not pending for the purposes of article 31(2) when the English action was started. It had not then been served, whereas the English claim had both been issued and served.

2. Rix LJ, with whom Chadwick LJ and the Vice-Chancellor agreed on the dispositive issue, held that “pending” and “started” express distinct concepts. In the international context of lis pendens, pendency requires service of the originating process. Mere filing or issue is insufficient. The approach in Dresser UK Ltd v Falcongate Freight Management Ltd [1992] 1 QB 502, although developed under the Brussels Convention, provided persuasive guidance.

   An English court considering article 31(2) may determine, with the assistance of evidence about foreign law, whether the foreign proceedings have reached a state of pendency. The evidence showed that Austrian law also treated service as necessary. The Austrian proceedings therefore had no priority over the English action.

3. On the non-dispositive question concerning negative declarations, Chadwick LJ held that article 31(2) was capable of applying where the first action sought a declaration of non-liability. The Vice-Chancellor agreed, forming the majority on that issue. “Enforceable” should not receive a narrow, technical meaning limited to execution of money judgments. It meant capable of being given effect, which included recognition of a negative declaration.

   Rix LJ was inclined to uphold the contrary conclusion in Frans Maas Logistics (UK) Ltd v CDR Trucking BV [1999] 2 Lloyd's Rep 179. He relied principally on the language of enforcement and the potential limitation difficulties created by requiring a substantive claim to be advanced as a counterclaim. He expressly treated that conclusion as his opinion rather than his decision. The Vice-Chancellor and Chadwick LJ rejected that approach. Because the issue did not determine the appeal, the court recognised that its conclusion was not binding.

4. All three judges concluded that a negative-declaration action and a mirror-image damages claim arising from the same contract may be brought “on the same grounds”. The expression encompasses the facts and rule of law forming the basis of the actions. This conclusion was also non-dispositive.

5. The appeal was dismissed with costs. Permission to appeal was refused.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The Austrian proceedings were not pending under article 31(2) when the English action was started. The court also expressed non-dispositive conclusions concerning negative declarations and proceedings brought on the same grounds.

2. Commercial Court, Queen's Bench Division: Longmore J held that England and Scotland were within the same contracting country, the United Kingdom, for article 31(1)(b). He followed Frans Maas Logistics (UK) Ltd v CDR Trucking BV [1999] 2 Lloyd's Rep 179 on the remaining issues, which were reserved for appeal. The challenge to his article 31(1)(b) ruling was abandoned in the Court of Appeal.