Rosewood Trucking Ltd. v Balaam

Under Article 37 of the Convention on the Contract for the International Carriage of Goods by Road, a successive carrier may recover compensation only where it paid that compensation in compliance with the Convention. A payment made solely under a separate sub-contract between carriers does not satisfy that requirement. Article 40 permits carriers to agree different arrangements between themselves, but it does not convert a contractual payment into a Convention payment or create a recovery right against a carrier who was not party to the contract. A carrier should protect itself by contractual provisions, assignment or, where available, subrogation.

P&O Ferrymasters contracted to carry television sets from Spain to England and sub-contracted the carriage through Rosewood Trucking Ltd. to Brian Balaam. Balaam’s vehicle and the goods were stolen before delivery. P&O paid the sender’s claim, and Rosewood indemnified P&O under their sub-contract. Rosewood then sought recovery from Balaam under Article 37, without an assignment or subrogation.

The recorder held that Rosewood’s payment was made under its contract with P&O rather than in compliance with the Convention. Rosewood appealed. The central issue was whether Article 37 permitted a carrier to recover a contractual indemnity payment from the carrier responsible for the loss.

1. Appeal dismissed. Tuckey LJ held, with Neuberger LJ agreeing, that Rosewood had not paid compensation in compliance with the provisions of the Convention. Its payment to P&O was made in compliance with the obligations assumed under its sub-contract.
2. Chapter 6 of the Convention establishes a complete regime for carriage by successive carriers. It creates a statutory quasi-contractual nexus between the sender and each carrier and defines the carriers’ rights against one another. Rosewood was a successive carrier, but under that regime it had no liability to the sender or to P&O.
3. Article 37(a) makes the carrier responsible for the loss solely liable for the compensation, whether paid by that carrier or by another carrier. It did not enable Rosewood to pass on its separate contractual liability to Balaam, who was not a party to the sub-contract.
4. Article 40 permits carriers to agree provisions differing from Articles 37 and 38. It does not make a payment under those contractual arrangements a payment in compliance with the Convention, or permit reliance on Article 37 after contracting out of it.
5. The result was unfortunate, because Balaam would have been liable had the sender or P&O sued him. Rosewood could have protected itself by its sub-contract, by taking an assignment of P&O’s claim, or possibly by subrogation. The appeal was dismissed. Costs were assessed at £5,750.

• Court of Appeal (Civil Division): dismissed Rosewood’s appeal on 4 November 2005.
• High Court Civil Division: Mr Recorder Pooles QC held that Rosewood’s payment was not made in compliance with the Convention and granted permission to appeal.