Royal & Sun Alliance Insurance Plc & Anor v MK Digital Fze (Cyprus) Ltd. & Ors

For jurisdiction under CMR article 31.1, a claimant must show a good arguable case that the parties’ contract is carriage governed by CMR. The court must assess the whole evidential context. A CMR consignment note is prima facie evidence of the contract and cannot be treated as peripheral where direct evidence is absent. An inconsistent contractual case adopted in parallel proceedings may fundamentally undermine jurisdiction. Under the Brussels Convention, domicile requires more than the residence of a company’s directors. Article 5.1 jurisdiction turns on the obligation made the focus of the claim, not the contract’s characteristic obligation. A declaration concerning liability for loss during carriage does not make delivery at the intended destination the obligation in question. The appeal was allowed and the claim form set aside.

Royal & Sun Alliance Insurance plc and Exel Logistique SA brought English proceedings seeking declarations concerning liability for the theft of mobile phones during transport. Hi-Tec Electronics A/S had commenced related proceedings in France. The English claim was issued first, although the French claim was served first.

Aikens J held that the English court had jurisdiction under CMR article 31.1 and that the English proceedings had priority under article 30 of the Judgments Regulation: [2005] EWHC 1408 (Comm). The appeal concerned whether there was a good arguable case for a CMR contract and, alternatively, whether jurisdiction arose under articles 2 or 5.1 of the Brussels Convention.

The appeal was allowed unanimously. Rix LJ gave the leading judgment, with Maurice Kay LJ and Auld LJ agreeing. Exel’s claim form was to be set aside.

1. CMR jurisdiction. The claimant bore the burden of showing a good arguable case that the parties’ contract was a contract of carriage governed by CMR. The characterisation exercise required consideration of the factors identified in Aqualon [1994] 1 Lloyd’s Rep 669 and approved in Lukoil [1999] 2 Lloyd’s Rep 129. The judge below had overvalued incomplete evidence of the telephone conversation and undervalued the CMR note. Under article 9.1 of CMR, the note was prima facie evidence of the making and terms of the contract. The October notes, the charging structure and Exel’s position before the French court also supported Hi-Tec’s analysis that Exel acted as a commissionnaire de transport.
2. Exel’s adoption in France of the contractual analysis which excluded a CMR contract fundamentally undermined its inconsistent English case. On the evidence, Exel had failed to show a good arguable case for CMR jurisdiction under article 31.1. England was nevertheless the good arguable destination of the transport, but that did not cure the absence of a CMR contract. The article 31.2 lis alibi pendens issue therefore did not need to be decided.
3. Article 2 jurisdiction. Under articles 2 and 53 of the Brussels Convention and section 42(3) of the Civil Jurisdiction and Judgments Act 1982, a company may have an additional domicile where its central management and control is exercised in the United Kingdom. Residence of the directors and a registered address, without evidence of board meetings, business decisions, funds or business activity in England, did not establish a good arguable case of English domicile. The Rewia [1991] 2 Lloyd’s Rep 325 was not determinative because central management and control had not been disputed in that case.
4. Article 5.1 jurisdiction. The special jurisdiction in article 5.1 had to be interpreted restrictively. The obligation in question was the contractual obligation corresponding to the right on which the claim was based, not the obligation characteristic of the contract. The claim form focused on liability for the theft while the goods were in care, custody and transit. The relevant performance was therefore connected with France, not delivery in England. The claim could not be expanded retrospectively to encompass every possible obligation or to create first-seisin priority by ex post facto rationalisation. The alternative jurisdictional grounds consequently failed.

• Court of Appeal (Civil Division) allowed the appeal on 17 May 2006 and ordered that Exel’s claim form be set aside.
• Queen’s Bench Division (Commercial Court) Aikens J dismissed Hi-Tec’s challenge to English jurisdiction, holding that there was a good arguable case for a CMR contract and that the English proceedings had priority: [2005] EWHC 1408 (Comm) .