Hatzl & Anor v XL Insurance Company Ltd

The Court of Appeal allowed the insurer's appeal and held that Article 31(1)(a) of the CMR does not extend the list of competent fora to include the domicile or principal place of business of an assignee/insurer who has taken an assignment of the shipper's or consignee's rights. The court applied a broad, purposive construction of the Convention read as a whole and concluded that the connecting factors in Article 31 are primarily directed to the parties contemplated by the Convention (carriers, senders and consignees and those to whom the Convention ascribes rights or duties) rather than to assignees/insurers as a class.

The court rejected a purely literal construction which would treat any named defendant as falling within Article 31(1)(a) simply because the defendant is resident or has its principal place of business in a Contracting State. The judge emphasised concerns about forum-shopping, the special role of negative declarations in CMR litigation and the need to give Article 31 a purposive operation that preserves its channeling function. The Court concluded that XL, as assignee/insurer, did not thereby render England a competent forum under Article 31(1)(a).

This appeal concerned jurisdiction under the Convention on the Contract for the International Carriage of Goods by Road (CMR) as given force in the United Kingdom by section 1 of the Carriage of Goods By Road Act 1965. The claimants, a carrier and its driver, sought a declaration in England that they were not liable for goods stolen in transit; XL (the insurer of the consignor and consignee) was sued as a defendant because it had taken assignments of the consignor's and consignee's rights.

Nature of the claim: The respondents sought a declaration of non-liability in England. XL contended that Article 31(1)(a) did not permit the English courts to be treated as a competent forum merely because the defendant was resident in England when that defendant was sued only as assignee of the consignor/consignee.

Procedural posture: The claimants issued proceedings in the Birmingham District Registry. HH Judge Simon Brown QC held that assignees are among the persons concerned by the CMR (section 14(2) of the 1965 Act) and that Article 31(1)(a) gave the English court jurisdiction over XL. XL appealed to the Court of Appeal.

Issues framed:

• Whether the expression "the defendant" in Article 31(1)(a) of the CMR includes an assignee/insurer sued in its capacity as assignee of a consignor or consignee.
• Whether an assignee may rely on the same territorial limits on suit as its assignor (analogy with arbitration/jurisdiction clauses and assignment).
• The proper approach to interpretation of Article 31(1)(a) in the context of forum-shopping and negative declarations.

Court's reasoning: The Court examined the language of Article 31, its structure and purpose and relevant provisions of the 1965 Act. Although a literal reading might be thought to include a defendant who happens to be an assignee, the court adopted a purposive construction. Article 31 is a self-contained code to channel claims to fora related to the contract and to parties contemplated by the Convention. To interpret "defendant" as including assignees/insurers would undermine the channeling function, permit artificial forum-shopping and create arbitrary jurisdictional links remote from the contract or the events in dispute. The court therefore held that Article 31(1)(a) does not confer jurisdiction on the courts of the domicile or principal place of business of an assignee/insurer simply by reason of assignment. The court also noted existing practice and concerns about negative declarations and wilful misconduct under Article 23/29 of the CMR which make forum-shopping a realistic concern.

Result: The Court allowed the appeal and concluded that the English court did not have jurisdiction under Article 31(1)(a) in respect of XL.

Appeal allowed. The Court of Appeal held that Article 31(1)(a) of the CMR should be given a purposive construction: its connecting factors are intended principally for the parties contemplated by the Convention (carriers, senders, consignees and those to whom rights/duties are ascribed), and do not extend to permit jurisdiction over an assignee/insurer solely because it is resident or has its principal place of business in a Contracting State. Allowing otherwise would frustrate the Convention's channeling function and facilitate forum-shopping, particularly by use of negative declarations.

Appeal from a decision of HH Judge Simon Brown QC sitting as a designated Mercantile Judge in the Birmingham District Registry (Case No: 8BM40028). On 2 July 2008 the judge held that the English court had jurisdiction under Article 31(1)(a) of the CMR; the Court of Appeal allowed XL's appeal on 19 March 2009.