Hatzl & Anor v XL Insurance Company Ltd

Article 31 of the CMR is an exclusive jurisdictional code. Its references to the defendant must be construed purposively in the context of the contractual and geographical connecting factors specified by the Convention. They do not permit an insurer which has taken an assignment from a sender or consignee to create an additional forum solely through its own residence or principal place of business.

A literal reading which allowed that result would frustrate Article 31 by introducing an arbitrary and unconnected jurisdiction. The interpretation of an international convention begins with its language, but must be broad, purposive and informed by the Convention as a whole.

Goods were carried by road from Austria to Italy under the CMR and were stolen in Italy. The carrier and driver brought proceedings in England for a declaration of non-liability against the Austrian sender, the Italian consignee and their English insurer, XL. The insurer had obtained assignments of the sender’s and consignee’s claims.

XL challenged jurisdiction. On 2 July 2008, HH Judge Simon Brown QC, sitting as a designated Mercantile Judge in the Birmingham District Registry, held that Article 31(1)(a) permitted proceedings against XL because its principal place of business was in England. XL appealed. The central issue was whether an insurer-assignee was a “defendant” within Article 31(1)(a) so as to supply an additional jurisdiction.

Appeal allowed. The English court had no jurisdiction under Article 31(1)(a) of the CMR.

1. Lawrence Collins LJ held that Article 31 must be construed as an exclusive jurisdictional code. Although its natural language does not restrict a defendant to a carrier, the word “defendant” must be read purposively in the setting of the Convention. It extends to the parties to the contract of carriage, and probably to other persons to whom the CMR itself gives rights and duties. It does not extend to an insurer merely because that insurer has received an assignment from a sender or consignee.

2. The contrary construction would frustrate Article 31’s purpose of limiting proceedings to jurisdictions connected with the carriage dispute. It would permit an assignment to create a forum having no connection with the contract, the goods, the loss or the original parties. It could also multiply available jurisdictions where different cargo interests or assignees were based in different countries.

3. The linguistic point concerning a branch or agency did not assist XL. The words concerning the branch or agency qualified that connecting factor alone, rather than every reference to the defendant. The result followed instead from the Convention’s structure and purpose.

4. Jacob LJ agreed with the leading reasoning. He added that it would be absurd if jurisdiction depended on an insurer’s choice to take an assignment rather than pursue a subrogated claim in the insured’s name. Rix LJ also agreed and gave the additional reason that an assignee takes the rights, and the inherent limits on rights of suit, held by its assignor. An assignment could not expose the assignee to suit in a forum in which the assignors could not have been sued.

5. Accordingly, the judge’s order dismissing XL’s jurisdiction challenge could not stand.

• Court of Appeal (Civil Division) Allowed XL’s appeal and held that England lacked jurisdiction under Article 31(1)(a) of the CMR: [2009] EWCA Civ 223.
• Birmingham District Registry On 2 July 2008, HH Judge Simon Brown QC dismissed XL’s jurisdiction challenge, holding that Article 31(1)(a) applied because XL had its principal place of business in England.