JTI POLSKA Sp. Z o.o. and others v Jakubowski and others

Under article 23.4 of the Convention on the Contract for the International Carriage of Goods by Road 1956, “other charges incurred in respect of the carriage” include excise duty arising when goods are stolen during carriage. The required connection may arise from the way in which the goods were carried, miscarried or lost. The charge must nevertheless be a charge, which excludes loss of bargain, lost profits and other ordinary consequential loss.

A final appellate court will not depart from a tenable precedent on the construction of an international convention merely because it might prefer another interpretation. Departure requires an additional justification, such as practical failure, manifest injustice, material changed circumstances or a need to restore international uniformity.

During international road carriage from Poland to England, thieves stole 289 cases of cigarettes. The theft caused the goods to be treated as released for commercial consumption, and HMRC assessed the cargo interests for £449,557 in excise duty. They sought reimbursement from the carrier under article 23.4 of the Convention on the Contract for the International Carriage of Goods by Road 1956.

The High Court, in [2021] EWHC 1465 (Comm), held that it was bound by James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141, which adopted a broad interpretation of article 23.4. It certified the case for a direct appeal to the Supreme Court.

The central issues were whether Buchanan was untenable or manifestly wrong and, if so, whether the Supreme Court should depart from it under the 1966 Practice Statement.

1. Appeal dismissed unanimously. Lord Hamblen, with whom Lord Reed, Lord Hodge, Lord Briggs, Lord Sales, Lady Rose and Lord Richards agreed, held that James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141 remained binding. Excise duty incurred because goods were stolen during road carriage was recoverable as an “other charge” under article 23.4 of the Convention on the Contract for the International Carriage of Goods by Road 1956.

2. The broad interpretation was tenable. The words “in respect of” were widely drawn and ordinarily meant “in connection with”. A loss occurring during road carriage because of the way in which that carriage was performed could be connected with the carriage. The competing narrow interpretation required additional words limiting recovery to charges arising from proper or normal performance.

3. The broad interpretation did not make all consequential loss recoverable. The loss had to constitute a “charge”. Claims for loss of bargain, expectation loss and lost profits therefore remained excluded by the concluding words of article 23.4. Excise duty was reasonably foreseeable, and the evidence showed no practical history of unforeseeable liabilities being recovered.

4. Treaties must be interpreted through the structured approach in articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969. Ordinary meaning, context, object and purpose form a single combined operation. Preparatory material may confirm an article 31 meaning without identifying a definite legislative intention. The stricter requirement that the material clearly and indisputably reveal such an intention applies when it is used to determine meaning.

5. The 1966 Practice Statement required more than persuading the present court that the earlier decision was wrong. A tenable construction should rarely be displaced, particularly in commercial law. Buchanan had not produced manifest injustice, practical market failure or unmanageable uncertainty. Carriers and cargo insurers already underwrote the risk of excise duty, and no international consensus favouring the narrow interpretation had emerged.

6. The Court of Appeal's statement in Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113 that Buchanan should not be applied more widely than precedent required was inappropriate and should not be followed. Any uniform change to exclude excise duty was a matter for amendment of the Convention by protocol.

1. United Kingdom Supreme Court: The carrier's appeal was dismissed unanimously. The broad interpretation of article 23.4 established by Buchanan was retained.
2. High Court: In [2021] EWHC 1465 (Comm), Judge Pelling KC held that Buchanan bound him to decide that the excise duty was recoverable. He granted a certificate for a direct appeal under section 12 of the Administration of Justice Act 1969.