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JTI POLSKA Sp. Z o.o. & Ors v Jakubowski & Ors
Factual and Procedural Background
The Respondents, international tobacco traders, contracted with the Appellant, a Polish road haulier, for the carriage of 1,429 cases of cigarettes from Poland to England in March 2019. While the vehicle was parked overnight at a motorway service station in The City, thieves stole 289 cases.
Because the goods were carried under the European excise-duty-suspension regime, the theft triggered a liability to excise duty. His Majesty’s Revenue and Customs assessed the second Respondent for duty of £449,557, which it paid. The Respondents then sued the Appellant under the Convention on the Contract for the International Carriage of Goods by Road 1956 (“CMR”) to recover, inter alia, that duty.
At first instance, Judge Pelling KC held himself bound by the House of Lords decision in Buchanan and awarded the excise duty. He nonetheless certified the case for a “leap-frog” appeal so that the Supreme Court could be invited to depart from Buchanan. Permission to appeal was granted, and the present judgment dismisses the appeal.
Legal Issues Presented
- Whether excise duty levied after theft of goods in transit is recoverable from the carrier under Article 23.4 of the CMR as “other charges incurred in respect of the carriage of the goods.”
- Whether the Supreme Court should exercise its power under the 1966 Practice Statement to depart from the House of Lords decision in Buchanan, which adopted a “broad interpretation” of Article 23.4.
Arguments of the Parties
Appellants' Arguments
- The natural and ordinary meaning of “other charges incurred in respect of the carriage” refers only to charges that would have been incurred had the carriage been properly performed (e.g., packing, insurance, quality certificates), not to excise duty triggered by theft.
- Article 6.1(i) of the CMR shows that “other charges” are those to be entered on the consignment note, again indicating routine carriage-related expenses.
- The structure and purpose of Chapter IV aim at certainty and limited, foreseeable liability; allowing excise duty—often exceeding the cargo’s value—defeats that purpose.
- Buchanan is demonstrably wrong, out of line with the majority of continental decisions, criticised academically, and should be overruled under the 1966 Practice Statement.
Respondents' Arguments
- The wording of Article 23.4 in both English and French is deliberately broad; “in respect of” (French: “à l’occasion du”) naturally covers charges arising because of the manner in which the carriage was performed.
- “Other charges” must have content separate from “carriage charges” and “Customs duties.” Excise duty is analogous to Customs duty and plainly foreseeable in carriage of alcohol/tobacco under duty-suspension regimes.
- Article 6.1(i) uses different, more restrictive language; had the drafters intended the same limitation in Article 23.4 they would have repeated it.
- No material change or market dysfunction has occurred since Buchanan; insurers underwrite on the basis that excise duty may be recoverable, and parties have not “contracted around” the decision.
- The absence of international consensus and the continued adoption of the broad view in several jurisdictions show that Buchanan remains a tenable interpretation that promotes uniformity as well as fairness.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141 | Adopts the “broad interpretation” of Article 23.4, allowing recovery of excise duty as an “other charge.” | Central precedent; Appellant sought its reversal but the Court reaffirmed it. |
| Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] QB 1270 | Criticised and sought to confine Buchanan; warned against extending the broad view. | Cited to show existing judicial scepticism; Supreme Court held the criticism did not justify overruling Buchanan. |
| Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 | Enables the Supreme Court to depart from its own or House of Lords precedent “when it appears right to do so.” | Applied; Court concluded criteria for departure were not met. |
| Fothergill v Monarch Airlines Ltd [1981] AC 251 | Endorses Vienna Convention Articles 31-32 as customary rules of treaty interpretation. | Relied on for the interpretative framework of international conventions such as the CMR. |
| CMA CGM SA v Classica Shipping Co Ltd (The CMA Djakarta) [2004] EWCA Civ 114 | Confirms structured approach to treaty interpretation under the Vienna Convention. | Cited as authority for interpretative methodology. |
| Chandler v Trinidad and Tobago [2022] UKPC 19 | Restates the high threshold for departing from precedent—must show it is “untenable.” | Applied in evaluating whether to overrule Buchanan. |
| Knauer v Ministry of Justice [2016] UKSC 9 | Emphasises that the Court should be “very circumspect” before invoking the 1966 Practice Statement. | Cited when considering whether to overturn the earlier authority. |
Court's Reasoning and Analysis
Judge Hamblen, delivering the judgment of the Court, employed the Vienna Convention methodology: ordinary meaning, context, and object-and-purpose considered “as a single combined operation.”
He accepted that powerful arguments support a narrow reading but held that the broad reading remains tenable because:
- The phrase “in respect of” is naturally wide—synonymous with “in connection with”—and easily accommodates charges arising from the manner of carriage, including theft-triggered excise duty.
- Article 23.4’s wording differs from Article 6.1(i); the drafters could have used the latter’s narrower formulation but did not.
- Criticisms that the broad view undermines certainty or insurance are not borne out in practice; insurers already price for potential excise-duty exposure, and parties do not attempt to contract around Buchanan.
- International jurisprudence is divided; absence of consensus militates against a unilateral shift that would itself diminish uniformity.
- Under the 1966 Practice Statement, more than mere doubt about correctness is required. Buchanan is not “manifestly wrong” or “untenable,” nor has a material change rendered it impracticable.
Consequently, the Supreme Court refused to depart from Buchanan and reaffirmed the broad interpretation.
Holding and Implications
APPEAL DISMISSED.
The Appellant remains liable for the excise-duty component (£449,557) under Article 23.4 of the CMR. The decision preserves the long-standing broad interpretation of that provision, leaving the risk of duty falling on carriers where theft occurs in transit. No new precedent is set, but the Court signals that any change to the compensation regime must come from multilateral amendment of the Convention rather than judicial reinterpretation.
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