On 28 February 2023, in the case of JTI POLSKA Sp. Z o.o. and others v Jakubowski and others, the Supreme Court will be reviewing the House of Lords’ judgment in James Buchanan & Co. Ltd v Babco Forwarding & Shipping (U.K.) Ltd  regarding the liability to pay excise duty under the CMR.
The Buchanan v Babco decision
This longstanding judgment has been of considerable significance to those involved in the international road carriage of tobacco products, spirits and any other cargos which attract high rates of excise duty. Where such goods are moved under a duty suspension scheme (meaning that duty is only paid upon release of the goods into a relevant market) and those goods are stolen in transit, very substantial liabilities arise because the excise duty becomes immediately payable when the goods are stolen.
Article 23(4) of the CMR provides:
“In addition, the carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damages shall be payable”.
In Buchanan v Babco, a majority of the House of Lords (the predecessor of the Supreme Court) adopted a wide interpretation of the words “other charges incurred in respect of the carriage of the goods”. The carrier therefore had to pay the cargo owner, by way of damages, the limit of liability under Article 23 of the CMR and, in addition, the full value of the excise duty charged by the relevant tax authority to the cargo owner.
The issues to be considered
The decision in Buchanan v Babco has been subject to criticism by some academic and judicial channels - particularly the Dutch, Swedish and German courts - but also in the Court of Appeal in Sandeman Coprimar SA v Transitos y Transportes Integrales SL . That said, it has also found support in other jurisdictions (such as Italy, Belgium and Denmark) which have embraced the wide interpretation.
However, aside from the question of the damages recoverable under Article 23 of the CMR, a review of the Buchanan v Babco decision will inevitably raise other issues of significant importance. The speech of Lord Wilberforce in Buchanan v Babco is widely seen as providing valuable guidance on the approach of English Courts to interpreting international conventions (see, for example, Jindal Iron and Steel Co. Ltd. and Others v. Islamic Solidarity Company Jordan Inc. – the "Jordan II" ). Following such endorsement of the approach adopted by Lord Wilberforce, it will be interesting to see whether the Supreme Court considers that his conclusions were wrong!
The Supreme Court will also have to consider whether it is appropriate to disturb such a longstanding decision which relates to the interpretation of legislation and conventions (such as the CMR) in circumstances where the relevant legislative bodies have not taken the opportunity to amend or clarify the position since the decision was handed down.
Counsel for the Respondents are Stewart Buckingham KC and Ben Gardner of Quadrant Chambers. Instructing solicitors are Christopher Chatfield and Sara Askew of Kennedys.
A further update will follow the decision.