Jurisdiction of the court in a case concerning international transport
Diary number: S2015/421
Issue date: 19.2.2019
Given after the preliminary ruling of the European Court of Justice (Judgement of 11 July 2018, Zurich Insurance and Metso Minerals, C-88/17, EU:C:2018:558).
Background to the case
Consignor A and haulier B had concluded a contract for the carriage of a cylindroconical crusher (referred to below as “crusher") from Pori (Finland) to Sheffield (United Kingdom). The crusher had first been transported on the chassis of a lorry from Pori to Rauma harbor (Finland), where it had been unloaded from the lorry and driven onto a ship under its own power. After having been transported by sea to the port of Hull, the crusher had been driven off the ship, again under its own power, and had then loaded onto another lorry. The crusher had been dispatched from Hull by road, but it had disappeared before being delivered to the consignee in Sheffield.
Insurance company C had reimbursed A the value of the crusher, less the excess provided for by the insurance contract.
By their action brought before the Satakunta District Court, C and A requested that B be ordered to pay them as damages a sum equivalent to the value of the crusher. B’s primary defence was that the action was inadmissible because the court lacked jurisdiction. B asserted that the English court had jurisdiction. The District Court proceeded to hear the case on the merits and ordered B to pay the sum claimed in the action. On the appeal of B, the Court of Appeal held that the Finnish court did not have jurisdiction, and dismissed the action as inadmissible.
Provisions on the jurisdiction of the court
The Supreme Court deemed that the case was one of civil and commercial law which falls within the scope of application of Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (referred to below as the Brussels I Regulation). Therefore in principle the question of jurisdiction was to be assessed on the basis of the provisions of said Regulation.
According to article 71(1) of the Brussels I Regulation, this Regulation shall not affect any conventions to which the Member States are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. The Supreme Court noted that the 1956 Convention on the Contract for the International Carriage of Goods by Road (the CMR), to which both Finland and the United Kingdom are parties, is such a special convention. According to the case law of the Court of Justice of the European Union, in cases where a legal dispute falls within the scope of application of both the Brussels I Regulation and the CMR, a Member State may, in accordance with article 71(1) of that Regulation, apply the rules concerning jurisdiction laid down in article 31(1) of the CMR (judgment of 4 September 2014, Nickel & Goeldner Spedition, C-157/13, EU:C:2014:2145).
The provisions of the Finnish Road Transport Contract Act concerning international transport are based on the CMR. According to section 1 (1) of the Road Transport Contract Act, the Act applies to a contract on the carriage of goods by motor vehicle in Finland (domestic transport) or between Finland and a foreign country, or between foreign states, at least one of which is a party to the CMR (international transport).
The Supreme Court held that, in the event that a dispute was deemed not to fall within the scope of application of the CMR, the case had to be assessed on the basis of the rules of jurisdiction laid down in the Brussels I Regulation. Article 23 (1) of the Regulation provides that where the parties, at least one of which is domiciled in a Member State, have agreed that a court or courts of a Member State shall give judgment in a dispute or disputes arising out of a particular legal relationship, said court or courts of that Member State shall have jurisdiction to decide the case. Unless the parties have agreed otherwise, jurisdiction is exclusive. The Regulation also provides for the formal requirements for such an agreement.
The Supreme Court noted that if it is deemed in the case that no agreement on the competent court meeting the requirements of Article 23 of the Brussels I Regulation has been made, jurisdiction may be based on Article 5 of the Brussels I Regulation, paragraph 1(a) of which provides that an action relating to a contract may be brought in a court with jurisdiction over where the obligation underlying the claim has been fulfilled or is to be fulfilled. The second indent of point (b) provides that, unless otherwise agreed, for the purposes of the application of this provision and in respect of services, the place of performance of the obligation giving rise to the claim is the place in the member state where, according to the contract, said services had been performed or were to be performed.
International transport according to the CMR and the Road Transport Contract Act
The Supreme Court noted that the transport contract between A and B concerned a so-called combined transport operation, in which the overall performance of transport consists of separate portions performed by different modes of transport. In the present case, the combined transport had been made up of road transport in Finland, sea transport from Finland to England and road transport in England.
The Supreme Court noted that neither the Road Transport Contract Act or the CMR take a clear position on whether they apply to combined transport that crosses national frontiers and in which the goods are transported in part by motor vehicle and in part by another mode of transport so that the goods are unloaded from a motor vehicle for example for the duration of transport by sea.
The Supreme Court further noted that, according to the preambular paragraph of the CMR, the purpose of the Convention is to standardize the conditions governing the contract for the international carriage of goods by road. The Convention does not contain explicit provisions on combined transport, with the exception of the specific situation provided for in Article 2. In the signing protocol to the Convention, the contracting parties had undertaken to enter into negotiations to conclude a convention on combined transport contracts. These considerations supported the conclusion that road haulage operations within a single country included in combined transport such as was involved in the present case are not covered by the Agreement.
The Supreme Court noted that the court praxis in other states that are parties to the CMR is not completely uniform in respect to how they assess the application of the CMR to combined transport. However, the legal praxis that was considered by the Court of Appeal in its judgment or that had been presented by the parties in this case to the Supreme Court had not reached the interpretation that the CMR would apply to a road haulage operation within a single country that was part of combined transport, such as was involved in the present case. Also in the jurisprudence on the CMR there was more support for the view that the provisions of the CMR would not apply to transport similar to what was involved here.
Therefore the Supreme Court held that the first road transport of the crusher had been concluded in the port of Rauma when the crusher had been driven under its own power on board the vessel that was to be used for sea transport, and that the road transport in England had been a separate stage in the transport. Thus, the road transport from Pori to Rauma was to be deemed domestic transport within the meaning of the Road Transport Contract Act. Also, no international border had been crossed between Hull harbour and Sheffield, and therefore this had not been international transport. Consequently, the Road Transport Contract Act, which corresponds to the CMR, was not applicable to the road haulage stage in England, and the jurisdiction of the court could not be based on the Road Transport Contract Act.
Jurisdiction based on an agreement on jurisdiction
In the case, B had argued that the parties to the contract had agreed on the application of the BIFA conditions, and that these conditions included a mandatory provision on jurisdiction, according to which the competent court was in England. The Supreme Court held that the parties had not agreed on BIFA-compliant jurisdiction in accordance with article 23 of the Brussels I Regulation.
Jurisdiction in cases relating to transport service contracts under Article 5 of the Brussels I Regulation
The Supreme Court referred the following question to the Court for a preliminary ruling:
“How are the place or places where the service is provided to be determined in accordance with the second indent of Article 5(1)(b) of Council Regulation (EC) No 44/2001 in a case involving a contract for the carriage of goods between Member States in which the goods are conveyed in several stages and by different means of transport?"
In its judgment of 11 July 2018 in Zurich Insurance and Metso Minerals, C-88/07, EU:C:2018:558, the Court replied to the request of the Supreme Court for a preliminary ruling as follows:
“The second indent of Article 5(1)(b) of the Brussels I Regulation must be interpreted as meaning that, in the context of a contract for the carriage of goods between Member States in several stages, with stops, and by a number of means of transport, such as that at issue in the main proceedings, both the place of dispatch and the place of delivery of the goods constitute places where transport services are provided, for the purposes of that indent."
The Supreme Court held that, as was apparent in the reply of the Court of Justice to the request for a preliminary ruling, the second indent of Article 5 (1) (b) of the Brussels I Regulation was to be interpreted as meaning that the place of performance of the contract for the carriage of goods between Member States such as that involved in the present case was the place of dispatch and the place of delivery of the goods.
The crusher had been shipped from Pori, which belonged under the jurisdiction of the Satakunta District Court. Contrary to the finding of the Court of Appeal, the Satakunta District Court had therefore had jurisdiction on this basis to consider the action.
The Supreme Court overturned the decision of the Court of Appeal and referred the case back to the Court of Appeal.