Scottish Court of Session Decisions

The pursuers (Compaq Computer Manufacturing Limited) are the successors to the rights and liabilities of Digital Equipment (Scotland) Limited. In the pleadings the term "the pursuers" is used as meaning Digital Equipment (Scotland) Limited. I shall adopt that terminology. The defenders are a limited company with a place of business in Paisley. The third parties, referred to as "Fedex", are a company that carries cargo and, in the present case, entered into a contract with the defenders for the carriage of the cargo with which the case is concerned.

The pursuers and the defenders entered into contracts for the carriage of goods from the United States of America to Scotland. Parties are agreed that the contracts for the carriage of such cargo from the United States of America to Scotland were governed by the Warsaw Convention, as amended by the Guadalajara Convention of 1962. The pursuers aver, "The defenders were the carriers in terms of said contracts. This averment is echoed by a further averment, "The defenders were the 'contracting' carriers as defined by the Convention. The pursuers were the consignees of said cargo." In further averments relating to the matter of jurisdiction, the pursuers also aver, "... the place of destination for the goods carried by the defenders was Scotland. This Court accordingly has jurisdiction in terms of Article 28(1) of the Convention."

In Article 2 of the Condescendence the pursuers aver, "In or around October 1996, the pursuers contracted with the defenders whereby the defenders agreed to carry cargo, namely 1440 Seagate Disc Drives, on behalf of the pursuers, from the United States of America to Scotland." Before this court, the parties were agreed as to the text of the Conventions that applied to the circumstances of the present case. The relevant parts of the text of the Warsaw Convention, as amended, are to be found in Part B of Schedule II to the Carriage by Air Act (Application of Provisions) Order 1967 (1967 No. 480). Article 2(1) of the Order applies the Interpretation Acts to the interpretation of the Order. Article 26 of the Warsaw Convention reads as follows:

Article IV of the Guadalajara Convention is in the following terms:

In that Convention, Chapter V, B, Article 1(b) the term "contracting carrier" is defined to mean

The words "actual carrier" are defined to mean

The goods were disc drives. It is averred that,

Despite these averments, the parties were agreed at the bar of the court that the cargo had in fact been flown from Boston to Stansted Airport in England by the third parties and that the cargo was then delivered to the defenders who conveyed it to Prestwick Airport and delivered it there to the pursuers. Both the pursuers and the defenders had warehouse facilities there.

Mr Tyre, for the defenders, argued and Mr Philip Brodie, for the pursuers, accepted that Article 26 of the Warsaw Convention imposed a formal requirement of notice in writing if it was to be claimed that the cargo had sustained damage. The issue before me in the procedure roll debate was whether or not such a notice in writing had been timeously given.

There are two aspects to this issue. Firstly, the pursuers aver specifically at page 15D-E that notice was given. The averments read:

The defenders argued that these averments were irrelevant because, properly read, they failed to provide a sufficiently and properly specified basis for a submission that written notice had in fact been given by the pursuers to the defenders within the relevant period. After due consideration, Mr Brodie recognised that his pleadings could be improved to meet this criticism. He accordingly tendered at the Bar of the court a draft of a proposed Minute of Amendment. Mr Tyre invited the court to allow him time to consider the new averments. In the circumstances, as the second point argued before the court had to be decided now, it was agreed that I should issue an Opinion dealing with that second point and put the case out By Order to allow for further procedure in relation to the proposed Minute of Amendment. In the circumstances I need say nothing further about that aspect of the case at this stage.

I turn to the second point, which raised an issue of interpretation of the Conventions.

I was referred by Mr Tyre to a number of authorities bearing upon the correct approach to the interpretation of the Conventions. The case of Fothergill v Monarch Airlines Limited [1981] AC 251 was cited as authority for the proposition that the correct approach to the interpretation of the enactment bringing the Conventions into UK law was to look for the purpose of the provision to be construed. In particular reference was made to the speech of Lord Wilberforce, at page 272, in relation to the purpose of Article 26 of the Warsaw Convention. Further support for the view that a purposive interpretation was appropriate was found in the speech of Lord Diplock at page 279 and in the speech of Lord Fraser of Tullybelton at pages 285-6. Reference was also made to the observations of Lords Wilberforce and Fraser of Tullybelton as to the exact purposes of Article 26. Mr Tyre also referred me to the case of Abnett v British Airways Plc 1997 SC (HL) 26 and to the speech of Lord Hope in that case. In the passage headed "Conclusion" on pages 44-45 his Lordship referred to the need to look at the objects and structure of the Convention, which was designed to achieve a uniform international code, and the recognition that underlying the Convention was the principle of freedom of contract. The Convention was not designed to provide remedies against the carrier to enable all losses to be compensated but was designed instead to define those situations in which compensation was to be available.

Mr Brodie accepted that the correct approach was to adopt a purposive construction. In view of this, and having regard to the limited character of the debate, it is unnecessary for me to comment further upon the authoritative guidance given in Abnett and Fothergill.

The argument that Mr Brodie presented is not capable of much greater elaboration than appears on page 16 of the Closed Record a passage from Article 3 of the Condescendence in the following terms:

He argued that, as it was a matter of concession that the defenders had complained in writing to the third parties about damage to the cargo and had done so within seven days of delivery of the cargo by the third parties to the defenders, then nothing more was required. There had been a complaint in writing within the relevant timescale. It had been made to the actual carrier. It had been made by "the person entitled to delivery". The defenders were a "person entitled to delivery". It was submitted that, although the pursuers were entitled to delivery, so also were the defenders: more than one person might be entitled to delivery. The defenders' entitlement derived from their contractual arrangements with the actual carrier, Fedex. In this regard, reference was made to paragraph (565) in Volume VII of Shawcross and Beaumont (4^th Edition). Reference was also made to a commentary by unidentified authors upon Article 26 of the Convention in Lloyds Shipping Law Library. The reference was to the notes headed "5.1.3.24.2 Notes". That commentary includes the statement,

In response to this argument, Mr Tyre submitted that it was not consistent with the terms of either Convention to treat the carriers as "the person entitled to delivery". If the defenders could be both "the person entitled to delivery" and the "contracting carrier" at the same time, then it might logically be said that the defenders could have given notice to themselves and thus satisfied the terms of Article 26. However, the Conventions properly drew a distinction between the person entitled to delivery and the carriers. If it had been intended to include the defenders, whose entitlement to delivery from Fedex rested upon a separate contract with Fedex, then the expression used in Article 26(2) would have been not "the person entitled to delivery" but "a person entitled to delivery". The underlying idea of the Convention was that the carrier had a responsibility to deliver the cargo to "the person entitled to delivery" and that person, in the present case, was the pursuers, not the defenders.

In this context, neither party made reference to the averments which I have quoted earlier by the pursuer to the effect that "the defenders were the carriers in terms of said contracts" or to the words "... the place of destination for the goods carried by the defenders was Scotland" or the pursuers' averment "The defenders were the 'contracting' carriers as defined by the Convention. The pursuers were the consignees of said cargo." Nor, in this connection, did either party make anything of the defenders' admission that the cargo had been "delivered by the third parties to the defenders" in Answer 3. I do not attach any significance to these averments in relation to the question of interpretation.

No authority was quoted by either party in relation to the correct meaning of the expression at the heart of this debate namely, "the person entitled to delivery". Looking at the Warsaw Convention, as amended, I observe that Chapter III is headed "Liability of the Carrier". Article 18 specifically makes the carrier "liable for damage sustained in the event of the destruction or loss of, or damage to, any registered baggage or cargo ...". Article 19 makes the carrier liable for damage occasioned by delay. Article 20 excuses the carrier from liability in certain circumstances. Article 21 allows for the exoneration of the carrier in whole or in part from his liability. Other Articles make appropriate provision in relation to damages and proof. Although I was not referred to Article III of the relevant parts of the Guadalajara Convention as applied by Schedule 2, I observe that that Article provides,

There is a converse provision in Article III, paragraph 2. This, in my view, gives a context for Article IV which has already been quoted. It appears to me that the whole scheme of the Conventions is to identify three separate and distinct persons in a transaction of the present kind: the person entitled to delivery, the contracting carrier, and the actual carrier. Any loss resulting from damage to the cargo is suffered not by the contracting carrier or by the actual carrier but by the person entitled to delivery of the baggage or cargo, the consignee. Article 28 contemplates an action of damages being brought before the court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made. These provisions appear to me to be strongly consistent with the notion that the carrier may be sued in respect of the damage by some person other than the carrier. As I read the provisions, they mean that the owner or consignee is the person who is entitled to make a claim, though not bound to do so; but, if he seeks to make a claim, he must do so by following the peremptory provisions in Article 26 as to timeous notice in writing. The persons envisaged in the notes in Lloyds Shipping Law Library 25.1.3.24.2 are persons whose right derives from the consignor or the consignee, or is otherwise the person who may suffer the loss, if any, flowing from the damage to the goods in transit. It is perfectly possible to envisage circumstances in which the person who owns the goods, or is the consignee, and who suffers the loss if the goods are damaged, decides not to make a claim against the contracting carrier or the actual carrier. His loss might be covered by insurance or otherwise compensated for. The loss might be so trivial as not to warrant a claim. The carrier, whether the contracting carrier or the actual carrier, might well have notice of the damage but have no notice of any intention by anyone to make a claim against either of them in respect of that damage.

Although, in the absence of any authority, the matter is not entirely free from difficulty, I am of the view that the scheme of the Conventions is such as to envisage that the carrier, whether the contracting carrier or the actual carrier, cannot be the person entitled to delivery for the purposes of a claim for damage to the cargo, albeit, as between the contracting carrier and the actual carrier, the actual carrier has undertaken to deliver the goods to the contracting carrier, who has the responsibility for the ultimate delivery to the consignee.

In the light of this conclusion, the correct course for me to follow would appear to be to sustain the second plea-in-law for the defenders to the extent of upholding the submission that the averments at the end of Article 3 of the Condescendence for the pursuers are irrelevant. Those are the averments beginning with the words "The defenders complained in writing to the third parties" and concluding with the words "Article 26(2) of the Convention", quote above. However, in view of the request of the pursuer for an opportunity to amend I have decided at the present stage not to write an interlocutor sustaining that plea-in-law. The case must be put out By Order and the question of what plea-in-law to be sustained should be discussed at that stage.

The third parties appeared at the Bar at the commencement of the procedure roll but indicated that they had no separate argument to present at the present stage; but would support the argument presented by the defenders in relation to the absence of timeous notice. As there was nothing to add to the argument which Mr Tyre was going to submit on behalf of the defenders, Mr Connell, solicitor advocate, asked leave and was given leave to withdraw at the commencement of the procedure roll hearing. It should be added for completeness that the pursuer accepted certain other criticisms which were contained in the Notes of Argument and was proposing to tender amendments in order to meet the criticisms there contained. Accordingly a question of expenses might arise in which the third parties, among others, might be interested.