Fujitsu Computer Products Corp & Ors v Bax Global Inc & Ors

By a House Air Way Bill HAWB MEH031350 dated 12^th September 2001(“the HAWB”) Bax Global Inc (“Bax”) acknowledged the shipment of a consignment of 2,178 kg of hard disk drives which were to be carried by air from Manila in the Philippines to Glasgow. Fujitsu Computer Products Corp., the first claimant, was the shipper and Fujitsu Europe Ltd., the third claimant, was the consignee. The contract of carriage, which was between one or other of the Fujitsu claimants, (the second claimant is Fujitsu Limited) and Bax, was governed by the Warsaw Convention with the Amendments made by the Hague Protocol (“Warsaw-Hague”), which is set out in Schedule 1 to the Carriage by Air Act 1961. Bax subcontracted the carriage to Emirates, the airline. The consignment was stolen. Subject only to proof of title to sue Bax is liable to one or more of the claimants pursuant to Article 18 of Warsaw-Hague.

The claimants say that the theft was either an “inside job” or that the security was so lax that the loss can be said to result from an act or omission of the carrier, its servants or agents, done with intent to cause loss, or recklessly and with knowledge that damage would probably result. If so, by virtue of Article 25 of the Convention, Bax will not be entitled to limit their liability under Article 22(2), and, subject to proof of quantum and title to sue, the claim is worth about US $320,000. If not, the question, which is the preliminary issue that I have to decide, is whether the HAWB:

“failed to comply with the notice requirements of Article 8(c) of [Warsaw-Hague] so that by virtue of Article 9 the defendant is unable to rely on the limitation provisions of Article 22”.

Warsaw-Hague provides as follows:

“Article 8

The air waybill shall contain

(a)

an indication of the places of departure and destination;

(b)

if the places of departure and destination are within the territory of a single High Contracting Party, one or more agreed stopping places being within the territory of another State, an indication of at least one such stopping place;

(c)

a notice to the consignor to the effect that, if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers in respect of loss of or damage to cargo.”

Article 9

If, with the consent of the carrier, cargo is loaded on board the aircraft without an air waybill having been made out, or if the air waybill does not include the notice required by Article 8, paragraph (c), the carrier shall not be entitled to avail himself of the provisions of Article 22, paragraph (2).”

That is the English text. In the event of any inconsistency, the French text prevails: Corocraft Ltd v Pan American Airways Inc [1969] 1 QB 616. The French text of Article 8(c) is as follows:

“(c)

un avis indiquant aux expediteurs que, si le transport comporte une destination finale ou une escale dans un pays autre que le pays de depart, il peut etre regi par la Convention de Varsovie qui, en general, limite la responsabilite des transporteurs en cas de perte ou d’avarie des merchandises”

A potential inconsistency lies in the fact that “en general” has beentranslated into English asin “in most cases”.

The claimants contend that the HAWB does not contain a notice to the effect specified in Article 8(c). They say that what is needed is a self-contained and free standing section of the air waybill setting out the information required. Bax say that it is sufficient that the information required by Article 8(c) is contained somewhere within the HAWB, so that anyone who cares to read it is given notice of it, and that such information is, in the present case, contained in the conditions on the reverse of the HAWB, taken with these words on the face of the bill:

“It is agreed that the goods herein are accepted in good order and condition (except as noted) SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. THE SHIPPER’S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILTY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental charge if required”.

As between the parties the point at issue is a technical one. Neither side has the advantage of obvious merit. Fujitsu are a very large organisation. I have little doubt that they and, if they are concerned, their insurers, are well aware that air carriers are, under the Convention, usually entitled to limit their liability save in exceptional circumstances, unless a special declaration of interest is made. Mr John Russell, on their behalf, candidly accepted that the claimants had not been in any way prejudiced by the form of the waybill, or lured into a contract that they would not otherwise have made. Nevertheless, if the requisite notice has not been given in the waybill, it is no answer that the recipient knew what the notice would have told him if it had been there.

On the other hand, the reason why Bax used the form of air waybill that they did is a mystery. IATA has a recommended form of waybill. It contains on its face wording almost identical to that set out in paragraph 5 above, with the addition of another sentence not presently material. On the reverse of the waybill, at the top, immediately above the Conditions of Contract are the following words:

“NOTICE CONCERNING CARRIER’S LIMITATION OF LIABILTY

IF THE CARRIAGE INVOLVES AN ULTIMATE DESTINATION OR STOP IN A COUNTRY OTHER THAN THE COUNTRY OF DEPARTURE, THE WARSAW CONVENTION MAY BE APPLICABLE AND THE CONVENTION GOVERNS AND IN MOST CASES LIMITS THE LIABILITY OF THE CARRIER IN RESPECT OF LOSS, DAMAGE OR DELAY TO CARGO TO 250 FRENCH GOLD FRANCS PER KILOGRAM, UNLESS A HIGHER VALUE IS DECLARED IN ADVANCE BY THE SHIPPER AND A SUPPLEMENTARY CHARGE PAID IF REQUIRED. THE LIABILTY LIMIT OF 250 FRENCH GOLD FRANCS PER KILOGRAM IS APPROXIMATELY USD 20.00 PER KILOGRAM ON THE BASIS OF USD 42.22 PER OUNCE OF GOLD”.

Bax did not use the IATA form. Nor did it use a form of its own which contains on its face, buried in some wording, the words “Principal’s attention is drawn to the notice in carrier’s conditions concerning his (sic) limitation of liability”. On the reverse of this waybill at the top left hand side, above the conditions, is a notice in the IATA form, save that the words below the heading are not all in capital letters. Whether the failure to use this Bax form was by accident or design is not apparent. But the fact that Bax did not did do so does not determine whether the form that they did use was non-compliant.

The issue that I have to decide, upon which I was told there is no reported authority, may have a wider significance. Article 3 of Warsaw-Hague prescribes the contents of a passenger ticket. By Article 3(1)(c) the ticket is to contain:

“(c)

anotice to the effect that, if the passenger’s journey involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers for deaths or personal injury and in respect of loss of or damage to baggage”

Article 4 prescribes the content of the baggage check, which by Article 4(1)(c) is to contain

“(c)

anotice to the effect that, if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers in respect of loss of or damage to baggage.”

As can be seen the language of Article 4(1)(c), and the relevant part of Article 3(1)(c) is the same as that of Article 8 (c) save for the addition, in the latter, of the words “to the consignor” after “a notice” and the use of the word “cargo” instead of “baggage”. Articles 3(2) and 4(2) provide that, if the passenger ticket or baggage check does not include the notice required by paragraph (1)(c) of the respective Articles, the carrier cannot avail himself of the limitation provisions of Article 22.

Prior to its amendment by the Hague Protocol 1955, the Warsaw Convention (“Unamended Warsaw”) contained in Article 8(q) the following provision:

“The air waybill shall contain the following particulars:

…

(q)

a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention”.

As appears from the lettering of that sub-paragraph the statement was one of 17 matters particulars of which were required to be stated in the air waybill. Article 8 (q) was particularly troublesome to air carriers because whether or not the carriage was subject to Unamended Warsaw was not necessarily easy to decide. If the carriage was so subject, but the carrier failed to say that it was, Article 9 provided that the carrier was not entitled to avail himself of the limitation provisions of the Convention so a clerical error could have very serious consequences. A means of escaping from this dilemma would be to adopt a single form of air waybill which stated that the carriage was subject to the Convention – whether it was or not. That would, however, mean that, if the carriage was not so subject, the airway bill would be misleading.

That problem wasmet by the use of a condition in the following or similar form:

“Carriage hereunder is subject to the rules and limitations relating to liability established by [Unamended Warsaw] unless such carriage is not international carriage as defined by the Convention”.

In Samuel Montagu Ltd v Swiss Air Transport Co Ltd [1966] 2 QB 306 the Court of Appeal considered an almost identical clause. In that case the plaintiff contended that the “unless” clause meant that the air waybill did not comply with Article 8 (q) of Unamended Warsaw, so that the Article 22 limitation on its right to receive the full value of four lost boxes of gold was inapplicable. Lord Denning disposed of that contention in these terms:

“I do not think we should give a strict interpretation to article 8 (q) in the Convention. We should not give it so rigid an interpretation as to hamper the conduct of business. I do not interpret the article as meaning that the waybill must contain the statement verbatim. It is sufficient if it contains a statement to the like effect. Moreover, the carriage cannot be subject to all the rules relating to liability established by the Convention: for some relate to goods, others to passengers, others to luggage. It follows that (q) is satisfied if the statement says that the carriage is subject to the rules so far as the same are applicable to the carriage. If that is sufficient, it must also be sufficient to say that the carriage is subject to the rules except in so far as the same are not applicable to the carriage. The next step is plain. If that is sufficient, it must also be sufficient to say that the carriage is subject to the rules except so far as it is not international carriage. Hence it is sufficient to say “unless such carriage is not international carriage as defined by the Convention”. It is just another way of saying that the carriage is subject to the rules so far as the same are applicable.

Another way of looking at the statement is to read it in conjunction with the carriage stated on the face of the document, which was London to Zurich. Everyone concerned with the waybill knew that carriage from London to Zurich was international carriage. To those persons (and no one else matters) the words “unless such carriage is not international carriage as defined by the Convention” were mere surplusage. They added nothing. They were inapplicable to the circumstances of this carriage and could be ignored.”

(Italics as original)

The amendments to the Warsaw Convention provided for by the Hague Protocol were the result of an international conference at The Hague in September 1955. The travaux for that conference indicate that various proposals were mooted. They included proposals that the Convention should not lay down any requirements for the content of documents of carriage; or that, if they did, there should be no sanction for failure to comply so far as cargo was concerned. These proposals were rejected. Instead the delegates adopted what became the provisions of Warsaw- Hague including those to which I have referred.

Warsaw-Hague was further amended in 1975 in Montreal. In respect of cargo, the Convention, as there amended, no longer contains a provision that the air waybill shall say anything about the applicability or otherwise of the Convention. In addition it provides, in Article 9, that non compliance with its much more limited provisions about documentation relating to cargo:

“shall not affect the validity of the contract of carriage, which shall none the less be subject to the rules of this Convention including those relating to limitation of liability.”

The amendments made in Montreal have no application to the present case because, although the United Kingdom is, the Philippines are not, one of the High Contracting Parties to the Fourth Protocol agreed in Montreal.

The HAWB contains on its face the words set out in paragraph 5 above.

On the reverse of the Bill there is nothing that is described as a notice. What are set out are Conditions of Contract which read, so far as relevant as follows:

“1

As used in this contract “Convention” means the Convention for Unification of Certain Rules relating to International Carriage by Air, signed at Warsaw, 12^th October 1929, or that Convention as amended by the Hague Protocol, 1955 whichever may be applicable to the carriage hereunder…

2.

a)

Carriage hereunder is subject to the rules relating to liability

established by the Convention, unless such carriage is not “international carriage” as defined by the Convention. (See Carrier’s tariffs and conditions of carriage for such definition).

Article 31 of the 1980 Vienna Convention on the Law of Treaties provides as follows:

“ General rule of interpretation

Mr Michael McLaren QC, for Bax submits that the basic purpose of Article

In my judgment Warsaw- Hague requires there to be what is recognizable as

“a notice”, i.e. a discrete form of words warning the reader of the potential applicability of the Convention and its effect, namely to govern and limit liability. The expression “a notice” is not the same as “a statement”, an “indication”, “notification” or even “notice”. It suggests something more defined than these. The words “a notice” are words of ordinary language and should be given the meaning that they would convey to the ordinary reader. I do not think that the ordinary reader of the HAWB would regard it as containing on the reverse the notice promised on its face, or as containing by a combination of the face and the reverse, something that he would describe as “a notice” and, when he had identified what it was, “the notice”. Nor do I accept that the airway bill is to be treated as containing a notice to the effect required because (if such be the case) it is possible to spell out of the wording of some of the conditions of the contract notification of the relevant requirements.

I am confirmed in my view by what seem to me to be a number of indications

Mr McLaren cited to me the case of Parker v Pan American Airways Inc 447 S.W.2d 731 in the Court of Civil Appeals of Texas, Fifth District, Dallas. In that case Pan Am were held to be entitled to rely on conditions on the back of Mrs Parker’s ticket as constituting sufficient notice under the Convention. I do not find this case of assistance since it relates to Unamended Warsaw where the requirement is for the ticket to contain a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention, which was exactly what the Conditions in that case said.

If I am wrong on this, and the conditions, or some part of them, taken with the words on the face of the bill, are to be regarded as the notice called for under Article 8 (c) the next question is whether the provisions relied on satisfy the requirements of the sub-Article. The first matter of which the notice must give notification is that, if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable. As to that, it is apparent on the face of the air waybill that the carriage is to be from one country, the Philippines, to another, the United Kingdom. The provision in Condition 2(a) that carriage is subject to the rules relating to liability established by the Convention, unless such carriage is not “international carriage” as defined by the Convention, is, in my judgment, to the effect that the Warsaw Convention may be applicable. The face and the reverse of the air waybill, taken together, indicate that if goods are being carried from Manila to Glasgow (in which case the ultimate destination is a country other than the country of departure) Warsaw- Hague may apply. It is not necessary for the bill to set out the definition of “international carriage” or the identity of the High Contracting Parties. Such a conclusion is consistent with that of the Court of Appeal in Samuel Montagu.

The second matter that requires to be notified is that Warsaw-Hague governs the

But the Conditions do not state that the Convention contains any limit on recovery. In the absence of further explanation the reference on the face of the air waybill to the “carrier’s limitation of liability” means the limitation of liability imposed by the carrier under the conditions to which the contract of carriage is subject. Nothing on the reverse says anything about the limits imposed by the Convention, which are not the same as those contained in Condition 4 (c). The Conditions are entirely consistent with the Convention providing that, in cases to which it applies, it should be open to the consignor to make a special declaration of value, in which case any contractual limitation should only take effect to the extent that the value of the goods exceeds the declared value. In that case the Convention would not limit liability but expand it.

I am conscious that this analysis is itself technical. It falls to be made because Bax have omitted to take the simple course of including in their air waybill a notice in the form recommended by IATA and on occasion used by themselves. They are, thus, driven to extract from the Conditions of Contract, which it is reasonable to suppose were intended to be no more than what they are described as being, a notice as to the effect of the Convention, which it seems unlikely that the draftsman thought that he was drafting. Further, as it seems to me, the context in which the question arises does not justify interpretative generosity. The notice required by the Convention should be clear and directly informative - a result that is not difficult to achieve.

Mr McLaren further submitted that the conditions contained a notification that

I do not accept this submission. First, as I have said, the notice on the face of the waybill seems to me, prima facie, to indicate that it is the carrier who has stipulated a limit of liability. Second, the proposition that “if the carrier’s limitation of liability was to have any application the Warsaw-Hague’s liability regime must be such as to impose on the carrier limits of liability at least as low as the contractual limitation” assumes that which the conditions do not state namely that Warsaw-Hague imposes limitations on liability. It is noticeable that Condition 2 (a) does not state – as it did in the Pan Am case - that the carriage was subject to the rules “and limitations” relating to liability in the Convention.

Lastly Mr McLaren submitted that clause 2(d) impliedly stated that the $20 figure was a Convention limit (or thereabouts) as did the opening words of Condition 4 “Except as the Convention or other applicable law may otherwise require” when taken with Condition 4(c). I reject this submission. Neither of those provisions states, expressly or by obvious implication, that the Convention limits the liability of carriers. They are provisions understandably inserted on that assumption, but that is a different matter.

I should add that the fact that Bax are driven to spell out the notice that they need from the Conditions in the way that they do, serves to confirm my conclusion on the first issue. I find it difficult to believe that the draftsman of the relevant Article intended that the passenger or consignor should discern a notice with the requisite effect from the conditions in such a recondite way.

Accordingly, I answer the question posed by the preliminary issue: “Yes”.