JTI POLSKA Sp. Zoo and Ors v Jakubowski and Ors – UKSCBlog

In this post, David McKie and Dany Bitar, partners and associates respectively in the litigation team at CMS, preview the decision awaited from the Supreme Court in JTI POLSKA Sp. Zoo and Ors v Jakubowski and Ors.


This leapfrog appeal was heard by the Supreme Court on 28 February 2023. The case concerns whether a carrier is liable under the Convention on the Contract for the International Carriage of Goods by Road 1956 (“CMR”) for approximately £500,000 in excise duty payable by the owners of a cargo of cigarettes, because of a partial theft of the cargo in the UK whilst in transit from Poland.

CMR applies to the international carriage of goods by road between contracting states, and is enacted into English law by the Carriage of Goods by Road Act 1965.

For certain goods, including alcohol and tobacco, excise duty often far exceeds the non-dutiable value. HMRC will levy excise duty if imported goods are stolen during transit in the UK or if goods destined for export are stolen before they leave the UK on the basis that the goods are deemed to have been put into circulation in the UK. By virtue of a majority House of Lords decision in James Buchanan & Co Ltd v Babco Forwarding & Shipping Limited [1978] AC 141 (“Buchanan”), the words “… carriage charges, customs duties and other charges incurred in respect of the carriage of the goods …” for which the carrier is liable under CMR, art 23.4 is given a broad interpretation and includes excise duty imposed when the goods are stolen.

This approach has been criticized in textbooks and judicially. The Supreme Court will therefore have to decide whether the broad interpretation remains correct or whether to depart from Buchanan (under the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234). Its decision will be highly significant for owners and carriers of goods carried internationally by road and for their respective cargo and liability insurers.

Factual background

The parties entered into a contract for the carriage of a consignment of cigarettes from Poland to England. CMR applied compulsorily. The consignment was loaded into the defendant’s lorry on 5 March 2019 for carriage to Crewe. Overnight on 8 March 2019, while the lorry was parked at services on the M25, 389 cases of cigarettes were stolen.

Pursuant to Directive 20/24EC and the Finance Act 1994 s12(12A), on the basis that the stolen cigarettes were deemed to have entered circulation within the UK following the theft, HMRC levied excise duty of £499,557, which the cargo owners paid . The duty would not have been levied in the ordinary course of carriage. The parties settled all claims other than the claims under Article 23.4 for the duty.

The judgment under appeal

On 26 May 2021, judgment for the duty claimed was given by HHJ Pelling KC sitting in the London Circuit Commercial Court. The carrier conceded and HHJ Pelling agreed that the court was bound by the decision in Buchanan.

The issue was whether the court should grant the carrier’s application for a certificate under the Administration of Justice Act 1969 (“JUST”), s12 that a sufficient case had been made out for an application to be made to the Supreme Court for permission to appeal. This required a detailed consideration of the criticisms of Buchanan.


In Buchanan, a consignment of whiskey, valued at £7,000, carried under CMR terms from Glasgow to Tehran was stolen from a lorry park in London and the consignor thereby became liable to pay £30,000 of excise duty. The High Court and Court of Appeal found the carrier liable for the duty.

By a 3:2 majority, the House of Lords dismissed the carrier’s appeal, holding that the liability to excise duty constituted “other charges” for which the carrier was liable under CMR, art 23.4. The reasoning of the majority differed from that of the Court of Appeal and was expressed in slightly differing terms, but favored a broad approach to interpretation of Article 23.4.

The view of the minority was that Article 23.4 should be narrowly construed with Lord Edmund-Davies stating: “… I cannot fit excise duty into the genus of charges which have been ‘incurred in respect of the carriage of the goods’, a phrase which…would be appropriate for such charges as those in respect of ‘… packing insurance, certificate of quality and so forth’…in my judgment the recovery of the excise duty paid is excluded by the concluding words of article 23(4) that ‘…no further damage shall be payable’”.

Criticism of the decision in Buchanan

The majority decision in Buchanan has been criticized in the English textbook commentary on CMR.

Buchanan was also distinguished on the facts by the Court of Appeal in Sandeman Coprimar SA v Transitos Integrales SL [2003] EWCA Civ 113 (“Sandeman”).

Sandeman is concerned with the loss by theft of tax seals whilst in transit from Spain to Scotland. The seals had no intrinsic value. Against a guarantee from Sandeman, the seals were issued by the Spanish authorities, to be fixed to bottles of whiskey destined for import to Spain to show that excise duty had been paid. If the seals were not affixed to bottles or returned within 6 months of issue Sandeman was obliged to pay the equivalent of the duty that would have been payable on the imports. The theft of the seals meant that the Spanish authorities called on the guarantee given by Sandeman, who sought to recover the liability of some £420,000 from the carriers.

HHJ Hegarty in the Manchester District Registry Mercantile Court indicated that he felt bound by the decision in Buchanan to hold that the liability under the guarantee was within the scope of “other charges” for which the carrier is liable under Article 23.4, but dismissed the claim on the basis that the loss was not foreseeable. In upholding the carriers’ cross-appeal, the court distinguished Buchanan on the facts, but also expressed (obiter) views which cast doubt on the majority’s view, indicating that the decision in Buchanan should be confined strictly to what the doctrine of precedent requires.

Exercise of discretion

HHJ Pelling held that the issue was sufficiently one of general public importance to satisfy the threshold test in AJA, s12. After considering the various “trenchant” criticisms of Buchanan, he indicated that he was not bound by authority he too would have found the reasoning of Lord Edmund-Davies compelling. It was entirely possible that the Supreme Court might decide the issue in the same way as the majority of the House of Lords decided it in Buchanan but the uncertainty created by the decision in Sandeman meant clarification was needed either way. HHJ Pelling therefore exercised his discretion to certify that a sufficient case had been made out for an application to be made to the Supreme Court for permission to appeal.

Permission was then granted by the Supreme Court.


It might be questioned whether, given that it is 20 years since the decision in Sandeman, that decision has generated the level of uncertainty for cargo interests and carriers that persuaded HHJ Pelling to exercise his discretion. Nevertheless, the granting of permission by the Supreme Court indicates that it is appropriate to take stock and determine if the broad approach is taken in Buchanan as to the scope of CMR, art 23.4 should remain the law or if a narrower approach is to be preferred.

There is no uniformity of approach to the scope of CMR, art 23.4 across Europe. As HHJ Pelling noted, the Supreme Courts in France and Denmark have favored the broader approach; conversely those in the Netherlands, Germany and Sweden have not.

Whether from the perspective of reasonable foreeability or allocation of risk, it is certainly arguable that any carrier willing to undertake such international carriage should be aware of and take steps to investigate whether the loss of the goods in transit by reason of the carrier’s default would result in the consignee/consignor being liable for excise duty. Carriers and their insurers will know that for UK related shipments subject to English law the risk is currently allocated to the carrier. Where a liability arises only by reason of the carrier’s breach, in the absence of any clear indication in CMR that the carrier would be exempt from such liability, the scheme of CMR is that the carrier is liable.

Whatever the outcome, the decision will be important for road carriers, goods owners and their insurers, not just in relation to situations where excise duty is levied but more generally as to the types of additional expense for which the carrier can be liable under CMR.

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