In a judgment of 16 June 2022 (case T 3379-21) the Swedish Supreme Court held that the United Nation’s 1956 Convention on the Contract for the International Carriage of Goods by Road (CMR) takes precedence over the Rome I Regulation on the law applicable to contractual obligations and that the Convention shall be applied as implemented in the forum State.
CMR contains uniform substantive rules for transport contracts and is applied by all EU Member States as well as several other States around the world. Article 1 of the CMR states that the Convention is applicable to international road transport agreements when either the State from where the goods is transported or the State that is designated for delivery is a CMR State. In practice, the CMR applies to a very large share of road transport contracts in the EU. Nonetheless, it is not exactly clear what relation the CMR and the Rome I Regulation have with each other. Shall the CMR be applied “directly” without the application of the Rome I Regulation or must first the law applicable according to the Rome I Regulation be determined to see e.g. with what potential national reservations the CMR shall be applied?
This issue arose for the Swedish Supreme Court in a dispute over a carrier’s liability for a transport of cigarettes that were stolen during a transit storage. As the theft triggered Swedish excise duty on tobacco for the sending party, the substantive issue was whether the excise duty expenses should be reimbursed by the carrier. It is here noteworthy that out of the 154.565 Euros that the dispute was about, 135.325 Euros were compensation for excise duty and 19.240 Euros were compensation for the loss of the goods.
The extent of the carrier’s liability is regulated in Article 23 of the CMR. According to a compilation of international case law made in the Swedish court of appeal’s judgment, this carrier liability has been interpreted differently in contracting states. Whereas e.g. the UK and Denmark have held carriers to compensate also for excise duties, Germany and the Netherlands have applied a more restrictive approach only allowing for compensation that directly relates to the transport (not including tax levied after theft). In this perspective, an application of the CMR under Dutch law would most probably follow the restrictive approach applied by the Dutch courts. If the CMR was to be applied under Swedish law, the liability issue was more unclear.
In its judgment, the Swedish Supreme Court noted that it normally is the Rome I Regulation that determines the law applicable for contractual disputes in Swedish courts. For the relation between the Rome I Regulation and international conventions, Article 25(1) of the Regulation contains a special conflict rule that gives precedence for multilateral conventions that were already in force when the regulation was adopted under the condition that the convention “lay down conflict-of-law rules relating to contractual obligations”. As the CMR is a multilateral convention that existed when the Rome I Regulation entered into force, a question for the Swedish Supreme Court was whether it also contained a conflict of law rule relating to contractual obligations.
Article 1(1) of the CMR contains a rule on the scope of application for the convention. This rule states that the convention shall be applied to
every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a contracting country, irrespective of the place of residence and the nationality of the parties.
With references to the Swedish preparatory works from the 1960s and 1970s relating to the Swedish accession to the CMR, the Supreme Court noted that the Swedish legislator had understood the named article as a conflict-of-law rule. The Supreme Court concurred to the legislator’s understanding and added that Article 1 of the CMR can be seen as a unilateral conflict-of-law rule. The fact that not a single Member State notified the CMR as such a convention that could have precedence under Article 25 of the Rome I Regulation back in 2009 when the Regulation was to enter into force, was not mentioned by the court.
Regardless of whether unilateral conflict-of-law rules take precedence according to Article 25, the Supreme Court referred to the CJEU’s judgment in TNT Express Nederland to interpret the meaning of Article 25 in the Rome I Regulation.
In TNT Express Nederland, the CJEU ruled on Article 71 of the old Brussels I Regulation (44/2001), which concerns that regulation’s relationship with international conventions. The CJEU held then that the lis pendens rules in the CMR could take precedence over the Brussels I Regulation on the ground that the lis pendens rules of the Convention
are highly predictable, facilitate the sound administration of justice and enable the risk of concurrent proceedings to be minimized and that they ensure, under conditions at least as favourable as those provided for by the regulation, the free movement of judgments in civil and commercial matters and mutual trust in the administration of justice in the European Union.
Clearly inspired by the TNT Express Nederland judgment, the Swedish Supreme Court held that also the conflict-of-law rules in a convention shall have precedence over the Rome I Regulation if that leads to a high degree of predictability, facilitate the sound administration of justice and ascertains the EU goals on free movement and mutual trust between the judicial authorities under conditions at least as favourable as those provided for by the Rome I Regulation.
With this, in my opinion, somewhat bold analogy from the TNT Express Nederland case, the Supreme Court concluded that CMR takes precedence over the Rome I Regulation and that CMR shall be applied as it has been implemented according to lex fori. In other words, the Swedish Supreme Court applied the CMR without determining the law applicable according to the Rome I Regulation.
In substance, the choice-of-law matter did not affect the liability issue. Just like what was reported to be the case in the Netherlands, also the Swedish Supreme Court embraced the restrictive approach when interpreting Article 23 of the CMR. Therefore, the carrier was not held liable to pay the expenses for the excise duty on tobacco. Even if that conclusion might have been the same under Dutch law, this conflict of public and private international law raises issues that are not just theoretically interesting.
In the Swedish Supreme Court’s case the matter was clearly at heart of the substantive rules of the CMR. However, conventions tend often not to be so thorough that there are no gaps that need to be filled out. Also states ratify conventions with different reservations. In my opinion, these aspects call for at least a subsidiary application of the private international choice-of-law rules.
To me, it is unfortunate that the CJEU was not given a chance to have a say on the interplay between conventions and the Rome I Regulation. A clarifying judgment on this matter would improve predictability for international civil and commercial matters in the EU.