CMR: Contracts for the international carriage of goods by road

Andrew Messent and David A Glass

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CHAPTER 5 The performance of the carriage

5.1 This chapter concerns the position as between the three parties concerned, namely the consignor, the carrier and the consignee, in the period during which the goods are being carried and then on the arrival of the goods. The sort of questions which might arise are such as: who has the right to dispose of the goods while they remain in transit? What is the position of the carrier where those rights of disposal are exercised? Who is entitled to require delivery of the goods? What is the position where performance of the carriage becomes impossible? The Convention deals with issues such as these in Articles 12 to 17.

The right of disposal

5.2 Article 12 provides as follows:

1. The sender has the right to dispose of the goods, in particular by asking the carrier to stop the goods in transit, to change the place at which delivery is to take place or to deliver the goods to a consignee other than the consignee indicated in the consignment note.
2. This right shall cease to exist when the second copy of the consignment note is handed to the consignee or when the consignee exercises his right under article 13, paragraph 1; from that time onwards the carrier shall obey the orders of the consignee.
3. The consignee shall, however, have the right of disposal from the time when the consignment note is drawn up, if the sender makes an entry to that effect in the consignment note.
4. If in exercising his right of disposal the consignee has ordered the delivery of the goods to another person, that other person shall not be entitled to name other consignees.
5. The exercise of the right of disposal shall be subject to the following conditions:
- (a) that the sender or, in the case referred to in paragraph 3 of this article, the consignee who wishes to exercise the right produces the first copy of the consignment note on which the new instructions to the carrier have been entered and indemnifies the carrier against all expenses, loss and damage involved in carrying out such instructions;
- (b) that the carrying out of such instructions is possible at the time when the instructions reach the person who is to carry them out and does not either interfere with the normal working of the carrier’s undertaking or prejudice the senders or consignees of other consignments;
- (c) that the instructions do not result in a division of the consignment.
6. When, by reason of the provisions of paragraph 5(b) of this article, the carrier cannot carry out the instructions which he receives, he shall immediately notify the person who gave him such instructions.
7.

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A carrier who has not carried out the instructions given under the conditions provided for in this article, or who has carried them out without requiring the first copy of the consignment note to be produced, shall be liable to the person entitled to make a claim for any loss or damage caused thereby.

5.3 It will first be noted that the rights conferred on the sender under Article 12 are distinct from and wider than the equivalent rights under the Sale of Goods Act 1979,1 namely the unpaid vendor’s lien and the right of stoppage in transit. Those rights are restricted to circumstances where the sender is an unpaid seller or where the consignee is an insolvent buyer;2 there are no equivalent restrictions on the rights of disposal under Article 12. 5.4 Turning to the substance of the rights conferred by Article 12, it will be observed that the basic scheme is that the carrier is, in the first instance, treated in effect as the agent of the sender,3 so that the sender retains the right to dispose of the goods until,4 in most cases, the delivery of the consignment note to the consignee, which will normally coincide with delivery of the goods.5 This right will, however, necessarily be overridden where the sender chooses to confer an immediate right of disposal on the consignee under Article 12(3). It should be borne in mind, however, that the right of disposal conferred by Article 12 does not necessarily reflect the ownership of the goods, nor does the first copy (the sender’s copy) of the consignment note constitute a document of title; it is a document of proof only, and in this context will prove the right of the consignee to dispose of the goods, although only if the appropriate instructions were entered at the time the consignment note was drawn up. One commentator has detected a hiatus in the scheme of CMR here, and suggests that where the consignee is in possession of the first copy of a consignment note but without any right of disposal having been vested in him under Article 12(3) by means of an appropriate note, the sender has lost his right of disposal while the consignee has not yet acquired his right.6 As against this, however, it might be argued that the delivery of the first copy to the consignee may on its true construction amount to an assignment of the right of disposal, but in any event it would seem that this theoretical difficulty has caused few, if any, problems in practice. If there is in truth a hiatus, then the goods can only be disposed of once

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the second copy of the consignment note, which will have accompanied the goods, has been handed to the consignee.7

Restrictions on the right of disposal

5.5 The right of disposal is not unfettered, but is qualified in various respects by CMR. Firstly, there is the procedural requirement for production of the first copy of the consignment note endorsed with the amended instructions.8 Secondly, there is the requirement that the person exercising the right must indemnify the carrier against any expenses, loss or damage,9 and the carrier can also refuse instructions which are impracticable, or which would interfere with the normal working of his undertaking, or which would prejudice the senders or consignees of other consignments.10 The Convention offers no guidance as to when a refusal for these reasons will be justified, but in relation to interference with normal working, since any alteration to instructions will cause a degree of interference, if only through the revision of paperwork, it seems sensible to follow Loewe11 when he suggests that the provision applies only where “the carrying out of the instructions will seriously interfere with the normal activities of the carrier’s enterprise”. Finally, the right

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can only be exercised if the instructions do not result in a division of the consignment.12 This provision is of particular relevance to consolidated groupage shipments, and in this context prevents the freight forwarder who has organised the shipment pressing the carrier into service as a de facto distributor, but it is not necessarily restricted to this category of shipment. 5.6 Loewe is of the view that the carrier is not entitled to rely on Article 12(5)(c) where separate consignment notes have been issued for goods in different vehicles, or for goods of different kinds, or for goods in different lots.13 There would seem no difficulty about this in relation to goods in different vehicles, but as regards the other two suggested categories this would mean that the sender can in effect render the carrier a de facto distributor by the device of issuing separate consignment notes for different parts of a consolidated shipment, originally naming the same consignee but then issuing separate instructions under Article 12(1) in respect of each. To an extent there is no problem about such an interpretation, since in such circumstances the carrier will have his claim for expenses under Article 12(5)(a), but nevertheless there are objections to this view. Firstly, such an approach is to interpret the word “consignment” in Article 12(5)(c) as “goods covered by one consignment note”, which is not what the Convention says, and secondly, such an interpretation could involve the carrier in a fundamentally different operation from what he originally envisaged. It would seem, therefore, that the better view is that where the carrier is carrying what can properly be regarded as one consignment,14 he ought to be entitled to refuse to accept instructions relating to different parts of the consignment, even if they are covered by separate consignment notes. If, however, he chooses to comply, he will be entitled to his expenses under Article 12(5)(a). 5.7 It must be conceded that in most respects this question will be academic, since in such circumstances the carrier would be able, in appropriate cases, to rely on Article 12(5)(b), as amounting to interference with the normal working of his undertaking. There is, however, one significant difference between sub-paras (b) and (c), in that Article 12(6) provides that where the carrier wishes to rely on the former, he must immediately notify the person who has given him the revised instructions that he cannot carry them out. The consequence of failure to do so is that the carrier will be liable, without limit as to quantum, for any loss or damage caused thereby.15 There is no corresponding obligations or liability in relation to sub-para. (c), so if the carrier has not given the necessary notification under sub-para. (b), the ability to rely on subpara. (c) may be crucial to him. 5.8 Article 12(7) provides that where the carrier has failed to carry out amended instructions,16 or where he has carried them out but without first requiring production of the first copy of the consignment note, he is liable to the person entitled to make a claim17

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for any loss or damage caused,18 there being no limit on such liability.19 The second part of this provision, namely acting on a variation without requiring production of the first copy of the consignment note, would, on the face of it, permit a sender who suffers loss as a result of the execution by the carrier of instructions which the sender has himself given to rely on the absence of compliance with the formal requirements of CMR to sustain a claim. It is submitted that the applicable principles of domestic law20 will prove to be available to assist the carrier to defeat any such claim, in particular since it is clear that the purpose of the provision is to cover the situation where the carrier agreed to amended instructions without a sight of the first copy of the consignment note and it transpires that the person giving the instructions had no right to do so. 5.9 The attachment of conditions to the right of disposal can also give rise to a further problem, namely the absence of specific rules to cover a dispute as to whether a refusal by a carrier to accept amended instructions which is grounded in Article 12(5)(b) is justified,21 or whether, even if it can be established that a refusal was not justified, any person who has suffered loss or damage thereby is entitled to compensation, and if so, on what basis. Again, it would seem that the parties will have to have recourse to domestic law, on the footing that an unwarranted interference with the right of disposal will be a breach of contract. Finally, it should be stressed that, since there is no obligation on the carrier to notify a person giving amended instructions that they are being refused on the grounds set out in Article 12(5)(a) or (c), the CMR regime appears to assume familiarity with these provisions on the part of such persons.

Successive disposals

5.10 The sender, while he retains the right to dispose of the goods, is free to nominate an alternative consignee,22 as is the consignee if he has acquired the right to dispose of the goods under Article 12(3). However, a consignee nominated by the original consignee under that provision does not have a similar right,23 but there is no similar express

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restriction on the sender or on the consignee who is exercising his right under Article 12(3); presumably therefore either the sender or the original consignee, as the case may be, can nominate further alternative consignees so long as he retains the right to dispose of the goods and the carrier does not invoke any of the restrictions in Article 12(5). The obligation under Article 12(5)(a) to indemnify the carrier will, of course, apply equally to any such further disposals. 5.11 The German Supreme Court has held that if the carrier, faced with the refusal of the consignee to accept the goods, avails himself of the right under Article 16(2) to unload the goods24 and to deposit them with a third party, the carriage comes to an end and the right of the sender to dispose of the goods by asking the carrier to deliver them to another consignee also ceases to exist.25

Disposal of goods on delivery

5.12 Article 13 provides as follows:

1. After arrival of the goods at the place designated for delivery, the consignee shall be entitled to require the carrier to deliver to him, against a receipt, the second copy of the consignment note and the goods. If the loss of the goods is established or if the goods have not arrived after the expiry of the period provided for in article 19, the consignee shall be entitled to enforce in his own name against the carrier any rights arising from the contract of carriage.
2. The consignee who avails himself of the rights granted to him under paragraph 1 of this article shall pay the charges shown to be due on the consignment note, but in the event of dispute on this matter the carrier shall not be required to deliver the goods unless security has been furnished by the consignee.

5.13 Article 13 provides that after the goods have arrived at the place designated for delivery which is specified in the consignment note,26 the consignee is entitled to obtain both the second copy of the consignment note27 and the goods themselves.28 It should be

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noted that the consignee is not himself required to hand over to the carrier the first copy of the consignment note, although he is required to provide the carrier with a receipt, the form of which is not specified by the Convention. Since under current transport practice it is unlikely that the consignee will ever see the first copy of the consignment note29 or, if he does, it is likely to arrive by post after the actual arrival of the goods, it seems sensible that the consignee should not be required to hand over to the carrier the first, or indeed any, copy of the consignment note. 5.14 Article 13(1) also lays down the procedure to be followed in the event of the loss or non-arrival30 of the goods. First, it may be established that the goods are lost, or alternatively that there has been a delay in delivery in that they have not arrived in the period laid down by Article 19. That period is either the agreed time limit or else, in the absence of such limit, the time it would be reasonable to allow to a diligent carrier having regard to the circumstances of the case. If either of these circumstances can be established, the consignee will be entitled to enforce in his own name against the carrier any rights arising from the contract of carriage. 5.15 Consequently, if the goods have been lost the consignee may be able to rely upon Article 17(1) whereby the carrier will be liable for the total or partial loss of the goods when it has occurred between the time of taking over and the time of delivery as well as for any delay in delivery. If the consignee cannot prove that the goods have in fact been lost he may be able to rely upon the provisions of Article 20 whereby failure to deliver within 30 days following the expiry of the agreed time limit or, in the absence of such a limit, within 60 days from the time when the carrier has taken over the goods is to be treated as conclusive evidence of loss, in which case the consignee is entitled to claim the amount lost.31 5.16 It will be noted that under Article 13(1) it is the consignee who is entitled to require the carrier to deliver the goods and the second copy of the consignment note to him. The consignee will normally be named and identified in the particulars of the consignment note as provided by Article 6. Not being a negotiable instrument, a consignment note will never be issued to bearer or to order. However, it should be remembered that the original consignee will cease to be so entitled where the sender has amended his instructions as regards delivery, naming a new consignee or instructing the carrier to return the goods to him under Article 12(1). Alternatively, the consignee himself may have exercised his right of disposal under Article 12(3) and named a third party as consignee.32

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5.17 If the consignee of goods wishes33 to avail himself of the rights granted to him under Article 13(1) he must pay the charges34 which are shown to be due on the consignment note. A degree of controversy has arisen in other jurisdictions as to whether the consignee is required to pay carriage charges which do not appear on a consignment note.35 In this country, it was held in T Comedy (U.K.) Ltd. v Easy Managed Transport

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Ltd.36 that unless they do appear on the consignment note as required by Article 6(1)(i), then no particular lien arises under Article 13(2). Having been referred to some of the conflicting Continental case law on the point, the judge found the scheme of the Convention to be clear: “The reference to charges shown to be due on the consignment note cannot be ignored. The commercial purpose is to give certainty as to what must be paid to secure the release of the goods, at a time when decisions may have to be made urgently and on the basis of limited information.”37 As to the point that the exact figure may not be known at the time the consignment note is completed, he thought that “the consignment note can easily make a general reference to these”.38 Article 13(2) also provides that in the event of a dispute as to the amount due, the carrier need not deliver the goods to the consignee unless security has been furnished by the latter.39 This provision is potentially unsatisfactory, insofar as it appears to place an absolute obligation on the consignee to furnish security, regardless of the existence of a legitimate claim by the consignee against the carrier. This problem will not arise in the event of a total loss of the goods since there is obviously then no question of any delivery, but may arise in the case of delay, damage or partial loss.40

The right to enforce the contract

5.18 The object of Articles 12 and 13 is to establish who at any particular time has the right to dispose of the goods comprised in a particular contract for the international carriage of goods by road. The object does not seem to have been fully achieved, in that courts in different jurisdictions have given conflicting decisions as to the interpretation of the two Articles, and also in that the Articles do not provide an exhaustive code of rules and have to be supplemented by national law.41 As a minimum, the courts are required to recognise the right given to the consignee by Article 13(1) to enforce the contract in his own name.42 The German courts, as a matter of interpretation of CMR rather than

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the application of national law, have linked this with the right of disposal, so that the consignee becomes entitled to sue in his own name for damage to the goods from the time he acquires the right of disposal of the goods.43 The right to delivery carries with it the right to receive the goods in a complete and undamaged condition, so that the consignee’s right of action is not limited to loss and delay which is expressly referred to in Article 13.44 Once acquired, on the arrival of the goods at the place designated for delivery, the consignee does not lose his rights by refusing to accept delivery of damaged goods unless it is made clear to the carrier that the consignee intends also to reject the right to claim compensation.45 Logically, one might expect that the application of the right of disposal would mean that, as between sender and consignee, only one of them would have the right to sue at any one time.46 However, this does not appear to be the case, the German courts being concerned, rather, to determine the time when the consignee’s rights are established.47 Consequently, both sender and consignee can possess joint rights against the carrier.48 This is especially true where the goods are lost, since the right of the consignee under the second sentence of Article 13(1) is not dependent on his having

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had the right of disposal transferred to him.49 The possibility of concurrent rights is also accepted in France,50 Belgium,51 the Netherlands52 and Austria.53 Clearly there is recognition54 that the rights of the consignee are not exclusive and do not exhaust the possibility of a claim by another party by virtue of their position as sender. 5.19 The possibility of there being more than one person with a right of action requires a mechanism to protect the carrier from having to pay twice in respect of the same claim. CMR itself does not provide this,55 so that the answer must be provided by the national law.56 One solution is to release the carrier once he has paid one of the parties.57 Another is to require the claimant to prove a sufficient interest to sue.58

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5.20 Where the contract of carriage has been made by a forwarder, the possibility of intervention by the principal is recognised in some States. In France, for example, the principal of a commissionnaire de transport 59 can intervene in relation to the contract of carriage and be identified as the real sender or real consignee.60 In the absence of such intervention the forwarder, as the party actually contracting, may also sue.61 The courts may require the forwarder to prove that he has an interest in doing so, which can include the fact that he has a liability towards his principal,62 or that the agent is suing on behalf of his principal.63 A further possibility arises where national law recognises the right of a contracting party to recover the interest of a third party.64 5.21 Further difficulties arise from uncertainty as to the importance of the consignment note in this respect. Sometimes the courts assume that only the persons named in the

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consignment note are properly to be regarded as the CMR sender or consignee.65 This appears to have been the assumption of the Supreme Court of the Netherlands which decided66 that, while CMR was drafted on the basis that the CMR contract would be made between the named carrier and the named sender, and therefore makes no provision as to liability when this is not the case, the person who has actually contracted with the carrier can maintain an action despite the provisions of Articles 12 and 13. Any such action must of course be under national law. Alternatively, application of Articles 4 and 9 may enable the court to reach the view that persons other than those named can be contracting parties,67 within the scope of CMR.68 This can be just as true in identifying the consignee as well as the original contracting party.69 Nevertheless, the consignee is not necessarily the person who receives the goods;70 rather, it is necessary for the person whom the sender intends to have the right to receive the goods to be identified to the carrier,71 and proof of this will normally come from the consignment note,72 unless a change of instruction has been made by the sender in accordance with Article 12. In a French case73 goods were consigned under a CMR consignment note. Metpas sold goods to Tisselva, who were importing them. A consignment note designated Metpas as sender and a bank as the consignee. Tisselva was indicated as a notify party along with Ste. Mory, who were agents of the sender and to whose address the goods were to be delivered. Ste. Mory was to re-consign the goods to the ultimate purchaser. Despite being indicated as

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the party to receive the goods, Ste. Mory could not be considered as the real consignee (destinataire réel). As agents of the sender, they were indicated in the part of the note referring to “instructions of the sender”. Thus to the reader of the consignment note the real consignee was not identifiable. Consequently, the insurer which had indemnified Ste. Mory had no right of subrogation through Ste. Mory in its position as agent of the sender, not even if it were the agent of Tisselva, the owner of the goods, since that company was neither the sender nor the consignee, the real consignee being the ultimate purchaser.74 5.22 These matters have received limited treatment in England to date. In Texas Instruments Ltd. v Nason (Europe) Ltd.75 goods were consigned under a CMR consignment note to a buyer to whom property and risk passed at the time of the carriage. Tudor Evans, J., held that the seller, by whose order the goods were consigned, acted as agent for the buyer who was thereby the carrier’s co-contractant with title to sue.76 Thus he applied the traditional approach in English law of presuming agency in a seller when the intention under the contract of sale is to pass the property to the buyer prior to or at the time of delivery to the carrier.77 However, if he were wrong in this view, he considered that the buyer had an unqualified right to sue by reason of Article 13 of CMR.78 5.23 In conclusion, it is suggested that so long as the sender and the consignee can be identified, CMR affords both parties the right to sue, and to obtain substantial damages, with the result that the carrier is released by payment to the first to present the claim. Regardless of how conflicting claims are to be resolved or the rights inter se adjusted,79

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the relationship between sender and consignee is best regarded as res inter alios actae to the carrier80 except to the extent that the relationship involves considerations of agency.81

Damage to the goods

5.24 Article 13 only expressly confers a right of action on the consignee in cases where the goods have been lost or delayed, no mention being made of the position in relation to damage. However, since under Articles 12(2) and 13(1) the right of disposal passes to the consignee on delivery, it would seem to follow that the consignee will equally have a right of action against the carrier from that time in respect of any damage that may have occurred, and such seems to have been consistently assumed in the Continental case law.82 As to whether or not such right of action is exclusive to the consignee, the same problem arises as discussed in the previous paragraph.

Impossibility

Impossibility in relation to the carriage

5.25 Article 14 provides as follows:

1. If for any reason it is or becomes impossible to carry out the contract in accordance with the terms laid down in the consignment note before the goods reach the place designated for delivery, the carrier shall ask for instructions from the person entitled to dispose of the goods in accordance with the provisions of article 12.
2. Nevertheless, if circumstances are such as to allow the carriage to be carried out under conditions differing from those laid down in the consignment note and if the carrier has been unable to obtain instructions in reasonable time from the person entitled to dispose of the goods in accordance with the provisions of article 12, he shall take such steps as seem to him to be in the best interests of the person entitled to dispose of the goods.

5.26 Article 14(1) is expressed to apply in all circumstances, there being no explicit limitations of causes of impossibility. In particular, the consignment note may specify in some detail the way in which the contract is to be performed,83 and it would seem that

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Article 14(1) will apply if it becomes impossible to comply with any of these requirements. On the other hand, the Article applies only to impossibility;84 it will therefore not apply where it has merely become onerous, difficult or expensive to perform. The rights and liabilities of the parties in such circumstances would be governed by the domestic law.85 The carrier must ensure that he seeks instructions from the person currently entitled to dispose of the goods,86 and failure to do so will render him liable to an action at the hands of the person properly so entitled.87 Furthermore, the carrier will be liable if, instead of responding to the instructions, he engages in a discussion as to the costs involved and so delays delivery even beyond an extended period granted by the fresh instructions.88 5.27 Where the carrier fails to obtain instructions,89 but acts on his own responsibility, he will be liable for any loss, whether or not he acted reasonably: the provisions of CMR operate to deprive him of any defence of implied agency or the like.90 It seems that CMR does not itself provide for the case where loss results from the fulfilment of instructions given on the basis of incomplete or misleading information from the carrier, but it is submitted that in such a case the carrier’s liability will depend upon whether or not he has been negligent. 5.28 Where the carrier cannot obtain instructions “in reasonable time”91 he may, if it is possible, take such steps as appear to be in the best interests of the person entitled to dispose of the goods to carry out the carriage in some alternative way. While it seems clear that if the carrier continues to carry the goods in a different manner he will remain liable as CMR carrier,92 it is by no means so clear that he will remain so if he arranges for onward carriage by a third party. It may be that the third party will become a successive carrier under the original CMR contract, in which case the original carrier will remain liable for the onward carriage under Article 34.93 It is possible, however, that the original carrier will be treated as a forwarder in respect of the further carriage. In support of such a view, it might be argued that the duty imposed by Article 14(2) to act “in the best interests of the person entitled” does perhaps suggest the character of a freight forwarder.94 If this latter view be correct, the onward carriage will be governed by a new contract; it will depend upon the circumstances whether this in its turn will also be a CMR contract.

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5.29 Article 14 must also be read in conjunction with Article 16(2) which permits the carrier, in circumstances where carriage has become impossible within the meaning of Article 14(1), to unload the goods for the account of the person entitled to dispose of them, whereupon the carriage is deemed to be at an end.95 It is important to keep in mind that both Article 16(2) and Article 14(2) qualify and amplify Article 14(1), which must therefore be read subject to them. It may be that further performance has become impossible within the meaning of Article 14(1), and the carrier would prefer to exercise his option under Article 16(2). It would seem that he may do so instead of seeking instructions. There is no problem where onward carriage has become impossible; where, however, the carriage could be completed in some alternative manner, if the carrier has sought instructions but has not received them, Article 14 imposes on him a duty to act in the best interests of the person entitled to dispose of the goods. He can only unload and store the goods if that is in the best interests of the person entitled. In a case where the carrier wishes to unload and store, but believes that this might not be in the best interests of the person entitled, he will therefore be well advised to refrain from seeking instructions. While this clearly frustrates the primary intention of Article 14(1), it appears to follow from the true construction of the three provisions referred to. 5.30 Where, in pursuance of his responsibilities under Article 14(2), the carrier has elected to continue to carry the goods, and during the course of that further carriage difficulties arise, it is arguable that the carrier cannot then avail himself of Article 16(2). This is because the new difficulty does not make it “impossible to carry out the contract in accordance with the terms laid down in the consignment note”, since ex hypothesi carriage is not being performed pursuant to the consignment note and therefore this is not the “[case] referred to in Article 14, paragraph 1…”. Accordingly, it would seem to follow that Article 16(2) cannot apply, and the carrier can again only unload and store the goods if this can be said to be in the best interests of the person entitled to dispose of them.

Impossibility in relation to delivery of the goods

5.31 Article 15 provides as follows:

1. Where circumstances prevent delivery of the goods after their arrival at the place designated for delivery, the carrier shall ask the sender for his instructions. If the consignee refuses the goods the sender shall be entitled to dispose of them without being obliged to produce the first copy of the consignment note.
2. Even if he has refused the goods, the consignee may nevertheless require delivery so long as the carrier has not received instructions to the contrary from the sender.
3. When circumstances preventing delivery of the goods arise after the consignee, in exercise of his rights under article 12, paragraph 3, has given an order for the goods to be delivered to another person, paragraphs 1 and 2 of this article shall apply as if the consignee were the sender and that other person were the consignee.

5.32 Article 15(1) makes provision for the situation that arises where circumstances prevent the delivery of the goods after their arrival at the place designated for delivery. The provision makes a distinction between two situations. Firstly, the inability to deliver may result from extraneous causes. Secondly, the consignee may refuse to accept delivery

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of the goods.96 Although the carrier must ask the sender for his instructions in either case,97 where the consignee refuses to accept delivery of the goods, the sender may dispose of them without being required to produce the first copy of the consignment note.98 This rule is a practical necessity, as the sender may no longer have possession of the first copy of the note, and some action on his part is essential if the consignee will not accept the goods. Presumably in all other cases the sender will be required to produce the first copy of the consignment note. It is not clear what will happen where the sender cannot produce the consignment note because he has sent it to the consignee, as the Convention makes no provision for this eventuality. One authority has suggested that this can be overcome by reference to domestic law and the other provisions in the Convention.99 Probably the only possibility is for the carrier to unload the goods under the provisions of Article 16(2) or to sell them, if perishable, under Article 16(3).100 5.33 However, even if the consignee has refused to accept the goods, he can still change his mind and require delivery provided the carrier has not actually received instructions to the contrary from the sender.101 5.34 If the circumstances preventing delivery of the goods arise after the consignee has given instructions for the goods to be delivered to a third party where he has been given the right of disposal of the goods under Article 12(3), Article 16(1) and (2) will apply as if the consignee were the sender and the third party were the consignee.

Expenses

5.35 Article 16(1) provides as follows:

1. The carrier shall be entitled to recover the cost of his request for instructions and any expenses entailed in carrying out such instructions, unless such expenses were caused by the wrongful act or neglect of the carrier.”

5.36 Clearly, the provisions of Articles 14 and 15 may well involve the carrier in additional expenditure. Accordingly, Article 16(1) provides that the carrier will be entitled to recover the cost of his request for instructions under Articles 14 and 15, together with

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any expenses entailed in carrying them out,102 unless such expenses were caused by “the wrongful act or neglect of the carrier”. The question therefore arises as to the exact scope of this proviso, and the French text is perhaps more precise, as it uses the phrase “la conséquence de sa faute”.103 It would appear that this proviso is intended to cover not only fault of the carrier which occurs in relation to the request for instructions or to the carrying out of such instructions, but that it also applies to the events which have themselves caused the circumstances which preclude the performance of the contract of carriage in accordance with the terms laid down in the consignment note or have prevented delivery of the goods on arrival. Further, where such expenses have been caused by the fault of a servant or agent, it would seem that Article 3 will apply in the normal way. Since under that provision any fault of such persons is to be treated as being that of the carrier,104 any such fault will operate to deprive the carrier of his claim for expenses. The position would be the same where the circumstances have arisen due to the fault of a successive carrier.105 Apart from the expenses payable under Article 16(1), it is possible for the parties to agree that further sums be paid to the carrier such as a demurrage charge for delay in completion of the carriage, for example because of delays at customs points, beyond a specified period.106

Unloading and storing the goods

5.37 Article 16(2) provides as follows:

2. In the cases referred to in article 14, paragraph 1, and in article 15, the carrier may immediately unload the goods for account of the person entitled to dispose of them and thereupon the carriage shall be deemed to be at an end. The carrier shall then hold the goods on behalf of the person so entitled. He may however entrust them to a third party, and in that case he shall not be under any liability except for the exercise of reasonable care in the choice of such third party. The charges due under the consignment note and all other expenses shall remain chargeable against the goods.107

5.38 Article 16(2) provides for an entirely different response on the part of the carrier where he is prevented from performing the contract of carriage in accordance with the consignment note under Article 14(1) or from delivering the goods under Article 15. Provision is made whereby he may immediately unload the goods for account of the

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party entitled to dispose of the goods, in which event the carriage shall be deemed to be at an end.108 As has already been mentioned, while the provision does not preclude a request for instructions under Articles 14(1) or 15 coupled with action under Article 16(2), it is submitted that there may be grounds for refraining from submitting a request in the circumstances described above.109 5.39 Article 16(2) refers to the goods being unloaded “for the account of the person entitled to dispose of them”; it would seem therefore that where the carrier is exercising his rights under this provision, all the costs of the unloading will be payable by that person, regardless of which party would have been responsible for unloading the goods had they reached their destination. On the other hand, the carriage is not deemed to be at an end until after the unloading, so any damage caused during the unloading would be the carrier’s responsibility. Thereafter, since completion of the unloading is in effect equated to due delivery, any continuing liability of a carrier who elects to store the goods himself will be regulated by domestic law.110 This may well raise interesting questions as to the terms on which the goods are being stored. Firstly, it may be necessary to establish which national law is applicable.111 Secondly, the carrier may wish to avail himself of clauses of his own terms of business which exclude or limit the liabilities imposed on him by the general law. This may not be a problem if he and the sender are already in contractual relations governed by those terms, but otherwise there may be some difficulty in establishing that they have indeed been incorporated into the contract for storage, if indeed there is a contract, rather than a non-contractual bailment. 5.40 Article 16(2) also permits the carrier to “entrust [the goods] to a third party”,112 in which case the former will not be “under any liability except for the exercise of reasonable care in the choice of such third party”. In other words, if the carrier deposits the goods with a warehouseman, he will only be liable if he fails to exercise reasonable care in selecting him. Where, however, goods are later found to be missing, the carrier must prove that he did actually warehouse them.113 Whether this duty is more or less than would be applicable if the contract was subject to common law will depend upon the form the relationship takes. If the carrier is considered as entering into a contract with the ware-houseman as agent for the interested party, as is provided in some general conditions of contract, his liability would be approximately the same. If, however, the carrier remains bailee of the goods and enters into a contract of sub-bailment with the warehouseman, he will remain liable as bailee unless he has contractually restricted his liability. Whether the

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cargo interests will be bound by the terms of contract employed by the warehouseman in the latter case will also depend upon the form the relationship takes.114 5.41 Article 16(2) also provides that where the carrier unloads the goods and either holds them himself on behalf of the cargo interests, or else deposits them with a ware-houseman, the charges which are due under the terms of the consignment note, together with all other expenses, will remain chargeable against the goods. The Convention does not make provision for the exercise of any rights of lien over goods carried, so the exercise of any such right will remain subject to national law. Presumably in most cases the courts seised of the matter will apply such rights as exist under their domestic law.115 5.42 If the carrier, faced with the refusal of the consignee to accept the goods, avails himself of his rights according to Article 16(2) to unload the goods and to deposit them with a third party, the carriage comes to an end, and the right of the sender to dispose of the goods by asking the carrier to deliver them to another consignee also ceases to exist.116

Sale of goods by the carrier

5.43 Article 16(3)–(5) provides as follows:

3. The carrier may sell the goods, without awaiting instructions from the person entitled to dispose of them, if the goods are perishable or their condition warrants such a course, or when the storage expenses would be out of proportion to the value of the goods. He may also proceed to the sale of the goods in other cases if after the expiry of a reasonable period he has not received from the person entitled to dispose of the goods instructions to the contrary which he may reasonably be required to carry out.
4. If the goods have been sold pursuant to this article, the proceeds of sale, after deduction of the expenses chargeable against the goods, shall be placed at the disposal of the person entitled to dispose of the goods. If these charges exceed the proceeds of sale, the carrier shall be entitled to the difference.
5. The procedure in the case of sale shall be determined by the law or custom of the place where the goods are situated.

5.44 Provision is thus made for the sale of goods by the carrier in certain circumstances. Firstly, if the goods are of a perishable nature or their condition warrants such a course, the carrier is free to sell them without waiting for instructions from the person entitled to dispose of them. Secondly, where storage expenses would be out of proportion to the value of the goods, the carrier is again free to sell them without waiting for instructions from the person entitled to dispose of them. Presumably, however, in both cases if the carrier has in fact already received instructions from the latter, he would be bound to follow them, and could not sell the goods if instructed to the contrary. Thirdly, the carrier may sell the goods in other cases, that is, where the goods are neither perishable nor of small value, if after the expiry of a reasonable time he had not received from the person entitled to dispose of the goods instructions to the contrary which he may reasonably be required to carry out.

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5.45 As to the reasonableness of any such instructions, there is no explicit cross-reference here to Article 12(5)(b),117 although the two clauses do deal with the same stage of the performance of the contract. In theory, the carrier may seek to say that although the instructions he has received are admittedly not within Article 12(5)(b), they are not such as he may “reasonably be required to carry out” under Article 16(3). While each case will have to be considered on its own facts, difficulties are unlikely to arise in practice since it will normally be open to the carrier to argue that any instructions which he considers it would not be reasonable to require him to carry out would interfere with the normal working of his undertaking so as to also be within Article 12(5)(b). It will be recalled, however, that where the carrier wishes to refuse instructions under the latter provision, he is required by Article 12(6) to notify immediately the person exercising the right of disposal. Article 16(3) imposes no equivalent requirement, but if the carrier is at all uncertain as to whether he is entitled to refuse instructions under Article 16(3), and might thus be forced to rely on Article 12(5)(b), it is clearly in his interests to protect himself by giving such notification. 5.46 Article 16 is silent as to whether, at the time of sale, the goods must have been unloaded as provided for by Article 16(2) and are being held either by the carrier himself or by a third party.118 It may well be that in some cases (e.g. perishable goods) there will be no unloading. But, where the goods have not been unloaded and the sale involves further carriage, this will of course be subject to a fresh contract of carriage with the buyer. 5.47 Where the goods have been sold pursuant to Article 16, the proceeds of sale are to be placed at the disposal of the person entitled to the goods subject to the deduction of expenses chargeable to the goods. If the latter exceed the proceeds of the sale, the carrier is entitled to claim the difference.119 The procedure in the case of such a sale will be governed by the law or trade custom of the place where the goods are situated.120