The backstop and the 1969 Vienna Convention on the Law of Treaties.

Two pieces of good news for Prime Minister May yesterday. She survived the ’48 Crash’ which precipitated a vote of confidence in her by Conservative MPs – which she won convincingly. Ouseley J threw out the application for judicial review of the article 50 notification brought by Susan Wilson. However, the problem of the backstop still remains and the Prime Minister is now attempting to secure an amendment to the Draft Withdrawal Agreement from the EU on this issue.

This blog’s attention now turns to the public international law implications of the ‘backstop’ in the Northern Ireland Protocol. Sir Edward Leigh MP is of the view that the 1969 Vienna Convention on the Law of Treaties will enable the UK to terminate the backstop on the ground of a fundamental change of circumstances under article 62.

https://www.edwardleigh.org.uk/news/full-stop-backstop

This is disputed by https://policyexchange.org.uk/wp-content/uploads/…/How-to-Exit-the-Backstop.pdf which states:

“In international law, a fundamental change of circumstances is normally understood as relating to something external to the treaty. Moreover, the party invoking fundamental
change of circumstances must also show that the change “was not foreseen by the parties” (Article 62(1), VCLT). In this case, the possibility of the backstop becoming permanent is already foreseen and is indeed already causing concern. On the other hand, this foresight is also in tension with the stated intention that the Protocol is to apply only temporarily.”

It is possible that if a technically feasible system of maximum facilitation for frictionless border checks comes into existence, the backstop would be terminable without agreement with the EU under this article.

It would also be terminable under Article 60(1) of the VCLT  which provides:
“A material breach of a bilateral treaty by one of the parties entitles the other to invoke the breach as a ground for terminating the treaty or suspending its operation in whole or in part.”
Article 60(3)(b) of the VCLT provides that a material breach consists in “violation of a provision essential to the accomplishment of the object or purpose of the treaty”.  Article 2(1) of the Northern Ireland Protocol to the Draft Withdrawal Agreement provides for parties to use their “best endeavours”  to conclude “an agreement which supersedes this Protocol in whole or in part”. This obligation is fundamental to the object and purpose of the Protocol and a refusal by the EU to accept a maximum facilitation system could be regarded as a ‘material breach’.

 

More Lex Brexitaria. CJEU OKs AG’s opinion.

The Court of Justice has just announced its decision in Wightman. It confirms the opinion of the Attorney General published last week that the UK is free to withdraw its article 50 notice before 29 March 2019.

In today’s Press Release it is stated.

“In today’s judgment, the Full Court has ruled that, when a Member State has notified the
European Council of its intention to withdraw from the European Union, as the UK has
done, that Member State is free to revoke unilaterally that notification.
That possibility exists for as long as a withdrawal agreement concluded between the EU
and that Member State has not entered into force or, if no such agreement has been
concluded, for as long as the two-year period from the date of the notification of the
intention to withdraw from the EU, and any possible extension, has not expired.
The revocation must be decided following a democratic process in accordance with
national constitutional requirements. This unequivocal and unconditional decision must be communicated in writing to the European Council. Such a revocation confirms the EU membership of the Member State concerned under terms that are unchanged as regards its status as a Member State and brings the withdrawal procedure to an end.”

Another instalment in the Lex Brexitaria is expected later today in the judicial review application concerning article 50 in the Administrative Court which was heard last Friday.

 

In the light of the judgment, the current Prime Minister Mrs May has made  a statement at 15.30 in which she  announced a delay to tomorrow’s meaningful vote in the House of Commons on the Draft Withdrawal Agreement. The Prime Minister hopes to use this delay to address the concerns of MPs regarding the backstop. She could start by getting them to read paragraphs 20 and 21 of the Attorney General’s advice which points out that Northern Ireland will be in a more advantageous position with the EU than the rest of the UK in the event the UK enters the backstop.

Back to bailment. A storm in a coffee cup.

 

In today’s decision in Volcafe Ltd and others (Appellants) v Compania Sud Americana De Vapores SA (Respondent) [2018] UKSC 61 the Supreme Court has overruled the decision of the Court of Appeal on the incidence of the burden of proof in relation to the exception of inherent vice in article IV (2)(m) of the Hague Rules.

The claim arose out of for nine separate consignments of bagged Colombian green coffee beans shipped at Buenaventura in Colombia between 14 January and 6 April 2012 on various vessels owned by the defendant shipowners for carriage to Bremen. They were stowed in a total of 20 unventilated 20-foot containers.

The bills of lading, which were subject to English law and jurisdiction and incorporated the Hague Rules, were on LCL/FCL (less than full container load/full container load) terms which meant that the carriers were contractually responsible for preparing the containers for carriage and stuffing the bags of coffee into them. If coffee is carried in unventilated containers from a warm to a cooler climate the beans will inevitably emit moisture which will cause condensation to form on the walls and roof of the container. This makes it necessary to protect the coffee from water damage by lining the roof and walls with an absorbent material such as cardboard, corrugated paper or “Kraft” paper. This was a common commercial practice in 2012 and was used by the carriers in this case, but when the containers were opened the bags in 18 of them were found to have suffered water damage from condensation.

The case raised the issue of the legal burden of proof at two stages. First, does the cargo-owner bear the legal burden of proving breach of  article III(2) of the Hague Rules, or is it for the carrier, once loss or damage to the cargo has been ascertained, to prove compliance? Second, as regards to article IV.2, and particularly exception (m), what is the burden of proof.. The carrier accepted that he must bear the burden of proving facts which bring the case within an exception, but submitted that once he had done so it is for the cargo-owner to prove that it was the negligence of the carrier which caused the excepted peril (in this case, inherent vice) to operate on the cargo. This was the analysis adopted by the Court of Appeal.

Lord Sumption gave the leading judgment and found that the questions must be resolved by examining the nature of a contract for the carriage of goods by sea. This was a contract of bailment under which the carrier is under an obligation is to take reasonable care of the goods accepted into its custody with a rule that the carrier would be liable for loss or damage to the goods while in its custody unless it could disprove negligence. The scheme of the Hague Rules assumes that the carrier does indeed have the burden of disproving negligence albeit without imposing that burden on him in terms.

In principle where cargo is shipped in apparent good order and condition but is discharged damaged the carrier bears the burden of proving that that was not due to its breach of the obligation in article III.2 to take reasonable care. The Hague Rules authorities, such as Gosse Millard v Canadian Government Merchant Marine Ltd [1927] 2 KB 432 and Silver v Ocean Steamship Co Ltd [1930] 1 KB, bear this out. The true rule is that the carrier must show either that the damage occurred without fault in the various respects covered by article III.2, or that it was caused by an excepted peril. If the carrier can show that the loss or damage to the cargo occurred without a breach of the carrier’s duty of care under article III.2, he will not need to rely on an exception.

As regards the second issue, the burden of proof under article IV (2), pre Hague Rules decisions such as Notara v Henderson (1872) LR 7 QB 225 and The Xantho (1887) 12 App Cas 503 and Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518 treated absence of fault as an integral part of the exception of perils of the sea. Against that there is the decision of the Court of Appeal in The Glendarroch [1894] P 226,  holding that the burden of proving that an excepted peril had been occasioned by the carrier’s negligence lay on the cargo owner.

Even if the decision was correct as regards the exception for perils of the sea, it would not apply to the exception for inherent vice. The distinction between the existence of the peril and the standard of care required of the carrier is impossible to make in that context. A cargo does not suffer from inherent vice in the abstract, but only in relation to some assumed standard of knowledge and diligence on the part of the carrier.  Lord Sumption stated:

  1. It follows that if the carrier could and should have taken precautions which would have prevented some inherent characteristic of the cargo from resulting in damage, that characteristic is not inherent vice. Accordingly, in order to be able to rely on the exception for inherent vice, the carrier must show either that he took reasonable care of the cargo but the damage occurred nonetheless; or else that whatever reasonable steps might have been taken to protect the cargo from damage would have failed in the face of its inherent propensities.

The Court of Appeal held that the Deputy Judge’s had misdirected himself in finding that article III (2) meant that the cargo had to be carried in accordance with a system that would prevent damage, and that inherent vice could be demonstrated only if damage was inevitable. The Deputy Judge had found that the evidence did not establish what weight of paper was used for these shipments, except that it was more than 80 gsm, and did not establish how many layers were used, and there was no evidence to show what thickness of paper ought to be used for a given number of layers, in order to avoid condensation damage, and no generally accepted commercial practice this point. The Court of Appeal had made two different findings of fact. First, that there was an accepted industry practice in 2012 for lining unventilated containers for the carriage of bagged coffee, either by using two layers of paper of at least 80 gsm or one layer of at least 125 gsm. Second, that two layers of paper had been used. It therefore followed that the containers had been lined in accordance with accepted industry practice. The Court of Appeal was not justified in overturning the deputy judge’s findings on either of these two critical points.

Lord Sumption concluded:

  1. I would hold that the carrier had the legal burden of proving that he took due care to protect the goods from damage, including due care to protect the cargo from damage arising from inherent characteristics such as its hygroscopic character. I would reinstate the deputy judge’s conclusions about the practice of the trade in the lining of unventilated containers for the carriage of bagged coffee and the absence of evidence that the containers were dressed with more than one layer of lining paper. In the absence of evidence about the weight of the paper employed, it must follow that the carrier has failed to prove that the containers were properly dressed.

 

Today’s decision is of great importance to both carriers and cargo owners. It reiterates the accepted wisdom as regards the operation of the burden of proof in respect of Article III(2), but departs substantially from that  position as regards the incidence of the burden of proof in respect of the exceptions afforded to the carrier under Article IV(2). Although the case concerned the specific exception of inherent vice, the Supreme Court’s decision would apply equally to all the exceptions in Article IV(2) – save for the nautical fault exception in (a) and the ‘catch-all’ exception in (q) which in terms specifically requires the carrier to prove absence of fault on its part or that of its servant or agents.

Advocate General comes out for unilateral right to revoke article 50 notice (terms and conditions apply)

 

Today Advocate General Campos Sánchez-Bordona has given an opinion[1] that Article 50 TEU allows the unilateral revocation of the notification of the intention to withdraw from the EU, until such time as the withdrawal agreement is formally concluded, provided that the revocation has been decided upon in accordance with the Member State’s constitutional requirements, is formally notified to the European Council and does not involve an abusive practice. Revocation is only possible within the two year period that starts when the intention to withdraw is notified.

The decision of the Court of Justice on this matter is expected later this month.

 

[1] Advocate General’s Opinion in Case C-621/18 Wightman and Others v Secretary of State for Exiting the European Union

A couple more cases in the ‘Lex Brexitaria’. 

 

First, last Monday in its Judgment in Case T-458/17 Shindler and Others v Council of the European Union the Court of Justice of the European Union held that the application for annulment of the decision authorising the opening of Brexit negotiations, brought by thirteen British citizens who live in EU Member States other than the UK, was inadmissible. The applicants based their claim on the fact that, as UK citizens living in another Member State, they were unable to vote in the 2016 referendum. They claimed that this had a direct impact on the rights which they derive from the Treaties. and sought to annul the act by which the Council accepted the UK’s notification of intention to withdraw from the EU. The Court noted that, although the decision of the Council authorising the opening of the Brexit negotiations had legal effects as regards the relations between the EU and its Member States and between the EU institutions, in particular the Commission, which was authorised by that decision to open negotiations for an agreement with the UK, it did not directly affect the legal situation of the applicants. The action was dismissed as inadmissible since the Council’s decision did not produce binding legal effects capable of affecting the interests of the applicants by bringing about a distinct change in their legal position.

Second, in Susan Wilson v The Prime Minister this Friday, 7 December, the Administrative Court is due to hear an application for judicial review of the UK government’s giving of notice under art.50 on the grounds that “facts recently revealed since the Prime Minister exercised her power under s. 1 of the European Union (Notification of Withdrawal) Act 2017(“the 2017 Act”) to notify the European Union (“EU”) of the UK’s intention to leave the EU show that the 2016 referendum (“the Referendum”) on whether the UK should remain a member of the European Union (“the EU”) was vitiated by illegality and/or unlawful misconduct.” This is particularised with reference to the recent finding by the Electoral Commission that serious offences were committed by the designated campaign for leaving the EU and by others, in breach of the statutory framework established by Parliament for the Referendum. The applicants are seeking a declaration that the result of the EU Referendum is invalid and asking for the decision of the Prime Minister to invoke Article 50 to be quashed.

And we still await the CJEU’s decision on whether an article 50 notice can be unilaterally withdrawn by the Member State that gives the notice.

Forwarder’s right to limit under Montreal Convention

When does the Montreal Convention 1999 cover loss or damage to a cargo under a multimodal contract when that occurs outside the airport? That was one of the questions  before the District Court of the Hong Kong Special Administrative Region in In Mozard v Dachser [2018] HKDC 574. A Hong Kong garment exporter engaged the defendant freight forwarder to carry 20 cartons of garments by air from Hong Kong to Lyon, France. The goods reached the buyer but the exporter did not receive payment of the price and argued that the carrier had been in breach of its contract in allowing delivery to be taken without production of the airwaybill which named a bank as the consignee. The exporter had signed the carrier’s shipper’s instructions which expressly incorporated ‘HAFFA’s Standard Conditions’ and received and AWB which was expressly subject to the rules relating to liability under the Montreal Convention. The forwarder accepted that is was liable, but argued that it could limit liability as per the limitations under either the Montreal Convention or the HAFFA standard conditions.

The first issue was whether the loss or damage was covered by the Montreal Convention. The alleged misdelivery had not occurred during actual air flight and it was for the defendant to prove that it occurred within an airport. This was not the case as the only evidence before the court was that the forwarder did not have a warehouse inside Lyon airport. Nor did the Montreal Convention apply to the loss by virtue of the contractual provision in clause 2/2.1 of the AWB: “Carriage is subject to the rules relating to liability established by the Warsaw Convention or the Montreal Convention unless such carriage is not “international carriage” as defined by the applicable Conventions.” The word ‘carriage’ bore the same meaning as in the Convention and therefore the Montreal Convention only applied in relation to loss or damage within the limits set by the Convention.

 

The forwarder’s liability was dealt with under the HAFFA conditions and the relevant liability and limitation provisions were to be found in cl.21. Cl. 21.1 a general exception from liability for damage to or loss or non-delivery of or misdelivery of the goods unless it was proved that this occurred while the goods where in the carrier’s actual custody and under its control and was due to the wilful neglect or default of the forwarder or its servants. In the event of liability being established Cl. 21.5 provided a limitation of HK$200 per shipping package or unit or HK$10.00 per kilogram, whichever is the least. The clause covered loss which was not covered by other clauses in cl.21 as well as causes of loss which were unknown or not capable of being defined or characterised. On the evidence there was no explanation of how the loss here had arisen. There was nothing in the contract or on the face of the AWB to show that the AWB had to be presented for delivery of the goods to be obtained. The AWB was marked ‘Not Negotiable’. Nor was a term to this effect to be implied as the AWB is not a document of title. There was no legal or factual basis to find that the loss here was a fundamental breach or deviation and its specific cause was unknown and fell within cl.21.5 which covered situations where explanation is lacking.

The court then found that the limitation clause satisfied the reasonableness test in  Hong Kong’s Control of Exemption Clauses Ordinance which is modelled on the UK Unfair Contract Terms Act 1977. First, the parties’ bargaining power were equal and the exporter could have engaged other freight forwarders and, indeed had done so: the reason why it engaged the defendant was simply due to their usual agent switching to work for the defendant. Second, clause 21.5 was inherently relevant to the rates charged by the forwarder as the exporter had the option under clause 21.7 to contract out of the clause 21.5 limits by paying additional charges. Third, the exporter could have effected insurance on the cargo and was in fact in a better position to do so as there was no evidence that the forwarder knew of the cargo’s value and it would be cheaper for the exporter to effect indemnity insurance than for the forwarder to effect liability insurance

 

Brexit. The draft political declaration – and a Spaniard in the works?

The draft political declaration has now been published. The shopping list for determining the shape of negotiations on the future relationship between the UK and the EU, which cannot start until after exit day, has grown from 7 pages to 26 pages. In the maritime sphere there is a brief reference to the UK’s relationship with EMSA in para 65, providing for facilitation of cooperation on maritime safety and security, including exchange of information between EMSA and the UK Maritime and Coastguard Agency, consistent with the UK’s status as a third country. There is nothing on civil jurisdiction.

Fishing opportunities are referred to in paras 73 to 76 with para 75 stating ‘Within the context of the overall economic partnership the Parties should establish a new fisheries agreement on, inter alia, access to waters and quota shares.” There is also some reference to what will be needed to ensure the new agreement is WTO compliant, so that, for example, in line with article V of the General Agreement on Trade in Services the Parties should aim at substantial sectoral coverage, covering all modes of supply and providing for the absence of substantially all discrimination in the covered sectors, with exceptions and limitations as appropriate.

Chapter IX notes that free  movement of persons between the EU and the UK will no longer apply and sets out various non discriminatory mobility arrangements such as confirming commitments to effective family law instruments to which the EU and the UK are party and noting the UK’s intention to accede to the 2007 Hague Maintenance Convention. In case the UK changes its mind on free movement in the future para 54 commits the Parties to consider addressing social security coordination.

A last minute obstacle to the signing of the agreement on Sunday has come with Spain’s objections to article 184 in the draft withdrawal agreement which provides that the EU and the UK will seek to “negotiate rapidly the agreements governing their future relationship” between the official day of withdrawal on 29 March 2019 and the end of a transition period in December 2020. Spain wants to ensure that negotiations on the future of the EU-UK relationship would not include Gibraltar and confine discussions to bilateral arrangements with the UK. No reference is made to this in the political declaration

It still remains uncertain whether the UK Parliament will vote for the withdrawal agreement when it is put before it in the meaningful vote, scheduled for some time early in December. There have been some interesting cultural references to the agreement. Following Dominic Raab’s resignation, various commentators have referenced ‘Hotel California’ with regard to the Backstop, “You can check out any time you like, but you can never leave.” while the Chief Minister of Gibraltar, Fabian Picardo, has referred to a ‘Thelma and Louise’ exit from the EU.

For myself, I go back to Tancredi’s words in ‘The Leopard’ by Giuseppe di Lampedusa. ‘For everything to stay the same, everything must change’.

Government loses challenge to article 50 CJEU reference.

 

 

The Secretary of State for Exiting the European Union sought  permission from the Supreme Court to appeal against the orders of  the Inner House of the Court of Session dated 21 September and 3 October 2018 requesting the CJEU to give a ruling on the following question:

“Where, in accordance with article 50 of the Treaty on European Union, a member state has notified the European Council of its intention to withdraw from the European Union, does EU law permit that notice to be revoked unilaterally by the notifying member state; and, if so, subject to what conditions and with what effect relative to the member state remaining within the European Union?”

Yesterday, the Supreme Court declined to give permission to appeal. Under section 40 of the Court of Session Act 1988 the only basis for an appeal against the orders would be if they constituted “a decision constituting final judgment in any proceedings”. The order did not constitute a final judgment. Under art. 267 of the TFEU under which the preliminary ruling has been requested the purpose of the ruling is “to enable [the national court] to give judgment”. The preliminary ruling is merely a step in the proceedings pending before the national court which is the court which must assume responsibility for the subsequent judicial decision.

The CJEU hears the case on 27 November.

Brexit. It’s the Supremes again!

More judicial fun and games around Brexit – this time arising out of  the Court of Session sending a reference to the CJEU seeking a preliminary ruling on whether EU law permitted unilateral revocation of an article 50 notice of withdrawal by a notifying state.

The CJEU applied its expedited procedure and fixed an oral hearing  for tuesday week, 27 November 2018.

An application was made to appeal to the Supreme Court on 16 October 2018 against the Court of Session’s reference. The First Division of the Inner House refused the application on 8 November 2018.

The Secretary of State for Exiting the European Union has now applied to the Supreme Court for permission to appeal.

Secretary of State for Exiting the European Union (Appellant) v Wightman and others (Respondents)

UKSC 2018/0209