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Road hauliers versus tobacco and alcohol traders – who bears the burden of excise duty?

by Dr Simone Lamont-Black, Senior Lecturer in International Trade Law, Edinburgh Law School

End of February this year, the Supreme Court heard submissions in JTI Polska Sp Zoo v Marek Jakubowski [2021] EWHC 1465 (Comm). The question was whether article 23(4) of the United Nations Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR) should be interpreted according to the Court of Appeal’s view in Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113 or the older (criticised)(1) House of Lords decision in Buchanan v Babco Forwarding and Shipping (UK) Ltd [1978] A.C. 141. The question was considered one of sufficient public importance to merit reconsideration by the Supreme Court.

The point of law at stake will determine whether the excise duty payable following the loss of cigarettes from the appellants’ lorry lies with the road haulier or with the trader, manufacturer or cargo owner trading in the goods (‘the cargo interests’). The decision of the Supreme Court will determine whether road hauliers will continue to be treated differently from rail and sea carriers. Any misalignment in treatment among them would cause problems in competition among different modes of carriage. It would create incentives for the cargo interests to select road transport over other, less environmentally harmful, modes of transport.

In this blog, after explaining the facts and conflicting decisions, I will frame relevant interpretative questions. I will show that an expansive interpretation of “other charges”, which leads to a refund of excise duty not only runs counter to the policy framework of the CMR and to the structure of limitation regimes of carriage conventions but it also fails the policy aims for charging excise duty.

Facts leading to liability of the road haulier

Whilst the road haulier was transporting a consignment of cigarettes from Poland to the UK, the cigarettes were stolen in England during an overnight stop at a service station. The cargo interests incurred excise duty as the cigarettes were deemed to have entered circulation in the UK. (The cigarettes had been subject to a European excise duty suspension.) They sought to recover the excise duty from the haulier under article 23(4) of the CMR.

Conflicting decisions on the provision

Article 23(4) of the CMR allows the cargo claimant to seek, in addition to the value of the goods, the refund of carriage charges, customs duties and other charges incurred in respect of the carriage of the goods. However, no other damages are payable. In Buchanan, the House of Lords interpreted the meaning of “other charges” expansively and held by a majority of 3:2 that it included excise duty payable for whisky which had been lost in transit. Yet, 25 years later, the Court of Appeal in Sandeman unanimously held guarantee payments, which the claimant had to make to tax authorities due to the loss of tax seals by the defendant carrier, were too remote to qualify as “other charges”.

Interpretative question at issue

While the matter concerns the interpretation of article 23(4) of the CMR, it raises broader policy questions. Should excise duty be refundable as damages, where convention regimes deliberately limit monetary compensation? Should road hauliers be treated differently from carriers under other modes of transport? Which of the parties benefits most of the trade and transport of goods which are taxed because of their properties?

Analysis of issue

I will first set out the convention systems and their limitation regimes in context to show that an expansive interpretation of other charges does not fit. Secondly, I will show that the CMR, more so than other conventions, was designed to safeguard the business of road carriage from the impact of the typical power asymmetries prevalent in the sector. To burden the road carrier with excise duty would be in opposition to this aim. Thirdly, I will argue that excise duty is connected to the goods and not the transport and that the beneficiary of the trade in such goods should bear the tax as a correlation to the benefit obtained.

The carriage convention limitation provisions in context

All international carriage conventions provide a framework of liability which includes a monetary limitation, providing certainty to commercial parties. The carrier is protected from the risks associated with cargo of high undisclosed value, which means they can calculate their exposure, and insure accordingly. Likewise, the cargo interests can work out the maximum recovery and, if inadequate, insure for the full value of their cargo.(2) Unless value is declared, the carrier provides their business without considering the value of the goods. Where the goods’ full value and additional exposure, including “other charges” is to be factored in, it has been shown that this is more economically done by cargo insurance than by carriers and their liability insurers.(3) As a matter of principle, therefore, properties of the goods that impact their value or any exposure, such as excise duty, ought to be treated as the risk and ultimate responsibility of the cargo interests.

Other charges in context

Under the sea carriage conventions, the issue of ‘other charges’ does not arise because the compensation value of the goods, albeit limited, is calculated by reference to their value at the place and time of discharge (see e.g. the International Convention for the Unification of certain Rules relating to Bills of Lading of 1924 (Hague Rules) as amended by the 1968 Brussels Protocol (Visby Protocol) (Hague-Visby Rules), article IV Rule 5(b)). Consequently, this value already includes carriage and other charges expended in order to get the goods to their destination. In contrast, the CMR and the Uniform Rules Concerning the Contract of International Carriage of Goods by Rail (CIM) land carriage conventions work on the basis of the goods’ value when handing them over for carriage (see CMR article 23.1 and CIM article 30.1). They therefore add the costs of transportation and other charges expended in order to get the goods to destination (see CMR article 23.4 and CIM article 30.4). However, excise duty only falls due because the goods do not arrive, and therefore does not fit this category. Instead, it falls due because of characteristics inherent in the goods, not the transport. This is clarified in the explanatory report to the CIM Uniform Rules.

While the CIM is a rail convention, both it and the CMR have been developed with reference to each other. Based on the idea that road and rail transport were in direct competition and that harmonisation of carriage regimes in light of combined transport would be necessary, the drafters aimed to keep the liability regime aligned as much as possible.(4) This similarity therefore enables comparison between the two instruments, as practised by courts on the continent.(5) In its Bulletin of International Carriage by Rail No.1/2004, Case Law (p.15-19), the Intergovernmental Organisation for International Carriage by Rail reported on case law and provided the opinion of its Central Office on whether excise duty was refundable. Its opinion was that, in alignment with the aim of the legislator, the provisions in the CMR and CIM only included costs or charges which would have been incurred to the same extent in carriage according to contract and which would have contributed to the value of the goods at the place of destination. This excluded charges incurred as the result of loss, such as excise duty. During the revision of CIM in 1999 the matter was made explicit in the convention text (article 30(4)) and further explained in the CIM Explanatory Report. Singling out road carriers and burdening them with excise duty is therefore an unjustified outlier.

The CMR’s exceptional boundaries to any extension of road carrier liability

The interpretation of the provisions of the CMR, such as article 23(4), must give credit to the policies enshrined in the instrument. Under article 41 of the CMR, any stipulation directly or indirectly derogating from the provisions of the CMR is null and void. Thus, the CMR ensures that the more powerful party, whether carrier or cargo interests, cannot require more favourable conditions or offer any terms that could distort competition.(6) (This is in contrast with sea carriage conventions, which were designed at a time when sea carriers were the more powerful. In these systems, a sea carrier can offer higher compensation but cannot reduce their liability.) It follows that the CMR has the capacity to act as safeguard in protecting road carriers from the demands of powerful shippers. An expansive interpretation of “other charges” which would circumvent this safeguard in the CMR is inappropriate.

Benefits of trade v transport charges

A carrier’s freight rate is based on parameters directly related to the carriage contract itself, such as the volume and weight of the goods transported, the type of vehicle or trailer used (e.g. curtain sided or box trucks) and any added security measures cargo interests required (e.g. additional drivers to avoid overnight stops). In contrast, cargo interests use the goods in their own business in order to make a profit. It is the cargo interests who ultimately benefit from the shipment.

The purpose of charging excise duty is unrelated to the contract of carriage itself. Its purpose is to affect consumer behaviour.(7) For example, the excise duty payable on tobacco and alcohol products reflects their negative impact on public health. This policy aim of the duty can best be achieved if the burden remains with the cargo interests, who can then adjust the prices of their products and pass on the burden to consumers. If instead the carrier has to pay the duty, then the policy aim is defeated.  The carrier bears a burden without getting any related benefit.


The monetary limitation provisions of carriage conventions have, for good reason, generally disconnected any compensation payable from the particular goods’ value. An expansive interpretation of other charges to include excise duty would re-introduce an unwelcome alignment to the goods’ value and properties. Excise duty, as a duty charged on goods due to their potential for causing physical or social harm, should remain with the cargo interests benefitting from the trade in such goods. The risk of exposure beyond the pre-determined limitation amount and carriage charges incurred that add to the value of the goods at destination should remain with the cargo interests.



  1. See e.g. M Clarke, ‘Charges recoverable under CMR: Scotch Mist in the Court of Appeal’, [2004] JBL 378.
  2. See Lord Diplock, ‘Conventions and Morals – Limitation Clauses in International Maritime Conventions’, (1970) 1 J Mar L & Com 525 at 527 & 529; S Girvin, Carriage of Goods by Sea (3rd ed, OUP, 2022) para 29.01 ff. and C W H Goldie, ‘Effect of the Hamburg Rules on Shipowners’ Liability Insurance’ (1993) 24 J Mar L & Com 111, 113; and W Tetley, Marine Cargo Claims (4th edn, Les Éditions Yvon Blais, 2008) Ch 41, 2158 n.11. See also J Verheyen, ‘The Technique and Economic Management of Liability Insurance for the Carrier by Road’, Ch 17 in J Theunis, International Carriage of Goods by Road (CMR) (LLP 1987), at 262 f.
  3. See Lord Diplock, ‘Conventions and Morals’ (n.2) at 529-30 & 536. An analysis of CMR, art 23.4 from a law and economics perspective see J. Schelin, ‘CMR Liability in a Law & Economics Perspective’, Stockholm Institute for Scandinavian Law 1957 – 2010, 176 at 186-7 and more generally advocating a law and economics perspective, see J. Schelin, ‘CMR Convention in a Law and Economics Perspective’ (2016) 21 Unif L Rev 434 at 434-5.
  4. M Clarke, International Carriage of Goods by Road: CMR (6th edn, Informa Law, 2014) para 2 and see A Messent and D A Glass, CMR: Contracts for the International Carriage of Goods by Road (4th edn, Informa Law, 2017) para 0.23.
  5. A Messent and D A Glass, CMR (n.4) para 0.23 and M Clarke (n.4) para 4e.
  6. A Messent and D A Glass, CMR (n.4) para 12.2.
  7. According to the World Health Organisation: “ Excise taxes are the most effective tax measure for promoting health because they change the price a harmful product relative to other goods and can be easily increased over time.”
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