TRANSPORT: An Introduction to UK-wide

2023 has seen persistent challenges in the transport sector with the continued driver shortage, increasing fuel costs and key changes to legislation. The recession, rising inflation, the war in Ukraine and the lingering effects of Brexit and COVID-19 also weigh heavily on the sector. Whether by road, rail, sea or air, the challenges remain consistent to operators.

We provide an update on the challenges 2023 has seen so far and what we predict is to come.

Trucks Cartel and Competition Litigation 

2023 has seen further developments in the Competition Tribunal, with the transport sector remaining at the forefront of developing the regime. Whether trains (Guttman v First MTR South Western Trains), trucks (RHA v MAN, DAF & Others) or ships (McClaren v MOL & Others), all aspects of the transport sector are involved in the regime.

A raft of appeals of the multimillion-pound (or, in the case of trucks, multibillion-pound) claims was anticipated, butthe CAT refused permission to appeal in the trains case and the respondents chose not to appeal any further. The trains case has been listed for a split trial taking place in June 2024 and June 2025 over a total of six weeks, with one additional week in reserve.

Both the trucks and ships cases have faced appeals. In trucks, the Supreme Court appeal (on the discrete issue of litigation funding) was heard in February 2023. Judgment was handed down on 26 July 2023, granting the appeal and ruling that litigation funding agreements (LFAs), pursuant to which the funder is entitled to recover a percentage of any damages recovered, were "damages-based agreements" (DBAs) within the meaning of the legislation that regulates such agreements. The trucks case was also in the Court of Appeal in May 2023 on a separate issue, where the appellants argued that the RHA should not have been granted the CPO due to a conflict within the group of claimants. The Court of Appeal dismissed these appeals in its judgment dated 25 July 2023, meaning that the trucks case will continue in the CAT, and it is anticipated that a case management hearing will take place in late 2023 or early 2024.

The appeal in the ships case was heard in November 2022 and the Court of Appeal handed down its judgment on 21 December 2022, dismissing the appeals. The CAT has since directed that a hearing will take place between December 2023 and May 2024 to determine a preliminary issue application of one of the defendants. The full trial is likely to take place in 2025.

CMR 

The Supreme Court has provided certainty of the recoverability of excise duty under the CMR. JTI POLSKA Sp. Z.o.o and others (Respondents) v Jakubowski and others (Appellants) [14.6.23] has put the question of the recoverability of excise duty under the CMR beyond any doubt and reintroduced certainty as to the English courts’ position on this point. It has also provided useful guidance on how to determine what “additional” charges can be recovered from a carrier under Article 23.4 of the CMR, in addition to the limits of liability.

Article 23 of the CMR sets out the damages recoverable in the event of a claim for loss or damage to goods, and limits the liability. Article 23.4 allows the cargo owner to recover certain further losses in addition to the limit of liability, which includes “other charges incurred in respect of the carriage of the goods”.

In James Buchanan & Co. Ltd v Babco Forwarding & Shipping (UK Ltd (1978), the House of Lords held that excise duty was a charge incurred in respect of the carriage. The Supreme Court has endorsed the Buchanan decision and provided clarification on what it considers not to be a charge (liability for liquidated damages and a liability under a guarantee to tax authorities).

Whilst this decision may attract academic criticism, it has reintroduced certainty on the English courts' interpretation of Article 23. 4 and provides clarity for the transport industry, specifically the shipping sector.

Increasing Fines 

On 13 February 2023, the Carriers’ Liability (Amendment) Regulations 2023 came into force, which changed the rules and penalties relating to vehicles carrying clandestine entrants into the UK.

The key changes made by the Regulations are that the fine for carrying clandestine entrants has increased from GBP2,000 per responsible person, per clandestine entrant, to GBP10,000 per responsible person, per clandestine entrant.

The way the fine is calculated has also changed dramatically, in that the starting point is for the full fine to be imposed and then reductions are applied for certain criteria (compliance with the Regulations and membership of the Civil Penalty Accreditation Scheme).

The fines under the new Regulations have started to filter through and we have seen a spate of enquiries from operators who have received hefty fines, including one operator who was fined GBP24,000 despite acting in compliance with the Regulations.

Guide to Maintaining Roadworthiness 

April 2023 saw the launch of the latest version of the Guide to Maintaining Roadworthiness. There have been a significant number of changes to the content of the guide. The starting point for the guide is that operators are expected to have read it, to be familiar with it and to have introduced systems that are in line with the guidance given, insofar as it relates to their business actives. The latest version of the guide has also seen a significant change in the language used, moving from a softer more encouraging style of language to a firmer, more directive approach. Words such as “must” and “should” are explained in the introduction, with “must” being a requirement due to the legislation and “should” being guidance. However, if an operator chooses not to follow the guidance, they will be expected to have demonstrated a risk assessment for their alternative approach that justifies not following the guidance. It is anticipated that, at public enquiries, Traffic Commissioners will use failure to follow the guidance as one of the reasons for the operator's failure to comply with their obligations as an operator. This of course will justify regulatory action in many cases.

Alternative Fuels 

One of the most significant challenges the industry faces at the moment is upgrading to alternative fuel vehicles. With the green agenda well underway, and the deadline of 2030 ominously close, the industry is scrambling around trying to find appropriate vehicles for their operation to meet this zero-carbon agenda. In some sectors, such as the bus sector, this has been hugely assisted by government grants and other schemes to enable the purchase of fleets of electric buses, which we are seeing in many towns and cities today. These purchases are not without problems, as the recharging of buses, particularly fleets of buses, requires a huge amount of electricity.

Hydrogen is being taken very seriously as an alternative but lacks investment at present. A real challenge is the distribution of hydrogen, which is currently treated as a chemical and not a fuel, creating all sorts of storage and transportation issues. Operators want to move to modern technology, but technology has not yet adapted this type of fuel/chemical enough to enable vehicles to be purchased by the vast bulk of the transport sector who do long-distance work.

Strikes and Agency Workers 

In 2022, the Secretary of State revoked regulations making it illegal for employers to knowingly use agency workers to carry out the work of striking employees, allowing employers to bring agency worker in to alleviate the effect of the strike.

In May 2023, in what was described as a significant victory for the Trade Union movement, Mr Justice Linden upheld claims brought in the High Court confirming that employers may no longer use the services of agency workers to stand in for striking employees, and that the government had acted unlawfully and unfairly in revoking the regulations back in 2022. The judgment highlighted that any changes made to strike laws in the future should be subject to rigorous consultation periods, with reference to the requirement for a meaningful consultation and the statutory duty to consult as an aspect of the common law duty to act fairly.

The Windsor Framework 

On 27 February 2023, the UK and EU agreed the Windsor Framework, providing a fundamentally new set of arrangements aimed at restoring the smooth flow of trade within the UK internal market; safeguarding Northern Ireland’s place in the Union; and addressing the democratic deficit that was otherwise at the heart of the original Northern Ireland Protocol. With the first substantive tranche of the terms of the agreement coming into force on 1 October 2023, hauliers and ship operators are preparing themselves for the changes and whether there is any impact on the supply chain.