Emery Air Freight Corporation v Merck Sharpe & Dohme (Australia) Pty Ltd

Emery Air Freight Corporation (Emery) appealed a decision of the Supreme Court of New South Wales concerning damage to a consignment of pharmaceutical chemicals during international air transportation. Merck Sharpe & Dohme (Australia) Pty Ltd (Merck) had suffered loss due to this damage and sought to recover compensation from Emery. The central issue revolved around the extent to which Emery's liability was limited by the provisions of the Warsaw Convention.

The Court of Appeal was required to determine whether Emery, as a freight forwarder that contracted as a principal to arrange international air carriage, qualified as a "carrier" under the Warsaw Convention. Further, the court had to consider whether Emery had complied with the requirements of Article 8(b), (c), and (e) of the Convention, which prescribe the particulars that must be included in an air consignment note. The ultimate question was whether these provisions, if not complied with, would preclude Emery from relying on the Convention's limitations on liability, thereby allowing Merck to recover damages reflecting their actual loss.

The Court of Appeal held that Emery, by contracting as a principal to arrange the carriage, was to be treated as a "first carrier" under the Warsaw Convention. The Court emphasised that in interpreting a multipartite treaty such as the Warsaw Convention, the substance of the transaction should be preferred over its form. It was found that Emery had failed to comply with the mandatory requirements of Article 8(b), (c), and (e) of the Convention in its consignment note. Consequently, Emery was not entitled to rely on the limitations of liability imposed by the Convention. The appeal was allowed, and the matter was remitted to the Supreme Court for assessment of damages.