Golden Endurance Shipping SA -v- RMA Watanya SA & Ors [2014]

The Commercial Court recently considered an application by cargo receivers and their insurers to set aside an order for service out of the jurisdiction in respect of proceedings brought against them by shipowners. Although the case principally concerned jurisdictional issues, we focus here on how the court reconciled the use of conflicting editions of the Congenbill form for the Bill of Lading, and its approach to the absence of a signed charterparty.

Background

Dispute had arisen regarding damage to cargo carried on the “GOLDEN ENDURANCE” from three African ports to Morocco, pursuant to three separate bills of lading.

The cargo receivers and their subrogated insurers (Cargo Interests) arrested the vessel in Casablanca. Cargo Interests also issued substantive proceedings relating to the cargo damage before the Casablanca court.

Shipowners were apparently unhappy with delays regarding security (and presumably the release of their vessel) and applied to the English court for an anti-suit injunction against the Moroccan proceedings. Various other steps were taken, but of particular note for these purposes is the fact that shipowners obtained leave to serve out their English proceedings on Cargo Interests and the latter sought to challenge that order.

Issues before the English court in relation to the Lomé Bill of Lading

Congenbill 1978 -v- 1994: an obvious muddle

The front page of the Lomé Bill was on the Congenbill 1978 form. However, its reverse was on the 1994 form. No explanation was given, although as the court noted, there was ‘obviously a muddle’.

The parties were in disagreement as to which of the standard Congenbill terms applied. It suited shipowners to rely on the provisions set out on the reverse (the 1994 version), while Cargo Interests preferred to rely on the 1978 edition, arguing that those terms applied given the use of the Congenbill 1978 front page.

The difference was important in terms of the applicable law and jurisdiction clause and the applicable cargo convention.

Most notably, it will be appreciated that the earlier 1978 Congenbill form does not include specific reference to a charterparty’s law and arbitration clause. This was a revision made to the 1994 standard form which reads:

‘All terms and conditions, liberties and exceptions of the Charter-Party, dated as overleaf, including the Law and  Arbitration Clause, are herewith incorporated.’

In effect, if the 1978 standard terms applied, there was no reference to the charterparty’s law and arbitration clause and Cargo Interests would look to the Hamburg Rules and the Moroccan Court. If the 1994 terms applied, the Bill of Lading did incorporate the ‘Law and Arbitration Clause’ of the charterparty and, in this case, the dispute should be dealt with under English law, and by reference to the Hague Rules.

Cargo Interests relied on the House of Lords decision in “THE STARSIN” in support of their interpretation that the front page of the Bill of Lading was the key focus. In “THE STARSIN” there was an inconsistency between the description of the carrier on the front page of the Bill of Lading and in the terms on the reverse. Cargo Interests referred in particular to Lord Steyn’s judgment, which stated:

‘…In my view he [i.e. the reasonable man experienced in shipping matters] would give greater weight to words specially chosen, such as the words which appear above the signature, rather than standard form printed conditions. Moreover, I have no doubt that in any event he would, as between provisions on the face of the bill and those on the reverse side of the bill, give predominant effect to those on the face of the bill.’

The court was not persuaded. It did not consider that “THE STARSIN” decision was conclusive of an analysis that the terms on the front would always be preferred over the terms on the reverse. Each case must be decided on its individual facts. Here, the conditions of carriage were clearly and legibly set out on the reverse of the Lomé Bill. There was no need, for example, to cross refer to the Congenbill 1994 terms: they were printed on the Lomé Bill. Construing the document in a business sense, it was logical to accept the incorporation of conditions which had been specifically set out in the Bill of Lading, as opposed to those said to be incorporated on its face.

As a result, the 1994 terms were found to apply.

The applicable charterparty

However, matters did not rest there. Not unusually, there was no signed charterparty. Cargo Interests argued that there was therefore no effective law and arbitration clause. In particular, they submitted:

  1. the fixture recap (and/or letter/enclosures) was ‘uncertain and incomplete’;
  2. the relevant charterparty was the head charter, and there was either no head charter or no written head charter; and/or
  3. there was no evidence of a written charterparty before the goods were discharged.

The court was not persuaded by any of these points. It accepted the ‘powerful’ arguments made by shipowners:

  1. Shipowners relied upon an internal email from the agents as the fixing recap. It left some matters incomplete, including the owners’ bank details, the identity of underwriters and the estimated maximum cargo quantity. It attached a standard form charterparty and the covering email stated ‘fixture (if any) is concluded with disp owners’. The court agreed that none of the incomplete details were significant to indicate that there was no consensus as to the existence of a contract. The court further noted the fact that the email annexed a standard form charterparty, and that a subsequent charterparty (albeit unsigned) included all relevant terms;
  2. For an English law clause to be incorporated, the charterparty had to be evidenced in writing. It plainly was so, as noted above.

There was no debate either that if two or more relevant charters existed, one generally presumed that the head charter applied. But this was of no assistance to Cargo Interests here. It did not matter that there was no separate written charterparty as between head owners and disponent owners: the court noted that they were related (common ownership and control), and both names appeared in the fixture recap and the (unsigned) charterparty. It was therefore clear to the court that there was only one charterparty (to which both head owners and disponent owners were a party), and this was obviously the relevant charterparty; and

  1. As per the “EPSILON ROSA”, the lack of an executed (signed) charterparty prior to discharge of the cargo is not fatal to a case that the charterparty is incorporated into the Bill of Lading. The decisive factor was that the terms were agreed  before discharge. The court accepted the evidence of the fixture recap and attached standard terms as being the terms applicable to this Bill of Lading. It was that charterparty’s law and arbitration clause that would be incorporated.