Navig8 Pte Ltd v. Al-Riyadh Co for Vegetable Oil Industry (Lucky Lady) [2013] EWHC 328 (Comm)

The Buyers of a cargo brought claims in Jordan against the Sellers of the cargo and the Disponent Owners of the vessel carrying the cargo. The Disponent Owners sought an injunction and declaratory relief from the Commercial Court, in particular that they were not liable to the Buyers and were not a party to the relevant bills of lading. The Commercial Court refused the injunction but granted declaratory relief, on the basis that the parties had, by implication, chosen English law and that the declaratory relief would be useful to the Disponent Owners in fighting any subsequent attempt at enforcement of a Jordanian judgment in Singapore, where the Disponent Owners were incorporated.

The background facts

The dispute concerned a shipment of palm oil and palm olein from Malaysia to Jordan. Upon delivery, the cargo was rejected by the Buyers on the grounds that it was apparently in poor condition. The Sellers of the cargo were sub-charterers under a Shelltime 4 charterparty, under which Navig8 Pte Ltd were the Disponent Owners.

The sub-charterparty was governed by English law and provided for disputes to be resolved by arbitration in London. The bills of lading issued in respect of the shipment of the cargo incorporated the terms of the sub-charterparty and provided as follows:

“This shipment is carried under and pursuant to the terms of the charter dated 7 March 2008 at Kuala Lumpur between... owners and... charterers, and all conditions liberties and exceptions whatsoever of the said Charter apply to and govern the rights of the party concerned in this shipment...”

The bills of lading further provided that, if a person other than the owner or the demise charterer was judged to be carrier or bailee of the shipment, that person would be entitled to rely upon “all limitations or exonerations from liability and/or defences provided by law or by the terms of the contract of carriage”.

The Buyers brought claims in Jordan against the Sellers of the cargo and the Disponent Owners, as the carriers under the bills of lading, for damages arising from the alleged poor condition of the cargo upon delivery. It was not in dispute that the Buyers’ claim had a real prospect of success under Jordanian law, including the Buyers’ argument that the Disponent Owners were the carrier under the bills of lading issued in respect of the shipment.

The Disponent Owners commenced a claim before the English Commercial Court, seeking: (i) an anti-suit injunction in respect of the Jordanian proceedings and damages; and (ii) declarations that the Disponent Owners were not a party to the bills of lading in respect of the shipment, that they were not bailees of the cargo and that they had no liability to the Sellers in respect of the cargo.

The Commercial Court decision

The Commercial Court rejected the Disponent Owners’ application for an anti-suit injunction. The Commercial Court held that the Disponent Owners’ argument that the Jordanian proceedings were vexatious and oppressive did not fall within the jurisdictional “gateway” provisions in the Civil Procedural Rules, Rule 6B paragraph 3.1(6)(c) of the Practice Direction. This paragraph covers claims made “in respect of a contract where the contract... is governed by English law”. The Commercial Court held that the claim for an injunction was not a claim made “in respect of” a contract governed by English law. In this regard, the Commercial Court cited Alliance Bank JSC v. Aquanta [2012] EWCA Civ 1588, in which Lord Justice Tomlinson said that “unless the claimant is suing in order to assert a contractual right or a right which has arisen as a result of non performance of a contract, his claim is not in this context properly to be regarded as one made in respect of a contract”. Applying this test, the Commercial Court held that the application for injunctive relief fell outside the provisions of paragraph 3.1(6)(c), since no contractual right was being asserted by the Disponent Owners, nor were they seeking to assert any right resulting from any actual or threatened non-performance of a contract.

In respect of the Disponent Owners’ application for declarations that they were not a party to the bills of lading, were not bailees of the cargo and had no liability to the Buyers, the Commercial Court held that the Disponent Owners had established that England was the proper place in which to bring the declaration claims (which was denied by the Buyers). The Commercial Court further held that the presumed parties to the bill of lading contracts between the Buyers and the Disponent Owners had chosen English law, not expressly, but by way of implication, through the incorporation into the bills of lading of the arbitration clause from the sub-charterparty.

The Buyers submitted that the Disponent Owners should not be permitted to serve out of the jurisdiction the claims for declarations, on the basis that these declarations would serve no useful purpose. The Commercial Court rejected that argument. In particular, the Commercial Court accepted the Disponent Owners’ argument that declaratory relief might help the Disponent Owners to resist enforcement of a judgment of the Jordanian court in Singapore, where the Disponent Owners were incorporated. The fact that the Disponent Owners were incorporated in another common law jurisdiction was an important factor in the Court’s decision, since the courts in that jurisdiction were more likely than those in other, non-common law, countries to take into account any orders of the Commercial Court.

Comment

This case highlights the importance of inserting express law and jurisdiction clauses into bills of lading, rather than relying upon wording in a bill of lading that purports to incorporate an arbitration clause from a charterparty. The Commercial Court’s decision shows that an English court may be more willing to grant declaratory relief where it would help the applicant to defend any subsequent enforcement of the foreign judgment in its country of incorporation, particularly where the applicant is based in a common law country that would more readily recognise orders of an English court.