In National Navigation Co v Endesa Generacion SA (The “Wadi Sudr”) – (2009) 767 LMLN 1 the dispute arose under a bill of lading in the CONGENBILL form. The bill of lading named the port of discharge as Ferrol, Spain, and provided that freight was payable “as per the relevant charterparty” but no date was given. The reverse of the bill provided for the application of the Hague or Hague-Visby Rules and also stated:

“… all terms, liberties and exceptions of the Charterparty dated as overleaf, including the Law and Arbitration clause are herewith incorporated.”

The Claimants, an Egyptian company, were the registered owners of the Wadi Sudr. At the relevant time, the vessel was subject to a head charter, a sub-time charter (to Morgan Stanley Capital Group Inc) and a voyage charter by Morgan Stanley to Carboex. The head charter and the voyage charter contained English law and arbitration clauses. The sub- time charter was not in evidence.

The cargo interests claimed damages in the Spanish courts and the Claimants sought declarations from the English court that the London arbitration clause (either under the head charter or the voyage charter) was incorporated in the bill of lading; damages for breach of the London arbitration clause; a declaration that the English Court had jurisdiction pursuant to Article 5; a declaration that Claimants had no liability in respect of any claim which cargo interests might bring in breach of the arbitration clause; and an anti-suit injunction.  

It was common ground that, in the light of the ECJ’s decision in The Front Comor, the Anti-Suit Application had to be dismissed.

The first question was therefore whether the English Court was required under Regulation 44/2001 to recognise the judgments of the Almería court in relation to incorporation of the arbitration agreement and waiver/repudiation of the arbitration agreement. Section 32 of the Civil Jurisdiction and Judgments Act 1982 provided inter alia that an overseas judgment given in proceedings brought in breach of an arbitration agreement should not be recognised or enforced in the United Kingdom, save that nothing in section 32 should affect the recognition or enforcement in the United Kingdom of a judgment which was required to be recognised or enforced there under the Regulation.

In the light of the ECJ’s decision in The Front Comor, the judgments of the Almería Court had to be characterised as judgments within the scope of the Regulation and were not within the arbitration exclusion contained in Article 1(2)(d). However, the question was whether, notwithstanding that the judgments of the Almería Court were within the Regulation, they were required to be recognised, pursuant to Article 33(1) of the Regulation, in proceedings in another Member State, which were not themselves proceedings within the Regulation.

Reference was made to The Front Comor, and Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Association Company Ltd [2005] 1 Lloyd’s Rep 67. The court favoured the view that, although the judgments of the Almería Court were Regulation judgments, they were not required to be recognised, pursuant to Article 33(1) of the Regulation, in proceedings in another Member State, which were not themselves proceedings within the Regulation, because, in the latter proceedings, the Regulation simply did not apply.

The reasoning of the ECJ in The Front Comor as to the incompatibility of an anti-suit injunction with the Regulation did not require a similar conclusion in relation to the declaration sought by the Claimants. The granting of the declaration sought by the Claimants would not amount to any attempt by the English Court “to strip [the Almería Court] of the power to rule on its own jurisdiction under [the] Regulation”. Nor would it amount to an attempt by the English Court to interfere with the Almería Court’s “exclusive” right to rule on its own jurisdiction pursuant to Articles 1(2)(d) and 5(1). All the English Court would be doing would be deciding, in compliance with its obligations under Article II of the New York Convention, whether there was a subsisting arbitration agreement between the parties; and, if so, referring the parties to arbitration. Nor would any such declaration of the English Court prevent the Almería Court from exercising its substantive jurisdiction under Article 5(1) in relation to cargo interests’ claim in the Spanish proceedings, or bar or restrain cargo interests from pursuing its Article 5(1) claim before the Almería Court – the mischief referred to in paragraph 31 of the judgment in The Front Comor. Nor would the granting of a declaration run “counter to the trust which the Member States accord to one another’s legal systems and judicial institutions and on which the system of jurisdiction under Regulation No 44/2001 is based”.

Accordingly, the judgments of the Almería Court were not required to be recognised, pursuant to Article 33(1) of the Regulation, in the Arbitration Action in the English Court, since the latter proceedings were outside the scope of the Regulation, by reason of the arbitration exception contained in Article 1(2)(d).

It followed that, pursuant to section 32 of the 1982 Act, the English Court was not bound by the Almería Court’s decision in relation to those issues. The English Court had to decide for itself whether the arbitration clause was validly incorporated in the bill of lading contract, and whether, by starting the Commercial Court Action, or otherwise, the Claimants waived or repudiated any arbitration agreement.

Both those issues would be decided in favour of the Claimants. English law was the applicable proper law to decide the issue of incorporation. Applying English law as the proper law, the arbitration clause in the voyage charter was incorporated into the bill of lading contract and the Claimants did not waive or repudiate the arbitration agreement by issuing the Commercial Court Action.

The final question was whether the English court should, as a matter of discretion, grant a declaration as to incorporation that conflicted with a judgment by a court of another Member State. However, principles of comity should not prevent the English Court from exercising its discretion to make the declaration sought by the Claimants.