It has long been established that in order for a law and jurisdiction clause in a governing charterparty to be incorporated into a negotiable bill of lading, specific reference must be made to the clause. The courts have required this level of clarity in order to protect the consignee, who will almost always not be a party to the original contract of carriage. In the case of Caresse Navigation Ltd v Office National de L’Électricité and 5 others (The “CHANNEL RANGER”) , the Court considered the question of how accurate such a reference to a charterparty law and jurisdiction clause needs to be.
The claim concerned alleged damage to a cargo of coal, shipped from Rotterdam to Morocco, as a result of selfheating and consequent dousing with sea water. The claimant shipowners (who were also the contractual carriers of the cargo) commenced proceedings in the English courts for a declaration of non-liability against the defendant cargo interests concerning damage to the coal. Cargo interests contested the jurisdiction of the English courts on the grounds that the clause providing for English jurisdiction in the underlying voyage charter was not adequately incorporated into the bill of lading.
The bill of lading (in the Congenbill 1994 form) provided that the “Law and Arbitration” clause of the voyage charter was incorporated. The problem was, however, that the underlying voyage charter (in the Amwelsh form 1979) contained a “Law and Jurisdiction” clause rather than a “Law and Arbitration” clause. Cargo interests argued that there was a need for clarity and certainty and, as such, the wording in the bill of lading should be taken literally. They therefore argued that as there was no “Law and Arbitration” clause in the charterparty to incorporate, no other clauses in the charterparty should be deemed incorporated in its place, including the “Law and Jurisdiction” clause. As a result, they contended, no inference as to English jurisdiction could be made, and the proper forum should instead be Morocco, this being the location of discharge.
The claimant argued that a certain amount of verbal manipulation should be permitted, in order to achieve the result which the parties had originally intended. Mr Justice Males agreed with this approach, stating that the question was one of construction, not incorporation; the requisite “specific reference” to a clause in the charterparty had been made, and it was therefore for the Court to decide to which clause this referred. The Judge concluded that as there were no other clauses in the charterparty dealing with dispute resolution, the “Law and Jurisdiction” clause was the only possible clause which a reasonable person would have understood as having been intended. As a result, it was possible to correct an error by the parties in mistakenly using the word “arbitration” instead of “jurisdiction.” However, he added the caveat that the consignee would only be bound by such charterparty clauses to the extent they were usual in the trade.
Mr Justice Males made it clear in his judgment that his decision was not inconsistent with the prevailing view that clarity and certainty are required in order to protect a thirdparty consignee. He maintained that as a result of his decision, a consignee is put in no worse position than if the underlying charterparty had in fact contained a “Law and Arbitration” clause which had been straightforwardly incorporated in the usual manner, as, in both circumstances, a consignee would still need sight of the charterparty before being able to ascertain the terms incorporated. It therefore seems to be the case that as long as a specific reference is made in the bill of lading to a discernable clause in a charterparty, which is usual in the trade, minor mistakes in the reference wording are likely to be overlooked. However, it should be noted that the decision is subject to appeal and a hearing is expected to take place in the Court of Appeal before October 2014.