ENFORCING ENGLISH JURISDICTION CLAUSES IN BILLS OF LADING

Citation(2006) 18 SAcLJ 727
Date01 December 2006
Published date01 December 2006

This article considers the differences of approach to exclusive court jurisdiction agreements in a bill of lading of the EC Regulation No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters and the English common law rules. The situation where proceedings are commenced in breach of the agreement is considered under both, the first with its certain and more inflexible rules and the latter with the discretion of the doctrine of forum non conveniens. The scope of the EC Regulation rules is discussed.

1 A bill of lading contains an exclusive English jurisdiction clause and one of the parties is domiciled in Singapore. Is the English court bound to accept jurisdiction to hear a claim under the bill of lading, whether by the receiver for damages or by the carrier for a declaration of non-liability? Are there circumstances when it cannot hear the claim or might choose not to? The party domiciled in Singapore may be surprised to find that the answer will depend on the domicile of the other party to the bill of lading and on whether and where any other proceedings have already been commenced. This results from the application of the black and white rules of the EC Regulation on jurisdiction,1 which seldom permit any discretion, in certain circumstances, and the more flexible common law rules (including the doctrine of forum non conveniens with

its wide discretion) in other circumstances. Although in all circumstances the principle of autonomy of the parties is very important, it is not always paramount. The EC Regulation favours the court first seised. At common law the English court would usually give effect to an exclusive English jurisdiction agreement. However, the court has a discretion and the agreement may give way to complex multiparty litigation elsewhere, which includes parties not bound by the jurisdiction clause. It may therefore be important to draw the line as to when forum non conveniens applies and when it does not.

2 The purpose of this article is to consider two issues which illustrate how the EC Regulation seeks to uphold party autonomy by enforcing the parties’ choice of an English exclusive jurisdiction clause in a bill of lading and to compare the position at common law. The first issue is the problem that arises when one party commences proceedings in breach of an exclusive court jurisdiction agreement. The second issue concerns whether Art 23(1) of the EC Regulation2 on jurisdiction agreements imposes mandatory jurisdiction on the court chosen only where two or more competing jurisdictions are all EC Member States or whether this is so, even where the conflict is between the court of a Member State and that of a non-Member State. This second issue raises

the question whether there is any room for the common law principle of forum non conveniens.

I. Introduction to the EC Regulation

3 The EC Regulation seeks to determine the international jurisdiction of the courts of the EC Member States so that all Member States are bound by the same rules and will recognise and enforce each other’s judgments. It therefore provides for highly predictable rules, generally based on the domicile of the defendant, subject to a number of exceptions, including party autonomy.3 It applies where the defendant is domiciled in a Member State no matter where the claimant is domiciled.4 Thus if a Singapore claimant sues a defendant domiciled in France in the English court, the EC Regulation applies. Article 25 provides that the defendant must be sued where it is domiciled. The important exception of party autonomy6 is addressed by Art 23 of the EC Regulation.

II. Article 23 of the EC Regulation: Is there a jurisdiction clause?

4 Article 23(1) of the EC Regulation provides that an agreement for a court or courts of a Member State to have jurisdiction must be either:

(a) in writing or evidenced in writing, or

(b) in a form which accords with practices which the parties have established between themselves, or

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

5 Whether there is a jurisdiction clause that satisfies these requirements in a bill of lading may be a complex question. A bill of lading will often be on a standard form usually only signed by one party, eg, the master on behalf of the carrier, and there may be no signature by or on behalf of the shipper, let alone by the third party holder of the bill of lading to whom it has been delivered and indorsed. The master’s signature is usually on the face of the bill of lading but the jurisdiction clause may be one of many printed conditions on the reverse of the bill. Alternatively in a charterparty bill of lading the jurisdiction clause is frequently incorporated into the contract by reference to the terms of the charterparty.7

6 To address these difficulties para (c) was added when the UK acceded to the EC Jurisdiction Convention. The reason that the UK wanted an amendment to the EC Jurisdiction Convention was to safeguard the jurisdiction of the High Court in London, which is chosen in many international standard form contracts, including bills of lading. The requirement to satisfy the formalities is to ensure that there is real consent on the part of the parties. However, consensus is presumed to exist where commercial practices in the relevant branch of international trade or commerce exist in this regard of which the parties are or ought to have been aware.8

7 The European Court of Justice has held9 that the validity of a jurisdiction clause must be assessed by reference to the relationship between the original parties to the contract, the shipper and the carrier. Furthermore, if the clause is effective as between the carrier and the shipper,10 it is also effective between the carrier and a third party bill of lading holder who was not an original party to the bill of lading, provided that the third party holder of the bill of lading succeeded to the shipper’s rights and obligations under the applicable national law when it acquired the bill of lading.11 The question of which national law is applicable is not one of interpretation of the Convention. It falls within the jurisdiction of the national court which must apply its rules of private international law.12

8 If the third party bill of lading holder does not succeed to the rights and obligations of the shipper under the applicable national law when it acquired the bill of lading, it must be established whether it agreed to the jurisdiction clause in accordance with the requirements in the first paragraph of Art 23. In Dresser UK v Falcongate Ltd (The Duke of Yare)13 the Court of Appeal held that, even where the doctrine of bailment on terms applied, it could not satisfy the requirements of Art 17 of the EC Jurisdiction Convention (now Art 23 of the EC Regulation).

9 The complexity of a dispute as to whether there is a valid jurisdiction agreement in a bill of lading and the length of time it takes to resolve is illustrated by Castelletti.14 That case took some ten years to proceed through the Italian courts and to obtain a judgment from the European Court of Justice on the requirements that have to be satisfied under Art 17 of the EC Jurisdiction Convention. That would still not be the end of the matter as the European Court of Justice can only

determine issues of interpretation. It cannot resolve issues of fact, which would have to go back to the national court.

10 In Castelletti, fruit was shipped in 1987 by Argentinian shippers under twenty-two bills of lading issued in Buenos Aires. The cargo was delivered in Italy to Trasporti Castelletti Spedizioni Internazionali SpA. The latter brought proceedings against Hugo Trumpy as agent of the ship and the carrier, Lauritzen Reefers A/S, in the court of Genoa, Italy, on the basis that Hugo Trumpy were domiciled there. The latter contested jurisdiction as the bill of lading contained an exclusive English High Court jurisdiction clause.15

11 The jurisdiction clause was the last on the back of a printed form bill of lading. The print was small but legible. The face of the bill had been signed by both the carrier’s agent and the shipper. Beneath the shipper’s signature, but in larger print than the other clauses, was a reference to the conditions set out on the reverse. The Court of Genoa held that the jurisdiction clause was valid in the light of the usages of international trade, although it had not been signed by the shipper. The Genoese Court of Appeal upheld that judgment but on the ground that the shipper’s signature on the face of the bills of lading implied acceptance of all the clauses, including those on the reverse. Castelletti appealed on a point of law, arguing that the signature of the original shipper could not have constituted acceptance of all the clauses, but only those relating to the particulars of the cargo, as made clear by the position of the shipper’s signature. The Italian Supreme Court of Cassation held that the signature of the original shipper could not imply consent to all the clauses of the bill of lading, and therefore resolution of the dispute depended on the interpretation of the provision concerning international usage in Art 17(c) of the EC Jurisdiction Convention. It referred fourteen questions to the European Court of Justice for a preliminary ruling. By the time the matter came before the European Court, the decisions in

MSG 16 and Francesco Benincasa v Dentalkit SRL17 had already answered some of the questions.

12 Although it is for the national court to decide whether it has been proved that commercial practices in the relevant trade or commerce exist, in MSG, the European Court of...

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