Extra-EU jurisdiction agreements and imperative rules

In England, according to recent law, a third party would be bound by the applicable law of a B/L agreed between original parties. In The Channel Ranger,^[1] there was an English choice of law in the B/L, enabling the English High Court to be competent for the purpose of issuing an anti-suit injunction, at a first glance.

The Channel Ranger carried coal from Rotterdam in the Netherlands to Nador in Morocco, and the cargo was damaged due to self-heating during transit. In June 2011, the shipowners started proceedings in England to declare their non-liability for any cargo damage, while the banks acting as cargo insurers commenced proceedings against them in Morocco alleging no incorporation of the English law and jurisdiction into the B/L. The Court of Appeal considered that the intention of the parties in the charterparty clause prevailed over the B/L, their intention being to apply the Hague-Visby Rules and not the Hamburg Rules in force in Morocco. The court considered beyond the construction of the clause and observed that the parties created an ancillary clause. The law and jurisdiction clause in the voyage charterparty was the only one that the parties could have intended to incorporate.

General words of incorporation are sufficient to incorporate a charterparty governing law provision into a B/L, allowing a certain degree of manipulation. Having the B/L include two express references to the choice of English law in the voyage charterparty was judged sufficient to incorporate the choice of law into the B/L according to Article 3 (freedom of choice) of the Rome I Regulation, in force in England.

In The Channel Ranger, the English judge did not consider the prorogatio fori and eliminated the possibility that the Moroccan courts could become competent by issuing an antisuit injunction (this applies only to extra-EU situations since it is not permitted between EU Member States). The choice of law clause was less favourable to the parties and would expose the carrier to a less favourable treatment under the Hamburg Rules in Morocco compared with England.

There are also examples of anti-suit injunctions targeting foreign proceedings by cargo interests against shipowners and of a P&I Club being considered vexatious and oppressive. In Aline Tramp f the English Commercial Court rejected an anti-suit injunction targeting foreign Jordanian proceedings by cargo interests against the shipowners and the P&I Club. The Jordanian court declared itself competent to judge the case on the merits by applying Article 21(l)(d) of the Hamburg Rules, referring to the port of discharge of the cargo. The B/L contained a London arbitration clause determining that the Jordanian judge had competence under the Hamburg Rules. The English judge considered that, due to the principle of comity, any undesired parallel proceeding could not be considered vexatious and oppressive.

The cargo interests in The Channel Ranger argued that the obligation of the carrier to the named consignee under the B/L was to provide the chosen law on the face of the negotiable instrument and to not disclose the terms later after the dispute arose. In favour of their statement, Article 5(1) of the Rome I Regulation states:

To the extent that the law applicable to a contract for the carriage of goods has not been chosen in accordance with Article 3, the law applicable shall be the law of the country of habitual residence of the carrier, provided that the place of receipt or the place of delivery or the habitual residence of the consignor is also situated in that country. If those requirements are not met, the law of the country where the place of delivery as agreed by the parties is situated shall apply.

The Moroccan port of Nador was the place of delivery. Males J emphasised that the real matter was the choice of law that had been made, according to Article 3 of the Rome I Regulation, by the original parties to the B/L contract.^[2] The judge accepted previous case law showing that general words of incorporation are sufficient to incorporate such a choice of law clause.

The AMWELSH charterparty for coal transportation did not include any limitation on transferring a B/L to a consignee who would bear the rights contained therein, including the choice of English law. It was assumed that English law applied to the question of validity of the choice of law clause, and the negotiable B/L seemed to fall outside the scope of the Rome I Regulation through the exclusion of Article l(2)(d). This led to the application of the Hague-Visby Rules under Article X, that is, carriage of goods between ports in two different states, if the B/L is issued in a contracting state or carried from a port in a contracting state, or if the law chosen by the parties in the B/L gives effect to the Hague-Visby Rules. Nevertheless, an express choice of law may be voided to prevent the carrier’s liability from being reduced if the Hague-Visby Rules are mandatorily applicable.

A party could make use of the lack of legal uniformity to avoid substantive rules of liability. Baatz suggests that there should be a provision preventing any party from taking such action. She states that at some point when substantive liability has been agreed between states, the freedom to contract as to jurisdiction or place of arbitration should not be limited to protecting the rights of cargo interests. The carrier has the choice of jurisdiction in standard form transport documents and can choose, for instance, the principal place of business of the carrier or a neutral venue.

• [1] Caresse Navigation Ltd v. Zurich Assurances Maroc and others (The Channel Ranger) [2014] EWCA Civ 1366; Caresse Navigation Ltd v. Office National de 1 'Electricite (The Channel Ranger) [2013] EWHC 3081. 2 Yvonne Baatz, 'Should Third Parties Be Bound by Arbitration Clauses in Bills of Lading?’ (2015) 1 LMCLQ 85. 3 Aline Tramp SA v. Jordan International Insurance Co [2016] EWHC 1317 (Conun).
• [2] Baatz, ‘The Conflict of Laws’ (n 9) 54-55. 2 The Njegos [1936] P 90; Pacific Molasses Co and United Molasses Trading Co Lid v. Entre Rios Campania Riviera SA (The San Nicholas) [1976] 1 Lloyd’s Rep 8. 3 Baatz, ‘Should Third Parties Be Bound by Arbitration Clauses in Bills of Lading?’ (n 40). 4 ‘If all States agreed to be bound by the same rules as to substantive liability it might be said that there was no need for any provisions on jurisdiction or arbitration as any court or arbitration tribunal chosen would apply the same rules. Unfortunately as there is no international uniformity on substantive law, it may be argued that that there needs to be some provisions which prevents a party from intentionally providing for a jurisdiction so that it may avoid the rules’; Yvonne Baatz,' Thirty Years of Europeanisation of Conflict of Laws and Still all at Sea?’ in Malcolm Clarke (ed), Maritime Law Evolving: Thirty Years at Southampton (Hart 2015) 268; see also Yvonne Baatz, ‘Incorporation of a Charterparty Arbitration Clause in a Bill of Lading and Its Effect on Third Parties’ in Miriam Goldby and Loukas Mistelis (eds), The Role of Arbitration in Shipping Law (OUP2016) 107-148.