Aquavita International SA and Another (Respondent/Claimant) v Ashapura Minecham Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Popplewell |
| Judgment Date | 02 May 2014 |
| Neutral Citation | [2014] EWHC 2806 (Comm) |
| Docket Number | Case No: 2013 folio 1404 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 02 May 2014 |
[2014] EWHC 2806 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE COMMERCIAL COURT
Rolls Building
Fetter Lane
London EC4a 1NL
Mr Justice Popplewell
Case No: 2013 folio 1404
Mr Stevenson (instructed by MFB) appeared on behalf of the First Claimant
Mr Tomson (instructed by R.R. Sanghvi & Co, now represented by Ince & Co) appeared on behalf of the Defendant
In this action the Claimants claim about US$ 1 million under a letter of guarantee dated 11 November 2011 signed by the Defendant ("the Guarantee"). The Guarantee guaranteed the performance by Arabian Resources FZC ("Arabian Resources") under a contract of affreightment which was entered into with the First Claimant in October 2011 ("the COA"). By an order of 24 October 2013 Field J granted to the Claimants permission to serve the claim form out of the jurisdiction on the Defendant pursuant to CPR 6.36 and practice direction 6B paragraph 3.1(6)(c) on the grounds that the Guarantee is governed by English law. This is the Defendant's application to set aside the order of Field J on the grounds that the Guarantee is governed by Indian law and/or that England is not the appropriate forum for resolution of the dispute.
It became clear during the course of the hearing that the second limb of that challenge stands or falls with the first limb. The essential question therefore relates to the governing law of the Guarantee.
The Defendant is an Indian company which supplies and exports of minerals on a large scale. Its website describes it as the flagship company in the Ashapura Group and describes the Group as India's largest multi-mineral solutions provider and one of the largest exporters of traded bauxite in the world.
The First Claimant is a shipping company which owns and operates vessels. It is registered in the Marshall Islands. The Second Claimant is a company registered in Cyprus, which is an affiliate of the First Claimant. It was nominated by the First Claimant as the performing party and freight beneficiary under the COA. Arabian Resources is a company registered in Sharjar in the United Arab Emirates. It was the party to the COA with the First Claimant as the Defendant's guaranteed nominee.
There is a dispute as to the relationship between the Defendant and Arabian Resources. The Defendant's evidence is that Arabian Resources is an independent company which is not connected with, or affiliated to, the Defendant or the Ashapura Group. The Defendant's evidence is that Arabian Resources was an FOB purchaser from the Defendant and that it was the practice of the Defendant sometimes to assist such purchasers by representing them in chartering tonnage on their behalf from owners who might not be prepared to charter directly to such purchasers; and that it was acting in a capacity as chartering broker on behalf of Arabian Resources both in entering into the COAand in its dealings with the Claimants thereafter. By contrast, the Claimants suggest that Arabian Resources is, or may well be, an associated or affiliated company of the Defendant. I shall come back to the significance of that dispute in due course.
The COAwas negotiated between the Defendant and the First Claimant. It was agreed on or about 11 October 2011. Its terms were recorded in a fixture recap. The version of the fixture recap I have is a subsequent restatement, but one can see the original terms from that document. The COAprovided that the First Claimant was to provide tonnage to carry 250,000 metric tons of bauxite, ten per cent more or less in owners' option. Shipments were to be of 40,000 metric tons each, again ten per cent more or less in owners' option, fairly evenly spread between November 2011 and March 2012, with charterers giving ten days' notice of a seven-day laycan spread. Carriage was to be from one or both of two named ports on the west coast of India to a named port in Georgia.
The charterers were identified as follows in paragraph 1:
"A/C ASHAPURA MINECHEM LIMITED, MUMBAI, 3 RD FLOOR, JEEVAN UDYOG BUILDING, D.N. ROAD, FORT MUMBAI 400001 INDIA GUARANTEED NOMINEE (ARABIAN RESOURCES, FZC UAE WILL BE PERFORMING, CHTRS). CHTRS TO DECLARE NOMINEE AT THE TIME OF LIFTING SUBS. ASHAPURA TO GTEE PERFORMANCE OF NOMINEE BY SIDE LETTER. HOWEVER, ASHAPURA NOT TO BE MENTIONED IN org CP AS CHTRS OR GUARANTORS."
The disponent owners were identified in the recap as the First claimant, but the First Claimant also had a right to nominate the performing party, which was expressed in these terms:
"OWNERS HV RIGHT TO NOMINATE FREIGHT BENEFICIARY/PERFORMING OWNS IN CHARTERPARTY IN CASE FRT BENEFICIARY ANY OTHER COMPANY THEN AQUAVITA TO GTEE PERFORMANCE OF SUCH NOMINEE AS PER ATTACHED WORDING…"
The COAincorporated the terms of a previous charterparty for the charter of the vessel Rosco Litchi with an affiliate of the Defendant, Age Trading FZE, which was another company registered in Shajar UAE. The Rosco Litchi charterparty was on the Gencon form, and included at clause 28 a provision for London Arbitration and English law in terms to which I shall return.
When the COA recap was resent on, or shortly before, 10 November 2011, it was introduced by the Defendant saying "Ashapura hereby nominate Arabian Resources FZC Shajar UAE as performing charterers for this COA." Pursuant to the terms of the COA the First Claimant nominated the Second Claimant to act as the freight beneficiary/performing owner. Pursuant to the terms of the COA and those nominations, both the Defendant and the First Claimant provided guarantees. The Defendant provided the Guarantee on which the Claimants sue by a letter dated 11 November 2011 which was addressed to both Claimants, by which it undertook to "fully guarantee the performance of Arabian Resources" under the COA. The letter was signed on behalf of the Defendant in India and was sent to the First Claimant and the Second Claimant in the Marshall Islands and Cyprus respectively. It was a short document comprising two paragraphs; it was written in English; it contains no express choice of law.
The First Claimant provided a guarantee of the Second Defendant's obligations as the nominated performing owners/freight beneficiary by a signed letter dated three days earlier, 8 November 2011. I shall refer to that as the "performance guarantee". It was provided to the Defendant, not to Arabian Resources. It contained a number of clauses which bear the hallmarks of having been drafted by a lawyer, unlike the content of the Guarantee. Clause 6 contained an express choice of English law as the governing law of the performance guarantee and provided for the exclusive jurisdiction of the High Court of Justice in England.
The question which I have to decide is whether there is a good arguable case that the Guarantee is governed by English law. That is the test which a claimant must meet to bring himself within one of the gateways of CPR Practice Direction 6B. A good arguable case connotes more than a serious issue to be tried, which has been interpreted as meaning a claimant having a real prospect of success, but connotes something less than a prospect of success on the balance of probabilities. It has been held that it connotes that the claimant must have the better of the arguments or much the better of the arguments. There is a discussion by Hamblen J in AstraZeneca v Albemarle [2010] EWHC 1028 (Comm), [2010] 2 Lloyd's Rep. 61 at paragraphs [24]–[26], which reviews the authorities which sometimes use the expression "strong argument", sometimes "the better of the arguments", sometimes "much the better of the arguments". Since that decision there has been the authoritative statement of the principles by Lord Collins in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd, in which he restates the test as being one in which the claimant must show that it has much the better of the arguments. In my view, nothing in this case turns upon whether one applies a test of the better of the arguments or much the better of the arguments.
The first question which arises is: what is the proper law of the contract of affreightment? On behalf of the Defendant, Mr Tomson submits that when one is concerned with contracts containing arbitration clauses with an international element there may be three different systems of law which require to be considered. There is the system of law which governs the contract itself and the substantive rights and obligations of the parties under that agreement; there is the law which governs the agreement to arbitrate, which is a separate contract which is separable from the contract within which it is contained or to which it refers – that is what Lord Steyn once described as part of the very alphabet of arbitration law and is now reflected in section 7 of the Arbitration Act; and, thirdly, there is the curial law of the...
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