Compagnie Tunisienne de Navigation S.A. v Compagnie d'Armement Maritime S.A.

JurisdictionEngland & Wales
JudgeLord Reid,Lord Morris of Borth-y-Gest,Viscount Dilhorne,Lord Wilberforce,Lord Diplock
Judgment Date14 July 1970
Judgment citation (vLex)[1970] UKHL J0714-1
Date14 July 1970
CourtHouse of Lords
Compagnie D'Armement Maritime S.A.
Compagnie Tunisienne De Navigation S.A.

[1970] UKHL J0714-1

Lord Reid

Lord Morris of Borth-y-Gest

Viscount Dilhorne

Lord Wilberforce

Lord Diplock

House of Lords

Upon Report from the Appellate Committee, to whom was referred the Cause Compagnie d'Armement Maritime S.A. against Compagnie Tunisienne de Navigation S.A., that the Committee had heard Counsel, as well on Thursday the 30th day of April last, as on Monday the 4th, Tuesday the 5th and Wednesday the 6th, days of May last, upon the Petition and Appeal of Compagnie d'Armement Maritime S.A., whose registered office is situate at 200 Via Espana, Panama City, in the Republic of Panama, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 11th of June 1969, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioners might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Compagnie Tunisienne de Navigation S.A., lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 11th day of June 1969, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Megaw, of the 19th day of February 1969, thereby Set Aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Reid

My Lords,


In 1967 the Respondents, a Tunisian company, wished to have a quantity of oil shipped from La Skhirra to Bizerta—both ports in Tunisia. They approached a firm of brokers in Paris who put them in touch with the Appellants who are French shipowners. The parties negotiated a contract in Paris and it was left to the brokers to prepare the written contract. They selected an English printed form which appears to be often used abroad. This form was for a tanker voyage charter party which required considerable adaptation because under the contract there were to be a number of shipments spread over nine months in vessels supplied as required by the Appellants.


After six shipments a dispute arose and the Respondents claimed damages. The contract provides that any dispute shall be settled in London, each party appointing a merchant or broker as arbitrator. Arbitrators were duly appointed and the first question which arose was as to the proper law of the contract. On this the arbitrators made an interim award adjudging that the proper law of the contract is French law and stating as a question of law for the decision of the Court the question whether the proper law is French law or English law.


One of the printed clauses in the form deals with the proper law. Clause 13 reads:

"This contract shall be governed by the laws of the flag of the vessel carrying the goods, except in the cases of average or general average, when same to be settled according to the York-Antwerp Rules, 1950."


This clause remains unaltered in the signed contract. The printed form, being for a charter party, had blanks at the beginning for the insertion of the name of the shipowner's tanker and its flag. These were left blank. Clause 28 provides:

"Shipments to be effected in tonnage owned, controlled or chartered by the Compagnie d'Armement Maritime S.A. of 16,000/25,000 tons 10 per cent. more or less at owners' option."


The first question is whether it is possible to give any meaning to Clause 13. The printed form, including clause 13, obviously contemplates that there is to be one vessel and one flag and that the law of that flag shall be the proper law. But under clause 28 there could be a variety of vessels with a variety of flags. Which is to be selected as determining the proper law? Even if one could hold that with regard to a dispute concerning a particular voyage the law of the flag of the vessel making that voyage should prevail, that would not provide for the dispute in this case which does not relate to any particular voyage.


We do not know and cannot enquire as to why clause 13 was left unaltered. We have to construe it as we find it. Normally where a clause was drafted by the parties or their agents we can assume that they must have intended it to mean something. But we cannot make that assumption here. The broker, relying on the form having proved useful in the past, may never even have read clause 13 and the strong probability is that the parties, being faced with a form in a foreign language which they assumed or were assured by the broker embodied their previous agreement, would not scrutinise the printed matter. Indeed one can say with some confidence that if any of them had scrutinised clause 13 he would have seen that it required adaptation. But whether they read clause 13 or not the parties are bound by what they signed.


Even if it were relevant it would be useless to ask in this case what the parties in fact intended as to the proper law, because it is found as fact in the interim award that there was no discussion at any time of the law by which the transaction was to be governed. But clause 13, like any other provision in a contract, must be construed in light of the facts known to both parties at the time when it was agreed. They knew that the Appellants owned a number of tankers flying the French flag and it is found in the interim award that it was contemplated by both parties that vessels owned by the Appellants would be used at least primarily to perform the contract.


If the parties had contemplated that the Appellants' vessels would always be used except in some unforeseen circumstances I would have held that clause 13 could be held to mean that the contract was to be governed by the law of the flag of those vessels i.e. the law of France. But in my opinion this finding is too indefinite to justify such a gloss. "Primarily" might mean in the first instance or it might mean in the majority of cases. The parties must have known that many other tankers not owned by the Appellants would be available on this route, and that, as the dates of shipment were to be determined by the Respondents, vessels other than those belonging to the Appellants might well have to be used. In my judgment clause 13 must in the circumstances be regarded as having failed in its purpose to determine the proper law of the contract.


If that is so then we are no longer concerned with the parties' intention. In the absence of any positive indication of intention in the contract the law will determine the proper law by deciding with what country or system of law the contract has the closest connection. Here three countries are involved. The contract was negotiated and signed in France and the freight was payable in Paris in French francs. The contract was to be performed in Tunisia. The only connection with England was that any dispute was to be settled by arbitration in London. The contract is in the English language and in English form but it was not argued, in my view rightly, that any great importance should be given to this.


Until this case reached this House it appears to have been assumed that France and Tunisia could be treated as one country or as having the same system of law. It is stated in the interim award that:

"The civil law of Tunisia (which until 1956 was a French colony) is based on the Code Napoléon"


and that "neither side contended for any other system of law" than French or English law. On that basis when one comes to weigh the various factors which tell in favour of French or of English law being regarded as the proper law, the fact that Tunisia was to be the place of performance of the contract would be put in the scale for French law. Then it is clear that the balance comes down heavily in favour of French law. On the one hand, there are the place where the contract was negotiated and signed, the place of performance, the place where and the currency in which the freight was to be paid, and the place where the parties resided and carried on business: on the other hand, there is only the place where disputes were to be settled by arbitration. But I wish to reserve my opinion as to how far in a case of this kind it is proper to disregard the fact that two countries are separate and independent countries, each with its own system of law, on the ground that those countries are or have recently been closely associated, or that their systems of law are very similar but both very different from English law.


The Respondents do not deny that if we are free to apply the general rule, that the proper law is the law of the place with which the contract is most closely associated, then the proper law would be French law. Their case is that that general rule does not apply where there is an arbitration clause requiring disputes to be settled by arbitration in England. They admit that such a clause does not prevent the parties from agreeing that some other law shall be the proper law, but they maintain that, if such an agreement cannot be deduced...

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