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

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date11 June 1969
Judgment citation (vLex)[1969] EWCA Civ J0611-1
Date11 June 1969

[1969] EWCA Civ J0611-1

In The Supreme Court of Judicature

Court of Appeal

Appeal of Claimants against judgment of Mr. Justice Megaw of 19th February 1969.


The Master of The Rolls (Lord Denning),

Lord Justice Salmon and

Lord Justice Karminski

In the Matter of The Arbitration Act, 1950


In the Matter of An Arbitration

Compagnie Tunisienne De Navigation S.A.
Claimants Appellants
Compagnie D'Armament Maritime S.A.

Mr. R.L.A. GOFF, Q.C., and Mr. S.S. ECKERSLEY (instructed by Messrs. Crawley & de Reya) appeared on behalf of the Claimants Appellants.

Mr. KENNETH ROKISON (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Respondents.


Early in 1967 a Tunisian company called Compagnie Tunisienne de Navigation S.A. wanted to transport crude oil from La Skhirra to Bizerta, which are two ports in Tunisia. They agreed with a French company of shipowners - Compagnie d'Armament Maritime - to transport these quantities of oil. The agreement was negotiated by brokers in Paris called Paris-Maritime, S.A. The brokers had an English director, Mr. Reed. He produced for signature a printed form. It was a form for a tanker voyage charterparty printed in the English language with all the English terms in it. It was unfortunately the wrong form to choose. Much of it was inapplicable to this contract. Disputes have now arisen. They have been submitted to arbitration here in London. The question is, by what law is the contract governed? Is it governed by French law, or by English law?


In order to determine this question, I must describe the document as it was eventually signed. It runs as follows:


"It is this day mutually agreed between Cie. D'Armament Maritime S.A., owners of the Tank Steamer/Motor Vessel called the…… - then there is a blank, nothing was filled in there - "Flag" - then there was another blank with nothing filled in - and Compagnie Tunisienne de Navigation, Charterers of Tunis. So there is no vessel named at all.


Instead of those blanks, there is an addendum called Clause 28, which says that:


This Charter-party covers the transport of minimum 300,000/maximum 350,000 long tons of light crude oil exact quantity at Charterers option. Shipments to be effected in tonnage owned, controlled or chartered 'by the Compagnie d'Armament Maritime S.A. of 16,000/25,000 tons 10% more or less at Owners option.


That addendum shows there was no vessel agreed. The contract was not truly a charterparty. It was a tonnage contract, that is,a contract to carry those tone of crude oil in ships which had not been specified except that they were to be owned, controlled or chartered by the French company, and were to be of 16,000 to 25,000 tons,


The printed clauses of this form are as usual in charter-parties. They contain the familiar exceptions known to English law: such as, "Act of God, perils of the sea, fire, barratry of the Master and crew", and so on, on which hundreds of cases have been reported.


Next there is a printed clause to prescribe the law to govern the contract. Clause 13 says: "This Contract shall be governed by the laws of the Flag of the Vessel carrying the goods". If there had been a vessel specified in this charter-party, that clause would have made it clear that the proper law of the contract was the law of that flag of that vessel.


Then, passing over a few common form clauses, we come to Clause 18, which says that: "Any dispute arising during execution of this Charterparty shall be settled in London, Owners and Charterers each appointing an Arbitrator - Merchant or Broker - and the two thus chosen, if they cannot agree, shall nominate an Umpire - Merchant or Broker - whose decision shall be final. Should one of the parties neglect or refuse to appoint an Arbitrator within twenty-one days after receipt of request from the other party, the single Arbitrator appointed shall have the right to decide alone, and his decision shall be binding on both parties. For the purpose of enforcing awards this agreement shall be made a Rule of Court."


That contract must be construed with reference to the surrounding circumstances which have been found by the arbitrators:-


(1) The French Company had four or five vessels flying the French flag, but none of them was large enough to take 25,000 tons. The largest could only take 22,000 tons. So they must have had in mind that the oil might well be carried by ships not belonging to the French Company, but chartered by them.


(2) Three days before this contract was signed, a Liberian ship called the "Jack", carrying over 25,000 tons, had already been nominated to carry the first consignment of oil under this tonnage contract. That shows that it was not contemplated that all the carriage was to be done by vessels of the French company,


The arbitrators say; "It was contemplated by both parties at the time the contract was entered into that vessels owned by the Respondents would be used at least primarily to perform the contract" - but that finding must be taken subject to the plain fact that the French company might charter as many ships of other flags as they pleased. And that is what happened. The oil was carried in six ships. One was Norwegian. Another Swedish. One French. Two Liberians and one Bulgarian. That conduct is also admissible.


Such being the admissible circumstances, we come to the construction of the document. Although the wrong form was used, we must apply it so far as we can. Clause 18 is clearly applicable. Any dispute is to be settled in London. Under that clause, English arbitrators have been appointed. What law ought they to apply? If clause 13 expressly and clearly specified what the law was to be, it would have to be applied even by English arbitrators. But to my mind clause 13 does not specify, clearly, or at all, what the proper law of the contract is to be. It says: "This contract shall be governed by the laws of the flag of the vessel carrying the goods. "There was no such vessel named in the contract. The only known vessel was the first, which was Liberian. No one suggests that Liberian law was to apply. Then there were six vessels employed, with five different flags. No one suggests that each consignment was governed by the law of the flag of the vessel which carried it. The truth is that clause 13 is entirely inapplicable to this contract. There is no vessel to which it can be applied and no flag to which it can be applied. Seeing that it is inapplicable, I think it should be ignored.


That leaves us simply with clause 18, which says that any dispute shall be settled in London, from which it follows that the law to be applied is English law. That is made clear by the recent case of ( Tzortzis and another v. Monark Line A/B 1968 1 W.L.R. 406), when we are referred to passages from the textbook writers, saying that: ".…. an express choice of a tribunal is an implied choice of the proper law'. That is good sense. Take English arbitrators sitting in London to decide a dispute between these cargo owners and carriers. Suppose the dispute is as to the meaning of the expression; perils of the sea, barratry of the Master and crew", and the like. The arbitrators would, of course, have to deal with it according to English law, to which law all those expressions are familiar, rather than by any other law.


It is said, however, that even if clause 13 is inapplicable, yet it should operate so as to negative the inference from clause 18. That would leave the contract governed by the system of law with which it has the closest and most real connection, i.e., French law. I see the force of this argument, but I cannot accept it. It seems to me that, if clause 13 is inapplicable to the case, as it clearly and admittedly is, then it should be ignored. So we are left with clause 18, which carried with it the implication that the contract is to be governed by English law.


This seems to me to be a sensible result. It would not be at all convenient that English arbitrators sitting in London should have to listen to an exposition of French law by experts in French law; then decide that French law as a matter of fact; and then seek to apply it to the circumstances of the case. It is much better for the English arbitrators to apply English laws for it is naturally applicable to a document which is in the English language and employs words and phrases well known to English law, but unknown to French law.


I would, therefore, allow the appeal and hold that the proper law of this contract is English law.


LORD JUSTICE SALMON; On the 27th February, 1967, a Tunisian and a French company entered into a written contract in Paris whereby the French company undertook to transport a minimum of 300,000 and a maximum of 350,000 long tons of light crude oil from La Skhirra in Tunisia to Bizerta in Tunisia between the 1st March and the 31st December of 1967. According to the finding of the arbitrators, the terms of this contract were negotiated in Paris in the French language by persons on behalf of the parties whose native tongue was French. There is also a finding that there was no discussion at any time between these gentlemen as to the law by which the transaction was to be governed. They ultimately signed a printed form of contract which was put before them slightly altered in the script by a member of the ship brokers company in Paris. The contract was in the English language. It was singularly inappropriate to the transaction with which the French and Tunisian companies were concerned, because that was a tonnage contract or contract of carriage, and the printed form of contract was a charterparty with an extra clause grafted on to it. This provided that the carriage was to be carried out by ships owned or controlled or chartered by the French company at their option. The printed form contract...

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