Essar Shipping Ltd (Applicant/Claimant) v Bank of China Ltd (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Walker |
| Judgment Date | 13 November 2015 |
| Neutral Citation | [2015] EWHC 3266 (Comm) |
| Docket Number | Case No: CL-2015-000521 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 November 2015 |
[2015] EWHC 3266 (Comm)
Mr Justice Walker
Case No: CL-2015-000521
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
Fetter Lane
London
EC4A 1NL
Mr Richard Lord QC and Mr Michael Bolding (instructed by Mays Brown Ltd) appeared for the applicant
Mr Simon Croall QC (instructed by Thomas Cooper LLP) appeared for the respondent
Hearing date: 7 October 2015
[Table of Contents]
| A. Introduction | 2 |
| B. Background: the documentary record | 4 |
| B1. General | 4 |
| B2. The time and voyage charters | 4 |
| B3. The cargo and the bill of lading | 4 |
| B4. The sales, the LOIs and discharge of the cargo | 5 |
| B5. The letter of credit and payment under it | 5 |
| B6. Arrest, part sale and onward delivery of the cargo | 6 |
| B7. The Tianjin ship arrest and ESL's defences | 6 |
| B8. The bank's Qingdao proceedings | 7 |
| B9. ESL enforces the LOIs | 7 |
| B10. Security is provided and the vessel is released | 7 |
| B11. ESL's jurisdiction challenge in Qingdao | 8 |
| B12. Expiry of time bar, issue of claim form & Qingdao dismissal | 8 |
| C. The proposed injunction: legal principles and issues | 8 |
| D. Has there been a lack of promptness? | 11 |
| E. The bank's complaint of prejudice | 19 |
| F. Other aspects of the claim | 21 |
| G. Conclusion | 22 |
A. Introduction
This is an arbitration claim. The main remedy sought by the claimant, Essar Shipping Ltd ("ESL"), is an anti-suit injunction against the defendant, Bank of China Ltd ("the bank"). The injunction would restrain the bank from commencing or continuing proceedings in breach of a London arbitration agreement incorporated into a bill of lading contract. The claim also seeks a declaration as to the existence of the arbitration agreement and damages for breach of the arbitration agreement.
At the hearing it was recognised that the proposed injunction required qualification so as not to contravene provisions in Regulation (EU) 1215/2012 of the European Parliament and of the Council, December 12, 2012, on jurisdiction and the enforcement of judgments in civil and commercial matters (recast) [2012] O.J. L351/1 (" Brussels I recast") and the Lugano convention as revised in 2007. These provisions have effect as regards actual or potential proceedings in an area which can conveniently be described as "the Brussels I recast/Lugano space". Thus far, however, the present case has been concerned only with proceedings in the People's Republic of China (referred to in this judgment as "China" or "the PRC"). It has not involved any foreign proceedings in the Brussels I recast/Lugano space. This judgment accordingly proceeds on the footing that I need not examine restrictions which would apply to court orders affecting proceedings in the Brussels I recast/Lugano space.
The injunction, if granted, would specify in particular that the bank must not take any steps to pursue or continue the proceedings currently pending before the Qingdao Maritime Court in Qingdao, China, suit number (2014) QHFSCZ No.1061 ("the bank's Qingdao proceedings"). The only question which I need determine in relation to the proposed injunction is whether there has been delay which, on the particular facts of this case, has the consequence that the proposed injunction would be neither just nor convenient and ought to be refused.
The evidence adduced on this question comprises:
(1) a first witness statement made on 8 July 2015 for ESL by Mr David Mark Wartski, a solicitor and a director of Mays Brown Limited, which acts for ESL in the present proceedings;
(2) a first witness statement made on 16 September 2015 for the bank by Mr Mark Sachs, a solicitor and member of Thomas Cooper LLP, which acts for the bank in the present proceedings;
(3) a first witness statement and second witness statement made on 16 and 30 September 2015 respectively for the bank by Mr Wang Feng of Beijing Tiantong & Partners, a Beijing based law firm which acts for the bank in the bank's Qingdao proceedings and which advised the bank prior to those proceedings;
(4) a first witness statement and a second witness statement made on 16 and 30 September 2015 respectively by Mr Liu Ji'an, an employee in the risk management department of the Yuncheng branch of the bank;
(5) an opinion on Chinese law produced for the bank on 10 September 2015 by Professor Wang Pengnan;
(6) a second witness statement of Mr Wartski dated 29 September 2015;
(7) a witness statement made on 29 September 2015 for ESL by Mr Wang Hongyu of Wing Jing & Co, a Shanghai based law firm which acts for ESL in the bank's Qingdao proceedings;
(8) a second opinion produced on 30 September 2015 by Professor Wang Pengnan;
(9) a third witness statement made on 30 September 2015 by Mr Wang Feng;
(10) a second witness statement made on 2 October 2015 by Mr Sachs.
After describing the background in section B below, in section C below I describe relevant legal principles, and the issues which arise, in relation to the claim for an injunction. Those issues focus on two features of the facts. The first feature concerns whether there has been promptness on the part of ESL in bringing the present claim. I deal with this in section D. In section E I deal with the second feature, which concerns the risk of prejudice to the bank if an injunction were granted. In section F I deal with other aspects of the claim. My conclusions are summarised in section G.
B. Background: the documentary record
B1. General
My account of the documentary record is largely taken from ESL's skeleton argument. In this section I supplement that record with certain matters which either are not in dispute, or are expressly stated to be one side or the other's account of events.
The MV Kishore ("the vessel") is owned by ESL's parent company, Essar Shipping (Cyprus) Ltd ("ESCL"). ESL operates the vessel under a bareboat charter.
B2. The time and voyage charters
On 27 November 2013 ESL time chartered the vessel to Ocean Bulk Shipping Pte Ltd ("OBS") under an NYPE form charterparty ("the time charter"). Clause 64 of the time charter provided for the possibility of discharge of cargo on the vessel against a letter of indemnity issued by OBS. Clause 74 provided that the contract was to be governed by English law and that disputes were to be submitted to arbitration in London under the rules of the London Maritime Arbitrators' Association ("the LMAA").
Also on 27 November 2013 OBS voyage chartered the vessel to Atlas Iron Ltd ("Atlas"). Under clause 56 of that charterparty ("the voyage charter") it was governed by English law and was subject to arbitration in London under the rules of the LMAA. It is this provision which ESL relies upon in seeking an anti-suit injunction.
B3. The cargo and the bill of lading
On 25 December 2013 a cargo of 104,012 MT of iron fines ("the cargo") was loaded on to the vessel at Fremantle, Western Australia, for transport to China. Bill of lading number 01 was issued on that date in a set of three originals. I shall refer to it as "the bill of lading". It acknowledged shipment of the cargo, naming Atlas as shipper, and was signed by agents on behalf of the Master. It is common ground that in this regard the Master was acting as agent for ESL.
The bill of lading was in Congenbill 94 form. A section on the face of the bill for identification of the consignee was made out "TO ORDER". Also on its face the bill of lading stated:
Freight payable as per CHARTER-PARTY DATED 27 NOVEMBER 2013.
…
FOR CONDITIONS OF CARRIAGE SEE OVERLEAF
…
The conditions of carriage on the back of the bill of lading provided:
(1) All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated.
Clause (2) of the conditions of carriage was a general paramount clause. The relevant effect of this under English law is common ground: it introduces a time bar so that the carrier and the ship are discharged from liability in respect of the cargo unless suit is brought within one year of the date of delivery of the cargo or the date when it should have been delivered.
B4. The sales, the LOIs and discharge of the cargo
Atlas sold the cargo to Cargill International Trading Pte Ltd ("Cargill"), which became the holder of the bill of lading. Pursuant to a contract dated 8 January 2014, Cargill sold the cargo to Shanxi Haixin International Iron and Steel Co. Ltd ("Haixin"). The payment clause of the contract stated, among other things:
Not later than 20 th January 2014, Buyer shall open an irrevocable workable Letter of Credit payable at sight as per Appendix I of this contract for provisional and final payment … in favour of Seller and through a bank acceptable to Seller.
By a letter of indemnity ("LOI") dated 7 January 2014, OBS requested that the cargo be discharged by ESL at Lanshan, China, into the custody of Rizhao Sea-Road Shipping Agency Co. Ltd ("Rizhao Sea-Road") without production of the original bills of lading. Atlas gave a materially identical LOI to OBS on 9 January 2014, and Cargill gave a materially identical LOI to Atlas on 8 January 2014.
The vessel arrived at Lanshan on 8 January 2014. The cargo was discharged into the custody of Rizhao Sea-Road, without production of the bill of lading, on 9 to 11 January 2014. Following discharge of the cargo the vessel left China.
B5. The letter of credit and payment under it
Upon an application by Haixin, the bank opened a letter of credit for US$11,165,128.46...
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