Mora Shipping Inc. of Monrovia v Axa Corporate Solutions Assurance SA
| Jurisdiction | England & Wales |
| Judge | Ward,Clarke,Neuberger L JJ |
| Judgment Date | 28 July 2005 |
| Date | 28 July 2005 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Ward, Clarke and Neuberger L JJ.
S Kenny (instructed by Holman Fenwick & Willan) for the appellant.
A Baker (instructed by Ince & Co) for the respondents.
The following cases were referred to in the judgment of Clarke LJ:
Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co KGECAS (Case C-256/00) [2002] ECR 1-1699.
Brookman's Trust, ReELR (1869) LR 5 Ch App 182.
Castle Insurance Co Ltd v Hong Kong Islands Shipping Co LtdELR [1984] AC 226.
Christie v WilsonENR 1915 SC 645.
Hanbridge Services Ltd v Aerospace Communications Ltd [1993] IL Pr 778.
Honck v MullerELR (1881) 7 QBD 92.
Layton v PearceENR (1778) 1 Dougl 15; 99 ER 12.
Price v NixonENR (1813) 5 Taunt 338; 128 ER 720.
Sameon Co SA v NV Petrofina SA (unreported, 30 April 1997, CA).
Sirius International Insurance Co v FA I General Insurance Ltd [2005] 1 CLC 451; [2004] UKHL 54; [2004] 1 WLR 3251.
Thorn v City Rice MillsELR (1889) 40 Ch D 357.
Union of India v EB Aaby's Rederi A/SELR [1975] AC 797.
Shipping — Jurisdiction — General average guarantee — Proceedings to recover cargo insurers' contributions in general average — General average guarantee provided for contributions to be paid to shipowners, domiciled in Liberia and/or Norway, or to average adjusters in London — Whether England place of performance of contractual obligation in question, namely obligation to pay contribution to general average — Council Regulation 44/2001, art. 5.1(a) — Civil Jurisdiction and Judgments Act 1982, Sch. 3C (Lugano Convention), art. 5.1.
This was an appeal from a decision of Langley J ([2005] EWHC 315 (Comm)) that the English court had no jurisdiction to entertain an action by the claimant shipowner against cargo insurers under a general average guarantee.
The claimant company (Mora), which was incorporated in Liberia and domiciled in Liberia and/or Norway, was the demise charterer of the vessel Vitoria when in 2003 she sustained serious bottom damage as a result of grounding whilst proceeding down the River Plate. At the time of the grounding she was laden with a cargo of vegetable oil and was en route for India and Bangladesh. The cargo was being carried under various bills of lading and a voyage charterparty. Mora was the carrier under the various contracts of carriage. Expenditure of a general average nature was incurred by Mora. The effect of the provisions of the bills of lading and charterparty was that general average would be stated and settled in London under the York/Antwerp Rules 1994. Mora appointed average adjusters (RHL) to collect general average security and to carry out the general average adjustment. The defendants were the cargo insurers of the whole cargo. At the invitation of RHL each subscribed, for its respective proportions of the cargo it insured, to a general average guarantee covering cargo interests' liabilities in general average. The insurers undertook in the average guarantee to pay to the shipowners or to the average adjusters, RHL, any contribution to general average ascertained to be legally due in respect of the goods.
RHL issued a general average adjustment in January 2004 requesting that payment be made to a London bank account. The cargo insurers refused to pay the contributions due from those concerned in cargo on the ground that the cargo owners were not liable to Mora in general average because the vessel was unseaworthy and the grounding and subsequent general average expenditure were caused by Mora's breach of the contracts of carriage. Mora denied any breach of contract and said that the cargo insurers were liable under the guarantee.
Mora brought proceedings in order to recover the cargo insurers' several contributions to the sum of US$1,053,302.15 under the average guarantee. The insurers said that the English court had no jurisdiction to entertain the claim or claims because Council Regulation 44/2001 in the case of the first to fourth defendants, who were domiciled in France, Belgium and the Netherlands, and the Lugano Convention in the case of the fifth and sixth defendants, who were domiciled in Switzerland, respectively required the defendants to be sued in the countries of their domicile unless some special ground of jurisdiction under the Regulation or Convention applied. Mora argued that art. 5.1(a) of the Regulation and art. 5.1 of the Convention conferred jurisdiction on the English court since England was the place of performance of the contractual obligation in question, namely the obligation to pay contribution to general average. The judge held that Mora had failed to establish that there was an obligation to pay in England. Mora appealed arguing that the right to choose between the two alternative modes of payment provided for in the guarantee was vested in the parties to whom the guarantee was addressed, and that once RHL instructed the cargo insurers on behalf of those parties (here Mora) to pay RHL in London, the cargo insurers' obligation was to pay in London.
It was common ground that the place of performance of the payment obligation was to be determined in accordance with the law governing the contract and identified by the conflict of laws rules of the lex fori and that by those rules that law was or was to be treated as English law. It was also common ground that, if the obligation was required to be performed in more than one jurisdiction, or could be performed in more than one jurisdiction, no single jurisdiction would be established under art. 5.1.
Held, dismissing the appeal:
The judge was right to conclude that the cargo insurers each had a choice whether to pay Mora or RHL and that since there was nothing in the guarantee requiring them to pay Mora in London they were entitled to pay Mora wherever it was to be found, in Liberia or Norway. The cargo insurers promised to pay cargo's respective contributions in general average to Mora or RHL. Any payment was intended to be received by the shipowners or the average adjusters on behalf of those entitled to receive it but properly construed the average guarantee did not give the receiving parties a choice as to where the payment obligation was to be carried out. The natural meaning of the language was that the cargo insurers had to pay their contribution to the shipowners or to the average adjusters but that they could decide which. Moreover, there was nothing in the language of the average guarantee, viewed as a whole, to lead to any other conclusion. In particular there was nothing in the language to suggest that it was for the persons entitled to the contribution to choose.
Clarke LJ:
1. This is an appeal from an order of Langley J made on 16th March 2005 in which he declared that the court had no jurisdiction over the claim and ordered that the issue and service of the claim form be set aside. He also ordered the claimant to pay the defendants' costs and gave permission to appeal to this court. The question in the appeal is whether the English court has jurisdiction to entertain an action by the claimant “shipowner” against cargo insurers under a general average guarantee.
2. The facts are not in dispute. The claimant was the demise charterer of the vessel “Vitoria” when on 14th February 2003 she sustained serious bottom damage as a result of grounding whilst proceeding down the River Plate. At the time of the grounding she was laden with a cargo of vegetable oil and was en route for India and Bangladesh. The cargo was being carried under various bills of lading and a voyage charterparty, which I will together call the contracts of carriage. The demise charterer was the carrier under the contracts of carriage. Expenditure of a general average nature was incurred by the demise charterer. The bills of lading incorporated the terms of the charterparty. They also provided, by clause 4, for general average to be payable according to the York/Antwerp Rules 1974 and to be settled at the place provided in the charterparty and, by clause 8, for arbitration in London.
3. Clause 20 of the charterparty provides so far as relevant:
“20. GENERAL AVERAGE. General Average shall be adjusted, stated and settled according to York-Antwerp Rules 1950, at such port or place in the United States as may be selected by the Owner, and as to matters not provided for by these Rules, according to the laws and usages at the Port of New York. in such adjustment, disbursements in foreign currencies shall be exchanged into United States money at the rate prevailing on the dates made and allowances for damage to cargo claimed in foreign currency shall be converted at the rate prevailing on the last day of discharge at the port or place of final discharge of such damaged cargo from the ship. Average agreement or bond and such additional security, as may be required by the Owner, must be furnished before delivery of the cargo. Such cash deposit as the Owner or his agents may deem sufficient as additional security for the contribution of the cargo and for any salvage and special charges thereon, shall, if required, be made by the cargo, shippers, consignees or owners of the cargo to the Owner before delivery. Such deposit shall, at the option of the Owner, be payable in United States money, and be remitted to the adjuster. When so remitted the deposit shall be held in a special account at the place of adjustment in the time of the adjuster pending settlement of the general average and refunds or credit balances, if any, shall be paid in United States money.”
4. Clause 20 is part of the printed form of Vegoilvoy 1/27/50 charterparty. Clause 20 was in part superseded by clauses 31 and 32 which were typed clauses and provide as follows:
“31. YORK/ANTWERP RULES 1994
York/Antwerp rules 1994 to apply to this Charter Party.
32. GENERAL AVERAGE/ARBITRATION
General...
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