National Navigation Company v Endesa Generacion SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Gloster J. |
| Judgment Date | 01 April 2009 |
| Neutral Citation | [2009] EWHC 196 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2008 Folio 64 |
| Date | 01 April 2009 |
[2009] EWHC 196 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
In the matter of the Arbitration Act 1996 and in the matter of an arbitration claim
QUEEN'S BENCH DIVISION
Before: Mrs Justice Gloster, Dbe
Case No: 2008 Folio 64
Case No: 2008 Folio 667
Ms. Vasanti Selvaratnam QC and Tom Whitehead Esq (instructed by Ince & Co) for the Claimant
Richard Lord Esq, QC and Richard Blakeley Esq (instructed by Thomas Cooper) for the Defendant
Hearing dates: 29 th & 30 th October 2008; 3 rd November 2008 (further written submissions 4 th-13 th November 2008; further written materials provided 17 th December 2008; further written submissions 12 th-13 th February 2009 further hearing date: 13 February 2009)
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mrs Justice Gloster:
Factual background and procedural chronology
There are various applications before me in both the above actions. The first action, 2008 Folio 64, I shall refer to as “the Commercial Court Action” or “Folio 64“; the second, 2008 Folio 667, I shall refer to as “the Arbitration Action” or “Folio 667”. In essence, the applications are a jurisdiction battle between the parties as to where, and by what means, their dispute should be resolved.
The Commercial Court Action was begun on 23 January 2008. The Arbitration Action was begun on 8 July 2008. In both actions, National Navigation Co (“NNC”) is claimant, and Endesa Generacion SA (“Endesa”) the defendant.
NNC, a company incorporated in Egypt, was, at all material times, the registered owner of the vessel “Wadi Sudr” (“the Vessel”). Endesa is, and was at all material times, an electrical generating company incorporated and carrying on its main business in Spain. It is therefore domiciled in Spain for the purposes of Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Regulation”).
By an exclusive supply agreement dated 27 December 2007 (“the Carboex Supply Agreement”) between Endesa of the one part, and its co-subsidiary, Carboex SA (“Carboex”), of the other, Carboex agreed to supply and Endesa agreed to purchase coal for use by Endesa in its power plants, upon and subject to the terms and conditions set out in the agreement. The Carboex Supply Agreement governed all shipments of coal made by Carboex to Endesa from 1 January 2001. Its terms included the following, at clause 6:
“Delivery by Carboex shall be made as CIF port of discharge, in accordance with the INCOTERMS. 2000, at a safe berth provided by Endesa …. The price of demurrage/dispatch shall be that indicated in the corresponding charterparty.”
and at clause 9.1, the following:
“… the CFR price shall be the result of adding the freight to the FOB price agreed by Carboex with the producer and with the shipowner respectively, together with the insurer of the Endesa group.”
Pursuant to the terms of the Carboex Supply Agreement, on or about 14 December 2007, Endesa entered into an individual contract to purchase from Carboex a consignment of approximately 64,609 tonnes of sub-bituminous steam coal in bulk (“the coal”), to be delivered at Ferrol in Spain, where it was to be used in Endesa's generating facility there. The coal was shipped aboard the Vessel on 6 December 2007 in Indonesia, as evidenced by a bill of lading issued on that date (“the Bill of Lading”). The terms of the Bill of Lading included the following:
i) it was in the CONGENBILL form, which expressly stated that the Bill of Lading was “to be used with charter-parties”;
ii) the shipper was named as PT Adaro Indonesia;
iii) Endesa was named as the consignee;
iv) the named port of loading was “IBT Coal Terminal, Indonesia”, and the named port of discharge was Ferrol, Spain;
v) the Bill provided: '… freight payable as per the relevant charterparty”, but no date was given;
vi) the reverse of the Bill provided in standard form for the application of the Hague Rules, and in appropriate circumstances, the Hague-Visby Rules 1;
vii) the reverse of the Bill also stated, by Clause 1:
'… all terms, liberties and exceptions of the Charterparty dated as overleaf, including the Law and Arbitration clause are herewith incorporated.”
The evidence shows that the Vessel was subject to various potentially relevant charters. First, NNC chartered the Vessel to China National Chartering Corporation (“Sinochart”), pursuant to a time charter dated 1 October 2007 (“the Head Charter”). The Head Charter contained the following English law and London arbitration clauses:
“ Clause 79 – Arbitration/Litigation
This Charter shall be subject to English Law. Any dispute or difference arising between Owners and the Charterers under this Charter shall be referred to three persons in London, one to be appointed by each of the parties hereto, and the third by the two so chosen, their decision or that of any two of them, shall be final and for the purpose of enforcing any award, may be made a rule of the court. The arbitrators shall be commercial shipping men conversant with shipping matters.
The arbitrations shall be conducted under the Rules of the London Maritime Arbitrator's Association. Each of Owners and Charterers shall be entitled to consolidate proceedings involving related contract disputes with third parties arising from common questions of fact or law and/or to have such proceedings conduct[ed] concurrently with proceedings hereunder.
Present Clause to be deemed fully incorporated into Bill(s) of Lading.”
Second, Sinochart sub-timechartered the Vessel to Morgan Stanley Capital Group Inc (“Morgan Stanley”), but neither party had a copy of this Charterparty, and it was not in evidence. Third, Morgan Stanley chartered the Vessel to Carboex under the terms of a voyage charter dated 25 September 2007 (“the Voyage Charter”). The Voyage Charter contained the following London arbitration clause:
'5. If any dispute or difference should arise under this Charter same to be referred to three parties in the city of New York London. One to be appointed by each of the parties herein, the third by the two so chosen and their decision, or that of any two of them shall, be final and binding and this agreement may, for enforcing the same, be made a rule of court. Said three parties to be commercial men and members of the LMAA.”
On or about 1 January 2008, the Vessel sustained damage to her rudder and general average was declared soon thereafter. The cause of the damage, and whether or not it resulted from a breach of the contract of carriage is in dispute, but the underlying merits of that dispute are not relevant for present purposes. Soon after the damage occurred, it became clear that the coal would not, or could not, be discharged at the contractual port of discharge under the Bill of Lading (namely, Ferrol). In fact, it was discharged short of destination at Carboneras in south-east Spain, on or about 30 January 2008.
Endesa contends that, because of the difficulties in transporting the coal from Carboneras to Ferrol, Endesa was forced to purchase a second shipment of coal for its plant at Ferrol, and incurred substantial cost in doing so. Endesa contends that NNC is liable for this additional cost.
By 18 January 2008 Ince & Co, solicitors, (“Inces”) had been instructed on behalf of NNC and on that date, Stephen Askins, the partner in Inces having conduct of the matter, sent an email to various people asking if he could have a copy of the Voyage Charter. On 20 January 2008 he sent a follow-up email, but no copy of the Voyage Charter was forthcoming. By this time it was clear to him that Endesa intended to rely upon non-delivery at Ferrol to ground a claim in damages against NNC. By 22 January 2008, Mr. Askins had had a telephone conversation with Juan Alegre, a partner in Thomas Cooper, solicitors, who, according to Mr. Alegre (although this is not necessarily accepted by Mr. Askins) was at that time only acting for Carboex, but who came also to act, in this country, for Endesa. It is not disputed that, in the course of that telephone conversation, Mr. Alegre informed Mr. Askins that:
'… the Voyage Charter has an English Law and Arbitration clause in the contract”,
although he maintained the position that he was not prepared to allow NNC to have a copy of the Voyage Charter.
Around this date, it was also clear to Mr. Askins, from discussions with Endesa's Spanish lawyers and cargo underwriters regarding security for Endesa's claims against the Vessel, that there was a risk that Endesa would seek to invoke the jurisdiction of the Spanish court to determine the substantive merits of its claim against NNC. Mr. Askins was alive to this possibility because the draft letter of undertaking (to be signed by NNC's insurers) proffered on behalf of Endesa and cargo underwriters provided for Spanish law and the exclusive jurisdiction of the Spanish courts. In the event, however, the security actually proffered to secure the release of the Vessel was framed to respond to a judgment on order of a competent court or tribunal in any jurisdiction.
On the morning of 23 January 2008, Endesa made an application to the Mercantile (First Instance) Court in Almería, Spain (“the Almería Court”) for the arrest of the Vessel, as guarantee for its claim in relation to expense suffered as a result of the discharge of the coal at Carboneras (“the Spanish claim”). This application was made under the 1952 Convention for the Unification of certain rules relating to the arrest of seagoing Ships (“the Arrest...
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