Primetrade AG v Ythan Ltd; The Ythan
| Jurisdiction | England & Wales |
| Judge | Mr Justice Aikens |
| Judgment Date | 01 November 2005 |
| Neutral Citation | [2005] EWHC 2399 (Comm) |
| Docket Number | Case No: 2005/284 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 November 2005 |
[2005] EWHC 2399 (Comm)
Mr Justice Aikens
Case No: 2005/284
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Simon Bryan (instructed by Mills & Co, Solicitors, Newcastle-upon Tyne) for the Defendant/Claimant in the Arbitration
Mr Graham Dunning, QC (instructed by Stephenson Harwood, Solicitors, London) for the Claimant/Respondent in the Arbitration
Hearing dates: 20 th 21 st and 22 nd July 2005
Judgment Approved by the court
for handing down
A. The Issues and how they arise
On 28 February 2004, off the coast of Colombia, a disastrous explosion occurred on board the bulk carrier " Ythan" ("the vessel"). The explosion caused the death of the Master and five crew of the vessel. " Ythan" and her cargo were totally lost. The cargo (totalling some 33,760 MT) was described in the two bills of lading as being " Metallic HBI Fines" ("the cargo"). It had been shipped on board at Palua Puerto Ordaz, Venezuela, for carriage to and discharge at Jingtang Port, China. Each bill of lading stated that the shipper was Orinoco Iron CA of Venezuela and the bills were consigned " To Order". The shippers ("Orinoco") had agreed to sell about 35,000 MT of metallic HBI fines on FOB terms to Primetrade AG, a Swiss company ("Primetrade"). Primetrade agreed to sell approximately the same quantity of the same commodity to Orient Prosperity Pty Ltd ("Orient Prosperity"), an Australian company, at a price CIF FO Jingtang, China. This contract identified an end—user in China.
Despite the fact that none of the principal parties involved in this case have any connection with England, 1 interesting and important questions that arise out of the tragic explosion and loss of the vessel now come before the Commercial Court in an appeal under section 67 of the Arbitration Act 1996 ("the 1996 Act"). The Owners wish to pursue a claim against Primetrade for losses the Owners have suffered as a result of the casualty, which they say was caused by the shipment on board of a dangerous cargo, the so—called "HBI Metallic Fines". 2 The Owners say that Primetrade became the "lawful holder" of the two bills of lading within section 2(1)(a) of the Carriage of Goods by Sea Act 1992 ("COGSA"). Further, they say that Primetrade, as lawful holder of the bills of lading, "made a claim under the contract of carriage against" the Owners, as carriers of the cargo, within section 3(1)(b) of COGSA.The Owners say that this entitles them to sue Primetrade for damages for losses they have suffered as a result of the shipment of a dangerous cargo. The claim is substantial: about US$ 15 million.
This assertion gives rise to the two principal questions that I must consider: first, was Primetrade "the holder" of the bills of lading at any relevant time, and if so, did that transfer and vest in Primetrade rights of suit under section 2(1) of COGSA? Secondly, did it or its agents "make a claim under the contract of carriage against the carrier in respect of" the cargo within section 3(1)(b) of COGSA? I have dubbed these issues "the holder point" and "the making a claim point" respectively. There is no authority on the first point. On the second, although Lord Hobhouse of Woodborough has analysed section 3(1) of COGSA extensively in Borealis AB v Stargas Ltd (the "Berge Sisar"), 3 this is the first time the meaning of section 3(1)(b) has come up for decision in the courts.
The third question I have to consider concerns arbitration law. It arises in this way. Each of the two bills provided that "All terms and conditions of Charter Party dated
Zug, January 16th, 2004 between Phoenix Bulk Carriers Ltd, Monrovia, Liberia and Primetrade AG, Zug, inclusive of Arbitration Clause are deemed incorporated in this Bill of Lading". The " Conditions of Carriage" on the reverse of the two Bills of Lading stated, in clause (1), that all the terms and conditions of the Charter Party "dated overleaf, including the Law and Arbitration Clause are herewith incorporated".
Those statements did not accurately describe the contractual arrangements for the carriage of the cargo. The position was that, Primetrade, as the FOB buyer from Orinoco, had entered into a contract of affeightment with Phoenix Bulk Carriers Ltd of Liberia ("Phoenix") by which Phoenix agreed to supply a vessel to carry a cargo of about 35,000 MT of HBI fines from Venezuela to Jingtan, China. That contract was contained in a fixture note dated 15 January 2004, which provided that the voyage should be performed on the terms of a charterparty dated 7 March 1996, with certain amendments. The owners of the vessel, Ythan Limited, a Marshall Islands registered company, had chartered " Ythan" to Americas Bulk Transport Ltd ("ABT") by a time charterparty dated 8 October 2003. ABT sub-chartered the vessel on back—to—back terms to Phoenix.
The charterparty dated 7 March 1996 4 contained a printed clause 28 which provided that all disputes arising out of that contract should be referred to arbitration in London. There was also a typed additional clause 44 which stated that "All disputes under this Charter Party and/or Bills of Lading are to be governed by English law". It is accepted by both sides that the contracts contained in or evidenced by the two bills of lading are "Owners' bills of lading" 5 and are governed by English law and, by virtue of the terms in the bills of lading, incorporate a London arbitration clause.
Primetrade was not an original party to either Bill of Lading, so it was not originally a party to the arbitration clauses in the Bill of Lading contracts. However, it is common ground that if Primetrade did become the "lawful holder" of the two bills of lading so as to transfer to it rights of suit under the bills of lading and if Primetrade had also "made a claim" under the two bills of lading against the Owners, then it, as well as the Owners, would be bound by the arbitration clause in the two bills of lading.
The precise analysis of how Primetrade would be bound by the arbitration clause was not debated before me. But if English law applies to all matters (see below), then I assume that the analysis is as follows: if Primetrade becomes the "lawful holder" of the bills of lading, then, subject to an important argument, 6 it would "have transferred to [it] all rights of suit under the contract of carriage as if [it] had been a party to that contract" within section 2(1)(a) of COGSA. Furthermore, by "making a claim" Primetrade would become "subject to the same liabilities under that contract as if [it] had been a party to that contract" within section 3(1)(b) of COGSA. Primetrade would not actually become a party to the contracts of carriage with the Owners, contained in or evidence by the bills of lading. But, as the
Owners have made a claim against Primetrade based on the bill of lading, and (it is assumed) Primetrade have made a claim based on the bills of lading, then both parties would be relying on the bill of lading contracts "as if they had been a party" to those contracts. Therefore both parties would be bound by all the contract terms, including an arbitration clause. So, they would be in a similar position to others that say they can rely on contract terms, such as a legal assignee, or a person who exercises rights pursuant to a contract against an insurer under the Third Parties Rights against Insurers Act 1930. Such people will be bound by an arbitration clause in the relevant contract. 7
The Owners started an arbitration against Primetrade, making their claim for damages caused by the shipment of an allegedly dangerous cargo. Primetrade retorted by saying that it was not bound by the arbitration clause, nor could it be sued for damages for shipment of a dangerous cargo, because it was neither the "lawful holder" of the bills of lading, nor had it "made a claim" within the terms of sections 2 and 3 of the COGSA. Therefore it had not become subject to the same liabilities under the bill of lading contracts "as if it had been a party to that contract".
The arbitrators appointed by the parties, Mr Richard Shaw and Mr Patrick O'Donovan, 8 in turn appointed Mr Anthony Diamond QC as third arbitrator in the reference. All three arbitrators have, of course, great experience of the shipping world and shipping law. On 23 November 2004 Primetrade applied to the tribunal to make a declaratory award under section 30(1) of the 1996 Act to the effect that the tribunal was without substantive jurisdiction because there was no valid arbitration agreement between the Owners and Primetrade. The arbitrators agreed to that course.
There was a four day hearing before the arbitrators, between 17 and 21 January 2005, at which Primetrade and the Owners were represented by solicitors and counsel. Witnesses were called by both sides and many written and oral submissions made. The arbitrators published their Award and Reasons to the parties on 8 March 2005. All three arbitrators held that Primetrade had become the lawful holder of the bills of lading at the relevant time. A majority, Mr Shaw and Mr O'Donovan, also held that Primetrade had "made a claim" against the Owners. Therefore the majority held that Primetrade was bound by the arbitration clause in the bills of lading and that the arbitrators therefore had substantive jurisdiction to hear and determine the Owners' claim against Primetrade. Mr Diamond QC concluded that Primetrade had not "made a claim" and was therefore not bound by the arbitration clause. So, on his view, the arbitrators had no jurisdiction to hear the Owners' claim.
The point on arbitration law arises because Primetrade now appeals the majority decision on jurisdiction,...
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