Starlight Shipping Company and Another v Tai Ping Insurance Company Ltd Hubei Branch and Another
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE COOKE |
| Judgment Date | 01 August 2007 |
| Neutral Citation | [2007] EWHC 1893 (Comm) |
| Docket Number | Case No: 2007 FOLIO 1108 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 August 2007 |
[2007] EWHC 1893 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
the Honourable Mr Justice Cooke
Case No: 2007 FOLIO 1108
Mr Stephen Males QC (instructed by Holman Fenwick & Willan) for the Claimant
Mr Michael Collett (instructed by MFB Solicitors) for the Defendant
Hearing date: 26 July 2007
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.
Mr Justice Cooke:
Introduction
By this application the Claimants seek an interim anti-suit injunction restraining the Defendants from taking any steps in respect of proceedings commenced by the First Defendant against the Claimants in the Wuhan Maritime Court in China. Although the Defendants have not yet been served with the Claim Form and have not submitted to the jurisdiction, the application was made on notice to them and they appeared by counsel at the hearing, reserving the right to challenge the jurisdiction of the court.
The Claimants submit that the Chinese proceedings have been commenced in breach of an arbitration clause contained in a Bill of Lading dated 13 April 2006 and that there is no good or strong reason, within the meaning of the decided authorities, why an anti-suit injunction should not be granted.
The Background
The First Claimant was the Owner, and the Second Claimant the Manager, of the vessel Alexandros T (hereafter “the Owners”, “the Managers” and “the vessel”). The vessel was chartered by the Owners to Transfield ER Cape Ltd (“Transfield”) for a voyage from Brazil to China with a cargo of iron ore. The terms of that charter included an English law and arbitration clause. Transfield then sub-chartered the vessel to the Second Defendant (“the Cargo Owners”) on essentially back to back terms, including identical terms as to law and arbitration. A Bill of Lading was issued on 13 April 2006 in which the Cargo Owners were named as the notify party. In due course the Cargo Owners became the holder of the Bill of Lading under an endorsement in blank, and a party thereto. That Bill of Lading, on its reverse included the following wording:—
“Bill of Lading to be used for shipments under charter party dated as overleaf.
All terms conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the war risks clause and the law and Arbitration clause are hereby expressly incorporated. In case any of the herein mentioned conditions will cause any ambiguity with the Charter Party dated as overleaf, then Charter Party's terms and conditions, liberties and exceptions to apply for this Bill of Lading.”
On the face of the Bill of Lading the statement was made that it was issued pursuant to a Charter Party dated 24 March 2006, which was the head charter. Clause 25 of that charter provided:—
“Arbitration
Any disputes arising under the contract shall be settled amicably. In case no such settlement can be reached, the matter in dispute shall be referred to three (3) peoples at London and according to English law. One chosen by each of the parties hereto and the third by the two so chosen; their decision or that of the two of them shall be final, and for the purpose of enforcing any awards, this agreement may be made a rule of the Court, the arbitrators shall be commercial men and members of the LMAA.”
In the course of the voyage from Brazil the vessel was lost with her cargo.
Proceedings in China
On 15 March 2007 the First Defendant, the alleged insurers (“the Insurers”) of the Cargo Owners obtained a “Civil Award” from the Wuhan Maritime Court against both the Owners and Transfield, naming the Cargo Owners, as a Third Party. The Civil Award froze the “credits” that had become due from the Cargo Owners to Transfield under the voyage sub-charter and from Transfield to the Owners under the head charter. Furthermore, the Owners and Transfield were ordered to provide security in the sum of $5.25 million to the court. It was also a provision of the Civil Award (in translation) that “the applicant shall commence litigation within 15 days from the date of service of this award, failing which this court shall cancel the property preservation”. There was an issue between the parties as to whether this meant that litigation had to be commenced in the Wuhan Maritime Court or whether this provision allowed for commencement of arbitration within the specified time.
At all events, by a Bill of Complaint dated 27 March 2007, the Insurers commenced proceedings against the Owners and the Managers in the Wuhan Maritime Court claiming $5.25 million by way of damages. The claim was also made against Transfield as Head Charterers and the basis of claim, as expressed in translation, appears to be the sub-charter between Cargo Owners and Transfield with a delegation of the duty to carry the cargo by Transfield to the Owners, whilst the Managers actually controlled the ship. The Bill of Complaint states that, under the trade contract between it and the foreign seller, the Cargo Owners obtained a full set of three original Bills of Lading, with an endorsement in blank by the seller, on acceptance of documents under a letter of credit, and thus became the legal holder of the Bills. The claim was made that the Owners, the Managers and Transfield, were all “jointly liable to carry the cargo…safely” and were “jointly and severally liable for any loss to the cargo during their liabilities period” (sic, in translation). In the Bill of Complaint, the Insurers alleged that they insured the Cargo Owners in respect of the cargo and indemnified them in the sum of $5.25 million, obtaining a receipt, thus acquiring subrogation rights against the Owners, the Managers and Transfield to the extent of the paid indemnity.
On 2 April the Civil Award was served upon the Owners and the Managers and on 25 April the Wuhan Maritime Court gave notice to the Insurers that it had accepted the suit filed. It was on 22 May 2007 that the Bills of Complaint were served upon the Owners and the Managers.
Also on 22 May, Charles Taylor wrote to the Owners, stating that they represented both the Cargo Owners and the Insurers in connection with the claim for the total loss of the iron ore cargo. Once again, the Insurers were said to be subrogated to the rights of the Cargo Owners against third parties and the claim put forward was for the value of the lost cargo, quantified at $9,329,375.63. By this letter Charles Taylor commenced arbitration on behalf of both the Cargo Owners and the Insurers, notifying the Owners of the appointment of Mr Mark Hamsher as arbitrator “to hear and to determine all and any disputes falling within the above arbitration clause”, which, as set out earlier in the letter, referred to the arbitration clause in the Bill of Lading. The Owners were called upon to appoint their own arbitrator, whilst Charles Taylor asked the Owners to note “that the appointment of Mr Hamsher as arbitrator and the sending of this notice to you are without prejudice to our clients' rights, including the right to contest the jurisdiction of the tribunal”.
I should at this point say that an issue was raised as to the identity of the Insurers. It was suggested by the Owners that the Claimant in the Wuhan Bill of Complaint, Tai Ping Insurance Co Ltd Hubei Branch and the company in whose name the arbitration had been commenced, Tai Ping Insurance Company of Shenzhen were different entities. Evidence has been produced which suggests that they are one and the same company, with a branch in Hubei, and I proceed on that basis.
On 18 June 2007, both the Owners and the Managers made separate objections to the jurisdiction of the Wuhan Maritime Court on grounds which included the existence of the arbitration clause incorporated in the Bill of Lading. The evidence as to the date when such an application will be determined is unsatisfactory. In his statement, the solicitor acting for the Owners and Managers said that a decision on the Claimants' jurisdictional challenge was likely within about two months, on the basis of advice given to him by Chinese lawyers. The normal practice is for the Wuhan Court to ask the other party for its comments upon the objection and to give a reasonable time for such a response. There is no requirement for a hearing and although the courts could request it, it is considered unlikely that such a hearing would take place. When the statement referred to a decision on the Claimants' jurisdictional challenge as likely to take place within about two months, it was unclear whether it referred to two months from the date of the challenge—i.e. about 18 August 2007 or two months from the date of the statement—i.e. 10 September 2007. According to the evidence, there is room for appeal from that decision, which would take further time but the evidence before this court is to the effect that the Owners face a struggle in making good their objections because the current tendency of the Chinese Maritime Courts is often to declare arbitration clauses invalid for a variety of reasons.
Applicable Principles of Law
As a matter of English law which governs the Bill of Lading and charter party contracts, the Cargo Owners are clearly bound by the arbitration clause incorporated in the Bill of Lading issued by the Owners, to which the Cargo Owners became...
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