Starlight Shipping Company v Tai Ping Insurance Company Ltd, Hubei Branch [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Cooke J. |
| Judgment Date | 01 August 2007 |
| Date | 01 August 2007 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Cooke J.
Stephen Males QC (instructed by Holman Fenwick & Willan) for the claimant.
Michael Collett (instructed by MFB Solicitors) for the defendant.
The following cases were referred to in the judgment:
Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace)UNK [1995] 1 Ll Rep 87.
Cetelem SA v Roust Holdings Ltd [2005] 1 CLC 821.
Elektrim SA v Vivendi Universal SA (No. 2) [2007] 1 CLC 227.
Navigation Maritime Bulgare v Rustal Trading Ltd (The Ivan Zagubanski)UNK [2002] 1 Ll Rep 106.
OT Africa Line Ltd v Magic Sportswear Corp [2005] 1 CLC 923.
Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading GmbH (The Jay Bola) [1997] CLC 993 (CA).
Through Transport Mutual Insurance v New India Assurance Co Ltd [2004] 2 CLC 1189.
Vale do Rio doce Navegacao SA v Shanghai Bao Steel Ocean Shipping Co Ltd [2000] CLC 1200.
West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA (The Front Comor) [2005] 1 CLC 347; [2007] UKHL 4.
Arbitration — Arbitration clause — Anti-suit injunction — Voyage charter and bill of lading including English law and arbitration clause — Vessel and cargo lost in course of voyage — Cargo owners' insurers took proceedings in China against ship owners and ship managers — Arbitration proceedings also started under London Maritime Arbitrators Association terms — Under English law insurers clearly bound by bill of lading arbitration clause — Case one of urgency and arbitral tribunal unable for time being to act effectively — Arbitrators had no power to grant interim relief under LMAA terms — No strong reason not to make interim order until tribunal could consider matter — Owners entitled to anti-suit injunction against cargo owners and insurers — Ship managers not party to arbitration agreement and not entitled to injunction — Supreme Court Act 1981, s. 37 — Arbitration Act 1996, s. 44.
This was an application by the claimants seeking an interim anti-suit injunction restraining the defendants from taking any steps in proceedings commenced by the first defendant against the claimants in the Wuhan maritime court in China.
The first claimant was the owner, and the second claimant the manager, of the vessel Alexandros T. The vessel was chartered by the owners to Transfield ER Cape Ltd 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 cargo owners on essentially back to back terms, including identical terms as to law and arbitration. A bill of lading was issued of which the cargo owners became the holders and which incorporated the terms of the charter including the law and arbitration clause. In the course of the voyage from Brazil the vessel was lost with her cargo.
The first defendant, the insurer of the cargo, commenced proceedings against the owners and the managers of the vessel in the Wuhan maritime court claiming $5.25 million by way of damages. The claim was also made against Transfield. The cargo owners and the insurers also commenced an arbitration and appointed an arbitrator under LMAA terms. The claimants also appointed an arbitrator. The LMAA terms did not give any power to grant interim injunctions.
The owners and the managers objected to the jurisdiction of the Wuhan maritime court on grounds which included the existence of the arbitration clause incorporated in the bill of lading. They brought English proceedings contending that the Chinese proceedings had been commenced in breach of the arbitration clause in the bill of lading and that there was no good or strong reason, within the meaning of the decided authorities, why an anti-suit injunction should not be granted. The owners submitted that s. 37(1) of the Supreme Court Act 1981 gave rise to a power to grant injunctions whether or not arbitration had been commenced, and that the court's powers under s. 44 of the Arbitration Act 1996 were limited to the grant of an interim injunction in support of a specific arbitration so that the owners did not have to meet the test set out in s. 44(3)— (5).
Held granting an anti-suit injunction:
1. As a matter of English law, which governed the bill of lading and charter party contracts, the cargo owners and insurers were clearly bound by the arbitration clause incorporated in the bill of lading issued by the owners, to which the cargo owners became party. The fact that the insurers claimed that they were not bound by the arbitration clause as a matter of the law of the People's Republic of China was irrelevant because the cargo claim was one which gave rise to a dispute arising under the contract and was therefore arbitrable. The only rights under the bill of lading contract which were capable of being transferred to the insurers by way of subrogation were those which had to be enforced by arbitration.
2. The court proceeded on the basis that s. 37 of the 1981 Act was available to the court in a situation such as the present, whether or not s. 44 of the 1996 Act could also be brought into play. In exercising any discretion under s. 37 of the 1981 Act the court would have regard to matters which arose under s. 44 of the 1996 Act. (Elektrim SA v Vivendi Universal SA (No. 2)[2007] 1 CLC 227considered.)
3. The court, on a proper construction of s. 44 of the 1996 Act, could grant an interim injunction for the purpose of preserving assets, including the contractual right to have disputes referred to arbitration. The court could only act under s. 44(3) if the case was one of urgency and also, by reason of the terms of s. 44(5), if, or to the extent that, the arbitral tribunal had no power or was unable for the time being to act effectively. In the circumstances the arbitral tribunal could not, in the time before any decision of the Wuhan court was issued, make a final (as opposed to an interim) award against the cargo owners and the insurers, who were party to the arbitration, restraining them from pursuing the Chinese proceedings. The requirement of urgency was made out as was the inability of the arbitrators for the time being to act effectively.
4. There was no strong reason against granting the injunction but its continuance was made conditional upon the owners making available to the insurers/cargo owners the same security as was available in China as and when that security was released.
5. Although the claim against the managers appeared to be hopeless, and therefore vexatious and oppressive, as a matter of English law, there was no jurisdiction in the English court to restrain the cargo owners and insurers from proceeding against them in China because the managers were not party to the arbitration agreement.
Cooke J:
1. 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.
2. 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.
3. 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.”
4. 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.”
5. In the course of the voyage from Brazil the vessel was lost with her cargo.
6. On 15 March 2007 the first defendant, the alleged insurers (“the insurers”) of...
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