WELEX AG v ROSA MARITIME Ltd [CA (Civil), 14/01/2003]

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice David Steel
Judgment Date25 April 2002
Neutral Citation[2002] EWHC 762 (Comm),[2002] EWHC 2035 (Comm)
Docket NumberCase No: 2001 / 1189

[2002] EWHC 762 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

COMMERCIAL COURT

Before

The Honourable Mr Justice David Steel

Case No: 2001 / 1189

Between
Welex Ag
Claimant
and
Rosa Maritime Limited
Defendant

Graham Dunning QC and Ricky Diwan (instructed by Stephenson Harwood) for the Claimant

Karen Troy-Davies (instructed by Brookes & Co) for the Defendant

Hearing dates: 31st January 2002, 28th February and 1st March 2002

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 David Steel Mr Justice David Steel

Mr Justice David Steel

INTRODUCTION

1

The court is faced with cross applications. The claimant seeks a declaration that no arbitration agreement was incorporated into a contract of carriage contained in or evidenced by a bill of lading between Welex AG ("Welex") as consignees/receivers and Rosa Maritime Ltd ("Rosa") as owners of Epsilon Rosa, together with an application for consequential orders, first that the London arbitration proceedings commenced by Rosa are of no effect and secondly restraining Rosa from proceeding with the arbitration. The defendant applies for an anti-suit injunction restraining Welex from continuing the proceedings that it has commenced against Rosa in Szczecin, Poland or otherwise prosecuting proceedings against Rosa other than by way of the arbitration that has been commenced.

THE BACKGROUND

2

The dispute relates to a shipment of 5,394 metric tonnes of steel plates from Mariupol, Ukraine, to Szczecin, Poland on board Epsilon Rosa. The Bill of Lading, dated 9th April 2001, was on the Congenbill form expressly "to be used with Charterparties". The shippers were Ilyich Iron and Steel Works. The consignee was named as "Korympic Steel International GmbH on behalf of Welex AG".

3

The Bill of Lading was claused by various ship's remarks that the cargo had been stored in the open, was wet before shipment and exhibited some rust. There was a typed clause to the effect that "freight payable as per Charter Party". There was also a box, which had not been filled in, that read:- "Freight payable as per CHARTERPARTY dated …". On the reverse, clause 1 reads:- "All the terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated." The focus of the dispute between the parties was whether there was, at any material time, a "Charter Party" and whether the arbitration clause contained within it was incorporated into the Bill of Lading by virtue of Clause 1.

4

The purchase contract was evidenced by an exchange of Purchase Orders between Welex and Liberty Steel and Service GmbH ("Liberty") dated 28th January and 8th February 2001 respectively. The delivery terms were cfr, free out, Szczecin, INCO Terms 2000. The general purchase terms of Welex were applicable. They included the provision:- "Unless otherwise agreed, bills of lading tendered under CIF and CFR contracts may be issued incorporating terms of any Charter Party". Notably, whilst INCO terms 1990 stipulated that the seller must provide a copy of the Charter Party, this requirement had been deleted in INCO terms 2000.

5

The Master signed the Bills of Lading on 9th April 2001. The same day, the charterers intimated a small claim for short shipment. The owners' response on the 12th April was a demand for payment of the freight in full, pending particularisation of any claim. The charterers made a proposal on the 13th April for payment of freight, less a shortage of 100 metric tonnes and other expenses. This freight claim was in due course settled on about the 20th April.

6

On May 1st, the vessel arrived at the discharge port of Szczecin. During discharge, the claimant's surveyors found that the cargo was damaged. It was their view that the cargo had been wetted by seawater, probably through leaking hatch covers.

7

On 31st May 2001, the vessel was sold by Rosa to Alexia Navigation Ltd ("Alexia"). The Maltese register was duly amended to that effect in June 2001. On 16th July 2001, the claimant instituted arrest proceedings in the maritime court in Lisbon. These proceedings were instituted against both Rosa and Alexia. Despite the sale, Epsilon Rosa was arrested on the 19th July following a short oral hearing. On 4th September, the claimant filed a claim with the District Court of Szczecin against both Rosa and Alexia claiming compensation in the sum of $868,654 USD. It was the claimant's contention that the claim carried a lien irrespective of the change of ownership, pursuant to the Polish maritime code.

8

On 18th September, the new owners applied to lift the arrest in Lisbon. This application was dismissed, although security was ordered in the reduced sum of $596,463.00. Nonetheless, Alexia's club refused to pay security on the grounds that it was not liable in respect of the claim. Rosa's club also refused to finish security on the grounds that its member no longer owned the vessel.

9

This unfortunate impasse has led to the vessel remaining under arrest to date since there is no provision for sale pendente lite under Portuguese law. This situation was rendered all the more unattractive by the fact that the vessel's value is no more than $1,000,000 even before the deduction of the costs of arrest and any other prior claims.

10

On 19th September, the day after the application to lift the arrest failed, Rosa commenced arbitration proceedings in London. This arbitration was purportedly invoked pursuant to a fixture evidenced by recap telex from Caspi Cargo Lines ("Caspi") acting on behalf of charterers dated 19th March 2001. This re-cap telex read as follows:

"FULL RECAP IS AS FOLL FOR YR URGENT REAPPROVAL:

MV EPSILON ROSA, AS FULY DECRIBED

FOR:

— ACCT MESSRS. RED SEA HEAVY INDUSTRIES L.A.

— SUB STEM / SHIPPERS / RECEIVERS APPROVALS LIFTED

— MIN 5,474.033 / MAX 5.500 MTS CHOPT STEEL PLATES OF MAX 12 MTRS, STW—DWT

— LDING: 1SB MARIUPOL COMMERCIAL PORT

— DISCH: ISB STETTIN (SZCZECIN—NORT POLAND)

— FRT USD 23.00 PER MT FIOS L/S/D PAYABLE IN USD

— FRT DEEMED EARNED ON COMPL OF LDING DISC NOT RETURNABLE VSL N/O CGO LOST OR NOT LOST

— FRT TO BE PAYABLE 100 PCT LESS BROKERAGE COMM W/1 3 B. DAYS AFTER S/R BS/L MARKED "FRT PAYABLE AS PER C/P" IN TO THE OWS NOMINATED BANK ACCOUNT IN US DOLL CURRENCY IAC BBB

— BSL MARKED "CLEAN ON BOARD"

— CHRTRS TO ISSUE LOI WITH OWNS PANDI WORDING FOR THE OTHER REMARKS WHICH WILL BE INSERTED IN THE MATE'S RECEIPT

— FOLLOWING REMARKS ALLOWABLE IN THE BS/L:

— "ATHMOSPHERICALY RUSTY"

— "LOADED EX OPEN STORAGE"

— "WET BEFORE SHIPMENT"

— ARB IN LONDON, ENGLISH LAW TO APPLY

— OWISE AS PERCHRTS STANDART C/P DETAILS AMENDED AS PER MAIN RECAP WHICH RECAP TERMS TO SUPERSEDE ANY CONTRADICTORY TERMS IN THE C/P WITH THE FOLL ALTERATIONS:

+ C1.47: As written by hand "London""

11

The accompanying standard form had indeed been amended in manuscript in that clause 47 read:- "47. Arbitration, if any, to be settled in London in accordance with the Rules of the LMAA."

12

In reply, Epsilon had stated that the recap telex was "in order" and that, accordingly, the vessel was "fully fixed". Notably, Liberty had then sent a fax to Welex (Deutschland) GmbH on the 16th March confirming the fixture of Epsilon Rosa "subject your stem". Welex (Deutschland) responded on the 20th March giving bill of lading instructions in a fax copied to Welex.

13

Despite all this, the reaction of the claimant (through its German lawyers in a letter dated 20th September 2001) to the notification by Rosa of the institution of arbitration proceedings, and the concurrent request to terminate the proceedings in Poland, was to deny the existence of any Charter Party:—

"Most certainly the documents attached to your first message to our clients dated 19th September 2001 does not prove an agreement on that Charter Party and/or arbitration clause."

14

The letter went on to say:—

"The Bill of Lading issued on the 9th April 2001 was apparently signed by the Master. The Bill does not identify any Charter Party, let alone any particular one dated 19th March 2001 between owners and Red Sea Heavy Industries LA. As no Charter Party was identified, the general words of incorporation in the printed clause 1 on the back of the B/L are not capable of incorporating terms and conditions of any Charter Party".

15

The claimant issued its application notice seeking a declaration that there was no arbitration clause incorporated in the Bill of Lading on the 17th October 2001. Its primary case at that stage was that the issue had been decided in their favour by the Portuguese Court in their judgment dismissing Alexia's application to lift the arrest. This submission is no longer pursued.

16

The actual focus of the claimant's case has become and remains that no formal "Charter Party" was executed at any material time by the parties. By way of further particularisation, the claimant says:

a) No such document has ever been produced;

b) No satisfactory evidence as to its existence has ever been tendered.

17

Alternatively, it was contended that the resolution of this factual issue in the defendant's favour was not determinative of the issue of incorporation. The claimant submitted that the law applicable to the incorporation of the arbitration clause was Swiss law or, in the alternative, Ukrainian law, pursuant to which the arbitration clause of even an executed Charter Party would not be incorporated.

18

The defendant's position was that a Charter Party had been duly executed, the applicable law was English law and that, accordingly, the arbitration clause within it was duly incorporated. Alternatively, in the event a Charter Party had not been...

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