Whitesea Shipping and Trading Corporation v El Paso Rio Clara Ltda [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Flaux J. |
| Judgment Date | 21 October 2009 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 October 2009 |
Queen's Bench Division (Commercial Court).
Flaux J.
Michael Ashcroft (instructed by Ince & Co) for the claimants.
Nigel Jacobs QC (instructed by Waltons & Morse) for the first, second and fourth to sixteenth defendants.
The following cases were referred to in the judgment:
Broken Hill Pty Ltd v Hapag Lloyd[1980] 2 NSWLR 572.
Chapman Marine Pty Ltd v Wilhelmsen Lines A/S[1999] FCA 178Hollandia, The [1983] 1 AC 565.
New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon)ELR[1975] AC 154.
Nippon Yusen Kaisha v International Import and Export Co (The Elbe Maru)UNK[1978] 1 Ll Rep 206.
Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York Star)WLR[1981] 1 WLR 138.
Sidney Cooke Ltd v Hapag Lloyd[1980] 2 NSWLR 587.
Starsin, The [2003] 1 CLC 921; [2004] 1 AC 715.
Shipping Anti-suit injunction Himalaya clause Owners' bills of lading subject to Hague Rules and containing English law and exclusive jurisdiction clause Cargo insurers brought proceedings in Brazil where Hague Rules did not apply against shipowners, charterer, sub-charterer, shipowners' P & I insurer and vessel's manager Shipowners sought anti-suit injunction to restrain proceedings against third parties Shipowners relying on Himalaya clause in bills Covenant not to sue in Himalaya clause inured for benefit of carrier alone Third party even if performing carriage obligations not party to contract of carriage None of third parties undertook sea carriage or was carrier within meaning of Hague Rules Enforcement of covenant not to sue Third parties constituted servants, agents or sub-contractors within Himalaya clause Shipowners could show sufficient interest in enforcing covenant to entitle them to anti-suit injunction Hague Rules, art. III, r. 8.
This was an application by the claimant shipowners for an anti-suit injunction against the fifth, ninth and fourteenth defendant insurers in respect of proceedings commenced by those defendants against the claimants and certain third parties in Brazil.
The claimants were members of a shipping pool. The pool agreement conferred authority on the pool manager to conclude charterparties on behalf of members of the pool, on terms which were based on the New York Produce Exchange form of time charter. The agreement also provided for a Bahamian company to appear as owner in any charterparty, as agent for the actual owners of the relevant vessel.
The claimants' vessel was time chartered pursuant to those arrangements to charterers (VOC). VOC sub-chartered the vessel to Bossclip. The vessel loaded cargoes at Rio de Janeiro, Brazil in respect of which four bills of lading were issued, one for discharge at Puerto Plata in the Dominican Republic and three for discharge at Houston, Texas. The bills were governed by English law and were Owners' bills. They contained an exclusive English jurisdiction clause, a Himalaya clause and a clause paramount, by virtue of which the Hague Rules applied.
The vessel grounded off Puerto Plata. The claimants contended that that was due either to perils of the sea, constituted by poor weather at the time, or to error in navigation by the master of the vessel, and that, in either case, they had a complete defence to any claim by cargo interests by virtue of art. IV, r. 2(c) or (a) respectively of the Hague Rules.
The vessel was refloated and the cargo under the first bill was discharged at Manzanillo in the Dominican Republic. The vessel was then towed to Freeport in Grand Bahama. The cargoes for the US were discharged there and on-carried to the US. There was no damage to any of that cargo.
Cargo interests commenced proceedings in the Dominican Republic, which the claimants considered to be in breach of the exclusive jurisdiction clause in the bills of lading. Those proceedings were stayed by consent.
The insurer defendants then commenced proceedings in Brazil against the claimants, the managers of the vessel, VOC, Bossclip and the claimants' P & I insurers.
The Brazilian proceedings included claims of failure to perform contractual obligations as maritime carriers to deliver the cargoes without incident. The claims asserted that the defendants in Brazil were under a strict liability and did not mention the Hague Rules which did not apply in Brazil.
The claimants sought an anti-suit injunction against the insurer defendants restraining them from pursuing the proceedings in Brazil against the third parties, as well as against the claimants.
The claimants' case against the insurer defendants was that the third parties being sued in Brazil were servants, agents or sub-contractors within the wide definition of sub-contractor in the Himalaya clause.
The insurers' contended that the claimants could not rely on the clause because it was equivalent to conferring on the third parties a blanket immunity from liability, contrary to art. III, r. 8 of the Hague Rules.
Held, granting an anti-suit injunction restraining the insurer defendants from continuing with the proceedings in Brazil against all the parties being sued in Brazil:
1. The covenant not to sue in the first part of the clause in issue only inured to the benefit of the claimants as carriers under the bills of lading, and not to the benefit also of the various third parties being sued in Brazil. (The Starsin [2003] 1 CLC 921; [2004] 1 AC 715 considered.)
2. Attempting to enforce that covenant, by way of injunction or otherwise, did not amount to the conferring of a blanket immunity on the third parties who performed carriage obligations, contrary art. III, r. 8, because the Himalaya contract, to which the relevant third parties (such as the charterers and sub-charterers, VOC and Bossclip) became parties when they performed the relevant carriage obligations, was not a contract of carriage within the meaning of the Hague Rules. Merely because the third party performed what might be regarded as carriage functions it was not to be regarded as a party to a contract of carriage governed by the Hague Rules. The third parties might be said to have performed services incidental to the goods or to the carriage of the goods but it could not be said that any of them had undertaken the actual carriage of the goods, which was undertaken by the claimants alone, pursuant to bills of lading which were Owners' bills. That conclusion could not be affected by the fact that, for their own tactical purposes in the Brazilian proceedings, the insurer defendants had alleged that all the third parties, together with the claimants, provided services as maritime carriers of the goods. The court was entitled to look at the substance, as opposed to the way in which the insurer defendants had chosen to categorise their claim in Brazil. Once it was seen that none of the third parties undertook the sea carriage or was in fact the carrier within the meaning of the Hague Rules, the conclusion that the enforcement of the covenant not to sue was not contrary to art. III, r. 8 was clearly correct. (The Starsin considered.)
3. The third parties were servants, agents or sub-contractors of the claimants within the wide definition of sub-contractor in the clause.
4. The claimants could show a sufficient interest in enforcing the covenant not to sue to entitle them to the injunction they sought. It was clear that, unless restrained, the defendants intended to continue against the third parties in Brazil, with a view to seeking at a later stage to persuade the English court to stay the proceedings in England or not continue the anti-suit injunction in respect of claims in Brazil against the claimants on the basis that it was more convenient for the proceedings against all potential defendants to continue in Brazil. The claimants had a sufficient interest in enforcing the covenant not to sue the third parties by preventing the defendants from seeking to use their own breach of the covenant to their own tactical advantage before the English court at a later date, to entitle them to an injunction. Furthermore, the restraint of proceedings in Brazil, which on their face ignored completely the application to the contract of carriage, to which all the defendants in Brazil were said to be parties, of the Hague Rules, would avoid the need for the claimants to seek to expedite the present proceedings so as to obtain an English judgment before any judgment in Brazil. (The Elbe Maru [1978] 1 Lloyd's Rep 206 considered.)
Flaux J:
1. The Claimants seek an anti-suit injunction against the Fifth, Ninth and Fourteenth Defendants in respect of proceedings commenced by those Defendants (to whom I will refer in this judgment simply as the insurer Defendants) against the Claimants and certain third parties in Brazil. They also seek a similar injunction against the proposed Nineteenth Defendant, another insurer which has commenced such proceedings in Brazil. So far as the application against the insurer Defendants is concerned, that was contested, at least in so far as the injunction sought would restrain the insurer Defendants from pursuing the third parties. All the current Defendants (apart from the Third Defendants, a Cayman Islands law firm named on one of the bills, against which the proceedings have been discontinued) were represented at the hearing on Friday 16 October 2009 by Mr Nigel Jacobs QC.
2. At the end of the hearing I indicated that I would grant the injunction sought against the insurer Defendants and give my reasons for doing so later. This judgment sets out those reasons. The proposed Nineteenth Defendant is another insurer which is yet to be served with the proceedings, so that the application against it was necessarily on a without notice basis. For the same reasons as set out in this judgment, the Claimants are entitled to an anti-suit injunction against it.
3. The Second Claimant is the registered...
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