QCR Spring 2017: The Court of Appeal considers whether an English jurisdiction clause in bills of lading was an exclusive jurisdiction clause.
Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd  EWCA Civ 401
In claims relating to alleged release of cargo without presentation of original bills of lading, freight forwarder, Hin-Pro, commenced multiple actions against CSAV in various Chinese Maritime Courts.
Clause 23 of the subject CSAV bills of lading provided:
“This Bill of Lading and any claim or dispute arising hereunder shall be subject to English law and the jurisdiction of the English High Court of Justice in London. If, notwithstanding the foregoing, any proceedings are commenced in another jurisdiction, such proceedings shall be referred to ordinary courts of law. In the case of Chile, arbitrators shall not be competent to deal with any such disputes and proceedings shall be referred to the Chilean Ordinary Courts.”
Following the commencement of proceedings in China, CSAV commenced proceedings in the English High Court. At first instance the court found in CSAV’s favour, granting (i) a declaration that clause 23 obliged Hin-Pro to bring claims under the bills of lading in the English courts; (ii) damages arising from Hin-Pro’s breach of clause 23; and (iii) a permanent injunction in respect of the Chinese Proceedings.
The Court of Appeal Judgment
In upholding the first instance decision the Court of Appeal held that clause 23 provided for the exclusive jurisdiction of the English High Court for the following reasons:
- The words “shall be subject to” are imperative. They do not simply give the parties an option to invoke the jurisdiction of English High Court.
- The natural commercial purpose of a clause such as this is to stipulate (i) what law will govern; and (ii) which court will be the court having jurisdiction over any dispute. There would be limited benefit in specifying English jurisdiction as an option only without there being obligation on the parties to litigate here given the number of courts that might otherwise have jurisdiction under the bills of lading and how they might apply English law.
- In agreeing to English law as the governing law under the bills, the parties should also be taken to have intended that the English courts should have exclusive jurisdiction. This might seem surprising, given that the jurisdiction clause in question provided for other courts to have jurisdiction in certain circumstances, but the Court of Appeal asserted England was the best forum for the application of its own laws.
- The second and third sentences of the clause are designed to ensure that where the first sentence is ineffective (e.g. because of the application of the Hamburg Rules, as in Chile and elsewhere, or where the country whose jurisdiction is invoked does not recognise the intended effect of an exclusive jurisdiction clause, as in China), proceedings will be brought before “ordinary courts”, without detracting from the parties’ primary contractual obligation to bring claims in the English High Court.
This case illustrates that the absence of the word “exclusive” will not of itself result in a jurisdiction clause operating on a non-exclusive basis. If a party to a contract intends that a particular jurisdiction named in a law and jurisdiction clause should apply on a non-exclusive basis, then they should expressly state that within the clause. By the same token, it is always worth specifying expressly that a particular jurisdiction should be exclusive if that is what the parties intend.
Members are also referred to additional case updates on the website of the UK Defence Club, www.ukdefence.com.
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IG Letters of Indemnity
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