QCR Winter 2021: The Danish Supreme Court - Judgment dated 9th September 2021 (U2021.4943 H)
The Danish Supreme Court rules that a jurisdiction clause in a waybill may under certain circumstances supersede the principal rule of jurisdiction in the Danish Merchant Shipping Act, section 310.1, if the Brussels I regulation was to be applicable to the case.
This case concerns a claim for loss of cargo stuffed in a number of containers lost overboard en route from China to Denmark. The cargo was manufactured in China and was being transported from Shanghai to Copenhagen.
The cargo underwriters and the final consignee initiated a recovery action before the City Court in Copenhagen against the contract carrier (DSV), and DSV summoned the actual carrier (Maersk) as co-defendant.
The Waybill between DSV and Maersk was issued and signed by the Chinese company Maersk (China) Shipping Co Ltd as agents for Maersk as carrier, to the Chinese company DSV Air & Sea Co Ltd as shipper, and DSV as consignee.
The Waybill refers to Maersk’s standard terms and conditions and includes a law and jurisdiction clause which provides for English Law and the jurisdiction of the High Court of Justice in London.
Before the Copenhagen City Court, Maersk sought the dismissal of the case as the jurisdiction clause of the Waybill prescribes the High Court of Justice in London as sole jurisdiction.
The Danish Administration of Justice Act allows the court to rule on a claim for dismissal prior to the hearing of the merits of the case. The City Court ruled that it had jurisdiction over the case pursuant to section 310.1 of the Danish Merchant Shipping Act. Section 310.1 in principle grants jurisdiction in Denmark for all cargo claims with destination in Denmark, irrespective of whether a jurisdiction clause is included in an otherwise valid waybill/ bill of lading
Maersk appealed against the above ruling to the High Court, Eastern Division. The High Court upheld the ruling of the City Court confirming that the City Court was the correct forum to hear the case. The High Court found that the parties had entered into a valid agreement which included a jurisdiction clause but concluded that section 310.1 of the Danish Merchant Shipping Act overruled the jurisdiction agreement.
Maersk then appealed to the Supreme Court. According to the Danish Administration of Justice Act, an appeal can only be brought before the Supreme Court if the Process Licensing Board (Procesbevillingsnævnet) grants permission. Such permission may only be granted if the matter is of an important legal principle. Maersk was granted permission to bring the question of jurisdiction before the Supreme Court.
The case before the Supreme Court concerned the question whether a jurisdiction agreement was agreed between Maersk and DSV and, if so, whether the jurisdiction agreement is overruled by section 310.1 of the Danish Merchant Shipping Act.
The Supreme Court’s decision
There were two questions before the Supreme Court:
1. Had the parties agreed to the jurisdiction clause?
and if so,
2. Could the jurisdiction agreement be overruled by section 310.1 of the Danish Merchant Shipping Act, the section granting jurisdiction in Denmark?
The Supreme Court accepted the High Court’s reasoning that a valid jurisdiction clause was agreed. However, the Supreme Court found that the international character of the transport was such that the exemption in section 310.5 of the Danish Merchant Shipping Act would apply, and the court therefore ruled in favor of Maersk for the case to be dismissed.
The cargo-underwriters’ claim against DSV as contract carrier is not affected by the ruling of the Supreme Court as the ruling solely concerns DSV’s claim against Maersk as co-defendants.
For a long time, it has been the overwhelming perception that irrespective of a jurisdiction agreed in a bill of lading/ waybill, the provisions of the Danish Merchant Shipping Act (section 310.1) would grant jurisdiction in Denmark for claims originating from a cargo carried to Denmark. The exception in section 310.5 of the Act, accepting an agreed jurisdiction, has found very limited use.
Whether the ruling of the Supreme Court in this case will lead to a general acceptance of jurisdiction clauses in bills of lading/ waybills – or whether the ruling has to be considered as an exception to the principle rule – remains to be seen.
The reasoning of the Supreme Court below provides some indications on the future acceptance of jurisdiction clauses in Denmark:
- According to section 310.1 of the Danish Merchant Shipping Act, any advance agreement which limits a claimant’s right to litigate a dispute in respect of the transport of containerized cargo is invalid, insofar as the agreement limits the claimant’s right to initiate legal action in Denmark.
- This is, however, not the case if the Brussels I regulation, especially the provisions regarding a jurisdiction agreement in article 25, applies, which it would if the case has sufficient international character.
- Following an overall assessment of the circumstances, the Supreme Court found that the dispute did have an international touch and so the Brussels I regulation was applicable. The conditions for application of the exemption in the regulation were therefore fulfilled.
- Before the Supreme Court, DSV argued that the Brussels I regulation should not apply, as the United Kingdom had left the EU. The Supreme Court rejected the pleading, as the case was first brought before the court in 2017.
The ruling in this case is slightly opaque as rulings of the Danish Supreme Court often are. It is therefore difficult to see exactly how the court arrived at the conclusion that the circumstances, the international element in this case, sufficed for the exemption in the Danish Merchant Shipping Act to be applicable, making the jurisdiction clause in the Waybill acceptable.
AS such, it is difficult to predict what general effect this ruling will have on future disputes involving jurisdiction clauses in bills of lading / waybills, and whether or not the ruling will lead to a broader acceptance of such clauses.
A starting point in order to uphold a jurisdiction clause in a bill of lading / waybill, could be that there must firstly be a condition that the agreement in respect of the jurisdiction clause is valid. Under Danish law, a signed/accepted bill of lading / waybill is generally accepted as agreed, therefore, a jurisdiction clause will usually be considered as valid.
The crucial point in deciding whether to accept a different jurisdiction to that described in section 310.1 of the Danish Merchant Shipping Act, appears to be the existence of an international aspect of the transport and of the parties to the freight agreement.
In this case, the Bill of Lading / Waybill was issued in China between two Chinese companies for the transport of products manufactured in China and both parties are large, professional and international operators within the transport sector.
It should be noted that the Brussels I regulation refers to contract jurisdictions in EU countries. Following Brexit, the Danish Court’s decision above would likely be very different today in a case on the same facts.
The UK P&I Club is grateful to Mr Henrik Nissen of Pandi Scandinavia, http://www.pandiscan.com/ for his above summary of the Danish Supreme Court’s decision of 09.09.21.
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