Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE ANDREW SMITH
Between:
Sideridraulic Systems SpA and anor | Claimants |
- and - | |
BBC Chartering & Logistic GmbH & Co KG | Defendants |
Mr Stewart Buckingham (instructed by Holman Fenwick Willan LLP) for the Defendant Applicants
Mr Yash Kulkarni (instructed by Clyde & Co LLP) for the Claimant Respondents
Hearing dates: 18 November 2011
Judgment
Mr Justice Andrew Smith:
Introduction
The dispute behind this application concerns the carriage of ten sand filter tanks for a water treatment plant (“the tanks”) from Porto Marghera, Italy to Mobile, Alabama on board the m/v “BBC Greenland” under a bill of lading dated 24 November 2009. The claimants are the cargo interests, the first claimants being the shipper and the second claimants being the receiver and the consignee named on the bill of lading. The defendants issued the bill of lading, and are the contractual carriers, the owners of the vessel, Briese Schiffahrts GmbH & Co KG (“Briese”), not being party to the proceedings. One of the tanks was lost and another damaged during the voyage, and the claimants contend that the defendants are liable for damages of some $400,000.
A central issue between the parties, although they both advance other arguments, is whether the carriage was subject to the Hague-Visby Rules (“the Rules”). The claimants contend that it was. The defendants contend that it was not because the tanks were deck cargo, that is to say “cargo which by the contract of carriage is stated as being carried on deck and is so carried”: article I(c). If they were deck cargo, they were not “goods” within the definition of the Rules, and therefore the bill of lading did not relate to the “carriage of goods” and, as the defendants contend, therefore the Rules do not apply to it: Article X of the Rules.
Procedurally, the question arises in these circumstances. By an arbitration claim form dated 17 June 2011 the claimants sought an anti-suit injunction restraining the defendants from continuing proceedings in Alabama on the ground that they were being prosecuted in breach of an arbitration agreement in the bill of lading and a declaration that the defendants are bound by the terms of the arbitration agreement. On 21 June 2011 Flaux J granted them permission to serve the claim form out of the jurisdiction. By this application the defendants seek to set aside that permission and the service of the claim form under it and an order that the court has no jurisdiction in respect of the claim and declaration.
The claimants first brought proceedings in Alabama on 23 December 2010 against Briese, but not against the defendants. On 27 December 2010 both Briese and the defendants brought proceedings in Alabama against the claimants for a declaration that they were not liable to the claimants or that their liability was limited to $1,000 (or $500 per package) because, as they pleaded, the United States Carriage of Goods by Sea Act, 1936 (“COGSA 1936”) “is applicable to this contract of carriage both under the terms of the applicable contract of carriage and by operation of law”. In their defence, the cargo interests denied that COGSA 1936 is applicable. On 24 March 2011 (within an agreed extension of time) the claimants commenced an arbitration reference against the defendants in London. The defendants disputed that they are party to any arbitration agreement and asserted that the courts of Alabama have exclusive jurisdiction in relation to the dispute.
The background facts
By a “fixture recap” of 16 September 2009, the defendants’ agents recorded that they had booked the carriage of two shipments of filter tanks between 15 and 30 November 2002, the first shipment being of 13 tanks and the second being of ten tanks. The recap included a provision giving the defendants liberty to carry the tanks as deck cargo: “shipment under/on deck in owners option, deck cargo at merchant risk and b/l to be marked accordingly”.
The first shipment of 13 tanks was carried on “BBC Greenland” under a bill of lading dated 26 October 2009. It was issued by the defendants and the named shipper and consignee were the first and second claimants respectively. It stated this on the face of the bill of lading under “Master remarks”:
“9 pieces (n. 1-2-4-5-6-10-11-12-13) carried on deck at shipper’s/charterer’s/receiver’s risk as to perils inherent in such carriage, any warranty of seaworthiness of the vessel expressly waived by the shipper/charterer/receiver and in all other respects subject to the provision of the Unites States Carriage of Goods by Sea Act 1936.”
The first shipment was completed without incident.
The second shipment was, as I have said, carried under a bill of lading dated 24 November 2009. There is no dispute that the tanks were carried on deck. On the face of the bill of lading, this was stated:
“MASTER’S REMARKS
-ALL CARGO LOADED FROM OPEN STORAGE AREA
ALL CARGO CARRIED ON DECK AT SHIPPER’S/CHARTERER’S/RECEIVER’S RISK AS TO PERILS INHERENT IN SUCH CARRIAGE, ANY WARRANTY OF SEAWORTHINESS OF THE VESSEL EXPRESSLY WAIVED BY THE SHIPPER/CHARTERER/RECEIVER.
AND IN ALL OTHER RESPECTS SUBJECT TO PROVISIONS OF THE UNITED STATES CARRIAGE OF GOODS BY SEA ACT 1936.
…”
It was also stated in a box on the front of the bill: “Special terms as per Booking note dated: 16/09/2009”. It is not clear from the evidence whether this refers to the “fixture recap”, but there is no other document that could be so described in evidence.
By the terms on the reverse, the bill of lading provided:
“3. Liability under the contract
(a) Unless otherwise provided herein, the Hague Rules contained in the International Convention for the Unification of Certain Rules Relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply. In respect of shipments to which there are no such enactments compulsorily applicable, the terms of Articles I-VIII inclusive of said Convention shall apply. In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on 23 February 1968 (“The Hague-Visby Rules”) apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. ... Unless otherwise provided herein, the Carrier shall in no case be responsible for loss of or damage to deck cargo and/or live animals….”
“4. Law and Jurisdiction
Except as provided elsewhere herein, any dispute arising under or in connection with this Bill of lading shall be referred to arbitration in London. The arbitration shall be conducted in accordance with … LMAA terms. English law to apply.”
“SPECIAL CLAUSES
…
B. US Trade. Period of Responsibility
(i) In case the Contract evidenced by this Bill of Lading is subject to the US Carriage of Goods by Sea Act of the United States of America 1936 (US COGSA), then the provisions stated in said Act shall govern before loading, and after discharge and throughout the entire time the cargo is in the Carrier’s custody. … In the event that US COGSA applies, then the Carrier may, at the Carrier’s election, commence suit in a court of proper jurisdiction in the United States in which case this court shall have exclusive jurisdiction.
(ii) If the US COGSA applies, and unless the nature and value of the cargo has been declared by the shipper before the cargo has been handed over to the Carrier and inserted in this Bill of Lading, the Carrier shall in no event be or become liable for any loss or damage to the cargo in any amount exceeding USD500 per package or customary freight unit …”
There were other contracts of carriage between the parties, and the defendants rely upon other bills of lading that they issued. In particular, by their bill of lading dated 13 July 2009, in which the claimants were named as shippers and consignees respectively, they agreed to carry on the “BBC Zarate” from Porto Margherita to Mobile 10 units of sand filters. It was in similar form to the bill dated 24 November 2009, and it was stated under “Master’s remark”, “One filter 26,00 mt no 10 of 10 carried on deck at shipper’s/charterer’s/receiver’s risk as to perils inherent in such carriage …”.
The Carriage of Goods by Sea Act, 1971 and the Hague-Visby Rules
The relevant provisions of the Carriage of Goods by Sea Act, 1971 (“COGSA 1971”) and of the Rules are as follow.
Section 1(6) and section 1(7) of COGSA 1971 provide:
“(6) Without prejudice to Article X(c) of the rules, the Rules shall have the force of law in relation to-
(a) any bill of lading if the contract contained in or evidenced by it expressly provides that the Rules shall govern the contract, …
(7) If and so far as the contract contained in or evidenced by a bill of lading … within paragraph (a) … of subsection (6) above applies to deck cargo or live animals, the Rules as given the force of law by that subsection shall have effect as if Article 1(c) did not exclude deck cargo and live animals.
In this subsection “deck cargo” means cargo which by the contract of carriage is stated as being carried on deck and is so carried.”
The Rules provide:
“Article I.
…
(b) “Contract of carriage” applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.
(c) “Goods” includes goods, wares, merchandise, and articles of every kind whatsoever except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried….”
“Article III
…
8. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure, in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect...”
“Article X
The provisions of these Rules shall apply to every bill of lading relating to the carriage of goods between ports in two different States if:
(a) the bill of lading is issued in a contracting State, or
(b) the carriage is from a port in a contracting State, or
(c) the contract contained in or evidenced by the bill of lading provides that these Rules or legislation of any State giving effect to them are to govern the contract,
whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.”
The parties’ contentions
The parties’ contentions were admirably presented in clear and focused arguments by Mr Stewart Buckingham for the defendants and by Mr Yash Kulkarni for the claimant cargo interests.
Mr Buckingham argued as follows:
The tanks were “deck cargo” because they were carried on deck and stated by the contract of carriage in the bill of lading to be carried on deck.
Therefore the tanks were not “goods” within the meaning of the Rules, the contract was not for the carriage of “goods” and the Rules do not apply to it.
Therefore the carriage was subject to COGSA 1936 because the bill of lading expressly so provided.
In any event, even if the tanks were not “deck cargo” and the Rules apply to their carriage, the carriage would still be subject to COGSA 1936 because the parties’ agreement that it should apply would be displaced only if it were shown (or agreed) that COGSA 1936 would relieve the defendants of liability or lessen their liability and therefore article III rule 8 of the Rules had effect, and it has not been so shown (nor agreed).
The bill of lading also provided (by special clause B) that, if COGSA 1936 applies, a United States court of competent jurisdiction should have exclusive jurisdiction over disputes.
Therefore (whether or not the tanks were deck cargo) the arbitration agreement in clause 4 of the bill does not apply because the bill “provided elsewhere” that the American courts should have exclusive jurisdiction.
Mr Kulkarni’s argument was as follows:
By clause 4 of the bill of lading the dispute is to be referred to arbitration in London “except as provided elsewhere”.
English law governs the contract under clause 4 of the bill, and the Rules would apply to carriage of goods under it because of article X, the carriage being from Italy, a convention country, and because the parties expressly so provided by clause 3(a).
The contract was for the carriage of goods within the meaning of the Rules, because, although they were carried on deck, they were not “by the contract of carriage … stated as being carried on deck”.
The bill of lading did not “provide elsewhere” for anything other than London arbitration. The statement on the front of the bill of lading that the carriage was “in all other respects subject to” COGSA 1936 does not do so because it is displaced by article III rule 8 of the Rules, and therefore the provision in special clause B for exclusive jurisdiction of a “court of proper jurisdiction in the United States” does not apply.
Even if the tanks were “deck cargo”, under sections 1(6) and 1(7) of COGSA 1971, the Rules apply to their carriage where, as here, the parties by their contract incorporate them into their contract of carriage.
I must therefore decide:
Whether the tanks were deck cargo, and more specifically whether they were “by the contract of carriage … stated as being carried on deck”.
If so, whether the Rules nevertheless apply to the carriage because of section 1(6) and 1(7) of COGSA 1971.
If not, whether COGSA 1936 still applies to the carriage so that American courts have jurisdiction.
Were the tanks “deck cargo”?
Although they were carried on deck, the tanks were not deck cargo unless the bill of lading stated that they would be so carried. Mr. Buckingham accepts that it would not suffice that the parties had agreed and the bill of lading stated that the carriers were at liberty to carry them on deck. The question is whether the bill of lading so stated. There was no such statement in the “fixture recap”: that only provided for a carrier’s liberty that they might be deck cargo.
Mr. Buckingham submitted that the master’s remark on the front of the bill is such a statement. In effect, he advocated a meaning that would insert into the remark the word “is” in the pivotal sentence so that it would read, “All cargo [is] carried on deck at shipper’s/charterer’s/receiver’s risk as to perils inherent in such carriage…”; and he argued that the remark is not to be understood as merely permitting the carriers to carry the tanks on deck because such a provision in the bill would have been pointless, the parties having already agreed in the fixture recap that the carriers were free to do this and that the bill was to be “marked accordingly”.
Mr Kulkarni disputed that the master’s remark means that the tanks were to be carried on deck. He did not, however, contend that it repeated the provision of the fixture recap that the carriers should be at liberty to carry them on deck, but submitted that it provided for an exclusion of liability that, if cargo was carried on deck, applied to that cargo. In effect, his interpretation would insert the word “is” after the expression “carried on deck”: “All cargo carried on deck [is] at shipper’s/charterer’s/receiver’s risk as to perils inherent in such carriage…”. Mr Kulkarni went on to argue that, if the meaning of the statement is uncertain or ambiguous, it is to be interpreted in the claimants’ favour because of the principle that documents are to be construed contra proferentem. He cited a “Summary of English and US Law” produced by the defendants’ insurers, Gard, that “The crucial question appears to be whether a third party transferee of the bill of lading would be able to ascertain from the terms of the bill of lading whether the goods were stowed on or under deck”, and argued that a reasonable person (or “a third party transferee”) on seeing the master’s remark would not realise that all the cargo was being carried on deck.
I accept that it is for the defendants to establish that the master’s remark states that the tanks were carried on deck, and if its meaning is uncertain, the uncertainty is to be resolved against them. They are (in the language of Staughton LJ in Youell v Bland Welch & Co Ltd, [1992] Lloyd’s LR 127 at p.134) the proferens coram iudice in that they need to rely upon the document to establish that the tanks were deck cargo. This principle applies not only where a party asserts a contractual exception but equally to the defendants’ argument that the carriage was not covered by the compulsory statutory regime of the Rules because of the exception for deck cargo: in Nimmo v Alexander Cowan & Sons Ltd, [1968] AC 107, Lord Wilberforce referred to “… the orthodox principle (common to both the criminal and the civil law) that exceptions etc., are to be set up by those who rely upon them”. Further, the defendants produced the bill (and the statement was made as a master’s remark), and for that reason too, the defendants being proferens in contrahendo or analogous thereto, ambiguity is to be resolved against them. That said, the court does not readily resort to the either rule of construing contra proferentem: see K/S Victoria Street v House of Fraser, [2011] EWCA (Civ) 904 at para 68, “… such rules are rarely if ever of any assistance when it comes to construing commercial contracts …. The words used, commercial sense, and the documentary and factual context, are, and should be, normally enough to determine the meaning of a contractual provision”.
The ordinary and natural meaning of the master’s remark is largely a matter of impression, but to my mind the defendants’ interpretation is the more natural. The claimants’ meaning would more naturally be conveyed by the statement that “Any cargo carried on deck at shipper’s/charterer’s/receiver’s risk…”. Moreover, the defendants’ interpretation is supported by considerations other than the language of the remark itself:
First, the statement is made by way of a master’s remark. This would not be an obvious or usual place to state a contractual provision. The remark is more readily taken to be, or at least to include, a statement of fact about how the cargo was to be carried or otherwise handled.
Moreover, the bill contained another master’s remark that “All cargo loaded from open storage area”. There (a) “All cargo” means all of the tanks (and not “any cargo”) and (b) a verb (“was” or “has been”) is to be interpolated after the word “cargo” in order to give the remark grammatical structure. In both respects, on the defendants’ interpretation both the master’s remarks are similar.
These reasons are sufficient to justify the defendants’ interpretation, but they have another argument based upon previous dealings between the parties. Mr Buckingham invoked the master’s remarks on the bills for the shipment on the “BBC Gibraltar”, the first shipment under the fixture recap, and for the shipment on the “BBC Zarate”. These can, in my judgment, only be understood as stating which filter or filters were carried on deck. Accordingly it is argued that against this background the master’s remark on the bill of 24 November 2009 is to be understood similarly, and I accept that argument. Generally, bills of lading are subject to the same principles of construction as other contracts, and “The general approach is therefore an objective one by which the courts will ascertain the intention of the parties by considering what meaning the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”: Scrutton on Charterparties and Bills of Lading (2011) 22nd Ed para 1-045. In particular, assistance may be found in a course of conduct before the parties entered into the contract on the bill of lading if its words are fairly capable of having more than one meaning: Scrutton (loc cit) at para 10-59, citing Houlder Bros v Public Works Commissioner, [1908] AC 276 at p.285 per Lord Atkinson. I do not need to consider the application of this approach in circumstances where the original parties expected that the bill would be transferred to third parties unfamiliar with relevant previous dealings between them: this case is concerned with a straight consigned bill and the named consignee was the second claimant and was similarly named in the earlier bills.
Mr Buckingham also sought support for his argument in forms of wording recommended by the Steamship Mutual and suggested in Hazelwood and Semark’s “P&I Clubs, Law and Practice (2010) 4th Ed. at p.426. It is not clear when the use of these wordings is recommended or suggested, and I do not consider that they assist his argument.
I therefore conclude that the ten tanks carried on the “BBC Greenland” were deck cargo.
The claimants’ alternative argument
The claimants’ alternative argument is that, even if the tanks were deck cargo and so the Rules do not apply compulsorily notwithstanding the carriage was from a convention country, nevertheless the parties incorporated the Rules by their contract. Mr Kulkarni cited Voyage Charters by Cooke and others (2007) 3rd Ed at para 85.75 (and see para 85.45):
“Where the contract of carriage contained in or evidenced by a bill of lading expressly provides that the Hague-Visby Rules shall govern the contract … such that the Hague-Visby Rules are given the “force of law” by section 1(6) of the Carriage of Goods by Sea Act 1971, then the above exclusion of the carriage of deck cargo and live animals does not apply. In such cases the carriage of those cargoes falls within the ambit of the Hague-Visby Rules like any other cargo.”
Undoubtedly the parties can agree that the Rules apply to the carriage of deck cargo: see Parsons Corp v C V Scheepvaartonderneming “Happy Ranger”, (The “Happy Ranger”), [2002] Lloyd’s LR 357 esp. at para 19. However, they did not do so here. The parties agreed, by clause 3(a), that the provisions of the relevant legislation should be considered incorporated in the bill “in trades where [the Rules] apply compulsorily” (emphasis added). If the tanks were deck cargo, the Rules did not apply compulsorily. The very point is made in Voyage Charters (loc cit) at para 85.66, fn 92: “… the common form of words in bills of lading that the Hague Visby Rules apply to a bill of lading in trades where those Rules compulsorily apply will not achieve the effect of incorporating the Rules unless they would otherwise so apply”.
The defendants’ alternative argument
The defendants’ alternative argument is that, even if the tanks were not deck cargo, the parties agreed that the carriage should be subject to COGSA 1936, and the claimants have not shown that effect should not be given to their agreement.
Mr. Buckingham accepted that, if the tanks were not deck cargo, the carriage would be subject to the Rules (both because the carriage was from a convention country and by the terms of the bill of lading). He also accepted that, if any provision of the bill applying COGSA 1936 relieved or lessened the defendants’ liability to the cargo interests, then it would be “null and void and of no effect” because of article III rule 8. However he submitted that the claimants have to establish that the relevant provision would relieve them of liability or lessen it, and that they have not done so, citing Lord Diplock in TheHollandia, [1983] 1AC 565 at page 575D:
“If the dispute is about duties and obligations of the carrier or ship that are referred to in that rule and it is established as a fact (either by evidence or as in the instant case by the common agreement of the parties) that the foreign court chosen as the exclusive forum would apply a domestic substantive law which would result in limiting the carrier’s liability to a sum lower than that to which he would be entitled if article 1V, paragraph 5 of the Hague-Visby Rules applied, then an English court is in my view commanded by the Act of 1971 to treat the choice of forum clause as of no effect.”
Despite Mr Buckingham’s attractive presentation of an undeniably unattractive argument, I cannot accept it. I do not doubt that an exclusive jurisdiction clause may have effect although the chosen forum will not apply the Rules to a dispute to which under English law they would be compulsorily applicable, so long as the carrier has agreed, in terms enforceable in the chosen forum, not to assert greater rights than is permitted by the Rules. However, here the parties agreed that a proper forum in the United States should have exclusive jurisdiction only in the event that COGSA 1936 applies to the carriage. The defendants’ argument requires that the bill be understood to evince an intention that COGSA should apply (so as to import the jurisdiction) notwithstanding the Rules too apply to the carriage. I am unable to accept that this was intended: COGSA 1936 and the Rules provide for different and inconsistent regimes.
Conclusion
I therefore accept the defendants’ submission that the tanks were deck cargo and therefore accede to their application. I reject their alternative argument. I invite counsel to seek to agree an order to give effect to this judgment.