England and Wales High Court (Commercial Court) Decisions

Judgment

(Please note that due to the poor standard of recording it has not been possible to produce a high quality transcript in this case)

MR JUSTICE COOKE:

"I have read and considered the second and third affidavits of Mr Kaiser and the affidavit which has been signed (but not yet sworn) by Mr Pizzolante. For the reasons given by Ms Melwani QC in her written skeleton arguments, I am satisfied that there is good reason for concern that Hin-Pro's activities in China involve a fraudulent bringing of proceedings and there are good grounds to fear that they may result in execution in China so as to force CSAV to pay a sum which, when combined with costs in this country, would total something in the region of USD27,845,000. Similarly I am satisfied that there are strong grounds for thinking that a cause of action has accrued now, even though a substantial part of the damages may not be suffered until sometime in the future ... Great care has been taken by those advising CSAV to ensure that appropriate proceedings are brought here and in Hong Kong."

"Law and jurisdiction.

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."

By the first sentence of this clause each party agrees to submit to the jurisdiction of the English High Court and to the application of English law as the governing law of the contract contained in, or evidenced by, the bill of lading. The question which arises is whether or not the parties have agreed to the exclusive jurisdiction of this court, with the result that proceedings taken elsewhere, such as those in China, amount to a breach of contract. If the first sentence of the clause stood alone, it would, by reference to a body of authority, constitute an exclusive jurisdiction clause. In Svendborg v Wansa [1997] 2 Lloyd's Rep 183 the clause read as follows:

"Wherever the Carriage of Goods by Sea Act 1936 (COGSA) of the United States of America applies ... this contract is to be governed by United States law and the United States Federal Court Southern District of New York is to have exclusive jurisdiction to hear all disputes hereunder. In all other cases, this Bill of Lading is subject to English law and jurisdiction."

Staughton LJ, with whom the other members of the Court of Appeal agreed, said this, referring to his own earlier judgment in the Court of Appeal decision in Sohio Supply Co v Gatoil [1989] 1 Lloyd's Rep 588:

"It can be argued that the express mention of exclusive jurisdiction in the first part of the clause excludes any implication that the second part provides for exclusive jurisdiction. On the other hand it can be argued that the author wished to provide for exclusive jurisdiction throughout, and did not think it necessary to repeat the word "exclusive" in the second part… I conclude that the clause does confer exclusive jurisdiction on the English courts. My reasons are in substance, first those which I stated in Sohio Supply Co v. Gatoil (USA) Inc (1989) 1 Lloyd's Rep 588 at pp. 591-2, and in particular that I could think of no reason why businessmen should choose to go to the trouble of saying that the English Courts should have non-exclusive jurisdiction. My second reason is that the parties in the second part of the clause were plainly saying that English law was to be mandatory if the American Carriage of Goods by Sea Act did not apply; it seems to me that they must have intended English jurisdiction likewise to be mandatory in that event."

"This agreement shall be governed by and be construed and take effect according to English law and the parties hereto agree that the courts of law in England shall have jurisdiction to entertain any action in respect hereof..."

He also referred to the Sohio decision and Staughton LJ's comment that he could think of no reason why parties should go to the trouble of saying that the English courts should have non-exclusive jurisdiction, but could think of every good reason why the parties should choose that some courts should have exclusive jurisdiction, so that both sides could know where all cases were to be tried. He went on to say:

"In the instant case the parties have expressly agreed English law and there would be no need to expressly agree that the English court should have jurisdiction or the English court to have non-exclusive jurisdiction. The English court would in any event have such jurisdiction, and by expressly agreeing to English jurisdiction they must be seeking to add something, i.e. that the English court should have exclusive jurisdiction."

"(iv) As to proceedings in Chile, the following facts were not in dispute: First, that claims for loss of or damage to cargo are subject to mandatory arbitration ; contractual clauses (such as the final sentence of cl.24 of the bills of lading) purporting to provide for the reference of such proceedings to the Chilean Courts have been declared by the Chilean Courts to be void. Secondly, under Chilean law, the provision contained in cl.24 of the bills of lading for English law and jurisdiction will be deemed null and void; the Metro Chilean claim will be determined in accordance with Chilean substantive law. Thirdly, if CSAV's application succeeded then, if Metro so chose, its claims under the bills of lading could be heard by the same arbitrator already appointed to hear the Metro Chilean claim.

(v) Reverting to cl.24 of the bills of lading, it was not in dispute that it provided for English law and non-exclusive English jurisdiction. The second sentence recognised that in certain jurisdictions (for example where the Hamburg Rules are applicable), the English jurisdiction clause might be disregarded. On the material before me, it appears that the third sentence represented an ineffective preference for the Chilean Courts over Chilean arbitration; as already noted, such clauses have been held by the Chilean Courts to be null and void."