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Web alert: The Channel Ranger - bill of lading 'law and arbitration' clause incorporates charterparty 'law and high court' clause

18 November 2014

In The Channel Ranger[1], the Court of Appeal was asked to decide whether the terms in a bill of lading referring to a law and arbitration clause successfully incorporated an English law and exclusive High Court jurisdiction clause referred to in a charterparty.  
 
Background
The case concerned the carriage of a cargo of bulk coal to Morocco. The vessel was time chartered on an amended NYPE charter dated 23 March 2011 so that a voyage charter dated 6 January 2011 could be fulfilled. The voyage charter contained the following clause:

‘This Charter Party shall be governed by English Law, and any dispute arising out of or in connection with this charter shall be submitted to the exclusive jurisdiction of the High Court of Justice of England and Wales.’
 
The bill of lading contained the following term: ‘All terms, and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration clause are herewith incorporated’.
 
A box on the front of the bill provided that: ‘Freight payable as per Charter Party. All terms, conditions, liberties and exemptions including the law and arbitration clause, are herewith incorporated.’
 
The front of the bill identified the charterparty as that ‘dated 06.01.2011’, i.e. the voyage charter.
 
When the vessel reached its destination the cargo temperature rose and in order to prevent fire and the loss of the vessel, the decision was taken to douse the cargo with seawater.
 
Proceedings
Upon arrival in Morocco, cargo interests claimed against the carrier under the bill for damage to the cargo. In response, the carrier made an application to the English High Court for a declaration of non-liability against cargo interests.
 
Cargo interests proceeded to issue proceedings in the Moroccan court system. In response, the carrier applied to the High Court for an interim anti-suit injunction to prevent the Moroccan proceedings from continuing. The carrier argued that the Moroccan proceedings were in breach of the exclusive jurisdiction clause in the relevant charterparty which was incorporated into the bill.
 
The carrier’s application for an interim anti-suit injunction was successful, with the court finding that the effect of the reference to law and arbitration in the bill was to incorporate the English law and exclusive High Court jurisdiction clause of the voyage charter. Cargo interests appealed. 
 
The Appeal
The Court of Appeal upheld the decision of the High Court, finding:

  1. that the correct approach is one of construction and not incorporation. The words in the bill of lading should be considered as a whole in context, including the relevant commercial background. In this case, the date of the voyage charter was stated on the bill and the bill’s incorporation clause included the words ‘law and arbitration clause’; 
  2. there was only one clause in the applicable charter dealing with law and jurisdiction and only one clause with the potential to be incorporated, i.e. the clause dealing with exclusive jurisdiction; 
  3. that reference to an arbitration clause is not inconsistent with the incorporation of a jurisdiction clause.

Comment
Members should exercise particular caution when referring to charterparties in bills of lading, ensuring that the relevant charter is identified by date and that specific, clear and correct words are used to incorporate specific terms of the relevant charter in order for such terms to be successfully relied upon.


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[1] Caresse Navigation Ltd v (1) Zurich Assurance MAROC (2) WAFA Assurance (3) AXA Assurance MAROC (4) Atlanta (the “Channel Ranger”) [2014] EWCA Civ. 1366