Glad tidings in the recognition and enforcement of judgments: The UK is to ratify the 2019 Hague Convention

On 23 November 2023, the UK Government published its response to the consultation paper on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (see the previous post related to the consultation and the groundwork of the process here The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog). Having considered the responses received, the Government has concluded that it is the right time for the UK to join Hague 2019 and will seek to do so as soon as practicable. Indeed, it is clear from the paper that a total of 39 responses were received from across the UK’s legal sector, both practitioners and law firms as well as academics, and all of the consultees supported the UK’s accession to the HJC.

The Convention has been in force since 1 September 2023 as the only global instrument containing uniform rules for the mutual recognition and enforcement of judgments in civil and commercial disputes for the EU, Ukraine and Uruguay as the existing Contracting States. Joining the Convention will indeed ensure greater legal certainty and promote the UK’s reputation as a preferred forum for resolving international civil and commercial cases. Indeed, it will contribute to a swift resolution of disputes by shortening expenses and time frames for businesses and consumers because of the facilitated recognition and enforcement of the final decisions. The latter will in turn boost commercial parties’ confidence while operating across borders with increased clarity about the effectiveness of their judgments.

The Government’s response further highlighted the fact that judgments from non-exclusive choice of court agreements, which are excluded from the scope of the 2005 Hague Convention on Choice of Court Agreements (HCCCA), are enforceable under Hague 2019, which will likely increase the attractiveness of the UK financial services industry. Having ratified the HCCCA, the UK has guaranteed the effectiveness of the English exclusive jurisdiction clauses in all other Hague Contracting States and vice versa. In fact, the HJC complements the HCCCA with the same objectives and further covers judgments given by non-exclusively designated courts; therefore, joining the HJC will enhance party autonomy and ensure the effectiveness of an entire range of choice of court agreements.

Additionally, becoming a Contracting State to the HJC will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. The relevant instruments will get reciprocally given effect in the UK and EU. Further, given the fact that the territorial scope of the Convention is expanding having Israel, Russia, Costa Rica, North Macedonia and the US already signed so far, joining the treaty will enhance the global enforceability of judgments.

In addition to the potential benefits of the HJC, the Government is also well aware of the downsides of the mechanism. In this context, the Government’s response underlines several concerns that have been raised by the consultees. These include the risks regarding the UK courts’ potential obligation to recognise and enforce foreign judgments under the HJC in the absence of an obligation under the common law or existing arrangements. Further, potential issues related to procedural fairness and rule of law in the origin country have also been mentioned. Yet, the Government considers that there are adequate safeguards such as making declarations under Article 29 to prevent the application of the Convention with regard to a particular Contracting State at the time of ratification of that state. Additionally, the recognition and enforcement of judgments can be refused if one of the grounds in Article 7 can be established, including if certain procedural fairness requirements have not been met and where recognition or enforcement would be manifestly incompatible with the public policy of the UK. Moreover, the Government is in the view that while Article 5 gives a list of indirect jurisdiction grounds and wider possibilities for recognition and enforcement in some circumstances, it also requires clear thresholds that parties must meet.

The Government also mentions the concerns raised regarding the exclusions and the more limited scope of the HJC compared to the Lugano Convention for which the UK applied to join. Yet, the potential merits of the HJC outweigh any possible downsides and joining the latter does not prevent the UK’s future reaccession to the Lugano regime. Another point that is noted by the Government is that the HJC does not change or remove existing recognition and enforcement mechanisms provided by domestic law in the UK and other Contracting States, on which parties can continue to rely for the recognition and enforcement of cases not covered by the treaty.

Regarding possible declarations under the relevant provisions of the HJC, the Government supports the respondents’ views about the potential of restricting the Convention’s application and likely reciprocal actions from other Contracting States which would further limit the scope of the Convention. In line with the consultees’ views, the Government thinks that the UK should not make any declarations at this time (nor any declaration in regard to insurance matters) but it will keep the questions of declarations under review as it proceeds to signature and implementation, and in future as the Convention comes into force between the UK and current and future Contracting States.

The Government concluded that the HJC should extend to all of the UK jurisdictions to ensure consistency and ensure that all jurisdictions can benefit from the advantages of the Convention. Also as observed in the respondents’ comments, the Government is planning to use a registration model for implementing the mechanism same as what is used for the implementation of the HCCCA 2005, which would require foreign judgments to be registered prior to their enforcement in the UK. It means that parties seeking to have a foreign judgment recognised and enforced in the UK under the HJC would need to apply to the court, setting out the applicable indirect jurisdiction ground, amongst other things, and provide the necessary evidence. Parties objecting to the recognition and enforcement of the foreign judgment would then have an opportunity to challenge the registration before enforcement takes place, by way of appeal against or setting aside of the registration.

The Government will further consider the details of this implementation model particularly in relation with the challenges highlighted by respondents for the indirect jurisdiction aspects of the procedures. In line with this, the suggestion to amend the jurisdiction grounds currently found in Practice Direction 6B and adjusting them to Article 5 of the HJC, will be passed onto the Master of the Rolls and the Civil Procedure Rule Committee for consideration. Moreover, since this might become a devolved matter in respect of Scotland and Northern Ireland, Government officials will continue to work closely with their counterparts in the Scottish Government and in Northern Ireland to ensure implementing frameworks are in place in all 3 jurisdictions ahead of ratification of the Convention. Overall, the Government will work with the Crown Dependencies and the Overseas Territories to determine if the Convention should extend to these territories.

The Government has further considered the concerns in relation to signature by Russia and considers that the UK should sign the Convention with the understanding that a future notification in relation to the Russian Federation under Article 29 might be available to prevent the Convention applying between the UK and Russia, should there be any development in the latter’s ratification of the treaty.

In summary, based on all the responses and comments received during the Consultation process, the Government estimates there will be a positive impact on businesses that operate across borders, because they will have a predictable, more certain and uniform way to enforce judgments that they might need to seek to resolve disputes. The Government also estimates that there will be a positive impact on the litigation sector. The Government will undertake further work to quantify the impact and issue guidance when implementing the Convention.

The Government is planning to lay the Convention in Parliament soon ahead of ratification and to make sure the implementing legislation is in place for the three jurisdictions ahead of the accession. Once ratified, the HJC will be implemented in domestic law mainly using powers in the Private International Law (Implementation of Agreements) Act 2020 as well as via rules of court in all 3 jurisdictions of the UK subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

See Government response to the Hague Convention of July 2019 on the Recognition and Enforcement of Foreign Judgements in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk)

General Average and Congenbill 1994 form. An old chestnut of interpretation resolved.

In The Star Antares, Star Axe I LLC v Royal and Sun Alliance Luxembourg SA – Belgian Branch & Ors [2023] EWHC 2784 (Comm) (10 November 2023) Butcher J was faced with resolving an old chestnut of interpretation as to which version of the York-Antwerp Rules (‘YAR’) is applicable pursuant to clause (3) of the standard Congenbill 1994 form, which provides:

‘General average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof, in London unless another place is agreed in the Charter Party’. The Claimant argued for the York-Antwerp Rules 1994 (‘the YAR 1994’), the Defendants for the York-Antwerp Rules 2016 (‘the YAR 2016’).

Butcher J started with the undisputed factual matrix submitted by the Defendants at [14].

 “(1) That shipowners and charterers are in the habit of using contract wordings for many years, even after newer wordings have been published. There could have been no assurance, when drafting a wording such as Congenbill 1994, that the market would only use it until such time as an updated wording became available.

(2) The YAR constitute a code for regulating the adjustment of general average. The first version of the Rules appeared in 1877, their aim being to harmonize the treatment of general average by the principal seafaring nations.

(3) The YAR have been periodically revised, with further versions being published in 1890, 1924, 1950, 1974, 1994, 2004 and 2016. At least since 1950, the revisions have been overseen by CMI. Following a consultation process, the new version will be approved at a CMI meeting and published in the CMI yearbook.

(4) In addition to these further versions, an amended version of the 1974 Rules was issued in 1990, on order to take account of the Salvage Convention 1989.

(5) Apart from that specific instance, the periodic updating of the YAR is, in general terms, to be explained by a desire for the adjustment of general average to march in step with developments in shipborne commerce and to suit the changing expectations of ship and cargo interests.”

The Claimant relied on opinions in a variety of learned academic texts and commentary to the effect that the words ‘[YAR 1994], or any subsequent modification thereof’ did not embrace either the York-Antwerp Rules 2004 (‘YAR 2004’) or YAR 2016, which were new sets of Rules and not ‘modifications’ of YAR 1994.

Butcher J found that, against the undisputed factual matrix, the words in question were reasonably to be understood as capable of applying to a new version of the Rules. A reasonable person possessed of that background knowledge, and without regard to the academic materials relied on by the Claimant, would understand the parties to have meant only amendments to the 1994 version of the Rules which were identified as such, rather than a new version of the Rules which included some changed provisions. The word ‘modification’ ordinarily signifies a change which does not alter the essential nature or character of the thing modified. When used in the context of a written instrument or set of Rules it ordinarily has, if anything, a rather wider connotation than ‘amendment’, extending to changes in approach, and being less focused than is the word ‘amendment’ on textual change. Additionally, the clause here referred to ‘any subsequent modification’ and the use of ‘any’ emphasised that all ‘modifications’ to the YAR 1994 were to be incorporated. This would apply equally to YAR 2004 as to YAR 2016. This conclusion was consistent with the way in which courts have construed clauses incorporating the Brussels International Convention of 1924 ‘and any subsequent amendment thereto’ in The ‘Vechscroon’ [1982] 1 Lloyd’s Rep 301, or national legislation enacting the Hague Rules ‘as amended’ in The ‘Marinor’ [1996] 1 Lloyd’s Rep 301. In each the conclusion was that the Hague-Visby Rules applied.

As regards the academic opinions on the wording in question, even assuming that this material could be regarded as being known to the parties at the time of contracting, it did not point to the conclusion that the relevant words would have been reasonably understood to have the meaning for which the Claimant contended. The reasonable person considering what the parties meant, would have regarded these expressions of opinion as just that.

Accordingly, Butcher J found that the clause referred to YAR 2016.

As welcome as flowers in May: The new Arbitration Act on the horizon

A long-desired development in the arbitration sector: Having included into the King’s Speech only a couple of days ago, the draft Arbitration Bill is taking its course to the UK Parliament. Brief key points below.

In March 2021, the Ministry of Justice asked the Law Commission to conduct a review of the Arbitration Act 1996 to ensure that the legislation remains fit for its purpose and continues to promote England and Wales as a leading destination for commercial arbitration. The consultation process that began in January 2022 analysed the existing law in two consultation papers (the papers were published in September 2022 and March 2023 respectively). See the related blog posts here Law Commission to review the Arbitration Act 1996 – The Institute of International Shipping & Trade Law (IISTL) Blog and here The next step in the reform of the Arbitration Act 1996 – The Institute of International Shipping & Trade Law (IISTL) Blog

Following the Law Commission’s completion of the review of the Arbitration Act, the final report was published in September 2023.  With the Law Commission’s estimations of at least 5,000 domestic and international arbitrations taking place in England and Wales each year, it was vital to modernise the arbitration framework and respond to global competition in the sector. Indeed, several competing jurisdictions have updated their legislation more recently: Singapore in 2023, Hong Kong in 2022, and Sweden and Dubai in 2018. Further, Singapore ranked equal first to London as the preferred choice of seat for the first time in 2021.

The Commission’s conclusions and recommendations were accompanied by a draft Arbitration Bill which was announced by King Charles in his speech at the State Opening Parliament on 7 November 2023. The King’s Speech points out that the Bill modernises the law on arbitration as recommended by the Law Commission. It has been stated that the reforms clarify the law governing arbitration agreements, strengthen the courts’ supporting powers, and facilitate quicker dispute resolution. The King’s speech also indicates that the new measures will bolster England, Wales, and Northern Ireland’s world-leading domestic and international arbitration sector with benefits for individuals and businesses seeking to resolve disputes, as well as boosting economic growth.

With the Government’s acceptance of the recommendations introduced by the Commission in the proposed Bill means that we can now anticipate a draft legislation to come before the parliament soon. The Bill will update the Arbitration Act 1996 that is currently in force. The territorial scope of the expected legislation covers England and Wales whereas the Arbitration Act 1996 also applies to Northern Ireland. Subject to the agreement of the Northern Ireland Department of Justice, the Bill might also extend and apply to Northern Ireland.

The King’s Speech 2023 is available here: The King’s Speech 2023: background briefing notes – GOV.UK (www.gov.uk).

NEW IISTL Book is now out!

We are delighted that the book that emerged from our 2022 Colloquium “Damages, Recoveries and Remedies in Shipping Law! is now out (November 2023)! Edited by Professors Soyer and Tettenborn the book is published by Informa Law (you can get 20 % discount with the code attached).

Contents:
Part 1

Damages


Chapter 1
Limitations to and Deductions from Contractual Damages
By Jonathan Webb, Florian Schacker, George Lawrence

Chapter 2
The Reflective Loss Doctrine and Shipping Law Can We Write It Off Yet?
Andrew Tettenborn

Chapter 3
Mitigation – Is It Relevant When Assessing Damages for Breach of Charterparty?
Simon Croall KC

Chapter 4
Prospects of Recovering Damages for Delay in Shipping Cases
Andrew Preston

Chapter 5
Limits on a Shipowner’s Right to Refuse Early Redelivery of a Time-Chartered Vessel
Ceren Cerit Dindar

Chapter 6
Ship Seller’s Potential Duty of Care in Respect of Buyer’s Dismantling of Vessel
Grace Asemota

Chapter 7
Judgments in Bitcoin?
Josephine Davies

Part II
Emerging Liability Regimes and Damages

Chapter 8
Remedies for Smart Legal Contracts- Rectification and Rescission Reconsidered
Adam Sanitt

Chapter 9
The Internet of Things in the Commercial Insurance Context – A Case for Regulation, or for Commercial Shrewdness and Judicial Creativity?
Barış Soyer

Chapter 10
Digital Banking and Liability Issues
Andrea M.

Chapter 11
Control Centres in the Context of Unmanned Ship Operations – Their Status and Potential Liabilities*
Prof Bülent Sȍzer

Chapter 12
Shipping Operators’ Obligations and Liabilities Under the International and EU Emission Reduction Strategy
Lia Athanassiou

Chapter 13
Damages for Late Payment of Insurance Claims
Peter MacDonald Eggers

Part III
Other Remedies and Third Parties

Chapter 14
Specific Remedies in Shipping – Specific Performance, Specific Enforcement and the Interaction of “Negotiating Damages”
Chris Kidd, Ben Moon, Waled Salih, Jack Maxted

Chapter 15
The Rebirth of the European “Anti-Suit Injunction” Issue Post-Brexit
Dr Aygun Mammadzada

Chapter 16
Punitive Damages in Maritime Cases – A View From Across the Pond
Michael Sturley

Chapter 17
Limitation of Liability – New Trends
Frank Stevens

Chapter 18
Am I My Brother’s Keeper? Liability in Tort for the Acts of Third Parties
Simon Baughen

Chapter 19
Third Party Loss in Carriage of Goods by Sea
Melis Özdel

Two interesting decisions from the European Commission.

First, it has proposed a draft Regulation clarifying who will be the “shipping company” for the purposes of the Emissions Trading Scheme which applies to shipping as from 1 January 2024. Although many ship managers or demise charterers would meet the definition of a “shipping company” in other contexts, such as the MRV regulation, under the ETS Member States should ensure that such shipping company has been duly mandated by the registered shipowner. The draft regulation specifies the documentary proof of this that must be provided the relevant Administering Authority, failing which the shipowner shall be considered as the entity responsible for ETS obligations. By 1 February 2024, a list of the Administering Authorities where shipping companies are registered will be published by the European Commission. Based on that list, the shipping company should apply to the registry and submit the required documents and applicable fees.

Second, it has decided not to extend the Consortia Block Exemption Regulation which will expire on 25 April 2024. The Commission’s press release of 10 October 2023 states:

“Given the small number and profile of consortia falling within the scope of the CBER, the CBER brings limited compliance cost savings to carriers and plays a secondary role in carriers’ decision to cooperate. Furthermore, over the evaluation period, the CBER was no longer enabling smaller carriers to cooperate among each other and offer alternative services in competition with larger carriers.

Based on the feedback received, the Commission has decided not to extend the CBER and to let it expire on 25 April 2024. The expiry of the CBER does not mean that cooperation between shipping lines becomes unlawful under EU antitrust rules. Instead, carriers operating to or from the EU will assess the compatibility of their co-operation agreements with EU antitrust rules based on the extensive guidance provided in the Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation.”

Twenty one years on and still fighting over the ‘Prestige’. Registering a foreign judgment in England and the Brussels Regulation.

Butcher J’s judgment of October 6, [2023] EWHC 2473 (Comm), provides us with the latest chapter in the long-running saga between Spain and the London P&I Club regarding the former’s attempts to register its Supreme Court Judgment of 2016 in England. The Club had a declaratory award of non-liability against Spain from Mr Schaff which it successfully converted into a judgment in a decision of Hamblen J, which was upheld by the Court of Appeal (The Prestige (No. 2) [2015] EWCA Civ 333, [2015] 2 Lloyd’s Rep 33). Subsequently, Henshaw J and the Court of Appeal The Prestige (Nos. 3 & 4) [2021] EWCA Civ 1589, [2022] 1 WLR 3434. found that damages would not result from Spain’s failure to comply with an award that was purely declaratory, but the Club obtained permission from the Court to appoint an arbitrator under s.18 of the Arbitration Act 1996 in a second arbitration claiming either damages or equitable compensation.

At the end of 2020 just prior to the ending of the Brexit transition period, Butcher J, who had been hearing the Club’s appeal against Spain’s obtaining a Registration Order for its 2016 Judgment, referred three questions to the CJEU. Shortly after the Court of Appeal found that he was wrong to make the reference but only he could withdraw the reference. Before that could be done, the CJEU gave their judgment, which did not bode well for the Club. In paras 54-73 the CJEU had found that, while a judgment on an arbitration award might fall within Article 34(3), this was only when a judgment on the same terms could have been entered by the enforcing court, and then to provide ‘guidance as to how that test should be applied to the facts presented to the CJEU in this case.’ This ‘guidance’ was that ‘the content of the arbitral award at issue in the main proceedings could not have been the subject of a judicial decision falling within the scope of Regulation No. 44/2001 without infringing two fundamental rules of that regulation concerning, first, the relative effect of an arbitration clause included in an insurance contract and, secondly, lis pendens.’ Further, it was not simply for the court seised with the enforcement application under the Regulation to consider and apply these principles, but the court seised with the application to enter the judgment in the terms of the arbitral award.’

Permission to appeal the Court of Appeal’s Judgment to the Supreme Court had been granted to Spain and a hearing scheduled, which was suspended with the agreement of the parties after the CJEU Judgment appeared. Later in 2022 Spain’s application for permission to appeal to the Supreme Court against the Court of Appeal’s Judgment in the Prestige 3 & 4 was turned down.

Since then, the Club has continued its appeal against Registration of the Spanish Judgment and in January and March 2023 it obtained two partial awards in its favour from Sir Peter Gross, appointed as sole arbitrator for the second arbitration. The awards were to the effect that Sir Peter Gross had jurisdiction as arbitrator, the arbitration exclusion in Brussels I meant that the CJEU erred in its findings at paragraphs of its judgment, equitable compensation could be awarded against Spain, potentially injunctive relief too, although the arbitrator exercised his discretion not to award such relief, and damages could also be awarded in lieu of an injunction.

The Club’s appeal came before Butcher J, along with Spain’s challenges to the awards of Sir Peter Gross under ss 67, 68 and 69 of the Arbitration Act 1966. Butcher J has essentially agreed with the findings of Sir Peter Gross, except as regards the availability of injunctive relief, due to s.13(2) of the Sovereign Immunity Act 1978, and the availability of damages in lieu of an injunction. He deferred a decision on the availability of injunctive relief against a State till after the decision of the Court of Appeal in UK P&I Club N.V. v Republica Bolivariana de Venezuela (The ‘Resolute’) [2022] 1 WLR 4856which is scheduled to be heard this December. On the key question of the effect of the CJEU’s judgment he noted that CJEU had considered questions beyond the three he had referred, and concluded, as had Sir Peter Gross, there was an issue estoppel to the effect that the jurisdiction-allocation provisions of the Regulation, and in particular its lis pendens and insurance provisions, were no good reason for the English s. 66 Judgments not to have been entered because the Regulation is not applicable to arbitration. Specifically, the CJEU did not take into account that, because of the issues which had been raised and decided in the earlier proceedings, there might be res judicatae relevant to the line of reasoning which it adopted. The Court could and should give effect to that issue estoppel, notwithstanding what may have been suggested in paragraphs [54]-[73] of the CJEU Judgment, and  the decision in the relevant part of the CJEU Judgment could not be binding.

Butcher J found that the Club’s Appeal against the Registration Order succeeded because the Spanish Judgment was irreconcilable with the English s. 66 Judgments, and, if that were wrong, recognition of the Spanish Judgment would be contrary to principles of English public policy relating to res judicata by reason of the prior Award of Mr Schaff.

Spain were given permission to appeal under s.69 on all of its four grounds of challenge, save that part of ground 1 which raised the issue of the effect of the CJEU Judgment on the jurisdiction of Sir Peter Gross as arbitrator. The appeal under s. 69 AA 1996 on grounds (1) and (2) (relating to the CJEU Judgment) and (4) (relating to equitable compensation) was dismissed. On ground (3) regarding injunctive relief against Spain and damages in lieu of an injunction, Butcher J concluded that Sire Peter Gross had no jurisdiction to grant either relief, but deferred his decision until after the decision of the Court of Appeal in The Resolute.

On the same day Butcher J gave a similar decision  [2023] EWHC 2474 (Comm) in relation to France’s applications in connection with two partial awards from the Arbitrator appointed by the Club, Dame Elizabeth Gloster, in which it sought declarations that the French State was in breach of its obligations not to pursue the non-CLC claims other than by way of London arbitration, injunctive relief, and an order that the French State pay to the Club such sums as the Club is ordered to pay to the French State in any jurisdiction in which the Spanish Judgment is recognised or enforced, as well as compensation for its costs of defending the non-CLC claims in Spain.

France did not seek to register the Spanish Supreme Court Judgment in England. It sought leave to appeal four questions of law arising out of the Awards, pursuant to s. 69 AA 1996 and an extension of time to appeal the first partial award.

Ground 1: whether the arbitral tribunal had the power to grant an injunction against the French State under s. 48(5) AA 1996;

Ground 2: whether the arbitral tribunal had the power to award equitable compensation for breach of an equitable obligation to arbitrate arising by application of the conditional benefit principle, or whether equitable compensation is otherwise available in these circumstances; Ground 3: whether an anti-enforcement injunction can be granted where its effect is to restrain enforcement of a foreign judgment which is granted recognition under English law; and

Ground 4: whether equitable compensation can be granted where its effect is to neutralise the effect of a foreign judgment which is granted recognition under English law.

Butcher J found that France required an extension of time to bring its s.69 AA 1996 application in respect of matters decided in the First Partial Award and one should be granted on Grounds 1 and 2, but not on Grounds 3 and 4. There should be permission to appeal on Grounds 1 and 2, but there would not have been such permission on Grounds 3 and 4. The appeal on ground 2 was dismissed. In relation to Ground 1 he concluded that the arbitrator had no jurisdiction to grant and injunction against the French state but his decision was deferred until after the Court of Appeal had come to a decision in the ‘Resolute’.

BIMCO releases CII Clause for Voyage Charters

On 13 October 2023 BIMCO released its CII clause for voyage charters. Considerably shorter and simpler that its CII clause for time charters, the clause allows owners/master with a view to reducing the vessel’s carbon intensity, to adjust course and reduce speed or RPM provided that vessels’s speed in good weather conditions (to be defined by parties) shall not fall below a knot rate (to be defined by the parties) during any voyages under the charter.

When doing so this will constitute compliance with the owners’ obligation to proceed on the usual/customary route with utmost/due despatch.

The charterers are to ensure that the terms of the transport documents issued by or on behalf of owners evidencing contracts of carriage provide that Owners’ exercise of their rights under the clause does not  constitute a breach of that contract. Charterers are to indemnify owners in respect of any liabilities under such contracts of carriage that result in more onerous liabilities for Owners than those assumed under the clause.

The clause is without prejudice to any express or implied rights under the charter entitling Owners to proceeds at speeds below the minimum speed stated in the clause.

Within a specified period of days ( if none, the default is seven days) of completion of final discharge of the cargo under the charter, Owners shall make available to the Charterers: (i) details of the types and quantities of fuels consumed under the Charter Party; and (ii) distance travelled with respect to both the ballast and laden voyages.

The clause does not affect the agreed laycan under the voyage charter.

The clause will also benefit Owners trading into and out and within the EU  in reducing carbon emissions and so reduce the cost to the ‘shipping company’ of acquiring and surrendering allowances in respect of those allowances.

Weather report. GHG litigation update.

1. The US

Montana

Held v Montana is an action by sixteen young people in Montana challenging the constitutionality of the State’s fossil-fuel based energy system, alleging that this breached their rights, including the right to a ‘clean and healthful environment’ as set out in the Montana Constitution. The action specifically targeted a provision in The Montana Environmental Policy Act (“MEPA”) which contains a limitation (the “MEPA Limitation”) that prevents the State from considering the impacts of greenhouse gas (“GHG”) emissions or climate change in environmental reviews of its energy economy. Since the claim was commenced, clarifications to the MEPA Limitation were signed into law in April 2023, further explicitly prohibiting “an evaluation of greenhouse gas emissions and corresponding impacts to the climate in the state or beyond the state’s borders” for MEPA reviews of new energy projects.

On 14 August 2023 District Court Judge Seeley held that the plaintiffs had standing to bring the action, as they have a “fundamental constitutional right to a clean and healthful environment, which includes climate as a part of the environmental life-support system.” Montana’s GHG emissions and climate change were found to be proven factors in causing climate impacts to Montana’s environment and harm and injury to the Plaintiffs. Montana’s GHG emissions could be fairly traceable to the MEPA Limitation. The MEPA limitation was held to have violated the plaintiff’s right to a clean and healthy environment by prohibiting analysis of GHG emissions and corresponding impacts to the climate of energy projects, as well as how additional emissions will contribute to climate change or be consistent with the Montana Constitution, and was unconstitutional. An injunction was granted prohibiting the state government and public bodies in accordance with the unconstitutional statutes. Montana has sixty days within which to appeal.

California

On 17 September 2023 a suit was filed by the State of California in the San Francisco which alleges that various oil and gas misled the public for decades about climate change and the dangers of fossil fuels and seeks compensation from those companies to help fund recovery efforts related to California’s extreme weather events, from rising sea levels to drought and wildfires, that have been exacerbated by human-caused climate change.

2. Europe

Two cases are currently before the European Court of Human Rights, brought by claimants from different ends of the age spectrum.

First, Verein Klima Seniorinnen v Switzerland, involving the effect of climate change on elderly women in Switzerland, amounting to violation of their rights under Articles 2 (right to life) and 8 (right to respect for private and family life) of the Convention., and was heard on 29 March 2023. Second, 27 September 2023 the hearing began in Duarte Agostinho and others v Portugal and 32, involving claims brought by young people in Portugal, aged 11-24, alleging that signatories to the Paris Agreement have failed to comply with their commitments, amounting to a violation of their rights under Article 2 and 8 of the Convention.

3. The Oceans

The law of unintended consequences may be applying to the IMO’s 2020 Sulphur Cap. This change was made to preserve human health, due to the toxic nature of sulphur aerosols, but may also have contributed to global warming. Sulphur aerosols also reflect sunlight, and as a result have a cooling effect, and are believed to have masked some of the effects of global warming, especially in the regions of heavy maritime traffic such as the North Pacific and North Atlantic regions. An analysis in July 2023 by Carbon Brief https://www.carbonbrief.org/analysis-how-low-sulphur-shipping-rules-are-affecting-global-warming/ states,

“Carbon Brief’s analysis suggests that the additional warming due to the IMO regulations on marine fuel is approximately equivalent to two additional years of global greenhouse gas emissions from human activity at their current rate. While this does not fundamentally change where the world is headed in terms of warming by 2050, it does make it more difficult to limit warming to 1.5C over the next few decades. However, the change in radiative forcing due to a drop in SO2 emissions remains highly uncertain, especially over the oceans… Taking the high end of the range of estimates of radiative forcing could result in up to 0.18C additional warming by 2030 and 0.25C additional warming by 2050, though most studies have found lower forcing estimates than this.”

Arbitration agreements — for once, perhaps we should be the world’s policeman

Whatever the position as regards English jurisdiction clauses, we’ve known for nigh on a quarter-century that you can’t get an ASI in London to protect the agreed jurisdiction of a foreign court. In 1998 Airbus Industrie G.I.E. v Patel [1999] 1 A.C. 119, our judges firmly eschewed the idea that they should operate as a kind of Global Good Litigation Police, and said that that foreign fora wanting to guard their jurisdiction as a choice of place to litigate could be expected to do their own dirty work.

But what about arbitration? Does a similar rule apply to complaints that a defendant is blithely suing away in Ruritania under a contract containing on the face of it a clause calling for arbitration in Utopia? A decision a week ago from Sir Nigel Teare suggests a possible Yes.

In G v R [2023] EWHC 2365 (Comm) suit was brought in Russia on a performance bond governed by English law. The claimant pointed out that the bond provided for any disputes to be settled by ICC arbitration in Paris, and to make sure this happened sought an ASI from the High Court. Could it get it? The answer was a fairly resounding no. In fact the claimant fell at the first fence; having failed to show that the agreement to arbitrate, as against the main contract, was governed by English law, he failed to seise the court of the matter in the first place.

But apart from that, even if the contract to arbitrate had been governed by English law, the judge thought England was not shown to be the appropriate jurisdiction. The fact that England could grant ASI relief whereas the French court, as the court of the seat, could not, went for little: the parties having chosen a French seat, there was nothing wrong with saying that having made their bed they should lie in it, and thus be stuck with the limited remedies available in France. Nor was there much relevance in a (hypothetical) English governing law, even if that had been chosen, since there was unlikely to arise any serious issue of English law that it would be difficult for a foreign tribunal to determine.

We have, if we may say so with great respect, our doubts about this decision.

First, there is an argument that if parties choose to have an arbitration agreement governed by English law, that should incline a court in favour of doing their best to make available the remedies normally applying in English law for breach of it. If so it should actually be a strong pull in favour of the English courts being an appropriate venue. The parties in G v R, had they (as the claimant argued) chosen English law as the lex arbitri, would one suspects have been somewhat nonplussed at the information that the English courts were nevertheless closed to them as an inappropriate forum. To that extent, the differing view of the Court of Appeal on an interlocutory appeal in SQD v QYP, decided the day before G v R (and noted here), and also a similarly divergent view expressed in March this year by Calver J (noted here), seem to carry more conviction.

Secondly, unlike choice of court agreements, there is something approaching an agreed international regime in force for international arbitration agreements under the New York Convention, which very strongly favours giving the most robust protection possible to such agreements. (Indeed, it was the notoriously casual attitude of the Russian courts towards the New York Convention that spawned the satellite litigation in G v R in the first place.) There is something to be said for an “all hands to the pumps” approach here, with the English courts doing their best to uphold the New York system.

This issue is clearly heading fast towards the Court of Appeal, if not further. Meanwhile, what should practitioners do if they wish to feel secure in reserving their seat on the Eurostar for that ICC session in Paris? First, they must make clear, preferably expressly, that the lex arbitri is English – something doubly important, if the Law Commission’s recommendation is enacted that the presumptive lex arbitri should always be that of the seat, rather than that of the matrix contract.

They should also – as some already do — expressly confer at least non-exclusive jurisdiction on the English court in matters related to the arbitration agreement. Not only will this make service out easier: it will make it much harder for another party to deny that the English court is indeed the appropriate one to seek relief in. True, the parties cannot force the court by agreement to exercise its discretion in favour of the always-discretionary remedy of an injunction. But they can sure use tactful means to smooth its way to that destination.

FuelEU Maritime and Alternative Fuel Infrastructure Regulations now live.

Two pieces of EU Legislation on GHG reduction and shipping have just been finalised with publication in the Official Journal on 22 September 2023, to come into effect 20 days thereafter.

1. FuelEU Maritime.

REGULATION (EU) 2023/1805 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC

The Regulation applies from 1 January 2025, with the exception of Articles 8 and 9 (on the submission and modification of the ship’s monitoring plan) which shall apply from 31 August 2024.

2. AFIR

REGULATION (EU) 2023/1804 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 September 2023 on the deployment of alternative fuels infrastructure, and repealing Directive 2014/94/EU

The Regulation applies from 13 April 2024.