Author: Professor Andrew Tettenborn

Professor Andrew Tettenborn joined Swansea Law School and the Institute of International Shipping and Trade Law in 2010 having previously taught at the universities of Exeter (Bracton Professor of Law 1996-2010), Nottingham and Cambridge. Professor Tettenborn is a well-known scholar both in common law and continental jurisdictions. He has held visiting positions at Melbourne University, the University of Connecticut and at Case Law School, Cheveland, Ohio. He is author and co-author of books on torts, damages and maritime law, and of numerous articles and chapters on aspects of common law, commercial law and restitution.

Intransigent defendants: Prestige 4.0

Most parties who lose English court cases or arbitrations give in (relatively) gracefully. In the long and ongoing Prestige saga, however (already well documented in this blog: see here, here, here, and here), the French and Spanish governments have chosen to fight tooth and nail, something that is always apt to give rise to interesting legal points. Last Friday’s episode before Butcher J (SS Mutual v Spain [2020] EWHC 1920 (Comm)) was no exception, though in the event nothing particularly novel in the way of law emerged.

To recap, nearly twenty years ago the laden tanker Prestige sank off northern Spain, grievously polluting the French and Spanish coasts. Steamship Mutual, the vessel’s P&I Club, accepted that it might be potentially liable to direct suit up to the CLC limit, but pointed out that its cover was governed by English law, contained a “pay to be paid” clause and required arbitration in London. Nothing daunted, the French and Spanish governments came in as parties civiles when the owners and master were prosecuted in Spain, and claimed their full losses. The Club meanwhile protected its position by obtaining declaratory arbitration awards in England against both governments that all claims against it had to be arbitrated here; for good measure it then successfully transmuted these awards into High Court judgments under s.66 of the 1996 Arbitration Act (see The Prestige (No 2) [2013] EWHC 3188 (Comm). These decisions the French and Spanish governments blithely ignored, however; instead they took proceedings in Spain to execute the judgments they had obtained there.

In the present litigation, the Club’s claim (slightly simplified) was against both governments for damages for continuing the Spanish proceedings, based either on breach of the arbitration agreement, or in the alternative on failure to act in accordance with the s.66 judgments. The object, unsurprisingly, was to establish an equal and opposite liability to meet any claim asserted by the governments under their judgments in the Spanish proceedings.

The Club sought service out on the French and Spanish governments: the latter resisted, arguing that they were entitled to state immunity, and that in any case the court had no jurisdiction.

On the state immunity point, the Club succeeded in defeating the governments’ arguments. The proceedings for breach of the arbitration agreement were covered by the exception in s.9 of the State Immunity Act 1978 as actions “related to” an arbitration agreement binding on the governments. Importantly, Butcher J regarded it as unimportant that the proceedings did not relate to the substantive matter agreed to be arbitrated, and that the governments might be bound not by direct agreement but only in equity on the basis that they were third parties asserting rights arising from a contract containing an arbitration clause.

The proceedings on the judgments, by contrast, were not “related to” the arbitration agreement under s.9: understandably so, since they were based on failure to give effect to a judgment, the connection to arbitration being merely a background issue. But no matter: they were covered by another exception, that in s.3(1)(a), on the basis that the breach alleged – suing in the teeth of an English judgment that they had no right to do so – was undoubtedly a “commercial transaction” as defined by that section.

The judge declined to decide on a further argument now moot: namely, whether suing abroad in breach of an English arbitration agreement was a breach of a contractual obligation to be performed in England within the exception contained in s.3(1)(b) of the 1978 Act. But the betting, in the view of this blog, must be that that exception would have been inapplicable: there is a big and entirely logical difference between a duty not to do something other than in England, and an obligation actually to do (or omit to do) something in England, which is what s.3(1)(b) requires.

State immunity disposed of, did the court have jurisdiction over these two governments? Here the holding was yes, but only partly. The claim based on the s.66 judgments was, it was held, subject not only to the Brussels I Recast Regulation but to its very restrictive insurance provisions dealing with claims against injured parties (even, note, where the claims were being brought, as some were in the case of Spain, under rights of subrogation). Since the governments of France and Spain were ex hypothesi not domiciled in England, but in their respective realms, there could be no jurisdiction against them.

On the other hand, the claims based on the obligations stemming from the arbitration award were, it was held, within the arbitration exception to Brussels I, and thus outside it and subject to the national rules in CPR, PD6B. The only serious question, given that the arbitration gateway under PD6B 3.1(10) or the “contract governed by English law” gateway under PD6B 3.1(6)(c) pretty clearly applied, was whether there was a serious issue to be tried as to liability in damages. Here Butcher J had no doubt that there was, even if the governments were not directly party to the agreements and the awards had been technically merely declaratory of the Club’s rights. It followed that service out should be allowed in respect of the award claims.

Further than this his Lordship did not go, for the very good reason that he had no need to. But in our view the better position is that indeed there would in principle be liability under the award claims. If, as is now clear, an injunction is available on equitable grounds to prevent suit in the teeth of an arbitration clause by a third party despite the lack of any direct agreement by the latter, there seems no reason why there should not also be an ability to an award of damages, if only under Lord Cairns’s Act (now the Senior Courts Act 1981, s.50). Further, there seems no reason why there should not be a an implied obligation not to ignore even a declaratory award by suing in circumstances where it has declared suit barred.

For final answers to these questions we shall have to await another decision. Such a decision might even indeed come in the present proceedings, if the intransigence of the French and Spanish governments continues.

One other point to note. The UK may be finally extricating itself from the toils of the EU at the end of this year. But that won’t mark the end of this saga. Nor indeed will it mark the end of the Brussels regime on jurisdiction, since the smart money is on Brussels I being replaced with the Lugano Convention, which is in fairly similar terms. You can’t throw away your EU law notes quite yet.

An odd decision over contribution, but no need to worry.

As they used to say as often as they could in the Hitch-Hiker’s Guide to the Galaxy, “Don’t panic!”

What rules govern contribution proceedings between tortfeasors? In Roberts v SSAFA [2020] EWCA Civ 926 a little boy, presumably a service child, was injured in hospital in Germany owing to SSAFA’s negligence. SSAFA claimed contribution from the MoD, alleging they were concurrently liable. The MoD said, correctly, that German law applied to the contribution proceedings and under German law they were out of time. SSAFA said yes, but then struck a remarkably nationalistic note. The English Civil Liability (Contribution) Act 1978, it argued, ought to apply to all proceedings in the English court even if the liability would otherwise be governed by foreign law: and since that said the claim against the MoD wasn’t statute-barred that was an end of it.

One decision directly in point, Arab Monetary Fund v Hashim [1994] CLY 3555, supported SSAFA; the law professors, by contrast, broadly supported the MoD. The Court of Appeal, after a lengthy analysis of the 1978 Act, came down on the side of SSAFA: on a proper interpretation the Act it, and its scheme of liability, were meant to apply to any proceedings brought here, full stop.

To put things neutrally, this blog would have been with the law professors. The decision will hardly do much for comity; nor does the result make much sense as part of a sensible scheme of private international law, since where it applies it is an open invitation to come and do some socially-distanced forum-shopping in England.

But, as we said at the beginning, don’t panic. The parties’ names in this case might well have been not Roberts and SSAFA but Jarndyce and Jarndyce: the events took place as long ago as 2000 (!). Since 2009 we have had a more sensible rule about contribution in Art.10 of Rome II, which essentially subjects contribution claims to the law governing the main tort. In just about every case you come across these days, barring outliers like this one, it will apply. Whatever else you may think of the EU, Rome I and Rome II are much better provisions than the common law rules they replaced; and even better than that, it seems a racing certainty they will they will continue serenely on post-Brexit. So litigation lawyers can pour that large gin and tonic with a clear conscience this evening.

Careful who you sell that ship to!

Safety in ship recycling has been a priority of the EU for more than seven years. Under EU Regulation 1257/2013, in force since 2018, there is a complex system of EU approval of ship recycling facilities, it being illegal to send an EU-registered ship for recycling to an unapproved facility (meaning as often as not a not-very-deserted beach in India or Bangladesh, where she is broken up essentially by hand). This Regulation is to be retained EU law post-Brexit, though from the end of this year it will be significantly narrowed, in that it will only apply to UK-registered vessels (i.e. pretty few).

But quite a lot of ship recycling is outside the regulation. A case in point was the Maran Centaurus, a vessel previously in the news as the victim of a high-profile Somali hijacking in 2009 that led to payment of a then-record ransom of about $7 million. Owned by Greek interests, at the end of her life she was reflagged to Palau and sold to a buyer for demolition, who in turn resold her to a beachside Bangladeshi concern. During demolition a worker operating in very dangerous conditions was killed. His widow rightly concluded that the demolishers were not worth powder and shot. She instead sued the owner’s managing agents, a UK company who acting under the owners’ instructions had arranged the sale, alleging that it should have been foreseeable that unless they took steps to ensure that the vessel ended up in the hands of responsible breakers she would be broken up — as she was — without any serious regard for worker safety. The agents denied fault and applied for a strikeout, on the basis that a seller of a ship owed no duty in respect of dangerous practices that might later occur in relation to her. This was not, they said, a case of damage caused by hazardous materials aboard the vessel injuring a worker: there was nothing more here than a sale indirectly to a person likely to have a less than satisfactory attitude to industrial safety.

This writer has quite a lot of sympathy for this view. But in Begum v Maran (UK) Ltd [2020] EWHC 1846 (QB) Jay J declined a strikeout, regarding it as highly arguable that, despite the vessel herself not being unusually hazardous, this was a case where the defendants had created a foreseeable risk of harm and as such potentially owed a duty of care to the worker concerned.

Note that this is not a holding that there was a duty of care: merely that the argument that there was one wasn’t a non-starter. Nevertheless, it should worry shipowners everywhere (and cause them to check on their insurance coverage). It might even extend further: for example, what of a shipowner who sells (or bareboat charters) a vessel to an operator known to have a dodgy safety record: the logic of the Maran case seems to apply here too, and if it is followed we cannot rule out liability in the seller or owner.

Admittedly the if might be a biggish one. We said that we had sympathy for the defendant’s argument. The chances are that this case will now settle so we won’t ever get a final answer here. But the defendants’ case is strong. The case for making owners responsible for policing the safety records of disponees is by no means obvious, any mote than it is obvious that in selling my car I should have to take care lest the buyer is a known drink driver. It may well be worth fighting this issue again if, as seems highly likely, it comes back to the English courts in another case.

Of weekend sailors, docks and marinas.

Decisions that amuse law professors often end up as footnotes in law books because they’re not very significant in the great run of things. One suspects this is true of Teare J’s erudite judgment about marinas today in Holyhead Marina Ltd v Farrer [2020] EWHC 1750 (Admlty), but it’s still worth a short note.

Holyhead marina, like most marinas, is a floating labyrinth of wooden pontoons and walkways designed to cram in as many weekend sailors’ prides and joys as it can. A couple of years ago it was hit by Storm Emma and boats moored there suffered over £5 m worth of damage. The hull insurers sued, whereupon the marina raised the issue of limitation, claiming that under s.191 of the MSA 1995 it could limit liability to a fairly piddling sum based on the limitation figure applicable to the largest vessel (yacht) that had visited it in the previous five years.

This gave rise to the first issue: the right to limit was limited to “docks”. Was a marina, an erection that floated on water rather than solid land that abutted it, a “dock” — a term that included “wet docks and basins, tidal docks and basins, locks, cuts, entrances, dry docks, graving docks, gridirons, slips, quays, wharves, piers, stages, landing places and jetties”? Teare J had no doubt that it was, despite its relative insubstantiality and lack of any connection with commercial shipping. We suggest that this must be right. True, a mere buoy or dolphin shouldn’t be a dock, but beyond that essentially anywhere where vessels can tie up and people can board and disembark should be included. It is useful to have confirmation that s.191 will be generously construed, and technical pettifogging about the definition of a dock discouraged. Insurers now know where they stand.

A few minor points. First, the hull insurers argued that Holyhead was guilty of conduct breaking limitation. Although Teare J refused to strike out this plea as hopeless, he was clearly very sceptical of it, again one suspects with reason. Secondly, the hull insurers advanced a hopeful argument that because the marina was in vhf contact with users all over Holyhead Port, its limit fell to be reckoned by that applicable to the large Irish Sea ferry that visited the port. This received short shrift: what mattered was the area of which the marina was in effective physical or legal control.

Thirdly, an interesting question: why didn’t the marina have a clause limiting its liability to the yacht owners who used it under contract? Or did it, but was it sceptical of the ability of such a clause to withstand scrutiny under the Consumer Rights Act 2015 (yachtsmen being consumers)? It’s likely we’ll never know. But marinas up and down the kingdom, together with their liability insurers, might do well to look through their standard contract terms, if they wish to avoid having to argue the toss in future about an obscure provision in the Merchant Shipping Act.

Prestige 3.0 — the saga continues

The Spanish government and SS Mutual are clearly digging in for the long haul over the Prestige pollution debacle eighteen years ago. To recap, the vessel at the time of the casualty was entered with the club under a contract containing a pay to be paid provision and a London arbitration clause. Spain prosecuted the master and owners and, ignoring the arbitration provision, came in as partie civile and recovered a cool $1 bn directly from the club in the Spanish courts. The club meanwhile obtained an arbitration award in London saying that the claim against it had to be arbitrated not litigated, which it enforced under s.66 of the AA 1996 and then used in an attempt to stymie Spain’s bid to register and enforce its court judgment here under Brussels I (a bid now the subject of proceedings timed for this coming December).

In the present proceedings, London Steam-Ship Owners’ Mutual Insurance Association Ltd v Spain (M/T PRESTIGE) [2020] EWHC 1582 (Comm) the club sought essentially to reconvene the arbitration to obtain from the tribunal an ASI against Spain and/or damages for breach of the duty to arbitrate and/or abide by the previous award, covering such things as its costs in the previous s.66 proceedings. By way of machinery it sought to serve out under s 18 of the 1996 Act. Spain claimed sovereign immunity and said these further claims were not arbitrable.

The immunity claim nearly succeeded, but fell at the last fence. There was, Henshaw J said, no agreement to arbitrate under s.9 of the State Immunity Act 1978, which would have sidelined immunity: Spain might be bound not to raise the claim except in arbitration under the principle in The Yusuf Cepnioglu [2016] EWCA Civ 386, but this did not amount to an agreement to arbitrate. Nor was there, on the facts, any submission within s.2. However, he then decided that s.3, the provision about taking part in commercial activities, was applicable and allowed Spain to be proceeded against.

Having disposed of the sovereign immunity point, it remained to see whether the orders sought against Spain — an ASI or damages — were available in the arbitration. Henshaw J thought it well arguable that they were. Although Spain could not be sued for breach of contract, since it had never in so many words promised not to sue the club, it was arguable that neither Brussels I nor s.13 of the 1978 Act barred the ASI claim in the arbitration, and that if an ASI might be able to be had, then there must be at least a possibility of damages in equity under Lord Cairns’s Act.

No doubt there will be an appeal. But this decision gives new hope to P&I and other interests faced with opponents who choose, even within the EU, to treat London arbitration agreements as inconsequential pieces of paper to be ignored with comparative immunity.

VAT, missing traders, and illegality

Any trader’s recurring nightmare is to find that somebody it has bought goods or services from in the UK or the EU has been guilty of VAT hanky-panky. The classic instance is missing trader fraud; the fraudster charges VAT, does not account for it, and vanishes. The difficulty facing the person who paid the VAT is that HMRC, suspicious gentlemen that they are, are apt to disallow the payment unless the trader making it really had no reason to smell a rat. But a little relief came today from Joanne Wicks QC, sitting in the Chancery Division, in the decision in Colt Technology Services v SG Global Group SRL [2020] EWHC 1417 (Ch). The case also gave some useful confirmation on where a debt is payable, which makes it worth a brief note.

Colt Technology, acting through its Italian arm, bought voice trading services (i.e. super-reliable and super-secure real-time voice communication facilities) from Italian company SGG, based in Rome. All went well until Colt’s auditors warned them that there seemed something fishy about SGG, which looked increasingly like a participant in a missing trader ring. Colt, no doubt concerned at its ability to sustain the relevant VAT deductions when faced with a mercenary and sceptical Revenue, suspended payments to SGG totalling, in round figures, $5 million. SGG brought proceedings in Milan for payment, which were still ongoing. But in January 2018 it took the gloves off and served a statutory demand on Colt in England.

Colt defended, and sought to enjoin presentation of a winding-up petition, on the basis that liability was disputed on substantial grounds. These grounds were based on the rules in Ralli Bros v Cia Naviera Sota y Aznar [1920] 2 KB 287 (no enforcement in England of an obligation required to be performed in a jurisdiction where performance was illegal) and Foster v Driscoll [1929] 1 KB 470 (the colourful Prohibition case making it clear that there could be no enforcement here of a contract contemplating acts in a jurisdiction where they were illegal).

They succeeded on the first ground. Arguably payment was illegal under Italian law; furthermore, since SGG were Rome-based, the presumptive rule applied that Colt as debtor had to seek out its creditor and pay it where it was. Importantly, and correctly, the judge also discounted the fact that post-contract SGG had sent invoices asking for payment in California. What mattered was the contract. True, had Colt acted on these the debts would have been discharged; but this did not affect Colt’s underlying duty to pay in Italy and there alone.

Having held for Colt on the Ralli ground, the judge expressed no view on the Foster argument, namely that the contract involved a crime in Italy (duping the Italian fisc). She did, however, observe – again correctly — that on the authorities it did not seem to be engaged, since at the time of the contract Colt had had no idea of any possible plans by anyone to commit illegality.

Colt no doubt heaved a large corporate sigh of relief. But the case shows that traders remain exposed. There is something to be said for some drafting thought here. At least in the case of debtors with decent bargaining power, there comes to mind some kind of protective clause temporarily protecting a party from liability to pay when advised (say) by a lawyer or accountant that there is a possibility of missing trader fraud, unless and until the matter is settled by a suitable court or other tribunal. Over to you, City firms.

Classification societies are commercial — OK?

There is an easy side, and also a more wide-ranging and difficult one, to the CJEU’s decision last week in RINA SpA, Case 614/18, ECLI:EU:C:2020:349 on a point concerning the Brussels I Regulation.

Something over 14 years ago, a Red Sea ro-ro ferry, the Al Salam Boccaccio 98, sank with horrendous loss of life on a voyage between Duba in Saudi Arabia and Safaga in Egypt. She was registered in Panama and classed with Italian classification society RINA SpA.

A number of passengers sued RINA in its home state, Italy, for negligently certifying the vessel fit to sail, relying on what is now Art.4 of Brussels I Recast (the case actually concerned the previous 2001 jurisdiction regulation). RINA however had a trick up its sleeve. It pleaded sovereign immunity, on the basis that although it had been chosen and paid by the owners of the vessel, it had been acting on behalf of the Panamanian government. For that reason it argued that the Italian court had no jurisdiction over it in this respect, and that the Brussels Regulation was beside the point since this was not a civil or commercial matter. The Tribunale di Genova, faced with interesting issues of EU and public international law, understandably made a reference to the CJEU on the matter; was the claim covered by the Regulation?

The court, following the Advocate-General, had no doubt that RINA’s plea was misconceived. Even if the society had been acting for the Panamanian authorities in certifying the vessel so that those authorities in turn could, as the organs of the state of registration, give her the necessary clean bill of health, this was a matter governed by private law principles. According to the generally accepted rules of public international law, there was no way this could be construed as an act iure imperii; it was therefore covered by the Regulation.

It follows that in so far as it is sought to make a classification society liable for damage, loss or injury (a matter on which European and other legal systems differ considerably, and which we have no intention of going into here), lawyers can at least sleep easy on this point: as regards jurisdiction, it is simply a matter of looking up the relevant provisions of Brussels I Recast. It is a fair inference that the same also goes for other certification bodies (something likely to be relevant for international product liability cases) and probably state licensing bodies such as the CAA in so far as they are sued under private law provisions.

So much for the easy bit. Now for the harder one. Does this mean that state immunity law has now been quietly Europeanised as a matter of principle? This issue is not dealt with as such, and was explicitly left open by the Advocate-General in Para [106] of his opinion. The original Jurisdiction Regulation said nothing about it either; and although the Recast version adds a further few words to Art.1.1 saying explicitly that it does not apply to acts done iure imperii, this takes us little further.

The answer seems to be that we do have de facto Europeanisation, but only partly. RINA, read closely, says merely that in so far as Brussels I applies to an EU-based defendant, it is not open to a member state to apply a more generous home-grown version of state immunity and decline jurisdiction. It does not state the converse; namely, that if EU law regards a matter as covered by state immunity then an EU domestic court must not take jurisdiction at all. Why the case ended up in the CJEU in the first place is apparent only from a careful look at the facts: Italy indeed does as a matter of domestic law apply a very generous doctrine of state immunity, and it was this that the claimant sought, successfully, to sideline.

So for the moment – and, assuming Lugano or something similar to Brussels I applies after the transition period – English lawyers can breathe easy on this point too. There’s life yet in their well-thumbed copies of the State Immunity Act 1978.

Demand guarantees: interpretations and paradoxes.

Cases about letters of credit and performance bonds often raise points of intellectual interest in commercial law. Waksman J’s decision in Técnicas Reunidas Saudia Ltd v Korea Development Bank [2020] EWHC 968 (TCC), decided 12 weeks ago but only up on BAILII this week, is a case in point. It raised nice issues of contractual interpretation, and also discussed the old chestnut of what to do about non-documentary conditions. And in both cases it got the answer right: a good thing, given that quite big money (something like £8 million) turned on it.

TRS were a big construction company involved in a mega-project in Saudi Arabia. One of its subcontractors was S. The bank, a Korean corporation, issued TRS with what was effectively an advance payment guarantee, operable on first written demand by TRS, to cover TRS’s cash-flow advances to S. The guarantee, which was subject to URDG758, went on to say: “It is a condition for any claim and payment under this guarantee to be made that the funds paid as advance payments subject to the terms of the subcontract must have been received by the sub-contractor on its account number 042-117994-03 held with HSBC.”

S ceased work in circumstances at best murky. TRS called on the guarantee and provided evidence of advances made to the named account number at SABB, a Saudi associate of HSBC which traded on the connection and indeed used the HSBC logo. Meanwhile a court in Korea was asked to issue an injunction preventing the bank from paying. Caught between a rock and a hard place (it being clear that the English court would ignore any Korean court order, Korea being the place neither of the governing law nor of payment), the bank thrashed around for a reason not to pay. It eventually refused on the basis that, payment to an account at SABB was not payment to HSBC and hence the condition was unsatisfied. Waksman J was unimpressed and gave summary judgment for TRS. This he did for two reasons.

First, he said that the generic reference to “HSBC” had to be interpreted to mean HSBC or its associated banks. Not only was this what a reasonable man present at the time of contracting would have understood; it also avoided the awkwardness that would follow from any other answer, which was that the guarantee would have been waste paper from the beginning because it was subject to a condition that could not be complied with. He also added a reference to a further point, often forgotten by busy lawyers, known as the principle of misnomer. If a document referred to an entity by an incorrect name and the reference was not ambivalent between two separate entities, extrinsic evidence was admissible to show which entity was meant. This was the case here.

More interestingly, his Lordship also took the point that the condition in the guarantee was non-documentary, and said that TRS could invoke Art.7 of the URDG, equivalent to Art.14.h of the UCP600, which provides that “[i]f a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it”. The non-documentary condition, he held, simply fell to be excised; from which it followed that even if TRS had failed to comply with it this was irrelevant.

This has always been a matter of controversy, raising the same sort of paradoxical issue as Odysseus’s order to his crew to tie him to the mast as they sailed past the Sirens and to ignore any subsequent commands he might give (they duly disobeyed a subsequent order to untie him, thus assuring his safe arrival in Ithaca). On one argument, parties inserting a non-documentary condition are to that extent contracting out of Art.7 and so the condition still takes effect; but although accepted in Singapore (see Kumagai-Zenecon v Arab Bank [1997] 3 S.L.R. 770), this solution does have the disadvantage of leaving the provision like Cinderella: all dressed up, but with nowhere to go. In the present case Waksman J emphatically rejected it. Even if the UCP and URDG technically became binding on traders by contractual incorporation and were in no way legislative, they were a special kind of instrument not necessarily subject to the ordinary rules of contractual interpretation. And, whatever the logical problems, a court should interpret them so as to give effect as far as possible to all their provisions.

This may not be the last word, especially on Art.7 and its UCP equivalent. It is nevertheless a very sensible word. We at IISTL hope future courts will take it up, amplify and confirm it.

The murky world of anti-suit injunctions — with a new twist

When it comes to remedies in international litigation, what matters in most cases is not whether the court can give them, but when it will. The point is nicely illustrated in a decision yesterday from Cockerill J about anti-suit injunctions (see Times Trading Corporation v National Bank of Fujairah [2020] EWHC 1078 (Comm)). Essentially the issue was this. A person who sues abroad in blatant breach of an arbitration or jurisdiction agreement will be enjoined almost as of course on the basis of The Angelic Grace [1995] 1 Lloyd’s Rep 87 and Donohue v Armco Inc [2002] 1 All ER 749. But what if this is not so (for instance, where the injunction defendant is an assignee, or where the existence of a direct contract between the two is controverted)? Jurisdiction is not in doubt: but does the ASI run almost as of course as before, or does the person seeking it have to jump the fairly high hurdle of showing oppression? Cockerill J plumped for the former solution.

To over-simplify, a cargo of coal carried in the 57,000 dwt bulker Archangelos Gabriel was delivered without production of the bills of lading, which were held by NBF, a Fujairah bank financing the buyer. It was common ground that the bills incorporated a London arbitration clause. NBF, mindful that the twelve-month Hague-Visby time-bar expired in June 2019, intimated a claim to the vessel’s owners R in December 2018; they issued in rem proceedings in Singapore in January 2019 and served them ten months later. In addition they issued arbitration proceedings in London against R in June, just within the time-bar. Then came a bombshell: after some procedural skirmishing R alleged with considerable plausibility that the vessel had actually been bareboat chartered to T, with which it seemed to have fairly close relations, and that the relevant bills, issued on behalf of the master, were charterers’ bills and not theirs.

Caught on the hop, and with a claim against T now out of time, NBF made it clear that they would add T to the Singapore proceedings and attempt to add them as a respondent to the London arbitration. T, fairly confident that it could resist the latter attempt, sought an ASI to prevent continuation of the Singapore proceedings against it, relying on the arbitration clause.

Had it been admitted that T and NBF were both party to a contract containing the arbitration clause, the case would have been easy: but it was not. However incongruously given its claim against T in Singapore under the bill of lading, in London NBF put in issue the question whether T was party to that document at all. Was this a case where the ASI should normally run as of course? T said it was: NBF that it was not. Having discussed the authorities, Cockerill J fairly unhesitatingly supported T’s position. The claim for the ASI here was “quasi-contractual” in the same way as if the injunction defendant were an assignee of some sort seeking to enforce an obligation without respecting an arbitration clause in it (as in cases like The Yusuf Cepnioglu [2016] 1 Lloyd’s Rep 641); true that here the claim was that T rather than NBF was a technical third party, but that was irrelevant. And in all such cases, she said, the rule in The Angelic Grace [1995] 1 Lloyd’s Rep 87 applied. And rightly so in our view; what should matter in international litigation cases is a clear illegitimate attempt to make an end-run around a clear contractual arbitration or jurisdiction clause, not technical questions of rights to enforce, or duties to perform, a particular contractual obligation.

Not that this mattered in the event. Had push come to shove, her Ladyship would, in a no-nonsense way reminiscent of Bertie Wooster’s Aunt Agatha, have decided T was the carrier under the bill of lading and so applied The Angelic Grace anyway (see at [80]). But that is beside the point for our purposes.

We should add the final twist to the story. In the event T’s victory on this point was for another reason entirely Pyrrhic, the only gainers being the lawyers. NBF had acted fairly reasonably in proceeding against R, and T’s merits were not entirely sparkling. In the circumstances the judge, while clearly willing to injunct NBF, did so only on terms that T would not take any time-bar points in the London arbitration. Ironically these were exactly the terms on which NBF had offered to discontinue the Singapore proceedings in the first place. But at least we now know that their judgment was right; and in addition we have some very useful clarification on the subject of ASIs generally.

Security clauses in charters — by hook or by crook they will be enforced

Behind Teare J’s decision today in Trafigura Maritime Logistics PTE Ltd v Clearlake Shipping PTE Ltd (Rev 1) [2020] EWHC 995 (Comm) lies a fairly standard series of shipping lawyer’s nightmares.

Trafigura time-chartered the Miracle Hope, a big (320,000 dwt) VLCC, from Ocean Light. They voyage-chartered her to Clearlake and Clearlake sub-voyage-chartered to Petrobras, both charters being back-to-back under Shellvoy 6. Petrobras demanded that the cargo be delivered without production of the bill of lading; the demand was passed up the chain and the cargo (worth, before the recent oil debacle, something over $70 million) released.

Thereupon Natixis, a Dutch bank which had financed Petrobras’s buyers, emerged brandishing a bill of lading apparently issued by Ocean Light, demanded the value of the cargo, and arrested the ship in Singapore. Ocean Light immediately demanded an indemnity from Trafigura: Trafigura, relying on a duty in the charterer in such cases to “provide an LOI as per Owners’ P&I Club wording”, demanded an LOI from Clearlake and Clearlake did the same from Petrobras. Following clear practice (e.g. The Laemthong Glory [2004] EWHC 2738 (Comm); [2005] 1 Lloyd’s Rep. 632), Henshaw J granted mandatory orders down the line requiring the charterers to provide such bail or other security required to secure the release of the vessel.

Unfortunately at this point problems arose. Clearlake and Petrobras negotiated with Natixis; the result was deadlock. Furthermore, owing to the worldwide contagion the Singapore courts could not break the deadlock for some weeks. And, of course, all the time the Miracle Hope was mewed up in Singapore: something which, with tanker hire rates now sky-high, would not do.

In other words, Henshaw J’s order was unworkable. As a result the matter came back to the Commercial Court. To order the provision of a guarantee satisfactory to Natixis would be unsatisfactory: furthermore, since the matter was likely eventually to reach the Singapore courts, it risked prejudging the issue in that forum.

The solution reached was workmanlike. The court had to do something. Security to obtain the release of a vessel could take the form of a payment into court; and, faute de mieux, Teare J ordered just that. Clearlake and Petrobras were ordered to arrange for payment into the Singapore court of $76 million within 8 days, no doubt with Petrobras bound to indemnify Clearlake, who in the circumstances were little more than piggy-in-the-middle. If this was necessary to secure the release of the vessel, this would be what was ordered.

And rightly so, in our view. As the title of this blogpost implies, an obligation to secure the release of a vessel has to be given effect. As with Coronavirus, so with the release of a ship: it is a case of doing all that it takes. Even if that takes a slightly unorthodox form.