Tag: case law

ANTI-SUIT INJUNCTIONS: BACK IN STOCK?

On 18 November 2022, the English High Court handed down a judgment in Ebury Partners Belgium SA v Technical Touch BV [2022] EWHC 2927 (Comm) in favour of an anti-suit injunction against the Belgian proceedings breaching the English exclusive jurisdiction agreement. Mr. Justice Jacobs provided some welcome clarification and confirmation of the principles applicable upon breaches of exclusive jurisdiction agreements in the altered legal landscape post-Brexit. Indeed, the decision might be considered a continuing development following the anti-suit injunction granted by the English Commercial Court against the Spanish court proceedings in QBE Europe SA/NV and another v. Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

A brief glimpse of the factual background

The dispute arose between Ebury Partners Belgium SA/NV (Claimant) and Technical Touch and Jan Berthels (Defendants) in April 2021 following their Relationship Agreement for foreign exchange currency services which was consented to electronically through the claimant’s website. The hyperlink attached to the box ticked by Mr. Berthels (director of the company) would have taken onto the webpage containing a pdf file with the terms and conditions of the claimant applicable to their business dealings. Indeed, Clause 27 entitled “Other important terms” included governing law and exclusive jurisdiction clauses as follows:

“[27.11] This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims) shall be exclusively governed by and construed in accordance with the laws of England and Wales.

[27.12] Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims). For such purposes, each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction. Each party also irrevocably waives any objection to the recognition or enforcement in the courts of any other country of a judgment delivered by an English court exercising jurisdiction pursuant to this Clause 27.12.”

The parties further concluded a Guarantee Agreement signed by Mr. Berthels as a guarantor regarding TT’s obligations to Ebury. The latter agreement also contained English law and choice of court clauses as follows:

“[15] This guarantee and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of England and Wales. If any provision hereof or part thereof shall be held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect.

[16] Each party irrevocably agrees that subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this guarantee or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of Ebury to take proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.”

When TT failed to pay a margin call and further sums under their Relationship Agreement and no amicable settlement was achieved, TT brought the Belgian proceedings to seek negative declaratory relief and challenge the validity of the two agreements under Belgian law. In response to the Belgian proceedings, Ebury brought an action in England as agreed between the parties. In addition, Ebury also applied for a grant of an anti-suit injunction in breach of the exclusive jurisdiction clause.

A short recap of the judge’s legal reasoning and decision

As expressed by Mr. Justice Jacobs, the arguments brought by the parties – Ebury’s application for an anti-suit order, and the Defendants’ applications challenging the court’s jurisdiction or inviting the court not to exercise it, were pretty much different sides of the same coin.

Indeed, by considering the claimant’s application first, the judge swept away the defendant’s counter arguments. It was emphasised that, while it would not have been possible to grant an anti-suit relief upon the presence of the proceedings at an English and any other European Member State court pre-Brexit, the principles applicable upon such a request were already well-settled. In this context, the court particularly underlined Mr. Justice Foxton’s reasonings in QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm) at para [10]. Indeed, the judgment was based on Section 37(1) of the Senior Courts Act 1981 giving power to the court to grant an anti-suit injunction for restraining foreign proceedings when it was required by the ends of justice, therefore, was “just and convenient”, furthermore, a “high degree of probability” about the existence of a jurisdiction was established.

Being the touchstone of the reasoning, and referring to already established prior authorities, the judge rejected the defendants’ application challenging the English court’s jurisdiction and seeking a stay or a relief to that end. It was confirmed that there was a good arguable case for service out (in line with CPR 6.33 (2B) (b), also pursuant to the application of the Hague Convention on Choice of Court Agreements 2005) and the English court had exclusive jurisdiction per the agreements between the parties.  Accordingly, there were no strong reasons for the English court to decline its jurisdiction – in contrast, the court was bound to accept its jurisdiction per Article 5 of the Convention.

Significance of the judgment

This decision is of high importance for several reasons: It reiterates the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice be it in a conventional or an electronic form by incorporation of the standard terms and conditions which would bring a useful reference point for businesses.  Indeed, the Court asserted the principles of English law regarding the dealings in e-commerce and particularly click-wrap agreements.

The judgment also reasserts the termination of the prior authorities preventing the English courts from granting anti-suit injunctions against the proceedings at the European Member State courts (re: West Tankers and Turner Grovit). Indeed, the judgment follows up the Qbe reasoning which was a grand opening of a fresh chapter for anti-suit reliefs post-Brexit. It is worth noting that the availability of such reliefs might also stimulate the European courts to issue similar orders against the English courts bringing the effects of a double-edged sword.

Last but not least, the high value of the judgment derives also from the fact that it addresses the Hague Choice of Court Agreement 2005. While there is still an unreasonable lack of relevant authorities referring to this global convention, the judgment brings hope about more case law and precedents built upon by virtue of the HCCCA 2005.   

Misdelivery by the carrier after discharge and the Article III Rule 6 time bar: the ‘Alhani gap’ is filled

FIMBank p.l.c. v KCH Shipping Co., Ltd [2022] EWHC 2400 (Comm)

The Commercial Court (Sir William Blair) has recently handed down judgment in FIMBank p.l.c. v KCH Shipping Co., Ltd, an appeal under section 69 of the Arbitration Act 1996, holding that the time bar in Article III rule 6 of the Hague-Visby Rules can apply to claims in relation to misdelivery after discharge. The Court’s decision resolves an important question which had not previously been decided by the English courts, and which has divided leading academic commentators as well as judges in other common law jurisdictions.

Background

The appeal relates to a claim brought by FIMBank p.l.c. (“FIMBank”), as the holder of bills of lading, for the alleged misdelivery of cargo by the contractual carrier, KCH Shipping Co., Ltd (“KCH”). The bills were concluded on the Congenbill form, and were subject to the Hague-Visby Rules, including the time bar in Article III r 6 of one year after delivery which applies to claims against carriers.

FIMBank served a Notice of Arbitration on KCH after that time bar expired. Its position was that its claim was nevertheless not caught by the time bar, contending that: (a) on the facts, delivery took place after discharge; and (b) as a matter of law, the time bar did not apply to claims for misdelivery occurring after discharge. In its submission, this was so given that the Hague-Visby Rules do not regulate a carrier’s obligation to deliver cargo (as opposed to the carriage of goods by sea), and only relate to a ‘period of responsibility’ which ends with the discharge of cargo. FIMBank further argued that the parties had, in any event, contractually disapplied the Rules in respect of the period after discharge, insofar as Clause 2(c) of the Congenbill form provided: “The Carrier shall in no case be responsible for loss and damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel …”.

In an Award on preliminary issues, the arbitral tribunal determined that FIMBank’s claim was time-barred irrespective of whether delivery post-dated discharge on the facts (which remained a matter in dispute). This was because: (i) the Hague[1]Visby Rules time bar can apply to claims relating to misdelivery occurring after discharge; and (ii) Clause 2(c) of the Congenbill form does not disapply the Rules in respect of the period after discharge.

The Court’s reasoning

The Court upheld the tribunal’s decision on both questions, and accordingly dismissed the appeal.

On the first question, it concluded that, on its true construction, Article III r 6 of the Hague-Visby Rules applies to claims for misdelivery of cargo after discharge. The Court noted that this conclusion avoided the need for fine distinctions as to the point at which discharge ended, and accorded with the objective of the rule which was intended to achieve finality and to enable the shipowner to clear its books. It further observed that, although certain common law authorities and commentaries might be said to support the construction of Article III r 6 for which FIMBank contended (including Carver on Charterparties and Voyage Charters), there was no international judicial or academic consensus to that effect.

The Court held that, even if its conclusion above was wrong, the tribunal’s decision was in any event justified by its finding that the bills of lading contained an implied term providing that the Hague-Visby Rules obligations and immunities are to continue after actual discharge and until delivery takes place, in line with the reasoning of the Court of Appeal in The MSC Amsterdam [2007] EWCA Civ 794.

On the second question, the Court held that, on a proper construction, Clause 2(c) did not disapply the Hague-Visby Rules to the period after discharge. Although FIMBank relied in this regard on The MSC Amsterdam, in which the express terms of the bill of lading concerned were held to have disapplied the Hague Rules after discharge, the Judge held that that decision did not warrant a different result, insofar as it featured a bill of lading with materially distinguishable terms.

Simon Rainey K.C. of Quadrant Chambers and Matthew Chan of Twenty Essex acted for KCH, instructed by Kyri Evagora and Thor Maalouf of Reed Smith LLP














Who is an “operator of a seagoing ship” for the purposes of the 1976 Limitation Convention?

In a recent blog post I commented on various gaps in the limitation regime and the Admiralty court has now given guidance as to how another gap may be plugged – namely whilst an “operator of a seagoing ship” is a “person entitled to limit liability” pursuant to article 1.2 of the 1976 Limitation Convention, what is meant by the term “operator”? That is a term that is not defined in the Convention nor in the travaux preparatoires to the Convention, Furthermore, the issue has not been considered in any prior case and there is no helpful commentary in any of the leading textbooks on the subject.

In the case of the “Stema Barge II”(2020) EWHC 1294 (Admlty) Teare J has engaged in a careful and cogent analysis of the issue. The judge notes firstly that article 2.1 refers to the “manager and operator of a seagoing ship” and comments that in many instances there is considerable overlap between “manager” and “operator” and that the terms may often be used interchangeably:

“I therefore consider that the ordinary meaning of “the operator of a ship” includes the “the manager of a ship”. Indeed, in many cases involving a conventional merchant ship there may be little scope for operator to have any wider meaning than that of manager”. (para 74)

However, he goes on to say that a person may be an “operator” even if that person does not engage in the more conventional management activities which would include manning, fuelling, technical and safety supervision, trading, deployment of the ship etc.

The “Stema Barge II” was an unmanned dumb barge which required unique handling as explained by the judge:.

“The present case does not involve a conventional merchant ship but a dumb barge, laden with cargo, which is towed from the loading port to the discharge location, left there by the tug and thereafter “attended” (to use a neutral word) by a company which places men on board with instructions to operate the machinery of the dumb barge. The question which arises in these circumstances is whether the ordinary meaning of “the operator of a ship” in article 1(2) can include those who physically operate the machinery of the ship and those who cause the machinery of the ship to be physically operated, or whether the ordinary meaning of “the operator of a ship” is limited to the manager of the ship.” (para 75)

The judge concludes that:

“I have therefore concluded that the ordinary meaning of “the operator of a ship” in article 1(2) of the 1976 Limitation Convention embraces not only the manager of the ship but also the entity which, with the permission of the owner, directs its employees to board the ship and operate her in the ordinary course of the ship’s business.”

Whilst the facts of the case may have been somewhat special the decision may have an impact on the wider issue of who is deemed to be an “operator” of an unmanned ship and whether an entity that operates the controls of an unmanned ship “in the ordinary course of the ship’s business” from shore can limit its liability. It is true that in the case of the “Stema Barge II” the entity that sought the right to limit had actually boarded the barge in order to be able to operate its machinery. However, it does not seem that the physical boarding of the vessel should necessarily be a restricting factor and there are indications  that the judge was thinking in more general terms. For example, he makes the following more general observations:

“The question which arises in these circumstances is whether the ordinary meaning of “the operator of a ship” in article 1(2) can include those who physically operate the machinery of the ship and those who cause the machinery of the ship to be physically operated…” (para 75)

“Those who cause an unmanned ship to be physically operated…” (para 81)

It is true that the judge says at para 74 that:

“Indeed, in many cases involving a conventional merchant ship there may be little scope for operator to have any wider meaning than that of manager.”

However, it is equally true that an unmanned ship is not a “conventional merchant ship.”

Oil and Nigeria. Two new cases.

  1. In Federal Republic of Nigeria v MT Asteris (Charge FHC/L/239c/2015) the Federal High Court convicted a vessel and its crew of charges that included conspiracy to deal, dealing with, attempting to export and storing crude oil without lawful authority or a licence. The vessel had been arrested while drifting in Nigeria’s exclusive economic zone and Lloyds List data showed that the vessel had been trading in Nigeria. The vessel had 3,423.097 metric tons of petroleum products on board but no documents confirming their origin.
  2. Following Shell’s £55m settlement of an oil spill claim in the Bodo community in Nigeria, two new claims have been filed against Shell in the High Court by London solicitors, Leigh Day, in respect of spills in the Ogale and Bille communities.In the Ogale action, it is alleged that leaks are due to pipelines and infrastructure being several decades old and in a poor state of repair. In 2011 the United Nations Environmental Programme (UNEP) published an Environmental Assessment of Ogoniland which included extensive testing of the Ogale Community. UNEP’s recommended: (i) Emergency measures to provide adequate sources of drinking water to impacted households; (ii) Immediate steps to prevent existing contaminated sites from causing further pollution and; (iii) A substantial programme of clean up and decontamination of impacted sites. It is alleged that Shell has failed to comply with the recommendations of the UNEP Report and to clean up the sites polluted by their oil.In the Bille action it is alleged that creeks, mangroves and island communities have been devastated by oil leaks since the replacement of the Bille Section of the pipeline in 2010. The key issue in the claim will be whether Shell can be liable for failing to protect their pipelines from damage caused by third parties.On 2 March 2016 at the Technology and Construction Court, His Honour Judge Raeside QC, ruled that formal legal proceedings against Shell can now be served on Shell Nigeria (the Shell Petroleum Development Company of Nigeria Ltd) who will be joined to the English proceedings alongside Royal Dutch Shell plc.

Some improving TV?

A note for 1030 tomorrow and 1100 Wednesday. For those who want a degree of pre-Easter wind-down the Supreme Court is hearing the OW bunkers case (PST Energy 7 Shipping LLC v OW Bunker Malta Ltd [2015] EWCA Civ 1058; [2016] 1 Lloyd’s Rep. 228). Watch the excitement live on https://www.supremecourt.uk/live/court-02.html. To remind you, the sexy issue is whether a contract to sell goods (here fuel oil) for immediate consumption on reservation of title terms is a contract for the sale of goods or something else; but there’s a good deal besides. Starring Mance, Clarke, Sumption, Hughes and Toulson: a very decent cast!

Thanks to the guys at the HFW blog for the tip.

GAFTA 49 Notice of Delivery provisions apply to nomination of substitute vessel.

In Ramburs Inc v Agrifert SA [2015] EWHC 3548 (Comm) the High Court has considered the effect of notice provisions in an fob sale when the buyer nominates a substitute vessel. The sale provided for delivery between 15 to 31 March 2013. The buyer was to provide the seller with not less than 10 days’ “pre-advice” of, among other things, the collecting vessel’s name, dimensions and estimated time of arrival. The contract was also subject to the terms of GAFTA 49. Clause 6 “Period of Delivery” provides:

“Buyers shall serve not less than … consecutive day’s [sic] notice of the name and probable readiness date of the vessel and the estimated tonnage required. The Sellers shall have the goods ready to be delivered to the Buyers at any time within the contract period of delivery. Buyers have the right to substitute the nominated vessel, but in any event the original delivery period and any extension shall not be affected thereby. Provided the vessel is presented at the loading port in readiness to load within the delivery period, Sellers shall if necessary complete loading after the delivery period, and carrying charges shall not apply”.

The buyer nominated a vessel on 20 March 2013 with eta 26/27 March and on 26 March nominated a substitute vessel with eta 28 March. The seller asserted that the nomination was invalid and terminated the contract. Andrew Smith J overturned the award of the GAFTA Board of Appeal in favour of the buyer and held that where an FOB buyer nominated a substitute vessel pursuant to its right under GAFTA 49, it had to comply with the terms of the contract of sale as to nomination and pre-advice in respect of the substitute vessel. The GAFTA wording did not constitute a complete code defining and limiting the right to substitution, and did not dispense with any requirement for pre-notice in respect of the substituted vessel.

When is the Fund not the Fund? Venezuela’s unsuccessful fishing expedition.

The 1971 IOPC Fund ceased to exist on 31 December 2014. The 1992 IOPC Fund, however, is still going strong. This fact was not lost on the Venezuelan fishermen’s union who lodged a claim in Venezuela in respect of damage sustained as a result of an oil spill in May 1997 from the tanker Plate Princess. In 2009 they obtained a judgment against the shipowner and also against ‘The International Fund for Compensation for Oil Pollution Damage’. In March 2015 Master Eastman made a Registration Order in respect of that judgment.

In Sindicato Unico de Pescadores del Municipio Miranda del Estado Zulia v. IOPC [2015] EWHC 2476 (QB); [2016] 1 Lloyd’s Rep Plus 2, Picken J has set aside the Registration Order. The 1992 Fund was not involved in an incident which occurred at a time when Venezuela, although a signatory to the 1992 Protocol, had yet to ratify, accept, approve or accede to it. The Venezuelan judgment could not be regarded as applying to the 1971 Fund Convention as amended by the 1992 Protocol. Even if the judgment had been against the 1992 Fund, there was no relevant exception to the 1992 Fund’s immunity under art. 5(1) of the International Oil Pollution Compensation Fund 1992 (Immunities and Privileges) Order 1996. The only possible exception, in art. 5(1)(b) “in respect of actions brought against the 1992 Fund in accordance with the provisions of the [1992] Convention” would not apply.

Insolvency and anticipatory breach. More from Singapore

In The STX Mumbai [2015] SGCA 3; [2016] 1 Lloyd’s Rep 157, the Singapore Court of Appeal has held that the doctrine of anticipatory breach does apply to executed contracts and in appropriate circumstances a party’s insolvency is capable of amounting to an anticipatory breach. Bunkers had been supplied to a vessel with payment to be made within 30 days. A company in the corporate group of which the shipowning company was a part had become insolvent and the bunker supplier took the view that payment was unlikely to be made. Accordingly, three days before the due date for payment, they demanded immediate payment by the close of business, and when that was not forthcoming, arrested the vessel the following day. At first instance the in rem proceedings were struck out as legally unsustainable as the insolvency of an associated company in the shipowner’s corporate group did not amount to an anticipatory breach by the shipowner. Futhermore, the Judge expressed the view that the doctrine of anticipatory breach applied only to executory contracts and not to an executed contract such as the present.

The Court of Appeal disagreed. The doctrine could apply to executed contracts. Although insolvency in itself would not constitute an anticipatory breach, it might well do so in the proper context. Much would depend on the precise facts, which could only be adduced if the action went to trial. The evidence showed some plausible connection between the insolvent company and the shipowner such that it was not completely unarguable that the former’s insolvency could well have made it impossible for the latter to make timely payment under the bunker supply contract in respect of the vessel. Accordingly, the bunker supplier’s case was not legally unsustainable and its claim would not be struck out.

No loss, no damages: latest from the CA

Christmas reading from the English CA for charterparty buffs and damages enthusiasts. In The New Flamenco [2015] EWCA Civ 1299 , decided a couple of days ago, a cruise ship under time-charter at a highish rate was wrongfully redelivered a couple of years early. That’s OK, said the owners: we’ll just have those two years’ lost profits, please (there being no relevant market). Not so fast, say the charterers. You sold the ship on redelivery for a very tidy sum: had we given her back at the proper time the market would have collapsed and you’d have got many millions of dollars less for her — a figure that dwarfs any profits lost. In fact you should be d****d grateful to us for breaking our contract, since you’re actually a great deal better off than if we’d kept it.

Arbitrators hold for the charterers; Teare J on appeal for the owners. In a rare reversal of Teare J, the CA restore the arbitrators’ decision. Whatever the case where there is a market rate, in non-market cases where the claimant claims on the basis of profits lost, the general British Westinghouse rule applies and any gains resulting are in account. A salutary reminder from Longmore LJ at [29]: “compensation for actual loss is the underlying principle and … in this connection, it is the available market rule that is a gloss on that underlying principle.” Verb sap.

Happy Christmas to all.

AT

Anti-suit injunctions (or rather anti-enforcement injunctions) again

An international high-net-worth employment case decided last week, Ecobank Transnational Inc v Tanoh [2015] EWCA Civ 1309 (accessible on the excellent BAILII website), has a good deal of meat for international transaction lawyers too. The CEO of a Togolese bank had a contract of employment governed by English law and with a provision for arbitration of differences in London under the UNCITRAL Rules. In early 2014, following a textbook exercise in corporate character assassination, he was fired. He immediately sued in Togo for wrongful dismissal, and shortly afterwards in the Ivory Coast for defamation, recovering a cool $11 million-odd in the former, and in the latter about $15 million. Both courts held that under their respective laws the arbitration provision could not deprive them of jurisdiction. The employer claimed arbitration, and in April 2015 sought an anti-enforcement injunction in respect of the Togolese and Ivorian proceedings (i.e. an anti-suit injunction for the time after judgment has been obtained). The CA held an anti-enforcement injunction available on principle, but upheld its refusal on the grounds of delay.

Essentially this judgment makes clear a number of points of very general application. First, s.32 of the Civil Jurisdiction and Judgments Act 1982, dealing with the question of the recognition in England of foreign proceedings brought in breach of jurisdiction or arbitration agreements, is likely to precluded recognition of the relevant proceedings. Despite the exception to non-recognition where the jurisdiction / arbitration agreement is “illegal, void or unenforceable or was incapable of being performed”, it is irrelevant that an arbitration agreement is ineffective under the law of the place where the proceedings are brought or the law of the place where the contract was made. What matters is its enforceability under English law. Secondly, if people agree under a contract governed by English law to arbitrate disputes, the English courts will have little compunction where appropriate in granting anti-suit or anti-enforcement relief. Such relief is not as such a breach of the rules of comity: as Christopher Clarke LJ pertinently pointed out, the preservation of overseas judicial amour propre is not a particularly important aim these days. Thirdly, however, delay in seeking relief continues highly relevant, both on general equitable grounds and also because it is undesirable to render fruitless the expenditure of large amounts of curial time and litigants’ cash on ultimately unproductive proceedings abroad. In short, while anti-enforcement injunctions remain possible, in practice they are likely to be rare, as litigants will normally be expected to act earlier in the judicial process.

AT