UK: Court Grants Anti-Suit Injunction In Respect Of Some But Not All Cargo Claims

Last Updated: 13 February 2015
Article by Ted Graham and Margot Wastnage

Golden Endurance Shipping SA v. RMA Watanya SA and others (Golden Endurance) [2014] EWHC 3917 (Comm)

This dispute related to cargo claims brought under three bills of lading. One issue was whether the claims were subject to London arbitration and/or English court proceedings and/or Moroccan court proceedings. The Commercial Court decision held that the claims under one bill were subject to London arbitration and granted an anti-suit injunction in respect of Moroccan court proceedings brought in breach of the arbitration agreement. In respect of the claims under the other two bills, the Court held that these could be pursued in the English courts, but refused to grant an anti-suit injunction. The result is that, unless the parties come to some agreement, there will be three sets of proceedings in respect of cargo claims arising out of the same voyage: London arbitration, English court proceedings and Moroccan court proceedings. Clearly not ideal.

The background facts

The Golden Endurance loaded a cargo of wheat in Gabon, Togo and Ghana for discharge in Morocco. The cargo arrived in a damaged condition, the ship was arrested and the Owners had to put up security in Morocco and become involved in the court proceedings there. However, the charterparty provided for English law and London arbitration. The bills were based on the Congenbill form. So the Owners applied to the English Commercial Court for an anti-suit injunction which, in this context, meant an order from the English Court that cargo interests were not allowed to pursue the substantive claims in Morocco. The Owners wanted the cargo claims to be decided in London, where the Hague Rules would apply, rather than in Morocco where the local court would apply the Hamburg Rules.

Anti-suit injunctions can no longer be obtained if the court proceedings are within the EU, but they can still be obtained where cargo interests have commenced proceedings outside the EU. Readers may well ask themselves why a Moroccan cargo claimant, holding a bank guarantee that responds to a decision of the Moroccan Court, would take any notice of an order from the English Court. The answer to this is that to ignore the order is a very serious thing. Were the directors of that company to come to the UK, they could be fined and imprisoned for contempt of court. Furthermore, many cargo claims are, as in this case, brought by subrogated cargo insurers who in turn may come to the UK on business and/or place their reinsurance here and/or have assets in the UK. So anti-suit injunctions can be effective but, if you want to obtain one, you must act quickly and be sure not to submit to the jurisdiction of the local courts, save under protest. Legal advice should be obtained promptly.

The Commercial Court decision

The facts of this case gave rise to some interesting findings by the Court, some of which may be useful for dealing with other cargo claims and some of which relate solely to the business of obtaining anti-suit injunctions.

  1. There was an argument about whether the charterparty needed to be signed in circumstances where the Charterers asked the Owners to sign and return the charterparty. The Court confirmed that it did not need to be signed.
  2. The shipper must have been using fake Bimco bills of lading because one of the bills that was signed by the Owners' agents at the load port was a curious mix of Congenbill 1978 and 1994. Older readers will remember that the main reason for the change from 1978 to 1994 was that the 1978 version did not expressly say that it incorporated the arbitration clause from the charterparty and that, without these express words, the English court would not bring the arbitration clause into the bill. The other two bills that were issued were 100% Congenbill 1978. The outcome of this was that only the first bill (we will call this the 1994 bill) incorporated the arbitration clause from the charterparty, the other bills just incorporated the English law clause.
  3. The fact that the 1994 bill incorporated the arbitration clause made it easy for the Court to grant an anti-suit injunction in respect of this bill.
  4. With regard to the 1978 bills, the Judge agreed that the English Court was a more appropriate forum than the Moroccan Court to decide the case because the parties had chosen English law and the Owners would be unjustly deprived of the benefit of their bargain if the claims were not allowed to proceed in the UK (because the Moroccan court would apply the Hamburg Rules.)
  5. The Court had the jurisdiction to decide whether the Owners were liable for the cargo claim, but that did not mean the Court could necessarily grant an anti-suit injunction because the anti-suit was not of itself a contractual claim that was subject to English law. The judge decided, however, that he could grant the anti-suit injunction because it was "ancillary" to the English contractual claim.
  6. Nonetheless, the Judge refused to grant the anti-suit injunction because an English law clause did not, unlike an English jurisdiction clause, trump other competent jurisdictions. This notwithstanding that he recognised that two sets of proceedings, one in London and one in Morocco, might lead to inconsistent judgments in respect of claims under the 1978 bills.
  7. Finally, the Judge touched upon an argument by cargo interests that the phrase "or corresponding legislation", which is found in all Congenbills, could mean the Hamburg Rules. The Court's provisional view was that this argument did not work, but the Judge said the point required further investigation.

Comment

For our shipowner clients and their P&I insurers, this case is a good reminder that, whenever you face a cargo claim at the discharge port despite an English law and jurisdiction clause in the bill of lading, you should consider whether an anti-suit injunction from the English Court might assist. In addition, just as you take care over the wording of your charterparties, take care as regards the wording of the bills of lading you sign. The Owners' position would have been very much better in this case had the 1994 version of the Congenbill been used rather than 1978.

This case also helps to clarify a couple of legal issues relating to the jurisdiction to grant anti-suit injunctions. First, no separate jurisdictional gateway is required, provided the injunction is ancillary to claims where English jurisdiction is established – in this case, the application for a declaration of non-liability for the cargo claim. Second, in the absence of an exclusive English jurisdiction clause, an anti-suit injunction will not be granted merely because the local court will apply the Hamburg Rules, rather than those applying under the proper law of the contract, in this case the Hague/Hague Visby Rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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