April 2006
In the recent case of Horn Linie GMBH & CO -v- (1) Panamericana Formas e Impresos SA (2) ACE Seguros SA (2006) the English High Court was asked to consider (1) whether it had jurisdiction where, despite a exclusive English law and High Court jurisdiction clause in the bill of lading, proceedings had been commenced under Colombian law and (2) whether it should grant an anti-suit injunction in respect of the Colombian proceedings.
Panamericana were the Colombian consignees of a cargo of printing machinery shipped on board a vessel called the M.V. Hornbay, owned by a German company Horn Linie. Contrary to instructions the machinery was stowed on deck; there was inclement weather during the voyage and the goods landed at Le Havre were a constructive total loss. Panamericana and their cargo insurers, ACE, (collectively the "cargo interests") sought to claim against the Owners of the vessel, Horn Linie.
Instead of commencing proceedings in England in accordance with the exclusive English law and High Court jurisdiction clause in the bill of lading, ACE started proceedings against Owner's agents, Maritrans, in Colombia. Cargo interests ran an argument with which many members will be familiar: they argued that Colombian law would govern a contract for the carriage of goods for delivery in Colombia. The justification being that the agreement to English law and jurisdiction - a foreign jurisdiction - was void, as it was an infringement of the sovereignty of Colombian law and was contrary to public policy. Cargo interests claimed against Maritrans who, under the Colombian Code of Commerce, were the legal representative of the owner and could be held liable for cargo claims. A successful claim under the Colombian Code would enable cargo interests to circumvent the limitation and time bar provisions in the Hague-Visby rules and claim the full value of the goods from Owner's agents.
The Owners applied to the High Court of England for an anti suit injunction against cargo interests in respect of the Colombian proceedings. In response, cargo interests applied to challenge the jurisdiction of the High Court, seeking to maintain the jurisdiction of the Colombian Court.
On Jurisdiction
Mr Justice Morison in the English High Court agreed with cargo interests that article 8(2) of the Rome Convention was key to determining the issue. This provides that:-
"… a party may rely upon the law of the country in which he has his habitual residence to establish that he did not consent [to the law and jurisdiction clause in the contract] if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law [stipulated in the contract]".
In other words, if it was not reasonable to use English law to determine whether the parties had accepted the express choice of English law, then Colombian law could be used to determine whether the cargo interests had or had not consented to the exclusive law and jurisdiction clause. Cargo interest's contention was that the consignee was not party to the contract and as such had no knowledge of the jurisdiction clause until after the cargo was damaged. Mr Justice Morison rejected their arguments: the cargo interests were commercially experienced. The consignees were familiar with the rules of international carriage and the cargo insurers had agreed to underwrite the risk. It would have been easy to negotiate a contract without the exclusive English Law jurisdiction clause, but they had chosen not to opt for a different law or jurisdiction. Mr Justice Morison dismissed the cargo interest's jurisdictional challenge and held that the cargo interests had - through their freight forwarder - agreed to the jurisdiction clause. Consequently, it was not now possible to say that this agreement was not valid simply because the English law and jurisdiction clause offended Colombian public policy.
On Forum Conveniens and Anti-Suit Injunction
The pleadings in the Colombian action clearly stated that the Colombian agent's liability arose from the contract of carriage: cargo interests sought to hold Owners "contractually liable for the entire damages… due to the loss of the printing machine". However, it was considered by Mr Justice Morison that the action against the Owner's Colombian agent was a "red herring" as there was no hiding the fact that the real target was the Owner. It was expected that the Colombian agent would be able to obtain an indemnity from their principals, Owners. As such, an action against the Colombian agent was effectively an action against the Owners and it would be impossible to ignore the fact that the relationship between the consignee and Owner was governed by English law under the contract of carriage (as discussed above).
The provisions of Colombian law conflicted with the parties agreed exclusive law and jurisdiction clause, and cargo interests sought to turn this conflict of laws to their advantage: circumventing the law and jurisdiction clause previously agreed in order to obtain full damages for the loss.
As it would be undesirable to have two sets of proceedings, in two different jurisdictions with different laws being applied and probably different outcomes, Mr Justice Morison granted Owners an anti-suit injunction in respect of the Colombian proceedings. In so doing the parties were restored to their original agreed position - exclusive jurisdiction of the English law and the High Court of Justice.
See also the following Steamship Mutual website articles:
Anti-Suit Injunctions, European Law And London Arbitration
The Effect of Exclusive Jurisdictions Clauses on Package Limitation
