'Delos'

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Case No. DMC/ST/02/01

Cargo on Board MV 'Delos' v. Delos Shipping: [2001] 1 AER 763 

UK High Court Decision: Langley J. January 2001

VOYAGE CHARTERPARTY: ARBITRATION CLAUSE: INCORPORATION INTO BILLS OF LADING

This case concerns the principles to be applied in determining whether or not an arbitration clause in a charterparty is incorporated into bills of lading issued under that charterparty

DMC Category Rating: Confirmed

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Summary
1. Where a charterparty contained a clause reading: "This contract shall be governed by the laws of England….. Any disputes under this Charter Party shall be settled by Arbitration in London" and Congen bills of lading were issued containing the clause "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration clause, are herewith incorporated….", the charterparty arbitration clause was deemed incorporated in the bills of lading.

In addition to claims for breach of the bill of lading contract itself, claims for breach of duty as carrier and in bailment were also subject to the arbitration clause, as they were based on or dependent on the existence of the bills of lading.

Cases applied: The Rena K [1979] QB 177: The Nerano [1996] 1 Lloyd’s Rep. 1.

2. Where, under the same charterparty, bills of lading were issued containing the clause "This shipment is carried under and pursuant to the terms of the Charter dated July 7th 1998 at London …… and all the terms whatsoever of the said Charter ….. apply to and govern the rights of the parties concerned in this shipment….", the charterparty arbitration clause was not deemed incorporated in the bills of lading.

Despite the use of the wide expression "all the terms whatsoever", the bill of lading clause did not make specific reference to the arbitration clause and the arbitration clause did not make specific reference to the bills of lading. The decision of the House of Lords in the case of T.W. Thomas v. Portsea Steamship Company applied, by which [the arbitration clause] " is not incorporated by general words in the bill of lading. If it is to be incorporated, it must either be by express words in the bill of lading itself ….. or by express words in the charterparty itself….. If it is desired to bring in an arbitration clause, it must be done explicitly in one document or the other."

Lessons to be learnt
If you wish to incorporate into a bill of lading an arbitration clause contained in a charterparty, make specific reference to the arbitration clause in the clause inserted in the bill of lading incorporating the terms and conditions of the charterparty.

Cases applied
 T.W.Thomas v. Portsea Steamship Co. [1912] AC 1; The Federal Bulker [1989] 1 LL Rep 103; The Merak [1965] P 22; The Annefield [1971] P 169.  

 

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