Facts
By a voyage charterparty on the ASBATANKVOY form dated 16 October 2001, Siboti chartered a vessel to Enron International Corporation (through Enron Europe Finance and Trading Limited) to carry petroleum products from India to France, via Malta. At Malta, part of the cargo was discharged for blending and subsequently reloaded. By bill of lading dated 19 November 2001 at Malta, Siboti acknowledged shipment of the cargo in apparent good order for carriage to and safe delivery at Sete, France. At Sete, the cargo was discharged into shore tanks for the account of BP France, the ultimate purchaser.

Enron's financial difficulties meant that Siboti was never paid any of the freight or loadport demurrage. Siboti asserted a lien over the cargo in France and issued arbitration proceedings in the UK seeking to recover the amounts outstanding from BP. It argued that BP, as indorsee of the bill of lading, was the lawful holder under section 2(1) of the Carriage of Goods by Sea Act and that, by taking delivery of the cargo, it became subject to the outstanding liabilities under the bill of lading.

BP argued that neither the English Court nor English arbitrators had jurisdiction. Any claim against it had to be pursued in France as its place of domicile in accordance with Article 2 of Council Regulation 44/2001 (the successor to the Brussels Convention).

Article 2 of the Regulation can, however, be overridden if the parties expressly agree on a particular jurisdiction (Article 23). Such jurisdiction will be exclusive unless the parties have agreed otherwise. Siboti argued that the parties had reached just such an agreement.

Clause 49(b) of the charterparty provided "any dispute of whatsoever nature arising under this Charter Party shall be determined by the English [Court]… and the parties hereby expressly submit to the exclusive jurisdiction of the English…Courts...". Under 49(e), "All bills of lading under this Charter Party shall incorporate this exclusive dispute resolution clause...". Additional clauses included an English choice of law clause and a London arbitration clause.

The bill of lading provided:
"This shipment is carried under and pursuant to the terms of the charter dated……between…… and…… and all the terms whatsoever of the said charter apply to and govern the rights of the parties concerned in the shipment".

The date and the parties to the charterparty were left blank, although there was no real dispute that the bill referred to the charterparty of 16 October. The issue was whether the exclusive jurisdiction clause in the charterparty had been incorporated into the bill of lading.

Judgment
The judge held it had not been incorporated. In construing any document, the court would always try to give effect to the parties' intentions. Where the terms used expressed a clear intention to incorporate specific clauses, no problem arose. But general words of incorporation, such as those used here, would only incorporate into a bill of lading those provisions of the charterparty that were directly germane to the shipment, carriage and delivery of the goods. Ancillary provisions, such as an arbitration clause, would not be incorporated by general words alone (The Federal Bulker [1989] 1 Lloyd's Rep 103). Jurisdiction clauses, like arbitration clauses, are ancillary to the subject matter of a bill of lading (AIG Europe v Ethniki [1998] 4 All ER 301 and AIG v. QBE [2001] 2 Lloyd's Rep 268).

Even if the words of the bill were sufficiently precise to incorporate the charterparty clause in question, incorporation would not necessarily take place if it required undue manipulation of the terms used, although the amount of manipulation allowed by the court would depend on how clear the parties' intentions were.

Since, in order to construe a bill of lading, the starting point would always be the bill itself, the actual words used in the charterparty were irrelevant – even if, as here, it contained an express reference to bills of lading (The Varenna [1984] 1 Lloyd's Rep 599 and the Federal Bulker, above). In this case, the fact that the wording of the bill of lading did not follow the wording contemplated by clause 49(e) of the charterparty could only lead to the inference that the parties when drawing up the bill had not intended to give effect to the intentions expressed in the charterparty.

European Community law approaches the problem in much the same way as English law. Where there is a jurisdiction clause, the clause must be the "subject of a consensus between the parties which must be clearly and precisely demonstrated" (Salotti v. RUWA [1976] ECR 1831). In the absence of clear and specific language, the court would be unable to conclude that the parties had demonstrated such a consensus. General words of incorporation, therefore, would only incorporate terms that are germane to the subject matter of the contract.

The judge was wholly unpersuaded that a consensus between the parties had been demonstrated, let alone clearly and precisely. Under English law and under Community law, therefore, the exclusive jurisdiction clause did not apply and the English court did not have jurisdiction to hear the matter.