The "Yaoki"

The "Yaoki"

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DMC/SandT/06/36
The Owners of Cargo lately laden on board the "Yaoki" v. The Owners of the "Yaoki" (The "Yaoki")
High Court of Hong Kong, Court of First Instance: Waung J: Admiralty Action No. 134 of 2005: [2006] HKCFI 411
Colin Wright (instructed by Crump & Co) for the Plaintiffs
Russell Coleman SC (instructed by Holman Fenwick & Willan) for the Defendant
ADMIRALTY: STAY OF PROCEEDING: BILL OF LADING INCORPORATES CHARTERPARTY TERMS INCLUDING ARBITRATION CLAUSE: CHARTERPARTY NOT IDENTIFIED IN BILL OF LADING: WHETHER THE BILL OF LADING REFERRED TO THE TIME CHARTERPARTY OR THE VOYAGE CHARTERPARTY
Summary
Where a bill of lading purported to include the arbitration clause of a charterparty but did not identify the charterparty in question, the court held, in the circumstances of this case, that the relevant charterparty was the timecharter and not the voyage charter. As a result the bill of lading contained a binding arbitration clause and the proceedings in Hong Kong were accordingly stayed.

DMC Category Rating: Confirmed

This case note is contributed by Crump & Co, the International Contributors to the website for Hong Kong

Background
The claim was in respect of damage to a cargo of benzene. The bill of lading contained the following provision:

"…This shipment is carried under and pursuant to the terms of the Contract of Affreightment/Charter party dated AS PER CHARTER PARTY at PER CHARTER PARTY between AS PER CHARTER PARTY and AS PER CHARTER PARTY AS Charterer and all the terms whatsoever of the said Contract of Affreightment/Charter Party including the Arbitration clause, cargo lien clause, and the conditions appearing on both sides of this Bill of Lading to apply and to govern the rights of the parties concerned in this shipment. A copy of the Contract of Affreightment/Charter Party may be obtained from the Shipper or the Charterer upon request."

Clause 3 on the back of the bill of lading read:

"Any and all differences and disputes of whatsoever nature arising out of this Bill of Lading shall be put to arbitration in the City of New York or in the City of London, whichever place is specified in the Charter and in accordance with the Arbitration Clause therein".

There was no further indication in the bill of lading as to whether it referred to the time charterparty or the voyage charterparty. The dispute arose because there was no arbitration clause in the voyage charterparty whereas there was such a clause in the time charterparty. The judge had to decide whether to apply the voyage charterparty or the time charterparty to the bill of lading and determine whether a stay of proceedings was appropriate.

The judge cited Carver on Bills of Lading, 2nd Edition and Scrutton on Charterparties, 20th Edition concerning the general principle to be applied in such cases: that a general reference will normally be construed as relating to the head charterparty but the court can always ascertain the intention of the parties from the surrounding facts and reach an opposite conclusion or even declare the bill of lading void if the terms are too ambiguous.

Judgment
It was held that the time charterparty was the appropriate charterparty referred to in the bill of lading. Firstly, the shipowner was a party to the time charterparty but not a party to the voyage charterparty; thus there was a much stronger reason to link the bill of lading to the time charterparty. Secondly, a reference to the arbitration clause appeared not only on the front of the bill of lading but the clause was recited on the back. The judge took this as a strong indication on the shipowner’s part that disputes of whatever nature were to be settled by arbitration. Thirdly, according to the time charterparty, the bill of lading issued must contain the Paramount clause and the ‘export restriction’ clause. The exact match of the two clauses in the bill of lading further suggested that the charterparty referred to in the bill of lading was the time charterparty.

The judge further held that, even if the charterparty referred to in the bill of lading was the voyage charterparty, the existence of an express valid arbitration clause in the bill of lading itself cannot be easily "ousted" by a mere incorporation of charterparty terms. It followed that the arbitration clause as contained in the bill of lading was valid and binding; thus the court ordered a stay of the proceedings in favour of arbitration.

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