Verity Shipping v. NV Norexa

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(1) Verity Shipping SA (2) Chartworld Shipping Corporation v NV Norexa & Others
English High Court: Queen’s Bench Division: Commercial Court: Teare J.: [2008] EWHC 213
13 February 2008
Andrew Baker QC, instructed by Jackson Parton, for the Applicant Shipowners
Robert Thomas, instructed by Holmes Hardingham, for the Respondent Cargo Interests

In this case, cargo interests were able to demonstrate that there was strong cause or good reason for the court not to continue an anti-suit injunction enjoining them from pursuing a claim for damaged cargo against shipowners in the Commercial Court in Antwerp, in contravention of the London arbitration clause in the relevant charterparty incorporated into the bills of lading. First, particularly as regards the third party from whom the shipowners had claimed indemnity in the Antwerp proceedings, there was a risk of inconsistent decisions between the two jurisdictions. Second, in seeking the injunction, shipowners had failed to act promptly and before the Antwerp proceedings had advanced too far. However, the fact that a time-bar defence was available to owners in the arbitration proceedings did not amount to ‘good reason’ (see above), because cargo interests could not show that they had acted reasonably in failing to protect their rights of suit in the arbitration.

DMC Category Rating: Confirmed

In this case the claimants applied to continue an anti-suit injunction that had been granted ex parte (that is, without the other party being present), prohibiting the respondents from continuing proceedings which they had commenced in Antwerp, Belgium, in January 2005. The injunction had first been granted in December 2007 and then confirmed in January 2008.

The claimants were the owners and managers of the vessel Skier Star which, in December 2004, had been chartered under the Gencon 1994 form, for the carriage of fresh fruit and vegetables from the Argentine to Antwerp. Pursuant to the charterparty, the vessel loaded at Campana a cargo of palletized cartons of fresh grapes and plums, under bills of lading subject to the Hague/Hague-Visby Rules dated 3 January. The bills were on the Congenbill 1994 form and incorporated "All terms and conditions, liberties and exceptions of the Charter Party dated as overleaf, including the Law and Arbitration Clause…" The charterparty provided for disputes to be referred to arbitration in London in accordance with English law.

On the discharge of the cargo in Antwerp on 20 and 21 January 2005, the Belgian Federal Food Agency, the "FAVV" condemned it in its entirety, alleging contamination by oil vapour. Cargo interests immediately applied to the court in Antwerp for the appointment of a court surveyor and, on 8 February, instituted proceedings there against the shipowners. These proceedings were then adjourned sine die (without a date for return to court being fixed), pending completion of the surveyor’s report. This was normal procedure in Antwerp.

Shortly afterwards, the owners started proceedings in Antwerp against the FAVV, seeking an indemnity in respect of any liability they might have to the cargo interests. In the writ served on FAVV, which was not copied to the cargo interests, the owners stated that they "positively dispute the jurisdiction of the Antwerp Commercial Court as well as the basis and admissibility of the [cargo] claim." These proceedings were similarly adjourned sine die and were later amalgamated with the claim of the cargo interests against the owners.

In April 2006, the court surveyor published his preliminary report, on which – in August 2006 – owners submitted their comments, asked questions and submitted further documents. After a series of reminders from the owners, the court surveyor replied to the owners’ questions, with assistance from a professor at the University of Ghent. The surveyor submitted his final report to the court in March 2007.

After some unsuccessful negotiations between the parties, the cargo interests’ applied to the Antwerp court in October 2007 to set down a procedural calendar. Owners did not object to a procedural schedule as such but reminded the court that claimants had issued third party proceedings against FAVV and asked that the timetable should allow for pleadings from FAVV. Then, at the end of November 2007, owners informed cargo interests that they would seek an anti-suit injunction from the English court unless the latter withdrew their claim in the Antwerp court.

Early in December 2007, the Antwerp court fixed the timetable for its proceedings. Later that same month, the High Court in London granted owners an injunction requiring the cargo interests to discontinue the proceedings in Antwerp. Claimants applied to continue this injunction. Cargo interests opposed the application on three principal grounds:-

  1. There was a risk of inconsistent decisions between the arbitration in London and the court in Antwerp, principally because FAVV could not be a party to the London arbitration proceedings.
  2. The owners had delayed too long. They had known of the proceedings in Antwerp in January 2005 but had waited until December 2007 before seeking an injunction. The owners had joined FAVV in the Antwerp proceedings and participated in the court survey process. The proceedings had progressed to the point where the surveyor’s report had been published and the court had given directions for all parties, including FAVV, to plead their case and to prepare for an oral hearing in December 2008.
  3. Any claim in arbitration in London would be time-barred, the one-year time limit under the Hague/Hague-Visby Rules having expired on 21 January 2006.

The judge held that the injunction should be discharged (discontinued). The grounds for his decision were the following.

1. Although the owners were prepared to take the risk of inconsistent decisions between the arbitration in London and the Commercial Court in Antwerp, the judge considered that FAVV were also exposed to this risk, in the event that the cargo interests succeeded in London but FAVV was found liable to the owners in Antwerp. The risk of injustice to FAVV, as the third party, by reason of inconsistent decisions between the two jurisdictions, was therefore a reason in favour of refusing the anti-suit injunction.

2. The judge accepted that the owners, despite their participation in the court survey process in the Antwerp proceedings, had not, under Belgian law, waived their right to challenge the jurisdiction of the Antwerp court. Nevertheless, as a matter of English law, the principle was that an application for an anti-suit injunction had to be made "promptly and before the foreign proceedings are too far advanced" per Lord Justice Millet in The Angelic Grace [1995] 1 Lloyd’s Rep. 87 at p.96. Given the history of the present case, the judge held that the owners should have made their application for an anti-suit injunction at some stage in 2005. By failing to do so, the owners had failed to act promptly.

Furthermore, the completion of the court surveyor’s report represented substantial progress in the Antwerp proceedings as regards an investigation both of the facts relevant to the cargo interests’ claim against the owners and the owners’ claim against FAVV. It was true that a withdrawal of the cargo interests’ claim in Antwerp pursuant to an injunction ordering them to do so would not result in a cessation of the court survey. But that did not, in the judge’s view, justify the owners in delaying their application for an anti-suit injunction until after completion of the court survey process. The statement of Millet LJ in The Angelic Grace (see above) was "clear and should be applied in a common sense and straightforward manner."

3. As regards the third argument, namely that an anti-suit injunction should not be granted because any claim by cargo interests in London arbitration would now be time-barred, the judge noted that the authorities established the clear principle that a claimant who wished to avoid the effect of a time bar in the contractual forum must show that he did not act unreasonably in failing to preserve his right to sue in the contractual forum – see Clarke J. in The Bergen [1997] 2 Lloyd’s Rep.710. In this case, the evidence established that the cargo interests were not aware of the London arbitration clause until November 2007 (by which time the one year time-limit for suit under the Hague/Hague-Visby Rules had long expired), because before that date they had not taken any steps to obtain a copy of the relevant charterparty. They had thought it irrelevant to do so, given that Belgian law, unlike English law, would not regard the London arbitration clause as binding upon the cargo interests.

In these circumstances, the judge held that cargo interests were unable to show that they had acted reasonably in not protecting their claim in the contractual forum. It followed that the presence of the time bar defence in London arbitration could not amount to a reason, "let alone a ‘strong cause or good reason’ to refuse an anti-suit injunction", at para.51.

In the result, the judge held, by reason of the first and second arguments (but not the third) that the anti-suit injunction should be discontinued.

The judge approached the case on the basis that, in English law, the court has jurisdiction to grant an anti-suit injunction to enforce a contractually agreed arbitration clause, notwithstanding that the respondent to the application has commenced legal proceedings in a country of the European Union. He quoted as authority for this proposition the cases of Through Transport v. New India [2005] 1 Lloyd’s Rep.67 and The Front Comor [2007] 1 Lloyd’s Rep.391, noting that the House of Lords in the latter case had referred to the European Court of Justice the question whether such a jurisdiction is compatible with the Brussels Regulation 44/2001.

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