Vale Do Rio Doce Navegacao SA and anr v Shanghai Bao Steel Ocean Shipping Co Ltd (trading as Baosteel Ocean Shipping Co) and anr - QBD (Com Ct)(Thomas J) - 14 April 2000

Dispute as to whether agent had authority to contract on behalf of first defendant - Claimants alleging that agent had authority - First defendant denying that agent had authority - Alleged contract containing London arbitration clause - Claimants bringing court proceedings in England for a declaration that first defendant was party to the arbitration agreement - Claimants joining agent in those proceedings - Claimants obtaining permission to serve arbitration claim form on both defendants out of the jurisdiction - Whether Court had jurisdiction to hear the proceedings - Whether arbitration claim form should be set aside - Interpretation of Lugano Convention, Arbitration Act 1996 and CPR Practice Direction 49G

The claimant owners alleged that they had concluded a contract of affreightment with the first defendants (‘Bao Steel’) for shipments of iron ore from Brazil to China. The first defendants disputed that they were parties to the contract on the basis that the second defendants (‘the Brokers’), who were said to have concluded the contract on Bao Steel’s behalf, had no authority to do so. The owners were both companies within the same group. The first claimant was Brazilian and the second claimant was Liberian. The Brokers were a company domiciled in Norway. On 3 September 1997 the Brokers had sent a telex to the owners in which the Brokers stated that a company called Baosteel Ocean Shipping Co had agreed to the terms of the contract of affreightment which they then set out in summary. One of those terms was that the seat of arbitration was to be London with English law to apply. They subsequently sent to the owners a fully copy of the contract of affreightment, clause 27 of which contained a London arbitration clause.