A JURISDICTION RACE IN THE DARK
The Wadi Sudr
Is a judgment of another EU Member State, that a London arbitration agreement is not incorporated into a bill of lading, to be recognised and given effect to in England? This question has been considered by the Court of Appeal in National Navigation Co v. Endesa Generacion SA (The Wadi Sudr)
1 and decided unanimously in the affirmative, at least where that judgment is obtained before the English court has made a declaration as to the validity of the arbitration agreement. The position where the timing is reversed is considered obiter .
The case concerned a bill of lading dispute. The owners of the Wadi Sudr , National Navigation Co, carried coal from Indonesia for delivery in Ferrol, Spain. The vessel sustained damage to her rudder and it was necessary to discharge the cargo short of destination at Carboneras in south-east Spain. The bill of lading was in the Congenbill form, which incorporates the “Law and Arbitration clause” of the “charterparty dated as overleaf”, but no date was given. There were three charterparties: a head time charter, a sub-time charter and a voyage charterparty between the sub-time charterers, Morgan Stanley Capital Group, and the cargo interests’ co-subsidiary, Carboex SA. The day the owners’ solicitor was instructed, on 18 January 2008, he asked for a copy of the voyage charterparty. On 22 January, he was informed that Carboex did not wish to release this charterparty to third parties and, further, by the solicitor acting for Carboex, that the voyage charterparty provided for English law and London arbitration. Despite repeated requests, the charterparty was not disclosed. It became clear from the terms of the security they requested from the owners on 21 January that the cargo interests wished to have the dispute determined by the Spanish court. The reason that cargo interests preferred the jurisdiction of the Spanish courts was that, if Spanish law applied, the owners would not be able to raise a defence based on due diligence under the Hague-Visby Rules, because Spanish law imposed absolute liability on the carrier, except for Acts of God and force majeure . 2 The jurisdiction race was on.
On 23 January, cargo interests applied for a warrant to arrest the vessel in Spain. The same day, the owners commenced proceedings in the English court for a declaration of non-liability (“the Commercial Court action ”) in an attempt to seise that court first. The
1.  EWCA Civ 1397;  1 Lloyd’s Rep 193 .
2.  EWHC 196 (Comm);  1 Lloyd’s Rep 666 , .
CASE AND COMMENT
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