Welex A.G. v Rosa Maritime Ltd.

A bill of lading may incorporate a written and readily ascertainable charterparty recorded in a recap telex. The omission of the charterparty date is not fatal. A subsequently executed formal charterparty may also be incorporated where it records a fixture made before the bill was issued.

An English court will ordinarily enforce an agreed arbitration clause by restraining foreign proceedings. The party using the non-contractual forum must show strong reasons for doing so. Potential loss of security can qualify, but its weight is reduced where that risk resulted from the party’s failure to investigate and comply with the arbitration agreement.

The named consignee claimed that steel plates carried aboard the respondent’s vessel had suffered seawater damage. The Congenbill bill of lading expressly incorporated the law and arbitration clause of a charterparty, but its box for the charterparty date was blank. The underlying fixture had been recorded in a recap telex and standard terms providing for English law and London arbitration. A formal charterparty was subsequently executed.

The consignee nevertheless commenced proceedings in Poland and maintained an arrest of the vessel in Portugal. The Commercial Court held that the arbitration clause was incorporated and restrained the Polish claim against the carrier: [2002] EWHC 762 (Comm.) and [2002] EWHC 2035 (Comm). The appeals concerned incorporation, jurisdiction to grant the permanent anti-suit injunction, and whether the risk of losing Portuguese security supplied a strong reason to refuse relief.

1. Both appeals dismissed. The written recap telex and the standard terms it incorporated constituted a charterparty capable of incorporation into the bill of lading. The expression “the Charter Party” referred to the contract under which the vessel had been chartered. Capitalisation was immaterial. Although the charterparty date had been omitted from the bill, the express freight term and incorporation wording showed a clear intention to incorporate the related charter.
2. The incorporated contract had to be reduced to writing and readily ascertainable. An undocumented oral agreement would not suffice, but a recap telex could meet those requirements. Whether it did so depended on the particular documents. Here, the recap and accompanying terms clearly selected London arbitration, and any apparent inconsistency in clause 47 was resolved by that express choice.
3. The subsequently executed formal charterparty provided an alternative basis for incorporation. It recorded a fixture made before the bill was issued. It was immaterial that both parties had not executed the formal document by the date of issue, because it had been executed by the time it was first requested and was referable to the earlier fixture. Later inability to produce the original did not alter rights already created.
4. The High Court’s power to grant a permanent anti-suit injunction derived from section 37(1) of the Supreme Court Act 1981. Sections 32 and 45 of the Arbitration Act 1996 did not confer an implied power to grant such final relief. The appeal was therefore not subject to their restrictions.
5. A party suing in a non-contractual forum must show strong reasons why the agreed forum should not be enforced. The manner in which the agreement arose and the seriousness of the breach were relevant, but there was no sliding scale of enforcement. Contracting parties should ordinarily be held to their agreed dispute-resolution procedure.
6. Possible loss of security could amount to a strong reason. Here, however, the availability of the Portuguese security remained uncertain and the consignee had materially created the risk by commencing Polish proceedings without investigating the arbitration clause. Parallel proceedings against the vessel’s purchaser, modest convenience factors, and the applicable international conventions did not outweigh the contractual bargain. The injunction was upheld notwithstanding the judge’s imperfect evaluation of the security risk.

1. Court of Appeal (Civil Division): By [2003] EWCA Civ 938, unanimously dismissed both appeals and upheld the incorporation ruling and permanent anti-suit injunction.
2. Commercial Court: David Steel J held that the English-law and London-arbitration terms were incorporated into the bill of lading: [2002] EWHC 762 (Comm.); [2002] 2 Lloyd’s Law Rep. 81. He subsequently restrained the consignee from pursuing its claim against the carrier in Poland: [2002] EWHC 2035 (Comm); [2002] 2 Lloyd’s Law Rep. 701.