A/S D/S Svendborg v Akar

Costs and expenses incurred in foreign proceedings may be recoverable as damages where those proceedings are brought in breach of an exclusive jurisdiction clause. The same losses may also be recoverable in deceit where fraudulent claims have caused the claimant to investigate and defend them. Fraud must be proved on the balance of probabilities by cogent evidence, even at an uncontested trial. Similar-fact evidence should be admitted, or given weight, only where it has probative value in relation to the particular claim. A bill of lading’s exclusive English law and jurisdiction clause may bind an endorsee, and may also govern the terms of a bailment. An indemnity may be granted for future costs arising from continuing foreign proceedings.

The claimants, trading as Maersk Sealand, brought claims against members of the Akar family and related companies. The claims arose from two containers carried to Conakry. In the first claim, the claimants alleged that the defendants had removed the goods and then pursued fraudulent non-delivery claims in Hong Kong and Guinea. In the second, the claimants alleged that proceedings in Guinea concerning a short delay in delivery were brought in breach of the bill of lading’s exclusive English jurisdiction clause.

The defendants took no part in the trial. The court therefore considered whether the claims were established on the evidence and whether the claimants could recover existing and future costs and expenses.

1. First claim. The court found that the first, second and/or fifth defendants had removed the goods and pursued fraudulent non-delivery claims. The Customs register, the circumstances of the defendants’ request for a further survey, the alteration to the container door mechanism and the substantial inflation of the claim together provided cogent evidence. The court rejected the submission that Guinea Customs had necessarily been complicit in the fraud.
2. Fraud had to be proved on the balance of probabilities by cogent evidence, notwithstanding the uncontested trial. The alleged previous shortage claims were disregarded because their probative value in relation to this claim was insufficient.
3. The first and/or second defendants were inferred to be endorsees of the bill of lading and therefore parties to its contract. If necessary, they would also have been bound by the bill’s terms as bailees. The court relied on East West Corporation v N5 D/S Svendborg [2003] EWCA Civ 83; [2003] 1 Lloyd’s Rep 239.
4. Clause 27 was an exclusive English law and jurisdiction clause. Proceedings in Hong Kong and Guinea breached it. Applying Union Discount v Zoller [2001] EWCA Civ 1755; [2002] 1 WLR 1517, the claimants could recover reasonable legal fees and other expenses incurred in the foreign proceedings, without first proving that those expenses were irrecoverable there. Proceedings against Maersk Guinee also breached clause 3.
5. The claimants were entitled to damages of US$130,941.48, interest of US$7,414.73, declarations that the first claim was fraudulent, and indemnities for future costs and expenses.
6. Second claim. The third and/or fourth defendants had breached clause 27 by bringing proceedings in Guinea. The court did not decide whether their claim was fraudulent, but granted an indemnity for costs and expenses already incurred and incurred in future.
7. Costs were summarily assessed at £140,000, apportioned £110,000 against the defendants connected with the first claim and £30,000 against those connected with the second.