Sotrade Denizcilik Sanayi VE Ticaret AS v Amadou Lo & Ors

A party to a bill of lading containing an express London arbitration clause breaches that agreement by using a foreign arrest for the ulterior purpose of obtaining foreign jurisdiction or defeating the arbitration agreement. A conservatory arrest remains permissible where it is genuinely used to obtain reasonable security for the arbitration claim.

Accessory liability for procuring breach requires knowledge of the contractual obligation and an intention to procure its breach. Damages are limited to loss caused by the improper conduct, and belong to the legal entity that sustained them. A very late amendment may be refused where it causes procedural prejudice.

The registered owners of the Duden claimed against the cargo insurer after the vessel was arrested in Dakar following alleged cargo shortages. The bills of lading identified the owners as carrier and incorporated the time charterparty, including its London arbitration and English law clause.

The owners alleged that the insurer procured the receivers to use the arrest to force acceptance of Senegalese jurisdiction. The insurer contended that the proceedings were merely conservatory and that the owners had suffered no recoverable loss. The issues included incorporation of the arbitration clause, breach, accessory liability, damages, amendment of the claim, and a final anti-suit injunction.

1. Contractual status and arbitration clause. The owners were contractual carriers because the bills identified them as carrier and the master had actual or apparent authority to issue them. The bills expressly incorporated the time charterparty, including its arbitration clause. That was sufficient even though some manipulation of the charterparty terms was required: [1978] 1 Lloyd’s Rep 545.
2. Breach. There was no need to imply a separate term protecting the arbitration agreement. A party may obtain reasonable security through a foreign arrest. However, using the arrest to secure Senegalese jurisdiction or to force abandonment of London arbitration was a direct breach of the express arbitration agreement.
3. Procurement. Applying OBG Ltd v Allan [2007] UKHL 21 [2008] 1 AC 1, liability required knowledge that the conduct would induce breach and an intention to do so. The insurer knew of the incorporated London arbitration clause and intentionally maintained the arrest to force Senegalese jurisdiction. It was therefore liable for procuring breach from, at latest, 12 December 2005.
4. Other claims and loss. The interference and conspiracy claims added nothing or were not established. The recoverable loss was limited to the period after discharge during which the vessel could have been released against adequate security. The quantified loss was US$106,958.55. That loss was sustained by Anchor, the bareboat charterer, not the owners. Permission to amend to rely on agency or join Anchor was refused because the application was made too late and caused potential prejudice.
5. Relief. A final injunction was granted, subject to an undertaking in its stead, restraining proceedings relating to the bills of lading except before a duly constituted London arbitration tribunal. The owners’ damages claim was dismissed.