Whitesea Shipping and Trading Corporation & Anor v El Paso Rio Clara Ltd & Ors

A carrier’s contractual covenant not to sue servants, agents or subcontractors may be enforced by anti-suit injunction where the claimant has a practical interest exceeding a merely academic concern. A Himalaya clause is not a contract of carriage subject to the Hague Rules merely because a third party performs services connected with carriage. The decisive question is whether the third party undertook the actual carriage or was made party to the contract of carriage by appropriate deeming language. Article III rule 8 does not invalidate enforcement of a covenant benefiting the contractual carrier where the relevant third parties were not the actual carriers.

The claimants, owners of a vessel, sought anti-suit injunctions restraining subrogated cargo insurers from pursuing substantive proceedings in Brazil against the claimants and vessel-related third parties. The bills of lading were governed by English law, contained exclusive English jurisdiction clauses and included a covenant not to sue servants, agents and subcontractors.

The insurers accepted an injunction restraining proceedings against the claimants but opposed restraint of proceedings against the third parties. They argued that enforcement of the covenant would confer blanket immunity contrary to Article III rule 8 of the Hague Rules. The central issues were whether the covenant benefited the claimants alone, whether the third parties were within the clause, whether Article III rule 8 applied, and whether the claimants had sufficient practical interest to obtain relief.

1. Injunction granted. The claimants were entitled to restrain the insurer defendants from continuing the Brazilian proceedings against all parties sued there. The same relief was granted against the proposed nineteenth defendant without notice, with liberty to apply.
2. The first part of clause 3b was a covenant not to sue which benefited the contractual carriers, namely the claimants, rather than the third parties within the Himalaya clause. The reasoning of Rix LJ in The Starsin [2001] 1 Lloyd’s Rep 437 on that point remained compelling, notwithstanding the House of Lords’ conclusion that the clause in that case was not itself a covenant not to sue.
3. The majority reasoning in The Starsin [2004] 1AC 715 did not establish that any third party performing carriage-related functions became party to a contract of carriage governed by the Hague Rules. The ratio on Article III rule 8 depended on the deeming provision which made the relevant third party a party to the bill of lading contract. The actual carriage in the present case was undertaken by the claimants alone.
4. The charterers, sub-charterers and P&I insurers performed services incidental to the goods or carriage and fell within the wide definition of subcontractor, including indirect subcontractors, in clause 1f. The absence of a direct contractual relationship with the claimants did not prevent that conclusion.
5. Applying the practical-interest approach in The Elbe Maru [1978] 1 Lloyd’s Rep 206, the claimants had more than an academic interest. Continuing the Brazilian proceedings could create indemnity or insurance consequences, force the claimants to accelerate the English proceedings, and enable the insurers to use their own breach tactically to seek a stay or discharge of the English relief. Those risks justified the injunction.

First-instance decision. No prior appellate decision is stated in the judgment.