Brave Bulk Transport Ltd v Spot On Shipping Ltd

An exclusive jurisdiction clause covering proceedings relating to a contract does not extend to proceedings seeking to enforce a judgment debt against a different company under an alter ego doctrine. The court must identify the substance of the claim advanced. A claim to locate or recover assets said to belong to the judgment debtor is distinct from a claim that the other company was a contracting party or is liable under the contract. Where the claimant has elected to sue the contracting party and obtained judgment, it cannot sue another party on the same contractual liability as an undisclosed principal. A broad construction of the jurisdiction clause does not alter that analysis.

Brave Bulk Transport Ltd obtained default judgment in England against Spot On Shipping Ltd for sums due under a Forward Freight Swap Agreement. Zhanggang Shipping Ltd, which was not a party to that agreement, was later made subject to attachment proceedings in New York. The New York claim alleged that Zhanggang was Spot On’s alter ego and held assets available to satisfy the English judgment debt.

Zhanggang sought to intervene in the concluded English action and obtained an anti-suit injunction, alternatively commencing a separate action for declarations of non-liability and equivalent relief. Brave challenged the English court’s jurisdiction. The central issue was whether the New York alter ego claim related to the agreement within the exclusive jurisdiction clause.

1. Applications dismissed; jurisdiction application granted. Zhanggang could not obtain an anti-suit injunction restraining the New York proceedings. The English proceedings against Spot On had concluded in an unchallenged default judgment.
2. The court identified the narrow issue as whether Brave was alleging in New York that Zhanggang was the contracting party liable under the Forward Freight Swap Agreement. It was not. The New York proceedings sought to enforce the judgment debt against assets allegedly held by Zhanggang as Spot On’s alter ego.
3. Under Kendall v Hamilton [1879] 4 AC 504, having elected to sue the alleged contracting party and obtained judgment, Brave could not sue another party under the contract as an undisclosed principal. That principle reinforced the conclusion that Zhanggang was not being sued as a party to the agreement.
4. The alter ego pleading contained independent routes. Some alleged that Zhanggang was a shell through which Spot On conducted business, or that it held Spot On’s assets. Other allegations concerned domination and agency. None made it essential or inevitable that Zhanggang had been a party to the agreement. Establishing alter ego could involve fraud or equivalent misconduct and was conceptually different from contractual liability.
5. The court distinguished the intervention point discussed in Selby Paradigm [2004] 2 Lloyds Rep 714: Zhanggang was not seeking to set aside or defend the English judgment on its merits. The claim therefore did not fall within the jurisdiction clause, even construed broadly in accordance with Fiona Trust v Privalov [2008] 1 Lloyds Rep 254. There was no abuse, no arguable English jurisdiction and no basis for restraining the New York proceedings.