Star Reefers Pool Inc v JFC Group Ltd

Under Article 3 of the Rome Convention, an express choice of law in a related contract may demonstrate the parties’ choice for another contract with reasonable certainty. The court must discern a demonstrated intention, rather than infer the choice merely from the law having the closest connection with the contract. Differences between the parties to related contracts do not necessarily prevent that conclusion where their relationship and involvement are sufficiently close. Where the underlying dispute is subject to English arbitration and English law probably governs the related contract, England may be the appropriate forum even though the defendant is resident abroad.

Star Reefers Pool Inc claimed approximately US$13.3 million from JFC Group Ltd under guarantees relating to charterparties between Star Reefers and Kalistad Ltd. The guarantees contained no express governing-law, jurisdiction or arbitration clause. Star Reefers obtained permission to serve JFC in Russia and sought an anti-suit injunction in respect of proceedings brought by JFC in St Petersburg.

JFC applied under Part 11.1 of the CPR for declarations that the court lacked jurisdiction or should not exercise it, arguing that the guarantees were governed by Russian law and that Russia was the appropriate forum. The central issues were whether Star Reefers had a good arguable case that the guarantees were governed by English law under Articles 3 or 4 of the Rome Convention, and whether England was the proper place for the claim.

1. Jurisdiction. The application was dismissed. Star Reefers had a good arguable case that the guarantees were governed by English law.
2. Article 3. Article 3 requires the parties’ choice of law to be expressed or demonstrated with reasonable certainty. It requires the court to discern a demonstrated intention. It does not permit the court simply to infer the choice which the parties might have made from the law having the closest and most real connection with the guarantee.
3. The common-law authorities concerning guarantees following the law of the primary contract were not determinative under the Rome Convention, because that Convention applies a different test. However, the Giuliano-Lagarde Report recognised that an unexpressed choice may be demonstrated by an express choice of law in related transactions between the same parties. That example was not exhaustive.
4. Although the parties to the charterparties and guarantees were not identical, the relationship between Kalistad and JFC was exceptionally close. JFC was heavily involved in negotiating the charterparties, the charterparties were made for its benefit, and JFC was described in the guarantees as Kalistad’s nominee. Those circumstances demonstrated the choice of English law with reasonable certainty. It was unnecessary to decide the alternative Article 4 argument.
5. Forum. England was clearly the appropriate forum. The likely application of English law was significant. The documents were in English, and the guarantee dispute could conveniently be managed alongside the London arbitration concerning the charterparties. JFC’s Russian residence was the only substantial connection with Russia. A suggested issue concerning the capacity of those giving the guarantees was unsupported and would not outweigh the factors favouring England.

This was a first-instance Commercial Court application. Christopher Clarke J had granted an anti-suit injunction, and Teare J continued it on 8 November 2010 after rejecting JFC’s jurisdictional and forum arguments. Those earlier orders were not treated as giving rise to res judicata or issue estoppel. The present application was considered afresh.