Caresse Navigation Ltd v Zurich Assurances Maroc & Ors

General words incorporating a charterparty into a bill of lading do not ordinarily incorporate ancillary arbitration or jurisdiction clauses. Where the bill specifically refers to a law and arbitration clause, however, the issue is one of objective and contextual construction.

Such language can incorporate a law and exclusive jurisdiction clause where the charterparty contains no arbitration clause, that clause is the only identifiable clause to which the parties could sensibly have referred, and the intended meaning is clear. The need for certainty in negotiable bills of lading does not require an uncommercial construction that deprives specific incorporating words of effect.

Caresse Navigation Ltd was the shipowner under a bill of lading for a cargo of coal carried to Morocco. The bill, on the Congenbill 1994 form, referred to a charterparty dated 6 January 2011 and stated that its terms, including the law and arbitration clause, were incorporated. The referenced charterparty contained an English law and exclusive English jurisdiction clause, but no arbitration clause.

Following cargo damage proceedings brought in Morocco, Caresse obtained an interim anti-suit injunction. Males J had earlier rejected the cargo interests’ jurisdiction challenge and held that the bill incorporated the clause: [2013] EWHC 3081 (Comm); [2013] EWHC 3471 (Comm). The cargo interests appealed against the injunction. The central issue was whether the reference to a law and arbitration clause incorporated the charterparty’s English law and exclusive jurisdiction clause.

1. The appeal was unanimously dismissed. Lord Justice Beatson gave the reasons, with which Sir Robin Jacob and the Master of the Rolls agreed. The interim anti-suit injunction therefore remained in force.

2. English law recognises a special rule for bills of lading: general words of incorporation bring in only charterparty provisions germane or relevant to the shipment, carriage, discharge and delivery of the cargo. They do not, without more, incorporate ancillary arbitration or jurisdiction clauses. That rule did not determine this appeal because the bill specifically referred to a law and arbitration clause.

3. The decisive question was the objective construction of those specific words in their contractual and commercial context. The original parties knew the terms of the identified charterparty. It contained no arbitration clause, but did contain one usual clause dealing with English law and exclusive English jurisdiction. Reading the reference as meaning an arbitration clause only if one existed would leave the express incorporating words without practical content and would be uncommercial.

4. The court held that commercial certainty was preserved. The bill identified the charterparty by date and expressly alerted a holder that incorporation extended to ancillary provisions concerning choice of law and dispute resolution. The case was therefore unlike one involving only general words of incorporation.

5. The court distinguished authorities concerned with materially different charterparty wording or with inconsistency between bill and charterparty provisions. It rejected the submission that The Merak prevented a contextual construction. Its restrictive approach to an evident drafting error was outdated in light of the modern approach to contractual interpretation, reflected in Chartbrook.

• Court of Appeal (Civil Division) — unanimously dismissed the cargo interests’ appeal and upheld the interim anti-suit injunction: [2014] EWCA Civ 1366.
• High Court, Commercial Court (Males J) — granted the interim anti-suit injunction appealed from: [2013] EWHC 3471 (Comm). In an earlier decision, Males J rejected the cargo interests’ challenge to English jurisdiction and held that the bill incorporated the English law and exclusive jurisdiction clause: [2013] EWHC 3081 (Comm); [2014] 1 Lloyd’s Rep 337.