Yangtze Navigation (Asia) Co Limited & Anor v TPT Shipping Limited & Ors

On an application to set aside service out of the jurisdiction, the claimant must establish a good arguable case that a relevant jurisdictional gateway applies. The three-limbed approach requires a plausible evidential basis showing the better argument; a reliable conclusion where the court can reach one; and, where it cannot, a plausible though contested evidential basis. The court must avoid deciding the ultimate merits.

An undisclosed principal is liable only where the agent acted within actual authority, intended to act for the principal, and the contract does not exclude such liability. Approval of a transaction does not necessarily show consent to be bound. Where contractual documents establish that a company acted only as agent, and the evidence does not reliably show authority to bind the alleged principal, service should be set aside.

The claimants sought to enforce three letters of indemnity concerning the discharge of New Zealand logs in India without production of original bills of lading. The letters were issued by TPT Shipping Limited to the claimants and contained English governing-law and High Court jurisdiction clauses.

The claimants alleged that TPT Shipping had acted as agent for TPT Forests Limited and for three export companies, making those defendants undisclosed principals liable under the letters. Forests and the Exporters applied under Civil Procedure Rules 1998 Parts 11 and 6.33 to set aside service out of the jurisdiction. The central questions were whether the claimants had a sufficiently good arguable case that the defendants were parties to contracts containing English jurisdiction clauses, and whether any right to sue had been lost by election.

1. Application granted. Service of the claim form on Forests and the Exporters was set aside, and the claim was dismissed. The election issue did not require determination.
2. Part 6.33 of the Civil Procedure Rules 1998 permitted service without permission where a contract contained a term conferring jurisdiction on the English court. The relevant question was whether the claimants had the better argument that contracts containing such clauses existed with the defendants.
3. The court applied the three-limbed approach identified in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV. The claimant must provide a plausible evidential basis showing the better argument. If a factual issue can reliably be resolved on the available material, the court must resolve it. If no reliable assessment is possible, a plausible, albeit contested, evidential basis may suffice. The burden remained on the claimant. The test was not the balance of probabilities, and the court was not to determine the ultimate merits.
4. Under Sui Yin Kwan v Eastern Insurance, an undisclosed principal may sue or be sued on an agent’s contract where the agent acted within actual authority and intended to act for the principal, subject to contractual exclusion. The court also accepted the additional principle in Playboy Club v Banca Nazionale del Lavoro LPV that the third party must irrevocably elect whether to sue the agent or the undisclosed principal.
5. The contractual arrangements showed that Forests acted as agent for the Exporters and not as principal. The evidence that Forests approved the issue of letters of indemnity was better explained as protection of the Exporters’ commercial security, rather than consent by Forests to incur direct liability. Forests therefore was not shown to be an undisclosed principal.
6. The LMSAAs distinguished between charters entered into by Forests as agent for the Exporters and space made available on vessels chartered by Shipping. The present transactions fell within the latter arrangement. Shipping had chartered the vessels before knowing whose cargo would be carried and acted as principal in entering the charters.
7. There was no sufficient evidence that the Exporters authorised the letters of indemnity. The specific authorisation procedure in the LMSAAs had not been followed. Speculation about further disclosure or cross-examination could not establish a plausible evidential basis at the jurisdictional stage.