Hamburg Rules on jurisdiction not a block to an anti-suit injunction

United Kingdom

In Aline Tramp SA v Jordan International Insurance Company (CL-2016-000263) and The London Steam-Ship Owners’ Mutual Insurance Association Limited v Jordan International Insurance Company (CL-2016-000264), a Claimant vessel owner and insurer sought anti-suit injunctions, on the basis of an arbitration clause and a purported exclusive jurisdiction clause respectively, where proceedings relating to damaged cargo had been brought in the Jordanian Courts.

The anti-suit injunction was granted to the Claimant owner on the basis of the arbitration clause, despite Jordan being a party to the Hamburg Rules, pursuant to which rules the Jordanian Courts were entitled to hear the claim. The injunction sought by the Claimant insurer was dismissed as the purported exclusive jurisdiction clause in favour of the English Courts was found not to be a bilateral agreement.

Background

The Claimant owner’s application

The Hamburg Rules govern the international shipment of goods under the United Nations International Convention on Carriage of Goods by Sea (adopted in Hamburg in 1978). The Rules contain provisions allocating jurisdiction in respect of claims. The UK has not adopted the Hamburg Rules.

The Claimant owner argued that it was entitled to an anti-suit injunction because the Jordanian proceedings had been brought in breach of the arbitration clause in the bills of lading. The Judge agreed with the Claimant owner; the Claimant had a contractual right for any claims arising out of the bills of lading to be resolved by arbitration in London, subject to English law. The issue was therefore if there was any good reason to refuse the injunction and, in particular, if the injunction should be refused on the basis of Jordan’s adoption of the Hamburg Rules.

In deciding this issue, the Judge took account of a number of factors, including the question of reciprocity and the nature of the public policy of the foreign forum (which may be reflected in the way in which that policy is encapsulated into law). On the latter point, the Judge concluded that the jurisdiction of the Jordanian Courts was not an imperative jurisdiction designed to protect individuals or fundamental rights. Rather, it was a ‘different, permissive, means of managing a bargain between corporate counterparties than that embodied in their contract’, which should not be given greater significance than the contractual bargain struck between the parties. Further, the Hamburg Rules approach was not one adopted in England and Wales. The Judge therefore found no reason why the injunction should not be granted.

The Claimant insurer’s application

In support of its application for an anti-suit injunction, the Claimant insurer relied on the following wording in its letter of undertaking to the Defendant insurer:

“This Letter of Undertaking shall be governed by and construed in accordance with English law and we agree to submit to the exclusive jurisdiction of the English Courts”.

The Claimant insurer argued that, although the words in question were expressed as its (unilateral) agreement to submit to the jurisdiction of the English Courts, the phrase “exclusive jurisdiction” strongly suggested that the English Courts were intended to have exclusive jurisdiction in relation to the Letter of Undertaking. The Judge rejected the Claimant insurer’s submissions. The Letter of Undertaking was on the Claimant insurer’s headed notepaper, and it was the only signatory. Accordingly, the Judge found that a reader would not understand the phrase “we agree to submit” to refer to a bilateral obligation. There was therefore no agreement on exclusive jurisdiction and the Claimant insurer’s application for an anti-suit injunction was dismissed.

Conclusion

In the context of shipping disputes, this decision helpfully clarifies the relationship between arbitration agreements and the jurisdictional rules contained in the Hamburg Rules. The case also highlights the difficulties that will be faced in applying to the English Courts for an anti-suit injunction where the applicant cannot point to a clear agreement on exclusive jurisdiction.