Maersk Guinea-Bissau SARL & Maersk A/S v Almar-Hum Bubacar Balde SARL (The “Raquel S”)
DMC/Arbn/24/03
England
Maersk Guinea-Bissau SARL & Maersk A/S v Almar-Hum Bubacar Balde SARL (The “Raquel S”)
English Commercial Court: Jacobs J: [2024] EWHC 993 (Comm): 29 April 2023
Judgment Available on BAILII: https://www.bailii.org/ew/cases/EWHC/Comm/2024/993.html
Paul Henton (instructed by Holman Fenwick Willan LLP) for Maersk Guinea-Bissau SARL & Maersk A/S (Carriers’ Subcontractors/Carriers)
The Defendant Shippers (Almar-Hum Bubacar Balde SARL) were not in attendance nor represented.
CARRIAGE OF GOODS BY SEA: BILLS OF LADING: ENGLISH COURT EXCLUSIVE JURISDICTION CLAUSE (“EJC”): HIMALAYA CLAUSE (“HC”): SHIPPERS COMMENCED COURT PROCEEDINGS AGAINST CARRIERS’ SUBCONTRACTORS IN GUINEA-BISSAU CONTRARY TO EJC: WHETHER CARRIERS AND CARRIERS’ SUBCONTRACTORS ENTITLED TO RELY UPON AND CLAIM DAMAGES AND/OR AN INDEMNITY FOR CONSEQUENCES OF SHIPPERS’ BREACH OF THE EJC AND THE HC IN THE CONTRACTS
Summary
In finding in favour of the Claimants, Carriers and Carriers’ Subcontractors, the High Court held that the exclusive jurisdiction clause (“EJC”) and the Himalaya clause (“HC”) were validly incorporated into the contracts of carriage for shipments of madeira wood from Guinea-Bissau to China. The Defendant Shippers argued that these clauses were onerous and had not been sufficiently brought to their attention. However, the High Court held that such clauses were not onerous in the context of international shippers and that, in any event, Carriers had taken reasonable steps to provide notice of them during the booking process, satisfying the legal requirements.
The High Court also confirmed that Carriers’ Subcontractors, despite not being the direct contracting party, could rely on the protections of the HC as a sub-contractor of Carriers. Accordingly, Shippers’ decision to file proceedings in Guinea-Bissau, contrary to the EJC, amounted to a breach of the contracts, allowing Carriers and Carriers’ Subcontractors to claim damages and to obtain a declaration of non-liability to Shippers in respect of the contracts of carriage and the disputes that had arisen in relation to them.
Case note contributed by Mahera Sarkar, Inner Temple Scholar, BA Law (Cantab), MPhil (Cantab), and International Contributor to DMC’s CaseNotes.
Background
This case concerned a dispute over contracts of carriage for 150 containers of madeira wood (“Cargo”) shipped from Guinea-Bissau to Huangpu, China. Although Shippers were not represented at the trial of the case, their views had been set out in Defence submissions that had been delivered earlier in the proceedings. The Judge took note of these.
The contracts were made in December 2018 between the Second Claimant (Maersk A/S – “Carriers”) and the Defendant (Almar-Hum – “Shippers”), with 13 bills of lading to be issued by the First Claimant (Maersk Guinea-Bissau – “Carriers’ Subcontractors”).
The contracts were governed by Maersk’s standard terms, including Clause 26, an exclusive jurisdiction clause (“EJC”) in favour of the English courts (fn.1), and Clause 4, a Himalaya Clause (“HC”) that extended the protections to the Carriers’ Subcontractors (fn.2).
Complications arose in Guinea-Bissau due to issues arising between Shippers and the local authorities, including the tax authority, a civil court and the judicial police amongst others. These ended up embroiling Carriers’ Subcontractors, when the local authorities sought to obtain the bills of lading for the Cargo for sums said to be due to them from Shippers.
Shippers had not sent approval instructions, and so the bills of lading were not finalised before the Cargo arrived in China in March 2019. This led to delays due to non-presentation of documentation, accrual of detention/demurrage, and late delivery to receivers in Huangpu.
The dispute arose when Shippers - in breach of the EJC in the contracts - initiated proceedings in Guinea-Bissau against Carriers’ Subcontractors (who had since become obliged to issue and then to hand over the bills of lading to the local authorities). This led to substantial legal costs and financial losses for Carriers, whereby Carriers’ Subcontractors later ceased operations in Guinea-Bissau in 2021, at least in part due to these events.
Issues
The issues the High Court had to decide were as follows:
(i) Whether the EJC and the HC were validly incorporated into the contracts of carriage;
(ii) Whether Carriers and Carriers’ Subcontractors were both entitled to the judgment on liability for breach of the EJC and the HC;
(iii) Whether the Guinea-Bissau judgment (obtained by Shippers in breach of the EJC and the HC against Carriers’ Subcontractors) gave rise to res judicata estoppel or waiver; and
(iv) Whether Carriers and Carriers’ Subcontractors were entitled to a declaration of non-liability in relation to the performance of the contracts of carriage.
Judgment
The High Court found in favour of Carriers and Carriers’ Subcontractors on all of above issues for the following reasons.
(i) Carriers submitted that their standard terms and conditions, including the HC and the EJC, were properly incorporated into the contracts of carriage. These contracts were formed when Shippers made bookings through Carriers’ online system. Shippers argued that the terms were not incorporated because they were not made sufficiently clear. However, the Judge found that Carriers took reasonable steps to provide notice of their standard terms during the booking process, following the decision in Ebury Partners Belgium SA/NV v Technical Touch BV (fn.3). Shippers had received a rate sheet in October 2018 that clearly referenced Carriers’ terms and conditions, including a hyperlink to the full text of those terms. Furthermore, in December 2018, when Shippers made the bookings, they had to tick a box agreeing to those terms and conditions, which were again linked to Carriers’ website. The Judge noted that this was more than sufficient notice under English law, which enables a party to be bound by terms and conditions in a document even if the party does not read them, as long as reasonable steps are taken to draw attention to those terms and conditions.
(ii) Shippers argued that both the HC and the EJC were onerous because they substantially limited their rights and should, therefore, have been explicitly “signposted”. Where a contractual term is considered unusual or particularly burdensome, the party relying on it must ensure that it has been adequately drawn to the other party’s attention. The Judge dismissed Shippers’ argument, concluding that neither the HC nor the EJC could be considered onerous or unusual. The HC, which extended Carriers’ rights and defences to their subcontractors and agents, such as Carriers’ Subcontractors, is a common feature in international shipping contracts and has, therefore, been accepted in case law for decades. Similarly, the EJC is standard in bills of lading and commercial contracts of this nature. The Judge emphasised that requiring disputes to be settled in England, a neutral and experienced shipping law jurisdiction, could not be considered to be unreasonable or overly burdensome for a company engaged in international trade.
(iii) Although Carriers’ Subcontractors were not the contracting party under the bills of lading (as Carriers were), they claimed the right to rely on both the HC and the EJC. Carriers’ Subcontractors were involved in the carriage of goods as a subcontractor of Carriers, overseeing operations in Guinea-Bissau for Carriers. The HC, specifically Clause 4, extended Carriers’ rights and defences to their subcontractors. This meant that, despite not being the contractual carrier, Carriers’ Subcontractors were entitled to the protections of the contracts and could enforce the EJC and claim damages for any breach. The Judge, referencing The Starsin (fn.4), explained that the HC created a contractual link between the carrier and its subcontractor, which entitled the subcontractor to the same protections as the carrier. The Judge also noted that the wording of the clause was suitably clear for Carriers’ Subcontractors to rely on the HC..
(iv) Shippers had commenced legal proceedings against Carriers’ Subcontractors in Guinea-Bissau, despite the EJC’s requirement in the contracts that all disputes be resolved in the English courts. The Judge followed the decision in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC (fn.5) and found that Shippers had – by filing the proceedings in Guinea-Bissau - committed a breach of their promise in the EJC, not to sue elsewhere. As a result, the Guinea-Bissau court’s judgment did not prevent Carriers or Carriers’ Subcontractors from pursuing their claims against Shippers under the doctrine of res judicata (which in some instances may prevent the same issue or issues from being retried before another court or tribunal).
Accordingly, the Judge held that Carriers and Carriers’ Subcontractors were entitled to damages and/or an indemnity for the consequences of Shippers’ breach of the EJC and the HC and were also entitled to the declarations of non-liability sought in relation to the performance of the contracts of carriage, with damages and/or the amount of the indemnity to be assessed later
Comment
This case provides further clarity on determining whether terms have been incorporated into a contract. The legal test for whether a term may be considered to be “onerous” or “unusual” has often given rise to practical difficulties and contrasting judicial opinions. Although Shippers were right to note that the HC and the EJC significantly limited their rights and could, therefore, be viewed, in some sense, to be onerous, the High Court found that Carriers had clearly complied with their duty to give notice throughout the booking process.
This case also confirms that Himalaya clauses may be applied to exclusive jurisdiction clauses, binding both parties to a nominated forum, where – as in this case – the HC expressly referred to the EJC.
Footnote 1: The Exclusive Jurisdiction Clause (N.B. “Merchant” included Shippers and “Carrier” included Carriers) stated:-
“26. Law and Jurisdiction
…. In all other cases, this bill of lading shall be governed by and construed in accordance with English law and all disputes arising hereunder shall be determined by the English High Court of Justice in London to the exclusion of the jurisdiction of the courts of another country…
Footnote 2: The Himalaya Clause (N.B. “Subcontractor” included Carriers’ Subcontractors) stated:-
“4. Sub Contracting
4.1 The Carrier shall be entitled to sub contract on any terms whatsoever the whole or any part of the Carriage.
4.2 It is hereby expressly agreed that:
(a) No Subcontractor, agent or servant shall in any circumstances whatsoever be under any liability whatsoever to the Merchant for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on the Subcontractor, agent or servant's part while acting in the course of or in connection with the Goods or the Carriage of the Goods.
(b)
(i) The Merchant undertakes that no claim or allegation whether arising in contract, bailment, tort or otherwise shall be made against any servant, agent, or Subcontractor of the Carrier which imposes or attempts to impose upon any of them or any vessel owned or chartered by any of them any liability whatsoever in connection with the Goods or the Carriage of the Goods whether or not arising out of negligence on the part of such Person. The Subcontractor, agent or servant shall also be entitled to enforce the foregoing covenant against the Merchant; and
(ii) if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all consequences thereof.
(c) Without prejudice to the generality of the foregoing provisions of this clause, every exemption, limitation, condition and liberty contained herein (other than Art III rule 8 of the Hague Rules) and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled hereunder including the right to enforce any jurisdiction provision contained herein (clause 26) shall also be available and shall extend to every such Subcontractor, agent or servant, who shall be entitled to enforce the same against the Merchant…
4.4 The Merchant further undertakes that no claim or allegation in respect of the Goods shall be made against the Carrier by any Person other than in accordance with these Terms and Conditions which imposes or attempts to impose upon the Carrier any liability whatsoever in connection with the Goods or the Carriage of the Goods, whether or not arising out of negligence on the part of the Carrier, and if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all consequences thereof”
Footnote 3: [2022] EWHC 2027 (Comm), at [6]-[8]
Footnote 4: [2003] UKHL 12, [2024] 1 AC 715
Footnote 5: [2013] UKSC 35, at [1], [21] & [23]
