DMC/Arbn/2022/04 '''England''' '''ENEMALTA PLC v. THE STANDARD CLUB ASIA LIMITED [2021] EWHC 1215 (COMM)''' '''English Commercial Court (QBD): Judge Pelling QC: 26 April 2021''' Judgment available on BAILII @ https[http://www.bailiionlinedmc.co.org/ew/cases/EWHC/Comm/2021uk/551.html Mr. P MacDonald Eggers QC, instructed by DAC Beachcroft, for the Claimant Mr. N Jacobs QC, instructed by HFW LLP, for the Defendant '''WHETHER THE HIGH COURT HAD JURISDICTION TO DECIDE THE VALIDITY OF A LETTER OF UNDERTAKING ISSUED BY A P&I CLUB - CONTAINING AN ENGLISH HIGH COURT EXCLUSIVE JURISDICTION CLAUSE - IN RESPECT OF THEIR OWNER MEMBERS’ ALLEGED LIABLITY FOR DAMAGE TO A SUBMARINE CABLE, IN CIRCUMSTANCES WHERE THE OWNERS HAD INSTITUTED PROCEEDINGS IN SINGAPORE SEEKING TO ESTABLISH A LIMITATION FUND THERE IN RESPECT OF THE INCIDENT UNDER THE LIMITATION OF LIABILITY FOR MARITIME CLAIMS CONVENTION OF 1976''' '''Summary''' The High Court held that it had jurisdiction over the validity of the Letter of Undertaking (“LOU”) which contained an agreement to subject disputes to the exclusive jurisdiction of the English High Court, in circumstances where any proceedings established in Singapore in accordance with the 1976 Convention would most likely be unable to impact the LOU, as it had been issued in a state (the UK) which was no longer a state party to that Convention by reason of its adoption of the 1996 Protocol to that Convention. . Case note contributed by Julia Zizhen Zhu, Solicitor of England & Wales, Solicitor of Hong Kong, International Contributor to DMC’s Case Notes '''Background''' On 23 December 2019 there was a nationwide blackout in Malta. The Claimant believed that the power outage was caused by m.v. “Di Matteo” (the “Vessel”) damaging the Claimant’s high-voltage connector cable in the Sicily Channel (the “Incident”). The Vessel was entered with the Defendant P&I Club (the Club). On 3 January 2020, the Club provided security to the Claimant by way of a Letter of Undertaking (the “LOU”) in the amount equivalent to the maximum tonnage-related limitation figure prescribed under the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims 1976 (the “1996 Protocol”) but the amount of the LOU was inclusive of interest and costs. The Claimant had commenced proceedings in Malta seeking damages from Owners in respect of the Incident. Meanwhile, the Vessel’s owners had commenced proceedings in Singapore where the owners were established. The Owners sought in the Singaporean proceedings to establish a limitation fund for the purposes of limiting their liability in respect of the Incident, and requested that, upon the establishment of the said fund, any existing security given by or on behalf of owners should be released forthwith in accordance with Article 13.2 of the Convention. To the Claimant’s knowledge, the only such security in existence was the LOU. The LOU was expressly subject to English law and to the exclusive jurisdiction of the English High Court. The Claimant sought from the English Court a declaration about the status of the LOU, and the Club contested the jurisdiction of English High Court on the basis that the Singaporean Court had the sole and exclusive jurisdiction to make an order under Article 13.2 of the Limitation Convention. Article 13.2 of the Limitation Convention includes the following wording: “After a limitation fund has been constituted in accordance with Article 11, any ship or other property, belonging to a person on behalf of whom the fund has been constituted, which has been arrested or attached within the jurisdiction of a State Party for a claim which may be raised against the fund, or any security given, may be released by order of the Court or other competent authority of such State. “ '''Judgment''' The High Court reviewed the previous English High Court case ICL Shipping Ltd v. Chin Tai Steel Enterprise Co Ltd (The “ICL Vikraman”) [2003] EWHC 2320 Comm],example. com link title]- ICL Shipping v. Chin Tai Steel (onlinedmc.co.uk), in which a P&I Club provided a letter of undertaking to cargo interests in Singapore to obtain the release of a vessel arrested there. That letter of undertaking also included a non-exclusive English jurisdiction agreement. At the relevant time, the UK was a state party to the 1976 Convention but Singapore was not. The vessel’s owner established a limitation fund in England in accordance with the 1976 Convention and applied for the release of the letter of undertaking, pursuant to Article 13.2 of the 1976 Convention. Such application was dismissed.
The Court held that the purpose of Aricle 13.2 was to protect a shipowner, who had established a limitation fund in respect of a claim in any state that was a state party to the 1976 Convention, from enforcement of that claim against any other property or security that was subject to the jurisdiction of the same or another state party. Where the owner was entitled to establish the limitation fund in England, the effect of article 13.2 was that security located in Singapore did not fall within that article because Singapore was not at that time a state party to the 1976 Convention, with the result that the security would not be, or could not be, released.
