17/04/2019

Brandt v Liverpool contract does not give the English Court jurisdiction

Pan Ocean Co. Ltd v. China-Base Group Co. Ltd [2019] EWHC 982 (Comm)

Shipping lawyers could have been forgiven for thinking that the Brandt v. Liverpool contract – an implied contract between shipowner and cargo receiver on the terms of a bill of lading – was all but extinct. The repeal of the Bills of Lading Act 1855 and its replacement by the Carriage of Goods by Sea Act 1992 has removed the need for a Brandt v. Liverpool contract in most circumstances. However, in the recent case of Pan Ocean Co. Ltd v. China-Base Group Co. Ltd [2019] EWHC 982 (Comm) the novel question arose whether an English court jurisdiction clause in a Brandt v. Liverpool contract could found jurisdiction under Regulation 1215/2015 (the “Recast Brussels Regulation”).

The defendants were the receivers of a cargo of oil which they said had been impounded by the Chinese authorities on the grounds of customs irregularities. The claimants were the demise charterers of the vessel which had carried the oil to China. The defendants brought a claim in Singapore against the claimants for damages for alleged misrepresentations in the cargo documents issued by the claimants. The claimants issued proceedings in the English court seeking an anti-suit injunction to prevent the defendants from proceeding with their claim in Singapore.

The defendants neither presented any bills of lading nor gave any letter of indemnity to the claimants. The defendants were not said to be the holders of the bills of lading issued by the claimants. However, the claimants contended that an implied contract (containing an English jurisdiction agreement) had come into existence on the terms of those bills when the defendants or their agents took delivery of the cargo from the claimants.

The claimants asserted that the English court had jurisdiction over their claim for an anti-suit injunction under Article 25(1) of the Recast Brussels Regulation. The defendants challenged the jurisdiction of the English court on the grounds that the alleged implied contract did not satisfy the formalities requirements in Article 25(1) (specifically, “The agreement conferring jurisdiction shall be … (a) in writing or evidenced in writing”).

In a thorough review of the EU jurisprudence, Christopher Hancock QC, sitting as a Judge of the Commercial Court, held that the requirement of writing in Article 25(1)(a) was not satisfied by the fact that the jurisdiction clause itself was in writing: consent to the clause itself must be in writing, or evidenced (or confirmed) in writing. That requirement was not satisfied by the alleged Brandt v. Liverpool contract, which was a contract to be implied from the conduct of the parties at the discharge port. In light of that finding, the court did not need to, and therefore did not, decide whether any such contract was to be implied on the facts of the case.

The Judge also considered whether an interim anti-suit injunction would have been granted, if the jurisdictional challenge had failed. He concluded that the application for an injunction had neither been sought promptly, nor before the proceedings were too far advanced (over 9 months having passed since the warrant of arrest in Singapore was served, with several hearings in Singapore during that period).  Applying the approach laid down in Ecobank v. Tanoh [2016] 1 WLR 2231, if there had been a binding English jurisdiction agreement, he would have refused to grant the anti-suit injunction.

The successful defendants were represented by Michael Collett QC and Charlotte Tan, instructed by Shoreside Law (Russell Badrick, Peter Mavroghenis and Jack Hatcher) and Rajah & Tann Singapore LLP.