#5127 - The Komninos - Conflict of Laws BCL

The Komninos

Facts

This appeal concerns a cargo of steel coils which belonged to the plaintiffs in the action ("the cargo-owners"). It was shipped aboard the defendant shipowners' vessel Komninos S at Thessaloniki in March, 1987 and carried to Ravenna under contracts of carriage contained in or evidenced by two bills of lading. The vessel reached Ravenna on Mar. 18 and discharge was completed on the 23rd. After discharge the cargo was found to have been seriously damaged by water.

The parties were unable to settle their differences and on June 16, 1988, just before expiry of the three-month extension, the cargo-owners' solicitors issued a writ in the High Court, claiming damages in breach of contract and duty, bailment and negligence. Application was in due course made and granted to serve the writ on the shipowners in Cyprus, where the shipowners are incorporated, on the grounds that the cargo-owners were claiming damages for breach of a contract which contained a term to the effect that the High Court should have jurisdiction to hear and determine any action in respect of the contract.

Ship-owner’s Claim: they pleaded that the proper law of the contracts of carriage was Greek and that under Greek law the exemption clauses on which the shipowners relied were void. Alternatively, the cargo-owners pleaded that the proper law of the contracts of carriage was English, and so included the Hague-Visby Rules, art. III, r. 8 of which rendered void the exemption clauses on which the shipowners relied.

The main legal issues before the Judge and before us concerned determination of the proper law of the contracts of carriage and the consequences of that determination.

Clause 24 of the Bill of Lading:

In case any controversies arise with respect to the construction of the foregoing terms the English text alone to be conclusive. All dispute[s] to be referred to British Courts.

Holding

Reference to “British courts” – English courts?

Whatever the constitutional niceties, it seems to me altogether far-fetched, in truth a lawyer's point, to suppose that the parties can have meant or intended to embrace the Courts of British dependencies overseas. I intend no disrespect at all to the highly distinguished Judges who sit in Scotland and Northern Ireland when I say, further, that it is scarcely less far-fetched to suppose that the parties can have meant or intended to embrace those Courts. It is widely known that the Commercial Court and the Admiralty Court, both parts of the High Court, deal on a daily basis with a wide range of international maritime business, much if not most of it referred by agreement to English law or jurisdiction. No doubt for historical and geographical reasons, no other Court in the United Kingdom enjoys that reputation or dispatches that business. It would, in this class of contract between foreigners, be as unusual to find an express choice of a Scots or Northern Irish forum as it would to find agreement for general average adjustment in Edinburgh or Belfast rather than (as expressly agreed here) London.

Did the Reference to British Courts also mean that the parties chose English law?

In seeking, under sub-r. 2, to infer the intentions of the parties from the terms of the contract set in its factual matrix, I would (as the authority just examined indicates one should) infer that the parties intended their contracts to be governed by the law of the forum where disputes were to be tried unless there were strong indications that they did not intend or may not have intended this result. I find no indication here which begins to displace the prima facie inference. If cl. 24 did not exist, it would (I think) be impossible to draw any inference as to the parties' intentions. The sub-r. 3 test would then have to be applied, and in the absence of any substantial connection with the English system of law, I would accept that the Greek system of law is that with which the transaction had its closest and most real connection. As it is, however, cl. 24 did exist, and sub-rule 2 leads me to the conclusion that these parties intended their contracts to be governed by English law.

Incorporation of the Hauge-Visby Rules – Mandatory Rules

If, contrary to his submission, English law was the proper law of these contracts, Mr. Collins argued that English law included the Hague-Visby Rules and accordingly invalidated the exemption clauses on which the shipowners relied.

The Hague-Visby Rules were given the force of law by the Carriage of Goods by Sea Act, 1971.

By virtue of the Act and the Rules themselves the Rules apply (1):

…in relation to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in the United Kingdom [s. 1(3) of the Act].

(2) without prejudice to art. X(c) of the Rules -

…in relation to any...