Owners chartered their vessel by way of a charter containing a London Arbitration clause, for a carriage from Turkey to Liberia. The vessel was sub-chartered, and three bills of lading issued to cover the cargo, each naming the same consignee and incorporating the charter terms.
The consignee claimed for cargo damage and commenced proceedings against Owners in Liberia, which Owners alleged was in breach of the arbitration agreement. Owners commenced separate arbitration proceedings against Charterers (under the charter), and against the consignees and the consignee’s parent company (under the bills of lading) for that alleged breach.
The proceedings against Charterers were the subject of London Arbitration 2/14. Owners alleged close connections between Charterers, Sub-Charterers and the consignee. They argued that Charterers and Sub-Charterers had committed a tortious interference in “positively encouraging” the consignee’s alleged breach of the arbitration agreement.
Charterers responded that the arbitration agreement in question was contained in the bill of lading contracts, and that the alleged breach was committed by a third party. They could not be held liable for failing to prevent a breach of contractual obligations by a third party. Further, any “encouragement” to breach the bill of lading contract could not give rise to a dispute under the charter, which was an entirely separate contract. As such, Charterers argued, the Tribunal had no jurisdiction to hear Owners’ claim.
The Tribunal agreed with Charterers that it did not have jurisdiction. Even if Owners proved the alleged tort, it would not amount to a dispute “arising out of” the charter, and so would not fall within the scope of the charter arbitration clause.
The proceedings against the consignee’s parent company were the subject of London Arbitration 3/14. Owners asserted that the parent company was a party to the contract evidenced by the bills of lading, and so was a party to the arbitration agreement. They alleged that the parent company had wrongfully induced or procured the consignee’s breach of the arbitration agreement.
The Tribunal held that it did not have jurisdiction over Owners’ claims against the parent company. The latter had never been a party to the bills of lading, which were non-negotiable and named only the shipper and consignee. The consignee was a separate legal entity, and the parent company could not be bound by any agreement entered into by the consignee to which the parent was not a party.
These decisions are further illustrations of the importance of taking care to ensure that proceedings are commenced against the correct party under the correct contract, particularly in a situation where there are multiple contracts and several of the parties involved are connected. Where parties seek to arbitrate a dispute under a standard charterparty London Arbitration clause, the wording of the clause must be considered carefully: if the clause refers to disputes “arising out of” the charter, there must be a connection to the performance of the charter in order for the dispute to be arbitrable under the charter terms.