FEDERAL COURT OF AUSTRALIA Alkimos Shipping Company v Hind Lever Chemicals Corporation Limited [2004] FCA 969 ADMIRALTY AND MARITIME JURISDICTION – leave to serve outside Australia – anti-suit injunction – sought on the basis of incorporation of charterparty Brisbane arbitration clause into Congenbill of lading Federal Court Rule Order 8 rule 1(ab) Alkimos Shipping Company v Hind Lever Chemicals Corporation Limited N 1150 of 2004 ALLSOP J 23 JULY 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1150 OF 2004 BETWEEN: ALKIMOS SHIPPING COMPANY PLAINTIFF AND: HIND LEVER CHEMICALS CORPORATION LIMITED DEFENDANT JUDGE: ALLSOP J DATE OF ORDER: 23 JULY 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The matter be stood over to Thursday, 29 July 2004 at 9.30 am for the making of the terms of the final orders pursuant to Division 3 of Order 8 of the Federal Court Rules. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1150 OF 2004 BETWEEN: ALKIMOS SHIPPING COMPANY PLAINTIFF AND: HIND LEVER CHEMICALS CORPORATION LIMITED DEFENDANT JUDGE: ALLSOP J DATE: 23 JULY 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this matter Alkimos Shipping Corporation seeks leave to serve outside the jurisdiction a company incorporated in India known as Hind Level Chemicals Limited. The matter is brought in the jurisdiction of this Court as one falling within section 4(3)(f) of the Admiralty Act 1988 (Cth), which provides as follows: (f) a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charterparty or otherwise; 2 Briefly put, Alkimos Shipping Corporation, to which I will refer as the plaintiff, seeks an anti-suit injunction as the interlocutory and final relief in the application against the defendant, Hind Lever Chemicals Limited, to which I will refer as the defendant. The matter arises out of a troubled shipment of fertiliser, which was loaded on board the MV Alkimos in Tampa in the early part of 2002. 3 The vessel carried fertiliser for two cargo interests known as Incitec and Sumitomo. These two companies are plaintiffs in cargo claims against Alkimos Shipping Corporation in this Court. The problem arose, it is said, because of the apparent presence of grain in and about the hold in which the fertiliser was carried on the vessel. Grain, without specific permission of the quarantine authorities is a strictly prohibited import into this country and fertiliser with any unauthorised grain in the hold will be rejected. 4 After the vessel was prevented from unloading at the Port of Newcastle, she sailed to Gladstone where she anchored off the coast awaiting further directions. The cargo on board was sold to an intermediary trading company and then partly on-sold to the defendant. 5 The cargo was then to be carried both to Bangladesh and to India for delivery to Bangladeshi and Indian consignees, including the defendant, who had purchased the cargo indirectly from Incitec and from Sumitomo. To effect the carriage and to govern the carriage of the defendant's cargo, a bill of lading was issued on behalf of the owner, Alkimos Shipping Corporation, in the form of a "Congenbill", 1994 form. 6 The Congenbill form, intended as it is to operate with a charterparty, contained in clause 1 of the short form conditions of carriage, the following clause: All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated. 7 The charterparty was not specifically identified by date overleaf, notwithstanding what was intended by clause 1. In the box at the bottom of the face of the bill, the statement is simply made "Freight payable as per CHARTER PARTY date…….". 8 Given the express reference to a charterparty in clause 1, and the use of a bill specifically understood in its commercial context to be used with charterparties, very often, though not necessarily exclusively a voyage charterparty, there is a reasonable case to be made, sufficient for the purposes of an application under Order 8 of the Federal Court Rules, that the arbitration clause contained in the voyage charter here is incorporated. 9 It is necessary to understand a little about the chartering background. The ship was chartered to Hyundai Merchant Marine Co Ltd, by a time charter on New York Produce Exchange Form 1946 version, dated 10 January 2002 for a minimum of 90 days to about 5 months, with the word "about" identified as meaning plus or minus 20 days charterer's option. On or about 7 January 2002, Hyundai Merchant Marine Co Ltd entered into the voyage charter with Incitec for the carriage of part of the cargo on board the vessel. 10 The other part of the cargo on board the vessel, the Sumitomo cargo, was not carried under the voyage charter but was carried pursuant to bills issued by Alkimos Shipping Corporation. The cargo carried under the voyage charter between Hyundai and Incitec was also the subject of owners' bills issued by Alkimos Shipping Corporation. 11 Clause 10 of the voyage charter provides amongst other things that: The Master or his Agents is or are to sign Bills of Lading at any freight required by Incitec, not less than the chartered rate. As I indicated, owner's bills were issued on the voyage from Tampa to Newcastle. 12 The parties to the voyage charter executed an addendum to deal with the carriage of the cargo from Australian ports to Asian ports. That addendum does not relevantly affect clause 10. 13 On 14 May 2002, as I have said, an owner's bill was issued on behalf of the plaintiff to the consignee Hind Lever Chemicals Limited which was also named as the notify party. The bill is identified as "not negotiable". That does not become relevant because on the material before me it does not appear that the defendant sought to transfer the bill. Indeed, in the Indian proceedings it sues on the bill. 14 The arbitration clause in the voyage charter is relevantly in the following terms: a) Any dispute arising out of or in relation to this Contract (including any Bill of Lading issued pursuant to Clause 27) shall be referred to arbitration. b) The place of arbitration shall be: i. where the dispute arises wholly or substantially from events occurring prior to or during the loading of the vessel, in New York; ii. in any other case, in Brisbane. 15 The vessel was detained in Chittagong for some time. 16 The consignee defendant arrested the vessel in Bangladesh for a claim based on delay. A p & i club letter of security was put up on behalf of the vessel to secure her release. It can be seen that the dispute does not arise wholly or substantially or, indeed, at all from events occurring prior to the loading of the vessel in Tampa and so the arbitration clause operates to identify the location of the arbitration in Brisbane, not in New York. 17 Clause 35 of the voyage charter is entitled "Clause Paramount and Applicable Law" and is in the following terms: The Hague Rules as modified by the Carriage of Goods by Sea Act 1991 (Australia) as amended shall apply to this contract as if it were a Bill of Lading, and to any Bill of Lading issued under this contract. Subject to the foregoing, this contract shall be governed by and construed under the law of England. 18 Though this itself would not arguably make Australian law the governing law, section 11(1) of the Carriage of Goods by Sea Act 1991 (Cth) is in the following terms: (1) All parties to: (a) a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia; or (b) a non-negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii), relating to such a carriage of goods; are taken to have intended to contract according to the laws in force at the place of shipment. 19 The place of shipment here is arguably, and I would have thought strongly arguably, Newcastle in the light of the context of the facts and the issue of a fresh bill to a new consignee after the rejection of the shipment cargo by the authorities in Newcastle. 20 Thus, there is an arguable case that there is a contract made in Australia by the issue of the bill, which incorporated the arbitration clause as a term of the bill. If it is incorporated the plaintiff in these proceedings is seeking to enforce that provision by restraining the defendant from proceeding with the suit in Bangladesh. 21 There is a reasonably arguable case for the application of Order 8 rule 1 (ab) (i) and (ii). 22 Also given s 11(1) of the Carriage of Goods by Sea Act 1991 (Cth), Order 8 rule 1 (ab) (vi) also applies. 23 In these circumstances, I am satisfied that a case has been made out for satisfaction of Order 8. 24 There will be issues arising as to whether there has been a waiver of the arbitration rights given the lodgement of security in Bangladesh. Secondly, there may be debate at a final level about whether or not the incorporation in the Congenbill is sufficiently clear given that the charterparty is not dated. There may be other issues arising. 25 I am satisfied that, if it be the case that it is made out that there is a contract which incorporates a Brisbane arbitration clause, a sufficiently clear case on existing authorities may well exist for the issue of an anti-suit injunction, at least guided by English authority. I note, in that regard, an application for a stay has not been made in the Bangladesh courts. That is a matter which has been brought to my attention but which is a matter which will go ultimately to the exercise of discretion and relief if the plaintiff is able to satisfy me or a Judge of the Court that there has been incorporation of the relevant arbitration clause and that there has been no waiver. 26 I am satisfied that there is a sufficient prima facie case for the purposes of Order 8 or, alternatively, a sufficiently strong case for the exercise of discretion under Order 8 based on, first, Order 8 rule 1 (ab) (i) and (iv), that is that there was an incorporation of the arbitration clause in the voyage charter and in the circumstances that may be said to have been breached. 27 Certain matters need attending to in relation to the formalities of service under Division 3 of Order 8, that is, service in non-Convention countries. I propose to make an order under Order 8. I will have the draft orders formulated by counsel and I will stand the matter over to 9.30 am on Thursday, 29 July 2004. 28 I will make the order for service subject to compliance with Division 3 and I will order that the application, affidavit including its exhibit, notice of motion and the terms of today's extempore judgment be served on the parties. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 2 August 2004 Counsel for the Plaintiff: Dr A S Bell Solicitor for the Plaintiff : Middletons Lawyers Date of Hearing: 23 July 2004 Date of Judgment: 23 July 2004