Supreme Court on relationship between carrier and holder of bill of lading - International Law Office

International Law Office

Shipping & Transport - Belgium

Supreme Court on relationship between carrier and holder of bill of lading

June 08 2011

Background
Cases
Comment


The Supreme Court has recently considered the relationship between a carrier and a holder of a bill of lading. Two legal questions were asked. First, is the holder of a bill of lading bound by a jurisdiction clause contained therein? Second, is the holder bound by a choice-of-law clause?

Background

In Belgium, the doctrine of privity has caused difficulties in determining the rights and duties that apply between carriers and holders in respect of bills of lading. The United Kingdom resolved most of these problems with the Carriage of Goods by Sea Act 1992, but Belgium has no such legislation. Doctrine and case law had previously provided differing opinions, but the Supreme Court decisions in MS Parkgracht and MS MSC Dymphna have clarified the issue.(1)

Cases

The Brussels Convention applied in MS Parkgracht, as several of the defendants were domiciled in a contracting state. Consequently, those defendants argued that they had to be sued in the courts of that contracting state in view of the jurisdiction clause in the bill of lading. A Belgian court had been seized with the claim because the goods had been shipped from a Belgian port; therefore, the court had to consider its own jurisdiction.

The court considered the consequences of a jurisdiction clause in a bill of lading in relation to a third-party holder. Article 17(1)(c) of the convention states that:

"If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either… in international trade or commerce, in a form which accords with practices in that trade or commerce of which the parties are or ought to have been aware."

The Supreme Court concluded that this provision applies only to the original parties to the agreement containing the exclusive jurisdiction clause, and that the provision determines the permitted forms of such clauses. In MS MSC Dymphna the court held that it is incorrect to consider that a third-party holder is one of the contracting parties or the successor of one of them.

The defendants' argument in MS MSC Dymphna that a jurisdiction clause should be considered 'a trade or commercial practice' for the purposes of Article 17(1)(c) was dismissed on the same grounds - namely, that the third-party holder cannot be considered a contracting parties or a successor, but derives its right to claim against the sea carrier independently and directly from the bill of lading.

The bill of lading in MS Parkgracht contained a choice-of-law clause. It was argued that in applying the chosen (non-Belgian) law, the court would have to determine whether the third-party holder was a successor to the shipper's rights and obligations. In MS Parkgracht the court did not directly answer the question of whether such a choice-of-law clause applies to a holder of a bill of lading. Instead, it ruled that Article 91 of the Maritime Code is mandatory, irrespective of a choice-of-law clause. Article 91 incorporates the Hague-Visby Rules. It must be applied in Belgium in any arrangement that involves:

  • a negotiable bill of lading;
  • transport of goods;
  • a ship; and
  • transport to or from a Belgian port.

However, in MS MSC Dymphna the court held that it is incorrect to consider a third-party holder of a bill of lading to be a contracting party or a successor.

Comment

In MS Parkgracht the court did not explicitly identify the original parties to a jurisdiction clause, but in MS MSC Dymphna it excluded the third-party holder. In MS Parkgracht it held that a Belgian court, when seized, must consider the relationship between the parties involved in a claim when judging a jurisdiction clause. A holder of a bill of lading which is not a party to the charterparty or is not involved in the negotiation of the bill is not an original party for these purposes. In MS MSC Dymphna the court stated that a third-party holder of a bill of lading cannot be considered the legal successor of the shipper; nor is it one of the contracting parties.

For further information on this topic please contact Dirk Noels at Kegels & Co by telephone (+32 3 257 1771), fax (+32 3 257 1474) or email (dirk.noels@kegels-co.be).

Endnotes

(1) Supreme Court decisions of January 7 2011.


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