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Hissan Trading Co Ltd v Orkin Shipping Corporation (A Body Corporate)

Judgment Cited authorities 10 Cited in Precedent Map Related
Vincent
Judgment Date08 September 1992
Year1992
Judgement NumberHCCL39/1992
Subject MatterCommercial Action
CourtHigh Court (Hong Kong)
HCCL000039/1992 HISSAN TRADING CO LTD v. ORKIN SHIPPING CORPORATION (A BODY CORPORATE)

HCCL000039/1992

1992 No. CL 39

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

______________

BETWEEN

HISSAN TRADING CO. LTD.

Plaintiff
AND
ORKIN SHIPPING CORPORATION Defendant
(a body corporate)

______________

Coram: The Hon. Mr. Justice Mayo in Chambers

Dates of Hearing: 7 and 8 September 1992

Date of Delivery of Judgment: 8 September 1992 (Open Court)

_________________

J U D G M E N T

_________________

1. As questions of interest have arisen on these applications I am with the agreement of counsel delivering this judgment in Open Court.

2. 2 summonses lie before me for determination. They are both issued by the Defendant. The first is for a stay of the proceedings and the second is to set aside the Mareva injunction issued by Leonard J. on the 11th April 1992.

3. The claim is a cargo claim. The claim is made under a Bill of Lading for carriage of a cargo of gypsum from Thailand to Japan. The vessel carrying the cargo sank in March 1992 and the cargo was lost.

4. The application for the stay is made first on the ground that there is an agreement between the parties that any disputes which arise will be referred to arbitration and that the arbitration should be conducted in Japan. Should the Defendants be unable to succeed on this ground an alternative argument is mounted that there is an exclusive jurisdiction clause or alternatively it is argued that the doctrine of Forum non conveniens is applicable.

5. I will deal first with the question of arbitration. At the time in question there were 3 charterparties in existence, a Head Time Charterparty and 2 Voyage Charterparties. There was a provision in all of these charterparties that disputes should be referred to Arbitration in Japan. Also the Bill of Lading is governed by Japanese law. There is an endorsement on its face which reads "All terms, conditions and exceptions including Arbitration Clause of relevant Charterparty dated 6th February 1990 (sic) at Tokyo are herein fully incorporated".

6. There is one matter which I think I can dispose of very shortly. The Plaintiffs contended that this indorsement was defective by virtue of the fact that there is no Charterparty of the 6th February 1990. There is, however, a charterparty dated the 6th February 1992. It is quite clear from affidavits sworn on the Plaintiff's behalf that during the course of this litigation they accept that the charterparty being referred to is the charterparty of the 6th February 1992. I have no doubt that I am able to modify the date on the Bill of Lading and treat it as being the intention of the parties that it was the said charterparty which was being adopted. The authority for this being the Rena K 1979 1QB 377.

7. The next point raised by the Plaintiffs is much more difficult.

8. Article 7 of the Unicitral Model Law on International Commercial Arbitration is couched in these terms:

"Article 7. Definition and form of arbitration agreement

(1) "Arbitration agreement" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract."

9. The Plaintiffs argue that the definition in Article 7(2) does not extend to the instant Arbitration. The reason for this being that there is no agreement in writing signed by both parties. As I have already indicated the Bill of Laing adopted the arbitration clause in the manner I have described.

10. The authors of Hong Kong Arbitration Cases and Materials by Kaplan, Spruce and Cheng - Butterworth 1991 anticipate the difficulties which may arise in connection with Article 7(2) at p.187.

"(2) The arbitration agreement should be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference is a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract."

11. Mr. Ma submitted that the correct approach to interpreting Article 7(2) is to take the first sentence in the Article at its face value - namely that there is a requirement that the Arbitration Agreement must be in writing. The remainder of the Article should be treated as providing examples of the types of situation which would often be encountered. There was nothing in the Article to suggest that the examples cited were exhaustive or that the definition was limited to such agreements.

12. It was legitimate to consider 3 background documents when attempting to interpret the model law. These were

(1) The Report of the Secretary General dated the 25th March 1985 entitled "Analytical Commentary on Draft text on International Commercial Arbitration",

(2) The Report of Unicitral on the work of its 18th session, and

(3) The Report of the Law Reform Commission of Hong Kong on the adoption of the Model Law.

13. I regret that it is my impression that none of the material contained in any of these reports could be said to be conclusive one way or the other.

14. It is, however, possible to derive some assistance from "A Guide to Unicitral Model Law" by Holtzmaan and Neuhaus. Kluwer Law and Taxation Publishers Deventer Boston. It is evident from this work that a considerable amount of thought and discussions took place concerning the construction of Article 7(2) and more particularly whether the scope of the Article could be expanded so as to definitely embrace Bills of Lading incorporating arbitrations where one of the parties had not signed the Bill of Lading. It is apparent from the commentary that it was considered impossible to obtain unanimity of all interested countries if the definition was extended to include this.

15. Mr. Ma submitted that even if I was disposed to adopt a narrow view of Article 7(2) there was sufficient written evidence available to comply with the specific requirements referred to. He placed reliance upon the correspondence which had been exchanged between the parties solicitors prior to the commencement of the litigation. Having considered the relevant correspondence I do not think that this argument has any prospect of success. The whole tenor of the correspondence conducted by Clyde & Co for the Plaintiffs is inconsistent with a submission along these lines. Indeed at the conclusion of the correspondence Clyde & Co specifically deny the existence of such evidence. Even if there was merit in this argument I am of the view that the drafting of Article 7(2) precludes the adoption of memoranda in writing being relied upon which post date the Agreement to arbitrate.

16. Although the situation may be highly unsatisfactory I am satisfied that in the circumstances of this case that an application under Article 8 of the Unicitral Model Law has to be rejected on the ground of non compliance with the requirements of Article 7(2)

17. There are other reasons why I am unable to order a stay pending Arbitration.

18. Mr. Fok for the Plaintiffs argued most forcefully that there was no agreement to arbitrate made between the parties to this litigation and that the scope for manipulation of the wording of the relevant documentation to imply such an agreement between the parties was severely circumscribed.

19. There is a commentary in Article 34 of the 19th Edition of Scrutton on Charterparties on the considerations which need to be borne in mind when incorporating in Bills of Lading the terms of a charterparty.

"Article 34 - Incorporation of Charter in Bill of Lading - General

It is very common practice to inlude in bills of lading issued in respect of goods carried on a chartered ship, a provision purporting to incorporate into the bills some or all of the terms of the charterparty. There are numerous decisions on the effect of such provisions. It appears that in order to ascertain which, if any, terms of the charter are incorporated into the bills, an enquiry in three stages must be carried out

(1) The incorporating clause must be construed in order to see whether it is wide enough to bring about a prima facie incorporation of the relevant term. General words of incorporation will be effective to incorporate only those terms of the charterparty which relate to the shipment, carriage or discharge of the cargo or the payment of freight. Which of those terms are incorporated into the bill depends on the width of the incorporating provision. Where specific words of incorporation are used, either in the charter or in the bill, they are effective to bring about a prima facie incorporation even if the term in question does not...

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