(To be published soon at the special issue of Diritto del Commercio Internazionale in Honour of
Prof. Sergio M. Carbone, 2012)
“Validity and Effects of the Incorporation by
Reference of Arbitration Agreements in International
Maritime Arbitration: Current Situation and Future
Trends”*
Dr. Carlos Esplugues Mota
LLM (Harvard), MSc (Edinburgh)
Professor of Private International Law
Department of International Law “Adolfo Miaja de la Muela”
Faculty of Law
University of Valencia (Spain)
Arbitrator
Summary∗∗:
I. Introduction.
II. The arbitration agreement in international maritime arbitration:
1.
The role and significance of the arbitration agreement.
2.
Formal requirements.
III. The case of the incorporation by reference of the arbitration agreement embodied in a third contract in International Maritime Arbitration.
A. Introduction.
B. The issue of the incorporation by reference into the bill of lading of the charter party’s arbitration agreement.
a) England.
b) United States of America.
c) France.
d) Other countries.
IV. Final remarks.
*
Article prepared under the auspices of the Spanish Ministry of Education Research Project: I+D
DER2010-17126: “La experiencia del arbitraje y la mediación en los sistemas anglosajones y asiáticos y
su incorporación en el nuevo modelo de justicia española del Siglo XXI” and of the Generalitat
Valenciana, PROMETEO/2010/095 for research groups of excelence on “Mediación y arbitraje: piezas
esenciales en el modelo de justicia del Siglo XXI”.
∗∗ Major abbreviations used: AA: Arbitration Act; ADR: Alternative Dispute Resolution; art.: article;
ATS: Order of the Supreme Court; CAC: Commercial Arbitration Code; C.App.: Cour d’appel; C.Cass.:
Cour de cassation; CJ: Code Judiciaire; CPC: Civil Procedure Code; DCPC: Dutch Civil Procedure
Code; FAA: Federal Arbitration Act; LFDIP: Loi fédérale sur le droit international privé; P: Paragraph; S:
Section; S.Aud.Prov.: Judgment of the Provincial Court; S.Aud.Territ.: Judgment of the Territorial Court;
STS: Judgment of the Supreme Court; ZPO: Zivilprozessordnung
1
Electronic copy available at: http://ssrn.com/abstract=2063117
“Cada año la bíspera de Navidad los buenos hombres, navegantes y patrones,
marineros o partida de aquellos Allegan consejo en la yglesia de Santa Tecla, de la
ciudad de Valencia, y aquí por elección y no por suertes. Todos en uno concordes, o la
mayor partida, eligen dos buenos hombres de la arte de la mar en cónsules, y en juez
eligen otro de la mesma arte de la mart, y no de ningún otro oficio ni arte,…”
Capítulo primero. Libro Llamado Consulado de Mar, Valencia, 1539.
A Sergio M. Carbone con profundo cariño y admiración.
I. INTRODUCTION.
1. In the last decades we have witnessed a tremendous increase in the resort to
arbitration and several other ADR devices for reaching a fair and rapid solution to
disputes arising out in civil and commercial matters. This trend, which is noticeable
both
1
as
regards
domestic
and
international
disputes
, is common to almost all western countries. This tendency, for instance, is clearly
perceived in the new art. 812 of the Treaty on the Functioning of the European Union –
in force after the full reatification of the Treaty of Lisbon of 13-XII-2007- which sets
out the necessity for the European Parliament and the Council to adopt measures aimed
at ensuring: “g) the development of alternative methods of dispute settlement”.
Focusing on arbitration, the widespread resource to this device as the way to
solve present or future disputes has been accompanied in practice by an enormous
increase worldwide in the number of Arbitration Centers and by an unprecedented
number of new national Arbitration Acts, many of them endorsing the UNCITRAL
Model Law on International Commercial Arbitration, of 19853...
2. International maritime industry comes out as one of these areas in which the resource
to arbitration and other ADR devices have enjoyed a traditional and far-reaching
character4. Historically, a trend has existed for those disputes arising out of international
maritime transport to be referred to arbitration, ousting jurisdiction of national courts. In
fact, this bias has increased in recent years due both to the highly complex nature of the
1
BARONA VILAR, S.: Solución extrajurisdiccional de conflictos Alternative dispute resolution (ADR) y
derecho procesal, Valencia, Tirant lo blanch, 1999, pp. 45 ff.
2
Former art. 65, OJ C 115, 9-V-2008, p. 78.
3
See, ESPLUGUES MOTA, C.: “Sobre algunos desarrollos recientes del arbitraje comercial
internacional en Europa”, in BARONA VILAR, S.: Arbitraje y Justicia en el Siglo XXI, Cizur Menor,
Civitas, 2007, pp. 177 ff.
4
HARRIS, B.: “Maritime Arbitrations”, in TACKABERRY, J. & MARRIOT, A.: Bernstein’s Handbook
of Arbitration and Dispute Resolution Practice, London, Sweet and Maxwell/Chartered Institute of
Arbitrators, 2003, 2 Vols, Vol. I, Part 11, p. 743.
2
Electronic copy available at: http://ssrn.com/abstract=2063117
maritime industry and to the costs and delays that referring disputes to public courts
encompass.
Nowadays, international maritime arbitration looks as an extremely healthy
arbitration. The increasing number of Arbitration institutions5 devoted to it, and the big
amount and complexity of disputes referred to arbitrators6 are clear examples of this
good health. Nevertheless, international maritime arbitration, as international
commercial arbitration does as well, undergoes some problems –a sort of “growth
crisis”- due to its quick development: the increasing delays that arbitration proceedings
encounter and their expanding costs illustrate them7. All these complications are
broadening the resource to other ADR’s devices, essentially mediation8 -let’s remember
that reference to it in charterparties and bills of lading is rather usual in practice9- in this
area10. In fact, an increasing number of Arbitration Institutions in the maritime field
have already developed several regulations on mediation –for instance, the LMAA
Mediation Terms (2006), the SMA Rules for Mediation (1999) or the Règlement de
conciliation/médiation of the CAMP (2007)- and also conciliation –for instance, the
SMANY Rules for Conciliation (1988); the Rules of Conciliation of the GMAA (2005),
5
See ESPLUGUES MOTA, C.: Arbitraje marítimo internacional, Cizur Menor, Civitas, 2007, pp. 32 ff.
LMAA full members received in 2009 about 4445 new arbitration appointments (in 2006, the amount
was of 2500) and more than 647 awards (360 in 2006) were rendered by them (See:
http://www.lmaa.org.uk/about-us-Introduction.aspx). Although exact comparison is not feasible, it is
significant that in 2009 the International Court of Arbitration of the ICC handled 817 Requests for
Arbitration (See: http://www.iccwbo.org/court/arbitration/index.html?id=34704).
7
ARRADON, F.: “Arbitrage international à Paris et arbitrage à Paris selon la loi française”, DMF, 2004,
n° 646 (III/2004).
8
Although mediation is the most habitual ADR device referred to, some others exist in practice. Thus, the
GMAA Law and Arbitration Clause makes a straight reference to conciliation in paragraph II –“If the
parties agree to enter conciliation procedures, the GMAA Conciliation Rules shall apply”-. See,
DUNDAS, H.R.: “Expert Determination: A More Efficient Way of Resolving Disputes”, The Arbitrator,
VII-2007, p. 4.
9
That mention is found, for instance, in charterparty GRAINCON –cl. 42 “Dispute Resolution”, letter
(d)-: “Notwithstanding 42(a), 42(b) or 42(c) above, the parties may agree at any time to refer to
mediation any difference and/ or dispute arising out of or in connection with this Charter Party”-.
Mentions to mediation are also included in charterpaties BARECON 2001 –Part II, cl. 30 “Dispute
Resolution”-; COAL-OREVOY –Part II, cl. 26 “Dispute Resolution”, letter (d)-; GASVOY 2005 –Part II,
cl. 29 “BIMCO Dispute Resolution Clause”-; BALTIME 1939 –cl. 22 “Dispute Resolution” letter (D) or
BOXTIME 2004 –Part II, cl. 26 “Dispute Resolution Clause” letter (d). Reference to mediation is found as
well in letter b) of the BIMCO/LMAA Arbitration Clause, the BIMCO Dispute Resolution clause, US
Law/New York Arbitration and the BIMCO Dispute Resolution Clause. Law and Place of Arbitration as
Mutually Agreed. These three clauses clearly state that “the parties may agree at any time to refer to
mediation any difference and/or dispute arising out of or in connection with this Contract” even in case of
a dispute in respect of which arbitration has been commenced under any of the above BIMCO Dispute
Resolution Clause, setting out the procedure to be followed to implement mediation.
10
See to this respect, VAN GELDER, M.A.: “Maritime Arbitration: Quo Vadis? Have Delays and Costs
Caused us to Lose the Way?”, J.Int.Arb, 1995, pp. 79 ff.; ARNOLD, M.: “The Last Word”, The Maritime
Advocate.com, nº 14, II-2001, (http://www.maritimeadvocate.com/i14_arbi.htm); TETLEY, W.: Marine
Cargo Claims, Thomson/Carswell, Quebec, 4rd ed, 2008, 2 vols, vol I, pp. 1417-1418; ESPLUGUES
MOTA, C.: Arbitraje marítimo..., cit., pp. 168 and 541 ff.
6
3
the Règlement de conciliation/médiation of the CAMP (2007) or the JSE Conciliation
Rules (1992)- as regards the international carriage of goods by sea in the last years.
3. Nevertheless, international maritime arbitration cannot be approached as a unitary
reality as regards those disputes referred to it. As a matter of fact, these controversies
may heavily differ one from each other. There are some contractual disputes –for
instance, those arising from the use of the ship or the carriage of goods on board, or the
construction of a ship or its sale-, whereas some other disputes arise from noncontractual obligations –maritime rescue or collisions, for instance-11.
4. In this article we shall focus on the legal regime of arbitration agreements in the field
of disputes arising out of the use of the ship or the carriage of goods on board12. The
most relevant regulations will be studied and their solutions approached. This study will
allow us to perceive some trends currently existing in such a relevant area of
international maritime arbitration.
II. THE ARBITRATION AGREEMENT IN INTERNATIONAL MARITIME
ARBITRATION.
1. The role and significance of the arbitration agreement.
5. Arbitration is directly linked to party autonomy13. The arbitration agreement plainly
and directly reflects the will of the parties to submit their present or future disputes to
arbitration. This being so, the arbitration agreement becomes at the same time the very
11
GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.: Manual de Derecho de la Navegación marítima,
Madrid, Marcial Pons, 3rd ed., 2006, p. 957.
12
“Typically, issues center around: the investigation of damage to transported goods and ensuing liability
attached to the maritime carrier; damages to the ship caused by the nature of the carried goods; issued of
lay days and demurrage including damages resulting from late entry to port or late access to the operative
quay; damages suffered by the carrier as a result of force majeure; issues relating to non-execution of
charter parties (for example, non-payment of the charter fee, late return of the vessel or early collection of
the ship; sale, construction and ship repairs; matters relating to salvage at see; and maritime insurance”
(MARRELLA, F.: “Unity and Diversity in International Arbitration: The Case of Maritime Arbitration”,
Am. U. Int’l. L. Rev., 2005, p. 1059).
13
BARONA VILAR, S.: “Introducción”, in BARONA VILAR, S. (Coord.): Comentarios a la Ley de
Arbitraje. Ley 60/2003, de 23 de diciembre, Madrid, Civitas, 2004, p. 59; WILSON, J.F.: Carriage of
Goods by Sea, Harlow, Longman, 4th ed., 2001, p. 321; GAILLARD, E. & SAVAGE, J.: Fouchard,
Gaillard, Goldman on International Commercial Arbitration Deventer, Kluwer, 1999, pp. 31 ff;
TWEEDDALE, A. & TWEEDDALE, K.: Arbitration of Commercial Disputes. International and English
Law and Practice, Oxford, Oxford Univ. Press, 2005, pp. 34 ff.
4
basis and the limit of the arbitration proceeding14: the arbitration agreement manifests
the clear desire of the parties to submit their disputes to arbitration thus ousting the
jurisdiction of public courts and, besides that, it sets the limits for the arbitrators and the
parties throughout the whole arbitration proceeding15.
2. Formal requirements.
6. Almost all arbitration rules either of national -Spain16, Italy17, Belgium18, The
Netherlands19, Germany20, USA21, Switzerland22, England23, Perú24, among many
others- or international origin -the New York Convention on the Recognition and
Enforcement of Foreign Arbitration Awards of 195825, the original version of the
UNCITRAL Model Law on International Commercial Arbitration of 198526, or the
Model Law amended version of 200627- presuppose the arbitration agreement to fulfill
certain crucial formal qualifications.
7. Thus, the arbitration agreement is usually required to be reflected in writing and, also,
to be signed by the parties28. These formal requirements aim both to assess the real will
of the parties to submit their disputes to arbitration and to endorse the existence of a
valid and efficient arbitration clause as regards third parties.
14
VERDERA SERVER, R.: “Artículo 9”, in BARONA VILAR, S. (Coord.): Comentarios..., cit., p. 319.
BARONA VILAR, S.: “Artículo 25”, in BARONA VILAR, S. (Coord.): Comentarios..., cit., p. 919.
Sometimes pathological clauses may exist in which the will of the parties is not clearly ascertainable. In
relation to these clauses, see VERDERA SERVER, R.: “Artículo 9”, cit., pp. 389 ff.; GAILLARD, E. &
SAVAGE, J.: Fouchard…, cit., pp. 262 ff. or SCALBERT, H. & MARVIELLE, L.: “Les clauses
compromissoires pathologiques”, Rev.Arb., 1988, pp. 117 ff.
16
Art. 9 AA of 2003.
17
Art. 807 CPC.
18
Art. 1677 CJB.
19
Art. 1021 WBR/DCCP.
20
P. 1031 ZPO.
21
FAA, 9 USC P.3.
22
Art. 178.1 LFDIP.
23
S. 5(1) Arbitration Act 1996.
24
Art. 13 AA of 2008.
25
Art. II.
26
Art. 7.
27
Art. 7, option I.
28
See, VAN HOUTTE, V.: “Consent to Arbitration Through Agreement to Printed Contracts: The
Continental Experience”, Arb.Int., 2000, pp. 7 ff.
15
5
Although those conditions are paramount and are broadly maintained nowadays,
they have currently suffered an undeniable relaxation due to the technology revolution
undergone during the last decades29. Therefore,
1) Albeit the request for the arbitration agreement to be signed is still embodied
in many national arbitration rules –for instance, in Spain30, Belgium31; Germany32,
Canada33 or Austria34, among others-, it is approached in practice in an extremely
flexible manner. In fact many authors and national Courts do not require the arbitration
agreement to be signed for it to be considered valid: for instance, Spanish Case Law is a
good example to this respect35.
2) Although being in writing is still requested in most of the national and
international arbitration rules for the arbitration agreement to be considered valid and
effective36, there is currently a clear trend to construe it in a flexible manner. The
29
That happens both at the international level –Option II of art. 7 of the 2006 version of the UNCITRAL
Model Law on International Commercial Arbitration-, and at the national level –Sweden, Lag (SFS
1999:116) om Skiljeförfarande, Danemark (P. 7, Voldgiftsloven) or Scotland (S. 4 of the Arbitration
(Scotland) Act 2010)-. See. ESPLUGUES MOTA, C.: “Sobre algunos...”, cit., pp. 186-187; REDFERN,
A., HUNTER, M. et al: Law and Practice of International Commercial Arbitration, London, Sweet and
Maxwell, 4th ed., 2004, p. 159; BERGER, K.P.: “The Arbitration Agreement under the Swedish 1999
Arbitration Act and the German 1998 Arbitration Act”, Arb.Int., 2001, pp. 395 ff.
30
Art. 9.3.I AA.
31
Art. 1677 CJ.
32
P. 1031 ZPO.
33
Art. 7.2 CAC.
34
Art. 583 ZPO.
35
See to this respect, Sentencia Tribunal Supremo (STS) of 6-II-2003 (TOL 253543) and Sentencia
Audiencia Provincial (S.Aud.Prov.) of Pontevedra of 23-V-2002 (EDJ 2002/53698). This trend is also
ascertainable in some recent national arbitration rules (See, VAN HOUTTE, V.: “Consent ...”, cit., p. 3;
ESPLUGUES MOTA, C.: “Sobre algunos...”, cit., pp. 186-187) as well as in Option II of art. 7 of the
2006 amended version of the UNCITRAL Model Law on International Commercial Arbitration which is
silent as to the signature requirement: “’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”. This position is also maintained in the
Recommendation regarding the interpretation of article II (2) and article VII (1) of the Convention on the
Recognition
and
Enforcement
of
Foreign
Arbitral
Awards
(New
York,
1958)
(http://www.uncitral.org/pdf/spanish/texts/arbitration/NY-conv/A2S.pdf), in which it is said
recommended that “1. Recommends that article II, paragraph 2, of the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958, be applied recognizing
that the circumstances described therein are not exhaustive;...”.
36
The number of national arbitration Acts requesting the arbitration agreement to be in writing is much
bigger than that of those requesting the agreement to be signed. For instance, this condition is required in
Italy (art. 807 CPC); in Belgium (art. 1677 CJB); in The Netherlands (art. 1021 WBR/DCCP); in
Germany (P. 1031 ZPO); in the USA (FAA, 9 USC P.3); in Switzerland (art. 178.1 LFDIP); in England
(S. 5(1) Arbitration Act 1996); in Canada (art. 7.2 Commercial Arbitration Code); in Poland (art. 1163,
Polish Code of Civil Procedure, 2005 revision); in Austria (art. 883, ZPO amended in 2006), in Ireland
(S. 2 (1) of the Arbitration Act 2010) or in Peru (art. 13 of the Peruvian Arbitration Act of 2008), among
many others. That is also the position maintained by art. 9.3 of the Spanish AA of 2003 when stating that:
6
already mentioned Option II of art. 7 of the amended version of the UNCITRAL Model
Law on International Commercial Arbitration, of VI-2006, and some provisions
included to this respect in recent new national Arbitration Acts37 are plain examples of
this development.
8. Nevertheless, the special characteristics that international maritime transport
encompasses give place to the existence of certain difficulties in assessing the
fulfillment of those two requirements the arbitration agreement must accomplish to be
valid: that is, to be signed and to be in writing. The issue of the incorporation by
reference into a contract of an arbitration agreement found in a third contract is, in this
respect, paradigmatic of all these difficulties.
III. ASSERTING THE VALIDITY AND EFFECTS OF ARBITRATION
AGREEMENTS IN INTERNATIONAL MARITIME ARBITRATION: THE
CASE OF THE INCORPORATION BY REFERENCE OF THE ARBITRATION
AGREEMENT EMBODIED IN A THIRD CONTRACT.
1. Introduction.
9. International carriage of goods by sea contracts are usually embodied in charter
parties or documented on bills of lading. Practice shows that these two categories are
not mutually exclusive38.
A. Charterparties.
10. As far as charterparties is concerned, maritime transport practice reflects the
existence of a broad variety of –standard forms- charterparties39. A common feature of
“3. The arbitration agreement shall be verifiable in writing, …”. See, ESPLUGUES MOTA, C.:
Arbitraje marítimo..., cit., pp. 125 ff.
37
See, ESPLUGUES MOTA, C.: “Sobre algunos...”, cit., pp. 187-189
38
WILSON, J.F.: Carriage ..., cit., pp. 3 ff.; GASKELL, N., ASARIOTIS, R. & BAATZ, Y.: Bills of
Lading: Law and Contracts, London, LLP, 2000, pp. 28 ff.
39
See, RUIZ SOROA, J.M.: “El contrato de transporte marítimo internacional”, in CALVO
CARAVACA, A.L. & FERNÁNDEZ DE LA GÁNDARA, L.: Contratos internacionales, Madrid,
Tecnos, 1997, p. 709; WILSON, J.F.: Carriage..., cit., p. 3; MARRELLA, F.: “Unity and Diversity…”,
cit, pp. 1077 ff.
7
these charterparties is found in the usual40 insertion of an arbitration agreement among
their clauses41. Due to the very nature of charterparties, and to the capability of the
parties themselves to bargain on equal terms, these arbitration agreements enjoy a broad
acceptance by both doctrine and Case Law.
11. The arbitration agreements contained in charterparties are usually quite different
from each other, setting out different solutions as to the arbitration proceeding42.
Certainly, most of them are bilateral in nature43, but they furnish diverse responses to
issues such as the number of arbitrators, the way for them to be appointed or the place
where the arbitration is to take place44, among other relevant features of the prospective
arbitration.
40
Some isolated examples of lack of forum selection clauses or arbitration agreements exist in practice:
the SCANCON charterparty is a good example of that position.
41
Usually, a trend to avoid including forum selection clauses is ascertainable in practice. An isolated
example of that inclusion is found in clause P of the charterparty “HYDROCHARTER 1997”. The clause,
entitled “Law and Jurisdiction”, states that, “If not otherwise provided for in this Charter Party, any
disputes to be brought before the City Court of Oslo and Norwegian Law to be applied”.
Nevertheless, certain clauses allow the parties to choose between taking their disputes to public courts or
to arbitration. That is the solution set forth by charterparty BPTIME3, whose cl. 36 –“Law”- after
referring disputes to English Courts states that “Notwithstanding the aforesaid, the parties may jointly
elect to have any such dispute referred to arbitration in London pursuant to the Arbitration Act 1996 or
any modification or re-enactment thereof for the time being in force and under the Terms of the London
Maritime Arbitrator’s Association before a tribunal consisting of three arbitrators”.
42
An analysis in depth of these arbitration clauses may be found in ESPLUGUES MOTA, C.: Arbitraje
marítimo..., cit., pp. 163 ff.
43
Nevertheless, some examples of –somehow- unilateral arbitration clauses are found in practice. See, for
instance, charterparties “SHELLTIME 4” (cl. 41) or “SHELLVOY 5” (cl. 43).
44
As far as to the place of the arbitration is concerned: (1) Certain clauses directly specify a single
arbitration place. Thus, charteparties NIPPONGRAIN 98 –cl. 28- and BEIZAI 1991 –Part II, cl. 31- refer
to Tokyo. The charterparty SYNACOMEX 2000 -Part II, cl. 28- refers to Paris. Besides that, London is
referred to as the arbitration place in the WORLDFOOD 99 charterpary -Part II, cl. 43- and the
BIMCO/LMAA Arbitration Clause.
(2) Besides, several other clauses tend to link the place to the will of the parties: a paradigmatic example
of this option is found in the NUVOY-84 charterparty, which states in Part II, cl. 50 -“Arbitration”- that
“Any dispute arising under this Charter shall be referred to arbitration at the place and before the
arbitration tribunal indicated in Cl. 15 [“Arbitration (place, tribunal/rules, law)] in accordance with the
procedure and (unless otherwise agreed) with the substantive law prevaling there”.
(3) Nevertheless, the most usual trend in international maritime industry is to refer the parties to several
cities. Either,
a) Three cities: London, New York or a third place chosen by the parties. For instance, this option is
embodied in charterparties GENCON 94 -Part II, cl. 19 “Law and Arbitration-, GRAINCON –cl. 42-;
COAL-OREVOY -Part II, cl. 26-; FERTIVOY 88 –Part II, cl. 37-; HEAVYCON –Part II, cl. 32-; GASVOY
2005 –Part II, cl. 29-; OREVOY –Part II, cl. 23-; BALTIME 1939 –Part II, cl. 22-; BOXTIME 2004 –Part
II, cl. 26-; SUPPLYTIME 89 -Part II, cl. 32-; BARECON 2001 –Part II, cl. 30- or GENTIME –Part II, cl.
22-.
b) Or two cities: either London and New York (AMWELSH 93 –cl. 32-; NORGRAIN 89 –cl. 45- or
NYPE 93 –cl. 45-); or London or the place selected by the parties (POLCOALVOY –Part II, cl. 33-;
NUBALTWOOD -Part II, cl. 28- or BIMCHEMTIME -Part I, clauses 32 & 43); or London or Merlbourn
(AUSTWHEAT 1990 –cl. 33-) or London or Tokyo (NIPPONCOAL –Part II, cl. 28-), among other several
options.
8
2. Bill of ladings.
12. The situation as to bill of ladings greatly differs from that of charterparties. The
contract for the carriage of goods by sea evidenced by a bill of lading has been
characterized from its outset by the unequal position of the parties to it, thus favoring
the preponderance of the carrier over the shipper45. This unequal position has
traditionally accounted for some restrictions to be imposed on the autonomy of the
parties as regards this kind of contracts, and it is as well in the very basis of the lengthy
and fruitful process of international codification of the legal regime of this type of
contracts46.
13. The inequality of bargaining power between the parties to a bill of lading contract
has a direct influence on the issue of assessing the validity of the legal terms and
conditions the bill of lading itself embodies. Mainly, as regards non-liner bills of lading
-"tramp bills of lading" or "charterparty bills"47-. In practice, these sorts of bills of
lading issued in respect of a ship which is under charter48, usually contain a general
(4) In many cases, should the parties be silent as to the place of arbitration, this silence is understood to
mean the selection of London. As a matter of fact, this is the solution contemplated in charterparties
SUPPLYTIME 89 –Part II, cl. 33(d)-; BARECON 2001 –Part II, cl. 30(e)-; GENCON 1994 –Part II, cl.
19(c)-; GRAINCON –Part II, cl. 42-; COAL-OREVOY –Part II, cl. 26(e)-; FERTIVOY 88 –Part II, cl.
37.4-; BIMCO Dispute Resolution Clause –cl. 29(e)-; BALTIME 1939 –Part II, cl. 22-; BOXTIME 2004 –
Part II, cl. 22-; GENTIME –Part II, cl. 22(d)- or HEAVYCON –Part II, cl. 34(4)-.
45
GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.: Manual..., cit., p. 544.
46
See ESPINOSA CALABUIG, R.: El contrato internacional de transporte marítimo de mercancías:
cuestiones de ley aplicable, Granada, Comares, 1999, pp. 17 ff.
47
Liner bills of lading also include arbitration clauses. Different solutions are available in the
CONLINEBILL 2000 –cl. 4-; MULTIDOC 95 –cl. 95-; COMBICONBILL –cl. 5- or P&O NEDLLOYD
Bill of Lading 10/98 –cl. 24-, among others. See, GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.:
Manual..., cit., pp. 562-563; GASKELL, N., ASARIOTIS, R. & BAATZ, Y.: Bills of Lading…, cit., p.
29.
48
For instance, see OREVOYBILL –which states “to be used for shipments under the “OREVOY”
Charter” (p. 1) and “Issued pursuant CHARTER-PARTY dated...” (p. 2)-; NUBALTWOODBILL -“To be
used for shipments chartered on the “NUBALTWOOD Charter Party” (p. 1) and “Freight payable as per
CHARTER-PARTY dated…” (p. 2)-; SCANCONBILL -“to be used for shipments chartered on the
‘Scancon’ Charter” and “Freight and other conditions of carriage as per CHARTER PARTY dated…” (p.
2)-; POLCOALBILL –“To be used for shipments chartered on the ‘POLCOALVOY’ Charter Party” and
“Freight payable as per CHARTER-PARTY dated…” (p. 1)-; NUVOYBILL-84 -“To be used for shipments
under the “Nuvoy-84 Charter Party” (p. 1) and “issued pursuant and subject to all terms of ‘NUVOY84’” (p. 2)-; NORTH AMERICAN GRAIN BILL OF LADING -“To be used with “Norgrain”
Charterparty 1973, as amended 1989” and “Freight payable as per Charterparty dated…” (p. 1)-;
HEAVYCONBILL -“To be used for shipments under the “Heavycon” Standard Transportation Contract
for Heavy and Voluminous Cargoes” (p. 1)-; CONGENBILL -“To be used with Charter-Parties” and
“Freight payable as per CHARTER-PARTY dated…” (pp. 1-2); COAL-OREVOYBILL -“To be used for
shipments chartered on the COAL-OREVOY Charter” (pp. 1-2) and “Issued pursuant to CHARTER
PARTY dated: … Freight payable in accordance therewith” (p. 1)- or AUSTWHEAT BILL -“Assigns, he
9
clause of incorporation of the specific terms and conditions existing in a particular
charterparty into the bill of lading49.
Hence, clauses such as: “All terms of the Charter Party, dated as overleaf, are
herewith incorporated”50, “All terms conditions and exceptions as per Charterparty
dated as overleaf and any addenda thereto to be considered as incorporated herein,
including the Law and Arbitration Clause (Clause 45) as if fully written, anything to the
contrary contained in this Bill of Lading notwithstanding”51, “All terms and conditions,
liberties and exceptions of the Charter Party, dated as overleaf, including the Law and
Arbitration Clause, are herewith incorporated”52 or “All terms and conditions, liberties
and exceptions of the Charter Party, dated as overleaf, including the War Risks Clause
(Clause 16) and the Law and Arbitration Clause (Clause 23) are hereby expressly
incorporated. If this Bill of Lading covers a transport for which no Charter Party has
been agreed, the terms of the “Orevoy” Charter shall be deemed to be incorporated in
this Bill of Lading”53 are usual in the international maritime industry54.
This general reference to charterparty’s terms implies that the bill of lading
incorporates terms and conditions of the charterparty in their entirety, including –either
in an implicit or express manner- the choice of law and arbitration clause.
14. These general clauses of incorporation by reference pose the question of assessing
the real meaning and value of the incorporation of the arbitration clause, due to the
exceptional nature this clause is generally awarded, and to the different approaches and
solutions the question receives in different countries.
2. The issue of the incorporation by reference into the bill of lading of the
charterparty’s arbitration agreement.
15. International maritime practice displays how habitual the incorporation by reference
of the terms of the charterparty into a bill of lading is. As a matter of principle, national
or they paying Freight for the same as per the below-mentioned “Auswheat 1990” Charterparty, as
amended, …” (p. 1)-, among some others.
49
GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.: Manual... , cit., pp. 562-563.
50
NUVOYBILL-84, cl. (1) “Incorporation clause”.
51
NORTH AMERICAN GRAIN BILL OF LADING, cl. (1).
52
CONGENBILL 94, cl. (1).
53
OREVOYBILL 1980, cl. (1).
54
See also SCANCONBILL 1993, cl. I; POLCOALBILL 1997, cl. (1); HEAVYCONBILL 1986, cl. (1);
COAL-OREVOYBILL, cl. (1) or NUBALTWOODBILL 1997, cl. (1).
10
scholars and national Case Law share a positive attitude towards the acceptance of this
practice, thus rendering this incorporation as fully valid and effective. However, the
validity and effectiveness of the incorporation clause is finally conditioned to the clarity
of its wording, to the necessary congruence existing between the terms of the
charterparty and those of the bill of lading55 and, also, to the availability of those terms
which are deemed to be incorporated into the bill of lading56.
16. Nevertheless, this general positive approach existing towards the validity of the
incorporation by reference of the terms and conditions of the charterparty into the bill of
lading encounters a higher level of complexity as for the particular issue of the validity
of the incorporation by reference of arbitration clauses. The complex nature these
clauses encompass and the relevance of those effects arising from them result in the
necessary assessment of the existence of a clear intention of the parties to refer their
disputes to arbitration.
Hence, despite the fact that the incorporation by reference of a charterparty’s
arbitration clause into a bill of lading remains usual in practice, its final validity is made
dependant on the fulfillment of certain formal and substantial requirements by the
incorporation clause itself57.
17. In fact, the issue of the validity and effectiveness of the incorporation by reference
into the bill of lading -a document with different functions58- of an arbitration clause is a
complex one. It exceeds the mere formal dimension of the arbitration agreement,
connecting with the issue of the assessment of the nexus existing between an individual
-the actual bearer of the bill of lading- and a set of terms –those existing in a certain
charterparty- which are incorporated into the bill of lading through an incorporation
clause. Most probably, the bearer has not negotiated those terms and, even more, in
certain cases, he may not even know them59. Besides that, in many occasions this set of
55
GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.: Manual... , cit., p. 486.
GASKELL, N., ASARIOTIS, R. & BAATZ, Y.: Bills of Lading…, cit., pp. 692-693.
57
BOUCOBZA, X.: “La clause compromissoire par référence en matière d'arbitrage commercial
international”, Rev.Arb., 1998, p. 495; OPPETIT, B.: “La clause arbitrale par référence”, Rev.Arb., 1990,
pp. 551 ff.; VERDERA SERVER, R.: “Artículo 9”, cit., pp. 352 ff.
58
It acknowledges the receipt of cargo shipped, and it also acts as evidence of the contract of carriage and
as a document of title. See, WILSON, J.F.: Carriage..., cit., pp. 121 ff.; GASKELL, N., ASARIOTIS, R.
& BAATZ, Y.: Bills of Lading..., cit., pp. 1 ff.; GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.:
Manual..., cit., p. 486.
59
POUDRET, J.F. & BESSON, S.: Droit comparé de l’arbitrage international, Brussels/Zurich,
Bruylant/Schulthess, 2002, pp. 176-177.
56
11
terms and conditions were “not even bargained for expressly by the shipper and the
carrier”60...
3. Similar basis and different national solutions.
A. Introduction.
18. The issue of the validity of incorporation by reference of an arbitration agreement is
certainly addressed in a positive manner in art. 7.2 in fine of the original version of the
UNCITRAL Model Law on International Commercial Arbitration; currently, art. 7.661
of Option I of the amended version of 2006. Article 7.2 emphasizes that:
“... 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.”
19. Despite this plain wording, the issue of the validity of the incorporation by reference
of an arbitration clause into the bill of lading does not receive a unitary response in the
international maritime arbitration realm. Different approaches and solutions exist as to
this question in practice. In fact, national courts construe the issue in different ways,
combining some rigid and flexible approaches regarding it. The Case Law of the United
States of America, England and France, three major countries as regards international
maritime arbitration, is paradigmatic to this respect. The absence of international
maritime arbitration practice in Spain makes the answer provided to the question highly
irrelevant.
B. England.
20. London is unanimously considered to be the most important place in the world
concerning international maritime arbitration. A vast majority of these arbitrations are
60
TETLEY, W.: Marine Cargo…, cit., vol. I, p. 1417.
“Art. 7. ... (6) The reference in a contract to any document containing an arbitration clause constitutes
an arbitration agreement in writing, provided that the reference is such as to make that clause part of the
contract.”
61
12
directly linked to the London Maritime Arbitrators Association (LMAA)62, which
encompasses more than 70% of all maritime arbitrations worldwide63.
Although Sections 5 and 6 of the English Arbitration Act 1996 –providing for
certain formal conditions that arbitration agreement should fulfill to be considered
valid- seemingly support the validity of the incorporation by reference of an arbitral
clause into a contract - "if the reference is such as to make that clause part of the
agreement."64-, English Case Law has steadily maintained a highly restrictive attitude
towards the validity of incorporation by reference of arbitration clauses into a third
contract, whatever the nature of this last contract may be65:
“Generally speaking, the English law of contract has taken a benevolent view of the use of general
words to incorporate by reference standard terms to be found elsewhere. But in the present field a
different, and stricter, rule has developed, especially where the incorporation of arbitration
clauses is concerned.”66
Despite the fact that this rationale has deserved some critics, it has been upheld by
English Courts in the direct interest of commercial certainty and security:
“(T)his is indeed a field in which it is perhaps preferable that the law should be clear, certain and
well understood than that it should be perfect.”67.
21. In the particular case of incorporation of charterparties terms and conditions –
including arbitration clauses- into the bill of lading, this strict attitude maintained as to
its validity has been grounded as well on the specific characteristics that bills of lading
62
To this respect, note, HARRIS, B.: “Maritime Arbitrations”, cit., p. 756; FINCH, R.: “London: Still the
Cornerstone of International Commercial Arbitration and Commercial Law?”, Arbitration, 2004, pp. 256
ff.
63
TASSIOS, P.N.: “Choosing the Appropriate Venue: Maritime Arbitration in London or New York?”,
J.Int’l.Arb., 2004, p. 355.
64
Section 6(2) in fine. A positive attitude towards this understanding is maintained by TACKABERRY,
J. & MARRIOT, A.: Bernstein’s…, cit., vol. 1., p. 52, referring to Secretary of State for Foreign and
Commonwealth Affairs v The Percy Thomas Partnership, [1998] C.I.L.L. 1342 (although accepting that
in Trygg Hansa v Equitas, [1998] 2 Lloyd’s Rep. 439, a different solution was reached) or GASKELL,
N., ASARIOTIS, R. & BAATZ, Y.: Bills of Lading…, cit., p. 676. Much more skeptical to this respect
are AMBROSE, C. & MAXWELL, K., London Maritime Arbitration, London, LLP, 2nd ed., 2002, p. 32,
quoting Aughton v. MF Kent Services, [1991] 57 BLR 1, or MERKIN, R.: Arbitration Law, London, LLP,
2004, p. 133 ff.
65
Note, TWEEDDALE, A. & TWEEDDALE, K.: Arbitration…, cit., pp. 609 ff.
66
Sea Trade Maritime Corporation v. Hellenic Mutual War Risks Association (Bermuda) Ltd (The
"Athena") (No 2), [2007] 1 Lloyd's Rep. 280, at 289.
67
Federal Bulk Carriers Inc v. C. Itoh & Co. Ltd. and Others (The “Federal Bulker”), [1989] 1 Lloyd's
Rep. 103, at 105. The Court plainly adds that, “If commercial parties do not like the English rule, they
can meet the difficulty by spelling out the arbitration provision in the bill of lading and not relying on
general words to achieve incorporation.” (p. 105). See also Sea Trade Maritime Corporation v. Hellenic
Mutual War Risks Association (Bermuda) Ltd (The "Athena") (No 2), [2007] 1 Lloyd's Rep. 280, at 289.
13
encompass. The bill of lading is a negotiable commercial instrument which may come
into hand of a third party with no knowledge or no means of knowledge of the terms
and conditions of the specific charterparty68.
“… the approach of the Courts to the incorporation by reference of charter-party clauses in bills
of lading reflects the need for clarity and precision arising from (a) the status of bills of lading as
negotiable commercial instruments; (b) the jurisdictional consequences of such incorporation;
and (c) the importance of certainty in this area.”69.
22. Analysis of English Case Law shows that English Courts have maintained an open
attitude as to the validity of incorporation by reference of the terms and conditions of
the charterparty other than the arbitration –and choice of law- clause into the bill of
lading70. The final reason for this different treatment stands on the very nature of the
arbitration agreement: arbitration clauses are deemed “ancillary” to –independent fromthe carriage of goods by sea contract, whereas many other terms included in the
charterparty and which are also embodied by reference into the bill of lading are
construed as “germane” –linked- to the substantive contract of carriage:
“... the status of a so-called "arbitration clause" included in a contract of any nature is different
from other types of clause because it constitutes a "self-contained contract collateral or ancillary
to" the substantive contract. ... It is a self-contained contract, even though it is, by common usage,
described as an "arbitration clause". It can, for example, have a different proper law from the
proper law of the contract to which it is collateral. This status of "self-contained contract" exists
irrespective of the type of substantive contract to which it is collateral.”71.
68
See, ALTARAS, D.: “Incorporation and Stay – Welex AG v Rosa Maritime Ltd on Appeal”,
Arbitration, 2004, p. 57. This connection with the terms and conditions of the charterparty is heavily
criticized by P. TODD, who emphasizes that “the bill of lading should be the primary document to
construe, since is the only document of which both parties to a dispute have usually had sight. The terms
of the charterparty should ideally be irrelevant” (TODD, P.: “Incorporation of Arbitration Clauses into
Bills of Lading”, JBL, 1997, p. 333).
69
Siboti K/S v. BP France S.A., [2003] 2 Lloyd's Rep. 364, at 372. For instance, in Verity Shipping SA
and Another v. NV Norexa and Others (The "Skier Star"), [2008] 1 Lloyd's Rep. 652, the Court clearly
stated that “any shipping lawyer would know that where a bill of lading purports to incorporate the terms
of a charterparty including the law and arbitration clause it is, at the very least, prudent to obtain a copy
of the charterparty. That is because the arbitration clause might be regarded as binding upon the bill of
lading holders by the applicable law.” (p. 658).
70
See ESPLUGUES MOTA, C.: Arbitraje marítimo…, cit., pp. 242 ff.; TETLEY, W.: Maritime Cargo...,
cit., pp. 1451 ff.
71
OK Petroleum A.B. v. Vitol Energy S.A., [1995] 2 Lloyd's Rep. 160, at 167. The same philosophy in
relation to different topics is ascertainable in Heyman v. Darwings Ltd., (1942) 72 Ll.L.Rep. 65; Bremer
Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd., [1981] 1 Lloyd’s Rep.
253; Pine Top Insurance Co. Ltd. v. Unione Italiana Anglo Saxon Reinsurance Co. Ltd., [1987] 1 Lloyd’s
Rep. 476; Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G., [1981] 2
Lloyd’s Rep. 46; Authgon Ltd. v. M.F. Kent Services Ltd., [1991] 31 Con.L.R. 60; Harbour Assurance
Co. (U.K.) Ltd. v. Kansa General International Insurance Co. Ltd., [1993] 1 Lloyd’s Rep. 455; Excess
Insurance Co. Ltd. and Another v. Mander, [1997] 2 Lloyd's Rep. 119; Trygg Hansa Insurance Co. Ltd.
v. Equitas Ltd., [1998] 2 Lloyd’s Rep. 439. A somehow different solution is embodied in Secretary of
State for Foreign and Commonwealth Affairs v. Percy Thomas Partnership, [1998] C.I.L.L. 1342.
14
The drawing of these two different categories of clauses –“germane” and
“ancillary” clauses- by English Courts has given place to a Case Law –“well known and
recognized in the shipping industry” 72- that combines: (1) an open and flexible attitude
as to the validity of the incorporation by reference into the bill of lading of terms
embodied in the charterparty that are considered “germane” to the carriage of goods by
sea contract, with (2) the endorsement of a much more restrictive attitude as to the
validity of the incorporation into the B/L of “ancillary” terms: that is, the arbitration and
choice of law clauses existing in the charterparty.
1) English Courts undoubtedly accept the use of general language for the
incorporation by reference into the bill of lading of those charterparties terms
considered “germane” to the contract of transport. Clauses referring to the load,
transport, disembark and delivery of goods and payment of those goods are usually
granted the condition of “germane”73.
As a matter of principle, a clause drafted in general language, in line with clause
1 of the CONGENBILL 1978, would be understood as sufficient as regards the valid
incorporation of those terms of the charterparty construed as “germane”, into the bill of
lading74.
“(A)ll the terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf
are herewith incorporated...”.
Nevertheless for this general clause of incorporation to be valid, two additional
conditions should be fulfilled75:
a) First, it is necessary for the clause to clearly state the incorporation of
the charterparty terms and conditions into the bill of lading and,
72
AMBROSE, C. & MAXWELL, K., London Maritime…, cit., p. 33.
MOCATTA, A.A., MUSTILL, M.J. & BOYD, S.C.: Scrutton on Charterparties, London, Sweet and
Maxwell, 19rd ed., 1984. p. 64.
74
See, WILSON, J.F.: Carriage…, op. cit., pp. 235-236. Note, Fidelitas Shipping Co. v. V/O Exportchleb,
[1963] 2 Lloyd’s Rep. 113; The “Miramar”, [1984] 1 Lloyd's Rep. 142; The “San Nicholas”, [1976] 1
Lloyd's Rep. 8, or The “SLS Everest”, [1981] 2 Lloyd's Rep. 389.
75
See D’ARCY, L., MURRAY, C. & CLEAVE, B.: Schmitthoff’s Export Trade. The Law and Practice
of International Trade, London, Sweet and Maxwell, 10th ed., 2000, pp. 274-275; GASKELL, N.,
ASARIOTIS, R. & BAATZ, Y.: Bill of Ladings..., cit., p. 676.
73
15
b) Secondly, it is requested that those terms to be incorporated into the bill
of lading must be compatible with the terms and conditions of the bill of lading itself.
2) In practice, the flexible approach maintained as to those terms deemed
“germane” to the substantive contract, is combined with a longstanding76 rigid attitude
as for the incorporation by reference of arbitration clauses77. English Courts presuppose
the arbitration agreement to render some exceptional effects to the parties thereto78;
concurrently therewith it is considered as “ancillary” to –or independent from- the
contract of transport.
This independence from the main contract gives place to the maintenance of a
rigorous approach –“reminiscent of that adopted towards exception clauses”79- in
relation to the validity of the incorporation clause concerning the arbitration agreement.
Consequently therewith, a general incorporation clause is deemed insufficient for the
charterparty’s arbitration agreement to be considered validly incorporated into the bill
of lading… On the contrary, for the reference into the bill of lading to the charterparty
containing an arbitration clause to be valid and effective, the clause of incorporation
must be drafted in such a language as to make clear the desire of all parties to have this
arbitration clause incorporated into the bill of lading80. As Lord Denning said in 1971,
in The Annefield81, the leading Case on this question,
“a clause which is directly germane to the subject-matter of the bill of lading (that is, to the
shipment, carriage and delivery of goods) can and should be incorporated into the bill of lading
contract, even though it may involve a degree of manipulation of the words in order to fit exactly
the bill of lading. But, if the clause is one which is not thus directly germane, it should not be
incorporated into the bill of lading contract unless it is done explicitly in clear words either in the
bill of lading or in the charter-party.”82.
76
In this sense, see T. W. Thomas & Co., Limited v. Portsea Steamship Company, Limited (The
“Portsmouth”), [1912] A.C. 1; The Njegos, (1935) 53 Ll. L. Rep. 286; Atlas Levante-Linie
Aktiengesellschaft v. Gesellschaft Für Getreidehandel A.G., and Becher, (The "Phönizien"), [1966] 1
Lloyd's Rep. 150.
77
Significantly, this strict position maintained as to the incorporation by reference of arbitration clauses is
also asserted as regards choice of jurisdiction clauses: “Jurisdiction clauses, like arbitration clauses, are
ancillary to the subject-matter of a bill of lading. There is no good reason for distinguishing between
arbitration and jurisdiction clauses in this regard: see, in the insurance, reinsurance and Community law
context...” (Siboti K/S v. BP France S.A., [2003] 2 Lloyd's Rep. 364, at 369).
78
WILSON, J.F.: Carriage…, cit., p. 236.
79
WILSON, J.F.: Carriage…, cit., p. 236.
80
D’ARCY, L., MURRAY, C. & CLEAVE, B.: Schmitthoff’s…, cit., p. 275.
81
[1971] 1 Lloyd’s Rep. 1.
82
P. 4.
16
Therefore, a specific mention to the arbitration clause is requested for the
incorporation of the arbitration clause into the B/L to be considered effective. A clause
drafted in line with clause 1 of the CONGENBILL 1994 would suit this requirement:
“(A)ll terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf,
including the Law and Arbitration Clause, are herewith incorporated”
Since The Annefield judgment –rendered in 1970 under the Arbitration Act 1950this unrelenting attitude has been plainly maintained by English Courts in relation to the
incorporation by reference of these –“ancillary”- clauses: The Rena K83; Skips A/s
Nordheim and Others v. Syrian Petroleum Co. Ltd. and Petrofina S.A. (The
“Varenna”)84; Navigazione Alta Italia SpA v. Svenska Petroleum AB, (The "Nai
Matteini")85; Federal Bulk Carriers Inc v. C. Itoh & Co. Ltd. and Others, (The “Federal
Bulker”86; Partenreederei M/s "Heidberg" and Vega Reederei Friedrich Dauber v.
Grosvenor Grain and Feed Co. Ltd., Union Nationale des Cooperatives Agricoles de
Cereales and Assurances Mutuelles Agricoles, (The "Heidberg")87; The “Nerano”88;
Cargo on Borrad MV ‘Delos’ v. Delos Shipping (The “Delos”)89; Welex A.G. v. Rosa
Maritime Limited, (The "Epsilon Rosa")90 or Verity Shipping SA and Another v. NV
Norexa and Others (The "Skier Star")91 are good examples of this plain acceptance of
The Annefield doctrine.
23. Notwithstanding the existence in English Case Law of several exceptions to this
general rule, concerning certain clauses drafted in general language -Astro Valiente
Compania Naviera S.A. v. The Government of Pakistan Ministry of Food and
Agriculture [The "Emmanuel Colocotronis" (No. 2)] 92- or which include misprints or
mistakes -The Merak93-, an “increasingly hostile” attitude against the acceptance of
83
[1978] 1 Lloyd’s Rep. 545.
[1983] 2 Lloyd's Rep. 592 (C.A.).
85
[1988] 1 Lloyd's Rep. 452.
86
[1989] 1 Lloyd's Rep. 103.
87
[1994] 2 Lloyd's Rep. 287.
88
[1996] 1 Lloyd's Rep. 1 (C.A.).
89
[2001] 1 Lloyd's Rep. 703.
90
[2003] 2 Lloyd's Rep. 509.
91
[2008] 1 Lloyd's Rep. 652.
92
[1982] 1 Lloyd's Rep. 286.
93
[1964] 2 Lloyd's Rep. 527.
84
17
those clauses of incorporation by reference of arbitration agreements drafted in “general
words” is ascertainable in practice in England94.
C. United States of America.
24. New York is the home of the second most powerful center for international
maritime arbitration in the world: the Society of Maritime Arbitrators, Inc. (SMA) of
New York95. American Courts have quite often addressed the issue of the validity of
incorporation by reference into the bill of lading of the charterparty’s arbitration clause.
Although American decisions are not plainly consistent, they usually sustain a flexible
attitude towards the validity of this type of clauses96. This positive attitude stands -at
least- on three grounding arguments:
1) First, American Courts have steadily endorsed the existence of a policy
favoring the validity of arbitration agreements97. Thus, a presumptive validity of the
arbitration agreement entered by the parties is deemed to exist in practice. The existence
of this policy was acknowledged by the Supreme Court in 1995, in Vimar Seguros and
94
GASKELL, N., ASARIOTIS, R. & BAATZ, Y.: Bills of Lading..., cit., p. 706. Contradicting this
general approach, note, Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] Bus.
L.R. 880 QBD (Comm. Ct.). Although the case does not refer to maritime arbitration it differentiates
between those cases in which a specific reference to the arbitration clause is requested in order to consider
it valid and effective (i.e. in B/L cases, pp. 886-887 and 892). And those other cases in which no specific
reference to the arbitration clause is considered necessary for its validity, taking into account the nature of
the contract and the previous relationships existing among the parties (pp. 896-897, paras. 46-53). In other
words, coting Evans LJ in AIG Europe UK Ltd v The Ethniki [2000] 2 All ER 566 at 575-576 (CA) it is
said that “the circumstances in which charterparty provisions are stated to be incorporated in a bill of
lading are special and possibly unique, and they cannot give rise to any rule of construction which should
apply whenever one contract incorporates the term of another” (para 38)… “The bill of lading and
reinsurance contract cases provide a very different context from the present case. In the case of bills of
lading there is a particular need for certainty as to which clauses in a charterparty are incorporated into
the bill of lading contract since the bill is a negotiable instrument which may pass through many hands
and amongst those who may well neither know, nor have the means of knowledge, of the charterparty in
question and, in particular, that it may require arbitration in some place entirely foreign to him. Further,
for better or for worse, a body of case law has built up in relation to bills of lading which places them
somewhat in a category of their own. ….” (Africa Express Line Ltd v Socofi SA, 2009 WL 4666894 QBD
(Comm. Ct.), paras 34 and 41).
95
As regards this institution, see ESPLUGUES MOTA, C.: Arbitraje marítimo..., cit., pp. 37 ff.; COHEN,
M.M.: “Current Law and Practice of Maritime Arbitration in New York”, DMF, 1996, n. 561, pp. 589 ff.
96
See, TETLEY, W.: Marine Cargo…, cit., vol. I, pp. 1449 ff.; ESPLUGUES MOTA, C.: Arbitraje
marítimo..., cit., pp. 185 ff.
97
This presumption also extends to choice of jurisdiction clauses. Such an approach is based on Vimar
Seguros y Reaseguros v. M/V Sky Reefer, 515 U.S. 528 (1995) which drastically departs from Indussa
Corp. v. S.S. Ranborg, 377 F.2d 200 (C.A.N.Y. 1967). See also, Kanematsu USA, Inc. v. M/V Ocean
Sunrise, 2003 A.M.C. 2200 (E.D.La. 2003) or Barna Conshipping, S.L. v. 8,000 Metric Tons Slip Copy,
2010 WL 1443542 (S.D.Tex.).
18
Reinsurances v. M/V Sky Reefer98, and has been broadly upheld ever since by American
Courts99.
“As the Court observed in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32
L.Ed.2d 513 (1972), when it enforced a foreign forum selection clause, the historical judicial
resistance to foreign forum selection clauses "has little place in an era when ... businesses once
essentially local now operate in world markets." Id., at 12, 92 S.Ct., at 1914. "The expansion of
American business and industry will hardly be encouraged," we explained, "if, notwithstanding
solemn contracts, we insist on a parochial concept that all disputes must be resolved under our
laws and in our courts." Id., at 9, 92 S.Ct., at 1912. See Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 638, 105 S.Ct. 3346, 3359-3360, 87 L.Ed.2d 444 (1985) (if
international arbitral institutions "are to take a central place in the international legal order,
national courts will need to 'shake off the old judicial hostility to arbitration,' and also their
customary and understandable unwillingness to cede jurisdiction of a claim arising under
domestic law to a foreign or transnational tribunal") (citation omitted); Scherk v. Alberto-Culver
Co., 417 U.S., at 516, 94 S.Ct., at 2456 ("A parochial refusal by the courts of one country to
enforce an international arbitration agreement" would frustrate "the orderliness and predictability
essential to any international business transaction"); see also Allison, Arbitration of Private
Antitrust Claims in International Trade: A Study in the Subordination of National Interests to the
Demands of a World Market, 18 N.Y.U.J. Int'l Law & Pol. 361, 439 (1986).
That the forum here is arbitration only heightens the irony of petitioner's argument, for the FAA
is also based in part on an international convention, 9 U.S.C. § 201 et seq. (codifying the United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, [1970] 21 U.S.T. 2517, T.I.A.S. No. 6997), intended "to encourage the recognition and
enforcement of commercial arbitration agreements in international contracts and to unify the
standards by which agreements to arbitrate are observed and arbitral awards are enforced in the
signatory countries," Scherk, supra, at 520, n. 15, 94 S.Ct., at 2457, n. 15. The FAA requires
enforcement of arbitration agreements in contracts that involve interstate commerce, see AlliedBruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), and in
maritime transactions, including bills of lading, see 9 U.S.C. §§ 1, 2, 201, 202, where there is no
independent basis in law or equity for revocation, cf. Carnival Cruise Lines, 499 U.S., at 595, 111
S.Ct., at 1528 ("[F]orum-selection clauses contained in form passage contracts are subject to
judicial scrutiny for fundamental fairness"). If the United States is to be able to gain the benefits of
international accords and have a role as a trusted partner in multilateral endeavours, its courts
should be most cautious before interpreting its domestic legislation in such manner as to violate
international agreements. That concern counsels against construing COGSA to nullify foreign
arbitration clauses because of inconvenience to the plaintiff or insular distrust of the ability of
foreign arbitrators to apply the law.”100.
98
515 U.S. 528 (1995).
See, for instance, Bison Pulp & Papler Ltd. V. M/V PERGAMOS, 1996 A.M.C. 2022 (S.D.N.Y. 1995);
Great American Ins. Co. v. Byankin, Not Reported in F.Supp.2d, 1996 WL 756863 (N.D.Cal. 1996);
Asoma Corp. v. M/V Southgate, 2000 A.M.C. 399 (S.D.N.Y. 1999); Pasztory v. Croatia Line, 918
F.Supp. 961 (1996); Mitsui & Co. v. Mira M/V, 111 F.3d 33 (1997); Cargill Ferrous Intern. v. Highwate
MV, 70 Fed. Appx. 759 (2003); Seven Seas Insurance Company v. Danzas S.A., a French Corporation,
1997 A.M.C. 961 (S.D.Fla. 1996); Hyundai Corporation U.S.A. Inc., v. M/V an Long Jiang, her engines,
boilers, etc., Hyundai Merchant Marine Co. Ltd. and Guangzhou Ocean Shipping Company, 1998
A.M.C. 854 (S.D.N.Y. 1998). Nevertheless, several isolated exceptions to this line of thought can be
found in practice as well. See, Allianz Ins. Co. of Canada v. Cho Yang Shipping Co., LTd, 131 F. Supp.2d
787 (E.D. Va. 2000); International Marine Underwriters CU a/s/o Hyundai Corp. v. M/V Kasif Kavaran,
her engines boilers etc., Hyundai Merchant Marine Co. Ltd., and Rice Denizcilik, A.S, 989 Fed. Supp.
498 (S.D.N.Y. 1998) or, Tradearbed, Inc. v. M/V AGIA SOFIA, 1997 A.M.C. 2838 (D.N.J. 1997). An
analysis in depth of these cases is found in ESPLUGUES MOTA, C.: Arbitraje marítimo…, cit., pp. 185
ff.
100
Pp. 538-540.
99
19
2) Second, consequently therewith American Courts maintain a positive attitude
towards the acceptance and effectiveness of the incorporation by reference of arbitration
agreements –and forum selection clauses101- included in a third document like a
contract102.
3) Finally, and specifically referring to the issue of the validity and effectiveness
of the incorporation by reference into the bill of lading of the arbitration agreement
embodied in a charterparty, this positive attitude has led American Courts to accept -as
a matter of principle- the validity of the incorporation by reference of an arbitration
clause into a bill of lading through a clause of incorporation drafted in general word;
therefore diverging from the solution upheld by English Courts to this respect.
Accordingly the U.S. Court of Appeal (2nd Cir.) in its judgment of 12-11-1952 in Son
Shipping Co. Inc. v. De Fosse & Tanghe et al.103, the leading case in this matter, clearly
stated that:
“(T)hese order bills of lading specifically referred to the charter party and, in language so plain
that its meaning is unmistakable, incorporated in the bills all the terms 'whatsoever' of the charter
party 'except the rate and payment of freight specified therein.' The very breadth of the language
of inclusion is emphasized by the specific exception and leaves no fair doubt as to the meaning of
the parties. Gronstadt v. Withoff, C.C.S.D.N.Y., 21 F. 253; The Silverbrook, D.C.E.D. La., 18 F.2d
144. Since it is so plain that the provisions for arbitration in the charter party were brought over
into the bills,… Where terms of the charter party are, as here, expressly incorporated into the bills
of lading they are a part of the contract of carriage and are binding upon those making claim for
damages for the breach of that contract just as they would be if the dispute were between the
charterer and the shipowner.”104.
When dealing with this particular issue of the validity of the incorporation by
reference into the bill of lading of the charterparty’s arbitration agreement, American
Courts have focused on the condition of the parties, on their knowledge of the fact of
the incorporation itself and of the consequences arising from there105. As a result, the
verification of the existence of a clear desire of the parties to refer their disputes to
101
See, Mitsui & Co. (U.S.A.), Inc. v. Mira M/V, 111 F.3d 33 (5th Cir. 1997); Kanematsu USA, Inc. v.
M/V Ocean Sunrise, 2003 A.M.C. 2200 (E.D.La. 2003) or Bremen v. Zapata Off-shore Co., 407 U.S. 1
(1972), at 12-13.
102
See, GRENIG, J.E.: Alternative Dispute Resolution, St. Paul, West, 3rd ed., 2005, 2 vols., vol. I, p.
152, footnote 2.
103
199 F.2d 687 (C.A.2 1952)
104
P. 688. This approach is generally followed by American Courts ever since. Note, among many others,
Mitsubishi Shoji Kaisha Limited v. MS Galini, 323 F.Supp. 79 (S.D.Texas 1971); Midland Tar Distillers,
Inc. V. M/T Lotos, 362 F.Supp. 1311 (1973); Lowry & Co. v. S.S. LeMoyne D’Iberville, 253 F.Supp. 396
(S.D.N.Y. 1966), appeal dismissed, 372 F.2d 123 (2 Cir. 1967); Kurt Orban Company v. S/S Clymenia,
318 F.Supp. 1387 (S.D.N.Y. 1970) or Michael v. S/S Galini, 311 F.Supp 170 (N.D. Cal. 1970).
105
DI PIETRO, D.: “Incorporation of Arbitration Clauses by Reference”, J.Int’l.Arb., 2004, p. 441.
20
arbitration is deemed by US Courts to render the arbitration clause valid,
notwithstanding the general language of the clause of incorporation itself.
“Bills of lading are often issued under a charter-party. Therefore, we have two contractual
documents covering the contract of coverage. The charter party and the bill of lading. The charter
party will be more detailed and will often contain provisions more favorable than those in the Bill
of Lading. Generally the Court requires a clear manifestation of intention to incorporate the entire
charter or the particular term sought to be enforced”106.
25. Standing on all these three arguments, American Courts have provided for two
objective requirements as to the ascertainment of the validity of the incorporation by
reference into the bill of lading of a charterparty’s arbitration agreement. Hence, the
U.S. District Court (S.D.N.Y.), in Midland Tar Distillers, Inc. v. M/T Lotos107, clearly
stated that the incorporation by reference into the bill of lading of an arbitration clause
will be considered valid insofar two different conditions are fulfilled:
“…bill of lading will be found to incorporate an arbitration clause contained in the charter party
and will be made subject to it when the bill clearly refers to the charter party and the holder of the
bill has either actual or constructive notice of the incorporation.”108.
1) First, it is necessary for the incorporation by reference clause to clearly
individualize the charterparty to which the bill of lading refers. Therefore, certain
particular aspects of the charterparty must be detailed in the bill of lading.
“Whether a bill of lading "specifically refers" to and, thus, incorporates the charter party is fact
specific. However, a number of general rules have emerged to assist in the incorporation
determination. For instance, a charter agreement will generally be incorporated if the bill of
lading identifies either the signatories to the charter party or the date or place of the making of the
charter party... On the other hand, courts have found against incorporation where the
incorporation clause provides space for listing the name and date of the charter party and the
space is left blank.”109.
When dealing with this specific requirement, American Courts have usually
tended to individualize some relevant features to be referred to in the clause of
incorporation by reference: the date of issuance of the charterparty -Hawkspere
Shipping Co., Ltd. v. Intamex S.A.110, New York Marine Managers, Inc. v. M.V. "Topor-
106
Tropical Gas Co. v. M/T Mundogas Caribe, 388 F.Supp. 647 (1974), at 648.
362 F.Supp. 1311 (1973).
108
P. 1313.
109
Associated Metals & Minerals Corp. v. M/V Arktis Sky, Not Reported in F.Supp., 1991 WL 51087
(S.D.N.Y. 1991), at 2.
110
330 F.3d 225 (2003).
107
21
1"111 or U.S. Barite Corp. v. M.V. Haris112-, the parties to the charterparty –Federal
Insurance Company and Turbana Corp. v. M/V Audacia113 or Mitsui & Co., Ltd. v. M/V
Hermann Schulte114-, as well as the name of the particular vessel -Platamon de
Navegación, S.A. v. Empresa Colombiana de Petróleos and Gerald Asmus115 or
Fairmont Shipping (H.K.), Ltd. v. Primary Industries Corp.116- to which the charterparty
refers.
2) Closely linked to the previous condition, Midland Tar Distillers, Inc. v. M/T
Lotos also sets out the necessity of ascertaining the present or potential knowledge of
that incorporation by the bearer of the bill of lading himself, for it to be valid and
effective: an “actual or constructive notice of the incorporation” is thus required.
“(C)onstructive notice can be defined, crudely, as a rule in which ‘if you should have known
something, you'll be held responsible for what you should have known.”117.
This actual or constructive notice of the incorporation by the bearer is assessed
through the analysis of the factual and personal circumstances surrounding the case at
stake118.
Should these two requirements not be fulfilled, the arbitration agreement
incorporated by reference through a clause drafted in generic language will be –in
principle- rendered invalid and inefficient by American Courts119.
26. Nevertheless, despite the clear mandate embodied in Midland Tar Distillers as to the
necessity of assessing the existence of both conditions for the incorporation by reference
of an arbitration agreement into the bill of lading to be considered valid and effective,
“a handful of cases where federal court found incorporation despite the fact that the bill
111
Not Reported in F.Supp., 1989 WL 4030 (S.D.N.Y. 1989).
534 F.Supp. 328 (1982).
113
1987 A.M.C. 566 (S.D.N.Y. 1986).
114
Not Reported in F.Supp., 1996 WL 365660 (E.D.La. 1996).
115
478 F.Supp. 66 (1979).
116
1988 WL 7805 (S.D.N.Y. 1988).
117
Steel Warehouse Co. v. Abalone Shipping Ltd. of Nicosia, 141 F.3d 234 (1998), at 237.
118
See, Steel Warehouse Co. v. Abalone Shipping Ltd. of Nicosia, 141 F.3d 234 (1998); Castle & Cooke,
Inc. v. Etoile Shipping Co., Ltd., 622 F.Supp. 609 (1985); Siderius, Inc. v. M.V. Ida Prima, 613 F.Supp.
916; Otto Wolff Handelsgesellschaft v. Sheridan, 800 F.Supp. 1353 (1985); Otto Wolff
Handelsgesellschaft v. Sheridan, 613 F.Supp. 916 (1992) or Continental Florida Materials, Inc. v. M/V
Lamazo, 334 F.Supp.2d 1294 (2004), among others.
119
See, for instance, Continental Florida Materials, Inc. v. M/V Lamazo, 334 F.Supp.2d 1294 (2004).
112
22
of lading failed to specify”120 these two requirements exist in practice. American Courts,
perhaps aware of all the problems that the ascertainment in practice of both
requirements may endeavour121 and of the existence of a pro-arbitration policy in
American Case Law, have in certain cases –given the facts of the particular case at
stake- approached these two requirements in an extremely flexible manner, thus
“allow(ing) for quite a bit of leeway in the drafting of such clauses”122 of incorporation
by reference.
Occasionally, the incorporation by reference into the bill of lading of the
charterparty’s arbitration clause has been deemed valid in certain cases in which either
the place of signature of the charterparty was wrong -Continental U.K. Ltd. v. Anagel
Confidence Compania Naviera, S.A.123-, or the charterparty included no reference
whatsoever to the parties to it -Lowry & Co. v. S. S. Le Moyne D'Iberville124; Kurt
Orban Company v. S/S Clymenia125 or Kaystone Chemical, Inc. v. Bow-Sun126-, or
solely the date of issuance of the charterparty was mentioned in the incorporation clause
-National Material Trading v. M/V Kaptan Cebi127-, or, even, the charterparty was silent
as to its parties, date or place of issuance -State Trading Corp. of India, Ltd. v. Grunstad
Shipping Corp (Belgium) N.V.128-…
Consequently, although “(I)t is well established that where a bill of lading
clearly refers to the charter-party to be incorporated, and the holder has actual or
constructive notice of the incorporation, the charter-party will be deemed to be
incorporated”129, American Case Law clearly shows that certain exceptions to this
general rule exist in practice. Therefore, the final answer to the specific issue of the
validity of the incorporation by reference of a charterparty arbitration clause into the bill
of lading is very much dependent on the particular facts of the case at stake: “whether or
120
Continental Florida Materials, Inc. v. M/V Lamazo, 334 F.Supp.2d 1294 (2004), at 1299.
A certain trend to mix up -and confound- both requisites exists in practice. Note to this respect,
Michael v. S.S. Thanasis, 311 F.Supp. 170 (1970); Thyssen, Inc. v. M/V Markos N 1999 A.M.C. 2515
(S.D.N.Y. 1999), or F.D. Import & Export. Corp. v. M/V Reefer Sun, 248 F.Supp.2d 240 (2002).
122
Steel Warehouse Co. v. Abalone Shipping Ltd. of Nicosia, 141 F.3d 234 (1998), at 237.
123
658 F.Supp. 809 (1987).
124
253 F.Supp. 396 (S.D.N.Y. 1966), aff’d 372 F.2d 123 (C.A.N.Y. 1967).
125
318 F.Supp. 1387 (1970).
126
1989 A.M.C. 2976 (S.D.N.Y. 1989).
127
1998 A.M.C. 201 (D.S.C. 1997).
128
582 F.Supp. 1523 (1984).
129
National Material Trading v. M/V Kaptan Cebi, 1998 A.M.C. 201 (D.S.C. 1997), at 205-206.
121
23
not the incorporation clause is sufficiently specific to mandate inclusion is a factual
matter to be determined on a case by case basis.”130.
D. France.
27. International Maritime Arbitration in France is deeply linked to the Chambre
Arbitrale Maritime de Paris (CAMP)131. As a matter of principle, French Case Law
maintains a flexible position as regards the issue of the validity of the incorporation by
reference into an agreement of those terms and conditions included in a third document,
both in domestic132 and international arbitration133.
28. Focusing specifically on the situation existing as regards international arbitration –
and international maritime arbitration, too-, French Courts have usually vinculate the
issue of the validity and effectiveness of the arbitration agreement incorporated by
reference into a contract to the proof of the clear will of the parties to be bound by that
130
National Material Trading v. M/V Kaptan Cebi, 1998 A.M.C. 201 (D.S.C. 1997), at 206. See to this
respect, favouring the incorporation: Amoco Oil Co. v. M.T. Mary Ellen, 529 F.Supp. 227 (1975); Coastal
States Trading, Inc. v. Zenith Nav. S. A., 446 F.Supp. 330 (1977); Benship Intern., Inc. v. Bangladesh
Agr. Development Corp., Not Reported in F.Supp.2d, 1991 WL 710 (S.D.N.Y. 1991); Cargill Ferrous
Intern. v. Sea Phoenix MV, 325 F.3d 695 (2003) or Keytrade USA, Inc. v. Ain Temouchent M/V, 404 F.3d
891 (2005). Opposing the validity of incorporation, see, Amoco Oil Co. v. M.T. Mary Ellen (529 F.Supp.
227 (S.D.N.Y. 1981) or Cargill Inc. v. Golden Charlot MV, 31 F.3d 316 (1994).
131
DELEBECQUE, PH.: “L’arbitrage maritime contemporain: le point de vue français”, Dir. Mar., 2004,
pp. 436-439; ARRADON, F.: “Arbitrage international à Paris…”, cit.; ESPLUGUES MOTA, C.:
Arbitraje marítimo..., cit., pp. 39 ff..
132
See, DELVOLVE, J.L., ROUCHE, J. & POINTON, G.H.: French Arbitration Law and Practice, The
Hague, Kluwer, 2003, p. 64, footnote 129. Note that art. 1443.I CPC admits -in domestic affairs- the
possibility for the arbitration agreement being incorporated in a separate document to which the contract
refers.
133
This approach is based on the two existing cases of the French Supreme Court as regards Bomar Oil
N.V. c. Enterprise Tunisienne d’Activités Pétroliéres (E.T.A.P.), those of 11-XI-1989, (Rev.Arb., 1990, p.
134) and of 9-XI-1993 (Rev.Arb., 1994, p. 108) respectively. This trend is also ascertainable in some
other cases previous to 1993. See to this respect, C.Cass., 26-VI-1990, Dreistern Werk c. Crouzie,
Rev.Arb., 1991, p. 291; C.Cass., 18-II-1992, Firme Peyer Biegi c. Brittania, Rev.Arb., 1993, p. 103;
C.Cass., 3-III-1992, Sonetex c. Charphil et Topkapi, JDI, 1993, p. 141; C.Cass., 30-VI-1993, Société
Ferruzzi France c./ Société Roquette Frères, Rev.Arb., 1994, p. 115; C.Cass., 20-XII-1993, Rev.Arb.,
1994, p. 108. Note also, C.App. Paris, 13-XI-1980, Coopérative de déshydratation de la région de
Soulaines c. Hindrichs, Rev.Arb., 1982, p. 283; C.App. Paris, 20-I-1988, V.S.K. Electronics c. Sainrapt et
Brice International, J.D.I., 1989, p. 1032; C.App. Paris, 30-XI-1990, Jongerius Hanco BV c. Poilâne,
Rev.Arb., 1992, p. 645; C.App. Paris, 26-III-1991, Comité populaire de la Municipalité d'El Mergeb v.
société Dalico contractors, Rev.Arb., 1991, p. 456; C.App. Paris, 18-IV-1991, Société Afric Viande v.
Société Brittania, Rev.Arb., 1994, p. 115; C.App. Paris, 30-V-1991, Sarl Diva Fruits c./ Société Simfruits,
Rev.Arb., 1994, p. 115; C.App. Paris, 24-I-1992, Ferruzzi France c/ Ucacel et autres, Rev.Arb., 1992, p.
640, or C. App. Paris, 17-V-1995, Société Trafidi, Rev.Arb., 1997, p. 83.
24
arbitration clause134, leaving aside either the question of the assertion of the fulfillment
of certain formal requirements by the incorporation clause or its general or narrow
wording.
The necessary assessment of the existence of this real will of the parties to
submit their disputes to arbitration has led French Courts to evaluate a specific set of
circumstances surrounding the dispute at stake in order to assert it. French Courts are
willing to make sure that parties affected by the incorporation clause are aware of the
incorporation itself and of the legal consequences arising out of this fact, thus ensuring a
certain level of legal security and certainty as regards the whole process of
incorporation by reference of the charterparty’s arbitration clause into the bill of lading.
Accordingly, French Courts have attempted to verify from the outset that:
1) The person against whom those terms and conditions incorporated into the
bill of lading are to be opposed to –not both parties to the contract of carriage of goods
by sea-,
2) is aware of the terms to be incorporated into the bill of lading –acceptance is
actually not required-, specially, of the arbitration agreement,
3) and, also, that, he does not oppose it135.
Should all these conditions be complied with, it is said that “à l'exception de
rares hypothèses, la clause compromissoire par référence doit être considérée comme
valable”136.
This approach has been steadily upheld by French Case Law since the very
famous judgment of the French Supreme Court of 9-XI-1993 in Bomar Oil N.V. c.
134
DELVOLVE, J.L., ROUCHE, J. & POINTON, G.H.: French Arbitration…, cit., p. 64; VAN
HOUTTE, V.: “Consent…”, cit., p. 9; GAILLARD, E. & SAVAGE, J.: Fouchard…, cit., pp. 278 ff.
Specifically dealing with international maritime arbitration, note ESPLUGUES MOTA, C.: Arbitraje
marítimo…, cit., pp. 288 ff.; TETLEY, W.: Maritime Cargo…, cit., vol. I, pp. 1459 ff.
135
BOUCOBZA, X.: “La clause...”, cit., p. 506; VAN HOUTTE, V.: “Consent…”, cit., p. 15;
KESSEDJIAN, C.: “Note - Cour de cassation (1re Ch. civ.) 9 novembre 1993 - Société Bomar Oil NV v.
ETAP”, Rev.Arb., 1994, pp. 113-114; ESPLUGUES MOTA, C.: Arbitraje marítimo…, cit., pp. 291 ff.;
DELEBECQUE, PH: “Note - Cour de cassation (Ch. commerciale) 7 janvier 1992 - Psichikon Compania
naviera Panama v. société SIER et autres”, Rev.Arb., 1992, p. 554; DELEBECQUE, PH.: “L’arbitrage
maritime...”, cit., p. 440.
136
BOUCOBZA, X.: “La clause...”, cit., p. 512. A good example of the rejection of validity is found in
C.App. Douai, 30-X-2003, Steinweg Handelsweem BV c./ SA Generali, DMF, 2004, n. 646, pp. 253 ff.,
with commentary by Ph. DELEBECQUE (pp. 255 ff.).
25
Enterprise Tunisienne d’Activités Pétroliéres (E.T.A.P.)137. Thus, this line of thought is
followed by C.Cass., 3-VI-1997, Prodexport138; C.Cass., 21-I-1999, Coisplet139;
C.Cass., 17-VI-1997140; C.Cass., 20-XII-2000, Prodexport141; C.Cass., 6-II- 2001,
Peavey Company142; C.App. Paris, 11-IX-1997143, C.App. Paris, 17-V-2000, SA Crédit
Lyonnais144; C. App. Paris, 23-V-2002, SARL Euro Agri Food 145; C. App. Paris, 27-VI2002, Société Comecim146, or C.App. Rouen, 8-X-2002, Sté Cargill Division Soja
France c./ Capitaine du navire Walka Mlodych et a.147. All of them are plain examples
of this trend148.
29. Nevertheless, this generally positive attitude when it comes to the validity of
incorporation by reference of arbitration clauses receives a somehow specific projection
into the international maritime arbitration realm in France149… The point is that French
Case Law is not totally consistent while addressing this question:
1) First, certainly French Case Law includes a relevant number of cases clearly
upholding the validity of the incorporation by reference into the bill of lading of an
arbitration clause embodied in a charterparty: C.Cass., 4-VI-1985150; C.Cass., 3-III1992, OFER Brothers c/. The Tokyo Marine and Fire Insurance Co. Ltd.151; C.Cass.,
14-I-2004, Société Axa Corp. et autres c./ Capitaine du M/V Cay et autres152; C.Cass.,
22-XI-2005, Lindos153; C.Cass., 21-II-2006, Pella154; C.Cass., 11-VII-2006, Société
Generali France assurances et autres société Universal Legend, société de droit
137
Rev.Arb., 1994, p. 108.
Rev.Arb., 1998, pp. 537 ff.
139
Rev.Arb., 1999, p. 1341.
140
Rev.Arb., 1998, p. 539.
141
Rev.Arb., 2003, p. 1341.
142
Rev.Arb,, 2001, p. 765.
143
Rev.Arb., 1998, pp. 564 ff.
144
Rev.Arb., 1993, p. 1341.
145
Rev.Arb., 2003, p. 1341.
146
Rev.Arb., 2003, p. 427.
147
Rev.Arb., 2003, p. 1341.
148
See, MAYER, P.: “Note - C. Cass. 3 juin 1997”, Rev.crit.dr.internat.priv., 1999, pp. 92 ff.;
ESPLUGUES MOTA, C.: Arbitraje marítimo…, cit., p. 296.
149
See, ARRADON, F.: “L’incorporation des clauses de charte-partie dans les connaissements”, DMF,
2004, n. 653, p. 883.
150
DMF, 1986, p. 106.
151
Rev.Arb. 1992, p. 560.
152
Rev.Arb., 2004, p. 355.
153
DMF, 2006, n. 666, p. 16.
154
DMF, 2006, n. 670, p. 379.
138
26
panaméen et autre155; C.App. Aix-en-Provence, 11-IV-1967156; C.App. Aix-enProvence, 24-VI-1970, Eleni157; C.App. Rouen, 23-XI-1989, Compagnie La Reunion
Europeenne c./ Société Mediterranean Shipping Cº. et capitaine du navire «Diego»158;
C.App. Paris, 24-III-1992, Sociétés Stolt Nielsen, Stolt Cormorant et Stolt tankers c./
CDF Chimie North America, Compagnie Allianz et autres159; C.App. Rouen, 14-X1997160; C.App. Rouen, 6-VI-2002, ECT c/ Sté Hyundaiy Merchant Marine Co Ltd.161
or C.App. Paris, 5-VII-2006, Axa et a. c/ Rejoy Shipping162 are all examples of this
acceptance. All these judgments plainly affirm the validity of the arbitration agreement
incorporated by reference into the bill of lading, once the existence of a real knowledge
by the parties of the incorporation by reference and of its consequences is asserted by
the Court.
“... Qu'ainsi non seulement la société Italgrani a pris connaissance de son contenu et de la
clause compromissoire qui y est insérée mais l'a expressément acceptée, puisqu'elle a
donné à sa banque l'ordre de payer précisément après avoir reçu sans réserve et pris
connaissance de cette charte-partie, soit le 26 juin 1991;
Qu'en outre les opérations du déchargement qui a duré jusqu'en juillet 1992 n'étaient pas
terminées au moment de la manifestation expresse de l'acceptation des conditions de la
charte-partie tel qu'il résulte de l'ordre de paiement donné; qu'il s'en déduit par conséquent
que cette acceptation a eu lieu au moment de la réception de la livraison, quand il a été
adhéré au contrat de transport;...”163.
2) But, secondly, besides that French Courts also drastically oppose the
possibility of incorporation by reference into the bill of lading of arbitration clauses
embodied in a charterparty in certain situations164: C.Cass., 7-I-1992, Psichikon
Compania Naviera Panama c. SIER165; C.Cass., 16-VI-1992, Mediterranean Shipping
Co.166; C.Cass., 29-XI-1994, Stolt Osprey167; C.Cass., 18-X-1994, Saint Killian168;
155
Lexisnexis, JurisData n. 2006-034551.
DMF, 1968, p. 31.
157
DMF, 1970, p. 679.
158
DMF, 1990, n. 499, p. 605.
159
DMF, 1993, n. 528, p. 346.
160
Rev.Arb., 1998, p. 569.
161
DMF, 2002, n. 630, p. 865.
162
BTL, 2006, p. 600.
163
C.App. Rouen, 14-X-1997, Rev.Arb., 1998, p. 570.
164
Against this rationale, see, GOUTAL, J.L.: “Note - Cour de cassation (Ch. com.) 20 juin 1995 Société Mediterranean Shipping Co v. GAFL assurance et autres”, Rev.Arb., 1995, pp. 625 ff.; GOUTAL,
J.L.: “La clause compromissoire dans les connaissements: la Cour de cassation française et la Cour
suprême des Etats-Unis adoptent des solutions opposées”, Rev.Arb., 1996, pp. 605 ff.
165
Rev.Arb., 1992, p. 553.
166
D., 1992, IR 225.
167
Stolt Osprey DMF, 1995, n. 547, p. 218.
168
DMF, 1995, n. 548, p. 280.
156
27
C.Cass., 20-VI-1995, Mediterranean Shipping Co169; C.Cass., 8-X-2003, Borsha
Shipping ltd et al.170; C.App. Rouen, 8-VII-1993, General accident Fire and Life
Assurance et autres c./ M. le capitaine du navire Johnny-Two et Mediterranean
Shipping Company171; C.App. Rouen, 14-X-1993, Compagnie d’assurances GIE
Groupe Concorde et autres c./ Société Bishoprock Navigation et et Société Giavridis
Bros172; C.App. Rouen, 8-IV-1997, Stolt Nielsen et autres c./ CDF chimie et autres173;
C.App. Aix-en-Provence, 28-XI-1996, Margarita Foundation shipping co ltd et autres
c. Cie Sénégalaise d’assurances et de réassurances et autres174; C.App. Aix-enProvence, 14-XII-2004, Navire Metin Ka175; C.App. Paris, 27-XI-2002, M. le capitaine
commandant le navire marimar c./ GAN incendie accidents SS176 or C.App. de Rouen
6-VI-2002, ECT c/ Sté Hyunday Merchant Marine Co Ltd.177 are actual examples of this
attitude.
In all these judgments, French Courts have linked the acceptance or rejection of
the arbitration clause incorporated by reference into the bill of lading to the actual
knowledge by the bearer of the B/L of both the incorporation itself and of those terms to
be included in the bill of lading:
“... que pour être opposable au destinataire, une clause compromissoire insérée dans un
connaissement doit avoir été portée à sa connaissance et avoir été acceptée par lui, au plus tard
au moment où, recevant livraison de la marchandise, il avait adhéré au contrat de transport”178.
E. Other countries: Mixed solutions.
30. Those approaches and solutions so far stated as to the validity of the incorporation
by reference into the bill of lading of the arbitration clause embodied in a specific
charterparty are reproduced with different degrees of fidelity in some other countries of
the world. Swiss, Italian, Canadian and Spanish Case Law are good examples of the
several positions existing in practice towards this issue:
169
Rev.Arb.,1995, p. 621.
Rev.Arb., 2004, p. 77.
171
DMF, 1994, n. 536, p. 211.
172
DMF, 1994, p. 538, p. 381.
173
DMF, 1998, n. 583.
174
DMF, 1998, n. 578, p. 49.
175
DMF, 2005, n. 658, p. 293.
176
LexisNexis, JurisData n. 2002-203322.
177
DMF, 2002, n. 630, p. 865.
178
C.Cass., 29-XI-1994, Stolt Osprey DMF, 1995, n. 547, p. 218.
170
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a) Switzerland.
31. Swiss Case Law, for instance, seemingly maintains a positive and flexible attitude
as regards incorporation by reference. The Supreme Court tends to make the validity of
the incorporation by reference of the charterparty’s terms and conditions –including the
arbitration clause- into the bill of lading dependent on the degree of involvement of the
parties in international trade and on their awareness of such a complex reality.
According to the Swiss Supreme Court Judgement of 7-II-1985, in Tradax Export c./
Amoco Iran Oil Company179 different treatment should be awarded to those individuals
usually participating in international trade and to those who are not normally engaged in
international business. In the first case, a general positive attitude as to the validity of
the incorporation by reference is endorsed:
“cc) En l'occurrence, aussi bien Amoco Texas qu'Amoco Transport et Tradax peuvent être
considérées comme des sociétés commerciales rompues aux opérations liées au transport et
au commerce d'hydrocarbures. Elles sont donc censées connaître les formules habituelles
de charte-partie, telle la formule "Asbatankvoy", utilisées pour le transport du pétrole.
...
En pareilles circonstances, Tradax était en droit de comprendre que l'adhésion de son
cocontractant, agissant en faveur d'Amoco Texas, au texte du connaissement, emportait son
adhésion à la clause compromissoire contenue dans la charte-partie conclue avec Amoco
Transport. En effet, elle pouvait partir de l'idée qu'Amoco Texas, rattachée au groupe
Amoco, connaissait ou devait connaître ces modalités du contrat de transport - y compris
la clause compromissoire usuelle - et que, par renvoi à ces conditions, elle était d'accord,
elle aussi, de s'y soumettre. Peu importe que la date de la charte-partie n'eût pas été
mentionnée dans les connaissements, du moment que la référence à ce document était
conforme à la nature du connaissement.”180
32. Although Swiss authors are to some extent reluctant to speak about the existence of
a general trend in Swiss Case Law as regards this question181, some other Supreme
Court judgments have sustained this favourable attitude towards the validity of the
incorporation by reference: Tracomin S.A. c./ Sudan Oil Seeds Co Ltd., of 5-11-1985182,
or Compagnie de Navigation et Transports SA c./ MSC Mediterranean Shipping
Company183, of 16-I-1995, may be referred to this respect.
b) Italy.
179
ATF 110 II 54.
Pp. 59-60.
181
See POUDRET, J.F. y BESSON, S.: Droit Comparé…, cit., p. 179; VAN HOUTTE, V.: “Consent…”,
cit., p. 14.
182
ATF 111 Ib 253, at 256.
183
ATF 121 III 38.
180
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33. Conversely therewith Italian Courts maintain a much more rigid solution as to this
issue of incorporation by reference. The validity of the arbitration agreement
incorporated by reference into the bill of lading is made dependent on the proof of a
clear and unambiguous will of the parties to submit their disputes to arbitration, thus
ousting the jurisdictions of Italian Courts. For instance, the Italian Supreme Court
upheld this highly restrictive position in its judgments of 12-V-1969, Assicurazioni
Generali v. Agenzia Marittima Tirreno184; 13-12-1971, Ditta Augusto Miserocchi v.
Paolo Agnesi SpA185; 8-4-1975, Agenzia Marittima Tomasos Ltd. v. Sorveglianza
S.I.P.A.186, or 14-11-1981, Jaunch & Huneber v. Soc. Navigation Transoceanique187,
among some others.
c) Canada.
34. Besides that, Canadian Case Law requires –as English Courts do as well- an explicit
reference to the arbitration agreement in the incorporation clause for the arbitration
clause to be valid. The judgment on Nanisivik Mines Ltd. v. Canarctic Shipping Co.
Ltd.188 is a good example of this approach189.
e) Spain.
35. Finally, Spanish Courts have also addressed the issue of the validity and effects of
the incorporation by reference into the bill of lading of charterparty provisions. Two
elements characterize from the outset the answer awarded as to the incorporation of
arbitration clauses:
184
Dir. Mar., 1969, p. 279.
Riv.dir.int.priv.proc., 1972, p. 563.
186
Dir.Mar., 1976, p. 21.
187
Dir.Mar., 1982, p. 391.
188
113 D.L.R. (4th) 536.
189
See TETLEY, W.: Maritime Cargo..., cit., vol. I, pp. 1457-1459, including references to some other
Canadian cases.
185
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1) First, scholars in Spain have traditionally approached this possibility in a
rather restrictive manner190.
2) Secondly, there are no many cases dealing with this issue and, the
solution they have traditionally been afforded is not very consistent191. Nevertheless, the
analysis of Spanish Case Law reflects a certain evolution as regards this question.
Hence, the extremely negative attitude towards this possibility maintained by Spanish
Courts in former times, specifically as to the incorporation by reference of arbitration
agreements into a B/L –ATS of 19-XII-1985192; S.Aud.Territ. of Barcelona of 9-IV1987193; STS of 14-V-1992194; STS of 30-XII-1992195 or STS of 29-XI-2002196- has
given place nowadays to a much more flexible attitude favoring its acceptance –
S.Aud.Prov. of Valencia of 13-IV-1999197; STS of 6-II-2003198; STS of 9-V-2003199;
ATS of 29-IV-2003200; STS of 19-IV-2006201 or S.Aud.Prov. of Pontevedra of 21-XII2006202-. Nevertheless, it seems to be an unsettled situation and several negative cases
do still arise out of it203.
190
GABALDÓN GARCÍA, J.L. & RUIZ SOROA, J.M.: Manual..., cit., p. 567. In the same sense, see
ARTUCH IRIBERRI, E.: El convenio arbitral en el arbitraje comercial internacional, Madrid, Eurolex,
1997, p. 140.
191
See ESPLUGUES MOTA, C.: Arbitraje marítimo…, cit., pp. 324 ff.
192
RCEA, 1987, p. 156.
193
RCEA, 1988-1989, p. 303.
194
TOL 195782.
195
EDJ 1992/12914.
196
Referred to in STS 9-V-2003, TOL 274471.
197
AC 1999\4939.
198
TOL 253543.
199
TOL 274471.
200
JUR 2003\132244.
201
RJ 2006\5120.
202
TOL 1043683.
203
That is the case, for instance, of the Judgment of the Commercial Court of Almeria of 3-XII-2008
(unrecorded), rendered in the dispute between National Navigation Co and Endesa Generación SA and
which shortly afterwards gave pace to the famous Judgment of the English CA (Civ. Div.) of 17-XII-2009
in the case Endesa Generacion SA v National Navigation Co (The Wadi Sudr), [2009] EWCA Civ 1397;
[2010] 1 Lloyd's Rep. 193; [2009] 2 C.L.C. 1004; [2010] I.L.Pr. 10; Times, 8-II-2010 Official Transcript.
The case referred to the dispute between and Egyptian shipping company, National Navegation Co, and
the Spanish Corporation, Endesa which was owner of the cargo. In January of 2008, Endese filled a claim
against National Navegation before the Commercial Court of Almeria asking the court to attach the ship
and requesting payment by National Navegation of an indemnization due to the late arrival of the cargo.
National Navegation contested this claim alleging the lack of jurisdiction of the Spanish Court due to the
existence of a London arbitration clause in the B/L governing the transportation of the goods. This
arbitration clause was deemed incorporated by reference into the B/L from a previous charter party.
Endesa replied that National Navegation had never shown the charter party to it and that, besides, neither
National Navegation, nor Endesa were directly parties to this charter party. The Commercial Court
considered that no valid arbitration clause existed and continued with the litigation.
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3) Lastly, art. 9.4 of the Arbitration Act of 2003, which follows the
UNCITRAL Model Law on International Commercial Arbitration as for this point, is
approached as upholding this possibility of incorporation by reference of arbitration
clauses. Article 9.4 reads:
“The arbitration agreement appearing in a document to which the parties have expressly referred
in any of the forms specified in the preceding paragraph shall be deemed incorporated into the
contract.”204.
IV. Final Remarks.
Arbitration is directly rooted on party autonomy. This principle, accepted by national
and international legislators, academics, practitioners and case law, refers both to
domestic and international arbitration. Also international maritime arbitration stands on
party autonomy. Therefore, it is up for the parties to refer to arbitration and it is for the
parties to decide either in a direct or in an indirect manner how the arbitration will be
construed and developed.
Both legislation and case law of the countries most deeply related to international
maritime arbitration also support this principle and accept that international maritime
arbitration is fully dependent on party autonomy. Nevertheless, this principle receives a
special modulation as for the litigation in the field of the carriage of goods under bills of
lading. The special characteristics that this sort of transport encompasses and the deep
relationships existing between bills of lading and charterparties raise many issues as
regards the verification of the existence of a valid and effective arbitration clause
binding on the parties. The lack of international responses to this issue205 combined with
the presence of very many different national solutions, in too many cases plenty of
contradictions and inconsistencies, generates a very problematic situation, highly
capable of creating great problems to the parties involved. Some actions should rapidly
be taken to solve this unsatisfactory situation.
204
That is, according to art. 9.3: “The arbitration agreement shall be verifiable in writing, in a document
signed by the parties or in an exchange of letters, telegrams, telex, facsimile or any other means of
telecommunications that provides a record of the agreement.
This requirement shall be satisfied when the arbitration agreement appears and is accessible for its
subsequent consultation in an electronic, optical or any other type of format.”
205
For instance, despite the reference that the Rotterdam’s Rules make to Arbitration, no specific
solutions to this issue is included in them. See Rotterdam’s Rules, Chapter 15, Arts. 75-78
(http://www.uncitral.org/pdf/english/texts/transport/rotterdam_rules/09-85608_Ebook.pdf).
32