The High Court has rejected an application to stay a claim over damage to a fertilizer cargo, finding that the charterparty relied on by the vessel’s owners came after the bill of lading and could not form part of it.
Common Market Fertilizer S.A. and Grassland Fertilizers (Kilkenny) Limited began proceedings in January 2007, claiming damages for alleged breach of contract of carriage and breach of duty, including negligence. Their claim concerns 7,279.5 tonnes of compound fertilizer carried aboard the M.V. “Sonata” from St. Petersburg, Russia, to Waterford under a bill of lading dated 12 January 2007. The plaintiffs also sought interest.
The vessel was arrested by court order on 29 January 2007. The defendant, described in the proceedings as the owners and all persons claiming an interest in the vessel, then sought a stay under the Arbitration Act 1980, arguing that an arbitration clause in the charterparty was incorporated into the bill of lading. It also sought release of the ship from arrest or, alternatively, an order fixing security.
Mr Justice Paul Butler said the plaintiffs were not parties to the charterparty. Although the bill of lading referred to its arbitration clause, the judge found the charterparty had been generated after the bill of lading, so it could not form part of that document. He therefore refused the requested stay. Because that relief was refused, the requested consequential order to set aside the arrest and release the vessel did not arise.
The defendant also challenged the court’s jurisdiction to arrest the ship, pointing to its flag of the Commonwealth of Dominica, which was not a contracting state to the 1952 Arrest Convention. The judge held that the court had jurisdiction, citing the Convention provision permitting arrest in a contracting state in respect of specified maritime claims and other claims for which that state’s law allows arrest.
The remaining issue was security. The judge noted that the amount of the plaintiffs’ claim would be strongly contested and that the defendant had raised an arguable case that the plaintiffs might recover substantially less than claimed. However, security was to be assessed by reference to the plaintiffs’ “reasonably arguable best case”. He set that amount at $950,000, inclusive of interest and costs.
The judge said he would hear the parties on the form of order. The judgment does not state the final form of that order.