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Wednesday, 02 April 14
CHINA: ARBITRATION CLAUSES IN BILLS OF LADING UNDER CHINESE LEGAL PRACTICE - SKULD
 KNOWLEDGE TO ELEVATE
Successful incorporation of a charterparty arbitration clause into the bills of lading is not a straight forward matter under China jurisprudence and recently a Chinese maritime court dismissed the owners' motion to refer the case to arbitration, because it was held that the C/P arbitration clause incorporated into the B/L was not effective. Details of the matter are as follows. Key points following the legal decision are:
- Although the said B/L recorded on the front page that it was: "to be used with charterparty", there was no express statement in the bill terms for incorporating the arbitration clause from the C/P.
- The standard incorporation clause in the back page of the B/L could not constitute a valid incorporation of the arbitration clause under Chinese law and practice.
- If any C/P terms are to be recognised as incorporated then they would be those of the voyage charter to which the cargo receiver was a party - not the head time C/P. This is because the time C/P is in the nature of being primarily a leasing contract .
Facts of this case
The vessel owners concluded a time C/P as with a charterer. One of the rider clauses provided that English law shall be applicable, and a further clause provided that any dispute arising from the C/P shall be submitted to arbitration at the LMAA.
As part of her charter employment, the vessel carried a cargo of iron ore fines from South America to China. According to the B/L, the shipper South American and the receiver was a Chinese Steel Mill.
While on route the vessel was involved in collision with another vessel. The owners appointed salvors to conduct salvage, and concluded a LOF contract. General average was declared. The salvage was successful, and the Chinese Steel Mill (through its insurers) had to provide general average security to the vessel.
The general average apportionment of salvage costs to cargo was significant, and the Chinese Steel Mill commenced proceedings in China for an indemnity against the ship-owner. The owners raised objection to jurisdiction on the basis that the provisions of the time C/P, including the arbitration clause had been incorporated into the B/L, and thus was binding upon the Steel Mill. The expert opinion of English lawyers was put forward to confirm that the terms of the C/P were successfully incorporated in to the bills of lading, including the arbitration clause.
First instance trial before the Chinese Maritime Court
The Maritime Court dismissed the objection to jurisdiction for the following reasons:
- The case was about compensation of ship collision / general average salvage rewards. Hence, the case fell into the scope of the contract of the carriage of goods by sea.
- Although the said B/L recorded on the front page that: "to be used with charterparty", there was no express statement in the bill terms for incorporating the arbitration clause in the C/P. The standard incorporation clause in the back page of the B/L cannot constitute valid incorporation.
- Meanwhile, the C/P which the owner claimed was to be incorporated into the B/L was a time C/P between the owner and the charterer only. The C/P arbitration clause was only there for resolving the disputes arising from the leasing of the vessel. It was not an arbitration clause for purpose of carriage of goods by sea under the voyage C/P.
- The local Maritime Court, as the nearest court at the port of the destination of the said carriage contract, should have jurisdiction over this case.
Appeal judgment High People's Court
The owners then appealed to the High People's Court and the appeal court dismissed the objection to jurisdiction for reason that:
- Although it is stated on the face of the involved B/L that the said B/L should be used with the C/P, the said C/P to be used with B/L shall be the voyage C/P and not the time C/P to which the owner was a party.
- However, the C/P provided by the owners was a time C/P and there was also no record on the face of the B/L regarding the specific C/P concerned and no express acceptance to have the C/P arbitration clause incorporated.
Observation on this case and comment
Chinese courts hold a stringent view concerning the issue of incorporating the C/P arbitration clause into the B/L. In this case, a key issued appeared to be that the C/P terms sought to be incorporated came from the time C/P, instead of a voyage C/P.
It should also be noted that in 2004 the Qingdao Maritime Court also held that a time C/P is primarily a vessel leasing contract, and although it also has some clauses regarding transportation of cargo it is still primary a leasing contract which is very different from voyage C/P.
The Qingdao Maritime Court continued to say that the B/L relationship is different to the time C/P legal relationship, and because of the rooted difference in this respect, the time C/P arbitration clause cannot be incorporated into the B/L.
Although China is not a case law country, the reasoning of Chinese courts in this regard should be paid attention to for handling of other similar cases.
By Philip Peng
Hai Tong & Partners, Beijing
Source: Skuld / Hellenic Shipping
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Saturday, 08 March 14
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- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
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- Electricity Authority, New Zealand
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- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
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- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
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- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
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- The State Trading Corporation of India Ltd
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- Australian Coal Association
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- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
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- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
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- New Zealand Coal & Carbon
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- Australian Commodity Traders Exchange
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- Latin American Coal - Colombia
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- India Bulls Power Limited - India
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- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
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- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
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- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Parliament of New Zealand
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- PNOC Exploration Corporation - Philippines
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- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
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