Incorporation – general words insufficient to achieve incorporation of arbitration clause in Centrocon charterparty.
Maize was shipped partly in bulk and partly in bags from the Argentine to Europe under a Centrocon voyage charterparty.
Bills of lading were issued by the master on behalf of the owners including the negligence clause of the charterparty.
On outturn, the cargo was found to be damaged.
The arbitration clause in the Centrocon charterparty included a three month time bar. The clause referred to disputes arising under this “contract”.
Although some correspondence initiating the arbitration was entered into within three months of discharge of the cargo, action was instituted considerably later by the cargo interests against the shipowners.
The shipowners applied for a stay of the action on the basis that the arbitration clause had been incorporated into the bills of lading.
Brandon J, sitting in Admiralty, refused the stay, holding that the arbitration clause had not been incorporated.
He relied principally on the Njegos which had held that identical words were not sufficient to incorporate an arbitration clause which was not naturally germane to the bills of lading.
Brandon J distinguished the Merak on the basis that there, although the same words were used, the arbitration clause in the charterparty itself expressly contemplated disputes arising under bills of lading.
The Court of Appeal (Lord Denning MR, Phillimore and Cairns LJJ) upheld the judgment of Brandon J.
Brandon J quoted extensively from correspondence between the multiple parties which demonstrated an acquiescence by the shipowners in litigation as opposed to arbitration. Based on this correspondence, he intimated that, even if he had not refused the stay on the basis of binding authority, he would have exercised his discretion to refuse such stay.
Anthony Evans appeared for the shipowners while JS Hobhouse appeared for the cargo interests. Counsel for the cargo interests referred to the well known quotation of Lord Dunedin in Atlantic Shipping and Trading Company Ltd v Louis Dreyfus and Co:
“… in these commercial cases it is, I think, of the highest importance that authority should not be disturbed, and if… a certain doctrine has been laid down in former cases and presumably acted on in the framing of other contracts [the court] will not be disposed to alter that doctrine unless… it is clearly wrong.”
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