What is the attitude of your courts to the incorporation of a charterparty, specifically: is an arbitration clause in the charter given effect in the bill of lading context?

Shipping

Australia Small Flag Australia

Arbitration clauses or agreements in bills of lading and other sea carriage documents are also ineffective by virtue of s11(3) of COGSA unless they provide for arbitration conducted in Australia. Again, however, it is questionable whether foreign courts would regard a foreign arbitration clause as invalid if challenged elsewhere simply by operation of s11 of COGSA in Australia.

Until relatively recently, there was a question mark as to whether s11 extended to arbitration or clauses in a voyage charter party as a "sea carriage document". A 2013 decision of the Full Court of the Federal Court of Australia held that an arbitration clause in a voyage charterparty (despite arguments that such a document fell within the definition of a sea carriage document) was not invalid for the purposes of s11(3). Part of the reasoning was that charterers do not require the same level of protection as shippers and consignees from being forced to litigate or arbitrate in jurisdictions outside Australia.

In summary, arbitration clauses in a bill of lading will be valid only if they provide for Australian arbitration whereas arbitration clauses in charterparties, even if they provide for arbitration in a jurisdiction outside Australia, will be valid.

China Small Flag China

The Chinese courts do not normally enforce a clause in the bill of lading purporting to incorporate a charterparty clause (including the charterparty arbitration clause), unless the bill of lading holder is also a party to the charterparty and is aware of the charterparty terms.

Croatia Small Flag Croatia

An arbitration clause contained in the charterparty is given effect in the bill of lading context if the bill of lading makes an express reference to such arbitration clause. The similar principle applies to other terms of the charterparty.

Colombia Small Flag Colombia

There is no case law at the moment in this specific regard. The likely is that an arbitration clause in a bill of lading could be recognised as valid under local law parameters. In our view, this would be decided in a case-by-case basis.

Cyprus Small Flag Cyprus

If a bill of lading contains specific words which try to incorporate an arbitration clause contained in a charterparty, Cyprus Courts will recognise and enforce the clause provided the provisions in the charterparty are so worded as to make sense in the context of the bill of lading and they do not conflict with any express term of the bill of lading.

Israel Small Flag Israel

The Courts attitude in relation to enforcement of Arbitration clauses vary between the presumption that arbitration clauses are compelling and the presumption that in order to a party to give up its procedural and substantial rights before a court in favor of arbitration, clear evidence of the party's intention and agreement to enter an arbitration agreement are to be defined (Supreme Court judgment in civil appeal 7608/99 Lucy Projects Vs. "Mizpe Kinneret"). Therefore, it might be a circumstantial questions depending for example if incorporation of the charterparty was made on the face of the B/L or on the back page and if the charterer was aware of the conditions from say, a previous fixture, etc.

Italy Small Flag Italy

According to Italian Courts a valid incorporation of the charterparty in the bill of lading requires that reference to such charterparty be “specific”.

Italian case law tends to identify the date of conclusion of the contract as an element usually adequate for the purpose of identifying the charterparty into the bill of lading.

Therefore, a generic printed clause in the bill of lading, mentioning the incorporation of the charterparty without indication of the date of its conclusion, is considered null and void.

According to the Italian Courts, an arbitration clause contained in the incorporated charterparty is deemed valid and applicable in the event that (i) the charterparty is validly incorporated in the bill of lading, pursuant to the above guidelines, and (ii) the back of the bill of lading expressly refer to the arbitration clause amongst the terms and conditions of the charterparty applicable to the bill of lading. In such a case, the incorporation of the arbitration clause into the bill of lading is to be considered sufficiently specific and, consequently, valid.

Japan Small Flag Japan

Where a bill of lading has clear clauses or wording for the incorporation of the terms set out in the specific charterparty, the incorporation of such terms (including dispute resolution, arbitration clauses and jurisdiction clauses) into the bill of lading will be adopted by the Japanese courts, but it should be noted that the specific requirements for such incorporation have not yet been clarified by the courts.

Norway Small Flag Norway

A jurisdictional clause or arbitration clause in a charterparty is only binding on the holder of the bill of lading (who has acquired it in good faith), if the bill of lading expressively states that the provision is binding on the holder of the bill of lading, cf. NMC sec. 310, 311.

In case of tramp bills of lading, provisions of the chartering agreement which are not included in the bill of lading cannot be invoked against a third party unless the bill of lading includes a reference to them, cf. NMC sec. 325.

Philippines Small Flag Philippines

Case law has recognized and upheld the arbitration clause contained in a charterparty that is incorporated in the bill of lading.

It is important to note however that arbitration clauses bind only the parties. Thus, where the suit involves multiple parties and there is a claim by a non-party to the arbitration clause, the suit may still proceed even as against a party to an arbitration clause.

Singapore Small Flag Singapore

It depends on the wording of the clause. There is case law suggesting that general wordings may be insufficient to incorporate an ancillary charterparty arbitration clause and that the same result must follow with regard to the charterparty jurisdiction clause (see: The “Dolphina” [2012] 1 SLR 992) Parties should make clear in the bill of lading that the bill of lading is subject to an arbitration clause in the charter.

South Korea Small Flag South Korea

The Korean courts have ruled that in order for an arbitration clause in the charter to be given effect in the bill of lading context,

  1. it should be stated in the bill of lading that the arbitration clause in the charter shall be incorporated, and the charter should be specified by the statement in the bill of lading; or
  2. the holder of the bill of lading is aware, or could have been aware of the arbitration clause and the charter (Korea Supreme Court Case No. 2000 Da 70064 delivered on 10 January 2003, et al).

Taiwan Small Flag Taiwan

Even if the B/L states the incorporation of the terms of a charter party, many of the Taiwanese courts would still consider that the terms of a charter party are not necessarily applicable. That is, it is hard to prove the B/L holder had agreed on a charter party, especially when the B/L holder did not see the charter party at all.

Similarly, the key is whether the B/L holder agreed on the arbitration clause. Besides, according to Article 22(2) of the 1978 Hamburg Rules, the carrier may not invoke the arbitration clause pursuant to the charter party against a holder having acquired the B/L in good faith. Accordingly, unless otherwise explicitly stipulated in the B/L issued pursuant to a charter party, the holder having acquired the B/L in good faith is not bound by such arbitration clause. It is advisable to specially state the arbitration clause on the face of the B/L, which may convince the judge that the B/L holder did see it and agree.

United States Small Flag United States

The terms of a charter party can be incorporated into a bill of lading, provided it is clearly done on the face of the bill of lading.

Foreign forum selection clauses and foreign arbitration clauses found in incorporated charter parties are enforced if the charter party is properly incorporated in the bill of lading. To enforce an arbitration clause against a third-party holder, a bill of lading should specifically identify the charter party and clearly incorporate the arbitration clause. A party seeking to avoid enforcement of a foreign arbitration or forum selection clause has the burden of proving a likelihood that “the substantive law to be applied will reduce the carrier’s obligations to the cargo owner below what COGSA guarantees.” Vimar Seguros Y Reaseguros v. M/V Sky Reefer, 515 U.S. 528, 539, 115 S. Ct. 2322, 2329 (1995).

United Kingdom Small Flag United Kingdom

If a charter is identified specifically in the bill of lading then its terms will be incorporated into the bill.

If there is a blank or unspecific reference to a charter being incorporated, then it will usually be taken to mean the voyage charter at the bottom of the chain, which will usually be more appropriate to a bill of lading contract than a time charter.

It is not necessarily the case, however, that all terms of the charter will be incorporated. Usually it is only those that are appropriate to the carriage and delivery of the goods.

In particular, and arbitration clause in a charter will not be taken to apply to the bill of lading contract unless it is expressly incorporated (as it is in, for example, in most recent Congenbill forms).

Malta Small Flag Malta

The landmark judgement related to the matters raised in this question is the case of Northeastern Breeze case number 30/90 decided by the Court of Appeal on the 10th of October 2005. In that case the bill of lading had a reference to the incorporation of the terms of the Charterparty. There were issues as to which charterparty the clause was referring to however the point at issue was whether such a generic clause would also include the arbitration clause in the charterparty. The court accepted the submissions of the plaintiffs that such a generic clause could not include the arbitration clause and that specific words of incorporation of the arbitration clause would have to be made in the bill of lading.

Panama Small Flag Panama

According article 85 of Law 55, only if the bill of lading is part of a charterparty, then the charter party is to be considered as the contract. According to article 87 of Law 55, the same applies to a document other than a bill of lading, if issued by the carrier as evidence of the contract of carriage of goods by waterways.

However, in the event of conflict of law with respect to the effects of the contract of carriage, unless there is an express agreement to the contrary, the laws of the country where the cargo was loaded, would be applicable law to the matter.

Brazil Small Flag Brazil

The bill of lading verse must contain or refer the general terms and conditions of the charter party and should include the Arbitration clause.

Usually when Arbitration Clause are not effective express in the wording of the Bill of Lading, only referring to an existing clause on the Charter Part, the courts will likely understand that arbitration will not be applicable. Mostly when receivers are different party from those from charter party.

Necessary to note that the bill of lading may be considered an adhesion contract, if the issuer (shipowner) establishes its clauses without minimum negotiation cargo interest. Therefore, Jurisdiction or Arbitration clauses will only be binding in adhesion contracts if the contracting parties expressly agree on this specific clause, stating that same is accepted.

Updated: December 11, 2019