The Bill of Lading Jurisdiction Clause. A cross channel conflict

Professionals involved with disputes arising from contracts evidenced by bills of lading are of course familiar with jurisdiction clauses which form a common feature of these contracts. Typically, a bill of lading jurisdiction clause will state that disputes in relation to the contract of carriage shall be referred to the courts of the principal place of business of the carrier. Very often such clauses will identify a specific court in a well known jurisdiction which may not be the principal place of business of the carrier. Jurisdiction clauses referring disputes to the High Court in London subject to English law are, together with the Southern District Court of New York, the two most popular choices. Another equally common version of the jurisdiction clause is a term in the bill of lading which, by incorporation of the governing charter party, refers all disputes to arbitration in the place indicated by the charter party. The classic example of this incorporation mechanism is the use of the Congenbill Bill of Lading together with an all-inclusive incorporation clause on the reverse of the bill of lading incorporating all the terms of the governing charter party including the jurisdiction or arbitration clause.

Keywords: jurisdiction clause, applicable law clause, bill of lading conditions, prorogation clause.

Not surprisingly the English courts have always adopted a very liberal approach to the validity of such jurisdiction clauses given that the choice of English law is so common. But the liberality of the common law approach here has not traditionally been followed by civil law jurisdictions and in France in particular. The purpose of this article is firstly to set out the legal principles historically developed by French civil law in this field. The article then traces the development of the case law of the French courts which has progressively departed from the restrictions placed by earlier decisions on the validity of jurisdiction clauses. Finally, the article seeks to explore the future of this area of the law, in particular in the context of Brexit. Following the withdrawal of the United Kingdom from the European Union, the set of rules concerning the mutual recognition of judgments set out by the Brussels Convention of 1968 in the form of EU Regulations¹ no longer applies.

As a matter of English common law all three variants of the bill of lading jurisdiction clause identified above are perfectly valid in so far as the terms of the bill of lading are clear. Consequently, if a written clause featuring in the standard terms of a bill of lading refers disputes to the High Court in London or courts of the principal place of business of the carrier, then, provided that the clause is clear, that is the end of the matter. Similarly in respect of bills of lading which incorporate the terms of a charter party arbitration clause and applicable law provision, provided that the holder of the bill of lading is capable of identifying the relevant term in the governing charter party the jurisdiction or arbitration clause will be valid.

But the position adopted by French civil law in this area from the outset was very different. The courts, supported overwhelmingly by legal commentators, took a highly protective and restrictive approach to the validity of such clauses. The fact that the printed terms of a bill of lading included a jurisdiction clause even though the latter was clear was far from conclusive. The courts required evidence that the jurisdiction clause had been seen and accepted by the shipper or receiver. This requirement was justified by the courts on the grounds that a jurisdiction clause falls outside of the general contractual terms, and express acceptance of the clause is necessary for it to be binding on the parties to the contract. The question which this approach raised was naturally how can the Carrier actually prove that the shipper has accepted the jurisdiction clause? The response of the earlier French case law was that signature of the bill of lading from the shipper would be evidence that the clause had been accepted. From a strictly legal perspective this may be logical. But from a practical commercial point of view the requirement would in reality be untenable. All professionals involved in maritime transport of goods know very well that in practice bills of lading are only signed by the Master or agent for the Carrier but never or very rarely by the shipper.

In the legal developments which followed, the cause of the Carriers seeking to rely on jurisdiction clauses found support from the principle that such clauses are a regular standard feature of this commercial trade. This principle in particular found justification in the rules set out in the EU regulations giving legal effect to the Brussels Convention. Specifically, article 25 of the current version of the Recast Brussels Regulation states that a jurisdiction clause in an international contract will be valid in so far is it is in a form which is commonly accepted as forming part of business practice in the trade in question. Jurisdiction clauses in bill of lading contracts are of course undeniably a regular feature of such contracts. It followed that the French courts, albeit reluctantly, were obliged to concede that clauses in bill of lading terms providing that all disputes should be referred to the courts of the principal place of business of the carrier were valid. The CJE European Court of Justice in a land mark decision Castelleti² upheld this principle. The decision has been applied since very clearly by decisions of the civil and commercial branches of the French Supreme Court la Cour de Cassation. Of course, these decisions were welcomed by the English courts which were the most likely to benefit from referrals to the High Court in London through the typical bill of lading jurisdiction clause. The United Kingdom however was at the time of these decisions a member of the European Union, so the legal regime of the Recast Brussels directive applied. But since the beginning of 2022, following Brexit, the regulation has no application to England. It is generally recognized by French legal commentators that the liberalization of the French legal approach to the validity of jurisdiction clauses in bills of lading was heavily influenced by article 25 of the Recast Brussels Regulation. How would the issue be determined now that London could no longer benefit from the rule in article 25 of the EU regulation that a jurisdiction clause in a form regularly accepted in the trade in question would be valid? On the one hand there are now numerous decisions of French courts stating that a jurisdiction clause in a bill of lading is a regular feature of maritime trade. Should the position be different because London and the UK are no longer part of the European Union?

A recent decision of the Court of Appeal in Paris may give us some guidance on the future of the international jurisdiction clause post Brexit³. The case is of interest and relevant because, unlike many of the recent decisions in this field in France, it deals with a jurisdiction clause concerning a state outside of the European Union: South Korea. The bill of lading terms included a jurisdiction clause referring all disputes to the courts of the principal place of business of the Carrier in South Korea. The Court of Appeal of Paris upheld the first instance decision of the tribunal de commerce in declaring the clause valid on the grounds that it was well known that bill of lading contracts contained jurisdiction clauses referring disputes to the courts of the place of business of the carrier. The decision has attracted criticism from one commentator in a leading review the Droit Maritime Francais⁴ who has not surprisingly pointed out that the cases normally involve interpretation of article 25 of the Recast Brussels Directive which should not apply to South Korea. The decision of the Paris Court of Appeal involved a jurisdiction clause referring disputes to the courts of the place of business of the Carrier. The reasoning of the Court of Appeal of Paris followed what has become the orthodox approach to considering the validity of a jurisdiction clause in a bill of lading contract. The bill of lading contract is a tripartite contract of course and the receiver final holder of the bill of lading will acquire the rights of the shipper under the contract of carriage. The approach of the Court of Appeal of Paris was to determine whether the jurisdiction clause was in a form commonly found in the custom of the trade, in which case it would be binding on the shipper. The court would then apply the law applicable to the bill of lading contract to determine whether under that law the receiver acquires the same contractual rights as the shipper.

It is interesting to speculate how the Court of Appeal of Paris would consider a typical clause referring disputes to the High Court of London now that the United Kingdom is no longer entitled to rely on the article 25 of the jurisdiction rules of the Revised Recast Regulation. London is a leading capital for the resolution of international disputes in shipping. But there are very few ship owner carriers who have their place of business in the United Kingdom. For policy reasons it could be that the French courts will be tempted to take a less friendly approach to referrals to the High Court in London on policy grounds. But from the perspective of legal orthodoxy, it is difficult to deny that, pursuant to the reasoning of the Paris Court of Appeal, a London High Court jurisdiction clause in a bill of lading could also be a contractual term which features commonly in the international trade in question. There is however an earlier decision of a Court of Appeal of Paris where the judges did not consider that a clause referring disputes to the High Court in London, as opposed to the courts of the principal place of business of the carrier, could necessarily be considered typical for the particular trade in question. It is also difficult not to ignore that there is certainly support from legal practitioners and commentators in France for a return to a more restrictive approach to the validity of jurisdiction clauses particularly if it would mean that French courts could successfully resist challenges to their jurisdiction in favour of the High Court in London.

In concluding this article, we would like to draw attention to the risk of future disputes involving the English and French courts in relation to the third variety of jurisdiction clause mentioned at the beginning of this study. As stated above, the Congenbill, widely in use in international maritime trade, normally incorporates by an express term on the reverse side of the bill of lading all the terms of the governing charter party mentioned on the front of the bill of lading including the jurisdiction and applicable law clause. The position of English common law in relation to incorporation of terms has always been very liberal. Provided that the document incorporated has been clearly identified and can be easily obtained by the shipper or receiver there is no requirement as a matter of English law to prove that the latter have actually seen and accepted the clause. The position of French civil law on this question is quite the reverse. As a matter of French civil law, recently confirmed by a revised version of the French Civil Code, a party seeking to rely on its standard terms, or another contractual document not reproduced in a signed contract must produce evidence that these terms have been seen and accepted. As a matter of commercial practice, it is of course well known that Congenbills of lading will mention, on the front side of the bill, a charter party but the terms of the charter party let alone the relevant jurisdiction clause will not be reproduced. However strict compliance with the French civil law requirements would effectively mean that the Carrier would have to physically annexe the charter party jurisdiction clause to the bill of lading if he wanted to establish that it had been seen and accepted.

We would conclude with some observations on the likely legal disputes which may result from these important differences between the position of English common law and French civil law. Traditionally the English courts have had recourse to a procedural remedy, the anti suit injunction, to deter the breach of a jurisdiction clause by a party to the contract who commences proceedings before a foreign court ignoring the jurisdiction clause in the contract. The English courts are empowered to issue an injunction ordering the party in breach of a valid jurisdiction clause to withdraw the proceedings before the foreign court commenced and pursue the legal action before the High Court or arbitration tribunal in London. But when the United Kingdom was a part of the European Union, a series of judgments of the European Court of Justice ending with its decision in the Front Conor⁵ held that the English anti suit injunction could not be enforced or recognized by the courts of the members of the European Union because such procedural remedies were against the spirit of the mutual confidence which European Union member courts should bear to each other. However now that the United Kingdom has left the European Union, the English courts are free to issue anti suit injunctions where a classic London arbitration clause, incorporated into a Congenbill of lading, has been violated by a party commencing proceedings before a foreign court in the European Union. The French courts may of course refuse to recognize the anti suit injunction. And the English courts, in turn, may refuse to recognize a decision of an EU member court which does not confirm the validity of a typical bill of lading jurisdiction clause. In the absence of a new binding agreement on jurisdictional issues and recognition of judgments between the European Union and the United Kingdom it is difficult to predict how such conflicts will be resolved. Interesting times lie ahead. ■

Notes