Electric cable was carried on an Iranian flagged vessel from Hamburg to Dubai. The plaintiff consignees, alleging that the cargo was damaged, commenced proceedings against the shipowners in the English courts. The defendants sought a stay on saying that the bill of lading had an exclusive jurisdiction clause under which all disputes were to be tried in Hamburg. There was an issue as to the proper law of the bill of lading contract, the defendants contending for German law and the plaintiffs for Iranian law. The bill of lading contained a provision that the contract was, in the option of the carrier to be declared by him on the merchant’s request, to be governed either by Iranian law with the Tehran courts having exclusive jurisdiction or by German law with the exclusive jurisdiction of the Hamburg courts or by English law with the exclusive jurisdiction of the courts of London.
Held: The proper law must be capable of determination when the contract was entered into. The bill was impliedly under German law since that had the closest and most real connection. Applying German law the jurisdiction clause was invalid because it was printed in such small print as to be insufficiently legible. There was therefore no valid exclusive jurisdiction agreement. Obiter he considered the position under Iranian law. There being no evidence of that law, it was assumed to be identical to English law. It was common ground that, having regard to the decision of the Court of Appeal in Armar Shipping Co v. Caisse Algerienne, supra, the jurisdiction clause was unenforceable at least in so far as it introduced a floating proper law. The question then was whether that invalidity also rendered the optional choice of forum invalid.
Bingham J thought it did: ‘If the clause had confined itself to conferring three options for the choice of jurisdiction on the carrier alone that would seem to me a clause to which effect could properly and without difficulty be given. Moreover, it would seem to me that the plaintiff could well protect himself against abortive proceedings, if that were the effect of the clause, by requesting an exercise of the option before issuing proceedings in one jurisdiction or another. I very much doubt if there is any obligation on the merchant to request the exercise of the option. I do not, however, construing this clause as a whole, think that the choice of jurisdiction can be excised from each of these sub-clauses and given independent effect if the choice of law falls. They are intimately connected with the choice of law options and are not expressed in the clause as separate options. I think, as a matter of construction, that it is artificial and unreal to give effect to the ancillary provision while rejecting the main provision to which it is, as I think, parasitic. Accordingly, I reach the conclusion that this must be treated as a case in which there is no exclusive jurisdiction, applying the principles of English law on the assumption that that is the same as Iranian law.’
Judges:
Bingham J
Citations:
[1984] 2 Lloyds Rep 380
Jurisdiction:
England and Wales
Cited by:
Cited – Lexington Insurance Co v AGF Insurance Ltd HL 30-Jul-2009
The respondent insurers had been held liable in Washington, and had been granted indemnity against the appellants by the Court of Appeal. The insurance contract had been under the law of Pennsylvania, but that of the re-insurance under the law of . .
Lists of cited by and citing cases may be incomplete.
Transport, Contract
Updated: 11 May 2022; Ref: scu.372863