The “NAVIOS KOYO” [2021] SGHC 131: Court stays proceedings in contravention of jurisdiction clause

The recent decision in the “NAVIOS KOYO” is a reminder of the importance of ascertaining and complying with the relevant jurisdiction clause or arbitration agreement prior to commencing proceedings. Failure to do so may result in costly jurisdictional challenges, and, more importantly, expose claimants to the risk of their claims becoming time-barred.

Summary of facts

The plaintiff, Batavia EXIMP & Contracting (S) Pte Ltd (“Batavia”) commenced proceedings in August 2020 against Pedregal Maritime SA (“Pedregal”), the registered owners of the vessel “TAIKOO BRILLIANCE”. The claim was for USD 4.4m for alleged misdelivery of cargo.

The “TAIKOO BRILLIANCE” had arrived at the discharge port on 15 September 2019 and discharge of the cargo was completed on 23 September 2019.

At the material time, the “TAIKOO BRILLIANCE” had been time-chartered to China Navigation Co (“CNC”), and sub-chartered to TPT Shipping Ltd (“TPT”).

Batavia alleged that around the same time as commencing the claim in August 2020, it made a request to a connected party for a copy of the charterparty, but that this was refused.

On 18 September 2020, Batavia arrested a sister vessel, “NAVIOS KOYO”, in Singapore. CNC wrote to Batavia to discuss the release of the vessel and referred to the fact that the charterparty incorporated into in the bills of lading contained a London arbitration agreement. Batavia requested a copy of the charterparty from CNC, which was provided the next day.

The front of the bills of lading identified a charterparty dated 3 July 2019, which was the voyage charter between CNC and TPT. Clause 60 of that charterparty provided:

“Any dispute arising from or in connection with this Charter Party shall be referred to arbitration in London…”

On 6 November 2020, Pedregal applied for a stay of the proceedings in favour of arbitration in London, which was granted on 17 December 2020. At this point, claims brought under the bills of lading had become time-barred pursuant to Art III Rule 6 of The Hague / Hague Visby Rules.

Batavia appealed, arguing that the stay should be conditional on a time-bar waiver. However, the Court refused to exercise its discretion to make the stay conditional on a waiver of the time bar, and the appeal was dismissed for, amongst others, the following reasons:

1. Batavia claimed that it was unaware of the charterparty terms incorporated into the bills of lading until it was too late. However, they did not try to obtain a copy of the charterparty until July / August 2020 and the Court held there had been ample time to obtain a copy of the charterparty by other means.
2. Batavia would have known of the potential existence of an arbitration agreement even without having a copy of the charterparty, as Clause 1 on the reverse of the bills of lading expressly referred to the incorporation of 'the Law and Arbitration Clause'. This made Batavia’s inaction between September 2019 and July/August 2020 all the more unreasonable.

Conclusion

Steps should be taken at an early stage to identify and obtain a copy of the applicable jurisdiction clause or arbitration agreement to ensure proceedings are commenced in the correct forum. Failure to do so could expose claimants to costly jurisdictional challenges, and may result in their claims becoming time-barred.  Had further investigations been undertaken earlier on and other avenues to obtain a copy of the applicable charterparty been exhausted, the Court may have been more willing to make the stay of proceedings conditional on the Defendant’s waiver of the time bar defence.