The Commercial Court has found that there was ‘no good arguable case’ that a Russian shipowner was party to a time-charter, clarifying the limits of CPR 6.33(2B) in the context of jurisdictional challenges, and the high evidential burden in establishing ‘agency’ relationships.
The background facts
In March 2024, White Rock Corporation Ltd (White Rock), the charterers under a two-year time charter dated 25 March 2022, concluded on a fixture recap and an amended Shelltime 4 form (the Charterparty), issued proceedings against its purported counterparties under the Charterparty, Middle Volga Shipping Company (Middle Volga) and North Global Denizcilik Ithalat ve Ihracat Ticaret Ltd Sirketi (North Global), seeking damages for what it alleged were repudiatory breaches of the Charterparty.
Pursuant to the terms of the Charterparty, four vessels were fixed to White Rock for a period of 24 months. However, in the event, only three vessels were delivered, and each was later withdrawn from service. White Rock claimed damages of approximately US$12.6 million for the withdrawals and non-delivery of the fourth vessel.
Middle Volga challenged jurisdiction pursuant to CPR Part 11 on the alleged basis that it was not a party to the Charterparty and therefore not bound by its English jurisdiction agreement.
The parties’ arguments
White Rock’s arguments
White Rock alleged that it had contracted with Middle Volga, a Russian entity, as the owner of three of the vessels, and bareboat charterer of the fourth.
The Charterparty Recap stated, “registered owners as per attached Q88” and identified North Global as technical and commercial managers. The Q88 forms listed the registered owners as Hai Ocean (for MT Lada) and Global Logistics & Heavy Industries Inc (GLHI) for the others, with North Global specified as the “disponent owner.”
White Rock asserted that the Q88 forms did not reflect reality and that North Global was in fact acting as an ‘agent’ on behalf of Middle Volga – an undisclosed principal – such that Middle Volga was a contracting party to the Charterparty.
Middle Volga’s submissions
Middle Volga denied that it was a party to the Charterparty on the following bases:
Legal issues
The pertinent legal question to be determined by the Court was whether White Rock had established a ‘good arguable case’ that it had contracted with Middle Volga by the terms of the Charterparty, such that Middle Volga was to be bound by the English jurisdiction agreement.
If the answer was “yes”, then White Rock would have established the Court’s jurisdiction pursuant to CPR rule 6.33(2B)(b) and (c). These provisions essentially provide for the English Court to have jurisdiction where the claim arises under or is in connection with a contract that incorporates an English jurisdiction agreement.
If the answer was “no”, then Middle Volga would succeed in its application challenging the Court’s jurisdiction.
The Commercial Court decision
On the basis of its analysis of the available evidence, the Court concluded that it was Middle Volga which had the better of the arguments. In this regard, the Court held that the documents demonstrated that White Rock had contracted with North Global directly – not with Middle Volga.
The Court made the following points in support of its conclusion:
Comment
This decision is a useful reminder of the high evidential burden in establishing ‘agency’ or undisclosed principal contractual relationships in commercial contracts.
When considering whether such a relationship exists in a charterparty context, the Court will examine the underlying contractual documents, together with any contemporaneous supporting documents (such as the Q88 forms, hire invoices, and broker correspondence in this case).
Source: Hill Dickinson
