Ref: In MV ‘KOUTALIANOS’, EDIOLA SHIPPING LTD. vs CEFETRA B.V., Rotterdam District Court, 9 September 2020
The case concerns the carriage of soybean meal pellets by Ediola from Brazil to Europe on board of the mv Koutalianos. For the purpose of this transport, Ediola, as Owner, and Cargill B.V./IPS (hereinafter referred to as: IPS), as charterer, had entered into an NYPE time charter agreement dated 7 April 2017. This time charter agreement contains the following arbitration clause:
“58. Arbitration Clause :
- A) This contract is governed by and construed in accordance with English law.
- B) Should the parties fail to reach a prompt amicable settlement the parties hereby agree to refer all disputes to mediation under the model mediation procedure of CEDR (…).
- C) In the event that mediation does not lead to a mutually signed agreement within 35 days after the appointment of a mediator any dispute shall be resolved by London Arbitration as provided below:
1) All disputes arising out of or relating to this contract where the total amount claimed (…) does not exceed USD 50,000 shall be referred to arbitration in London (…) in accordance with the small claims procedure of the LMAA.
2) All other disputes, unless the parties agree forthwith on a single arbitrator, be referred to the final arbitrament of two arbitrators carrying on business in London who shall be members of the Baltic Exchange and engaged in shipping and/or grain trades (…).The parties are entitled at any stage, to appoint an arbitrator as to preserve time only (and give notice of such appointment) notwithstanding ongoing amicable negotiation or CEDR mediation.”
For the transport, bills of lading have been issued by or on behalf of the master naming either Cefetra or Amaggi as notify party. The bills of lading incorporate the law and arbitration clause contained in the time charter party. Delivery of the cargo is made to Amaggi and Cefetra as bill of lading holders, each for the cargo carried under their own bills of lading. Amaggi claims it has received too little of the soybean meal pellets, and states that Cefetra has received more cargo than the quantity indicated on its bills of lading. Amaggi raises the matter with Ediola, and Ediola purchases Amaggi’s purported claim against Cefetra on the basis of unjust enrichment.
Subsequently Ediola files this assigned claim for unjust enrichment against Cefetra before the court of Cefetra’s place of domicile Rotterdam. Before filing a statement of defence on the merits Cefetra contests that the court has jurisdiction, asserting that Amaggi’s claim, as assigned to Ediola, falls within the scope of the arbitration clause contained in the bills of lading. The court holds that whether this is the case is a matter of construction of the arbitration agreement in accordance with English law.
The Rotterdam court then holds:
The standard of interpretation of the contracts under English law is clearly set out in the judgment of the Supreme Court in Rainy Sky SA v Kookmin Bank  UKSC, paragraph 14 (Lord Clarke): “For the most part, the correct approach to construction of the Bonds, as in the case of any contract, was not in dispute. The principles have been discussed in many cases, notably of course, as Lord Neuberger MR said in Pink Floyd Music Ltd v EMI Records Ltd  EWCA Civ 1429;  1 WLR 770 at para 17, by Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd  AC 749, passim, in Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896, 912F-913G and in Chartbrook Ltd v Persimmon Homes Ltd  1 AC 1101, paras 21-26. I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffmann made clear in the first of the principles he summarised in the Investors Compensation Scheme case at page 912H, the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”
In Fiona Trust & Holding Corporation v Privalov  1 Lloyd’s Rep 254, it was held that the construction of an arbitration clause should start from the assumption that the parties, acting as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction.
However, this assumption cannot hold in circumstances as in this case, which differ from those in Fiona Trust, as is apparent from the decision of the Court of Appeal Michael Wilson & Partners Limited v John Forster Emmott  EWCA Civ 51. The difference being that Amaggi, if it had filed its claim itself, would not have been bound by the arbitration clause. Ediola as assignee can be in no worse position than the assignor was, unless Ediola and Cefetra agreed that assigned rights would fall within the ambit of the arbitration clause. The court holds that he arbitration clause covers Ediola’s rights and claims in relation to Cefetra, and vice versa, in their capacities as carrier and bill of lading holder. It has not been asserted that the parties have communicated about the meaning of the arbitration agreement before or at the time it was entered into. Therefore, there is no reason to suppose that they have taken the possibility into account that either party would, in the capacity of assignee, wish to bring a third party’s claim before arbitrators. An assigned non-contractual claim of another bill of lading holder/cargo receiver based upon unjust enrichment could not be foreseen and considered as a ‘dispute arising out of the relationship into which [Ediola and Cefetra] have entered or purported to enter’.
Ediola’s claim therefore does not fall within the ambit of the arbitration clause. The fact that Amaggi’s shortdelivery falls within a broad factual connection with the transport contracts between Ediola and Cefetra is correct in itself, but does not lead to a different interpretation of the arbitration clause.