Aage Krogh, IUNO, Denmark
In a case between a cargo owner’s cargo insurance and a carrier, a dispute regarding the jurisdiction arose. The cargo insurance alleged that the Danish courts had jurisdiction. This followed from the general conditions of the cargo owner’s group of companies. These general conditions were adopted between the carrier and another company from the group. The carrier alleged that the conditions could not apply in this case as they had not been agreed by the relevant parties. The Court agreed that the jurisdiction clause had not been adopted between the relevant parties and therefore rejected the case.
The cargo owner’s insurer demanded compensation from the carrier for damage to a wind turbine. A dispute regarding jurisdiction arose. The Maritime and Commercial High Court had to make an interlocutory decision on this issue.
The dispute began because the cargo owner alleged that their general conditions for stevedoring applied to the agreement between the parties. These conditions had a jurisdiction clause in favour of Danish jurisdiction. These conditions were adopted in a similar agreement between the carrier and another company in the cargo owner’s group. They also stated that they applied to agreements with all companies in the cargo owner’s group. The cargo owner alleged that since nothing else had been agreed in this case, these general conditions also had to apply here.
The carrier acknowledged that the conditions had been adopted with the other company. However, this did not mean that the same was true with the current agreement. Nor had the general conditions been mentioned in the negotiation of the agreement between the current parties. The carrier therefore alleged that the case did not have Danish jurisdiction.
The carrier argued that the principle of relativity of contract applies in Danish law. According to this principle, an agreement is only binding for the parties specifically specified in the agreement. Therefore, an agreement between the carrier and the other company in the owner’s group could not be binding in the matter between the carrier and the current cargo owner.
The Maritime and Commercial High Court: Danish jurisdiction not agreed between the current parties
The Court found that the application of the jurisdiction clause would require the agreement to be concluded in writing between the parties. Since there was no contract stating this, the case did not have Danish jurisdiction and was rejected.
It is common for parties to operate with standard conditions. It is also often seen that cargo interests use their own standard conditions against a carrier with jurisdiction agreements. Usually these conditions will also state that the conditions will apply to all the companies within the group. The case here shows that even such conditions, when agreed, do not always materialize as the cargo interest had envisaged. IUNO therefore recommends that parties, whether they are cargo interests or carriers, ensure that their standard terms are clearly referred to in any agreement.
[Ref: The Maritime and Commercial High Court’s ruling in case BS-53988/2019-SHR of 2 November 2020]