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IN THE HIGH COURT AT CALCUTTA
Dipak Kumar Sen, J.
Brennan Corporation & Anr. – Petitioners
Versus
The State Trading Corporation of India Ltd. - Respondent
Matter No. 1909 of 1979
Decided On: July 6, 1981
ARBITRATION - FOREIGN AWARDS (RECOGNITION AND ENFORCEMENT) ACT, 1961 - SECTION 2(1) - INCORPORATION OF ARBITRATION CLAUSE IN BILL OF LADING - WHETHER ARBITRATION CLAUSE IN CHARTER PARTY INCORPORATED IN BILL OF LADING - WHETHER DISPUTES RELATING TO PERFORMANCE OF CHARTER PARTY COVERED BY ARBITRATION AGREEMENT.
Fact of the Case:
Brennan Corporation, the petitioner, hired Motor Tanker "Kampos" under a time charter. Subsequently, a voyage charter party was executed between the petitioner and Messrs. Caprosal for carriage of crude rapeseed oil from Vancouver to India. The charter party contained an arbitration clause providing for arbitration in London. A bill of lading was issued by the petitioner in favor of the shippers, which incorporated the terms and conditions of the charter party. The vessel arrived at the Port of Calcutta and discharged the cargo. The respondent, State Trading Corporation of India Limited, filed a suit against the petitioners claiming damages for short delivery of the cargo. The petitioners filed an application for stay of the suit, contending that the dispute was covered by the arbitration clause in the charter party.
Finding of the Court:
The court held that the arbitration clause in the charter party was not incorporated into the bill of lading and that the disputes in the suit were not covered by the arbitration agreement in the charter party. The court distinguished the case from The Merak, where the charter party expressly provided that any dispute arising out of a bill of lading issued under the charter would be referable to arbitration.
Issues: Whether the arbitration clause in the charter party was incorporated into the bill of lading.
Ratio Decidendi: The court held that the words of incorporation in the bill of lading were general and did not specifically mention the arbitration clause in the charter party. Therefore, the disputes meant to be decided in arbitration were disputes between the parties to the charter, including those arising out of performance of the charter party, and not disputes where a party to a bill of lading who is not a party to the charter is involved.
Final Decision: The court dismissed the petitioner's application for stay of the suit.
The facts and the matters in record which are material and are not in dispute in this proceeding are as follows :-
Brennan Corporation, the petitioner No. 1 in this application and defendant No.1 in the suit, hired Motor Tanker "Kampos" a Greek vessel (and hereinafter referred to as the said vessel) under a time charter. Thereafter a voyage Charter Party dated the 8th August, 1979 was executed in Paris between the petitioner No. 1 as the disponent owner of the said Vessel and Messrs. Caprosal of Geneva the charterer for carriage of a quantity of crude rapeseed oil from the Port Vancouver in Canada to Ports in India.
2. The said Charter Party contains an arbitration clause as follows:
"Any dispute arising from the making, performance or termination of this Charter Party shall be settled in London, Owner and Charterer each appointing an arbitrator, who shall be a merchant, broker or an individual in the shipping business: the two thus chosen, if they cannot agree, shall nominate a third arbitrator who shall be an Admiralty lawyer. Such arbitration shall be conducted in conformity with the provisions and procedure of London and a judgment of the Court shall be entered upon any award made by the said arbitrators".
3. Pursuant to the said Voyage Charter the said vessel proceeded to the Port of Vancouver where a quantity of rape-seed oil was shipped for and on behalf of Messrs. Caprosal for delivery to the State Trading, Corporation of India Limited, the respondent herein and the plaintiff in the suit. A Bill of Lading dated the 17th August, 1978 in respect of the said cargo was issued by the petitioner No.1 in favour of the shippers, which contains a clause typed on its face as follows:-
"All terms, conditions and exceptions as per existing Charter Party to be considered as incorporated herein as if fully written, anything to the contrary contained in the Bill of lading notwithstanding".
4. The said Vessel arrived at the Port of Calcutta in December, 1978 and discharged the said cargo of rape-seed oil on or about the 25th December, 1978.
5. On the 22nd December, 1979, the respondent filed this suit against the petitioners claiming, inter alia, a decree for Rs. 3,34,895.85 jointly and severally for loss and damages allegedly suffered by the respondent for short delivery of the said cargo. Alternatively, the respondent claimed an enquiry into the loss and damages suffered by it and a decree for such sum as may be found due thereon and other ancillary and incidental reliefs.
6. It is alleged in the plaint that the respondent was the owner of the said cargo and for consignee thereof under the said Bill of lading and that the property in the said cargo had passed in its favour. Alternatively, it is contended that the respondent was the holder for value of the said Bill of lading and entitled to delivery of the entire cargo deliverable thereunder. It is alleged that in breach of the contract contained in the said Bill of lading or negligently, or in breach of duty, as a common carrier or bailee, the petitioners failed and neglected to deliver 68.3681 metric tonnes of the said cargo causing loss and damages to the respondent assessed at the aforesaid sum of Rs. 3,34,895.85.
7. On the 31st March, 1981, the Advocate on Record for the petitioners took out the notice of motion in respect of this application praying, inter alia, that the said suit be stayed.
8. It is alleged in this application that the respondent's claim in the suit relates to the performance by the petitioner No. 1 of its obligations under the said Charter and/or the Bill of lading and that the dispute relating thereto are covered by the arbitration clause in the Charter Party which has been incorporated in the Bill of lading.
9. It is contended that the arbitration agreement is one to which Article II of the Convention set out in the Schedule to the Foreign Awards (Recognition and Enforcement) Act, 1961 applies and that the said agreement is valid, operative and capable of bei
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