UK: Unpaid Bunker Suppliers Free To Pursue Their Maritime Lien Against Owners In The US

Last Updated: 15 December 2010
Article by Daniel Jones and Sacha Christopher

Oceanconnect UK Ltd & another v Angara Maritime Ltd (Fesco Angara) [2010] EWCA Civ 1050

Under English conflict of laws rules, recognition of a right to enforce a maritime lien is a matter to be determined by the lex fori (the law of the place where the action is heard). However, English law does not recognise the concept of a maritime lien for necessaries (charges for goods and services rendered to the vessel). Therefore, an unpaid bunker supplier would not enjoy a maritime lien as a matter of English law. However, under US maritime law, such a bunker supplier does have a maritime lien. In this case, US bunker suppliers sought to set aside an anti-suit injunction obtained by the vessel owners in the English court so that they could pursue a claim for unpaid bunkers by way of an in rem claim in the US.

Background facts

The original dispute between the parties in this case related to a claim by bunker suppliers, Oceanconnect, for unpaid bunkers which had been supplied to Britannia Bulkers A/S, charterers of the Fesco Angara. The charterers subsequently went into administration and the bunker suppliers sought to recover their losses from Angara Maritime, who were the owners of the vessel. The London Mercantile Court rejected Oceanconnect's claim against the owners (see report on that decision in our July 2010 e-brief). However, the matter came before the Court of Appeal on a slightly different issue.

Oceanconnect had originally arrested the vessel in Amsterdam in order to secure their claim. The parties subsequently entered into an escrow agreement whereby the vessel was released upon provision by the owners of an amount by way of security.

The escrow agreement was expressed to be "governed by and construed in accordance with English law and any dispute arising hereunder or relating thereto or arising in connection herewith shall be referred to the exclusive jurisdiction of the High Court of England and Wales" (clause 7). However, clause 3 of the escrow agreement also stated amongst other things that the amount of the claim was payable to Oceanconnect "...by virtue of a judgment (which is not or no longer subject to appeal) rendered against Angara by a competent court of law having jurisdiction ....or by virtue of a valid arbitration award which is not or no longer subject to appeal...."

Thereafter, the owners commenced proceedings in the English court for negative declaratory relief, seeking a declaration that they were not liable to Oceanconnect in respect of the sale of bunkers to Britannia. Subsequently, Oceanconnect (for a second time) arrested the vessel in Louisiana in the United States for the purposes of founding jurisdiction for an in rem claim based on a maritime lien under US law. The vessel was released from that arrest after Angara filed a copy of the earlier escrow agreement with the US court, the effect of which was that the owners were regarded as having given security for the claim already, in the form of the funds in escrow. As a result of Oceanconnect commencing legal proceedings in the US, the owners applied to the English court for an anti-suit injunction arguing that England was the forum conveniens for the dispute and that the ends of justice required the English court to decide the underlying claim.

Application for an anti-suit injunction

At first instance, Mr Justice Simon granted the anti-suit injunction. He held that the law and jurisdiction clause in the escrow agreement, on its proper construction, was intended to provide for the English court to be the exclusive forum for the resolution of disputes between the parties in relation to the supply of bunkers and that the US proceedings were brought in breach of that agreement. He also said that it made good commercial sense for the parties to provide that all their disputes should be resolved in one forum, particularly where (as in this case) the claim was relatively small in commercial terms. The judge concluded that England was the appropriate forum for the dispute and that the ends of justice required him to grant the order for an anti-suit injunction in order to avoid unnecessary parallel litigation in the US.

Court of Appeal

On appeal by Oceanconnect, the Court of Appeal set aside the anti-suit injunction. Lord Justice Gross gave the leading judgment and held that, construed as a whole and in context, the escrow agreement did not provide for the exclusive jurisdiction of the English court in respect of the underlying substantial claim for unpaid bunkers. Whilst he acknowledged that the wording of clause 7 ("any dispute arising hereunder or relating hereto or arising in connection herewith") was capable of being read as extending to the jurisdiction for determining the underlying claim, he concluded that it was in fact confined to the province of the escrow agreement itself. He added that the wording of clause 3, although it could have been better expressed and had a "boilerplate" element in that it also referred unnecessarily to arbitration, suggested that the jurisdiction for the resolution of the substantive claim had been left open.

Lord Justice Gross further stated that the object of the escrow agreement had been to achieve the release of the vessel from arrest as speedily as possible by providing security, rather than to address the jurisdiction for determining the underlying claim. Had the parties wished to extend the escrow to deal as well with the forum for resolving the claim, he said that they could have done so by express wording to that effect. The appeal judge also highlighted that it was unlikely that the bunker suppliers would agree to exclusive English jurisdiction (effectively a "one stop" adjudication) in circumstances where they had a relatively straightforward claim pursuant to a maritime lien in the US, compared to more difficult claims in tort, bailment and restitution in England.

The appeal judge also found that the US proceedings were neither vexatious nor oppressive in that they did not involve unnecessary parallel litigation because the issues raised in the US proceedings were not very similar or identical to those arising in the English proceedings. Furthermore, as he believed Oceanconnect's claim for a US maritime lien was bound to fail in the English court but enjoyed a strong chance of success in the Louisiana court, the judge was unable to accept that England was the natural forum for the proceedings. Rather, he held that the considerations of justice pointed to Oceanconnect being at liberty to pursue their claim in the US courts.

Comment

The Court of Appeal in this case took into account the fact that the bunker supplier's claim was doomed to fail in England whereas it had good prospects of success in the US, and obviously regarded it as improbable that the bunker suppliers would have restricted themselves to the exclusive jurisdiction of a court where they were unlikely to succeed on their claim. Whilst the escrow agreement might have been expressed more clearly, the Court of Appeal held that, properly construed, it meant that the English law and jurisdiction clause applied only to matters under the escrow agreement and did not prevent the bunker suppliers pursuing their underlying claim in the US.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions