INCORPORATION OF CHARTERPARTY ARBITRATION CLAUSES INTO BILLS OF LADING: RECENT DEVELOPMENTS

Abstract

This article looks at two recent court decisions and one recent arbitral award which help to clarify the position of English Law with regard to incorporation of charterparty arbitration clauses into bills of lading. It starts by giving a brief overview of past decisions of the English Courts on this issue. It proceeds to consider recent developments and to draw conclusions therefrom.  Most bills of lading contain jurisdiction clauses providing that parties are to resolve any disputes arising in connection with the contract of carriage contained in the bill through litigation in the courts. Where a bill of lading is issued under a charterparty, however, and where it expressly incorporates the charterparty’s arbitration clause into its terms, the parties to the contract of carriage contained in the bill of lading, including any transferees of the bill, may be obliged to refer their disputes to arbitration.  Wilson notes that “[a] strict contra proferentem approach has been adopted towards [attempts to incorporate charterparty arbitration clauses into bills of lading] since, while arbitration clauses are common in charterparties, hey are rarely found in bills of lading.” Three conditions must be met in order for a charterparty arbitration clause to be successfully incorporated into the bill of lading. First of all, “the operative words of incorporation must be found in the bill of lading itself”. Secondly such words must be suitable to describe the charterparty clause that is being incorporated. Finally, the incorporated clause must be consistent with the terms of the bill of lading, and in the event of conflict, the provisions of the bill of lading will prevail.