M.V. Aghia Thalassini and others (Appellants)
Abu Bakr Siddique and others (Respondents)
Kemaluddin Hossain, CJ
Badrul Haider Chowdhury, J.
K.M. Subhan, J
C.J, Ruhul Islam, J,
April 4, 1979.
The Arbitration Act, 1940 (Act 10 of 1940), section 34.
Bill of Leading
The question of fraud, collusion and conspiracy as alleged by Respondent No. 1 against the appellants can only be determined on taking evidence and not by arbitration. It is the discretion of the Court as to whether the jurisdiction under section 34 of the Arbitration Act is to be exercised. The learned Admiralty Judge decided in the negative as to exercise of discretion and the matter ends there.…….(9)
Cases Referred to-
Njgos (1935) All E R. 863; Anne field, (1971) All E.R., P-394; Thomas & Co. Ltd. vs. Portsea Steamship Co. Ltd. (1912) A.C. 1; AIR 1963 (SC) 1044.
Faqueer Shahabuddin Ahmed, Senior Advocate, with K. Z. Alam, A. W. Bhuiyan, Shah Abu Nayeem Advocates, instructed by Abu Backkar, Advocate-on-Record—For the Appellants.
Syed Ishtiaq Ahmed, Senior Advocate with Rafiq-ul-Huq, Senior Advocate, Mahmudul Islam, and Md Fazlul Huq Advocates, instructed by B. Hossain, Advocate-on-Record—For Respondent No. 1.
Not represented— Respondent Nos. 2-7
K.A Bakr, Attorney-General, instructed by B Hoda, Advocate-on-Record— Amicus Curiae.
Civil Appeal No. 14 of 1979.
(From the judgment and order dated 20-12-77 passed by the High Court in Admiralty Suit No. 2 of 1977.)
Badrul Haider Chowdhury, J :—This appeal by special leave arises out of an order passed by the High Court Division in Admiralty Suit No. 2 of 1977 dismissing the application under section 34 of the Arbitration Act filed by the appellants for stay of the proceedings in the suit.
Respondent No. 1 filed the Admiralty Suit for a decree for Tk. 54,43,567/00 as damages for delaying the carriage of goods and other causes.
2. Facts in short are Respondent No. 1 is the Proprietor of A.M. Traders to carry business of import and export. Appellant No. 1 is the Panamian Vessel and Appellant No. 2 and 3 are the owners and the Master of the Vessel. Respondent No. 1 obtained necessary permission, for importation of edible salt from India for the Government of Bangladesh and accordingly entered into a negotiation for importing salt from India. Respondent No. 2 had completed the necessary formalities for obtaining the allotment from the State Trading Corporation of India and since he had an allotment he contracted with respondent No. 7 for the supply of salt and accordingly respondent No. 2 furnished L/C. in favour of State Trading Corporation for the price of the salt against allotment of respondent No. 7. Respondent No. 7 chartered the appellant-vessel and the charter-party dated 14-7-77 was signed by respondent No. 7 and Respondent No. 6 as agent of appellant No. 2. Thereafter the vessel was loaded with salt and two Bills of Lading dated 3-8-77 were issued and these Bills of Lading which incorporated the charter-party by general words were ultimately endorsed in favour of A. M. Traders, the Respondent No. 1. The Vessel ultimately reached Chittagong Port on 17-10-77 and this delay has caused substantial loss to the respondent No. 1 as the price of salt went down. Hence the Admiralty Suit was filed. Appellants filed an application under section 34 of the Arbitration Act for stay of the proceedings pending arbitration contending that the charter party was bound by the arbitration clause and that the claims lodged by the Respondent No. 1 are related to and covered by the provisions of Arbitration Act. This petition was resisted by the Respondent No. 1. The High Court Division in passing the judgment had considered the point as to whether the arbitration clause in the charter party could be read as incorporated into the Bill of Lading, whether it is applicable to the contract. After reviewing number of decisions from the English jurisdiction it came to the conclusion that the arbitration clause in the charter party was not incorporated in the Bill of Lading and consequently the arbitration clause was not applicable to the contract evidenced by the Bill of Lading. The High Court Division also noticed that fraud, collusion and conspiracy were alleged by the Respondent No. 1. In this view of the matter the petition under section 34 of the Arbitration Act was rejected.
8. In the Bill of Lading the code name of which is ‘Cogenbill’ is approved by the Documentary Council of the Baltic and International Maritime Conference. It contains a clause ‘all terms, conditions liberties’ and exceptions of the charter party are herewith incorporated. The incorporation of charter party into the Bill of Lading was lying in general words. The charter party contains clause No. 31 which is as follows:
“Should there be any dispute between owners and Charterer, the matter shall be referred to three persons in London, one to be appointed by each of the parties hereto and the third by the two of them. Their decision or that of any two of them shall be final and for the purpose of enforcing any award this agreement may be made a rule of the court. The arbitrators shall be commercial men.”
4. Faqueer Shahabuddin, Ahmed, the learned Counsel appearing for the appellants relied heavily on the arbitration clause argued with reference to the clause in the Bill of Lading that it is to be used by the charter party and built up an argument on the arbitration clause of the contract. Therefore, it is contended that the High Court Division had wrongly rejected the prayer.
5. Syed Ishtiaq Ahmed, the learned Counsel appearing for the Respondents in painstaking manner had dealt with the clause of the Bill of Lading and the charter party and argued that the clause is one which is not directly germane to the subject-matter of the Bill of Lading i.e. Shipment, carriage and delivery of goods. Therefore, it should not be incorporated into the Bill of Lading.
6. This controversy originated from the beginning of the century. It was noticed in the Njgos (1935) All E R. 863 and it was observed that the arbitration clauses in the charter party bad been in existence since 1914 and Sir Boyd Merriman held that the arbitration clause was not incorporated in the Bill of Lading by observing :—
“Both Counsels agreed, and their experience in these matters is unrivalled, that since the adoption of this form of bill of lading in 1914, attempts made in chambers, under the bill of lading to enforce the arbitration clause in the charter-party had uniformly failed, and that no one had been hardy enough to test the matter in Court.”
7. In the case of Anne field, (1971) All E.R., P-394 Lord Denning MR considered that the aforesaid decision had not been challenged from the time to this and observed —
“So we have a course of practice from 1914 to 1970, some 56 years. After this time, it would require very strong case to upset the practice.”
It was noticed by Lord Denning that the House of Lords in Thomas & Co. Ltd. vs. Portsea Steamship Co. Ltd. (1912) A.C. 1 applied the test whether the arbitration clause is directly germane to the shipment, carriage and delivery of goods. It was held that if it is not directly germane to the shipment, carriage and delivery of goods etc. it is not incorporated by a general word in the Bill of Lading. The contention of Mr. Shahabuddin that the Bill of Lading is to be used with the charter party cannot be accepted in toto because arbitration clause itself postulates that dispute between the owners and the Charterer are to be referred to arbitration. The Respondent No. 1 seriously contested the proposition that the Charterer or, for that matter, his agent had signed the charter party. These questions are questions of fact to be determined on evidence.
8. Where a contract of carriage of goods by sea is evidenced by a Bill of Lading which has reference to charter party and incorporates terms of the charter party by general words of incorporation, the rule is that both the documents are to be read together and a clause in charter party which is directly germane to the subject matter of the Bill of Lading that is, the shipment, carriage and delivery of goods should be incorporated in to the Bill of Lading contract even though it might involve a manipulation of words to fit the Bill of Lading exactly, but the arbitration clause in the charter party is not regarded as directly germane to the shipment, carriage and delivery of goods and therefore cannot be deemed to be incorporated in the Bill of Lading by general words of incorporation in to the Bill of Lading or by the charter party. It has been observed earlier that in the instant case the incorporation of the charter party was made by general words and therefore the learned Judge of the High Court Division was perfectly justified in following the well settled rule of the construction that arbitration clause not being germane to subject matter of the Bill of Lading would not be deemed to be included as a clause of the Bill of Lading by the general words of incorporation.
9. Respondent No. 1 has filed the Admiralty Suit for the loss incurred by him owing to unusual delay which allegedly was due to fraud, collusion and conspiracy. The voyage from India took over two months whereas the normal voyage is for 8/10 days. The appellants had offered an explanation that the voyage was delayed due to an engine trouble which needs, to be substantiated on evidence and that can be done at the trial. The question of fraud, collusion and conspiracy as alleged by the Respondent No. 1 against the appellants can only be determined on taking evidence and not by arbitration. The High Court Division itself had noticed that arbitration itself is not convenient and beneficial because as per terms it was to be field in London, whereas, the evidence is to be collected from the sub-continent itself aid further, foreign exchanges are also involved for holding arbitration. The Indian Supreme Court also in such a matter considered that arbitration is not always beneficial in such circumstances. Reference may be made to a decision reported in AIR 1963 (SC) 1044. Lastly, it is a discretion of the Court as to whether the jurisdiction under section 34 of the Arbitration Act is to be exercised. The Admiralty Judge was satisfied that in the facts and circumstances such discretion cannot be exercised. There is the end of the matter.
In the result, therefore, this appeal is dismissed with costs.
Source: 32 DLR (AD) (1980) 107