arbitration

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April 19, 2016

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Legal Principle

Even if a Bill of Lading does not expressly contain an arbitration clause it might refer disputes to arbitration through the charterparty which may include an arbitration clause. The reference to arbitration shall be clear and unambiguous.

If arbitration clause so contained covers and may be used to settle the dispute in question it shall be interpreted that it was the parties' intent to refer such disputes to arbitration.

Facts

The claimant in the said case is an insurance company. The owner of goods to be transported had entered into a contract with the shipowner to transport the said goods from Saudi Arabia to UAE. However, during the transit the goods was subjected to pollution and the pollution changes the character of the goods. The claimant in the case was covering the goods owner as insurer and was found liable to cover the damage suffered by the goods owner which was estimated by expert evaluators to be over AED 8.6 million. This was paid by the claimant to the material owner.

The claimant filed a civil case under Article 398 of the Maritime Laws of UAE requesting the court to enforce the defendant to pay the claimant an amount of 2.4 million USD and interest.

The Respondent filed a counter claim that an arbitration clause was contained in the contract and requested the court to dismiss the case and to refer the dispute to arbitration. The Court of First Instance however accepted the case and dismissed the respondent's claim.

The respondent appealed the Court of First Instance's judgment to overturn the judgment and dismiss the case. The Court of Appeal accepted the respondent's argument and dismissed the case due to lack of jurisdiction.

Claimant's arguments

The claimant then brought the issue to the court of Cassation and argued that the Court of Appeal's decision be reversed. It was submitted that the Bill of Lading did not contain clear wording which establishes or expresses the conclusive will of the parties involved to refer disputes to arbitration. The claimant argued that the bill of lading is a template which only contains the details of vessel with ready-made conditions which did not include a clause for arbitration. This point of view was confirmed was confirmed by the Court of First Instance by ruling that the court shall not assume arbitration if it isn't clearly mentioned and expressed by parties.

Court of Cassation judgment

The Court of Cassation disagreed with the claimants arguments and ruled that the Bill of Lading was expressly referring to an arbitration clause through the charter party. The court also observed that such a reference was not a general reference to all clauses but the arbitration clause specifically. Therefore since the court was satisfied that the said arbitration clause covers the dispute such disputes shall need to be referred to arbitration thereby dismissing the claimant's case.

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