TaxTMI 
TaxTMI 
2001 (8) TMI 1289
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....f Canadian Yellow Peas ('the peas') from the Port of Vancouver in Canada to the Port of Calcutta in good order and condition. The Respondent o. 1 herein is the holder and endorsee of each of the said Bills of L ading and the owner of the said stock of peas. The said Respondent o. 1 filed Admiralty Suit No. 17 of 1997 in the High Court at Calcutta in its admiralty jurisdiction against the appellants and Respondent o. 2 alleging inter alia that the defendants had negligently and in breach of the contract of carriage and/or breach of their duties as bailees, failed to deliver goods to the plaintiff in good order and condition; the defendants have delivered part of the goods weighing 4,910 metric tonnes damaged by sea water and in consequence the plaintiff had suffered loss and damage at least in the sum of US $ 1,384,620 being the value of the said damaged quality. The plaintiff further alleged that it has suffered further loss and damages. It was in these circumstances that the plaintiff filed the suit. 3. The appellants and respondent o. 2 herein as the 1st and 2nd defendants in the suit filed an application under section 45 of the Arbitration and Conciliation Act, 1996 ('the Act....
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....l be conducted in accordance with Small Claims Procedure of the London Maritime Arbitrators Association." 4. Clause 1 of the Condition of Carriage of the Bills of Lading reads as follows: "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated." The question for consideration is whether the parties agreed that clause 62, the arbitration clause in the Charter Party Agreement shall be applicable to disputes arising under the Bills of Lading. For determination of this question it is necessary to ascertain the intention of the parties to the Bills of Lading. This question has engaged the attention of courts in India and in England from time to time. 5. In Hamilton & Co. v. Mackie & Sons [1988-89] 5 Times Law Reports 677 - the plaintiffs were the owners of the steamer President Garfield, and the action was brought for the balance of the Bill of Lading freight, the defendants being the consignees of the cargo and endorsees of the Bill of Lading. It was agreed by the Charter Party that any dispute that might arise under the charter was to be settled by arbitration at the po....
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....ction to adopt that when it is sought to introduce into a document like a bill of lading - a negotiable instrument - a clause such as this arbitration clause, not germane to the receipt, carriage, or delivery of the cargo or the payment of freight, - the proper subject-matter with which the bill of lading is conversant, - this should be done by distinct and specific words, and not by such general words as those written in the margin of the bill of lading in this case." Lord Robson made the following observations: "It is to be remembered that the bill of lading is a negotiable instrument, and if the obligations of those who are parties to such a contract are to be enlarged beyond the matters which ordinarily concern them, or if it is sought to deprive either party of his ordinary legal remedies, the contract cannot be to explicit and precise. It is difficult to hold that words which require modification to read as part of the bill of lading and then purport to deal only with disputes arising under a document made between different persons are quite sufficiently explicit for the appellant's purpose." 7. 'Merak', In re Lloyd's List Law Reports 1964 Vol. 2, the Court of Appeal....
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....f they had so agreed, whether their agreement related to present or future differences; that, therefore, section 4(2) applied to agreement in this case; and that, accordingly, proceedings would be stayed; (4) that no undue hardship would be caused if time for giving notice of arbitration were not extended; and that, therefore, no extension would be granted." 8. In the case of Astro Valiente Compania Naviera SA v. Pakistan Ministry of Food & Agriculture (No. 2) The Emmanuel Colocotronis (No. 2) [1982] 1 All ER 823. The Queen's Bench Division (Commercial Court), considered the case in which the charter party provided inter alia, that the charter party contract was to be completed and superseded by the signing of a Bill of Lading and further that the Bill of Lading was to contain a clause providing for arbitration in London by two arbitrators and umpire and that any claim was to be made in writing within nine months of final discharge. The shipment was acknowledged by a Bill of Lading which included a clause that 'All other conditions, exceptions, demurrage, general average and for disbursement as per (the) charter-party'. The Bill of Lading did not specifically provide for arbitra....
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....zione Alta Italia SPA v. Svenska Petroleum AB (The 'Nai Matteini) [1988] 1 Lloyd's LR 452, considered the issue: Whether the Bill of Lading was effective to incorporate the arbitration clause in either the head charter or the sub-charter and if so which, and held as follows: "that (1) the wording of the bill of lading gave no indication whether the unidentified charter referred to was the head or sub-charter both with their quite different forms of arbitration clause; the bill of lading complied with neither charter-party requirement but was a standard form held at Ras Tanura which was printed in the form as the loading port; there was no relevant bill of lading as referred to in the form and the form gave no clue as to what arbitration clause in what charter-party was referred to (see p. 459 cols. 1 and 2); (2) there was no arbitration agreement in force between the owners and consignees and the bill of lading did not have the effect of incorporating an arbitration clause which extended to disputes under the bill between the plaintiffs and the defendants (see p. 459, col. 2); (3) the normal rule was that the presumed intention of the parties to the bill of lading contract....
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....ied] 12. In the case of Daval Aciers D'usinor Et De Sacilor v. Armare S.R.L. (The "Nerano") [1996] Vol. 1 Lloyd's Law Reports page 1, the Court of Appeal, dismissing the appeal, held inter alia, that: "(1) looked at on its own, the provision on the front of the bill of lading only incorporated the conditions of the charter (which it was common ground would not include the arbitration clause in the charter) and the reference to English jurisdiction could (in the absence of any reference to arbitration) only be a reference to the English Courts; however if the provisions was considered with clause 1 on the back of the bill of lading a different meaning emerged; the provision on the face of the bill of lading did not expressly prohibit the incorporation of terms other than conditions from the charter, nor was the reference to English jurisdiction couched in language that excluded an English arbitration agreement which would ex hypothesi be subject to English jurisdiction; the two provisions read together were not inconsistent with each other (see p. 4 col. 1) (2) the parties had not merely used general words of incorporation, they had expressly identified and specified the ch....
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....er as to give it efficacy rather than to invalidate it. It would not be right while interpreting a contract entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to formal documents. The meaning of such a contract must be gathered by adopting a common sense approach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation. The Secretary in the Ministry of Food and Agriculture in charge of the Department of Food, would be the Secretary in the Ministry of Food and Agriculture concerned with the subject-matter of the contract and under clause (17), he would be the person intended by the parties to exercise the power of nominating the arbitrator. Furthermore, the respondents did not raise any objection to the appointment of the arbitrator and participated in the arbitration proceedings without protest, indicating the clear intendment of the parties that the Secretary in the Ministry of Food & Agriculture concerned with the subject-matter of the contract should be the person entitled to nominate the arbitrator (488 B-E, 489 A-E)." [Emphasis supplied] (p. 483) 15. In the case of Alimenta S.A. v. ....
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....act and the first contract in question were different, the former being a CIF contract, while the latter an f.o.b. contract, no question as to the germaneness of the arbitration clause to the subject-matter would be relevant. Where, as in the instant case, the parties are aware of the arbitration clause of an earlier contract, the subject-matter of which is different from the contract which is being entered into by them, but incorporate the terms of the earlier contract by reference by using general words, there would be no bar to such incorporation merely because the subject-matters of the two contracts are different unless, however the incorporation of the arbitration clause will be insensible or unintelligible. In the instant case, the arbitration clause in FOSFA-20 contract will fit in the first contract and it will be neither insensible nor unintelligible. Therefore, the arbitration clause in FOSFA-20 contract was incorporated into the first contract. (para 12) (2) However, though the first contract includes the terms and conditions of supply and as Clause 9 of the second contract refers to these terms and condition of supply, it is difficult to hold that the arbitration cl....
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....orporated by reference in the Bill of Lading; the principal question is, what was the intention of the parties to the Bill of Lading? For this purpose the primary document is the Bill of Lading into which the arbitration clause in the Charter Party Agreement is to be read in the manner provided in the incorporation clause of the Bill of Lading. While ascertaining the intention of the parties attempt should be made to give meaning to the incorporation clause and to give effect to the same and not to invalidate or frustrate it giving a literal, pedantic and technical reading of the clause. If on a construction of the arbitration clauses of the Charter Party Agreement as incorporated in the Bill of Lading it does not lead to inconsistency or insensibility or absurdity then effect should be given to the intention of the parties and the arbitration clause as agreed should be made binding on parties to the Bill of Lading. If the parties to the Bill of Lading being aware of the arbitration clause in the chartered party agreement have specifically incorporated the same in the conditions of the Bill of Lading then the intention of the parties to abide by the arbitration clause is clear. Whe....