UK Case law: Grand Financing Co v La Mere Maritime SA and another  EWHC 1803 (Comm)
News & Insights 1 September 2021
The owners of the MT Niovi discharged in China a consignment of crude oil to La Mere, the consignee under the bills of lading, without the production of the original bills of lading and in return for a letter of indemnity (LOI)...
The owners of the MT Niovi discharged in China a consignment of crude oil to La Mere, the consignee under the bills of lading, without the production of the original bills of lading and in return for a letter of indemnity (LOI) from the voyage charterers. Part of the cargo discharged into the shore tanks was delivered, but about 50,000 MT remained in the shore tanks.
In addition to La Mere, a number of other parties claimed entitlement for delivery of the remaining cargo. As a result, the vessel owner faced significant pressure to deliver the cargo as well as potential claims in respect of misdelivery and / or conversion (that is, interfering or denying another the use or possession of their property). In breach of the arbitration clause incorporated into the bill of lading, La Mere obtained an order from the Qingdao Maritime Court declaring them the party entitled to take delivery of the cargo.
The owners obtained an anti-suit injunction from the High Court in London on two points: (i) preventing further breach of the arbitration clause by La Mere and (ii) restraining the consignee from obtaining delivery of the cargo. The aim of the court order was to safeguard the property for the rightful owner. The order was obtained pursuant to clause 44 of the Arbitration Act 1996, which allows the court to grant a number of interim remedies to support the arbitration proceedings.
La Mere sought to set aside the order but did not succeed. By virtue of the London arbitration clause incorporated into the bills of lading, the English court had jurisdiction to preserve assets and property that were the subject of claims in arbitration. This is regardless of the fact that the disputes between the other parties arose under sale contracts governed by another law and jurisdiction.
The decision serves as a useful reminder of the court’s powers to grant interim remedies in support of arbitration proceedings and that it can act quickly to protect, as here, the innocent owners caught between competing claimants for the cargo. Although court intervention is limited under the act, interim remedies can be very effective as shown in this case.
Link to commentary by Stephenson Harwood can be found here