Insights / 06-11-2020

Weco Projects APS v. Loro Piana and others (My Song) [2020] EWHC 2150 (Comm)

This was a jurisdictional dispute arising out of the loss of a yacht overboard during the course of a voyage. The Court had to decide whether claims by the Italian domiciled yacht owner were properly brought in Italy or in the English courts. In doing so, the Court considered among other things what makes a contract a “contract of transport” for the purposes of exempting it from EU consumer protection regulations. The Court also found that, absent very express wording, a Himalaya clause does not allow servants, agents or sub-contractors to rely on an exclusive jurisdiction clause in the contract of carriage.

The background facts

Mr Loro Piana (“LP”), a businessman domiciled in Italy, arranged for his sailing yacht, MY SONG, to be shipped from Antigua to Genoa. The carriage was organised through Peters & May S.R.L. (“PMS”) on behalf of their principals, Peters and May Limited (“PML”).

A booking note recorded the contract between LP and PML. It provided for carriage of the yacht, which was named as the cargo, and it specified a set amount of freight payable by LP. The contract contained an exclusive jurisdiction clause (the “EJC”) providing for English law and English Court jurisdiction. The booking note also contained a Himalaya clause, stating that in the event of a claim against PML’s servants, agents and subcontractors regarding the contract of carriage, that third party would be entitled to rely on the exemptions and immunities granted to PML under the contract.

PML contracted with Zeamarine Carrier GmbH (“Zeamarine”) for the carriage of the yacht on BRATTINGSBORG, which was a vessel bareboat chartered by Weco Projects APS (“Weco”). During the course of the voyage, the yacht was lost overboard. LP brought claims for the loss of the yacht against PML, PMS, Zeamarine and Weco in the Italian courts. PML, PMS and Weco commenced English Court proceedings, challenging Italian Court jurisdiction.

The Commercial Court decision

The judgment provides a useful overview of the application of European law in jurisdictional disputes. Among other issues under consideration also were questions about whether the booking note was to be interpreted as a contract of transport and whether the Himalaya clause gave PMS and Weco, as PML’s servants, agents and/or subcontractors, the benefit of the EJC.

The Recast Brussels Regulation provides certain protections for consumers who enter into contracts with a business, including a right to sue the business in the courts of the consumer’s domicile. However, the Recast Regulation specifically states that this will not apply to a contract of transport (contract of carriage), which is deemed to already be subject to substantial international legislation. A key question in this case was whether the booking note evidencing the contract between LP and PML was a contract of transport.

LP argued that the booking note was not a contract of transport, but was instead a contract to arrange a contract of transportation. There is past case law which states that contracts for parcels of services, one of which is transport, do not come within the “contract of transport” exception. The Court, however, found that the booking note contract was not limited to the arrangement of carriage as there was provision for PML to perform the carriage themselves or for them to subcontract the carriage, as they did in this case. Additionally, the language of the booking note was in terms of a contract of transport: PML’s services were remunerated in freight, not in commission, and US COGSA applied. Therefore, the Court concluded that the EJC was not invalidated by the consumer section of the Recast Regulation.

LP had additionally brought claims against PMS, Zeamarine and Weco in Italy in respect of their liability for the loss of the yacht during the carriage on board BRATTINGSBORG. PMS and Weco argued that any claim should be brought in the English courts.

One of the arguments was that, under the Himalaya clause, PMS and Weco were entitled to “every exemption from liability, limitation, condition and liberty herein containedand every right, exemption from liability, defence and immunity of whatsoever nature applicable to [PML]”. PMS and Weco argued that this wording in the Himalaya clause extended to the EJC.

However, the Court stated that it was clear from the authorities that the purpose of the Himalaya clause was to provide defences to third parties performing services on behalf of PML. The scope of the clause’s wording had to be interpreted in this context. The EJC was not a clause that provided Weco or PMS with a contractual defence or a clause that was for the benefit of only one party. Rather, it created mutual rights and obligations. The Himalaya clause did not, therefore, allow PMS or Weco to rely on the EJC. However, they were able to successfully challenge the jurisdiction of the Italian courts on other grounds.

Comment

Given the UK’s imminent exit from the EU, the Court’s consideration of the scope of consumer protection under the Recast Regulation may be of limited use. However, the Court’s analysis of what will amount to a contract of transport and its discussion of the scope of a Himalaya clause in a contract of carriage remain relevant.

Those who intend that their Himalaya clause should be governed by the law and jurisdiction clause of the contract may need to state this expressly.