On September 9, 2021, the Danish Supreme Court determined whether legal action against a Danish shipping company, which had undertaken to transport containers from China to Copenhagen, could continue in Denmark, regardless of whether the plaintiff and the shipping company had agreed that the dispute should be heard exclusively by the High Court of the United Kingdom. The Supreme Court ruled that the dispute was of such an international character that the jurisdiction agreement between the parties could not be annulled under Article 310 (1) of the Merchant Shipping Act, since the recast of the regulation of Brussels from the EU(1) applied.
A Danish importer booked the sea transport of a container from Shanghai to Copenhagen with a Danish freight forwarder, who subcontracted the transport to a Danish shipping company. The agreement between the freight forwarder and the shipping company was concluded in Shanghai by the parties’ respective Chinese subsidiaries. The Chinese subsidiary of the shipping company, acting as an agent, issued a non-negotiable consignment note, which identified the forwarder as the consignee. The loading port was Shanghai and the unloading port was Copenhagen. The consignment note included the following choice of law and jurisdiction clause:
26. Law and Jurisdiction For shipments to or from the United States, any dispute relating to this bill of lading will be governed by the law of the United States and the United States Federal Court for the Southern District of New York will have exclusive jurisdiction. to hear all disputes concerning it. In all other cases, this bill of lading will be governed by and construed in accordance with English law and all disputes arising hereunder will be determined by the English High Court of Justice in London to the exclusion of the jurisdiction of the courts of another country. Alternatively and at the sole discretion of the Carrier, the Carrier may take legal action against the Merchant in a competent court of a place of business of the Merchant.
During the voyage, the ship encountered bad weather and lost three containers in the Mediterranean Sea. The freight forwarder was held liable by the importer and its freight insurers, who took legal action against the freight forwarder in Copenhagen.
The freight forwarder sued the shipping company in the same court and claimed he was not responsible. The shipping company requested that the proceedings be dismissed as it had been agreed that the dispute would be settled in London, which was not contested by the parties. However, in accordance with the Merchant Shipping Act, the freight forwarder argued that the case could be heard in Denmark regardless of the jurisdiction agreement because:
- both the freight forwarder and the shipping company were Danish companies domiciled in Denmark;
- the claim arose out of a transport contract with an agreed place of delivery in Denmark;
- the agreement was governed by the Merchant Shipping Act and its rules of jurisdiction, implying that there was jurisdiction in Denmark (as these rules can only be waived if there is a jurisdiction agreement that the court Danish recognizes in accordance with the overhaul of the EU Brussels Regulation); and
- the EU’s recast Brussels Regulation was inapplicable, as the dispute was not an international affair, having no international quality and no particular connection with London.
The shipping company argued that the jurisdiction agreement in the consignment note should be recognized under the EU’s recast Brussels regulation, as the case was international in nature. In support, the shipping company argued that:
- the container had been shipped from China;
- the transport contract had been concluded in China and the consignment note had been issued in China by the subsidiary of the Chinese shipping company to the subsidiary of the Chinese forwarder; and
- the container had been lost in the Mediterranean Sea.
The Danish Supreme Court ruled that the jurisdiction agreement between the parties could not be annulled under Article 310 (1) of the Merchant Shipping Act, since the recast Brussels Regulation of the EU applied because of the âinternational characterâ of the dispute. The reasoning was as follows:
It follows from the Jenard report of 1968, the Schlosser report of 1978 and the European Court of Justice that the applicability of the overhaul The EU’s Brussels Regulation on jurisdiction clauses presupposes that this dispute has an “international character”. It follows from the case law of the European Court of Justice according to which even if the two parties reside in the same EU state, the case may have an âinternational characterâ if the circumstances giving rise to the dispute arose in one state of the EU or a third state concerning the international jurisdiction of the tribunal, cf. C-281/02 (Owusu), premise 23-26 and C-237/10 (Lindner), premise 30.
[The shipping company] and [the freight forwarder] are both professional companies that operate in the field of international freight transport and this dispute between the parties concerns loss of freight during transport from Shanghai to Copenhagen. According to the bill of lading, the transport agreement was made between two Chinese companies, [the freight forwarder’s subsidiary] and [the shipping company’s subsidiary], last mentioned acting as agent for [the shipping company].
On this basis, the Supreme Court of Denmark, after an overall assessment, concludes that the present dispute between [the shipping company] and [the freight forwarder] has such an “international character“, that the recast of the EU’s Brussels Regulation is applicable, including article 25 concerning jurisdiction agreements.
The Supreme Court thus amended the High Court’s decision of February 25, 2020, according to which the claim could have been heard in Denmark.
Section 310 of the Merchant Shipping Act states that legal proceedings may be brought against sea carriers in Denmark in cases where the sea carrier receives goods for transport to Denmark or delivers goods after the completion of transport to Denmark. Denmark. However, Article 310 does not apply if a jurisdiction agreement which excludes Danish jurisdiction has been concluded in accordance with the recast Brussels Regulation of the EU.
It follows from the Supreme Court ruling that legal proceedings concerning claims for damaged goods – where legal proceedings are brought in Denmark under the Merchant Shipping Act – may have an “international character”, even when the consignee (as stated in the bill of lading) and the shipping company are Danish companies.
After Brexit, it can be assumed that the EU’s revised Brussels regulation will not apply to future legal proceedings regarding the validity of jurisdiction agreements which refer disputes to UK courts. Such legal proceedings could be initiated in Denmark even if the case is of an “international character” if the place of delivery is in Denmark or if the delivery of the consignment by the carrier takes place in Denmark.
For more information on this topic, please contact Jesper windahl to WSCO Advokatpartnerselskab by phone (+45 3525 3800) or by e-mail ([emailÂ protected]). The WSCO Advokatpartnerselskab website can be accessed at www.wsco.dk.