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1990 (3) TMI 171 - SC - CustomsWhether English courts would be likely to entertain the instant suit if instituted in England in terms of the bills of lading so that the first respondent is not likely to be without a remedy? Held that - In the instant case we find from Exts. P1 to P3 that the following has been prominently printed just below the signature For the Master and Owners in the bills of lading. SEE CONDITIONS OF CARRIAGE AND OTHER CONDITIONS ON REVERSE. It can not therefore be said that the shipper, whose knowledge will be attributed to the first respondent did not know of the conditions of carriage printed on the reverse there being no other conditions printed elsewhere in the bills of lading. There is nothing to show that the charterparty was by way of demise. Pacta dant legem contractui - the stipulations of parties constitute the law of the contract. Agreements give the law to the contract. Clause 4 having been a stipulation in the contract evidenced by the bills of lading the parties could not resile therefrom. It is not clear whether the English Carriage of Goods by Sea Act, 1924 or the Indian Carriage of Goods Act, 1925 was applied by the High Court. The Articles and the Rules referred to are to be found in the Schedule to the Indian Act, the Rules whereunder were not applicable to the facts of the case. The dispute could not have been decided partly according to municipal law and partly according to English law. The English law was not proved before the court according to law. The result is that this appeal must succeed. We accordingly allow this appeal, set aside the impugned judgments and remand the case to the trial court for disposal according to law after giving opportunity to the parties to amend their pleadings and adduce additional evidence, if they are so advised, in light of the observations made hereinabove.
Issues Involved:
1. Jurisdiction of Cochin Court 2. Applicability of Clause 3 of the Bills of Lading 3. Liability of the Appellant as a Charterer 4. Proper Law Governing the Contract 5. Incorporation of Charterparty Terms into Bills of Lading 6. Applicability of Indian and English Carriage of Goods by Sea Acts Detailed Analysis: 1. Jurisdiction of Cochin Court The primary issue was whether the Cochin Court had jurisdiction to entertain the suit filed by the first respondent. The appellant contended that the contract, evidenced by the bills of lading, was governed by English law and stipulated that disputes should be determined in England or, at the option of the carrier, at the port of destination, excluding the jurisdiction of courts of any other country. The trial court had previously ruled that it had jurisdiction, a decision affirmed by the High Court. The Supreme Court allowed the appellant to argue the jurisdiction issue but ultimately held that the appellant had either waived the objection or submitted to the jurisdiction by participating in the proceedings without specifically contesting jurisdiction in their appeal. 2. Applicability of Clause 3 of the Bills of Lading Clause 3 of the bills of lading stipulated that disputes were to be determined in England or, at the carrier's option, at the port of destination according to English law. The Supreme Court noted that the first respondent, as the consignee and holder of the bills of lading, was bound by this clause. The Court emphasized that the choice of law and jurisdiction clauses in international contracts should generally be upheld unless there is a strong reason to the contrary. 3. Liability of the Appellant as a Charterer The appellant argued that it was merely a charterer and not the owner of the vessel, and thus not liable for the shortage of goods. Clause 4 of the bills of lading specified that if the vessel was not owned or chartered by demise to the company issuing the bill of lading, the bill would take effect as a contract with the owner or demise charterer, with the issuing company acting solely as an agent. The High Court had rejected this defense, but the Supreme Court found that the High Court erred in not considering Clause 4 properly. The Court held that the appellant was not personally liable as the bills of lading clearly established a privity of contract between the owner or demise charterer of the vessel and the shipper. 4. Proper Law Governing the Contract The contract of affreightment, evidenced by the bills of lading, was governed by English law as explicitly stated in Clause 3. The Supreme Court affirmed that the express choice of law by the parties should be respected. The Court cited various authorities to support the principle that the proper law of the contract is the law chosen by the parties, and this choice should be upheld unless it is against public policy or lacks a bona fide connection to the contract. 5. Incorporation of Charterparty Terms into Bills of Lading The Supreme Court discussed the incorporation of charterparty terms into the bills of lading. It noted that specific terms of a charterparty could be incorporated into a bill of lading if clearly referenced. The Court found that Clause 4 of the bills of lading, which referred to the charterparty, was binding on the parties. The Court emphasized that the stipulations of the charterparty, when incorporated into the bills of lading, must be honored, and the liability of the parties should be determined according to these terms. 6. Applicability of Indian and English Carriage of Goods by Sea Acts The Supreme Court clarified that the Indian Carriage of Goods by Sea Act, 1925, was not applicable as the goods were shipped from Africa to Cochin, not from an Indian port. The Court also noted that the Carriage of Goods by Sea Act, 1924 of England, which was based on the Hague Rules, was relevant but not properly considered by the High Court. The Court held that the dispute should be resolved according to the applicable English law, as chosen by the parties in the contract. Conclusion: The Supreme Court allowed the appeal, set aside the judgments of the lower courts, and remanded the case to the trial court for disposal according to law. The parties were given the opportunity to amend their pleadings and adduce additional evidence. The Court made no order as to costs.
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