Court name
Commercial Court of Uganda
Judgment date
24 August 2012

Rapid Shipping & Frieght Ltd v Copy Line International LLC (Miscellaneous Application-2012/216) [2012] UGCommC 105 (24 August 2012);

Cite this case
[2012] UGCommC 105

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NUMBER 216 OF 2012

(ARISING FROM HIGH COURT CIVIL SUIT NUMBER 349 OF 2010)

 

  1. RAPID SHIPPING AND FREIGHT UGANDA LTD                                                                                                                                                                                                              ......................                                                                                                                                                                                 APPLICANTS
  2. RAPID FREIGHT INTERNATIONAL LLC                 

VS.

 

COPY LINE LIMITED)…................................................................................                                                                                           RESPONDENT

 

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA

RULING

The Applicants application is made under order 9 rules 3 (g), (h), 2, 3, 4, 5 of the Civil Procedure Rules, section 98 of the Civil Procedure Act, and section 33 of the Judicature Act for orders that the court be pleased to issue a declaration that in the circumstances of the case, the court has no jurisdiction over the second Defendant/Applicant in respect of the subject matter of the claim. For the second Defendant/Applicant be removed from the suit and for costs of the application be provided for.

The application is supported by the affidavit of Mr. Peters Musoke, an advocate of the High Court of Uganda practising with Messrs Shonubi, Musoke and Company Advocates. The grounds of the application are that the Respondent filed High Court civil suit number 314 of 2012 which it subsequently amended to include the second Defendant/Applicant. That the Respondent relies on a Bill of lading issued and marked as exhibit P1 and a receipt marked as exhibit P2. The Applicant contends that the Bill of lading indicates under its jurisdiction and law clause that the English courts shall have jurisdiction in respect of any claim or dispute. Consequently that the High Court has no jurisdiction to try the suit as against the second Defendant/Applicant. The relevant provision of the Bill of lading exhibit P2 provides as follows

"… Governed by English law and any claim or dispute arising hereunder or in connection herewith shall be determined by English courts only and no other court".

 On the basis of this clause the Applicant avers that it is only the English courts which have jurisdiction in this matter.

In the deposition in reply, Mr. Stephen Lubega the Managing Director averred that sometime in February 2009 the Plaintiff/Respondent was allowed by this court to amend its plaint by adding the 2nd Defendant to the suit in order to effectively determine the real issues in controversy between the parties, and that the summons to file defence were served on the 2nd Defendant through the Commercial Manager of the 1st Defendant, through which the 2nd Defendant carries on business in Uganda. The application to dispute jurisdiction of court ought to be filed within the time limited for filing a written statement of defence, and the Applicants application was time barred, having been filed without leave of court extending time. The deponents view is that the application is misconceived in as far as it does not rely on any irregularity in or the service of summons on the 2nd Defendant/Applicant as is envisaged by the rules. Furthermore, having failed to take the necessary steps within time provided for to object to jurisdiction, the 2nd Defendant/Applicant by its written statement of defence on record submitted to the jurisdiction of the court.

Furthermore, the bill of lading referred to in the affidavit in support was issued as evidence that the 2nd Respondent had received the Plaintiff's goods in UAE for shipping to Mombasa. The other bill of lading, appearing on page 4 of the Defendants' trial bundle on court record (DID 2), to which he was not a party and through which his consignment together with that of other people, was shipped from UAE to Mombasa does not have any clause in which this court's jurisdiction is waived in respect of the goods post Mombasa port. The inclusion of both Defendants as parties to the suit is important for purposes assisting the court in determining the real issues pertaining to the Plaintiff's lost goods. Lastly he averred that question of jurisdiction can still be decided as one of the issues in the main trial.

The background to this application is that the Respondent COPY LINE LIMITED filed High Court Civil Suit No 314 of 2007 against the Applicants jointly and severally for recovery of special damages of USD 38,360, general damages interest and costs for breach of contract by failure to deliver the Plaintiff’s goods. The Plaintiff subsequently amended its plaint to inter alia add the 2nd Defendant as a party to the suit.  The 1st Defendant filed a written statement of defence in which it contended that there was no contract between it and the Plaintiff because it merely acted as an agent for collection of freight on behalf of the transporters. At the hearing of the suit, the 2nd Defendant objected to jurisdiction of the court informally and the court directed the 2nd Defendant to files a formal application objecting to jurisdiction to enable the Plaintiff file a reply with any evidence if it has in opposition to the objection. This was against the background that the case was coming for scheduling conference/preliminary hearing and the parties had filed a joint scheduling memorandum which they signed on 21 March 2012. In the joint scheduling memorandum agreed facts were that:

  1. The Plaintiff had a consignment of goods from Dubai to Uganda via Mombasa.

 

  1. The Plaintiffs goods were shipped pursuant to a house to house Bill of lading (exhibit P2).

 

  1. The first Defendant received US$2160 from the Plaintiff on 13 March 2007.

 

  1. The Plaintiff’s goods went missing in Kenya whilst on transit to Uganda.

The parties agreed on all the documents which were exhibited by consent of the parties and marked as exhibits.

 

The Applicant filed two applications one of which was for extension of time within which to file an application objecting to jurisdiction and the other application is this main application objecting to jurisdiction. On 23 May 2012 and by consent of Counsels for both parties, court granted leave extending time within which to file the application objecting to jurisdiction.

Submissions of the Applicant

The Applicants Counsel submitted as follows. The Plaintiff’s claim is based on a bill of lading marked Annexure 1 and 2, (Exhibit P2) which shows that the transaction is governed by English law and any dispute determined by English courts. Furthermore, the addition of the 2nd Applicant/Defendant as a party to the suit was made after the 1st Defendant’s objections which were overruled.

Under paragraph 4(b) of the plaint, the Plaintiff/Respondent pleaded that it handed to the 2nd Defendant/2nd Respondent 60 items for onward shipping to the Plaintiff at Kampala Uganda, and the Plaintiff relies on a copy of a bill of lading (Exhibit P2) issued by the 2nd Defendant. In paragraph 4(c), the Plaintiff pleaded that the 2nd Defendant advised it to pay for the freight services at the 1st Defendant’s offices in Kampala. Counsel submitted these services arise from the bill of lading. The pleadings capture the transaction as one between the Respondent and both Applicants. In paragraph 4(d) of the plaint, Exhibit P1 is introduced as an agreement between the 1st Defendant and all the previous paragraphs aver that the agreement is with the 2nd Defendant.

The Applicant’s Counsel submitted in the bill of lading No RFI SF700321 (Exhibit P2), the parties are the Respondent and Rapid Shipping LLC, the 2nd Respondent. He contended that a bill of lading is a contract between the parties according to the case of Kenfreight (U) Ltd Vs Leather Industries (U) Ltd (HCCS 119 of 2000) per Byamugisha J. The bill of lading provides that any matter arising therein is governed by English law and jurisdiction vested exclusively in English courts. Counsel submitted that Exhibit P1 which the Defendant says is a 2nd agreement, is considered as one transaction in relation to the 2nd Defendant, because it makes reference to number 7000094/SF 70032E which is the bill of lading (Exhibit P2) and relates to a contract between the Plaintiff and the 2nd Defendant for freight between Dubai and Busia in Uganda. Counsel for the Applicant submitted that the bill of lading captured in Exhibits P1 and P2 ousts the jurisdiction of the court.

Counsel submitted that where parties to a contract chose a forum, then that is the appropriate forum, and in this case, 2nd Defendant and the Plaintiff have in Exhibit P2 unequivocally subjected themselves to the exclusive jurisdiction of the courts of England and the dispute cannot be determined by this court.  He relied on the case of World Population Foundation (2003) and Larco Concrete Products Ltd-vs-Transair Ltd reported in [1988-90]HCB 80.

Submissions in reply by Respondent

In reply, Counsel for the Respondent submitted that order 9 r 3 (g) and (h) of the Civil Procedure Rules do not permit objection to jurisdiction on the grounds set out by the Applicant. Order 9 r 3 (g) and (h) should be read ejusdem generis with Order 9 r 2 and 3(1) and the net effect is that for anyone to challenge jurisdiction of court it has to be on grounds of irregularity of service of summons as provided for under Order 9 r 3 (1) (a) to (f). The grounds for disputing jurisdiction in the application do not arise under Order 9 r 1, 2, 3 and should be overruled. Counsel relied on AG V. Westmont (MA 593 and 595 of 1999) per Justice Ntabgoba. He submitted that the 2nd Defendant was added by consent of all parties after the court ruled against a Preliminary objection raised by the Defendant’s Counsel, summons were served, and a defence was filed by the 2nd Respondent who did not dispute the jurisdiction of the court.

Furthermore, the bill of lading (Exhibit P2) operates as evidence of acknowledgement of receipt by the forwarding agent. At page 4 of the Defendant’s trial bundle is the master bill of lading by the airline, which was issued by Global Container Lines, and on that bill of lading, the consignee is Rapid Freight (u) Ltd and the consignor Rapid Freight LLC. Therefore the document in issue is just an acknowledgment that the shipper is Steven Lubega the Managing Director of the Plaintiff Company.

The cases referred to by Counsel for the Applicants are distinguishable on the facts, and in this case, Mr. Lubega the shipper is the Managing Director of the Consigner. This cannot be an agreement ousting the jurisdiction of the High Court.

Furthermore, there are 2 bills of lading; the house bill of lading acknowledging receipt at page 4 of the trial bundle (DID2), which was a document to give comfort to the Plaintiff that they had space in the ship, and was not the bill of lading for transporting the goods from UAE to Mombasa. Counsel submitted that on this bill of lading, the Plaintiff is not stated; the consignee is Rapid Freight (U) Ltd and not the Plaintiff. Furthermore, DID2 has the container number and the seal number which are the same as those on the bill of lading.

The clause relied upon cannot oust the jurisdiction of court because the goods which are the subject of this suit were lost on the way from Mombasa to Kampala, but the bill of lading was for UAE to Mombasa. The authorities cited by the Applicant are not applicable and both Defendants should remain part of this suit because the 1st Defendant is trying to rely on technicalities, but the 2nd Defendant’s defence raises issues for determination by court and therefore, it is in the interest of justice that court retains both parties.  

Lastly learned Counsel for the Respondent submitted that the bill of lading Exhibit P2 was issued by the 2nd Defendant without any input by the Plaintiff, and therefore, it cannot be taken to have been agreed to by the Applicant. Counsel for the Respondent further submitted that the constitution enjoins the court to hear all matters, and the jurisdiction of the court cannot be ousted by the clause referred too. Furthermore, that the 2nd Defendant filed a defence which should be taken as submission to jurisdiction.

Rejoinder of Applicant

In rejoinder, Counsel for the Applicant submitted that under Order9 r 3 (5) of the Civil Procedure Rules, the filing of a defence is not a waiver of the right to object. Furthermore, that the AG V. Westmont case is distinguishable having dealt with Order 9 r 3(1) to (d) of the CPR. Under joint memorandum it was agreed that the Plaintiff’s goods were shipped pursuant to Exhibit P2, and document DID2 refers to other parties, and not the Respondent, and therefore, there is no privity of contract. Counsel for the Applicant submitted that it is only the bill of lading that was agreed to by the parties and which constitutes the valid contract.

Ruling

I have carefully listened to the submissions of Counsels and have gone through the pleadings and authorities referred to in their submissions.

The Applicant moved under order 9 rules 3 (g), (h), 2, 3, 4, 5 of the Civil Procedure Rules. Counsel for the Respondent submitted that an application could only be made where there was irregularity in the summons or service of the summons or in any order giving leave to serve the summons out of jurisdiction or extending the validity of the summons for the purposes of service. This is based on order 9 rule 2 of the Civil Procedure Rules. Rule 2 of order 9 of the Civil Procedure Rules deals with acknowledgement by the filing of a defence. It provides that such a defence shall not be treated as a waiver of any irregularity in the summons or service. The rule does not deal with dispute as to jurisdiction but with whether the filing of a defence will constitute a waiver of any irregularity in the summons or service of summons or in the order giving leave to serve the summons out of jurisdiction or extending the validity of the summons for purposes of service. Order 9 rule 3 of the Civil Procedure Rules is the rule that deals with dispute as to jurisdiction and allows an Applicant to seek a declaration that the court has no jurisdiction over the Defendant in respect of the subject matter of the claim or reliefs sought in the action. Order 9 rule 3 (g) is wide enough to cover any Defendant who disputes the jurisdiction of the court as far as the subject matter of the claim or the relief or remedy sought in the action is concerned. The Respondent’s objection to the application on the ground that it only has to be granted on an irregularity in the service of summons is not supported by the rules and is overruled.

The basis of the objection to jurisdiction is exhibit P2.  Exhibit P2 is a bill of lading issued by the Applicant and is titled “Combined transport bill of lading”.  It shows that the shipper/exporter is Rapid Freight International LLC, the Applicant herein.  The consignee on the other hand is the Respondent/Plaintiff. The party to be notified is Rapid Shipping And Freight Uganda Ltd, the first Defendant in the main suit.

The foundation of the Applicant’s submission is a bill of lading issued by the Applicant.  It is premised on the assumption that a bill of lading is a contract between the Applicant and the Respondent in which it was agreed that the English courts shall have exclusive jurisdiction in case of any dispute arising between parties with regard to the contract evidenced by or contained in the bill of lading.  The jurisdiction and law clause reads in the B.O.L reads as follows:

"The contract evidenced by or contained in this Bill of lading is governed by English law and any claim or dispute arising hereunder or in connection herewith shall be determined by English courts only and no other court"

The provision clearly indicates that the contract is either evidenced by the Bill of lading or contained in the Bill of lading. However, there is no evidence of the contract. The jurisdiction and law clause is provided for in the Bill of lading itself. The Bill of lading is signed by and on behalf of the Applicant. It is however not signed by any other party and can be taken to be a unilateral document issued by the shipper. Whereas a Bill of lading may contain evidence of the contract between the parties, further evidence of actual terms of the agreement is required to establish the contractual relationship between the contracting parties. 

According to Halsbury’s laws of England volume 9 (1) 4th edition (reissue) paragraph 601, it may be impossible to give one absolute and universally correct definition of a contract though it is commonly accepted that it is a promise or a set of promises which the law will enforce. The expression "contract" may be used to describe (1) the series of promises or acts themselves constituting the contract; (2) the document or documents constituting or evidencing the series of promises or acts, or their performance; (3) the legal relations resulting from that series. To constitute a valid contract there must be two or more separate and definite parties to the contract. Those parties must be in agreement in that they must be consensus on specific matters. They must intend to create legal relations in the sense that the promise of each side are to be enforceable simply because they are contractual promises and lastly the promises of each side must be supported by consideration by some other factor which the law considers sufficient (see Halsbury's laws of England paragraph 603 supra). According to PS Atiyah in An Introduction to the Law of Contract fifth edition Clarendon press Oxford at page 185:

"Where a written document is relied upon by one party as representing the contract, but this document has not been signed by the Defendant, it is more difficult to determine whether its contents should be treated as embodying contractual terms. In principle it must be shown that such a document has been accepted by both parties as the basis of the contract."

The author further notes that an illustration is a group of cases called "ticket cases…" where one party offers to contract upon certain written terms, often contained or referred to in the ticket of some kind and there is no doubt that the contract has in fact been concluded but there is doubt whether the terms have been accepted by the other party, it must be shown inter alia that sufficient notice was given of those terms.

Learned Counsel for the Respondent submitted that the Respondent never participated in the making of exhibit P2 which is the Bill of lading relied on by the Applicant. The Applicant relied only on the Bill of lading exhibit P2 and the jurisdiction on law clause stated therein for his submission in objection to jurisdiction.

A Bill of lading is by its nature a document of title. Section 1 of the Sale of Goods Act defines documents of title to include bills of lading.Halsbury’s Laws of England 4th edition reissue, vol. 43(2) paragraph 1532, defines a Bill of Lading as a document signed by the ship owner, or by the master or other agent of the ship owner, which states that certain specified goods have been shipped in a particular ship and which purports to set out the terms on which the goods have been delivered to and received by the ship. The general rule is that the owner of the goods is the person named in the Bill of lading as consignee and the one who holds the original bill of lading.   In Heskell v. Continental Express [1950] 1 All E.R. 1033 Devlin J held at page 1042 that: 

The reason why a bill of lading is a document of title is because it contains a statement by the master of a ship that he is in possession of cargo, and an undertaking to deliver it.

According to section 1 (e) of the Sale of Goods Act cap 82,“document of title to goods” includes any bill of lading. Generally speaking therefore, a Bill of lading is a document of title though it may be evidence of a contract. According to Atiyah (supra) at page 186 an agreement for the carriage of goods by sea is almost invariably recorded in the Bill of lading which contains standardised, internationally agreed terms. "But in practice an oral agreement for the carriage of particular goods on a particular ship will usually be made in advance, often by telephone; indeed the Bill of lading is not usually issued until after the goods have been loaded." The proposition that the Bill of lading may not be the contract itself was considered by Lord Goddard CJ in the case ofS.S. Ardennes (Owner of Cargo) v. S.S. Ardennes (Owners) [1950] 2 ALL ER 517where he held that a bill of lading was not in itself the contract between the ship owner and the shipper. At pages 519 - 520 he said:

It is, I think, well settled that a bill of lading is not, in itself, the contract between the ship-owner and the shipper of goods, though it has been said to be excellent evidence of its terms: see Sewell v Burdick, per Lord Bramwell (10 App Cas 105), and Crooks v Allan. The contract has come into existence before the bill of lading is signed. The bill of lading is signed by one party only and handed by him to the shipper, usually after the goods have been put on board.

No doubt, if the shipper finds that it contains terms with which he is not content or that it does not contain some term for which he has stipulated, he might, if there were time, demand his goods back, but he is not, in my opinion, thereby prevented from giving evidence that there was a contract which was made before the bill of lading was signed, and that it was different from that which is found in the document or contained some additional term. He is not a party to the preparation of the bill of lading, nor does he sign it.It is unnecessary to cite further authority than the two cases which I have already mentioned for the proposition that the bill of lading is not itself the contract, and, therefore, in my opinion, evidence as to the true contract is admissible. ...” (Emphasis added)

It cannot be said that the clause relied upon by the Applicant is a standard internationally acceptable term for the carriage of goods. It is a peculiar term which provides that the courts of England shall have exclusive jurisdiction in case of any dispute arising between the parties. There is however no evidence showing that the Respondent accepted the exclusive jurisdiction term or what in particular the terms of the contract were before the issuance of the Bill of lading. I am persuaded by the authority of S.S. Ardennes (Owner of Cargo) v. S.S. Ardennes (Owners) (supra) that evidence of the contract should be adduced in court before reaching the conclusion that the parties agree to the term in exhibit P2 that any claim or dispute arising under the Bill of lading or in connection therewith shall be determined by English courts only and not any other court.

In those circumstances and in the absence of the agreement or contract made prior to the issuance of the Bill of lading which is a unilateral document, I agree with the Respondents Counsel that the Respondent did not even sign the Bill of lading and there is no evidence that the Respondent agreed to the jurisdiction and law clause contained in the Bill of lading. Additional evidence is required before the court can reach a conclusion that the parties agreed that any dispute would be determined by English courts and no other court. In the premises, in the absence of any evidence that this is the agreement of the parties and that there is consensus about the jurisdiction and law clause by the parties, the objection to jurisdiction is premature and cannot be considered without evidence of consensus ad idem on the specific clause conferring exclusive jurisdiction on English courts. The objection is accordingly disallowed for being premature with costs.

Ruling delivered in open court this 24th day of August 2012

Hon. Mr. Justice Christopher Madrama

Ruling delivered in the presence of:

Adubango Richard for the respondent

Respondents MD Mr. Steven Lubega in Court

Counsel for applicant not in court

Charles Okuni Court Clerk

 

 

Hon. Mr. Justice Christopher Madrama

24th of August 2012