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The Kallang and The Duden

In two judgments delivered together on 19th November, the Commercial Court has made significant findings against the Senegalese subsidiary of the Axa group. The decisions strengthen the hand of shipowners seeking to counter what they regarded as an abusive practice in some West African ports of arresting vessels in order to obtain inflated settlement of cargo claims.

In both cases, during the course of discharge in Dakar the cargo receivers had alleged cargo claims which the Owners regarded as exaggerated. Such claims were subject to London arbitration pursuant to clauses incorporated in the bills of lading. The cargo insurers had then been instrumental in arranging the arrest of the vessels, purportedly as security for those claims, had demanded a bank guarantee answerable to Senegalese jurisdiction as security for the release of the vessels, and rejected an offer of a letter of undertaking by the Owners’ P & I club, the American Club.

In both cases, Jonathan Hirst QC sitting as a Deputy Judge of the High Court, held that the conduct, knowledge and intent of the insurers, Axa Senegal, was such as to make them liable to the Owners in tort for procuring a breach by the cargo interest of the express terms of the London arbitration clause. In each case, he held that Axa Senegal was determined, if it could, to use the arrest as a means of forcing the Owners to give up the right to have any dispute arbitrated in London and to accept Senegalese jurisdiction.

The decision in the Kallang follows the decision of Gloster J in the same case - [2007] 1 Lloyd’s Rep 160 - to dismiss the Defendants’ application to set aside an anti-suit injunction requiring the release of the vessel from arrest.

The Owners of the Kallang were represented by Alexander Layton QC and the Owners of the Duden were represented by Michael Collett, both of whom were instructed by Jackson Parton.

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