Jurisdiction and arbitration

Autor:Tomotaka Fujita

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1. Introduction

This paper addresses how Chapters 14 and 15 of the Rotterdam Rules deal with the issues of jurisdiction and arbitration, which were among the most controversial issues during the Rotterdam Rules negotiations. The differences of opinions could not be reconciled easily and so the negotiations resulted in a unique "opt-in" system for these chapters. At the same time, the provisions in these chapters, which are more detailed regulations compared with previous transport law conventions, are highly technical and it is therefore difficult to see the intentions of the specific rules in these chapters.

The purpose of this paper is to provide the basic ideas behind the provisions in the Convention rather than providing comprehensive interpretations of each provision. Part II traces the drafting history of Chapters 14 and 15, which reveals a divergence of opinions among the delegations during the negotiations and explains why these chapters finally ended up with an optional character. Part III analyses the main features on the rules on jurisdiction. Part IV examines the rules on arbitration, taking into account the practical implication of the rules, and Part V is the conclusion.

2. A drafting history of chapters 14 and 15
a Opt-in System of Chapters 14 and 15

The most important feature of the chapters on jurisdiction and arbitration (Chapters 14 and 15) of the Rotterdam Rules is that they are optional. Articles 74 and 78 say that the provisions of these chapters bind only the contracting states that declare that they will be bound by them. The Rotterdam Rules do not allow "reservations" (Article 90), meaning that the contracting states cannot pick and choose the provisions as they like. The chapters on jurisdiction and arbitration are the exception to this general rule. We review the drafting history of the Rules to understand why they have such an exception.

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b The CMI Draft

Not all previous transport conventions included provisions on jurisdiction and arbitration. For example, the Hague1and the Hague-Visby Rules2do not contain any such provision. The first draft of the Rotterdam Rules, which was originally prepared by the Comité Maritime International (CMI), did not contain any provision on jurisdiction and arbitration.3It should be noted, however, that this does not mean that the CMI thought the new Convention should not have provisions on these issues. On the contrary, the CMI thought that jurisdiction and arbitration provisions would be included in the final convention. The CMI’s report states:

"that uniform rules should contain a provision on jurisdiction along the lines of article 21 of the Hamburg Rules, but not including the provisions of article 21 which were in conflict with article 7(1) of the 1952 Arrest Convention, and a majority was in favor of a provision along the lines of article 22 of the Hamburg Rules, but with the omission of subparagraph (3)."4The first draft did not deal with the issues of jurisdiction or arbitration not because CMI thought they were not important. They were not included as it seemed premature to consider these topics before some conclusions were reached on the substantive solutions.5CMI assumed that the jurisdiction and arbitration provisions would be included in the final Convention along the lines of Articles 21 and 22 of the Hamburg Rules6.

c Discussion in the UNCITRAL Working Group

At the 9th session of the UNCITRAL Working Group, which was the first meeting for the deliberation of the Convention, it was discussed whether to include the provisions on jurisdiction and arbitration. An overwhelming majority favored incorporating chapters on these two topics. The official

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report of the session states, "While some support was expressed for not including in the draft instrument such a provision on jurisdiction and arbitration, it was widely considered that such a provision would be useful and even, in the view of some, indispensable."7The most curious aspect of the discussion at that time was that most delegations supported the inclusion of chapters on jurisdiction and arbitration without knowing what their contents should be. In any event, the UNCITRAL Secretariat entrusted with the draft prepared new chapters on jurisdiction and arbitration, primarily copying Articles 21 and 22 of the Hamburg Rules.8Once the discussions began on the new text, it was immediately evident that the delegations had very different rules in mind. The main issue was whether, and to what extent, parties could agree on the "exclusive" jurisdiction in the contract of carriage. Bills of lading sometimes include a jurisdiction clause that provides that a certain court (such as the New York District Court) has exclusive jurisdiction, and parties cannot sue in any other place. The validity of such a clause varies in each state9and, accordingly, diverse opinions were expressed during the discussions in the UNCITRAL Working Group. On one hand, delegations argued that an exclusive choice-of-court clause should not be allowed and that the claimant should be entitled to sue in any location the Convention provided. Many "shipper countries" such as Australia and Canada belong to this camp. On the other hand, other delegations thought that an exclusive choice-of-court clause was generally valid. The EU Commission10and Japan supported this position. Finally, in between, intermediate positions such as that by the United States did not permit exclusive choice-of-court clauses as a general rule, but recognized their validity for certain types of contracts.

d Final Text of the Convention

Although intensive discussions were held, none of the three groups won a majority. Finally, it was decided that the text of the Convention should adopt an intermediary position; i.e., that it generally prohibits exclusive choice-of-

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court agreements while recognizing their validity only for volume contracts. At the same time, each contracting state had an option of whether to be bound by this rule.11None of the three groups prevailed over the others, but none totally lost.

Each contracting state can make the declaration pursuant to the procedure provided in Article 91. Declaration can be made when a state ratifies the convention, or at any time after its ratification. A state can also withdraw the declaration at any time (Article 91(5)).

Please note that it is possible for a contracting state to make a declaration to be bound by only one of these chapters. The regulation on arbitration is, as mentioned later, a supplement of the regulation on jurisdiction, and one might question whether it is more logical to permit the state to choose to be bound by both Chapters 14 and 15 or to be bound by neither. The reason for the current rule is more practical (or political) than theoretical. It is necessary for European countries to allow independent decision-making on these two chapters.12The EU has the authority to decide whether to opt-in Chapter 14 (Article 93), while each member state may decide whether to opt-in Chapter 15.

3. Jurisdiction
a General Nature of Chapter 14

Before we move on to specific provisions, we will review the general nature of Chapter 14.

i. The Allocation of International Jurisdiction

First, Chapter 14 deals with the allocation of international jurisdiction among contracting states. In other words, it regulates which state has the jurisdiction, but does not regulate which court in a specific state has jurisdiction. The latter concern is left to national law. For instance, let us assume that

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the place of receipt under the contract of carriage is Yokohama, the biggest port in Japan (let us assume Japan is a contracting state that declares to be bound by Chapter 14). Although the place of receipt is referred to in Article 66(a)(ii), it does not give the jurisdiction to the Yokohama District Court. As such, Article 66(a)(ii) indicates that Japan, being the location of receipt, has international jurisdiction; the question of which court in Japan has jurisdiction is outside the scope of the Convention. The point is clarified through the concept of "competent court," which is defined as follows: "a court in a Contracting State that, according to the rules on the internal allocation of jurisdiction among the courts of that State, may exercise jurisdiction over the dispute" (Article 1(30); emphasis added).

ii. A "Competent Court"

Please note that the "competent court" should be situated in a contracting state. For example, if a place of receipt is in a non-contracting state, a court in such a state cannot be a competent court and does not have jurisdiction under the Rotterdam Rules. Although the Hamburg Rules do not provide for such a requirement, the UNCITRAL Working Group thought it was necessary.13

The reason is not self-evident because, at the first look, the requirement seems irrelevant. Let us assume a carriage from State X (a contracting state that declares it is bound by Chapter 14) to State Y (a non-contracting state). Even if the Convention requires that "competent court" be situated in a contracting state, it does not prevent the consignee from bringing an action in State Y, since the courts in State Y are not bound by the Convention. On the other hand, it does not give any guarantee for the consignee to bring an action in State Y if the...

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