On The Problems Of Jurisdiction Clause In The Bill Of Lading

Jurisdiction clause in the bill of lading is a clause which calls for suit in a specific court or in the courts of a country when a dispute according to or related to the bill of lading arises. It's a general practice that carriers in liner trade conclude jurisdiction clause in their bill of lading. Because that the shippers, the carriers, the ship owner and the consignees in the carriage by sea often situated in the different jurisdictions and be regulated by different laws, the selection of the jurisdiction may fundamentally affect the interests of all the parties. Countries in favor of different interests hold different position toward the jurisdiction clause in bill of lading, and, those countries who generally recognize the effectiveness of the clauses calls for foreign jurisdiction in the bill of lading apply different criteria in judging the effectiveness of the clause.In the author's opinion, the theoretical basis of jurisdiction clause is that the jurisdiction clause can be regarded as the agreement of the carrier and the shipper on the selection of the forum. In practice, carriage by sea often carried out between nations, so it often involves more than one jurisdiction, such as the port of loading, the port of discharge, the port of transship and the habitual residence of the complainant and so on. Especially in the liner trade, the carrier may be sued by various complaints in different countries because of disputes caused by a single damage. If there is not a stable jurisdiction, most of the lawsuits in which the carrier involved may be carried out in foreign courts, the carrier have to deal with the lawsuits here and there facing the unfamiliar laws and unfamiliar proceedings, the carrier also have to assume the heavy litigation expenses. In addition, the complaints often choose the forum to make a favorable claim for the compensation of the damage of goods, what is called forum shopping, which makes the place where to litigate even impossible to be foreseen. All of the factors above may cause a lot of inconvenience and heavy burden to the carrier, all what he can do is to increase the transportation charges to disperse the expenses to the shipper, which will definitely hinder the operating of shipping industry and the development of international sales of goods. So, it's necessary that forums recognizing the effectiveness of jurisdiction clause in the bill of lading and to allow the carrier be sued in a stable jurisdiction for the well being of shipping industry and international trade in goods. Jurisdiction clause in the bill of lading not only binds the carrier and the shipper but also binds the third party of the contract of carriage, who may be the consignee, the assignee of the bill of lading or the subrogated cargo underwriter. Under certain conditions the actual carrier has the right to cite the jurisdiction clause in the carrier's bill of lading to call for a stay of proceedings. There are two existing theories which could back up the binding of the jurisdiction clause in the bill of lading to the third party, which are the subrogating of the contractor's right theory and the circulation of the negotiable securities theory. On the other side, in the author's opinion, jurisdiction clause in the bill of lading should bind the third party because: first, it's the third party other than the shipper who often sues the carrier, so the jurisdiction clause would be useless if it doesn't bind the third party. Second, the third party should anticipate that he would be bind by the jurisdiction. Now that he expected to enjoy the rights in the bill of lading, he should take the responsibility in the bill of lading too. Third, it's unfair to let the jurisdiction clause to be ineffective, just because the shipper has transferred the bill of lading to other people.Although it's necessary to recognize the effectiveness of the jurisdiction clause in the bill of lading, it doesn't mean that the carrier could choose the forum wherever he likes. If we don't put any restriction on the jurisdiction clause which the carrier conclude in the bill of lading, the carrier would take the advantage of negotiation power over the shipper and infringe the rights of holders of the bill of lading. Carriers could circumvent the mandatory laws of related countries by concluding exclusive jurisdiction clause in the bill of lading to lessen his duty of compensation. In addition, the jurisdiction clause could be a veiled defense that caused settlements. Carriers could choose those jurisdictions which have little or no connection to the dispute. Often, it's very costly for the claimant to prosecute the carrier in the chosen jurisdiction, sometimes it could even force the claimant to give up prosecution, especially when the sum in question is low. So, the author's proposal is that, in principle, courts should recognize the effectiveness of the jurisdiction clause in the bill of lading, in the mean time, they should also put some reasonable restrictions on the clause to balance the interests of all parties, that is to say, to let the carriers being sued in a stable jurisdiction, at the premise of not infringing upon the claimer's rights.After studying provisions in several countries'legislation and in the international treaties, as well as the judicial practices of some countries, the author discussed four criteria in judging the effectiveness of the jurisdiction clause, which the author considered reasonable: first, jurisdiction clause in the bill of lading should only bind the merchant while he shipped the cargo for sale. Their experiences provide them with the ability to understand how the jurisdiction clause will influence their interests, and the aim of confining the binding of the jurisdiction clause within the shipment of cargo for sale is to guarantee that the claimants go abroad to prosecute the carrier is worthwhile. Second, the jurisdiction clause in the bill of lading should be clear and precise, so the forums could presume that the holders of the bill of lading had already accepted the jurisdiction clause. Third, the jurisdictions which the carrier chose should have connections with the facts or the disputes. It could prevent that the carrier circumventing the mandatory laws and prevent the jurisdiction clause being used as a defense. Last, the jurisdiction clause shouldn't cause unfairness to the holder of the bill of lading, which demands that the jurisdiction clause shouldn't lighten the responsibility of the carrier, and to send the jurisdiction to the foreign forum shouldn't cause the litigation prescription went over.There are some factors affecting the judgment of the effectiveness of the jurisdiction clause. First, the application of the foreign law will affect the criteria of the judgment on the jurisdiction clause. Second, the anti-suit injunctions and the recognition of judgments by foreign forums shouldn't be neglected before the forums judging the effectiveness of the jurisdiction clause. If the forum ignored the jurisdiction clause in the bill of lading or the anti-suit injunctions issued by foreign forums and insisted on announcing a verdict, what it did might be in vain, in case of the verdict needed to be enforced by foreign forum. Third, when the forum obtained the jurisdiction by arresting the ship, it could enforce its verdict all by itself, but for the harmony the international commercial relations, the forum should be better to judge the effectiveness of the jurisdiction clause in the bill of lading as usual, in this circumstances the forum could requests the carrier to make a sufficient pledge for the enforcement of verdict which will be made by the foreign forum.