The plaintiff, Hoanh Son Group JSC, claimed USD 643,288.61 plus interest, and an acknowledgement of liability by the defendant, Scandi Trading Denmark ApS (Scandi), for other losses as a result of the detention of the Hoanh Son Sky in Mozambique initiated by Scandi in 2024, following a dispute over unpaid bunkers, including any amount that the plaintiff might be obligated to indemnify Hengda Shipping Group Ltd (HSG), as the charterer of the vessel.

On 10 May 2024, the Mozambican Court decided to detain the Hoanh Son Sky based on Scandi's arrest application. This was done without prior consultation with HSG. Following a trial in the Mozambican Court, in which HSG objected to the arrest, the Court ruled on 27 June 2024 that the vessel should be released. The main reason was that arts 3.1 and 3.4 of the Arrest Convention 1952 did not allow for the vessel's arrest.

HSG brought this action for compensation for unjustified arrest. The parties disagreed as to whether Denmark had jurisdiction, and Scandi therefore filed a principal claim for inadmissibility. If the question of liability were to be decided, the parties agreed that the case should be determined by Mozambican law: see art 6.1 of the Arrest Convention 1952; Executive Order No 59 of 11 December 2000.

Scandi further argued that that the effect of art 6 of the Arrest Convention 1952 is that the Mozambican courts should have exclusive jurisdiction to adjudicate a case of unlawful arrest. HSG argued that art 6 contains a conflict of laws rule, which means that questions of liability for unlawful arrest must be decided according to the law of the State in which the arrest was made. Article 6 does not contain a rule on jurisdiction, let alone exclusive jurisdiction.

Held: Judgment for the plaintiff on the issue of jurisdiction and inadmissibility; judgment for the defendant on the main issue of liability.

Jurisdiction

The question whether there is a venue for the case in Denmark depends primarily on whether the parties have entered into an arbitration agreement; specifically whether HSG is bound by Scandi's general terms and conditions of sale, cl 22.2, which provides for LMAA arbitration in London.

On 3 July 2023, the bunker oil in question was ordered for the ship, and in the acceptance of the offer, the time subcharterer, Bromley Shipping & Trading Ltd (Bromley), clearly stated that it had ordered the bunker oil. In the order confirmation that Scandi sent to Bromley, but not to HSG, Scandi stated that the buyer was: 'M/V Hoanh Son Star and/or Master and/or owner and/or Charterer and/or Managers and/or Hoanh Son Group Joint Stock Company and/or Bromley Shipping & Trading Ltd'. This order confirmation cannot lead to an agreement being entered into between Scandi and HSG for the purchase of bunker oil. There is therefore no basis to consider HSG bound by the arbitration clause in Scandi's general terms and conditions of sale.

Scandi has secondly argued that art 6 of the Arrest Convention 1952 not only regulates the choice of law, but also the question of territorial jurisdiction in cases of damage caused by arrest, and that as a result there is no jurisdiction for the case in Denmark, but only in Mozambique. The Court notes in this regard that art 6 is a provision on choice of law which does not contain rules on jurisdiction.

On the basis of the above, and since Scandi is domiciled in Denmark, the venue for the case is in Denmark, and Scandi's claim for inadmissibility is rejected.

Liability

The parties agree that the question of liability for Scandi shall be determined in accordance with Mozambican law: see art 6.1 of the Arrest Convention 1952; Executive Order No 59 of 11 December 2000.

The expert evidence on Mozambican law agrees that under art 483 of the Mozambican Civil Code, one of the conditions for liability for damages is a culpable act, in the form of (at least) negligence. Liability in the present case under Mozambican law requires that Scandi acted culpably, negligently, or without normal prudence when submitting the arrest request. Under Mozambican law the plaintiff has the burden of proving the defendant's culpable conduct.

The main question is whether the fact that Scandi, in its arrest request of 9 May 2024, only referred to art 3.1, and not to art 3.4, of the Arrest Convention, constituted a culpable act. HSG has the burden of proof to demonstrate that the application of the exception in art 3.4 of the Convention under Mozambican law would be so obvious that the very submission of a request for arrest of a sister ship in a situation such as the present one constitutes an abuse or a culpable application of the legal system. This burden of proof has not been discharged.