This was an appeal and cross-appeal from the judgment of the Douai Court of Appeal, 8 November 2011. Lesieur and Saipol bought crude Argentinian sunflower oil from Glencore under a CIF sales agreement subject to the general conditions of the Federation of Oils, Seeds and Fats Associations (FOSFA), including a London arbitration clause. The goods were loaded in the port of Necochea, Argentina, on the ship Bering Wind to be transported to Dunkirk by Kura Shipping Ltd (Kura). The ship had to deliver another part of the cargo of the same nature to other customers of Glencore in Rotterdam, the Netherlands, and Hamm, Germany. Upon arrival in Dunkirk on 1 October 2005, product pollution consisting of the presence of dirty slime giving off a foul odor was observed on unloading the oil. The oil was analysed and a forensic investigation ordered. In order to guarantee their rights, Lesieur and Saipol ordered the seizure of the vessel, which was subsequently released. Lesieur and Saipol brought proceedings against Kura and the master of the ship ex officio for damage to their goods. Kura, the master of the ship ex officio, and all the insurers subrogated in the rights of Glencore sought compensation from Lesieur and Saipol for the damage caused by the immobilisation of the vessel and the cargo resulting from the abusive seizure of the ship. The Court of Appeal upheld both the claim and the counter-claim.

In the main appeal, Kura and the master of the ship ex officio complained that the Court of Appeal judgment incorrectly upheld the liability of the maritime carrier. They argued that the Judges of the merits had the obligation not to distort the documentary evidence. It followed from the clear and precise terms of the expert's report that the cargo was sound and of merchantable quality, and that the pollution of the cargo was inherent in the very nature of sunflower oil which contains organic residues including amino compounds. By finding that the legal expert had only put forward the hypothesis that the presence of silt and the state of emulsion of part of the cargo could come from the state of the goods prior to their loading in Argentina, the Court of Appeal distorted the clear and precise terms of the expert report in violation of art 4 of the Code of Civil Procedure. The inherent defect of the goods for which the maritime carrier is not liable is defined as the propensity of goods to deteriorate under the effects of maritime transport carried out under normal conditions, taking into account the circumstances. By simply stating that Kura and the master of the Bering Wind did not provide proof that the presence of silt and emulsion of part of the cargo did not come from the state of the goods prior to their delivery, without investigating, as requested, whether the pollution was not attributable to the particular nature of the goods which was thus affected by a specific defect, the Court of Appeal deprived its decision of a legal basis with regard to art 4.2.m of the Hague-Visby Rules, together with art L 5422-12 of the Transport Code.

The provisions of art 3.4 of the Hague-Visby Rules relating to the probative value of statements of the bill of lading do not prohibit the carrier, even in the absence of reservations made on this document, to establish that the damage is due to one of the causes likely to exonerate it from its liability, in particular an inherent defect of the goods. By holding that Kura and the master of the Bering Wind could not rely on an excepted case, and that the bills of lading were issued without reservations, the Court of Appeal violated arts 3.4 and 4.2.m of the Hague-Visby Rules and article L 5422-12 of the Transport Code.

In the cross-appeal, Lesieur and Saipol criticised the Court of Appeal judgment for having ordered them to pay Kura and the master of the ship ex officio the sum of EUR 67,000 in damages for unlawful seizure of the ship. They further argued that the sales agreement was subject to FOSFA 54, which contained a London arbitration clause. Under the competence-competence principle, a judge faced with an arbitration clause can retain its competence only if the clause is manifestly inapplicable. The parties subrogated to the rights of a party under the arbitration agreement are placed in the same situation as the latter. The arbitration agreement may also relate to damages which, although falling under quasi-tortious liability, have a link with the agreement to which it relates. By refraining from investigating whether the arbitration agreement concluded in the contract for the sale of goods entered into between Glencore and Lesieur and Saipol was manifestly inapplicable before being able to retain their jurisdiction, the trial Judges violated the principle of competence-competence, together with art 1458 of the Code of Civil Procedure.

Held: Partial cassation.

As to the main appeal, when reviewing the opinion of the legal expert, according to which the residues of dirty and foul-smelling mud observed in the oil discharged from the ship and its partial emulsion were due to the condition of the goods before loading, the Court of Appeal rejected these conclusions, without distorting them, as it was entitled to do under art 246 of the Code of Civil Procedure, by considering that it was only a question of an hypothesis. Without further stating that the absence of reservations on the bills of lading prevented the maritime carrier from contesting the resulting presumption on the prior good condition of the goods, the Court of Appeal thus carried out the aforementioned research on the existence of an inherent defect in the goods, which would fully exonerate the maritime carrier from liability, on condition that it proved the alleged defect in the goods. This ground of appeal is therefore unfounded.

As to the cross-appeal, the authorisation given by the Judge to maintain the precautionary seizure of a vessel does not exclude, in principle, an investigation, depending on all the circumstances, of the liability of the arresting party for abuse of the right to seize the vessel. Lesieur and Saipol had received independent expert analyses concluding that, apart from a certain quantity isolated from the first days to be sold in salvage, the oil after refining was of commercial quality and suitable for human consumption. The Court of Appeal was able to deduce from this that, although legal proceedings and deliberation on the continuation of the seizure were ongoing at that date, maintaining the immobilisation of the vessel beyond that point in time characterised a fault constituting abuse of the right to arrest.

However, under the competence-competence principle it belongs to the arbitratral tribunal to rule, by priority, on its own competence except for the nullity or manifest inapplicability of the arbitration clause. In finding itself competent to rule on the relations between the buyers and the insurers subrogated in the rights of the seller, on the damaging consequences for the latter of the prolonged immobilisation of the vessel and its cargo, the Court of Appeal judgment held that the dispute does not concern the execution of the sale agreement, but relates to the seizure of the property of a third party, so that it does not fall under the arbitration clause.

By thus ruling, without establishing the manifest nature of the nullity or inapplicability of this clause, which submitted to arbitration any dispute relating to the sale contract, and without clearly excluding the possibility for the arbitrators to rule on the harmful consequences for the seller of an abusive ship arrest intended to guarantee the execution of its obligations towards the seizing purchaser, the Court of Appeal violated the competence-competence principle.

The Court of Appeal judgment is thus struck down and annulled, but only in that it declared itself competent to hear the claims of Delta Lloyd Schadeverzekering, Victoria Versicherung AG, Kravag-Logistic Versicherung AG, AXA Versicherung AG, Condor Allgemeine Versicherung AG, Basler Securitas Versicherung AG, Amlin Corporate Insurance NV, HDI-Gerling Verzeringen NV and TSM Insurance Co, declared their claims admissible, and ordered Lesieur and Saipol jointly to pay them the sum of EUR 177,393.70 in damages. The judgment delivered on 8 November 2011 between the parties by the Douai Court of Appeal is therefore reversed to that extent, and is remitted to be upheld by the Douai Court of Appeal.