Conflicts of Laws & Forum Shopping

Payment & Finance for International Trade – Litigation, Arbitration & ADR – Conflicts of Laws & Forum Shopping

The Task
Siteco Ltd whose principal place of business is Port Harcourt, Nigeria, entered into a contract to sell 500 drill pipes each to 1. Axis Ltd, 2. Portman Ltd and 3. Seaman Ltd, ‘cif’ London. The three buyers are pursuing a joint oil and gas project in the United Kingdom. All the contracts incorporated the UCP 600. Each pipe was to measure 100 inches in length with a circumference of 300 mm. Payment was to be made by irrevocable documentary letter of credit set up differently by the three companies. The letters of credit were issued in London and confirmed in Nigeria.

All parties agreed that the loading and other logistics will be carried out by an independent loading company jointly appointed by them. The consignment for Axis Ltd was to be loaded on the 13th of April 2016 while those of the other two companies were to be loaded on the 27th of April 2016.

(a) Axis Ltd’s consignment was loaded on the 17th of April 2016 but the loading company fraudulently inserted the 13th of April 2016 in the bill without the knowledge and consent of Siteco Ltd. Siteco Ltd has presented documents for payment but the bank has refused to pay citing late shipment and fraud.

(b)Portman Ltd has discovered from one of the several documents tendered that it states 10 of the pipes as 98 inches in length. They have instructed the bank that they are rejecting the documents, thereby preventing Siteco Ltd from drawing on the letter of credit. However, Siteco Ltd argues that since only 10 pipes measure less than 100 inches in length, the de minimis rule should apply to estop Axis Ltd from rejecting the documents.

(c) Seaman Ltd accepts that it has received valid documents but claims that some of the pipes are defective and hence do not conform to the sale agreement. Therefore, Seaman Ltd is seeking an injunction to prevent Siteco Ltd from drawing on the letter of credit.

Siteco Ltd is in despair but has been advised by their partners that you are the expert in matters of this nature. Therefore, Siteco Ltd has appointed you to argue its case. Using relevant case law, investigate the issues and advise Siteco Ltd on the legal position in each of the above contractual relationships.

PART B (Word limit: 1.250 words)
In the Court of Appeal case The Atlantic Star [1972] 2 Lloyd’s Rep. 446, 451, Lord Denning M.R. stated: “…You may call this “forum shopping” if you please, but if the forum is England, it is a good place to shop in, both for quality of goods and the speed of service”.

Critically analyze the above statement, especially in the context of shipping disputes.

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