The Maritime Arbitration Clause by Reference: When is a Charterparty Arbitration Clause Incorporated into a Bill of Lading?

In maritime commerce, a Bill of Lading does not always contain all of the terms governing the underlying carriage arrangement. It may refer to another contractual document, most commonly a Charterparty, which may contain an arbitration clause.

This gives rise to an important practical question: When does a reference in a Bill of Lading incorporate the arbitration clause contained in the Charterparty? The answer depends on the wording and legal effect of the incorporation.

The Egyptian Legal Framework

Article 10(3) of Egyptian Arbitration Law No. 27 of 1994 expressly recognizes arbitration agreements created by reference. It provides that a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement where the reference is such as to make that arbitration clause an integral part of the contract.

The Typical Maritime Structure

A common transaction may involve: a Charterparty containing an arbitration clause; a Bill of Lading issued pursuant to that Charterparty; and an incorporation clause in the Bill of Lading referring to the Charterparty. The question is then whether the arbitration clause has become part of the Bill of Lading contract.

A General Reference Is Not Necessarily Enough

A mere reference to a Charterparty does not necessarily mean that every provision, including its arbitration clause, has been incorporated into the Bill of Lading. The relevant question is whether the reference is sufficiently effective to make the arbitration clause an integral part of the contract.

Why the Wording Matters

There is an important practical difference between a Bill of Lading that merely states that the carriage is subject to the terms of a Charterparty and one that expressly refers to the Law and Arbitration Clause. The clearer the language, the stronger the basis for establishing incorporation.

The Bill of Lading Holder and Endorsee

The issue becomes more complex where the party seeking to enforce rights under the Bill of Lading was not a party to the original Charterparty. Can the arbitration clause be invoked against a subsequent holder who did not participate in negotiating the Charterparty?

The Practical Takeaway

Incorporation by reference is valuable but should not be treated as automatic. Clear drafting reduces uncertainty. Ambiguous incorporation can create a jurisdictional dispute before the substantive claim is heard.