Yangtze Navigation (Asia) Co Ltd & Anor v TPT Shipping Ltd & Ors [2024] EWHC 2371 (Comm) (18 September 2024)

Three New Zealand companies in the timber industry (“the Exporters”) were sued in the High Court of England and Wales by ship owners for more than US$6 million.  Owners alleged that the Exporters were undisclosed principals to letters of indemnity which had been issued to Owners but which had gone unpaid by the (insolvent) issuer (“TPT Shipping”). The letters of indemnity provided for English jurisdiction.

The Exporters challenged the Court’s jurisdiction to determine the claims against them. David Bailey KC and James Goudkamp argued on their behalf that there was no good arguable case that they were TPT Shipping’s undisclosed principals. They also submitted that the doctrine of election had been engaged by steps that Owners had taken in connection with TPT Shipping’s liquidation, i.e., that Owners had chosen to treat TPT Shipping as their debtor and were bound by that election.

On 18 September 2024, Mr Christopher Hancock KC, sitting as a Deputy Judge of the High Court, allowed the Exporters’ application and set aside service of the claim form. In his judgment, Yangtze Navigation (Asia) Co Ltd & Anor v TPT Shipping Ltd & Ors [2024] EWHC 2371 (Comm), the Judge offered a comprehensive articulation of the law regarding undisclosed principals. Applying the relevant rules, the Judge was satisfied that there was no plausible evidential basis for concluding that TPT Shipping was acting other than as principal. There was, accordingly, no proper foundation for the claim that the Exporters were undisclosed principals. On the contrary, the evidence was to the effect that the relevant entities within the TPT group had structured their affairs with a view to ensuring that the risks associated with shipping were borne by TPT Shipping alone. That was inconsistent with the existence of an agency relationship between TPT Shipping and the Exporters.

David and James were instructed by Herbert Smith Freehills LLP.

To view a copy of the judgement please click here