American Bureau of Shipping v. Jules Verne et al.

The American Bureau of Shipping (ABS) (defendant) inspected and approved a shipping vessel. The inspection and approval were undertaken pursuant to a contract of classification between ABS and the builder of the ship. The contract of classification contained an arbitration clause. Jules Verne (plaintiff), a shipping company that was neither connected to the shipbuilder nor a party to the contract of classification, obtained ownership of the vessel. The vessel was damaged in an accident. Jules Verne filed an action in Paris Commercial Court against ABS, alleging that the damage resulted from ABS’s improper approval of the seaworthiness of the vessel and failure to notice design flaws in the vessel. ABS objected to the jurisdiction of the French courts and argued that Jules Verne should be bound by the arbitration clause because Jules Verne had knowingly received certain benefits of the contract of classification. The lower court rejected ABS’s objection. ABS appealed, and the France Court of Appeal also rejected ABS’s argument that the dispute must be referred to arbitration under the arbitration clause. The court of appeal stated that the arbitration agreement did not apply to Jules Verne and, therefore, the lower court, not an arbitrator, was competent to hear the dispute. However, the court of appeal did not explain the legal reasoning behind its findings. ABS appealed to the France Court of Cassation.