(1) Finmoon Ltd (2) OOO "Megafruit" v (1) Baltic Reefers Management Ltd (2) Howell Trading Sa and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 17 April 2012 |
| Neutral Citation | [2012] EWHC 920 (Comm) |
| Docket Number | Case No: 2011 FOLIO 115 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 April 2012 |
[2012] EWHC 920 (Comm)
Mr Justice Eder
Case No: 2011 FOLIO 115
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Crookenden QC and Jeremy Brier (instructed by Holman Fenwick Willan LLP) for the Claimants
Michael Howard QC and Peter Ferrer (instructed by Horn & Co) for the Defendants
Hearing dates: 25, 26, and 27 January 2012
Introduction
In these proceedings, the claimants seek to challenge certain parts of an arbitration award (the "Award") dated 24 December 2010 under s.67(1)(a) of the Arbitration Act 1996. As appears below, the Award determined certain preliminary issues concerning, in particular, the jurisdiction of the tribunal under a number of related but separate arbitration references.
The underlying claims which form the subject of these proceedings are cargo damage claims in respect of 12 cargoes of bananas shipped from Ecuador to St. Petersburg, Russia in the course of 2008 on the following vessels:
Baltic Navigator – Week 12
Nordic Star (1) – Week 12
Smolensk – Week 13
Skulptor Tomskis – Week 13
Nordic Cape – Week 14
Nordic Ice – Week 15
Eisha – Week 16
Baltic Wind – Week 17
Sun Unity – Week 18
Baltic Meridian – Week 19
Nordic Star (2) – Week 20
Sun Blossom – Week 21
The claimants are part of the Optifood Group, a major producer, importer and distributor of food products based in the Russian Federation. The second claimant ("Megafruit") is a Russian registered company; it was responsible within the Group for the importation to and the distribution within Russia of fruit including bananas. The first claimant ("Finmoon") is a Cyprus registered company and was concerned primarily with the shipping arrangements for the Group. It has been represented since 2001 by chartering brokers, Van Weelde Chartering ("VWC").
So far as these proceedings are concerned, Megafruit sourced produce from Ecuador and shipped it to St. Petersburg by weekly shipments on reefer vessels. From the second half of 2006, the carrying vessels were chartered for Megafruit by Finmoon and were (using a neutral term) supplied by the first respondent ("BRM") or by its predecessor company, Baltic Reefer Management LLP ("BRM LLP"). BRM LLP was a Scottish limited liability partnership. In December 2006, the business of BRM LLP was transferred to BRM, a Virgin Islands registered company. It is not in dispute between the parties that BRM succeeded to the rights, obligations and business of BRM LLP. Both were at all relevant times represented by Baltic Shipping Ltd ("BSL") a Russian registered company that acted as agents only. For present purposes, it is common ground that no distinction is to be drawn between BRM and BRM LLP and unless otherwise stated I shall therefore refer to them compendiously and without distinction as "BRM". BRM does not own any ships but (at least so far as the respondents are concerned) generally acts as manager on behalf of various shipowners and also charters in tonnage as part of what is sometimes referred to as the "Baltic Fleet". At all material times, it is common ground that BRM was the disponent owner of three of the ships identified above viz Skulptor Tomskis, Sun Blossom and Sun Unity (which I shall refer to as the "TBU" vessels); the other vessels were owned by separate registered companies which are the named second to ninth respondents and were managed by BRM. I shall refer to these companies as the "Baltic Owners".
It is also common ground that for the summer season of 2006 and the winter season of 2006/7, the carrying vessels were supplied pursuant to written contracts of affreightment ("COAs") based on the Gencon form and incorporating the normal Gencon arbitration clause. There is an important issue as to the identity of the parties to these COAs but it is, at least, common ground that as a matter of form, the COAs were signed by BRM as owner and Finmoon as charterer.
Weekly reefer tonnage continued to be provided by BRM after the expiry of the winter 2006/7 season COA although formal contracts of affreightment were not executed. For the summer season of 2007 the parties continued to do business "as per present coa until new one is finalised". For the 2007/8 season which covers the shipments in question, although the terms of a new COA were discussed, no formal agreement was ever signed by both parties. It is the claimants' case that, notwithstanding the absence of a properly executed and signed COA, BRM chartered each of the carrying vessels to Finmoon on Gencon terms as principal either under a COA covering the 2007/8 season or under individual Gencon charterparties. BRM accepts that this is indeed the case so far as the TBU vessels are concerned but otherwise this is denied by BRM. In summary, so far as the other vessels are concerned, BRM says that it acted only as agent and that the COA or individual charterparties were entered into on behalf of each of the registered owners respectively.
Bills of Lading were issued for all the cargoes in question. The bills named Megafruit as the consignee. The bills were on the standard Gencon charter bill of lading form and expressly incorporated the charterparty arbitration clause.
The arbitration proceedings
The claimants purported to commence arbitration in respect of their cargo damage claims both under the alleged charterparty arrangements and under the bill of lading contracts – although it will be necessary to consider in more detail how this was done and with what effect. In the result, the present proceedings are concerned with seventeen separate but connected arbitration references. One arbitration was commenced by Finmoon (and arguably Megafruit as undisclosed principals) as charterers under the alleged 2007/2008 COA which they said they had with BRM as owners. Twelve arbitration references (of which these proceedings are concerned with eight) were also commenced against each of the Baltic owners under the alleged COA alternatively under individual charterparties on the terms of the COA. Megafruit has applied to be joined as a claimant in the references under the alleged COA. A further twelve arbitrations were commenced by Megafruit as the alleged lawful holder of the bills of lading against each of the twelve one-ship companies which issued the bills of lading. At this stage, it is sufficient to note that with regard to the claims in respect of the TBU vessels BRM has accepted the jurisdiction of the appointed arbitration tribunals; and with regard to the other vessels, the registered owners have accepted the jurisdiction of the appointed tribunals under the charterparty arrangements but not under the bills of lading.
Although there are numerous separate references, the parties appointed the same arbitrators in each reference ie Finmoon and Megafruit appointed Mr David Farrington. BRM and the registered owners (including the Baltic owners) appointed Mr Alan Oakley. These two arbitrators then appointed Mr Brian Williamson as the third arbitrator. For simplicity, I shall refer to them as the "tribunal".
The preliminary issues
Following directions by the tribunal, there was a hearing to determine certain preliminary issues. These questions and the tribunal's answers as set out in the Award are as follows.
(1) (a) [Claimants' draft] Was there a COA between BRM and Finmoon covering the disputed voyages? (b) [Defendants'/Respondents' draft] Was there a COA between BRM and Finmoon dated 22 nd October 2007? If not, was there such a COA for any other period in 2007–2008? If so, when was it made and what period did it cover?
Tribunal's Answer: 1(a) Yes. 1(b). There was no COA dated 22nd October 2007 in the sense that there was a formal written agreement on that date. The COA for the period which included the disputed voyages came into existence no later than 25th October 2007 when Mr Kukhalashvili nominated the "Baltic Mariner" for week 44 and, possibly, as early as 17th October when he nominated the "Baltic Wind" for week 43. The parties intended the COA to be for the period week 43 in 2007 until week 22 in 2008.
(2) If not, are BRM estopped from denying that there was?
Tribunal's Answer: Yes.
(3) If so, did BRM contract as principals or as agents for the owners of the ships which performed the service?
Tribunal's Answer: BRM contracted as principals and not as agents. They were disponent owners.
(4) If BRM contracted as agents, is there an estoppel by convention which prevents them from asserting that fact?
Tribunal's Answer: An answer is not required.
(5) Were the bills of lading issued at the load port or the discharge port contracts of carriage to which Megafruit were a party?
Tribunal's Answer: No.
(6) Were there charterparties covering the disputed voyages? If so, were they the ones referred to in the bills of lading?
Tribunal's Answer: No.
(7) If the answer to question (6) is yes, were BRM (a) parties to those charterparties or (b) estopped from denying that they were parties?
Tribunal's Answer: An answer is not required.
(8) Has an arbitration against BRM been validly begun under a COA? Was Mr Farrington validly appointed as Arbitrator by the Claimants in relation to the claim made for the carriage by the "Baltic Meridian"?
Tribunal's Answer: No.
(9) Is Megafruit a party to the arbitration commenced by Finmoon under the COA? If not, can it now join the arbitration rather than commence proceedings of its own?
Tribunal's Answer: Megafruit is not a party because an arbitration under the COA has not validly been commenced. Megafruit is a party to arbitration...
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