Ardahalian v Unifert International S.A. (Elissar)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ACKNER,LORD JUSTICE BROWNE-WILKINSON |
| Judgment Date | 11 April 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0411-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 84/0157 |
| Date | 11 April 1984 |
[1984] EWCA Civ J0411-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
(CIVIL DIVISION)
From: Mr Justice Staughton
(Q.B.D., Commercial Court, London)
Royal Courts of Justice,
Lord Justice Ackner and
Lord Justice Browne-Wilkinson
84/0157
MR T.R. CHARLTON (instructed by Messrs McKenna & Co.) appeared for the Appellant (Claimant) (Owner).
MR S.M. TOMLINSON (instructed by Messrs Sinclair Roche & Temperley) appeared for the Respondents (Respondents) (Charterers).
This is an appeal from the refusal of Mr Justice Staughton, on 21 October 1983, to set aside two awards, an interim and a final award, and to remove the arbitrator. The basic facts are not in issue. They are most conveniently set out in the first few pages of the judgment of the learned judge, and it is from there that I will in substance take them.
The appellant, Mr Hagop Ardahalian, of Beirut, is the owner of a vessel called the Elissar, and I will refer to him hereafter as the owner. He is the claimant in the arbitration. The respondents to this appeal are the charterers of that vessel under a voyage charter. What happened was this. In late 1980 the owner owned a cargo of scrap in Newport, Wales, and decided, with another gentleman, to buy a ship to carry that scrap to Pakistan. That is how the vessel came to be purchased. The scrap venture did not materialise. The owner made up his mind that the vessel herself should then go for scrap. Before that he obtained a cargo of fertiliser to be carried from Constanza to Iran. There was a prospect of getting another cargo from Kuwait to Karachi, and it was there that he intended to scrap the vessel or, if the market made it worthwhile, to continue with further trading. Thus it was that the vessel came to be chartered to the respondents to carry the fertiliser from Constanza to one of three ports in the Gulf, that is to say, Bandar Khomeini, Bandar Abbas and Bandar Bushehr.
The vessel itself was 27 years of age. A question arose as to what was its capable maximum speed. It set off loaded with the fertiliser from Constanza. In the Persian Gulf it encountered two substantial periods of breakdown. First it had to wait at Suez from 1 June to 4 July. Secondly it had to wait at Dubai from 21 July to 2 August for further repairs. When she got to the Persian Gulf the Iranian government had instituted a convoy system for vessels proceeding to Bandar Khomeini. They were to be capable of a minimum speed of 12 knots in order to sail in the convoy. The charterers ordered the vessel to BandarKhomeini but she did not get there. She waited at BandarAbbas for some four months, and then the fertiliser was there discharged and the vessel went on to Karachi, where she was broken up for scrap.
The owners complaint is that what prevented the vessel from going to Band Khomeini was the convey system of the Iranian government and the fact that she could not go fast enough to keep up with the convoy. The charterers, however, argued that it was the mechanical defects of the vessel, and the incompetence of the crew, that caused that situation.
An arbitration was held before Mr Clifford Clark as sole arbitrator. It lasted for some five days, from the end of January to 4 February 1983, and the claims were as follows.
The owner claimed demurrage at Constanza, a loading port, in the sum of $25,000. That claim succeeded. Secondly the owner claimed demurrage at Bandar Abbas in the sum of more than $ 1/2 million. It related to four months waiting there. It was his principal claim and it failed before the arbitrator. Thirdly the owner claimed freight earned by reason of the Chamber of Shipping War Risks Clauses. That claim also failed before the arbitrator. Fourthly, the charterers counterclaimed despatch at Constanza. That failed. But in their further counterclaim for damages for breach of contract because the fertiliser was delivered at Bandar Abbas instead of to Bandar Khomeini they were awarded $110,000, with the result that there was an award to them in favour of nearly $85,000, being the counterclaim of $110,000 less the loading port demurrage at Constanza.
On the second day of the arbitration the owner sought to amend his pleading in this way. In para.9 of the points of claim he had alleged:
"9.Further, or alternatively, and in breach of lines 19–20 of Clause 1 of the Charterparty there was no safe and/or accessible berth at Bandar Khomeini to which the vessel could proceed. The Claimant will rely upon the facts and matters particularised in paras.6–8",
and when one comes to look at the facts particularised in paras.6–8 they do not provide any real support for that allegation. Thus the amendment which he sought was:
-"and further on the fact that by reason of the state of war between Iran and Iraq the vessel would have been exposed to damage which could not be avoided by good navigation and seamanship namely bombing and torpedoing. The Claimant will further rely on the loss by bombing of the Louise at or near the port of Bandar Khomeini on 21 May 1981".
Because of the lateness of that amendment the issue was reserved for later evidence and argument, and therefore not dealt with in the initial hearing. A letter from the solicitors for the charterers to the solicitors for the owner stated:
-"we write to place on record the arbitrator's Order. Your application was granted on terms—
(a) that it be dealt with at an adjourned hearing at some later date and not during the present week".
It was also part of the terms that the arbitrator could deal with the costs of the arbitration without that issue in a certain manner. There was a considerable period of delay before Mr Clark provided his interim award, a period of some four months.
In the meantime a telex was sent by the solicitors for the respondents, the charterers, to the arbitrator in these terms. It is dated 10 May 1983:
"We have given further thought to your query and have discussed the matter with Messrs McKenna & Co.".
They are the solicitors for the owner.
"In view of the leave granted to the claimant to argue that Bandar Khomeini was an unsafe port your award, if in favour of the respondents, must clearly be interim, contrary to what we suggested to you this morning. However, your award should also be interim if you find in favour of the claimant as he may still wish to take the matter further if his success is partial or if there were to be a successful appeal.
"Consequently your award should, whatever its terms, be interim in the reference but, of course, final as to the issues dealt with at the hearing. As requested it should also be in the form of a reasoned award".
Mr Tomlinson, for the respondents, accepts that that was not a very clear telex, for one reason amongst others, that if the arbitrator had found wholly and totally in favour of the owner there would have been no need to return to the issue reserved, namely, the alleged unsafeness of the port.
As the learned judge observes, the arbitrator appears to have forgotten about that telex and what he had been told in the January-February hearing. He made an interim award of some $85,000 in favour of the respondents, whereas quite clearly he should have left any figures open until he dealt with the reserved issue. In his award he said:
"7. This my Interim Award is Final as to the matters in the reference. As requested by the parties I leave the question of costs, if necessary, to a Final Award",
and right at the end of his reasons he said:
"49. As requested by the parties, I left over costs for a Final Award should this be necessary".
In para.38 of his Reasons he said this, and it is this which has given rise to the application to remove him:
"38. If the decision had rested on whether or not Bandar Khomeini was an accessible and safe port, I would have found that, in spite of the war and various incidents, provided vessels joined the convoy and provided they were able to meet the convoy requirements, it was accessible and safe".
Mr Charlton submits—and in my judgment quite rightly—that this is not a preliminary or tentative view. It does not suggest that this is a mere indication of what he might well conclude as and when the issue came back to him. It does not contemplate the return of that issue. On the other hand, it does not deal, as one would expect from a reasoned award, with the safety of the port itself during the period when the vessel would be discharging the cargo; it only purports to deal with the extent to which a vessel could safely reach that port.
The complaint which Mr Charlton makes is that the arbitrator is guilty of misconduct in the conduct of the proceedings—what is often referred to as technical misconduct—because he has purported to decide an issue which the parties had, by express agreement, reserved, and upon which he had not heard them.
Mr Tomlinson, who was not called upon by Mr Justice Staughton, has accepted that that was misconduct; and, indeed, the learned judge dealt with the case on that hypothesis.
What is to be the consequences of that misconduct? Should it result, as the learned judge decided, that the award be remitted to the arbitrator so that he could continue the hearing and reconsider his monetary award in the light of the evidence and argument on the issue of the port being unsafe, or, as it was urged upon him, should he set aside the award and remove the arbitrator?
Mr Charlton submits that his client has lost all confidence in the arbitrator by reason of the arbitrator's misconduct,...
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