Ari v Wxj
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 20 June 2022 |
| Neutral Citation | [2022] EWHC 1543 (Comm) |
| Docket Number | Case No: CL-2022-000154 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1543 (Comm)
Mr Justice Foxton
Case No: CL-2022-000154
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Paul Key QC and Mark Tushingham (instructed by Addleshaw Goddard LLP) for the Defendant/Applicant
James Leabeater QC and Gideon Shirazi (instructed by Ince Gordon Dadds LLP) for the Claimant/Respondent
Hearing dates: 10 June 2022
Draft judgment to parties: 14 June 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Monday 20 June 2022 at 14:00 pm.
The Claimant and the Defendant are in dispute as to the constitution of the tribunal in a London Maritime Arbitrators Association (LMAA) Arbitration, it being:
i) the Claimant's position that the Defendant did not (as it claims to have done) validly appoint JJJ as its arbitrator by 5 January 2022, with the result that the Claimant's appointed arbitrator (GGG) is now the sole arbitrator; and
ii) the Defendant's position that GGG should be removed because justifiable doubts exist as to their impartiality.
There are also issues as to the constitution of the tribunal in a number of related LMAA Arbitrations.
These issues are currently set down for a three-day hearing. However, the Defendant has sought summary judgment on the issue at [1(i)] above. At the end of the argument, I informed the parties that I had concluded that the Defendant had validly appointed JJJ as its arbitrator by 5 January 2022. This judgment sets out my reasons for that conclusion.
The background facts
The Claimant and related shipowning companies chartered vessels to the Defendant over a number of years, on bareboat terms. In 2018, a Reconciliation Agreement was entered into or purportedly entered into between the Claimant and the Defendant in relation to those vessels currently subject to charter, and which also provided for instalment payments by the Defendant of outstanding amounts. Clause 6 of the Reconciliation Agreement provided:
“(1) For the purpose of executing this Agreement, the governing law is the law that currently governs the Bareboat Charters in force.
(2) In case of any dispute or impasse that may arise regarding the execution or implementation of this agreement, the parties elect the forum stipulated in the Bareboat Charter contracts for the resolution of disputes.”
The relevant Bareboat Charters were on the BARECON form, clause 30(a) of which provides:
“This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 …
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators. A party wishing to refer a dispute shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint in its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement.”
(emphasis added).
I should record at this point that the Defendant has formally reserved its position as to whether the arbitration agreement in clause 30 of the Bareboat Charters was incorporated into the Reconciliation Agreement. Mr Key QC did not seek to develop that argument at this hearing.
The arbitration agreement in the BARECON form (like those in the BALTIME and ASBATANKVOY forms) requires a party to appoint its own arbitrator in order to commence an arbitration, and also imposes a time limit on the other party's right to appoint its own arbitrator in response.
On 22 December 2021, the Claimant sent the Respondent a notice of appointment of an arbitrator stating that it had appointed GGG as an arbitrator and stating that if the Defendant did not appoint its own arbitrator and give notice that it had done so within 14 days, it would appoint GGG as sole arbitrator.
Following exchanges between the Defendant and JJJ which I will return to, on 5 January 2022 (the last day of the 14-day period triggered by the Claimant's notice of 22 December 2022), the Defendant sent the Claimant a notice, copying GGG and JJJ, giving notice that it had appointed JJJ as arbitrator in connection with the arbitration commenced by the Claimant's notice of 22 December 2021.
In subsequent correspondence between JJJ and GGG which was provided to the parties once the dispute about JJJ's appointment had emerged, JJJ referred to the need to agree the terms of their appointment and remuneration with the Defendant's legal representatives, and on 1 February 2022 JJJ said that they would not be able to participate in the arbitration because the maximum rate of compensation fell significantly below the level of their firm's charge-out rates. The Defendant sought to appoint a replacement arbitrator, and the Claimant to appoint GGG as sole arbitrator. This crystallised the present dispute as to whether JJJ had in fact been appointed when the Defendant sent its notice of 5 January 2022 to the Claimant. If JJJ had not been appointed by 5 January 2022, the Defendant does not suggest that this position changed at any subsequent point. As a result, the issue between the parties turns on the interpretation of a few emails exchanged between the Defendant and JJJ between 3 and 5 January 2022.
The context
Under s.16(1) of the Arbitration Act 1996, the parties “are free to agree on the procedure for appointing the arbitrator or arbitrators”. As noted above, there are some forms of arbitration agreement which require a party to appoint its arbitrator as part of the process of commencing an arbitration. In those cases, the issue of whether and when an arbitrator has been appointed may have significant implications for limitation purposes. This is particularly likely to be the case in the maritime context in which there are usually shorter time periods for bringing claims. For example, the CENTROCON clause, which is often incorporated into voyage charterparties and contracts of affreightment, provides:
“Any claim must be made in writing and claimants' arbitrator appointed within [ ] months of final discharge, and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred”
(a provision which often specifies a three-month limit, although periods of 9 months or more are more common).
In addition, where (as in this case) the appointment is responsive to the notification of an appointment by the other party, the date when an appointment is completed will be important in determining whether the other party is entitled to designate its arbitrator as sole arbitrator.
In both contexts, the appointment of an arbitrator may be conducted against a background of significant time pressure. In addition, in cases where the arbitration tribunal is required to make orders in the dispute at an early stage (for example in dealing with an application for urgent relief), the date when an arbitrator's appointment is effective will be important in determining whether the tribunal is properly constituted at the point when it is asked to act.
Finally it has been noted, when construing s.14 of the Arbitration Act 1996, which sets out the steps which need to be taken to commence an arbitration, that a broad and nontechnical approach should be adopted because “notices are given by international traders and businessmen” ( Seabridge Shipping AB v AC Orssleff's EFTF's A/S [1999] 2 Lloyd's Rep 685, 619) and “arbitration is widely used by commercial parties, often acting without the benefit of legal advice” ( Atlanska Plovidba & Anor v Consignaciones Asturianas SA (The Lapad) [2004] EWHC 1273 (Comm), [17]). The court has had regard to the same factors when construing notices said to have commenced an arbitration as well as s.14 itself (see for example Cockerill J in Agarwal Coal Corporation Pte Ltd v Harmony Innovation Shipping Pte Ltd [2017] EWHC 3556 (Comm), [81] and Calver J in Lavender Shipmanagement Inc v Ibrahima Sory Affretement Trading SA (The Majesty) [2020] EWHC 3462 (Comm), [50]–[54]). I am satisfied that the issue of whether an arbitrator has been “appointed” for the purposes of a clause such as clause 30 of the BARECON form should be approached with similar considerations in mind. Even when lawyers are involved in appointing an arbitrator, the process frequently involves no more than the exchange of a small number of very brief communications, which essentially involve the party asking the arbitrator if they are willing to accept the appointment, the arbitrator confirming their willingness to do so, and the appointment then being...
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