Armada Ship Management (S) Pte Ltd v Schiste Oil & Gas Nigeria Ltd (Armada Tuah 101)
| Jurisdiction | England & Wales |
| Judge | Cockerill J. |
| Judgment Date | 28 April 2021 |
| Neutral Citation | [2021] EWHC 1094 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 1094 (Comm)
Cockerill J.
Queen's Bench Division Commercial Court.
Arbitration — Shipping — Charterparty — BIMCO Supplytime 2005 form — BIMCO Dispute Resolution Clause amended to provide for sole arbitrator — Wording of amended clause incoherent — Arbitrator appointed by President of London Maritime Arbitrators Association at claimant's request — Claimant applying to court with arbitrator's permission to confirm arbitrator's jurisdiction — Defendant not participating in proceedings — Court declining to rule on arbitrator's jurisdiction because of statutory saving for rights of non-participants — Arbitration Act 1996, s. 32, 72.
This was an application by the claimant under the Arbitration Act 1996, s. 32 for an order declaring among other things that the appointment of a sole arbitrator by the London Maritime Arbitrators Association (LMAA) to determine disputes under a charterparty was valid and effective.
In 2016 the claimant time chartered its offshore service vessel, Armada Tuah 101, to the defendant on the BIMCO Supplytime 2005 form. The charter provided for arbitration in London under English law. Clause 34 in Part II of the charter, the BIMCO Dispute Resolution Clause, provided, as amended, that the arbitration would be conducted in accordance with the LMAA and UNCITRAL terms current at the time when the arbitration proceedings were commenced. The remainder of the clause had been amended to reflect the parties' intention to appoint a sole arbitrator instead of three arbitrators. However, there was a lack of clarity as to how the sole arbitrator was to be appointed: on the face of it the appointment mechanism contradicted the LMAA terms which were said to apply and it was not clear whether and how the additional reference to the UNCITRAL terms was supposed to interact with the LMAA terms.
The claimant's case was that a number of invoices issued under the charterparty totalling US$ 973,310 remained unpaid despite having become due in 2016–2017. In 2020 the claimant issued a reference to arbitration. In August 2020 the claimant applied to the President of the LMAA for the appointment of a sole arbitrator under the LMAA Terms, and the President appointed an arbitrator, after expressly considering the potential conflict between the different parts of the charterparty arbitration agreement.
The defendant did not engage with the arbitration process and the arbitrator gave the claimant permission to apply under s. 32.
Held, refusing the application:
1. It was not appropriate for the court to make an order under s. 32 where the defendant was not participating in the proceedings, since that would tend to undermine the protections in s. 72 for a person who took no part in the proceedings. A s. 32 application formed part of the proceedings in relation to which he had a right not to engage. A person could lose the right to object to jurisdiction if he took part in the s. 32 determination; on the other hand if he did not he would not be heard on jurisdiction in relation to a determination which prima facie bound him. That put the non-participant in an unacceptable position in the light of s. 72. It could not be right that the non-participant was effectively obliged to participate in the s. 32 process so as to be bound by it in order to protect his own interests. Further in circumstances where the determination could not properly bind the defendant, there was no ‘good reason’ why the matter should be decided by the court within s. 32(2)(b)(iii).
2. Apart from the s. 72 point, the s. 32 conditions would be met.
3. It was clear that the parties intended to amend cl. 34 so that disputes would be determined by a single arbitrator. Proceeding on the basis that the parties should be taken to have intended to produce a coherent agreement, the inclusion of both the LMAA Terms and the UNCITRAL Rules would naturally be interpreted as meaning that the parties agreed that the President of the LMAA would be the appointing authority for the purposes of Article 8 of the UNCITRAL Rules.
The following cases were referred to in the judgment:
British Telecommunications plc v SAE Group Inc [2009] EWHC 252 (TCC).
Enka Insaat ve Sanayi AS v OOO Insurance Co Chubb [2020] UKSC 38; [2020] 2 CLC 604.
Law Debenture Trust Corp plc v Elektrim Finance BV [2005] EWHC 1412 (Ch); [2005] 2 CLC 39.
London Steam Ship Owners' Mutual Insurance Association Ltd v Spain [2013] EWHC 2840 (Comm).
Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd [2018] EWHC 163 (Comm); [2018] 1 CLC 94.
Toyota Tsusho Sugar Trading Ltd v Prolat Srl [2014] EWHC 3649 (Comm).
VTB Commodities Trading DAC v JSC Antipinsky Refinery [2019] EWHC 3292 (Comm).
Samar Abbas Kazmi (instructed by CMS Cameron McKenna Nabarro Olswang) for the claimant.
The defendant did not appear and was not represented.
Cockerill J: Introduction
1. This is a slightly unusual case in which the claimant makes an application under section 32 of the Arbitration Act 1996 (‘the Act’) for an order declaring that:
‘(1) Mr Jonathan Lux … has jurisdiction to hear and determine the disputes which have arisen under a charter party dated 31 August 2016 for the offshore service vessel “Armada Tuah 101” (the “Charterparty”);
(2) The appointment by the London Maritime Arbitrators Association (“LMAA”) of Mr Lux as sole arbitrator to determine disputes under the Charterparty is valid and effective; and
(3) The effect of clause 34(a) of the Charterparty is that, in the absence of agreement between the parties as to the choice of a sole arbitrator, the power to appoint a sole arbitrator rests with the President of the LMAA.’
2. It comes before me for decision on the documents following a submission via the court's electronic filing system. Usually such a decision would not attract a written judgment, but given the nature of the dispute and the relative rarity of section 32 applications it has seemed to me appropriate to produce one. I should say that I am very grateful to Mr Kazmi, who produced a most helpful skeleton argument on behalf of the claimant to assist in my consideration of this issue.
3. The claimant is a company carrying on the business of, among other things, chartering and managing of ships and vessels. The defendant is a company carrying on the business of providing marine and offshore support services.
4. On 31 August 2016, the parties entered into a contract (‘the Charterparty’), pursuant to which the claimant time chartered to the defendant the ‘Armada Tuah 101’, International Maritime Organization number 9387293, from a delivery date of 1 September 2016.
5. The Charterparty was in the BIMCO Supplytime 2005 form, which is one of the many standard forms of time charterparties for offshore service vessels. As with other such forms, it consisted of two main parts: Part I setting out the specific terms agreed between the parties; and Part II setting out the standard terms of contract from which the parties were free to (and did) choose those terms which they considered applicable and strike out those terms which they did not.
6. The Charterparty provided for an initial hire period of two months from the date of delivery, with options to extend under certain circumstances. It was extended on a number of occasions and the charter period was ultimately completed on 7 September 2017.
7. The claimant's case is that a number of invoices issued under the Charterparty remain unpaid despite having become due in 2016–2017. In total, a sum of USD 973,310.03 – representing nearly half of the USD 1,961,853.70 invoiced by the claimant is said to remain outstanding.
8. Difficulties arose when the claimant started the process of arbitration provided by the arbitration agreement contained in the Charterparty. As to this:
(1) Part I of the Charterparty, at Box 34, provides for dispute resolution by arbitration as follows: ‘(a). London under English law’.
(2) This is further elaborated in Part II, clause 34, of the Charterparty which – after a number of bespoke amendments in the standard form – states in relevant part:
‘34. BIMCO Dispute Resolution Clause
(a) This Charterparty shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Charterparty shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitration Association (LMAA) and UNICITRAL [sic] Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three a single arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint 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. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as...
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