B.v Scheepswerf Damen Gorinchem v The Marine Institute The "Celtic Explorer"
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux |
| Judgment Date | 24 June 2015 |
| Neutral Citation | [2015] EWHC 1810 (Comm) |
| Docket Number | Case No: 2014 FOLIO 1269 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 June 2015 |
[2015] EWHC 1810 (Comm)
The Honourable Mr Justice Flaux
Case No: 2014 FOLIO 1269
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr Nicholas Vineall QC & Mr Andrew Stevens (instructed by Curtis Davis Garrard LLP) for the Claimant
Mr Timothy Hill QC (instructed by Norton Rose Fulbright LLP) for the Defendant
Hearing date: Thursday 4 June 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction and background
By an arbitration claim form dated 20 October 2014, the claimant (to which I will refer as "Damen") applies to set aside the Award of the arbitrator, Mr Patrick O'Donovan, dated 23 September 2014 pursuant to section 68 of the Arbitration Act 1996. The grounds for the application are that:
(1) Pursuant to section 68(2)(a) and/or (c) the delay in publishing the Award (of some 376 days after a three day hearing) was a failure by the arbitrator to comply with his general duties under section 33 of the Act and/or a failure to comply with the procedure agreed between the parties, clause 20 of the LMAA terms;
(2) Pursuant to section 68(2)(a) and/or (d) the arbitrator failed to deal with all of the issues put to him and/or failed to consider central issues and/or failed to take proper consideration of key evidence.
The dispute between the parties arose under a contract dated 19 December 2000 pursuant to which Damen agreed to build and The Marine institute ("TMI") agreed to purchase a multi-purpose research vessel subsequently named the CELTIC EXPLORER. The vessel's engines were not commissioned at Damen's yard in Romania, but the vessel was towed to Holland where commissioning of the engines took place. For the purposes of keeping the engines in position during the towage, additional distance plates ("ADPs") were fitted on either side of each engine. Those ADPs should have been removed during the commissioning of the engine but were not. Unbeknownst to TMI they remained fitted when the vessel was delivered to TMI in December 2002. Subsequently damage was found which necessitated repairs to the vessel at Falmouth in January and February 2008 and later at Galway in July and August 2008.
Clause 19 of the contract provided for disputes to be submitted to a single arbitrator in London pursuant to the terms of the London Maritime Arbitrators Association ("LMAA") and the parties appointed Mr O'Donovan. In the arbitration, TMI claimed against Damen that the failure to remove the ADPs was a breach of contract and claimed damages for that breach of contract consisting of (i) €1,195,444.10 in respect of inspections and remedial work and (ii) €856,000 in respect of loss of hire. By the time of the hearing, which took place over three days on 9, 11 and 12 September 2013, Damen had admitted that it was in breach of contract, but asserted that the presence of the ADPs had not caused the damage sustained. It put forward three potential causes of the damage, none of which was the fault of Damen: (i) misalignment caused by normal wear and tear of the flexi-mounts (which permitted movement of the engines whilst in service); (ii) failure to turn the engine when not in use; and (iii) some underlying problem which was the common cause or a common cause for both the damage observed in 2008 and subsequent damage observed in 2011, the root cause perhaps lying in the Trelleborg mounting system.
Both parties were represented at the hearing by leading counsel. Expert marine engineering evidence was called from Mr John Gibson of Brookes Bell for TMI and Mr Nicholas Chell of London Offshore Consultants, who had exchanged reports sequentially (Mr Gibson's report being produced first) and produced a joint memorandum. Both were cross-examined in detail. It should be noted at the outset that, although Mr Chell's evidence in his reports and orally dealt with the first two potential causes of the damage referred to in the previous paragraph, misalignment and failure to turn the engine, no evidence was led from him about the third potential cause, the common cause of the 2008 and 2011 damage, (notwithstanding that at [7.2] of his first report, Mr Gibson had expressed the opinion that there were differences between the damage noted in 2008 and that noted in 2011 and that there was no connection between the causes of the damage). The common cause point was not pleaded by Damen but was raised for the first time in his written opening submissions by Mr Vineall QC on behalf of Damen. He cross-examined Mr Gibson about it at some length and, throughout, Mr Gibson maintained his opinion that the damage in 2011 was significantly different from the damage in 2008 and not caused by the same problem. Damen not having led any evidence from Mr Chell on the common cause theory, Mr Hill QC on behalf of TMI understandably did not cross-examine him about it.
It was not until more than five months after the end of the hearing that, on 24 February 2014, Mr O'Donovan emailed the parties to update them on the likely date of publication of the award which he envisaged would be in the second half of March. Neither party had chased him in the meantime, nor did they react to this email. A further two months passed until the arbitrator sent a further email on 29 April 2014 saying his earlier indication had been over-optimistic, but he was confident of publishing his Award in the week of 12 May 2014. On 20 May 2014 he wrote again apologising for the delay and saying he was making good progress and hoped to publish the following week, which seems to me to be a fair indication that he had started writing the Award by then.
However, he did not publish the Award the following week and wrote again on 3 June 2014, saying he envisaged publishing the following week or at the latest early in the week after that. On 30 June 2014, he emailed saying the Award was substantially drafted, but he was in a hearing and would be unable to finalise it that week but would do so the following week. TMI's solicitors responded asking the arbitrator if he could provide them with a figure for the costs of the Award but did not comment on the delay. On 28 July 2014, he emailed again saying he had hoped and expected to publish the Award before going on holiday the following weekend but that had not proved possible and he now envisaged publishing shortly after his return on 13 August 2014. On 5 August 2014, his assistant corrected the date for his return to 20 August 2014.
However, the Award did not appear shortly after his return from holiday and, on 28 August 2014, he emailed to say he was back in harness after the holiday and would publish the Award the following week. He did not. On 5 September 2014 he emailed again apologising that he would not publish that week, but stating he would definitely do so by the end of the following week. Again he did not do so and, on 16 September 2014, emailed saying he was in a hearing but would publish by the end of the week. On 23 September 2014, he published the Award and informed the parties by email apologising again for the delay in doing so. At no stage had either party chased the Award or complained about the delay.
For reasons which I elaborate later in the judgment, delay in publishing an Award is not in itself a ground of serious irregularity under section 68(2) of the Arbitration Act, because, without more, the delay will not have caused the applicant serious injustice. There must be something else, for example that the delay has led to a failure to deal with issues under subsection (2)(d). However, it does not follow that extensive delay, let alone inordinate delay of twelve months in publishing an Award, should be permissible. The arbitrator has not provided any explanation for this delay, other than on occasions in the emails suggesting it was due to the pressure of other work. If that is the explanation, then it is no excuse. If, because of pressure of work, an arbitrator cannot produce an Award for many months, then the solution is take on fewer appointments to ensure that Awards can be produced within a reasonable time of the conclusion of the hearing. Clause 20 of the LMAA terms provides that the Award should: "normally be available within not more than six weeks from the close of the proceedings". Whilst that is not intended to be an immutable rule, in a normal case, of which this was one, LMAA arbitrators should be aiming to produce Awards in that timescale and certainly not exceeding it to the extent that the arbitrator did in this case.
By the Award the arbitrator found that all the loss and damage claimed was caused by Damen's breach of contract and negligence. He provided 30 pages of Reasons supporting that conclusion. After the award was published, Damen's solicitors wrote on 20 October 2014 asking the arbitrator to correct the Award and provide further reasons pursuant to section 57 of the Arbitration Act in respect of various issues with which it was contended the arbitrator had not dealt in his Reasons. In his email response on 27 October 2014, the arbitrator said that he did not consider further Reasons were necessary or appropriate and he rejected the criticisms that Damen had made of the Award.
It is against this background that Damen brings its section 68 application. Before setting out the arbitrator's conclusion and reasoning in more detail I propose to summarise the applicable legal principles.
Legal principles applicable to section 68 applications
Section 68 of the Arbitration Act 1996...
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