Babanaft International Company S.A. v Avant Petroleum Inc. (Oltenia)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE DONALDSON,SIR DAVID CAIRNS |
| Judgment Date | 07 April 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0407-4 |
| Docket Number | 82/0168 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 April 1982 |
[1982] EWCA Civ J0407-4
Lord Justice Stephenson
Lord Justice Donaldson
and
Sir David Cairns
82/0168
1981 B No. 5620
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE BINGHAM)
Royal Courts of Justice
MR. RICHARD YORKE Q.C. and MR. RICHARD AIKENS (instructed by Messrs. Thomas Cooper & Stibbard, Solicitors, London EC3A 1AB) appeared on behalf of the Plaintiffs/Claimants (Appellants).
MR. DAVID JOHNSON Q.C. and MR. TIMOTHY DUTTON (instructed by Messrs. Coward Chance, Solicitors, London ECV2 7LD) appeared on behalf of the Defendants/Respondents (Respondents).
I ask Lord Justice Donaldson to give the first Judgment.
The proceedings in this court raise two issues of considerable commercial interest and general importance. They concern (i) the principles upon which leave to appeal to the Court of Appeal should be granted from a decision of the High Court determining a preliminary point of law pursuant to section 2 of the Arbitration Act, 1979; and (ii) the scope of section 27 of the Arbitration Act, 1950.
The Background.
On 12th November, 1980, Babanaft International Co. S.A., disponent owners of the m.t. "Oltenia", to whom I shall refer as "the owners", chartered the vessel to Avant Petroleum Inc., to whom I shall refer as "the charterers", for a voyage from one safe port Soviet Black Sea to one or two safe ports European Mediterranean Sea including Greece and Turkey. The charterparty was on the Asbatankvoy form, October 1977 edition, published by the Association of Ship Brokers and Agents (USA) Inc. That form, as printed, provides by clause K that: "The place of General Average and arbitration proceedings to be London/New York (strike out one)".
The parties modified this printed clause by striking out "New York" and adding in typescript, the words "in accordance with English law".
The printed form also provides space, under the heading "M. (Special Provisions)", for the parties to include additional clauses. The parties in the event agreed upon eight such clauses of which only one, M.2, is relevant. This provided:
"Charterers shall be discharged and released from all liability in respect of any claims Owners may have under this Charter Party (such as, but not limited to, claims for dead freight, demurrage, shifting expenses or port expenses) unless a claim has been presented to Charterers in writing with all available supporting documents, within 90 (ninety) days from completion of discharge of the cargo concerned under this Charter Party".
The vessel completed discharge at Algeciras on 16th December,1980, and accordingly the 90 day period mentioned in clause M.2 expired on 16th March, 1981. On 31st December, 1980, the owners presented to the charterers a claim for discharging port demurrage with all available supporting documents. The validity of this claim is disputed by the charterers, but we are not concerned with it. However, on the previous day the owners had presented a different claim to the charterers, namely, one for damages for the detention of the vessel at Augusta. The sum claimed was U.S. $162,341.05 and, broadly speaking, the claim was based upon loss of daily profit from the use of the "Oltenia".
For reasons which are not apparent, bearing in mind that the charterparty contained an arbitration clause, on 17th March,1981, the owners issued a writ out of the High Court endorsed with points of claim. This advanced the claims already notified to the charterers. However, the damages claimed for detention were based not only upon loss of profit, but also upon an allegation that the detention had rendered the owners liable to pay damages to Petroship International S.A. in the sum of U.S. $130,046.45, being that company's liability for demurrage on another vessel, the "Cys Mariner". For present purposes it is sufficient to say that, the owners were advancing (a) the discharging port demurrage claim, (b) the original ("Oltenia" loss of daily profit) detention claim and (c) the new ("Cys Mariner") detention claim. The first that the charterers heard of the "Cys Mariner" detention claim was when they received the writ in New York on 6th May, 1981.
Predictably a summons was issued to stay the proceedings and in due course the claims were referred to arbitration on the basis of the existing points of claim. In reply to the detention claims, the charterers relied, inter alia, upon clause M.2 alleging, so far as the "Oltenia" loss of daily profit claim was concerned, that the owners had failed to present documents relating to alleged port disbursements amounting to U.S. $51,000 within the 90 day period and, so far as the "Cys Mariner" claim was concerned, had failed both to present the claim and to present supporting documents within that period.
The owners then made two originating applications to the High Court. The first invited the court to determine a preliminary point of law arising in the course of the reference pursuant to section 2 of the Arbitration Act, 1979. The second invited the court to make an order under section 27 of the Arbitration Act, 1950, extending the time for the presentation of the detention claims and all available supporting documents.
The Preliminary Point of Law.
The preliminary point of law was expressed in the following terms:
"…whether upon the true construction of the said Charterparty and the facts set out at paragraphs 9 to 12 of the Points of Claim and paragraph 14 of the Points of Defence and Counterclaim served by the above parties respectively in the above reference, the Plaintiffs/Claimants' claim for damages for detention of the 'Oltenia' is time-barred as alleged by the Defendants/Respondents or at all".
Section 2 of the Arbitration Act, 1979 , as amended by the Supreme Court Act, 1981, provides as follows:
"(1) Subject to subsection (2) and section 3 below, on an application to the High Court made by any of the parties to a reference—
(a) with the consent of an arbitrator who has entered on the reference or, if an umpire has entered on the reference, with his consent, or
(b) with the consent of all the other parties, the High Court shall have jurisdiction to determine any question of law arising in the course of the reference.
(2) The High Court shall not entertain an application under subsection (l) (a) above with respect to any question of law unless it is satisfied that—
(a) the determination of the application might produce substantial savings in costs to the parties; and
(b) the question of law is one in respect of which leave to appeal would be likely to be given under section 1 (3) (b) above.
(2A) Unless the High Court gives leave, no appeal shall lie to the Court of Appeal from a decision of the High Court to entertain or not to entertain an application under subsection (l) (a) above.
(3) A decision of the High Court under this section shall be deemed to be a judgment of the court within the meaning of Section 16 of the Supreme Court Act 1981 (appeals to the Court of Appeal), but no appeal shall lie from such a decision unless—
(a) the High Court or the Court of Appeal gives leave; and
(b) it is certified by the High Court that the question of law to which its decision relates either is one of general public importance or is one which for some other special reason should be considered by the Court of Appeal".
Section 3 (to which of course reference is made in section 2) relates to exclusion agreements affecting rights under sections 1 and 2 and is immaterial for present purposes.
In the instant case the owners secured the consent of the charterers to their application and were thus able to proceed under section 2 (1) (b). In deciding whether or not to grant the application, the learned judge's discretion was accordingly unfettered by subsection (2), no doubt because Parliament considered that prima facie it could be left to the parties to consider whether the determination of the question of law at that stage would be likely to lead to a substantial saving in costs (subsection 2 (a)) and whether it could substantially affect their rights. Nevertheless, it should be emphasised that the High Court has a discretion whether or not to grant such an application. It is a not uncommon experience to be faced in the Divisional Court of the Queen' s Bench Division with a question of law stated by justices which, although important as a question, can on the facts found only be answered by saying "Well, it all depends". If such were the position, it would not be surprising if an application were refused notwithstanding the fact that it was supported by both parties. In the instant case Mr. Justice Bingham acceded to the application and was plainly right to do so.
The learned judge's judgment on the preliminary question of law is a model of clarity and conciseness and I cannot do better than quote it in full:
"Mr. Aikens, for the owners, submitted that the clause was on any showing unhappily drafted, there being an obvious lack of correspondence between 'any claim' before the bracket and 'a claim' after it. But this was a clause inserted exclusively for the benefit of the charterers and any ambiguity should be resolved against them. The natural meaning, and that consistent with authority, was that the owners should within the period communicate the factual ground of the claim (in this case the detention at Augusta) and supply documents relevant to that...
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