Bernuth Lines v High Seas Shipping Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 21 December 2005 |
| Neutral Citation | [2005] EWHC 3020 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2005 FOLIO 684 |
| Date | 21 December 2005 |
[2005] EWHC 3020 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice Christopher Clarke
Case No: 2005 FOLIO 684
Mr David Lewis (instructed by Jackson Parton) for the Applicant
Mr Ravi Aswani (instructed by Swinnerton Moore) for the Respondent
Hearing dates: 16 th December 2005
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.
I have before me an application to set aside the Final Award of an LMAA Arbitrator dated 26 th July 2005. The basis of the application is that the arbitration was purportedly commenced by e-mail but was not effectively served.
The Applicant—Bernuth Lines Ltd—was the charterer of the "Eastern Navigator". Bernuth Lines Ltd is described in the charter, concluded on 18 th August 2004 on an amended NYPE form, as being of Grand Cayman, in the Cayman Islands. Their agents are Bernuth Agencies Ltd.
The "Eastern Navigator" was owned by High Seas Shipping Ltd ("High Seas") of the Marshall Islands. Their brokers, whose stamp appears on the charterparty, were Jan Gisholt Shipping Inc. ("Jan Gisholt"). They also had as general agents Altomar Maritime Inc ("Altomar").
The charter was for a period of "one time charter trip to Nicaragua via good/safe ports. Duration 6 days without guarantee". The vessel was to be delivered, as in the event she was, at the arrival pilot station at Miami. Clause 45 of the charterparty contained a London arbitration clause which provided as follows:
"All disputes arising out of this contract shall be arbitrated at London and, unless the parties agree forthwith on a single Arbitrator be referred to the final arbitrament of two Arbitrators carrying on business in London who shall be members of the Baltic Mercantile & Shipping Exchange and engaged in Shipping, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire….
For disputes where the total amount claimed by either party does not exceed US $ 50,000 the arbitration shall be conducted in accordance with the Small Claims Procedure of the London Maritime Arbitrators Association".
The vessel departed Miami on 24 th August 2004. She was bound for Nicaragua. The intention was that she should go to Rama, a riverine port on the River Escondido, access to which is by the Bluefields lagoon starting at the port of El Bluff. On 27 th August the Master sent a message to the effect that he would not be able to enter El Bluff because the vessel's departure draught was 4.2 metres and the maximum permissible draft at El Bluff was 3.30 metres. On 29 th August the vessel arrived at El Bluff. According to the (disputed) evidence of Captain Monocandilos, the President of Bernuth Lines, the river pilot advised the Master that at high water the vessel could proceed safely because at that time the depth would be 3.8 metres compared to the vessel's then draught of 3.6 metres. But at high water the Master declined to proceed because he insisted on a clearance greater than 0.28 metres. He is said to have wanted a clearance of at least 0.30 metres. As a result the vessel was sent to San Andres the nearest port where she discharged her entire cargo into another of Bernuth Lines vessels.
On 1 st September 2004 High Seas issued a revised invoice in the sum of $ 34,100 for hire (less commission) and bunkers. The invoice was addressed to Bernuth Lines at the postal address in Miami of Bernuth Agencies. On 7 th September 2004 Bernuth Agencies sent a fax to Jan Gisholt which enclosed claims invoices of Bernuth Agencies, as agents for Bernuth Lines, totalling $ 93,384.77, producing, when set off against a claim understood by Bernuth Agencies to be for $ 29,695.03 a balance of $ 63,689.74. On 13 th and 16 th September 2004 High Seas, through Altomar, forwarded their second hire invoice to cptdavis@bernuth. com, which Captain Davis of Bernuth Agencies forwarded to c.polo@polylina. com. Mr Polo was also a representative of Bernuth Agencies.
On March 22 nd 2005 Lawrence J. Roberts & Associates P.A., a Law Office of Coral Gables, Florida wrote (they said " again") to Mr Polo at Bernuth Agencies in relation to the unpaid charter hire. The letter demanded that Bernuth Lines post security for not less than $50,000 "in order to satisfy any London arbitration award in favour of High Seas". The letter went on to say that "In the event that Bernuth fails to respond to this demand for security by March 25 2005, our client is expected to authorise us to pursue litigation against Bernuth Lines, Ltd, in order to obtain the necessary security".
On 5 th May 2005 High Seas' London lawyers, Swinnerton Moore, sent an e-mail to info@bernuth. com. This e-mail invited Charterers to settle the amount of $ 34,100 said to be due as hire for the period 30 th August to 2 nd September 2004 so as to avoid the commencement of arbitration proceedings. It went on to say that once such proceedings were commenced the owners would seek to recover the outstanding hire, compound interest, and costs pursuant to the LMAA Small Claims Procedures, and gave notice requiring agreement to the appointment of a sole arbitrator.
The e-mail address—info@bernuth. com—was not an address that had appeared on any previous communication from Bernuth Agencies. It is however an address for Bernuth that appears (a) in the Lloyds Maritime Directory 2005 and (b) on a website—www.bernuth. com—where it follows the postal address, telephone and fax numbers of Bernuth Agencies in Miami. According to the instructions given to Mr Hughes of Jackson Parton, as recorded in his first witness statement, the address given on the website is only intended for cargo bookings for Bernuth Lines' liner service. There is, however, no indication either on the website or in Lloyd's Maritime Directory that it is only to be so used. In his third witness statement Mr Hughes describes the address as a "general information e-mail address".
Thereafter a series of communications were sent by Swinnerton Moore, Mr Timothy Marshall ("the arbitrator"), and the LMAA by e-mail to info@bernuth. com. These included:
(a) an e-mail of 7 th June from Swinnerton Moore enclosing claim submissions and a letter to the LMAA;
(b) a fax from the LMAA to Swinnerton Moore copied to info@bernuth. com by e-mail informing the recipient of the appointment of the arbitrator;
(c) an e-mail of 13 th June 2005 from the arbitrator notifying the recipient of his appointment by the President of the LMAA under the Small Claims Procedure and asking for defence submissions within 28 days;
(d) an e-mail of 12 th July 2005 from Swinnerton Moore to the arbitrator seeking a peremptory order requiring service of a defence within 7 days;
(e) an e-mail of 12 th July from the arbitrator to Swinnerton Moore. And by copy to info@bernuth. com asking for the Respondent's comments on the earlier e-mail of that day;
(f) an e-mail from the arbitrator of 14 th July 2005 making a final peremptory order requiring defence submissions by close of business on 22 nd July 2005;
(g) a request of 22 nd July 2005 by Swinnerton Moore to the arbitrator to proceed with his award;
(h) an e-mail from the arbitrator of 25 th July confirming that he will do so.
E-mails from Swinnerton Moore generated e-mail confirmation of delivery receipts.
On 29 th July the arbitrator issued his final award which was sent to info@bernuth. com and also by post. This was the first communication since 5 th May 2005 in connection with the arbitration to be sent to the charterers otherwise than by e-mail to info@bernuth. com.
In the recital to his Award the arbitrator recorded the procedural history, including, as recital K:
"No Defence submissions were received at any time. I was and am satisfied that the Charterers are aware of these proceedings and that they have had a reasonable time to serve Defence Submissions. Accordingly I proceeded to my Award".
He did not state on what basis he was so satisfied.
By his Award the arbitrator held that owners were entitled to $ 40, 220.93 for hire, less commission and payment received and a sum for hold cleaning, and awarded interest and costs.
On 12 th August 2005 Jackson Parton, who had by now been instructed on behalf of Bernuth Lines, wrote to the arbitrator and Swinnerton Moore expressing their client's surprise at receiving the Award and stating that their client had been unaware thereof until receipt of the Award by post. They said that:
"..it appears that email notices may have been sent to our client's department for cargo bookings for liner service and would have been ignored by the clerical staff in receipt of such messages. Our client is perplexed that the other channel of communication established through your client's Miami lawyers appears to have been by passed."
They asked for copies of the relevant correspondence.
On 15 th August Jackson Parton appointed Mr George Henderson as Bernuth Lines' arbitrator in respect of their counterclaims, said to be just under $ 100,000, and invited Swinnerton Moore to appoint Mr Marshall as their arbitrator to start the proceedings afresh.
The application before me was made under section 68 of the Arbitration Act 1996. It is said that the arbitration proceedings were not properly brought to the attention of Bernuth Lines such that there has been a serious irregularity affecting the proceedings which has caused or will cause them substantial injustice. During the course of the hearing Mr David Lewis, for Bernuth, indicated that he sought also to advance a claim under section 72...
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