Bulk & Metal Transport (UK) Ltd v VOC Bulk Ultra Handmaz Poll LLC
| Jurisdiction | England & Wales |
| Judge | HH Judge Mackie |
| Judgment Date | 20 February 2009 |
| Neutral Citation | [2009] EWHC 288 (Comm) |
| Docket Number | 2008 FOLIO NO 551 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 February 2009 |
[2009] EWHC 288 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN AN ARBITRATION CLAIM
His Honour Judge Mackie Qc
Sitting as a Judge of the High Court
2008 FOLIO NO 551
Mr Nevil Phillips (instructed by Mills & Co) appeared for the Appellant Charterers
Mr Michael Coburn (instructed by MFB) appeared for the Respondent Owners
“VOC GALLANT” Time Charterparty dd. 1 June 2005
This is an appeal about the question of when an arbitration is commenced within section 14 of the Arbitration Act 1996. At the hearing on 19 January 2009 I allowed the appeal but said that I would give written reasons so that it was clear to the arbitrators why the court had differed from their view. As I gave reasons when dealing with two subsidiary issues I shall refer to them only briefly in this judgment.
Background
By a charterparty on a New York Produce Exchange form the Owners chartered a vessel to the Charterers for a time charter trip from Jeddah to the Persian Gulf. The facts of the dispute which arose are irrelevant because this is a time bar point. The parties appointed Mr Brian Williamson and Mr Alan Oakley as arbitrators on LMAA terms. This appeal by Charterers is from the first interim award of 13 May 2008 by which the Tribunal held that Charterers are time-barred (by virtue of Article III rule 6 of the Hague Rules) from advancing claims under Article III rule 2, because a message from the Owners' solicitors dated 2 November 2006 did not commence arbitration proceedings for the purposes of section 14 (4) of the Arbitration Act.
On 10 June 2008 Charterers sought permission to appeal raising two questions of law, essentially:-
(i) on its true and proper construction did the message from Owners' solicitors of 2 November 2006 take effect as a notice sufficient to commence arbitral proceedings within the meaning of section 14 (4) of the Arbitration Act?; and
(ii) if so, are Charterers barred from relying upon their claims in defence of Owners' claims?
On 15 October 2008 Mrs Justice Gloster granted permission to appeal under section 69 of the Arbitration Act giving the following reasons:-
“given authorities such as The Agios Lazaros [1976] QB 933, and other authorities cited in the claimant's witness statement, which show that a broad and flexible approach has to be adopted as to whether a document complies with the notice requirements of section 14 of the Act, I am satisfied that:
i) the decision of the Tribunal is open to serious doubt;
ii) the relevant question of law raises a point of public importance; and
iii) the point does substantially affect the rights of the parties.”
Section 14 of the Arbitration Act provides as follows:-
“14. Commencement of arbitral proceedings
(1) The parties are free to agree when arbitral proceedings are to be regarded as commenced for the purposes of this Part and for the purposes of the Limitations Acts.
(2) If there is no such agreement the following provisions apply.
(3) Where the arbitrator is named or designated in the arbitration agreement, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties a notice in writing requiring him or them to submit that matter to the person so named or designated.
(4) Where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter …”.
Admissibility
Before setting out the terms of the message of 2 November 2006 I mention the first ancillary point which arose. The Tribunal's reasons cite only a part of one sentence of that message which is several paragraphs long. Furthermore, the Tribunal's reasons summarise the arbitration clause which is Clause 45 (b) of the charterparty but do not set it out. Mr Coburn for the Owners argued that the full terms of the message and the clause were extraneous evidence not contained in the award and reasons and therefore inadmissible. I rejected that submission essentially for two reasons. First, I respectfully agreed with the view expressed by Mr Justice Jackson, as he then was, in Kershaw Mechanical Services Limited -v—Kendrick Construction Limited [2006] EWHC 727 (TCC) in which he said:-
“The principal document which should be considered in any appeal under section 69 of the 1996 Act is the arbitral award itself. In addition to that however the court should also receive any document referred to in the award, which the court needs to read in order to determine a question of law arising out of the award.”
Furthermore, I doubt that observations in earlier decisions, particularly those of the Commercial Court, excluding extraneous material, would have been intended to apply to documents as essential as the arbitration clause itself and the short message at the heart of the appeal. Secondly, I do not consider that justice could fairly be done without the court looking at documents which have been expressly referred to in the award and, I infer, read as a whole by the Tribunal.
The Messages and the Arbitration Clause
The message of 2 November 2006 reads as follows:-
“We are instructed by [Owners] …in respect of a claim they have for outstanding hire due from you under the charterparty dated 1 June 2005.
We understand that there remains an outstanding sum of US$162,222.60 due to our clients in respect of unpaid hire. We therefore attach a copy of their hire statement dated 1 August 2008. There is no justifiable reason for your failure to pay the outstanding hire and you remain in breach of the charterparty.
In the circumstances, therefore, we are instructed to notify you that failing payment of the US$162,22.60 [sic] within 7 days of today's date we are instructed to commence arbitration against you pursuant to clause 45 of the charterparty. At this point in time interest and costs will also accrue on the claim.
Further in the absence of agreement to settle this outstanding claim we hereby invite you in accordance with clause 45 of the charterparty to agree to one of thrse [sic] following arbitrators, all of whom are full LMAA members, as sole arbitrator.
1. William Packard
2. Patrick O'Donovan
3. Brian Williamson
Failing payment, or in the alternative agreement to the appointment of one of the above arbitrators as sole arbitrator, we will appoint our own arbitrator …”.
Charterers accepted that the message should be seen in the context of Owners' solicitors' message of 13 November 2006 which reads as follows:-
“We refer to your fax of 10th November 2006 and confirm we will address further correspondence to you.
As your members have failed to pay the outstanding balance of US$162,222.60, and have decided not to agree to appoint a sole arbitrator, we are now instructed to appoint our client's arbitrator in order to commence arbitration proceedings for the recovery of the full amount together with interest and costs.
In accordance with clause 45(b) of the charterparty we hereby give you notice of our appointment of Brian Williamson, on behalf of Disponent Owners. Mr Williamson's contact details are:
115 Hounsditch
London
EC3A 7BR
Further details can be found on the LMAA website at www.Imaa.org.uk
Please appoint your Member's arbitrator within 14 days pursuant to Section 16 of the Arbitration Act 1996.”
Clause 45 (b) provides in full:-
“All disputes arising out of this contract shall be arbitrated in 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 full members of the LMAA and engaged in Shipping, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire …”
The Approach to Section 14 – The Law
It is well established and was common ground at the hearing that a broad and flexible approach must be adopted when determining whether a communication satisfies the requirements of section 14 (4). Mr Phillips' skeleton argument put it thus:-
“(1) In Seabridge AB v AC Orsslef's Eftf's A/S [1992] 2 Lloyd's Rep. 685 (cited in Taylor Woodrow Construction v RMD Kwikform Ltd. [2008] 2 Lloyd's Rep. 345 by Ramsey J. at paragraph 34), Thomas J. stated at p. 690 (RHC):
“Section 14 should, in my view, be interpreted broadly and flexibly. A strict and technical approach to this section has no place in the scheme of the 1996 Act. Notices are given by international traders and businessmen who often use shorthand expressions, or ways of doing things, which are objectively clear in giving notice to the other party of a reference and of the requirement to appoint an arbitrator.”
(2) In The Lapad [2004] 2 Lloyd's Rep. 109, Moore-Bick J. stated in paragraph 17:
“Arbitration is widely used by commercial parties, often acting without the benefit of legal advice, and there are good reasons, therefore, for concentrating on the substance of their communications rather than the form. If a notice of arbitration is to be effective, it must identify the dispute to which it relates with sufficient particularity and must also make it clear that the person giving it is intending to refer the dispute to arbitration, not merely threatening to do so if his demands are not met. Apart from that, however, I see no need for any further requirements. Whether any particular document meets those requirements will depend on its terms which must be understood in the context in which it was written. The weight of authority supports a...
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