Bulk Ship Union SA (Applicant/Claimant) v Clipper Bulk Shipping Ltd (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Popplewell |
| Judgment Date | 26 June 2012 |
| Neutral Citation | [2012] EWHC 2595 (Comm) |
| Docket Number | Claim No: 2011 Folio 1558 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 26 June 2012 |
[2012] EWHC 2595 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Popplewell
Claim No: 2011 Folio 1558
MR J PASSMORE (instructed by Jackson Parton) appeared on behalf of the Claimant
MR C PRIDAY (instructed by Winter Scott LLP) appeared on behalf of the Defendant
By a time charter party on an amended NYPE form dated London, 9 August 2006, the Claimant, Bulk Ship Union SA ("the Owners") let their vessel, Pearl Sea, to the Defendant, Clipper Bulk Shipping Limited ("the Charterers"), for a period of about 9 to 12 months. The vessel was a gearless bulk carrier, built in 1987, of about 65,000 tons summer deadweight. The vessel was delivered into the Charterers' service on 10 October 2006 and redelivered to the Owners on 14 December 2007. Disputes arose and were referred to arbitration pursuant to clause 73 of the charter, which provided for arbitration in London with English law to apply.
The tribunal chosen by the parties comprised Christopher Spencer and John Schofield. Both have sea-going experience. Christopher Spencer is a master mariner and a current harbourmaster and pilot. The parties agreed that the tribunal should proceed to an award without an oral hearing, on the basis of written submissions from the representatives of the parties, and accompanying written documentary evidence.
The Owners' claim in the arbitration was for US$624,276.77 plus interest at 13.5 per cent per annum pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 ("the 1998 Act"). The tribunal, by its award dated 28 October 2011, awarded the Owners US$505,302.08. The tribunal also awarded interest on that sum, not under the 1998 Act, but under section 49(3)(a) of the Arbitration Act 1996, at an annual rate of 5 per cent, compounded with three-monthly rests from June 2007. The difference between the sum claimed by the Owners and that awarded by the tribunal, namely US$118,974.69, is the amount which the tribunal held the Charterers were entitled to withhold by reason of slow steaming of the vessel. The vessel performed sixteen laden or ballast voyages during the currency of the charter party. The Charterers claimed for slow steaming in respect of seven of those voyages. The tribunal upheld their claim in respect of three voyages.
The Owners appeal, with leave of Flaux J against the tribunal's decision in respect of those performance claims and its decision not to award interest under the 1998 Act. In addition, the Owners pursue an application under section 68 of the Arbitration Act 1996 in relation to the tribunal's decision not to award interest under the 1998 Act.
Interest under the 1998 Act
The tribunal dealt with the applicability of the 1998 Act at paragraphs 146 to 149 of the award in the following terms:
"146. We were surprised, in any event, that the Owners should seek an award of interest under the 1998 Act. This is the first occasion either of the members of the tribunal has encountered such an application being made and this has led us to ask ourselves why this should be, given the obvious advantage to any Claimant.
147. We believe the answer why there are not commonly claims for interest under the 1998 Act lies in Section 12(1) of the Act, which under the heading Conflict of laws, provides: 'This Act does not have effect in relation to a contract governed by the law of a part of the United Kingdom by choice of the parties if — (a) there is no significant connection between the contract and that part of the United Kingdom; and (b) but for that choice the applicable law would be a foreign law.'
148. The contract in the present case, the charterparty, is governed by English law as the law of choice of the parties, perhaps not surprisingly as it was negotiated through London brokers, the only connection with this country. The Owners of the "PEARL C" are a company domiciled in the Marshall Islands and the vessel flies the Cypriot flag. The Charterers are domiciled in the Bahamas. Even the parties' representatives who have provided submissions on their behalf are resident in Greece and Denmark respectively. At no stage did the "PEARL C" call at an English port during the course of the charter and clearly therefore the contract has no significant connection with, nor were any services provided under the charter provided in any part of, the United Kingdom.
149. It appears that the Owners have overlooked this provision and therefore their claim for interest under the 1998 Act is rejected."
The possibility of a claim for interest under the 1998 Act is not as unusual in London maritime circles as paragraph 146 might suggest. In the first witness statement of Mr Hewitt, the Owners' solicitor, which was made in support of the application for permission to appeal in this case, he said at paragraph 15 that he was aware that the general applicability of the 1998 Act to charter party disputes in London arbitrations was an issue on which London arbitrators were split. He went on to say:
"Some arbitrators are routinely awarding interest under the Act, whilst other arbitrators are routinely refusing such interest. More often than not, the different approaches seem to arise from different views as to the operation of section 12."
He amplified the position in his second witness statement. He referred in paragraph 5 to an article in Lloyd's List published on 25 February 2009, written by Mr Colin Sheppard who is a well-known LMAA arbitrator and former partner of Messrs Holman Fenwick and Willan (and more latterly the honorary secretary of the LMAA). That article, a copy of which was attached, discussed the applicability of the 1998 Act to hire claims and to other shipping-related claims brought by way of London arbitration. It identified one of the main obstacles to such interest being recoverable as the operation of section 12(1) of the Act.
Mr Hewitt also exhibited a copy of an arbitration award in which the tribunal consisted of Mr Bruce Harris and Captain Spencer himself. This was an award which was dated 8 December 2010, before the award in this case was published. In that award, Captain Spencer and Mr Harris identified that section 12 potentially precluded recoverability under the 1998 Act. They rejected its application and they awarded interest under the 1998 Act. It seems from this material that the novelty of the attempt to apply the Act in the instant case was somewhat overstated in the award.
The Owners' application under section 68 of the Arbitration Act is put in the following way. In their initial claim submissions to the tribunal, the Owners made a claim for interest under the 1998 Act. In the responsive submissions served by the representatives of the Charterers, the Charterers contended that the Act, was inapplicable. That contention was simply a bare denial as to the applicability of the Act without advancing any reasons for its inapplicability. There were a number of subsequent rounds of written submissions from the representatives of both parties which dealt with other issues in the case, but none of them addressed the question of interest under the 1998 Act.
The submissions served on behalf of the Charterers were, so it was contended before me, defective under the terms of the applicable LMAA rules, schedule 2, paragraph 6 of which deprecates bare denials unaccompanied by the giving of reasons. Accordingly, it was submitted to me on behalf of Owners, the tribunal's reliance on section 12 of the Act to reject the interest claim came without any prior indication to the Owners that section 12 might be the basis for the denial of such a claim. It was contended that if Owners had been given an indication that the 1998 Act interest might be denied on the basis of section 12, they would have filed a submission that assuming section 12(1)(a) applied, section 12(1)(b) did not apply because, but for the parties' express choice of law, the applicable law would have been English law in any event. The 1998 Act should therefore have been given effect in relation to the charter party with an award of interest under that Act. In circumstances where the Charterers made no substantive submissions on the applicability of the 1998 Act, it was contended that the tribunal's failure to give any indication that it was minded to deny 1998 Act interest on the basis of section 12(1) was a failure by the tribunal to comply with its general duty under section 33 of the Arbitration Act 1996 to give the Owners a reasonable opportunity to put their case; and a failure to adopt procedures to provide a fair means for the resolution of the claim for interest.
In my judgment, the section 68 application must fail because there was no breach of section 33 of the Arbitration Act, which is the only basis put forward for there having been a serious irregularity under section 68. Section 33 of the Act provides:
"(1) The tribunal shall -
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined."
The applicability of the 1998 Act was put in issue by the Charterers in their submissions to the tribunal. If the Owners had wanted to have elucidated the...
To continue reading
Request your trial
-
Eastern Pacific Chartering Inc. v Pola Maritime Ltd
...Enterprise [1993] 1 Lloyd's Rep. 352. 66 This approach was also confirmed by Popplewell J in in a claim for slow steaming in The Pearl C [2012] EWHC 2595, where he also explained [at 53] that there is a breach of the utmost despatch obligation if there is an unjustifiable decision not to op......
-
Charterers entitled to withhold hire due to underperformance of vessel
...claim breach of clause 8 in NYPE Form of Charter Party The case Bulk Ship Union SA v Clipper Bulk Shipping Limited (The "Pearl C"), (2012) 2 Lloyds Rep 533 concerned a claim by charterers against owners that there had been a breach of clause 8 in the NYPE Form of Charter Party. That clause ......