Classic Maritime Inc. v Lion Diversified Holidings Berhad and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cooke |
| Judgment Date | 21 May 2009 |
| Neutral Citation | [2009] EWHC 1142 (Comm) |
| Docket Number | Case No: 2009 FOLIO NO 60 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 May 2009 |
[2009] EWHC 1142 (Comm)
Before: The Honourable Mr Justice Cooke
Case No: 2009 FOLIO NO 60
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr R Southern QC and Mr R Sarll (instructed by Winter Scott) for the Claimants
Mr V Flynn QC and Mr D Walker (instructed by Kennedys) for the Defendants
Hearing dates: 14 and 19 May 2009
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.
THE HON MR JUSTICE COOKE
Mr Justice Cooke:
Introduction
I have a number of applications to decide in this action. The claimants (Classic) seek summary judgment against both defendants. The second defendant (Limbungan) seeks a stay of the action so that the dispute between it and Classic can be decided in arbitration in accordance with an arbitration clause contained in a Contract of Affreightment (COA) and the first defendant (Lion) seeks a stay on case management grounds.
Classic brings the action against Lion under a written guarantee dated 28 th August 2008 by which it guaranteed the obligations of its subsidiary, Limbungan, under the COA contained in or evidenced by an email Recap dated 13 th August 2008 (the August COA) which in turn incorporated an earlier July COA.
Lion raises two defences to the claim. First it says that the guarantee is unenforceable because any consideration given was past consideration. Secondly it says that performance of the COA was frustrated in part, inasmuch as it was unable to discharge the ships on two nominated voyages in Malaysia, or that performance of those shipments was excused under the force majeure clause in the COA. A challenge is also raised to the quantum of the claim in respect of these two voyages which has been put forward on the basis of the difference between the equivalent time charter rate for the COA and the Baltic Capesize Index setting out the market rate at the relevant time.
Limbungan's Application for a Stay
There is no issue between the parties that Limbungan was party to an arbitration agreement with Classic contained in the documents making up the August COA, as set out in the Recap for that COA, the Recap for the July COA and the Charterparty document incorporated in both. The issue between the parties is whether Limbungan has agreed to vary that arbitration agreement by virtue of the guarantee given by Lion to Classic or in the negotiations for that guarantee, or has represented in the guarantee or negotiations that it would accept the English court's jurisdiction, either instead of or in addition to the provision for disputes to be resolved by arbitration.
This is an issue with which this court must grapple since it must, under section 9 of the Arbitration Act, decide whether the arbitration agreement is null and void, inoperative or incapable of being performed, if it is not to stay the action in favour of arbitration. The issue turns on the construction and effect of the guarantee given by Lion and some email negotiations and in particular whether Limbungan is bound, in one way or another by the contents of a clause in the guarantee.
Classic relies on the terms of the guarantee which includes the following provisions:—
“The Guarantor's obligations under this guarantee are independent of Limbungan Makmur Sdn Bhd's obligations under the Charterparty. The Counterparty may bring and prosecute separate actions against Classic Maritime Inc. and the Guarantor or may join the Guarantor and Limbungan Makmur Sdn Bhd in one action.
………
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH ENGLISH LAW WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE GUARANTOR IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF AND AGREES THAT ANY ACTION TO ENFORCE THIS GUARANTEE MAY BE DETERMINED BY THE COURTS OF ENGLAND AND WAIVES ANY OBJECTION TO THE ENGLISH COURTS ON THE GROUNDS OF INCONVENIENT FORUM OR OTHERWISE IN CONNECTION WITH THIS GUARANTEE. IN ANY ACTION TO ENFORCE THIS GUARANTEE THE GUARANTOR AGREES TO ACCEPT, IN LIEU OF PERSONAL SERVICE, SERVICE OF PROCESS BY POSTAGE PREPAID REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE GUARANTOR AT THE ADDRESS SPECIFIED PURSUANT TO THE NOTICE PROVISIONS OF THIS GUARANTEE.”
Although infelicitously drafted, it is clear that the reference to “the Counterparty” in the first paragraph set out above means Classic and that where, in the second sentence, the Counterparty is referred to as bringing separate actions against Classic Maritime and the Guarantor, the reference should be to Limbungan and the Guarantor since the sentence goes on to refer to the entitlement to join the Guarantor and Limbungan in the same action. Classic relies on this provision which, on its face, gives Classic the right to sue Limbungan and Lion in the same action whilst the later paragraph cited above sets out the agreement of Lion to submit to the jurisdiction of the English court. Putting the two together, Classic says that it is entitled to sue Limbungan and Lion jointly in the English court, although I was unclear whether it went so far as to say that it could pursue Limbungan on its own there, though that must be the logic of its position if Limbungan, as opposed to Lion, is bound by the provision.
Classic submits that, as the guarantee was given pursuant to the terms of the August COA, it was therefore procured by Limbungan and Limbungan must have impliedly agreed that it could be sued in the English courts alongside the Guarantor, Lion, at Classic's option, thereby varying the arbitration clause in the COA. It is further suggested that Limbungan must be taken to have represented that it would not object to being sued in the English courts, even if it was not party to an implied agreement. If Classic is right on either point, then Limbungan has agreed to be sued or represented that it may be sued in the English court either separately or jointly with Lion.
I cannot imply any such agreement from the material put before the court. Such an agreement cannot lightly be implied, whether from words or conduct. The burden of proof must rest upon Classic in this regard to show the necessity for any such implied contract, as exemplified in The Aramis [1989] 1 LLR 213, The Hannah Blumenthal [1983] AC 854 and The Gudermes [1993] 1 LLR 311.
Although the negotiation of the interlinked July and August COAs are inadmissible for the purpose of construing them, they must be of significance in assessing whether some implied contract has been agreed. The negotiations for the July COA show discussion of an arbitration clause and rival positions as between the parties as to the seat of that arbitration, namely London or Singapore. London arbitration was then specifically agreed as set out in the fixture Recap, which also included the provision for the obligations of Limbungan to be fully guaranteed by Lion Industries Corporation Berhad, (Lion Industries) which was not the company which ultimately actually gave the guarantee.
On 11 th August 2008 Classic sent to Captain Khor, a senior manager in the Shipping and Chartering Department of LDH Management Sdn Bhd a draft of the guarantee to be given under the July COA and on 14 th August a draft of the guarantee to be given under the August COA. In each case the heading of the email referred to the relevant “Limbungan/Classic COA” and stated:
“As per main terms agreed, attached please find guarantee wording which kindly get Lion Industries to affect in accordance with Charterparty. Please confirm when same will be affected.”
In an email dated 18 th August Limbungan's brokers forwarded to Captain Khor a draft email to go to the owners which included corrections to the draft guarantee drafted by the “Chtrs Legal Dept”. From this it is to be inferred that there was discussion of the terms of the guarantee between the legal department acting for “Charterers” and Limbungan and the terms of the guarantee itself were negotiated between persons acting for Limbungan and Classic. In due course the agreed form was put before the Lion company for signature, at the behest of Limbungan, albeit that, by that time, the guarantor was to be Lion rather than Lion Industries.
On this basis it is submitted by Mr Richard Southern QC for Classic that Limbungan must be taken to have agreed the terms of the guarantee to be given by the guarantor with the inclusion of the provision allowing Classic to bring and prosecute separate actions against Limbungan and Lion or joining both in one action. Thus, it is said that Limbungan agreed to be sued in an action and specifically agreed to be sued jointly in an action with Lion which, by the terms of the guarantee itself, accepted the jurisdiction of the English courts.
I cannot accept this submission. There is no allegation that Lion acted as agent for Limbungan in entering into the guarantee. The guarantee is in itself specifically an agreement between Classic and Lion to which Limbungan is not a party whether or not Charterers' legal department is Limbungan's legal department or a legal department which acts for numerous members of the Lion Group. Whether or not the form of the guarantee was negotiated between Limbungan and Classic, there is no basis for construing negotiations or the guarantee as amounting to an agreement on the part of Limbungan itself to the terms of a clause in a document to which it was not a party. For the same reasons it cannot be said that there is a representation made on behalf of Limbungan when forwarding a document which is to take effect between Classic and Lion, once...
To continue reading
Request your trial
-
Stemcor UK Ltd v Global Steel Holdings Ltd and Another
...from the Court of Appeal's approach and reasoning in Alfred McAlpine. 55 Stemcor relied on the decision of Cooke J in Classic Maritime v Lion Diversified Holdings [2009] EWHC 1142 (Comm), [2010] 1 Lloyd's Rep 59, where a stay of proceedings under a guarantee pending an arbitration to be br......
-
Hualon Corporation (M) Sdn Bhd ((in Receivership)) Acting by its Receiver and Manager Mr. Duar Tuan Kiat Applicant/Claimant v Marty Ltd Respondent/Defendant
...case management powers to grant a stay in an arbitration context also was referred to but not used in Classic Maritime Inc. v Lion Diversified Holdings Berhad and Limbungan Makmur SDN BHDF [2009] EWHC 1142 (Comm). 183 For the purposes of this application, given the other bases upon which a ......
-
Autoridad Del Canal De Panamá v Sacyr, S.A. and Others
...outcome of an arbitration as to the underlying debt. The court distinguished Classic Maritime Inc v Lion Diversified Holdings Bhd [2010] 1 Lloyd's Rep 59 which went the other 163 It is clear that each case depends on its facts. One of the points that weighed with the court in Stemcor was t......
-
Sylvia Shipping Company Ltd v Progress Bulk Bonding Ltd
...apply. If he was saying that, it was not a view shared by the majority and it would be heterodox to say the least.” 46 In Classic Maritime v Lion Diversified Holdings [2010] 1 Lloyd's Rep. 59 Cooke J stated (at p71) that he would be “highly surprised” if The Achilleas established a new test......
-
Commercial Court Provides Further Guidance on Remoteness of Damage in Breach of Charterparty Cases
...He added that this conclusion was consistent with other recent cases, for example Classic Maritime v Lion Diversified Holdings [2010] 1 Lloyd's Rep 59, where the judge stated that he would be "highly surprised" if The Achilleas had established a new test for the recoverability of damages fo......