CMA CGM SA v Classica Shipping Company Ltd (The CMA Djakarta)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Neuberger,Lord Justice Waller |
| Judgment Date | 12 February 2004 |
| Neutral Citation | [2002] EWCA Civ 1878,[2004] EWCA Civ 114 |
| Docket Number | Case No: 2003 0808 A3,Case No: A3/2002/1596 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 2004 |
[2002] EWCA Civ 1878
The Lord Phillips of Worth Matravers, Mr
Lord Justice Rix and
Lord Justice Dyson
Case No: A3/2002/1596
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Hon Mr. Justice Tomlinson
Ms Philippa Hopkins (instructed by Ince & Co for the Appellant)
Mr Stephen Kenny (instructed by Holman Fenwick & Willan for the Respondent)
Lord Phillips MR
Introduction
This appeal arises out of and relates to an award of three eminent commercial arbitrators, Sir Christopher Staughton, Mr Adrian Hamilton QC and Mr Kenneth Rokison QC. The arbitration raised the question of whether charterers of four vessels under the New York Produce Exchange ('NYPE') form of charter had validly cancelled those charters pursuant to the War Cancellation Clause. The arbitrators held that they had not. The charterers sought permission to appeal to the Commercial Court against that decision, contending that the arbitrators had erred in relation to seven issues of law. They did so pursuant to section 69 of the Arbitration Act 1996 ('the Act'). By Order dated 2 July 2002 Tomlinson J. refused permission to appeal. On 16 July 2002 he granted permission to appeal to this court against his decision in relation to four issues. So far as we are aware, this is the first time that permission to appeal to this court has been granted pursuant to section 69 of the Act. The appeal raises three issues: (1) Did Tomlinson J. apply the correct principles when granting permission to appeal to this court? (2) Did Tomlinson J. apply the correct principles when refusing permission to appeal against the Arbitrators' award? (3) Did Tomlinson J. correctly apply the latter principles?
The Respondents ('the Owners'), who were the claimants in the arbitration, are four German limited-liability partnerships each of which owns one container ship. They chartered these vessels under the NYPE form of time charter, with amendments up to June 12 1981, to a company of which the Appellants ('the Charterers'), who were the respondents in the arbitration, are the universal successor. Clause 31 of each of the Charterparties was a war cancellation clause which provided, so far as material, as follows:
"In the event of the outbreak of war (whether there be a declaration of war or not) between any two or more of the following countries: The United States of America, the United Kingdom, France, Russia, the People's Republic of China, Federal Republic of Germany and any country of the EEC or in the event of the nation under whose flag the vessel sails becoming involved in war (whether there be a declaration of war or not), either the Owners or the charterers may cancel this charter…."
The charters were for lengthy terms and, from 1996 to 1999, container line rates fell. In September 1997 the charters were varied, to accommodate the Charterers. Notwithstanding this variation the Charterers had, in March 1999, a powerful commercial motive for terminating the charters. It was in March 1999 that a military operation began in Kosovo in which Germany participated as a member of NATO. In relation to this, the arbitrators found the following facts:
"The particular operation with which we are concerned started on 24th March 1999. Germany participated as a member of NATO. Under the German constitution, the German Bundestag approved German participation in the operation. From 24th March 1999, this participation involved the deployment of 10 Tornado ECR aircraft and 4 Tornado Recce aircraft of the German Air Force, initially mainly suppressing Yugoslav air defences, and reconnaissance, and later switching to other targets. During the second half of April the intensity of the operation, including Germany's participation increased considerably. We conclude, however, that the operation was one operation, starting on 24th March 1999, and the increase in Germany's participation was one of scale or tempo, rather than in the nature of Germany's involvement."
By notice dated 29 April 1999 the Charterers purported to terminate each of the charterparties on the ground that Germany, under whose flag the vessels sailed, had become involved in war in Kosovo and Yugoslavia.
The arbitrators found that the cancellation of the charterparties was invalid for reasons which included the following: (1) [by a majority] that the events in Kosovo did not constitute 'war' within the meaning of that word in clause 31; (2) [by the same majority] that if events in Kosovo did constitute war, Germany was not 'involved' in that war within the meaning of that word in clause 31; (3) that under clause 31, the right to cancel a charter had to be exercised within a reasonable time of the event in question; (4) the Charterers had not given notice of cancellation within a reasonable time of the alleged involvement of Germany in the alleged war.
The issues in respect of which the charterers sought permission to appeal and which we shall have to consider, having regard to the terms upon which Tomlinson J. gave leave to appeal to us, are the following:
"(i) Whether on a proper construction of clause 31 of the Charterparties, the expression "[a] nation … becoming involved in war" in that clause is apt to encompass circumstances in which a nation participates in a military operation as a member of NATO (or another international body)
(ii) Whether the option to cancel given by clause 31 of the charterparties arose only in the event that the war in question, or the flag state's involvement in that war, had an impact on the trading or operations of the vessel or vessels concerned.
(iii) Whether (a) there was implied into clause 31 the Charterparties any term to the effect that the right to cancel the Charterparties pursuant to that clause had to be exercised by the giving of a notice within a particular time frame or (b) there was no such implied term and the right to cancel could be lost only as the result of an election by the party concerned.
(iv) If there was an implied term, whether the term in question was that the right to cancel had to be exercised (a) by notice given within a reasonable time of its accrual (and in particular within a few days thereof) or (b) before such time had elapsed as to make the other party believe that no such right would be exercised."
Section 69 and its history
The regime under which decisions of arbitrators were brought before the High Court by case stated was radically altered by the Arbitration Act 1979, section 1 of which provided, insofar as material:
"(1) In the Arbitration Act 1950 … section 21 (statement of case …) shall cease to have effect and, without prejudice to the right of appeal conferred by subsection (2) below, the High Court shall not have jurisdiction to set aside or remit an award on an arbitration agreement on the ground of errors of fact or law on the face of the award.
(2) Subject to subsection (3) below, an appeal shall lie to the High Court on any question of law arising out of an award on an arbitration agreement; and on the determination of such an appeal the High Court may … (a) confirm, vary or set aside the award …
(3) An appeal under this section may be brought by any of the parties to the reference –
(a) with the consent of all the other parties to the reference; or
(b) … with the leave of the court.
(4) The High Court shall not grant leave under subsection (3)(b) above unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement…
(7) No appeal shall lie to the Court of Appeal from a decision of the High Court on an appeal under this section 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…."
In Pioneer Shipping v B.T.P. Tioxide ('the Nema') [1982] AC 724 the House of Lords gave guidance as to the circumstances in which permission to appeal to the High Court from the decision of an arbitrator should be given. In relation to the construction of a 'one-off' clause, permission should not be given unless, in the opinion of the court, the arbitrator was obviously wrong. In dealing with the approach to standard clauses, Lord Diplock said this at p.743D:
"For reasons already sufficiently discussed, rather less strict criteria are in my view appropriate where questions of construction of contracts in standard terms are concerned. That there should be as high a degree of legal certainty as it is practicable to obtain as to how such terms apply upon the occurrence of events of a kind that it is not unlikely may reproduce themselves in similar transactions between other parties engaged in the same trade, is a public interest that is recognised by the Act particularly in section 4. So, if the decision of the question of construction in the circumstances of the particular case would add significantly to the clarity and certainty of English commercial law it would be proper to give leave in a case sufficiently substantial to escape the ban imposed by the first part of section 1 (4) bearing in mind always that a superabundance of citable judicial decisions arising out of slightly different facts is calculated to hinder rather than to...
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