Eurosteel Ltd v Stinnes AG [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Longmore J |
| Judgment Date | 08 December 1999 |
| Date | 08 December 1999 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Longmore J.
Philip Edey (instructed by Jackson Parton) for the claimants.
Steven Berry and Philippa Hopkins (instructed by Holman Fenwick & Willan) for the defendant.
The following cases were referred to in the judgment:
Baytur SA v Finagro Holding SAELR [1992] QB 610
Industrie Chimiche Italia Centrale v Alexander G Tsavliris & Sons Maritime Co (“The Choko Star”) [1995] CLC 1461[1996] 1 WLR 774
Montedipe SpA v JTP-RO Jugotanker (“The Jordan Nicolov”) [1990] 2 L1 Rep 11
National Bank of Greece & Athens SA v MetlissELR [1957] 2 QB 33 (CA) [1958] AC 509 (HL)
NBP Developments v Buildko (1992) 8 Const LJ 377
Toprak Enerji Sanayi AS v Sale Tilney Technology plcWLR [1994] 1 WLR 840
Arbitration — German law — Universal succession — Arbitration could be continued by successor to assets and liabilities of German company and did not lapse on merger and dissolution of transferor.
This was an application raising the issue whether an arbitration had come to an end in 1996 when one of the parties, a German company, was dissolved.
In 1992 the German company, “BL”, made a contract of affreightment as owners with “Eurosteel” as charterers. In 1994 the parties each appointed an arbitrator in a reference in relation to a claim for dead freight. In 1996 BL agreed to merge with another German company, “Stinnes”, the merger took effect and BL was dissolved. Certain steps were taken in the arbitration until in 1999 Stinnes' solicitors indicated that the claimants were Stinnes/BL, Stinnes having succeeded to BL's rights and obligations in 1996. Eurosteel applied to the court to decide whether the arbitration had lapsed in 1996 on the merger so that the tribunal had no jurisdiction to decide the dead freight claim.
Held, dismissing Eurosteel's claim:
1. The arbitration did not lapse on the merger and BL's dissolution. Any question of the status of the two German corporations had to be resolved by reference to German law. It was not a requirement of German law that notice of transfer be given to either the other party to the arbitration proceedings or to the arbitrators before the right to claim in arbitration was effectively transferred from BL to Stinnes. That was the effect of “universal succession” under German law and procedure. A contract to arbitrate did not fall into a special category of assets or liabilities which could not be transferred automatically under the doctrine of universal succession, such as a trustee relationship. Even if there was an “interruption” of the proceedings until the successor took them up, that did not mean that notice was required for an effective transfer. Interruption did not in any event occur where the party was represented by an attorney as BL was. If German law did require notice to the arbitrator or the other party that would be a merely procedural formality.
2. English law would recognise that the rights and liabilities, constituted by the various agreements making up the arbitration, were vested in Stinnes. ( National Bank of Greece & Athens SA v MetlissELR [1958] AC 509 (HL) and Toprak Enerji Sanayi AS v Sale Tilney Technology plcWLR[1994] 1 WLR 840 considered.)
3. English law required notice of the transfer to be given and that had now been done. To hold that notice could not be given because BL was no longer in existence would defeat the whole idea of universal succession. It would be for the arbitrators to decide whether the notice was not given in a reasonable time and whether the claim in the arbitration should be dismissed for want of prosecution.
Longmore J: The question in the present application is whether, when one foreign corporation merges with or is absorbed by a second foreign corporation in such a manner that the second corporation takes over the assets and liabilities of the first corporation which is dissolved at the time of the takeover, arbitration proceedings begun by the first corporation come to an end at the time of the merger or absorption or whether they can be continued for the benefit of and (if necessary) in the name of the second corporation. In this particular case I am concerned with two German corporations and it is agreed that any question of the status of the two corporations must be resolved by reference to German law. Since, however, the arbitration is taking place in London, the final answer to the question must, procedurally, accord with English law.
The chronology is as follows:
| 1 May 1992 | Bayerischer Lloyd AG as owners make contract affreightment with Eurosteel Ltd as charterers. |
| 8 March 1994 | Bayerischer Lloyd appoint their arbitrator in a reference in relation to a claim for dead freight. |
| 14 March 1994 | Eurosteel appoint their arbitrator. |
| 23 August 1996 | Bayerischer Lloyd agree to merge with Stinnes AG. |
| 9 December 1996 | Merger takes effect and Bayerischer Lloyd is dissolved. |
| June 1997 | The tribunal (who, together with Eurosteel, are ignorant of the merger) decline to fix a hearing date until discovery is concluded. |
| 10 February 1999 | (1) Owners' solicitors Holman Fenwick Willan again ask the arbitrators for a hearing date. |
| (2) Eurosteel's solicitors respond by saying that they will ask the arbitrators to dismiss the claim for want of prosecution. | |
| 22 March 1999 | Eurosteel make written submissions in support of their application to have the claim dismissed. |
| 31 March 1999 | Holmans serve reply submissions naming Stinnes AG/Bayerischer Lloyd AG as claimants and stating: |
| “The Claimants in this reference were originally Bayerischer Lloyd AG. However in 1996 Bayerischer Lloyd AG merged with Stinnes AG. The... |
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