Fimbank Plc v KCH Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 03 July 2020 |
| Neutral Citation | [2020] EWHC 1765 (Comm) |
| Docket Number | Case No: CL-2019-000679 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 July 2020 |
[2020] EWHC 1765 (Comm)
IN THE HIGH COURT OF JUSTICE
OF ENGLAND AND WALES
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice,
Rolls Building
Fetter Lane,
London, EC4A 1NL
Mrs Justice Cockerill DBE
Case No: CL-2019-000679
Mr Steven Berry Q.C. and Mr Frederick Alliott (instructed by Campbell Johnston Clark Limited) for the Claimant
Mr Simon Rainey Q.C. (instructed by Reed Smith LLP) for the Defendant
Hearing dates: 10 June 2020
Sent to Parties: 30 June 2020
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.
Introduction
In this matter the Claimant, Fimbank PLC (“the Bank”), applies under section 12 of the Arbitration Act 1996 (“the 1996 Act”) to extend the time for commencing arbitration proceedings against the Respondent (“KCH”).
The backdrop is of course the fact that the claim which the bank would wish to make – a damages claim against the carrier for misdelivery of cargo without production of the bills of lading (“Bills”) – concerns bills which were subject to a one year Hague/ Hague-Visby Rules time limit. I am told that the claim is worth some US$7.3 million; KCH express scepticism about this by reference to another claim advanced in other proceedings by the Bank. That is immaterial for present purposes.
What is significant is that the Bank commenced arbitration against the registered owner of the vessel on which the goods had been carried, the M/V GIANT ACE (“the Vessel”) within time as extended via a course of correspondence conducted remotely through the time charterers' solicitors. The registered owner was a Panamanian company called Mirae Wise SA (“MW”) But since then it has become apparent that there was a bareboat charter, between MW and KCH. As demise charterer KCH obviously says it is the carrier, and it has relied on the Hague Rules time bar. Hence the application for an extension of time.
The Bank relies on two heads of section 12(3): (a) “ that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time”, or (b) “ that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question”.
I shall deal first with the facts, including the issue of authority, before turning to each head of application.
Before I do so I should note that the arbitration claim form in this matter, which was issued on 5 November 2019, proceeds on the basis of assumptions, without prejudice to the Bank's right to argue to the contrary in subsequent arbitration proceedings, as follows. It is assumed that:
i. The bareboat charter is genuine and operative.
ii. If it is genuine and operative MW are not estopped from denying that they were the carriers.
iii. KCH and not MW granted the extension of time.
iv. The time bar provision applies to claims in misdelivery.
This approach is because it is established that the Court is entitled to determine the section 12 application on the assumption that the time bar in question applies to the claimant's claim, without prejudicing a claimant's right to argue otherwise subsequently: see The Seki Rolette [1998] 2 Lloyd's Rep. 638 at 646 (LHC) per Mance J.
The decision which follows is made on this basis.
I shall deal first with the facts, incorporating as I do conclusions about a number of issues, for example as to authority, which arise as part of the chronology and which then form the backdrop to the consideration of the issues.
The Facts
Phase 1: April 2018 – April 2019
As already noted MW is the registered owner of the Vessel. The chain down from MW goes thus:
i. KCH were the bareboat charterers of the Vessel. Whether KCH has any link to MW is contentious. Lloyd's List suggests it does. I am told on instructions that this is not correct. Whether or not there was a connection does not much matter. In due course, but not at the outset, Mr Nicholas Mallard of DLA Piper acted for them.
ii. Classic Maritime Inc (“Classic”) were the time charterers of the Vessel from KCH. They instructed Wikborg Rein and specifically Mr Nicholas Shepherd. He is an extremely experienced shipping solicitor, who has practised in the area for more than 30 years.
iii. Trafigura Maritime Logistics Pte Ltd (“Trafigura”) were the voyage charterers of the Vessel. They instructed Holman Fenwick Willan LLP (“HFW”).
The Bills were issued “to order” for and on behalf of the Master for about 85,000MT of coal in bulk (“the Cargo”) for carriage from Indonesia to India. The Bank says it came to hold the Bills in the first place as security for monies it lent to the purchaser of the Cargo. The Bills incorporated the voyage charterparty (i.e., that between Classic and Trafigura), which contained a London arbitration clause. The Bills also incorporated the Hague or Hague-Visby Rules, and thus the Article III rule 6 time bar of one year from delivery.
The cargo was discharged by the Vessel on 12 and 18 April 2018. It was discharged without the Bills having been presented, but against letters of indemnity issued up the line, so from Classic (to KCH) and Trafigura (to Classic) and from the buyer, Farlin Energy & Commodities FZE (“Farlin”) (to Trafigura). In the circumstances, the clock was ticking down to a time bar in April 2019, one year from the date of the delivery of the Cargo.
The Bank's lawyers at the time were the Maltese firm Fenech & Fenech (“F&F”). Ms Ann Fenech looked into the claim and did a website search on Equasis. This showed the Vessel's flag to be Panama and her registered owners to be “ Mirae Wise SA”. Equasis gave a “c/o” address of another entity “ Korea Line Corp” in South Korea.
Korea Line Corp was separately described as “ Ship manager / Commercial Manager”. Ms Fenech's evidence (the credibility of which is challenged) is that she did not join the dots between the SA designation of the company and the flag of the vessel and realise that MW was a Panamanian company. She says she saw the Korean ship management company and thought that it was a Korean company. As I have noted that is contentious; but it certainly would not be an unusual situation if a ship management company were related to a registered owner.
On 24 January 2019 Ms Fenech sent a letter before action to MW. That letter was addressed to “ Mirae Wise SA”, and gave an address of “ C/O Korea Line Corp., […] Seoul, South Korea”. After having set out details of her client (the Bank), and identified the Bills, Ms Fenech wrote as follows:
“Clients understand that notwithstanding the fact that they are in possession of the original bills of lading, the carrier discharged the cargo covered by these bills of lading to a third party without presentation of bills of lading.
FIMBank plc therefore has a claim against Mirae Wise SA as owners of the MV Giant Ace for the value of these goods”.
I accept that this indicates that F&F and hence the Bank had identified MW as the intended Respondent of the Bank's claim, which was being made against them “ as owners of the M/V Giant Ace” and also, as the carriers under the Bills.
Of course, in truth this letter was misdirected; the appropriate recipient of the claim was KCH. But Ms Fenech did not know about the bareboat charter. Such arrangements are not matters of record. At the same time, anyone who has been involved in such matters for any period of time will know that they are not uncommon.
Ms Fenech did not inquire whether there was a bareboat charter. Whether she should have done so or not has been a matter of argument before me. KCH, via counsel's skeleton and via Mr Shepherd, says such an inquiry is standard. The skeleton says that: “ A standard letter of claim to a registered owner will accordingly make that enquiry as a matter of basic prudence”. Mr Shepherd contends (slightly differently) that it is standard operating procedure to check this when negotiating the Club LOI, which is a rather different point. Ms Fenech says one would normally only check this at the outset if there were an inkling that such an arrangement existed, and that she had none. I do not consider that, absent expert evidence, I have the material before me to conclude that Ms Fenech's action at this point was open to criticism.
Ms Fenech also sent the letter before claim to Gard, the Vessel's P&I Club. It appears that Gard then sent the letter to Grieg Shipbrokers (“Grieg”), Classic's brokers; who sent it to Classic. This was presumably because Classic and Trafigura down the line had a significant financial interest in the claim, because the claim made directly on the carrier by the Bank would simply pass down the line of charterparties (subject to any applicable contractual defences). Classic were asked: “Pls check and reply us urgently and let us know C/P chain and each PNI Club”. It was suggested in argument that this was KCH expressly authorising Classic to correspond on KCH's behalf. I do not accept that submission. That simple request to get specific information cannot sensibly be seen as clothing Wikborg Rein with authority to correspond on KCH's behalf.
But it was thus that Classic sent the letter to their lawyers, who as luck would have it, were already corresponding with Ms Fenech on behalf of cargo interests in another similar matter. The evidence of Mr Shepherd is that he first received a copy of F&F's letter on 15 February 2019.
At this point Mr Shepherd...
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