Guangzhou Dockyards Company Ltd v E N E Aegiali I
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BLAIR,Mr Justice Blair |
| Judgment Date | 05 November 2010 |
| Neutral Citation | [2010] EWHC 2826 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2010 FOLIO 900 |
| Date | 05 November 2010 |
[2010] EWHC 2826 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before: Mr Justice Blair
Case No: 2010 FOLIO 900
In The Matter of an Arbitration Claim
Mr Robert Bright QC and Mr Charles Holroyd (instructed by Reed Smith) for the Claimant
Mr Bernard Eder QC and Mr Sean O'Sullivan (instructed by Ince & Co) for the Defendant
Hearing dates: 18 October 2010
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.
Mr Justice Blair:
This is an application by the defendant ship owners to strike out that part of an appeal against an arbitration award by the claimant dockyard which is an appeal on questions of fact. In summary, the issue between the parties is as follows. The claimant argues that it is open to the parties to an arbitration agreement to agree that questions of fact (as well as questions of law) arising out of an arbitration award can be the subject of an appeal to the English court, and that they have so agreed in this case. In particular, this is said to follow from the principle of party autonomy enshrined in the Arbitration Act 1996. The defendant on the other hand contends that an appeal to the court on factual matters is misconceived, in that: (1) The court has no jurisdiction to hear an appeal against factual findings by arbitrators; and (2) The parties cannot by agreement confer such jurisdiction. Furthermore, the defendant submits, on the true construction of the agreement, the parties did not seek to do so in this case. Both parties agree that these points fall to be decided without reference to evidence, and that the defendant's objection can be dealt with summarily on this application.
For the purposes of the application, the factual background can be stated shortly. The ship owners (the “Owners”) are a Greek company, and the dockyard (the “Dockyard”) is a Chinese company. The dispute concerns a contract dated 7 November 2007 for the conversion of the Owners' VLCC (Very Large Crude Carrier) into a VLOC (Very Large Ore Carrier) by the Dockyard in its Wenchong Yard in the port of Guangzhou, China. The contract was governed by English law, and the parties agreed to LMAA arbitration in London, in terms which I set out below. The work could not be performed, and the dispute was as to the cause. The Owners said that the berth that the yard intended to use was unsuitable to receive the vessel. The Dockyard said that the reason the vessel could not proceed was that an agency called the Guangzhou Maritime Safety Administration was unwilling to allow it to navigate through the waterways of the port. By an award issued on 9 June 2010 as amended on 9 July 2010, the arbitrators (Michael Baker-Harber, Robert Gaisford and Simon Gault) concluded that the Owners succeeded on their claim. They were awarded damages of US$59,614,214, plus interest, and a refund of their first instalment payment of US$9,250,000, plus interest.
Following the award, the Dockyard has issued two separate claims in the Commercial Court. The first is an appeal on issues of law pursuant to s.69 of the Arbitration Act 1996. It is common ground that the parties agreed to a right of appeal in that regard in their agreement, and that claim remains to be determined. The second, and the claim that gives rise to this strike out application, is divided into two distinct parts set out in parts B and C of the Claim Form. Part B is the Dockyard's appeal on issues of fact. Part C is the Yard's challenge under s. 68(2)(a) Arbitration Act 1996 (in respect of which leave is not required). The Dockyard argues, and I should make it clear that this is contentious, that Parts B and C both arise out of the same fundamental question, which it says the arbitrators both dealt with unfairly and got wrong. The question, it says, is as to the true meaning of Article 43 of the Rules of Pearl River Estuary Ship Navigation Safety Management (trial) 2002 which has to do with restrictions on navigation in the waters in question. This issue is a question of Chinese law, and thus (as a matter of English law) it is a question of fact, albeit one of a special kind. There are further factual issues which (the Dockyard says) all follow from this, on which the arbitrators' conclusions depended directly on their view as to the meaning of Article 43 which the Dockyard says was wrong. The remaining factual issue (to do with the number of days per annum the vessel could expect to be earning) was, it is said, indirectly affected by it. The s.68 claim is in conventional form and remains to be determined.
Before dealing with the arguments, I set out the parties' agreement as to applicable law and arbitration. This is to be found in Article 22 of the ship conversion contract of 7 November 2007 which provided as follows.
“ARTICLE 22—APPLICABLE LAW AND ARBITRATION
22.1 The Contract shall be governed by and construed in accordance with English law;
22.2 Any dispute concerning the Vessel's compliance or non-compliance with the rules, regulations and requirements of Class shall be referred to the head office of Class, the decision of which shall be final and binding upon the Parties hereto.
22.3 All other disputes or differences arising out of or in connection with this Contract or otherwise shall be referred to arbitration in London, England before a tribunal of three (3) arbitrators. One (1) arbitrator shall be appointed by each Party to this Contract and the third by the two (2) so chosen. All arbitrators shall be full members of the London Maritime Arbitrators Association (“LMAA”) and all arbitrations shall be conducted in accordance with the then current Rules of the LMAA and the Arbitration Act 1996. The Parties agree that either Party may appeal to the English High Court on any issue arising out of any award. The Parties agree that any final unappealable judgment of the English High Court (or higher court on appeal therefrom) shall be referred back to the arbitrators and the arbitrators shall issue a final unappealable award in the form of the said judgment.”
Jurisdiction: the Dockyard's submissions
The Dockyard's arguments are set out in interesting and wide ranging submissions. It accepts that the factual element of its appeal is not a conventional arbitration appeal. It is not an appeal on questions of law under s. 69, nor is it a procedural challenge under s. 68. It is a novel appeal, not least, it says, because it arises under a novel arbitration clause which has not been considered previously by any English Court. In seeking to maintain it, it puts its case on the basis of party autonomy, a principle enshrined in s.1 (b) Arbitration Act 1996. It argues that the single most important feature of arbitration is that it gives the parties the opportunity to choose the particular manner in which their disputes are to be resolved. Accordingly they are able to determine for themselves which potential attributes of the arbitral process are important to them, and how to maximise the aspects that they perceive as advantageous, while minimising the perceived disadvantages. Parties who choose to arbitrate can, it is said, dine à la carte. If they do not like any of the characteristics conventionally associated with arbitration, such as finality, they can agree to opt out, by using a suitably worded arbitration clause. In this respect, the Act reflects the familiar precepts of English law in relation to freedom of contract. Everything is permitted, the Dockyard submits, unless it has been prohibited by statute.
The Dockyard points out that by s. 4 of the Act, the mandatory provisions of the 1996 Act are limited to those listed in Schedule 1, which “have effect notwithstanding any agreement to the contrary”. All other provisions (the non-mandatory provisions) allow the parties to make their own arrangements by agreement, whether by agreeing to the application of institutional rules or by “providing any other means by which a matter may be decided”. Significantly, the list of mandatory provisions does not include s. 69, which deals with appeals. This sets out what Mr Robert Bright QC, counsel for the Dockyard, describes as the default position. He accepts that it is concerned only with appeals on questions of law. However, the opening words of s. 69 reiterate once again, it is submitted, the Act's general deference to the principle of party autonomy, to which the entire section is made subject. The words “unless otherwise agreed by the parties…” show that the section expressly contemplates that the parties may agree something different. The parties are allowed to agree what they like. This legislative emphasis on the importance of party autonomy was a new feature of the 1996 Act; there had been no provision similar to s. 1 (b) or to s. 4 (2), (3) in any of the equivalent legislation that preceded the 1996 Act.
The Dockyard disputes that there is a general principle that parties cannot by agreement confer jurisdiction on a court which the court does not otherwise possess. Cases cited by the Owners such as Kammins Ballrooms Co Ltd v. Zenith Investments (Torquay) Ltd [1970] 1 QB 673, [1971] AC 850 are (it is submitted) examples of relief being sought from the court in circumstances where a legal right has been specifically created by a statute and both the existence of the right, its justiciability and the power of the court to grant relief all have been defined by reference to prescribed facts and circumstances. In principle, the claim cannot be brought, and the court does not have the...
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