Guangzhou Dockyards Company Ltd (formerly Guangzhou CSSC-Oceanline-GSW Marine Engineering Company Ltd) v ENE Aegiali I [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Blair J. |
| Judgment Date | 05 November 2010 |
| Date | 05 November 2010 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court)
Blair J.
Robert Bright QC and Charles Holroyd (instructed by Reed Smith) for the claimant.
Bernard Eder QC and Sean O'Sullivan (instructed by Ince & Co) for the defendant.
The following cases were referred to in the judgment:
Barton v FinchamELR[1921] 2 KB 291.
Burnard v Wainwright(1850) 19 LJ QB 423.
E v Secretary of State for the Home DepartmentELR[2004] QB 1044 (CA).
Finelvet AG v Vinava Shipping Co Ltd (The Chrysalis)UNK[1983] 1 Ll Rep 503.
Geogas SA v Trammo Gas Ltd (The Baleares)UNK[1993] 1 Ll Rep 215.
Hall Street Associates LLC v Mattel Inc(2008) 552 US 576.
Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) LtdELR[1970] 1 QB 673; [1971] AC 850 (HL).
Kyocera Corp v Prudential-Bache Trade Services Inc(2003) 341 F 3d 987.
SAB Miller Africa v East African BreweriesUNK[2009] EWCA Civ 1564; [2010] 2 Ll Rep 422.
Arbitration Shipping Contract with shipyard for conversion of crude carrier to ore carrier Work not performed Dispute as to cause Arbitrators' decision in favour of owners Purported appeal on questions of fact Court's power to entertain appeal against arbitration award statutory Appeal on question of law only permitted Doubtful whether parties could by agreement confer jurisdiction where none existed Arbitration clause in shipyard contract did not purport to permit appeal on questions of fact Appeal on facts struck out Arbitration Act 1996, s. 69.
This was an application by the defendant ship owners to strike out that part of an appeal against an arbitration award by the claimant dockyard which was an appeal on questions of fact.
The ship owners were a Greek company and the dockyard was a Chinese company. The dispute concerned a contract for the conversion of the owners' very large crude carrier (VLCC) into a very large ore carrier (VLOC). The contract was governed by English law, and the parties agreed to LMAA arbitration in London.
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. The arbitrators concluded that the owners succeeded on their claim and made an award in their favour.
The dockyard sought to appeal on issues of fact on the basis that the arbitrators' conclusions depended directly on their view as to the meaning of art. 43 of the relevant rules for navigation in the Pearl River estuary, which the dockyard said was wrong.
The dockyard argued that it was open to the parties to an arbitration agreement to agree under the Arbitration Act 1996, s. 69 that questions of fact (as well as questions of law) arising out of an arbitration award could be the subject of an appeal to the English court, and that they had so agreed in thiscase; alternatively the dockyard sought to invoke the inherent jurisdiction of the court on the ground that there was a contractual basis for the appeal under the arbitration clause in the ship conversion contract and that was consistent with party autonomy. The ship owners argued that an appeal to the court on factual matters was misconceived since the court had no jurisdiction to hear an appeal against factual findings by arbitrators and the parties could not by agreement confer such jurisdiction.
Held, striking out the dockyard's appeal on the facts:
1. Section 69 of the 1996 Act provided for, and only for, an appeal to the court on a question of law. The opening words of the section (Unless otherwise agreed by the parties') had to do with agreement between the parties in the context of an appeal on a question of law. The words could not be construed as expanding the jurisdiction of the court to include an appeal to the court on a question of fact on the basis that the parties had agreed to such an appeal. Thus the dockyard's factual appeal could not stand as a s. 69 appeal. (Geogas SA v Trammo Gas Ltd (The Baleares)UNK[1993] 1 Ll Rep 215considered.)
2. The better view was that the Act contained a complete account of the court's powers of intervention, and the court had no jurisdiction to review the arbitrator's decision by an appeal otherwise than on a question of law. Thus the alternative basis of jurisdiction for an appeal on the facts would be excluded. (Finelvet AG v Vinava Shipping Co Ltd (The Chrysalis)UNK[1983] 1 Ll Rep 503considered.)
3. In any event on its proper interpretation the arbitration clause in the ship conversion contract (either Party may appealon any issue arising out of any award) did not extend to an issue of fact. The words any issue meant any issue susceptible of appeal. They did not extend to factual findings. That was consistent with the fact that the parties had agreed expressly that all arbitrations shall be conducted in accordance withthe Arbitration Act 1996', since the Act did not allow for appeals from findings of fact. The parties intended to dispense with the need to obtain permission for an appeal on a question of law pursuant to s. 69. There was nothing in the language used which was apt to warrant a wider construction.
Blair J:
1. 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.
2. 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.
3. 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) of the 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.
4. 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...
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