Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi as v Vsc Steel Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 19 December 2013 |
| Neutral Citation | [2013] EWHC 4071 (Comm) |
| Docket Number | Case No: 2012-1055 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 December 2013 |
[2013] EWHC 4071 (Comm)
Mr Justice Hamblen
Case No: 2012-1055
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Peter MacDonald Eggers QC and Tim Jenns (instructed by Swinnerton Moore) for the Claimant
Neil Kitchener QC and Eleanor Campbell (instructed by Mayer Brown International LLP) for the Defendant
Hearing dates: 3, 4 and 5 December 2013
Introduction
The dispute between the Claimant ("Habas") a company incorporated in Turkey, and the Defendant ("VSC"), a company incorporated in Hong Kong, arises out an alleged contract for the sale by Habas and purchase by VSC of 15,000 mts (+/-5%) of Prime High Tensile Deformed Reinforcing Bars (the "Steel") for shipment from Turkey to Hong Kong (the "VSC contract").
No delivery of the Steel was made and VSC commenced arbitration proceedings claiming damages pursuant to the London arbitration clause allegedly agreed. Habas denies that any such arbitration agreement was made.
Following a contested hearing, the sole arbitrator, Professor Charles Debattista (the "Tribunal"), issued an Award dated 10 July 2012 (the "Award"). The Tribunal concluded that it did have substantive jurisdiction, that Habas agents, Steel Park and Charter Alpha, had ostensible authority to conclude the VSC contract and the arbitration agreement and that there was a binding contract made containing a binding London arbitration agreement.
The Tribunal decided that Habas was in breach of contract for non-supply of the Steel and awarded VSC the sum of US$3,142,500 plus interest and costs (to be assessed).
Habas challenges the Tribunal's jurisdiction and its Award pursuant to s. 67 of the Arbitration Act 1996 (the "1996 Act") on the grounds that the Tribunal erred in finding that there was a binding arbitration agreement made between the parties because:
(1) Steel Park and/or Charter Alpha did not have actual or ostensible authority to conclude the London arbitration agreement on behalf of Habas; and
(2) there was no binding consensus on the terms of the London arbitration agreement.
Habas also has an application under s.69 of the 1996 Act pursuant to which it seeks to challenge the Tribunal's decision as to the date for assessment of damages.
The s.67 application involves a rehearing. Ms Ivy Ho of VSC, Mr Berkan Uzentepe of Habas and Mr Salih Kurtoglu of Steel Park all gave written and oral evidence at the arbitration, and they have each provided written witness statements in these proceedings.
The parties agreed that none of these witnesses would be required to give oral evidence at the hearing, but each party reserved their right to challenge their evidence.
The Court heard oral expert evidence on issues of Turkish law from Dr Bulent Sozer (on behalf of Habas) and Professor Ilhan Helvaci (on behalf of VSC). Their evidence principally concerned (a) the authority required to conclude an arbitration agreement; (b) ratification; and (c) the extent to which an arbitration agreement and the grant of authority to conclude an arbitration agreement is subject to formality requirements under Turkish law.
Both parties made extensive written submissions and I have drawn on those submissions, with adaptations and amendments, in preparing this judgment, particularly in relation to matters of common ground and in setting out the parties' arguments.
Factual background
Habas is a Turkish manufacturer of steel. Mr Uzuntepe was its Marketing Manager. He provided two witness statements in the arbitration proceedings, and attended the arbitration hearing to give evidence on behalf of Habas. He provided two further witness statements in these proceedings.
VSC is a subsidiary of VSC Holdings Limited. VSC Holdings Limited and its subsidiaries form the VSC Group of companies listed on the Hong Kong stock exchange. VSC's operations comprise the stockholding business of rebars, structural steel and engineering products in Hong Kong and steel distribution in mainland China.
Ms Ho is and was at all relevant times, Deputy General Manager of VSC. She reported to the General Manager, Mr Tse. Mr William Ng, Shipping and Logistics Manager, reported to Ms Ho.
At the arbitration Mr Kern Lim (CEO and CFO of VSC's parent company at the time), and Ms Ho, gave evidence for VSC. In these proceedings, VSC served one further short witness statement from Ms Ho. Mr Ng had ceased working for VSC before the arbitration.
Steel Park Limited is an English company of which Mr Kurtoglu was a director. Steel Park operated a business acting as agent for manufacturers of steel. Mr Kurtoglu gave evidence for Habas in the arbitration. In these proceedings Habas served two further witness statements from Mr Kurtoglu.
Charter Alpha Limited is a Hong Kong company which, like Steel Park, operates a business negotiating contracts for the sale of steel. Relevant personnel at Charter Alpha are Mr Jacky Cheung, and Ms Ada. Neither Mr Cheung nor Ms Ada gave evidence in the arbitration or in these proceedings.
In his first arbitration witness statement Mr Kurtoglu explained the relationship between Charter Alpha and Steel Park as follows:
"[Charter Alpha] source the material all over the world and use the resources of Steel Park Limited when sourcing material from Turkey and the transaction is vice versa; when Steel Park needs to source material from the Far East to Europe, they use Charter Alpha. Steel Park and Charter Alpha mainly bring suppliers and buyers together and take commissions from suppliers. All trade commissions are divided 50/50 in between. Charter Alpha follows up and liaises with Buyer in Hong Kong and forwards them to Steel Park and Steel Park follows up and liaises with Seller, and vice versa."
Negotiations for the VSC contract began at the end of October 2009. The chain of communications adhered to during the negotiations involved Habas communicating with Steel Park, Steel Park communicating with Charter Alpha and Charter Alpha communicating with VSC, and vice versa. Habas did not communicate directly with Charter Alpha or with VSC and Steel Park did not communicate directly with VSC.
On 28 October 2009, at 12:21 Hong Kong time, Mr Kurtoglu of Steel Park sent Mr Jacky Cheung of Charter Alpha an email stating that Habas wanted to confirm an order by VSC for 15,000 mt steel as follows: "Habas wants to confirm 15000 order vsc … just over 477 … incl. Our commissions. Pls advise urgently. … a. +/-50mm b. Unconfirmed lc c. Shipment not earlier then 15th Jan".
On 28 October 2009, at 16:08 Hong Kong time, Mr Jacky Cheung of Charter Alpha sent Mr Tse of VSC, copied to Ms Ivy Ho and Mr Ng of VSC, an email setting out the main terms of the proposed contract, subject to contract, stating: "On behalf of Habas, plsd to confirm having sold 15,000 mt (+/-5 pct) debars … for shipment not earlier than Jan 15, 2010 … Otherwise, subject mutually agreed terms and conditions".
On 29 October 2009, at 11:01 Hong Kong time, Mr Tse replied by email to Mr Cheung, copied to Ms Ho and Mr Ng stating: "We confirm accept USD478/mt … CFR FO CQD Hong Kong for 15,000 mt (+/-5 pct) … We will send the Contract Draft for you and the mill's perusal … The L/C will be issued within 1 week after contract being signed by both parties". Mr Tse then set out some initial comments from VSC on the proposed terms set out in Mr Cheung's email of 28 October at 16:08 and said that VSC would prepare a draft contract for the "perusal" of Mr Cheung and "the mill" (Habas).
On 29 October 2009, at 12:02 Hong Kong time, Mr Cheung replied by email to Mr Tse, copied to Ms Ho and Mr Ng saying, inter alia: "By the way, ctr draft to be establish by SteelPark, Uk who is my associate and will tender Habas' letter confirming her official agent status. LC will be opened direct to Habas' designated advising bank … ctr will be made from this end and will tender draft soonest". Habas emphasises the fact that Mr Cheung thereby informed VSC that the contract would be drafted by Steel Park.
On 29 October 2009, at 12:38 Hong Kong time, Ms Ho emailed Mr Cheung, stating: "As discussion over the phone just now, we both agreed below 15000 mt order ship out time at 15 Jan — 10 Feb 2010 (guarantee arrival HK after Chinese New Years Holidays, aiming end Feb/early Mar). We will waiting for your contract draft and Agents letter soon".
On 29 October 2009, at 15:30 Hong Kong time, Mr Cheung sent a first draft of the contract to Ms Ho and Mr Tse of VSC, copied to Mr Ng "for your study and comments". The draft contract contained a Chinese arbitration clause and provided:
"VSC Steel Company Limited/Hong Kong as Buyers, herewith confirm having purchased and Steel Park Limited, herewith acting as agents on behalf of [Habas] as Sellers herewith confirm having sold the following material at the terms and conditions indicated hereafter:
… Steel Park Limited is merely acting as agent for [Habas], therefore quality claims, if any, should be directed to seller ([Habas])."
On 29 October 2009, at 18:27 Hong Kong time, Mr Ng responded by email to Charter Alpha (attention Mr Cheung, Ms Ada), copied to Ms Ho and Mr Tse, setting out VSC's detailed comments on the draft contract, including proposing that there be Hong Kong governing law and Hong Kong arbitration clauses. Mr Ng enclosed a soft copy draft contract containing the terms that VSC was prepared to accept (including Hong Kong law and arbitration) and expressed to be made between VSC and Habas, with signature boxes for those two parties. Mr Ng asked Charter Alpha to clarify whether Habas would sign the contract as seller or whether Steel Park would sign as...
To continue reading
Request your trial
- Thai-Lao Lignite Company Ltd and Another v Government of The Lao People’s Democratic Republic
-
Integral Petroleum S.A. v Scu-Finanz AG
...to express a concluded view on the first point, although it gains support from the analysis of Hamblen J in Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSL Steel Co Ltd [2013] EWHC 4071 (Comm) at [122] to [130]. However, I accept the second of Mr Collins' points on the application ......
-
National Iranian Oil Company v Crescent Petroleum Company International Ltd
...Hizmetleri AS v Delkor UK Ltd [2013] 1 Lloyd's Rep 254, Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2014] 1 Lloyd's Rep 479, Konkola Copper Mines plc v U&M Mining Zambia Ltd [2014] EWHC 2210 (Comm), C v D1 [2015] EWHC 2126 (Comm), A v B [2017] 1 Lloyd's Rep 1......
-
Kabab-Ji S.A.L. (Lebanon) v Kout Food Group (Kuwait)
...from the authorities, culminating in Sulamerica and Arsanovia, at [101] of the judgment of Hamblen J (as he then was) in Habas Sinai v VSC Steel Company Limited [2013] EWHC 4071 (Comm): “(4) Where the matrix contract contains an express choice of law, this is a strong indication or pointer......
-
THE LAW GOVERNING ARBITRATION AGREEMENTS: BCY V BCZ AND BEYOND
...law, this article takes the view that C v D should be rationalised as a case relating to the third stage of analysis instead. 41[2013] EWHC 4071 (Comm). 42Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd[2013] EWHC 4071 (Comm) at [101]. 43FirstLink Investments Corp Ltd ......