Halki Shipping Corporation v Sopex Oils Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeHirst,Henry,Swinton Thomas L JJ
Judgment Date19 December 1998
Date19 December 1998

Court of Appeal (Civil Division).

Hirst, Henry and Swinton Thomas L JJ.

Halki Shipping Corp
and
Sopex Oils Ltd

Nicholas Hamblen QC (instructed by Dorman & Co) for the appellants.

R B Waller (instructed by Clifford Chance) for the respondents.

The following cases were referred to in the judgments:

Acada Chemicals Ltd v Empresa Nacional Pesquera SAUNK [1994] 1 Ll Rep 428.

Channel Tunnel Group Ltd v Balfour Beatty Construction LtdELR [1993] AC 334.

Eagle Star Insurance Co Ltd v Yuval Insurance Co LtdUNK [1978] 1 Ll Rep 357.

Ellerine Bros (Pty) Ltd v KlingerWLR [1982] 1 WLR 1375.

Ellis Mechanical Services Ltd v Wates Construction LtdUNK [1978] 1 Ll Rep 33n.

Ever Splendor, TheUNK [1988] 1 Ll Rep 245.

Fuohsan Maru, TheUNK [1978] 1 Ll Rep 24.

Hayter v NelsonUNK [1990] 2 Ll Rep 265.

Hume v AA Mutual International Insurance Co Ltd [1996] LRLR 19.

Jacobs v London City CouncilELR [1950] AC 361.

John C Helmsing, TheUNK [1990] 2 Ll Rep 290.

Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbHWLR [1977] 1 WLR 713.

SL Sethia Liners Ltd v State Trading Corp of India LtdWLR [1985] 1 WLR 1398.

Tradax Internacional SA v Cerrahogullari TAS (“The M Eregli”)UNK [1981] 3 All ER 344.

Shipping — Arbitration — Stay of proceedings — Summary judgment — Charterparty referred disputes to arbitration — Plaintiff shipowner sought summary judgment for liquidated damages for demurrage on the basis that there was no arguable defence — Defendant charterer sought stay of proceedings — Whether “dispute” excluded defence which had no real substance — Rules of the Supreme Court, 0. 14 — Arbitration Act 1996, s. 9.

This was an appeal by shipowners from a decision of Clarke J ([1997] 1 WLR 1268) staying proceedings against charterers under s. 9(1) of the Arbitration Act 1996 on the basis that the proceedings were brought in respect of a matter which was to be referred to arbitration under the agreement between the parties.

The plaintiff shipowner's case was that the defendant charterer failed to load and discharge the vessel within the lay time provided for by the charterparty. The shipowner claimed demurrage in the sum of US$517,473.96 and sought summary judgment for that sum under 0. 14 as liquidated damages for breach of the charterparty. The defendant did not admit liability. The charterparty provided for any dispute arising from or in connection with the charterparty to be referred to arbitration in London.

The shipowner relied on the practice under the Arbitration Act 1975 of hearing the application for a stay together with the application for summary judgment, as the two sides of the same coin, and argued (citing Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbHWLR [1977] 1 WLR 713) that there was in fact no dispute to be referred to arbitration because dispute in the arbitration agreement meant real or genuine dispute and excluded claims to which there was no arguable defence.

The charterer argued that the 1996 Act had changed the law because the words in s. 1 of the 1975 Act providing for the court to stay proceeding “unless satisfied that there was not in fact any dispute between the parties with regard to the matter agreed to be referred” (“the 1975 qualification”) did not appear in s. 9 of the 1996 Act. With that omission went authorities based on those words, such as Nova (Jersey) Knit. The charterer did not admit liability and there was thus a dispute within the arbitration clause. Ellerine Bros (Pty) Ltd v KlingerWLR[1982] 1 WLR 1375andHayter v NelsonUNK[1990] 2 Ll Rep 265were authority for the proposition that dispute in the clause was not restricted to disputes where the court was satisfied that there was something disputable between the parties.

Clarke J held that the 1996 Act had effected a change in the law. Short of any admission by the charterer, there remained a dispute between the parties which they had agreed to refer to arbitration even if the charterer had no arguable defence to all or part of the claim. Therefore the charterer was entitled to a stay under s. 9 of the 1996 Act and there was no scope for an 0. 14 judgment in the plaintiff's favour. The plaintiff appealed.

Held, dismissing the appeal, by a majority (Hirst LJ dissenting):

1. (Per Henry and Swinton Thomas L JJ) There was a dispute within the meaning of the arbitration clause in the charterparty when the charterers refused to admit and refused to pay the amount claim. The meaning of the word “dispute” in an arbitration clause was not restricted to disputes which could not be resolved by the court under 0. 14. The cases relied on by the plaintiff to the opposite effect resulted from the particular interpretation that the courts had placed on the words “in fact any dispute” in s. 1 of the 1975 Act and its predecessors which did not appear in s. 9 of the 1996 Act. The fact that those words were not re-enacted in the 1996 Act had changed the law. Those words were the source of the court's jurisdiction to grant summary judgment and their omission excluded the 0. 14 jurisdiction. With the omission of those words went the authorities founded on them. Clarke J had been right to stay the proceedings on the basis that there was a dispute and the court was not to inquire whether there was “in fact” a dispute. ( Ellerine Bros (Pty) Ltd v KlingerWLR [1982] 1 WLR 1375 and Hayter v NelsonUNK [1990] 2 Ll Rep 265 approved; Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbHWLR[1977] 1 WLR 713distinguished.)

2. (Per Hirst LJ dissenting) There was binding authority to the effect that the word “dispute” in an arbitration clause did not include a defence which had no real substance, and Parliament in enacting s. 9 without the 1975 qualification had not effected an abolition of the existing 0. 14 practice. ( Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbHWLR [1977] 1 WLR 713 considered.)

JUDGMENT

Hirst LJ:

Introduction

This case raises an important question under s. 9 of the Arbitration Act 1996, namely whether it is still open to a plaintiff to bring 0. 14 proceedings to enforce a claim to which the defendant has no arguable defence, where the claim arises under a contract which contains an arbitration clause.

Section 9 of the Arbitration Act 1996 provides so far as relevant as follows:

Stay of legal proceedings

(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.

(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.”

This section replaced s. 1 of the Arbitration Act 1975 which provided:

“If any party to an arbitration agreement to which this section applies…commences any legal proceedings in any court against any other party to the agreement…in respect of any matter agreed to be referred any party to the proceedings may…apply to the court to stay the proceedings; and the court unless satisfied that…there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.”

Under the 1950 and 1975 Arbitration Acts there was a well established practice that a defendant's application for a stay and a plaintiff's application for summary judgment were heard together, and treated as opposite sides of the same coin.

The usefulness of this practice has frequently been recognised judicially, for example by Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction LtdELR[1993] AC 334 in a speech with which the other members of the appellate committee agreed at p. 356B:

“In recent times, this exception to the mandatory stay has been regarded as the opposite side of the coin to the jurisdiction of the court under RSC, Ord. 14, to give summary judgment in favour of the plaintiff where the defendant has no arguable defence. If the plaintiff to an action which the defendant has applied to stay can show that there is no defence to the claim, the court is enabled at one and the same time to refuse the defendant a stay and to give final judgment for the plaintiff. This jurisdiction, unique so far as I am aware to the law of England, has proved to be very useful in practice, especially in times when interest rates are high, for protecting creditors with valid claims from being forced into an unfavourable settlement by the prospect that they will have to wait until the end of an arbitration in order to collect their money. I believe however that care should be taken not to confuse a situation in which the defendant disputes the claim on grounds which the plaintiff is very likely indeed to overcome, with the situation in which the defendant is not really raising a dispute at all. It is unnecessary for present purposes to explore the question in depth, since in my opinion the position on the facts of the present case is quite clear, but I would endorse the powerful warnings against encroachment on the parties' agreement to have their commercial differences decided by their chosen tribunals, and on the international policy exemplified in the English legislation that this consent should be honoured by the courts, given by Parker L.J. in Home and Overseas Insurance Co. Ltd. v. Mentor Insurance Co. (U.K.) Ltd.WLR[1990] 1 WLR 153, 158–159, and Saville J. in Hayter v. NelsonUNK[1990] 2 Lloyd's Rep. 265.”

The basis on which this jurisdiction has been exercised is that, in respect of the claim or some part of the claim to which there is no defence, there is no dispute to be referred to arbitration. Thus in one of the leading cases, Eagle Star Insurance Co Ltd v Yuval Insurance Co LtdUNK[1978] 1 Ll Rep 357, Goff LJ stated at p. 362...

To continue reading

Request your trial
92 cases
  • Bankamerica Trust v Trans-World Telecom Holdings
    • Cayman Islands
    • Grand Court
    • 15 March 1999
    ...Bros. (Pty.) Ltd. v. Klinger, [1982] 1 W.L.R. 1375; [1982] 2 All E.R. 737, not followed. (2) Halki Shipping Corp. v. Sopex Oils Ltd., [1998] 1 W.L.R. 726; [1998] 2 All E.R. 23, not followed. (3) Investors” Compensation Scheme Ltd. v. West Bromwich Bldg. Socy., [1998] 1 W.L.R. 896; [1998] 1 ......
  • Salford Estates (No. 2) Ltd v Altomart Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 8 December 2014
    ...its debts as and when they fall due. 20 The Judge referred to Rusant Limited v Traxys Far East Limited [2013] EWHC 4083 (Ch) and Halki Shipping v Sopex Oils [1997] EWCA Civ 3062, [1998] 1 WLR 726. In Rusant Warren J made an order restraining the presentation of a winding up petition based ......
  • Wealands v CLC Contractors Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 22 July 1999
    ...referred to in the judgment of Mance LJ: Chandris v Isbrandtsen-Moller Co IncELR [1951] 1 KB 240. Halki Shipping Corp v Sopex Oils Ltd [1998] CLC 583; [1998] 1 WLR 726. India (President of) v La Pintada Compania Navigacion SAELR [1985] AC 104. Ram Dutt Ramkissendass v E D Sassoon & Co [1929......
  • XPL Engineering Ltd v K & J Townmore Construction Ltd
    • Ireland
    • High Court
    • 11 October 2019
    ...of that amendment was considered by the Court of Appeal of England and Wales in Halki Shipping Corporation v. Sopex Oils Ltd [1998] 1 WLR 726 ( “The Halki”). In The Halki, a majority of the Court of Appeal held that the English 1996 Act had altered the law in that jurisdiction which had pr......
  • Request a trial to view additional results
1 books & journal articles
  • Arbitration - Should courts get involved?
    • Ireland
    • Irish Judicial Studies Journal Nbr. 2-2, July 2002
    • 1 July 2002
    ...and Enforcement of Foreign Arbitral Awards, New York, 10 June 1958. 11Art. 8(1). 12 Halki Shipping Corp. -v- Sopex Oils Ltd. [1998] 1 W.L.R. 726; [1998] 2 All E.R. 13Arbitration Act, 1969, s. 32(1)(b). 14Arbitration Act, 1969, s. 67. 2002] Arbitration 38 B. Serious Irregularity This head, e......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT