Ispat Indurstries Ltd (Claimant (Respondent Charterer in Arbitration)) v Western Bulk PTE Ltd (Defendant (Claimant Owner in Arbitration))
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE TEARE,Mr. Justice Teare |
| Judgment Date | 31 January 2011 |
| Neutral Citation | [2011] EWHC 93 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2010 FOLIO 405 |
| Date | 31 January 2011 |
[2011] EWHC 93 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: 2010 FOLIO 405
Nigel Cooper QC and Ravi Aswani (instructed by Swinnerton Moore) for the Claimant
Julian Kenny (instructed by Ince & Co.) for the Defendant
Hearing dates: 20 January 2011
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 Teare:
This is an application by the Claimant, who was the Charterer of the vessel SABRINA 1, challenging the award of arbitrators on the ground of serious irregularity pursuant to section 68 of the Arbitration Act 1996 and appealing against the same award pursuant to section 69 of the Arbitration Act 1996, leave to appeal having previously been granted.
The claim and counterclaim before the arbitrators
SABRINA 1 was chartered by her Owner to the Charterer pursuant to the terms of a fixture recap dated 21 December 2007 which provided as follows:
2. Delivery DOP [Dropping outward pilot] Chennai ……
3. Laycan: 0001 31/12/2007 – 5/1/2008
4. For one time charter trip via SPS [Safe ports], SBS [Safe berths], SAS [Safe anchorages] ALW W/I IWL [Always within Institute Warranty Limits] and always in lawful trade of duration about 12/15 days WOG [Without guarantee]
5. Cargo Intention: Calibrated/lumpy iron ore/iron ore pellets/Iron ore fines/Quartzite ore minerals in bulk.
6. Redelivery DOP Mumbai ……
25. OWISE PER WBC/ISPAT last performed CP based on Owners BTB [back to back] with logical amendments and mainterms as fixed.
The parties' last performed charterparty was on the New York Produce Exchange Form for a time charter trip. The standard terms (as amended) provided that the vessel was to be employed in carrying lawful merchandise (line 36) with certain exclusions and that the master would be under the orders and directions of the Charterers as regards employment and agency (clause 8). Clause 16 provided that "the act of ……enemies always mutually excepted". The rider clauses included clause 36 which provided that
"the vessel shall be employed for one time charter trip from Vizag to Mumbai lawfully trading between safe port(s), safe berth(s) and safe anchorages ………."
On 24 December 2007 the Charterer sent voyage instructions to the Master which read in part as follows:
"LAYCAN: 31 st December '07 to 5 th January 2008
Delivery: DOP Chennai …….
Redelivery: DLOSP Mumbai …..
Load Port: Visakhapatnam (Vizag)
Disport: Mumbai….
Intended cargo: Iron Ore…"
On 26 December 2007 the Charterer informed the Owner that:
"……due to Maoist and Naxai Insurgency in Orissa and Andhra Pradesh our cargo movement to the port of Vizag has been seriously affected. Consequently there will be no more cargo available by the time MV Sabrina 1 arrive at Vizag.
View above due to circumstances beyond our control we regretfully have to cancel the above noted fixture."
On 27 December 2007 the Owner replied:
"We have read Chrtrs msg cancelling our fixture and accept their repudiatory breach of our fixture. We are now looking for alternative employment for vsl upon completion present business.
We have looked at current market and only gainful employment we can see is in South America. So in order to mitigate our claim for damages for whole Ispat TC earnings we have to ballast to South America and hopefully find a profitable fixture there. Obviously chrts obliged to cover our ballasting costs but we expect to find ok fixture there so such a trip is best way to mitigate. We shall let you know as soon as vsl fixed for next business."
The vessel was not refixed until 15 January 2008. The Owner therefore claimed damages of US$802,725 being the hire which would have been earned on the 12 day time charter trip agreed with the Charterer.
On 12 November 2008 the Owner obtained a Rule B attachment in New York as a result of which sums totalling US$945,282 were attached. The attachment was vacated on the application of the Charterer and the funds were released. But on 29 December 2008 the funds were again attached and on a further application by the Charterer the second order was vacated. The judge granting the second vacation declared herself "awestruck" by the Owner's conduct. In the arbitration the Charterer counterclaimed a sum in excess of US$1m. representing the attached sums.
The arbitrators' decision
After written submissions had been exchanged a hearing took place on 20 and 21 January 2010 at which the Owner and Charterer were represented by solicitors and counsel. The arbitrators published their award on 5 March 2010. A majority of the arbitrators (Mr. Simon Gault and Mr. Timothy Marshall) held that the Owner's claim succeeded in the sum of US$802,725 and dismissed the Charterer's counterclaim. The reasoning of the tribunal was that the charterparty was a time charter and so, although the intended cargo was not available at Vizag because of "enemy activity" within clause 16 of the NYPE form, the Charterer was obliged to find an alternative lawful cargo. The Charterer had made no attempt to do so but had simply cancelled the charterparty. In any event a cargo of iron ore was available at Vizag after 7 January 2008. The majority further held that there had been no unreasonable failure to mitigate the Owner's loss and so awarded damages equal to the hire which would have been paid for the estimated duration of the charterparty. The tribunal dismissed the counterclaim on the grounds that neither the first nor second attachment proceedings in New York were a breach of the arbitration clause in the charterparty. The dissenting arbitrator (Mr. Abid Bilgrami) would have dismissed the Owner's claim on the ground that the Owner had failed to mitigate its losses.
The disagreement between the arbitrators concerned the evidence of a Mr. Heward, who had been called by the Owner as a witness on the question of mitigation and had been cross-examined. The dissenting arbitrator considered that Mr. Heward's evidence was in some respects untrue and unreliable. By contrast, as accepted by Mr. Nigel Cooper QC, counsel for the Charterer, the majority accepted Mr. Heward's evidence. The majority recounted his evidence in detail between paragraphs 56 and 70 of their Reasons and summarised the Charterer's challenge to this evidence between paragraphs 84 and 91. The majority considered the disputed question of mitigation between paragraphs 108 and 125 and concluded that the Owner had not acted unreasonably in mitigating its loss.
The Charterer's challenge pursuant to section 68
Having lost the arbitration the Charterer has sought to challenge the award on the grounds of several "serious irregularities". No less than 8 such irregularities were alleged in the Arbitration Claim Form and developed in counsel's skeleton argument. Whilst Mr. Cooper formally maintained all of these allegations he recognised that some could not be maintained (for example, those which suggested that the tribunal had failed to give appropriate weight to certain evidence) but invited the court to bear all the allegations in mind when considering those complaints which were seriously maintained.
Mitigation
The Charterer said that the tribunal's approach to the question of mitigation was flawed. In his oral submissions Mr. Cooper identified the serious irregularity relied upon as being a failure to address the concerns raised by the dissenting arbitrator as to the reliability of Mr. Heward's evidence.
This alleged serious irregularity was said to be within section 68(2)(a), namely, a failure by the tribunal to comply with its duty under section 33 to act fairly, and within section 68(2)(d), namely, a failure by the tribunal to deal with all the issues that were put to it.
Mr. Kenny, counsel for the Owner, referred me to Fidelity Management SA v Myriad International Holdings BV [2005] 2 Lloyd's Reports 508 in which Morison J. agreed with Colman J. in World Trade Corp. v Czarnikow Sugar [2005] 1 Lloyd's Reports 422 that arbitrators did not have to deal with every argument on every point raised but only with essential issues and that section 68(2)(d) was confined in its application to essential issues as distinct from the reasons for determining them. Morison J. added however that the duty of the court was to apply the clear wording of section 68 without any judicial gloss, in the light of the scheme of the Act and its legislative purpose. I respectfully agree with the statement by Morison J. as to the court's duty but also regard Colman J.'s comments as helpful guidance as to the ambit of section 68(2)(d). To the same effect is the guidance of Christopher Clarke J. in Van der Giessen-de-Noord v Imtech Marine [2009] 1 Lloyd's Reports 273 at paragraph and 14:
"It is likely to be a serious irregularity under section 68 for the tribunal to fail to deal with all essential issues. But it may do so concisely. A failure to deal with an issue is not the same as a failure to set out the reasoning for rejecting a particular argument. Such a failure is remediable under section 70(4)."
The reference by Christopher Clarke J. to section 70(4) explains why, in applying section 68(2)(d), the court has distinguished between dealing with an issue and setting out the reasons for the tribunal's decision. Under section 70(4) a party who has made an application under sections 67, 68 or 69 may, where the award does not contain the tribunal's reasons or not in sufficient detail to enable...
To continue reading
Request your trial
-
SBT Star Bulk & Tankers (Germany) GmbH & Company KG v Cosmotrade SA (m/v Wehr Trave)
...The following cases were referred to in the judgment: Ispat Industries Ltd v Western Bulk Pte Ltd (The Sabrina 1)UNK [2011] EWHC 93 (Comm). Martrade Shipping & Transport GmbH v United Enterprises Corp (The Wisdom C)UNK [2014] EWHC 1884 (Comm); [2014] 1 CLC 985; [2015] 1 WLR 1. Ocean Tramp T......
-
Mr Rustem Magdeev v Mr Dmitry Tsvetkov
...including Ultisol Transport Contractors Ltd v Bouygues SA [1996] 2 Lloyd's Rep 153and Ispat Industries Ltd v Western Bulk Pte Ltd [2011] EWHC 93 (Comm). 397 This is submitted to be an analogous case. It is submitted that the expert evidence is that UAE law prevents English law protective m......
-
CONTRACT LAW IN COMMONWEALTH COUNTRIES: UNIFORMITY OR DIVERGENCE?
...at [48]; The Sylvia [2010] EWHC 542 (Comm); [2010] 2 Lloyd's Rep 81 at [40]–[48]; Ispat Indurstries Ltd v Western Bulk Pte Ltd [2011] EWHC 93 (Comm) at [53]; and Jayesh Shah, Shaleetha Mahabeer v HSBC Private Bank (UK) Ltd [2012] EWHC 1283 (QB) at [232]. Cf Nicholas G Jones v Environcom Ltd......