Lantic Sugar Ltd and Another v Baffin Investments Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE GROSS,Mr Justice Gross |
| Judgment Date | 18 December 2009 |
| Neutral Citation | [2009] EWHC 3325 (Comm) |
| Docket Number | Case No: 2009 FOLIO 572 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 December 2009 |
[2009] EWHC 3325 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND IN THE MATTER OF AN INTENDED ARBITRATION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Gross
Case No: 2009 FOLIO 572
Ben Olbourne (instructed by Swinnerton Moore) for the Claimants
Yash Kulkarni (instructed by Mays Brown) for the Defendant
Approved Judgment
Hearing dates: 14/9/09
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 Gross :
INTRODUCTION
There are before the Court applications by the First and Second Claimants (“Lantic”, “Copersucar” and “the Claimants”, respectively) for relief as follows:
i) A declaration that arbitration proceedings were commenced on or before the 12 th March, 2009 – and so, in time —in accordance with s.76 of the Arbitration Act 1996 (“the Act”);
ii) If the arbitration proceedings were not commenced in time, an extension of time for their commencement up to the 23 rd March, 2009, or such further date as the Court may permit, pursuant to s.12 of the Act.
The applications have been pursued by Lantic and Copersucar, though, in reality, it may be that they primarily affect the position of Lantic. The Defendant (“Baffin”) opposes both applications.
The factual history is as follows. By a Bill of Lading on the “CONGENBILL” form, dated 19 th November, 2007 (“the Bill of Lading”), Baffin, the owner of the m/v Lake Michigan (“the vessel”), acknowledged receipt of about 32,000 mt of raw cane sugar (“the cargo”) at Santos, Brazil, for carriage to the St. Lawrence River Canada. It is not in dispute that the Bill of Lading incorporated a provision for London arbitration and the Hague/ Hague-Visby Rules.
Copersucar was the shipper and Lantic the consignee, named in the Bill of Lading.
Discharge of the Bill of Lading cargo was completed in Montreal on the 22 nd December, 2007. The Claimants allege that, on discharge, a significant quantity of cargo was found to be damaged – due to rain wetting the cargo during loading and/or as a result of defects in the vessel's hatch covers.
It is common ground that any claims under the Bill of Lading were subject to a 12 month time bar, which would have expired on the 22 nd December, 2008, unless extended.
Pausing there, it is convenient next to describe the contractual and corporate background against which the Bill of Lading shipment took place. In summary, as to the contracts:
i) A contract of affreightment (“the COA”) dated 6 th October, 2004, between Copersucar, as charterers and Fednav International Ltd (“FIL”) as disponent owners, provided for the carriage of about 525,000 mt raw cane sugar in 15 shipments;
ii) The underlying sale contract was a sugar sale and purchase agreement, dated 26 th October, 2004, made between Copersucar, as sellers and Lantic, as buyers.
iii) The vessel came into the picture by way of, first, a time charterparty, dated 7 th December, 2002, between Baffin, as owner and FIL as charterer.
iv) Subsequently, the vessel became a carrying vessel under the COA, by virtue of a voyage charterparty, dated 25 th October, 2007, between FIL as disponent owner and Copersucar, as charterer.
As to corporate matters:
i) Baffin is incorporated in Barbados, where it has its principal and registered office. It has, in addition, registered offices in Hong Kong and the Marshall Islands. In the Marshall Islands it has a registered local agent for receiving service of process, the Trust Company of the Marshall Islands Inc (“TCMI”).
ii) The vessel was managed on behalf of Baffin by Anglo-Eastern Ship Management Ltd, Hong Kong (“Anglo-Eastern”).
iii) At all material times, Baffin was entered in the register of members with the Standard Steamship Owners' Protection and Indemnity Association (Bermuda) Limited (“the Club”).
iv) Both Baffin and FIL were part of the “Fednav Group” of companies (“the Fednav Group”) and were (indirectly) wholly owned subsidiaries of a Canadian company Fednav Limited (“Fednav”).
Returning to the factual history, following the completion of discharge (December 2007), discussions commenced between the parties. The Claimants were represented by a Mr. Behr, a Brazilian lawyer practising in London, at a firm or entity Consultrade. Baffin was represented in these exchanges, principally, by a Mr. Morland of Charles Taylor P&I Management (“Charles Taylor”), on behalf of the Club. These communications extended to the provision of Letters of Undertaking (“LOUs”) by the Club, on behalf of its member/s, as security for the Claimants' claims, settlement negotiations and extensions of time to commence arbitration, granted by the Club on behalf of “owners/carriers”.
Two such extensions of time were granted. For present purposes, the second extension, granted by the Club on the 3 rd February, 2009, is critical. It extended the time for commencing arbitration up to and including the 12 th March, 2009.
I turn to the key points in time. On the 6 th March, 2009, Mr. Behr addressed a “Notice for Arbitration” to FIL and the Club, so far as concerns the latter, for the attention of Mr. Morland (“the 6 th March Notice”). Insofar as material, the 6 th March Notice provided as follows:
“ Re: M/v Lake Michigan CoA dd. 6.10.04, at Montral Dec. 2007, B/L Santos/Montreal 00707LXSTMOBP001. Wet damage to cargo of raw sugar loaded at Santos, Brazil.
Notice for Arbitration
Please be informed that by appointing Mr. William Robertson…, as the first arbitrator on the dispute based upon the captioned CoA, clause 22 and others, and bill of lading 00707LXSTMOBT001 Santos/Montreal against the Disponent Owners.
Please accept this letter-fax as our Notice for Arbitration and invitation for you to appoint the second arbitration, pursuant to 'The LMAA Terms 2006' article 8(a) within fourteen days to be counted from the date of this Notice (unless you are agreeable to maintain Mr. Robertson as the sole arbitrator)…..
For the Claimant: FORTIS CORPORATE INSURANCE NV, subrogated cargo underwriters of the Charterers, COPERSUCAR TRADING AVV.”
In terms of clarity, the 6 th March Notice, with respect, left much to be desired. In the event and as will be seen, the drafting shortcomings in this Notice may matter less than in other circumstances they might have done. For the moment, suffice to say that, as is undisputed, the references to the numbered bill of lading are references to the Bill of Lading.
With regard to the 11 th March, 2009, I need to consider whether there was a telephone conversation between Mr. Behr and Mr. Morland and, if so, what was said. The evidence in this regard is not free from curiosity.
First, the assertion that there was a conversation between Messrs. Behr and Morland on that day emanates from the Baffin “ camp”. Mr. Morland has himself never produced a witness statement. However, in his witness statement dated 15 th May, 2009, Mr. Brown of Mays Brown, Baffin's solicitor, says this:
“On 11 March 2009, Gerson Behr of Consultrade telephoned Eddy Morland of the Club to enquire as to whether he had received the faxed ….[6 th March Notice]…Mr Morland informed Mr. Behr that he was taking instructions on the fax but that, pending express instructions, the Club did not have authority to accept service on behalf of…..[Baffin]….This conversation was referred to in a later email sent by Mr. Morland to Mr. Behr on 12 March 2009…..”
Secondly, Mr. Behr in his witness statement dated 9 th September, 2009, said that he “cannot now remember at all” whether he spoke with Mr. Morland on the telephone on the 11 th March —though the sense of his statement does suggest that there were telephone conversations between him and Mr. Morland over the period 6 th– 12 th March. Mr. Behr said that, in particular, he did not remember Mr. Morland telling him, in any telephone conversation between the 6 th and 12 th March (for the events of that day, see below) that the Club was not authorised to accept service of notice of arbitration on behalf of Baffin; nor did Mr. Behr remember Mr. Morland telling him expressly that the Club did have such authority. Mr. Behr added that he believed it to be “very unlikely” that Mr. Morland did say that the Club did not have authority to accept service on behalf of Baffin. Had Mr. Morland said that, Mr. Behr thought that he would have reacted as he did on the 12 th March (see below). Moreover, given Mr. Morland's authority to deal with the LOUs, settlement negotiations and extensions of time, Mr. Behr says that he had “no reason to believe” that Mr. Morland did not also have authority to accept service of notice of arbitration on behalf of Baffin.
Thirdly, I have regard to the contemporaneous or near-contemporaneous e-mails. On the 12 th March and after the balloon had, so to speak, gone up (see below), Mr. Morland said this in an e-mail to Mr. Behr:
“I had previously told you by telephone that we had received your email attaching the notice of arbitration but that the Club was not able to accept/acknowledge service.”
Later on the same day, Mr. Behr – by now primarily and understandably focussed on seeking to serve the notice of arbitration on Baffin itself – said that he would comment on the contents of Mr. Morland's e-mail “soon”. That, he did not do, directly to Mr. Morland. However, in an e-mail to Anglo-Eastern, dated 15 th March, 2009, Mr. Behr referred in terms to Mr. Morland's 12 th March e-mail, remarking:
“Eddy Morland….declared in writing that he told the undersigned by phone Standard could not be served notice on behalf of owners....
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