Lavender Shipmanagement Inc. v Ibrahima Sory Affretement Trading S.A.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Calver |
| Judgment Date | 16 December 2020 |
| Neutral Citation | [2020] EWHC 3462 (Comm) |
| Date | 16 December 2020 |
| Docket Number | Case No: CL-2020-000273 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 3462 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Justice Calver
Case No: CL-2020-000273
Karen Maxwell (instructed by Jackson Parton) for the Claimant
Tom Nixon (instructed by Roose & Partners) for the Defendants
Hearing date: 27 th November 2020
Approved Judgment
This case raises issues concerning sections 67 and 69 of the Arbitration Act 1996. It first concerns the application of the Claimant (the “Owners”) pursuant to section 67 of the Arbitration Act 1996 (“1996 Act”) for an order setting aside a London arbitral tribunal's final award on jurisdiction dated 2 March 2020, by which it held that it had substantive jurisdiction to hear the parties' dispute (the “Award”).
If that application is dismissed, then the Owners seek permission to appeal against the ruling on time bar contained in paragraph C of the Tribunal's Award pursuant to section 69 of the 1996 Act. They maintain that this ruling was on a question of law, is obviously wrong and that it is just and proper in all the circumstances for the court to determine the question.
Background Facts
I can take the background facts to the case from the helpful summary contained in the Award, and they are as follows.
In October 2017 the vessel Majesty carried a cargo of bagged rice from Yangon in Myanmar to Conakry in Guinea. The cargo was carried pursuant to a voyage charterparty and under five bills of lading. On arrival in Conakry, the cargo was alleged by the cargo Claimants to be short, damaged and wet, with torn bags and a small quantity allegedly lost overboard on the voyage.
The cargo Claimants (including initially the charterer of the vessel, the second Defendant in these proceedings) commenced arbitration proceedings in London against the Owners. They appointed Mark Hamsher as their arbitrator. The Owners appointed Jonathan Elvey as their arbitrator. When they found themselves unable to agree, the arbitrators appointed Christopher Moss as the third arbitrator. Prior to the appointment of Christopher Moss, the parties had expressly agreed that he should be a third arbitrator and not an umpire.
The Owners challenged the Tribunal's jurisdiction. The parties agreed that the Tribunal would make a ruling on its own jurisdiction as a preliminary issue. The Tribunal duly did so and found by a majority (with Mr. Elvey dissenting) that it did have jurisdiction.
The events after discharge
The vessel arrived at Conakry on 15 October 2017 and berthed on 29 October. A survey firm called JLB Expertises acting on behalf of the cargo Claimants arrived that day and monitored discharge in Conakry until it finished on 16 November. They inspected the cargo, the discharge operation and the sorting of the cargo thereafter. They recorded their findings in an undated survey report (although it appears it was issued at some point after 27 November 2017). They classified their findings by types of damage – shortage, torn bags, mouldy/caked cargo, and so on. They did not do so by bill of lading numbers or cargo quantities carried pursuant to each bill. Their assessment of the financial claims, by reference to loss and depreciation, was the global sum of USD$165,208.96. It is that figure which the cargo Claimants claimed in the arbitration.
The Owners also retained local surveyors to attend discharge at Conakry. Their report was issued on 15 January 2018. They also noted loss, shortage and damage. They too did not classify their findings by bill of lading numbers or cargo quantities.
The contracts of carriage and the LOU
The bills of lading
Five bills of lading were issued for the voyage between August and September 2017. The five bills of lading covered the total quantity of cargo carried by the Majesty – a cargo of 25,000mt of bagged long grain white rice, made up of 500,000 bags of 50kg each. Each bill of lading recorded the shipment of a different quantity of cargo. The bills of lading contained the conditions of carriage which included at clause (1) the following wording:
“ All terms and conditions, liberties and exceptions of the Charter Party dated as overleaf, including the Law and arbitration clause are hereby incorporated.”
The Charterparty
The charterparty was a voyage charterparty on the Synacomex 90 Form with additions and amendments. It was dated 13 June 2017 and was made between the Owners and, as charterers, the Second Defendant. The clauses of the charterparty dealing with law and jurisdiction were clauses 17, 38, 43 and 69:
Clause 17 : This is a printed clause in the Synacomex form referring disputes to arbitration in Paris. It has been deleted and replaced by the words “See Clauses 38 & 43”.
Clause 38 – BIMCO standard law and arbitration Clause 2009
BIMCO Standard Law and Arbitration Clause 2009 to apply – English Law, London arbitration.
Clause 43 — arbitration
General Average/Arbitration in London and English Law to apply.
Clause 69
This contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this contract shall be referred to arbitration in London in accordance with the arbitration act 1996 or any statutory modification or re-enactment thereof …
The arbitration shall be conducted in accordance with the London maritime arbitrators association (LMAA) terms current at the time when the arbitration proceedings are commenced. The reference shall be to two arbitrators.
A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice.
If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly.
The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
If two arbitrators properly appointed by both arbitrators shall not agree they shall appoint an umpire whose decision shall be final.
In cases where neither the claim nor any counterclaim exceeds the sum of USD$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA small claims procedure current at the time when the arbitration proceedings are commenced.
Clause 69 is slightly different to the standard BIMCO clause referred to in Clause 38, but it was common ground between the parties before the Tribunal (and before this court) that Clause 69 was the applicable arbitration agreement that governed each bill of lading.
The Letter of Undertaking
Following discharge of the cargo, the parties discussed the provision of a letter of undertaking to the cargo Claimants to afford them security for their claims. A letter of undertaking was issued on 5 April 2018 (“the LOU”). It was issued by ETIC SAS (“ETIC”), on behalf of the Owner's Club, the London P&I Club (the “Club”).
There were, in fact, two letters of undertaking issued with one superseding the other. The first, which is termed Temporary Guarantee No 17–091, was issued on 14 November 2017 during discharge operations (“the Temporary LOU”). This was before any claims had been formulated or advanced, and before the issue of the survey report, although necessarily after the cargo Claimants recognised that they had a claim against Owners. The second LOU, termed Guarantee No 17–091, was issued some 5 1/2 months later on 5 April 2018. Its terms are materially identical to those of the Temporary LOU; only the sum secured has been amended from USD$365,270 down to USD$280,000. It follows that the parties always envisaged that the claims under the bills of lading, when aggregated, were likely to well exceed the small claims limit of USD$100,000. It is also apparent (see paragraphs 7 and 8 above) that from the outset, the loss was treated by the surveyors as the loss of one indivisible cargo of rice, rather than by individual bill of lading, hence the issuing of one LOU covering the entire cargo.
The LOU was addressed to the company which is now the first defendant in these proceedings, “ as receivers with title to sue and their subrogated underwriters”. It was not addressed to the second defendant-charterer, although it was stated to be:
“ IN CONSIDERATION OF the Owners of and other parties entitled to sue in respect of the above mentioned claims concerning the cargo referred to above (hereinafter together referred to as the “cargo owners”) refraining from taking action …”.
The heading of the LOU is important as it contains its subject matter. It reads as follows:
“Vessel: M/V “MAJESTY”
Port/date: Yangon/Conakry on 30/10/2017
Cargo: 25,000 MT of bagged rice
Bills of Lading: [all 5 bills of lading are listed by number]
Nature of Claim: Alleged loss, shortage and/or damage to cargo.”
The LOU then reads...
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