Lisnave Estaleiros Navais Sa v Chemikalien Seetransport Gmbh
| Jurisdiction | England & Wales |
| Judge | Mr C Edelman QC |
| Judgment Date | 27 February 2013 |
| Neutral Citation | [2013] EWHC 338 (Comm) |
| Docket Number | Case No: 2012 Folio 1014 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 February 2013 |
[2013] EWHC 338 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Colin Edelman QC
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Case No: 2012 Folio 1014
John Lockey QC (instructed by Vincent French & Browne) for the Claimant
Christopher Smith (instructed by Fleet Hamburg LLP) for the Defendant
Hearing date: 19th February 2013
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.
The application
This is an application by the Claimant ("Lisnave") under section 67(1)(a) of the Arbitration Act 1996 to set aside a First Interim Final Award dated 10 July 2012 ("the Award") in which the majority arbitrators (Messrs Bruce Buchan and Edward Mocatta) upheld the case of the Defendant ("CST") that the Tribunal had substantive jurisdiction over the claim which CST brought against Lisnave in purported arbitration proceedings under the terms of a written Ship Repair Fleet Agreement dated 11 September 2007 ("the Fleet Agreement"). The dissenting arbitrator, Mr Simon Crookenden QC, would have held that the Tribunal lacked jurisdiction.
The application is supported by the witness statement of Mr McKenzie of Lisnave's solicitors, to which there was a response from Ms Bandara of CST's lawyers.
The Issue
The issue is whether the Fleet Agreement incorporates the arbitration clause in Lisnave's General Conditions of Contract for Dry Docking, Conversion, Maintenance and Repair of Vessels and Off-shore Units ("the General Conditions"), notwithstanding the absence of any reference within it to the General Conditions.
The facts
The evidence before the Court is the same as the evidence before the Tribunal (with the exception of the few additional documents exhibited by Ms Bandara). The only evidence relied on by either party for the purposes of the hearing before me was documentary.
Lisnave is a company incorporated in Portugal where it also has its principal place of business and its central administration. Lisnave operates a commercial shipyard at Setubal in Portugal where it repairs ships. CST is a ship management company incorporated in Germany with its principal place of business at Mattentweite 1 D-20457 Hamburg. It does not own any ships.
The Fleet Agreement was concluded in September 2007 between Lisnave and CST. The Fleet Agreement was concluded after Lisnave had carried out repair work on vessels managed by CST pursuant to somewhere between 8 and 12 individual ship repair contracts concluded between Lisnave and the relevant individual shipowning company (and not CST). It is common ground that those individual ship repair contracts incorporated the General Conditions.
Some of the documents relating to one such prior transaction in 2005, concerning the repairs to the vessel Maersk Rouen owned by Luke Investment Inc Corp ("Luke") and managed by CST, were included in the bundle of documents for the hearing before me. This transaction was treated as having been typical of the course of trading. Although the contract terms were negotiated on Luke's behalf by CST, the relevant contract was concluded between Luke as shipowner and Lisnave. The invitation to tender issued to Lisnave was issued by CST on behalf of Luke. Lisnave's tender of 5 September 2005 was addressed "Please Pass to Owners". Lisnave's acknowledgement of receipt of the award of the contract for the repairs was also addressed to Luke. Lisnave's invoice was duly issued to Luke on 20 November 2005.
Lisnave's tender of 5 September 2005 specifically referred to the General Conditions ("subject to our Comments, Conditions and Notes…" ; "Acceptance of order is subject to… Yard's General Conditions for Construction, Conversion or Maintenance and Repair Work").
The General Conditions set out the detailed conditions to apply to "all contracts for the drydocking, conversion, maintenance, repair and/or other work … which [Lisnave] carries out or causes to be carried out on or for" the specific Vessel, unless otherwise agreed (see Article 1.1).
The General Conditions then set out detailed provisions regarding the scope and performance of the contract work (Article 2), including provisions relating to the use of sub-contractors (Article 2.5) and authority to agree variations to the contract work (Article 2.6). Article 3 contains detailed provisions concerning delivery and re-delivery of the subject Vessel, including a force majeure provision (Article 3.7). Article 4 regulates drydocking. Article 5 deals with title to spare parts and surplus materials. Article 6 deals with authority to require movement of the Vessel (Article 6.1) and tests and trials (Article 6.2–6.4). Article 7 deals with the pricing for contract works, and Article 8 deals with payment (including provision for a lien at Article 8.3). Article 9 deals with guarantee work (i.e. work required to remedy any defect in the repair work carried out by Lisnave). Article 10 contains limitation provisions restricting Lisnave's liability. Article 11 regulates the cancellation and termination of the contract work. Article 12 sets out the requirements for Lisnave to carry shiprepairers' liability insurance (Article 12.1) and for Owners to maintain Hull and Machinery and Protection and Indemnity insurance and full coverage for any liability to Lisnave (Article 12.2). Article 13 deals with responsibility for safety and pollution whilst the Vessel is at Lisnave's yard. Article 14 deals with communications and notices. Article 15 deals with arbitration and legal proceedings. In addition to including a provision for London arbitration (Article 15.2), Article 15 also includes a provision which permits Lisnave to institute legal proceedings in any court of competent jurisdiction where the Vessel, or sister Vessel, may be found or where the customer may have assets or legal representation (Article 15.5).
The Fleet Agreement was to apply for a period of 12 months from 1 October 2007, renewable on an annual basis thereafter. It was duly renewed until it expired on 30 September 2012. By the Fleet Agreement, CST and Lisnave agreed certain commercial terms to apply in the future to dry-docking and repairs to CST's managed fleet. In particular, the Fleet Agreement set out terms relating to additional work, penalty/bonus payments for late or early completion, an invoice price discount, and a fleet rebate. The Fleet Agreement did not itself provide for any dry-docking or repair work to be carried out.
Following the Fleet Agreement, 12 individual ship repair contracts were concluded for repairs at Lisnave's yard. As with the prior practice, the relevant contracting parties were the individual shipowning companies (not CST) and Lisnave. The individual ship repair contracts also incorporated the General Conditions.
The Fleet Agreement provided, in Clause J, for certain Fleet Rebates to be paid by Lisnave. The dispute which CST has sought to refer to arbitration is a claim by CST for Fleet Rebate said to be due under the Fleet Agreement in respect of the years October 2007/September 2008, October 2008/September 2009 and October 2009/September 2010.
Whilst the Fleet Agreement as drawn up did not itself contain an express arbitration agreement, CST's case is and was before the arbitrators that the arbitration agreement contained in Article 15.2 of the General Conditions was incorporated into the Fleet Agreement by virtue of the parties' prior course of dealing and/or because it was the clear intention of the parties that the Fleet Agreement was to be subject to Article 15.2 of the General Conditions.
The terms of the Fleet Agreement and the Arbitration Agreement
The Fleet Agreement provided as follows:
"This agreement is made on 11th September 2007
Between:
Lisnave…
And
Chemikalien Seetransport GMBH
(hereinafter referred to as the "Owners")
B. Pricing
Dry-docking and repairs to the Owner's fleet of vessels will be carried out under the terms of this Agreement, and the Prices, Terms, and Conditions quoted for individual vessels as may be requested by the Owners.
C. Additional Work
Prices for additional work will be processed within 24 hours after receipt of request from Owners Representative.
D. Delivery
The Yard will quote the delivery time based on two shift working (Monday-Friday) and week-end working as required to meet vessel's commitments.
E. Penalty/Bonus
The Yard will accept a Penalty Clause for late delivery for work not completed by the agreed delivery time. The daily rate of Penalty shall be agreed on a vessel by vessel basis.
F. Payment terms
Total agreed invoice amount to be paid as follows:
- Forty (40) pct upon completion of repairs.
- Thirty (30) pct within 30 days after completion of repairs.
- Balance within 60 days after completion of repairs.
G. Organisation & Planning
The Yard will appoint an exclusive Project Management Team for the Management of the repair contract on each and all of the Owners' vessels.
…The Owners will provide the yard with a schedule of the vessels due for repairs during the period of this Agreement…
H. Service Engineers and Subcontractors
…Owners' subcontractors will be permitted to work on board vessel subject to mutual agreement on a case by case basis.
I. Vessel Discount
A discount will be applied to the Final Agreed Invoice Value for each vessel as follows:
Final Agreed invoice value
Discount
Below €500,000
Nil
€500,000 to €1,000,000
Three (3) percent
Over €1,000,000
Five (5) percent
J. Fleet Rebate
In addition to the Vessel Discount, the Yard will grant proportionately to each vessel on...
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