Martrade Shipping & Transport GmbH v United Enterprises Corporation: The Wisdom C
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Popplewell |
| Judgment Date | 12 June 2014 |
| Neutral Citation | [2014] EWHC 1884 (Comm) |
| Docket Number | 2013 Folio 1459 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 12 June 2014 |
[2014] EWHC 1884 (Comm)
The Hon. Mr Justice Popplewell
2013 Folio 1459
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
7 Rolls Building, Fetter Lane
London, EC4A 1NL
John Bignall (instructed by Winter Scott LLP) for the Claimant
Neil Henderson (instructed by Jackson Parton) for the Defendant
Hearing dates: 23 May 2014
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.
Introduction
1. This is an appeal pursuant to s. 69 of the Arbitration Act 1996 from the Second Partial Final Award of William Robertson and Bruce Harris dated 10 September 2013, as further explained and clarified, pursuant to s. 57(3) of the 1996 Act and/or paragraph 25(a)(ii) of the LMAA Rules, by an email dated 11 October 2013 ("the Award"). It raises a short point in relation to the applicability of the Late Payment of Commercial Debts (Interest) Act 1998 to charterparties providing for English law and London arbitration. It is a point which the tribunal described as arising in an increasing number of cases and upon which the Court's guidance would be welcomed.
The Issue
2. At the material time the M/V Wisdom C ("the vessel") was owned by the Defendant, a Marshall Islands company ("the Owners"). The vessel was registered in Panama and managed by a Liberian company registered in Greece. The vessel was chartered by the Owners to the Claimant charterers ("the Charterers") for a time charter trip via the Mediterranean/Black Sea under a charterparty on an amended NYPE form dated 2 July 2005. The Charterers are a German company. The vessel was to be placed at the disposal of the Charterers on passing Aden, and was to be redelivered at one safe port or passing Muscat outbound/Singapore range in Charterers' option. In the event the vessel loaded cargoes of steel products at Tuapse (Russia), Odessa (Ukraine) and Constanza (Romania) and discharged them at Jebel Ali (UAE), Karachi (Pakistan) and Mumbai (India). Hire was payable in US$ to a bank account in Greece. The broker named in the charterparty as entitled to commission was Optima Shipbrokers Ltd who I was told were Greek. The charterparty recorded that it was made and concluded in Antwerp.
3. An additional typed clause of the charterparty provided for English law and London arbitration in the following terms:
" Clause 48 – Arbitration
All disputes arising out of this contract which cannot be amicably resolved shall be referred to arbitration in London. Unless the panics agreed upon sole arbitrator the reference shall be to 2 (two) arbitrators, one to be appointed by each parties (sic). The arbitrators shall be members of the LMAA, and the umpire, if appointed shall be a legal man, and shall be Members of the London Maritime arbitrators' Association otherwise qualified by experience to deal with commercial shipping disputes.
The contract is governed by English Law and there shall apply to arbitration proceedings under this clause the terms of the London Maritime Arbitrators' Association current at the time when the arbitration proceedings are commenced.
…
In the event the amount of claim and counterclaim has not exceed US$ 50,000.00 (sic), the parties agree to refer any dispute to a sole arbitrator in accordance with the "LMAA Small Claims Procedure 1989" and any subsequent amendments thereof."
4. A number of disputes between the parties were referred to arbitration, including a claim by the Owners for unpaid hire, in respect of which the Charterers claimed to be entitled to deduct sums for alleged off-hire, bunkers used during off-hire, and a bunker price differential claim. By the Award the tribunal held that the Charterers had not made deductions from hire bona fide and on reasonable grounds (see the Kostas Melas [1981] 1 Lloyd's Rep 18); and that the Owners were therefore entitled to an award in respect of hire in the sum of US$ 178,342.73. The tribunal further held that the Owners were entitled to interest on that sum calculated at the rate of 12.75% per annum from 23 September 2005 until the date of payment under the 1998 Act.
5. The Charterers do not appeal from the award of principal. The appeal is against the award of interest under the 1998 Act. The Charterers contended before the tribunal, and contend on this appeal, that the 1998 Act has no application by reason of s. 12(1) which provides:
"This Act does not have effect in relation to a contract governed by a law of a part of the United Kingdom by choice of the parties if –
(a) there is no significant connection between the contract and that part of the United Kingdom; and
(b) but for that choice, the applicable law would be a foreign law."
6. The tribunal addressed whether there was a "significant connection" under s.12(1)(a) in their clarificatory email of 11 October 2013 in which they said:
"Our view is that the same factors that we listed in paragraph 21, and possibly also those mentioned in paragraph 22, are sufficient to show that there was a significant connection with this country."
7. Paragraphs 20–23 of the Reasons, which formed part of the Award, addressed the question of applicable law under s.12(1)(b) in the following terms:
"20. On the basis that they were entitled to the Award they sought, the owners asked for interest on the balance of hire awarded to them under the Late Payment of Commercial Debts (Interest) Act 1998. The charterers sought to rely on section 12(1) of that Act, arguing that if the charterparty had not been expressly amended to make it subject to English law (as happened in clause 48 of the charter), the New York arbitration provision in the printed clause 17 would have remained and there would thus have been a clear choice of US law, so English law would not have applied but for the specific choice in clause 48, and therefore the Act could have no application. However, it does not seem to us to follow at all that if the parties had not expressly chosen English law, as they did, they would also not have opted for London arbitration. The presumption must, in fact, be to the contrary.
21. The question then would be what law was to govern, and the choice of London arbitration would be a very powerful indication in favour of English law. The owners also pointed to other factors which, certainly cumulatively, seem to us to reinforce that indication, namely the use of the English language, the fact that the logs to which the charterers were entitled were to be in English, that GA was to be adjusted in London (and English law was to apply to it), that the ship was entered in the London P&I Club, and that the Inter-Club Agreement was incorporated which would be subject to English law. These, in our view, and contrary to the charterers' suggestion that individually and collectively these considerations were "beyond hopeless" are wholly persuasive in favour of a conclusion that English law would have governed absent an express choice. One final consideration: if one asks the question "What other system of law might the charter have been subject to?" there is simply no plausible answer — yet it would have to have a governing law.
22. The owners also sought to say that the fact that the standard for classification purposes was set by Lloyd's Register, and that basic war risk coverage was to be as defined by Lloyd's of London supported their case, but we do not think those are factors to which any weight can be given. However, that does not affect our conclusion on the basis of the other matters we have mentioned.
23. Accordingly, we have no hesitation in concluding that the Act does apply and therefore the owners are entitled to interest at the prescribed rate of 12.75% per annum (being 4.75%, the official rate in June 2005, plus the enhancement of 8%), and we have so awarded."
The arguments
8. Mr Bignall submitted on behalf of the Charterers that:
(1) The choice of London arbitration was an irrelevant consideration under either limb of s. 12 of the 1998 Act. Section 12(1)(a) requires important factors connecting England to the commercial transaction itself which cannot include choice of jurisdiction or any other indicia of an implied choice of law. Section 12(1)(b) requires the application of Article 4 of the Rome Convention ignoring any indicia of choice of law whether express or implied.
(2) The other factors relied on by the tribunal were not capable of amounting to significant connecting factors under s. 12(1)(a) either singly or cumulatively.
(3) The application of Article 4 of the Rome Convention to the inquiry under s. 12(1)(b) led to the conclusion that the charterparty would be governed by foreign law absent the express choice of English law in clause 48.
9. On behalf of the Owners Mr Henderson submitted that:
(1) The Tribunal's finding that there was a significant connection between the charterparty and England for the purposes of s.12(1)(a) was a finding of fact which is not subject to review upon an appeal ( The Baleares [1993] 1 Lloyd's Rep 215, 228).
(2) The London arbitration clause was capable of amounting to a significant connection between the charterparty and England under s.12(1)(a). When considering whether there is a significant connection, there is no need to disregard factors which might be indicia of an implied choice of law such as the arbitration clause.
(3) In any event the other factors relied upon by the tribunal were capable, singly or cumulatively, of amounting to a significant connection between the charterparty and England.
(4) Further or alternatively Section 12(1)(b) was not fulfilled because...
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