Metalfer Corporation v Pan Ocean Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | Longmore J. |
| Judgment Date | 07 October 1997 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 07 October 1997 |
Queen's Bench Division (Commercial Court)
Longmore J.
M Coburn (instructed by Holman Fenwick & Willan) for the plaintiff.
S Phillips (instructed by Clyde & Co) for the defendant.
The following cases were referred to in the judgment:
Atlantic Shipping and Trading Co v Louis Dreyfus & CoELR[1922] 2 AC 250.
Ayscough v Sheed, Thomson & Co(1923) 39 TLR 206.
Ion, The [1971] 1 Ll Rep 541.
Metalimex Foreign Trade Corp v Eugenie Maritime Co LtdUNK[1962] 1 Ll Rep 378.
Pinnock Brothers v Lewis & Peat LtdELR[1923] 1 KB 690.
Pompe v Fuchs(1876) 34 LT 800.
Sabah Flour and Feedmills Sdn Bhd v Comfez LtdUNK[1988] 2 Ll Rep 18.
Smeaton Hanscomb v Sasoon I Setty Son & CoWLR[1953] 1 WLR 1468.
Szymonowski & Co v Beck & CoELR[1923] 1 KB 457.
Voltaz, The [1997] 1 Ll Rep 35.
Charterparty Arbitration clause Time bar Owners relied on clause referring disputes to arbitration within 30 days of completion of voyage Whether arbitration clause included in fixture agreement Whether failure to comply with arbitration clause barred claim entirely Whether arbitration clause inconsistent with Hague Rules time limit incorporated by clause paramount.
These were issues in an application by charterers for a declaration that their claims were not time-barred and alternatively an order under s. 12 of the Arbitration Act 1996 extending time for the commencement of arbitral proceedings.
The arbitration clause on which owners relied referred any dispute arising out of the charterparty to London arbitrators within 30 days of completion of the voyage with English law to apply.
The issues were (1) whether the arbitration clause was part of the fixture agreement made between charterers and owners; (2) if it was part of the agreement, whether it operated to bar charterers' claim if (which the court did not decide) it was made after the lapse of 30 days from the completion of the voyage; and (3) if the clause was a barring clause, it was to be disregarded as inconsistent with the further provision of the agreement deeming a paramount clause to be fully incorporated in the agreement.
Held, ruling accordingly:
1. The fixture did include the 30-day arbitration clause. Charterers argued that their agent had authority only to negotiate terms and not to agree them without referring back to charterers, but by conducting negotiations through him, charterers held him out as having the usual authority of a chartering broker to conclude an agreement. Any private limitation on his authority, did not prevent owners and their brokers relying on the position which charterers allowed him to hold.
2. Failure to comply with the arbitration clause, did mean that the claim could not be made at all. (Metalimex Foreign Trade Corp v Eugenie Maritime Co LtdUNK[1962] 1 Ll Rep 378and The Voltaz[1997] 1 Ll Rep 35 followed ; Pinnock v Lewis & PeatELR[1923] 1 KB 690not followed.)
3. The contract included the arbitration clause and a clause incorporating other terms of a previous charterparty, and the arbitration clause therefore prevailed over the paramount clause incorporating the Hague Rules time limit, because the parties gave express consideration to the inclusion of the arbitration clause. (Sabah Flour andFeedmills Sdn Bhd v Comfez LtdUNK[1988] 2 Ll Rep 18 applied.)
Longmore J:
Pursuant to an agreement by which Pan Ocean Shipping Co Ltd of Seoul in Korea (the owners) agreed to provide a vessel for Metalfer Corp (the charterers) for the carriage of steel rods in bundles, the owners on 18 November 1996 nominated the vessel VELARGI DIPLOMAT with an expected date of arrival at Riga of 4 December. They later said that they could not provide that ship and nominated the CANALPE instead with an ETA of 910 December. The charterers said the owners were not entitled to make a fresh nomination, let alone a nomination which gave an ETA of outside the spread of laydays to cancelling date of 24 November to 6 December provided in the agreement.
They held owners responsible for all their loss and damage, but accepted the CANALPE by way of mitigating their damages. On 23 January 1997, they quantified their claim. Owners asked for time to comment on their case on 5 March and, on 27 March, asked for supporting evidence. Charterers' solicitors initially said that that was unacceptable in view of the delay to date and on 15 May they appointed an arbitrator and called on owners to appoint an arbitrator of their own.
That elicited the response that the time for arbitration had already expired and that the claim should be withdrawn.
The clause on which owners rely for this purpose is in the following terms:
Any dispute arising out of this charterparty to be referred to the London arbitrators within 30 days of completion of the voyage and English law to apply. One arbitrator to be appointed by each of the parties thereto and the third by the two so chosen.
Charterers have now sought a declaration that their claims are not time-barred and alternatively an order under s. 12 of the Arbitration Act 1996 extending the time for the commencement of arbitral proceedings. That application, which raised at least six separate issues, was estimated for two hours. By the end of three and a quarter hours, argument had only taken place on three issues. I shall now proceed to determine those issues. They are:
(1) Was the arbitration clause relied on by owners part of what I will call the fixture agreement made between charterers and owners?
(2) If it was part of the agreement, does it operate to bar charterers' claim if, which I am not deciding, it was made after the lapse of 30 days from the completion of the voyage?
(3) If the clause is a barring clause, is it to be disregarded as inconsistent with the further provision of the agreement deeming a paramount clause to be fully incorporated in the agreement?
Subject to questions of authority raised by Mr Coburn for charterers, there can be no doubt that the arbitration clause was part of the contract. The negotiations proceeded to a...
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