MH Progress Lines SA (Claimants (Owners) v Orient Shipping Rotterdam BV (Respondents (Charterers)
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE TEARE,Mr. Justice Teare |
| Judgment Date | 28 November 2011 |
| Neutral Citation | [2011] EWHC 3083 (Comm) |
| Docket Number | Case No: 2011 Claim nos.295 and 296 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 November 2011 |
[2011] EWHC 3083 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: 2011 Claim nos.295 and 296
Nigel Jacobs QC (instructed by Clyde & Co LLP) for M.H.Progress Lines SA
Nigel Cooper QC (instructed by Bentleys Stokes & Lowless) for Nordana Project & Chartering
Hearing dates: 31 October 2011
This is an appeal pursuant to section 69 of the Arbitration Act 1996 brought with the leave of the court. The appeal is against an award of Mr. O'Donovan, Mr. Marshall and Mr. Farrington dated 28 January 2011. The award was made in two related but not consolidated references which determined preliminary issues which arose in both references. Those issues concerned the interplay between the Interclub Agreement 1996 ("ICA 96") and an amended Centrocon arbitration clause.
The appeal was brought by the Owners of the vessel GENIUS STAR 1, MH Progress Lines SA ("Progress"), and was resisted by Nordana Project & Chartering ("Nordana"), the sub-charterers. Orient Shipping Rotterdam BV ("Orient"), the charterers, did not appear but were content to be bound by the decision of this court.
The appeal was argued by reference to the terms of the head charterparty which was a time charterparty dated 30 May 2005 on an amended NYPE 1946 form. The charter was for a period of about two years +/—one month in charterers' option with a further optional third year. The sub-charter was for a single trip time charter duration 20/25 days dated 25 August 2006.
The material terms of the head charter were as follows:
"Clause 26
….. Charterers to pay any extra crew war bonus, crew, and all other matters, all cargo claims to be settled as per Nype Interclub Agreement 1996 and any amendments thereto, same as when trading for their own account.
Clause 39
[1] All disputes from time to time arising out of this contract shall unless the parties agree forthwith on a single arbitrator, be referred to the final arbitrament of two arbitrators carrying on business in London, who shall be members of the Baltic Exchange and engaged in the shipping trades, one to be appointed by each of the parties, with power to such arbitrators to appoint an umpire. 1
[2] Any claim must be made in writing and the claimant's arbitrator appointed within 12 months of final discharge and where this provision is not complied with the claim shall be deemed to be waived absolutely barred.
[3] No award shall be questioned or invalidated on the ground that any of the arbitrators is not qualified unless objections to his acting be taken before the award is made.
[4] In the event the amount of claim does not exceed US$25,000 the parties agree to refer any dispute to a sole arbitrator in accordance with the LMAA Claims Procedure 1989.
[5] This Charter Party shall be governed by and construed in accordance with English Law. 2
Clause 50
…… Clause Paramount ….. deemed to be incorporated in this Charter Party." 3
ICA 96 is the third edition of the Inter-Club Agreement 4. It applies (pursuant to its express terms) where a cargo claim has been properly settled or compromised or paid by the owners or the charterers and "apportionment" of such claim is sought. In the first case dealing with the Inter-Club Agreement, the Strathnewton [1983] 1 Lloyd's Rep. 219, the agreement was described as "analogous to "knock-for-knock" agreements in the field of motor insurance; the essential feature of such agreements is to avoid any investigation of blameworthiness as between the parties for the events which have occurred…….[it] provides for a more or less mechanical apportionment of financial liability"; per Kerr LJ at pp.223–224. Experience has shown however that some evidence is still required to operate the agreement and the agreement has itself given rise to litigation; see the Benlawers [1989] 2 Lloyd's Rep. 51 at p.62 per Hobhouse J., the Holstencruiser [1992] 2 Lloyd's Reports 378 at p.389 per Hobhouse J. and P&I Clubs Law and Practice by Hazelwood and Semark 4 th ed. paragraph 15.42.
The material provisions of ICA 96 were as follows:
"(1) This Agreement applies to any charterparty which is entered into after the date hereof on the New York Produce Exchange Form 1946 or 1993 or Asbatime Form 1981 (or any subsequent amendment of such forms).
(2) The terms of this Agreement shall apply notwithstanding anything to the contrary in any other provision of the charterparty; in particular the provisions of Clause (6) (time bar) shall apply notwithstanding any provision of the charterparty or rule of law to the contrary.
…………
(5) This Agreement applies regardless of legal forum or place of arbitration specified in the charterparty and regardless of any incorporation of the Hague, Hague-Visby Rules or Hamburg Rules therein.
Time Bar
(6) Recovery under this Agreement by an Owner or Charterer shall be deemed to be waived and absolutely barred unless written notification of the cargo claim has been given to the other party to the charterparty within 24 months of the date of delivery of the cargo or the date the cargo should have been delivered, save that, where the Hamburg Rules or any national legislation giving effect thereto are compulsorily applicable by operation of law to the contract of carriage or to that part of the transit that comprised carriage on the chartered vessel, the period shall be 36 months. Such notification shall if possible include details of the contract of carriage, the nature of the claim and the amount claimed.
…………
Governing Law
(9) This Agreement shall be subject to English Law and Jurisdiction, unless it is incorporated into the charterparty (or the settlement of claims in respect of cargo under the charterparty is made subject to this Agreement), in which case it shall be subject to the law and jurisdiction provisions governing the charterparty."
The material facts of the instant case are that Nordana loaded a cargo of 108 pieces of wind turbine parts for carriage from Brake, Germany, to Albany, USA. The cargo was discharged at Albany on 19 September 2006. A claim was brought against Nordana by General Electric in respect of the carriage of the cargo. Nordana settled the claim for US$425,000 on 21 February 2008 and sought to recover that sum (together with related costs) from Orient either as an indemnity pursuant to ICA 96 or by way of damages for breach of the sub-charter. Orient has in turn sought to pass the claim "up the line" to Progress under the head charter.
Although Nordana must have been aware of General Electric's cargo claim within the one year limitation period prescribed by clause 39 (an amended form of the Centrocon arbitration clause), Nordana only notified Orient in writing on 22 January 2008 and did not commence proceedings against Orient within 12 months of final discharge. For their part Orient did not seek or obtain an extension of time from Progress.
The issue of law
The issue of law which has to be determined is whether or not the one year time limit in clause 39 of the head charter between Progress and Orient applies to cargo claims which are to be settled and apportioned in accordance with ICA 96. In other words, are the respective claims of Nordana against Orient and Orient against Progress deemed to be waived and absolutely barred because both Nordana and Orient failed to make any claim in writing and appoint an arbitrator within 12 months of final discharge in compliance with clause 39 of the respective charters? It was common ground that neither Nordana nor Orient in fact commenced proceedings within 12 months of final discharge.
Mr. Jacobs QC, counsel for Progress, submitted that the arbitrators were wrong to hold that the time limit in clause 39 did not apply to a cargo claim which was to be settled and apportioned in accordance with ICA 96. Mr. Cooper QC, counsel for Nordana, submitted that the arbitrators were right so to hold. Wilford on Time Charters 6 th ed. at paragraphs 20.71–72 supports Mr. Jacobs. Hazelwood and Semark on P&I Clubs Law and Practice 4 th ed. at paragraph 15.48 supports Mr. Cooper and the arbitrators.
Clause 26 of the head charter provides that "all cargo claims" are to be settled as per ICA 96. Clause (6) of ICA 96 contains a time bar provision with regard to recovery under ICA 96, namely, that recovery will be barred unless written notification of the cargo claim has been given to the other party within 24 months of the date of delivery of the cargo or the date the cargo should have been delivered (save where the Hamburg Rules apply in which case the period shall be 36 months). Clause (9) of ICA 96 provides for English law and jurisdiction unless ICA 96 is incorporated in a charterparty in which case it provides for the law and jurisdiction provisions governing the charterparty. Clause 39 of the charterparty provides for arbitration of "all disputes arising out of this contract" and requires that "any claim" must be made in writing and the claimant's arbitrator appointed within 12 months of final discharge, failing which the claim shall be barred. (Clause 50 of the charterparty incorporates the Hague Rules and in particular the time bar in Article III r.6. It is however not disputed that that time bar does not apply to claims under ICA 96.)
These contractual provisions give rise to two possible...
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