Midnight Marine Ltd v Thomas Miller Speciality Underwriting Agency Ltd (formerly Osprey Underwriting Agency Ltd) “Labhauler”
| Jurisdiction | England & Wales |
| Judge | Mr Justice Males |
| Judgment Date | 12 December 2018 |
| Neutral Citation | [2018] EWHC 3431 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000242 |
| Date | 12 December 2018 |
[2018] EWHC 3431 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS OF ENGLAND & WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Males
Case No: CL-2018-000242
Jeremy Richmond (instructed by EC3 Legal LLP) for the Claimants
Nigel Cooper QC (instructed by Cozen O'Connor LLP) for the Defendant
Hearing date: 7 th December 2018
Approved Judgment
Introduction
This is an application by the claimants (1) to set aside an order made by Butcher J dismissing without a hearing the claimants' challenge to an arbitration award on the ground of serious irregularity under section 68 of the Arbitration Act 1996 and (2) for permission to appeal to the Court of Appeal against the refusal by Butcher J of the claimant's application for permission to appeal on a question of law to the High Court pursuant to section 69 of the Act.
I heard submissions on both applications from Mr Jeremy Richmond for the claimants and did not need to call upon Mr Nigel Cooper QC for the defendant. At the conclusion of the hearing I dismissed both applications and said that I would give my reasons in writing. I now do so.
The procedure in paragraph O8.5 the Commercial Court Guide for dismissal of a section 68 application at a hearing is intended to be a summary procedure for identifying and disposing economically and promptly of hopeless applications. The provision for an oral hearing of an application to set aside a dismissal on paper should not lead to a major escalation in the costs incurred in dealing with unmeritorious section 68 challenges.
I am concerned that in the present case the application to set aside the dismissal on paper has been argued as fully as the section 68 application itself would have been. If that were to become the standard procedure, the availability of a procedure for dismissal on paper would achieve nothing. It may therefore be helpful to say something about the procedure for such applications. When I was told, after announcing my decision, that the combined costs incurred by the parties in dealing with the present applications amounted to over £150,000, my concern was exacerbated.
Background
The arbitration arose out of the loss of the cargo being carried on the barge “Labhauler” in March 2007, which was owned by the claimants (to whom I shall refer together as “the Assured”). The barge was being towed by the tug “Western Tugger” on a voyage from St Martin in the Caribbean to Newfoundland with a cargo of scrap crushed motor vehicles, together with some other equipment. On 8 March 2007 the barge rolled suddenly to starboard in good weather conditions and shed the cargo, which was lost overboard. Later in the month the barge capsized and sank.
These events gave rise to a claim against the Assured by the owners of the cargo which was settled on 11 July 2008 for the sum of CAD $625,000.
The Assured claimed to be entitled to an indemnity in respect of this sum from the defendant (“the Underwriters”) who had provided P&I cover under a policy dated 14 August 2006. The policy contained a London arbitration clause providing that “any dispute arising under or in connection with this insurance is to be referred to Arbitration in London”. The Underwriters had advised, prior to the settlement with the cargo owners, that they did not accept liability under the policy and that any claim against them should be made in London arbitration. After the settlement was concluded, however, the Assured commenced proceedings for an indemnity against the Underwriters in the Supreme Court of Newfoundland and Labrador (Trial Division) and not in arbitration.
In response the Underwriters commenced arbitration on 17 October 2008. Its notice of arbitration was in the following terms:
“… Given that your clients are now preparing to issue a Statement of Claim through the Canadian Court, our client is forced to take positive steps to commence arbitration in London to seek declaratory relief that they have no liability to your clients. …”
Details of the Underwriters' nominated arbitrator were then given together with notice for the Assured to appoint an arbitrator within 14 days. However, it was then agreed between the parties that the Assured need not appoint its arbitrator until after the Canadian court had ruled on an application for a stay of the Canadian proceedings to be made by the Underwriters. That application was made and was eventually successful on appeal to the Supreme Court of Newfoundland and Labrador Court of Appeal, whose judgment was dated 22 October 2010.
There was further correspondence between the parties which it is unnecessary to set out. In brief, the Assured's Canadian lawyer insisted that the Assured's claim was not going to go away and had to be paid, but there was no further step taken in the arbitration until the Assured appointed an arbitrator on 12 July 2017. By this time the Underwriters had closed their file on the case.
The application to the arbitrators
This led to an application to the arbitrators made by the Underwriters for a declaration that any claim by the Assured was time-barred, no claim having been brought either within a one-year contractual time limit contained in the policy or within the six-year statutory limitation period for contractual claims. Alternatively, the Underwriters contended that the claim should be dismissed pursuant to section 41(3) of the 1996 Act on the ground of inordinate and inexcusable delay.
The Assured contended in response that there was no applicable contractual time limit, that the claim was not time-barred because proceedings were commenced when the Underwriters served notice of arbitration, and that the Underwriters had waived any time bar that might otherwise apply. In response to the application under section 41(3) the Assured contended that there was no power under that section to dismiss a counterclaim, that it was not in fact a claimant or counter claimant in the arbitration, that there was no inexcusable delay, and that a fair resolution of the issues in the case remained possible.
The award
The arbitrators dealt first with the question whether the Assured's claim was time barred. They held as follows:
(1) The policy contained a one-year contractual time limit within which the claim had to be brought.
(2) The six-year statutory limitation period also applied.
(3) Although the Underwriters had waived compliance with the one-year contractual time limit, they had not waived compliance with the six-year statutory period.
(4) Accordingly, as the Assured had done nothing else within the six-year period which might suffice to stop time running, the critical question was whether the Underwriters' own notice of arbitration was sufficient to protect time in respect of the Assured's claim.
(5) By a majority, the Underwriters' notice of arbitration was not sufficient. The only matter referred to arbitration was the Underwriters' claim for a declaration of nonliability and no arbitration had been commenced in respect of the Assured's claim.
(6) Accordingly that claim was time-barred.
The arbitrators went on to consider the application under section 41(3) “for completeness and in case the majority is wrong on the time bar point”. As they pointed out, the only basis on which it could be concluded that the Assured's claim was not time barred was that the claim was to be treated as having been brought in arbitration within time by reason of the Underwriters' notice of arbitration dated 17 October 2008. On this basis the Assured had done nothing to progress its claim for over nine years since the commencement of arbitration and over 10 years since the casualty.
The arbitrators concluded that (1) it was appropriate to treat the Assured as a claimant or counter claimant within the meaning of section 41(3), (2) there had been inordinate and inexcusable delay on the part of the Assured and (3) there was a substantial risk that it would not be possible to have a fair resolution of the issues in the case such that, if the arbitration were to proceed, that would be likely to cause substantial prejudice to the Underwriters. Accordingly they concluded that it was appropriate to make an award dismissing the claim pursuant to section 41(3).
The challenge to the award
The Assured challenged the award on two bases. First, it said that the arbitrators had “exceeded their jurisdiction” by dismissing the claim pursuant to section 41(3) of the 1996 Act as this section only applied to delay on the part of “the claimant” in the arbitral proceedings, which did not include the Assured, and that this had caused it substantial injustice. Although couched in terms of excess of jurisdiction, it is clear that this was an application made pursuant to section 68 and not section 67 of the Act. Second, it sought permission to appeal on a question of law under section 69, contending that the majority arbitrators were wrong in concluding that the Underwriters' notice of arbitration was insufficient to refer its claim for an indemnity to arbitration.
It is immediately apparent that the Assured needed to succeed on both applications in order to make any progress. Any potential irregularity dealing with the section 41(3) application could not possibly cause “substantial injustice” and therefore could not qualify as a serious irregularity under section 68 unless the majority decision on time bar was reversed. As the arbitrators themselves had said, the section 41(3) application would only arise if the majority was wrong on that issue. Conversely, even if...
To continue reading
Request your trial
-
Minister of Finance (Incorporated) 1Malaysia Development Berhad v International Petroleum Investment Company Aabar Investments PJS
...“cannot be overridden by the parties”. 6 See, for example, Midnight Marine Ltd v. Thomas Miller Speciality Underwriting Agency Ltd [2018] EWHC 3431 (Comm), [2019] 1 Lloyd's Rep 399 at [37] to 7 See also Lord Hope at [34] to [35]. 8 Arbitration claims are defined in CPR Part 62.2(1) as mean......
-
Kevin Paul Osler v Marlene Osler
...reasoning and decision in WSB as well as in the other cases cited therein, particularly BLCT ( ante) and Midnight Marine v Thomas Miller [2018] EWHC 3431, where an application for permission under section 69 has been dealt with on paper, there is no right to a renewed oral 26 I also reject ......
-
John Sydney Kirby & Others v Baker & Metson Ltd
...section 69(8), and McDonald v. Rose is also irrelevant. 18 Further, he relies on the case of Midnight Marine Ltd v Thomas Miller [2018] EWHC 3431 (Comm) at [24] as an example of a case where, in the context of section 69, the application for permission was made at a later hearing after the......
-
English Court Provides New Guidance On Summary Dismissal Process For Groundless Serious Irregularity Challenges
...these have already been dismissed on paper. The decision in Midnight Marine Ltd v Thomas Miller Speciality Underwriting Agency Ltd [2018] EWHC 3431 (Comm) suggests that the court should take a more active role in preventing such hearings from escalating into a full s68 challenge hearing (ca......