NB Three Shipping Ltd v Harebell Shipping Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morison |
| Judgment Date | 13 October 2004 |
| Neutral Citation | [2004] EWHC 2001 (Comm) |
| Docket Number | Case No: 2004/510 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 October 2004 |
[2004] EWHC 2001 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Morison
Case No: 2004/510
Mr D Allen (instructed By Stephenson Harwood) For The Claimant
Mr C Hancock Qc & Mr S O'sullivan (instructed By Watson, Farley & Williams) For The Defendant
Hearing Dates: Tuesday 10 August 2004
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 principal issue on these applications is whether, on a proper construction of Charterparties on an amended Barecon 89 Form and on a proper interpretation of section 9 Arbitration Act 1996, the Defendant ['Owners'] are entitled to stay an action commenced against them by the Claimant ['Charterers'].
Factual background
By two bareboat charterparties on the Barecon 89 Form dated 17 January 1994, the Owners agreed to charter two vessels, ARCTIC TRADER and ARCTIC VOYAGER, which the Claimants' predecessors agreed to hire on the terms of the charterparties as amended. The hire payable was calculated on the basis of a 'principal' element and an 'interest' element. The interest element was at a specified interest rate increased by a specified margin. The interest rate was defined as "the cost of funds to [the Owners] of obtaining the amount in dollars equal to the Principal Balance" [the principal element] prior to the relevant payment date. There was provision for the certification in writing of the rate of interest at which the fund providers were providing funds to the Owners in connection with the financing of each of the two, newly built, vessels.
In early July 2003 there was a dispute between the parties about increases in the interest rate and an explanation was sought by Charterers for them. This led to exchanges in correspondence, and Owners declared that there were events of default. For their part, Charterers served notices to enable them to pay off the indebtedness and acquire the vessels.
Charterers believe, rightly or wrongly, that they have been overcharged and that the Owners have been making a secret profit. On 22 June 2004 Charterers issued a claim form in this jurisdiction claiming against Owners
"damages and/or specific performance in respect of the Defendant's failure in breach of [the terms of the two charterparties] … to procure the provision of interim certificates and/or damages and/or repayments and/or delivery up of interest over charged in breach of contract and/or overpaid and/or an account of interest paid by the Defendant with interest thereon assessed pursuant to section 35A of the Supreme Court Act 1981 and costs".
On the same day, Charterers issued an application notice for an order requiring Owners to procure from the lenders "written certificates certifying the rate of interest at which [the lender] have provided funds to the Defendant throughout the term of the Charterparties …" and an order that [Owners] carry out a reasonable search to locate a large number of specified documents and "do make and serve on [Charterers] a list and disclosure statement" relating to them.
By letter dated 24 June 2004, Owners' solicitors indicated that they were entitled to a reasonable time to "consider whether it will exercise its option to refer any dispute under the Charterparties to arbitration in accordance with clause 47.02". They went on to say: "Given our client's option we are surprised that you did not consult with our client before you commenced court proceedings." The response of Charterers' solicitors was that clause 47.02 "does not apply in circumstances where our clients have exercised their right pursuant to clause 47.09 … to bring proceedings in the High Court. It is not inappropriate for our client to seek the mandatory orders … in the absence of arbitration proceedings and an established tribunal." On 30 June 2004 Owners purported to exercise their right "to refer the dispute to arbitration" and to indicate that they would be applying to the Court to stay the proceedings. On 6 July 2004 Owners appointed Mr Stewart Boyd QC as their arbitrator under clause 47.10. On 8 July 2004, Owners notified Charterers that there were certain events which they treated as Termination Events and accordingly Charterers' claims to exercise their purchase options were of no effect. A further dispute arose as to whether an Interest Certificate dated 24 June was issued properly in compliance with the Charterparties.
I am not concerned with the merits of the underlying dispute. Charterers say that the claims relating to Termination Events are concocted and have no merit and have been raised to try and create a dispute which may be referred to arbitration.
The statutory and contractual provisions in issue
The issue between the parties centres on Clause 47 of the Charterparties and Section 9(1) of the Arbitration Act 1996 and I set them out:
"47. LAW, JURISDICTION AND ARBITRATION
This Charterparty shall be governed by, and construed in accordance with, English law.
The courts of England shall have jurisdiction to settle any disputes which may arise out of or in connection with this Charterparty but the Owner shall have the option of bringing any dispute hereunder to arbitration.
In case of court proceedings the provisions of Clauses 47.03–47.09 (both inclusive) and of Clauses 47.11 and 47.12 shall apply, while in case of arbitration the provisions of Clauses 47.10–47.12 (both inclusive) shall apply.
The Owner may bring proceedings relating to this Charterparty in any other court which has jurisdiction by virtue of the Convention on jurisdiction and the enforcement of judgements in civil and commercial matters signed at Brussels on 27th September, 1968, as amended whether before the date of this Deed or not (the "Brussels Convention").
Moreover, the Owner may bring any proceedings relating to this Charterparty:-
(a) in any court which has jurisdiction by virtue of any other convention or provision which is covered by article 57 of the Brussels convention; or
(b) in any court in a country or territory which is not at the relevant time a Contracting State under the Brussels Convention and in which property of the Charterer is then situated.
The Charterer waives any objection which it may have now or later (whether on the ground of forum non conveniens or otherwise) to any proceedings relating to this Charterparty being brought in the courts of England or in any court which is covered by Clause 47. 03 or 47.04.
The Charterer agrees that any process or other document connected with proceedings in the English courts which related to this Charterparty shall be treated for all purposes as having been duly served on it if received by Pannell Kerr Forster, New garden House, 78 Hatton Garden, London EC1N 8JA or by any other process agent appointed under the following subclauses.
Without the prior written consent of the Owner (which consent shall be granted on condition that the Charterer simultaneously appoints another process agent) the Charterer may not terminate the appointment of a process agent which has been appointed under this clause but, if such a process agent resigns or its appointment ceases to be effective, the Charterer within fourteen days thereafter shall appoint a new process agent.
A judgment relating to this Charterparty which is given or would be enforced by an English court shall be conclusive and binding on the Charterer and may be enforced without review in any other jurisdiction.
The Charterer shall have the same right to bring proceedings against the Owner in relation to the performance of its obligations hereunder, limited to bringing proceedings in the courts of England and the provisions of Clauses 47.07 and 47.08 apply equally mutatis mutandis to this clause as if they were set herein in full, changing "Owner" to "Charterer" and "Charterer" to "Owner" and, in relation thereto, the Owner hereby appoints WFW Legal Services Limited, presently of 15 Appold Street, London, EC2 as their process agent.
Any dispute arising from the provisions of this Charterparty or its performance which cannot be resolved by mutual agreement which the Owner determines to resolve by arbitration shall be referred to arbitration in London or, at Owner's option, in another city selected by the Owner by two arbitrators, one appointed by the Owners and one by the Charterers who shall reach their decision by applying English law. If the arbitrators so appointed shall not agree they shall appoint an umpire to make such decision.
Nothing in this clause shall exclude or limit any right which the Owner may have (whether under the law or any country, an international convention or otherwise) with regard to the bringing of proceedings, the service or process, the recognition or enforcement of a...
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