Oao Northern Shipping Company v Remolcadores De Marin Sl
| Jurisdiction | England & Wales |
| Judge | MRS JUSTICE GLOSTER, DBE,Mrs Justice Gloster, DBE |
| Judgment Date | 27 July 2007 |
| Neutral Citation | [2007] EWHC 1821 (Comm) |
| Docket Number | Case No: 2006–1167 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 July 2007 |
IN THE MATTER OF THE ARBITRATION ACT 1996
AND
IN THE MATTER OF AN ARBITRATION
[2007] EWHC 1821 (Comm)
Mrs Justice Gloster, DBE
Case No: 2006–1167
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Paul Henton Esq (instructed by Clyde & Co LLP) for the Claimant
The Respondent did not appear, and was not represented
Hearing dates: 15 th June 2007
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.
This was an application by the Claimant Buyers, OAO Northern Shipping Company (“Buyers”) under section 68 of the Arbitration Act 1996 (“the Act”) for an order setting aside, alternatively remitting for further consideration, an arbitral award dated 18 October 2006 (“the Award”). These are short reasons for the ruling which I gave on 15 June 2007.
Buyers relied on the grounds set out in their application notice, and the witness statement of Robert Wilson of Clyde & Co, both dated 14 November 2006.
The application was served on the Defendant Sellers, Remolcadores de Marin SL (“Sellers”) and on the arbitrators themselves. Sellers did not respond to the application other than by acknowledging service, and the time limit for so doing has now expired. Sellers (who did not instruct English lawyers for the arbitration) did not attend to contest the application.
The Award relates to a dispute arising out of an agreement dated 21 June 2005 (“the Agreement”), for the sale and purchase of an ice classed tug (“the Vessel”). The Agreement was on the 1993 Norwegian Saleform with additions and amendments. Buyers sought damages on the basis that the Agreement had been induced by a misrepresentation as to the total power rating of the Vessel's engine. The alleged misrepresentation consisted of providing to Buyers' representative (“Mr Bogdanov”) at the pre-purchase inspection on 7–8 June 2005, a Germanischer Lloyd certificate of class dated 28 June 2001 (“the GL Certificate”), which provided, so far as relevant: “Total Rated Power … 1265 kW”.
The tribunal found that Buyers' case failed at the first hurdle. The tribunal concluded that there was no “material representation that the tug's engine power equalled 1265 kW”. The tribunal concluded that Sellers had represented not that the GL Certificate was “true”, but merely that it was “authentic”: see the Award paragraph 41.
However, if there had been a representation, the tribunal went on to find that Buyers would have surmounted each of the remaining hurdles and established their case, namely:
i) the representation would have been false; the actual power of the engine was “some 956 kW”, which was 25% lower than the figure stated in the GL Certificate (paragraph 42);
ii) the representation would have induced the contract; there was no evidence that the representation had been “superseded by Buyers' own enquiries” (paragraphs 43–4);
iii) whilst Sellers in fact believed the 1265 kW figure to be true, they had not shown reasonable grounds for holding this belief (paragraph 45);
iv) the right to damages for misrepresentation had not been excluded by the terms of the MOA, nor waived by Buyers (paragraph 46);
v) the representation would have caused Buyers to suffer loss (paragraph 46).
Buyers' essential complaint before this court was that the case had been presented to the arbitrators on the basis that the “representation” point was no longer in issue between the parties (if it ever had been).
By the time of the hearing before the tribunal, Sellers' arguments were focussed on: (i) the “as is” nature of a NSF sale, giving no guarantees as to the Vessel's particulars (i.e. the issue of waiver /exclusion of reliance); (ii) the level of inspection carried out by Buyers (i.e. the question of inducement); (iii) whether Buyers had proved the 1265 kW figure was incorrect (i.e. whether the representation was false); and (iv) quantum. This was clear from Sellers' skeleton argument before the tribunal.
Whilst, as a small claim, no transcript would have been taken, Mr Wilson's evidence before this court confirms that “no argument or discussion whatsoever was directed towards [the issue] at the hearing”. The arbitrators therefore found against Buyers on a ground which had neither been raised nor seriously disputed by Sellers, but Buyers were not invited to address this ground whether by way of submissions or further evidence.
Sellers initially pleaded that the true engine power of the Vessel was indeed 1265 kW, and was represented so to be, (inter alia by virtue of the GL Certificate). They alleged: “the power of the vessel is 1,265 kW”, and that this was “reflected in all the vessel's documentation”.
Whilst Sellers eventually chose to put Buyers to proof of the Vessel's engine power, they continued to defend the GL certificate they had provided by stating in paragraph 6 of their skeleton argument that: “there is no proof that the engine power is not the one which appears in the last GL certificates”. In these circumstances, it is not surprising that Buyers were under the impression that Sellers accepted that they had indeed represented the truth of the 1,265 kW figure when Sellers themselves were convinced of its truth from the outset.
Sellers' Defence Submissions were later clarified in a letter to the tribunal dated 29 March 2006 and thereafter in their skeleton argument.
In the light of these contentions, Buyers' counsel presented the case to the Tribunal on the basis that:
“The Seller in their Defence Submissions appear to accept that they provided the particulars of the Vessel by way of her class certificates … and have not denied that there was a representation… The Seller's only contention as regards the documents handed over to the Buyer is that the documents revealing the true power of the engine were in fact given to the Buyer prior to delivery. It is presumed that the Sellers are therefore alleging that the Buyer did not rely on the representation that the engine's power to be 1,265 kW”. (emphasis added)
As Mr Paul Henton, counsel for Buyers submitted, the first they heard of the argument that Sellers had represented only the authenticity of the GL Certificate (rather than its truth) was upon publication of the award; the tribunal had invited submissions on each issue of the cause of action save for the one on which the tribunal actually decided the case. Conversely, the tribunal heard evidence and/or oral argument on each of the issues which it would have found in Buyers' favour had the tribunal concluded that there been a representation.
In order successfully to challenge the Award under section 68 of the Act, Buyers must demonstrate:
i) that there has been a “serious irregularity”, falling within the closed list of categories set out in section 68(2), and
ii) that the serious irregularity “has caused or will cause substantial injustice” to Buyers.
see Lesotho Development v Impregilo SpA [2006] 1 AC 221 at paragraph 28, per Lord Steyn.
The primary ground relied upon by Buyers in the present case is: “(a) failure by the tribunal to comply with section 33 (general duty of tribunal)”. Section 33 provides as follows:
“(1) The tribunal shall —
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.
(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it.”
Alternatively, Mr Henton submitted that the application can be dealt with under ground (c), as set out in section 68(2), of “failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties”.
Mr Henton...
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