Primera Maritime (Hellas) Ltd and Others v Jiangsu Eastern Heavy Industry Company Ltd and Another
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Flaux,The Honourable Mr Justice Flaux |
| Judgment Date | 15 October 2013 |
| Neutral Citation | [2013] EWHC 3066 (Comm) |
| Docket Number | Case No: 2012 Folio 1719 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 15 October 2013 |
[2013] EWHC 3066 (Comm)
The Honourable Mr Justice Flaux
Case No: 2012 Folio 1719
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
AND IN THE MATTER OF THE ARBITRATION ACT 1996
Rolls Building
Fetter Lane, London, EC4A 1NL
Robert Bright QC (instructed by Reed Smith LLP) for the Claimants
Graham Dunning QC and Jern-Fei Ng (instructed by DLA Piper UK LLP) for the Defendants
Approved Judgment
Hearing date: 3 October 2013
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.
Introduction
The claimants were the buyers under two shipbuilding contracts with the defendants dated 12 July 2007 in relation to two Kamsarmax bulk carriers to be built at the defendants' yard in China. Disputes arising under both contracts were referred to arbitration in London pursuant to the LMAA Terms 2006 before the same tribunal, David Aikman, Mark Hamsher and Michael Howard QC. The basis for the claimants' claim for damages, so far as currently relevant, was that from 19 October 2007, the defendants had been in anticipatory breach of contact by refusing to perform the contracts in accordance with their terms, specifically in relation to delivery by the contractual delivery dates in 2011, and hence renounced the contracts.
The arbitration hearing took place over two and a half weeks, with eight days of oral evidence, both parties being represented by leading counsel. In all over 700 pages of written submissions in opening and closing were presented to the tribunal which stated at [12] of its Reasons that: "It is because of the thoroughness of those submissions that we have been able to express our Reasons in comparatively concise terms". Nonetheless, the tribunal's third Interim Award dated 29 November 2012 was supported by detailed Reasons running to 84 pages. By that Award, the tribunal dismissed the claims, holding that although the defendants had renounced the contracts in an email of 19 October 2007 and at a meeting on 6 November 2007, the claimants thereafter affirmed the contracts.
The claimants now apply under section 68(2)(d) of the Arbitration Act 1996 to set aside that Award and remit it to the tribunal, on the grounds that the tribunal failed to deal with two issues which the claimants had put before them: (i) that the renunciation by the defendants was continuous; and (ii) in relation to the quantum of the claimants' claim, that the claimants would have "flipped" the contracts.
Notwithstanding the elegant and well-reasoned submissions of Mr Robert Bright QC on behalf of the claimants, by the end of the hearing of the application under section 68 I had concluded that the application should be dismissed. I informed the parties that that was my decision and that I would give a judgment setting out my reasons at a later date. This is that judgment.
Legal principles applicable to section 68(2)(d)
Section 68 of the Arbitration Act 1996 provides, inter alia, as follows:
"68 Challenging the award: serious irregularity. E+W+N.I.
(1)A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.
A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).
(2)Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—
(d)failure by the tribunal to deal with all the issues that were put to it;"
In order to succeed under section 68 an applicant needs to show three things. First of all, a serious irregularity. Secondly, a serious irregularity which falls within the closed list of categories in section 68(2). Thirdly, that one or more of the irregularities identified caused or will cause the party substantial injustice. As Hamblen J said in Abuja International Hotels v Meridian SAS [2012] EWHC 87 (Comm) at [48] to [49], the focus of the enquiry under section 68 is due process, not the correctness of the tribunal's decision. As the DAC Report states, and numerous cases since have reiterated, the section is designed as a long-stop available only in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected. This point, that section 68 is about whether there has been due process, not whether the tribunal "got it right", is of particular importance in the present case, where, for the reasons set out below, the claimants' real complaint is that they consider that the tribunal reached the wrong result, not a matter in relation to which an arbitration Award is susceptible to challenge under section 68.
In cases under section 68(2)(d), there are four questions for the court: (i) whether the relevant point or argument was an "issue" within the meaning of the sub-section; (ii) if so, whether the issue was "put" to the tribunal; (iii) if so, whether the tribunal failed to deal with it; and (iv) if so, whether that failure has caused substantial injustice: see per Andrew Smith J in Petrochemical Industries Co v Dow Chemical [2012] EWHC 2739 (Comm); [2012] 2 Lloyd's Rep 691 at [15].
Andrew Smith J goes on to discuss what constitutes an "issue" and summarises the earlier authorities at [16]:
"A distinction is drawn in the authorities between, on the one hand "issues" and, on the other hand, what are variously referred to as (for example) "arguments" advanced or "points" made by parties to an arbitration or "lines of reasoning" or "steps" in an argument (see, for example, Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd's Rep 83, 97 and Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The "Pamphilos") [2002] 2 Lloyd's Rep 681, 686). These authorities demonstrate a consistent concern to maintain the "high threshold" that has been said to be required for establishing a serious irregularity (see Lesotho Highlands Development Authority v Impergilo SpA and ors [2005] UKHL 34 paragraph 28 and the other judicial observations collected by Tomlinson J in AAB AG v Hochtief Airport GMBH and anor [2006] EWHC 388 paragraph 63). The concern has sometimes been emphasised by references to "essential" issues or "key" issues or "crucial" issues (see respectively, for example, Ascot Commodities NV v Olam International Ltd [2002] 2 Lloyd's Rep 277, 284; Weldon Plant v Commission for New Towns [2001] 1 All ER 264, 279; and Buyuk Camlica Shipping Trading and Industry Co Ltd v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm.)), but the adjectives are not, I think, intended to import a definitional gloss upon the statute but simply allude to the requirement that the serious irregularity result in substantial injustice: Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 at paragraph 10. They do not, to my mind, go further in providing a useful test for applying section 68(2)(d)."
The learned judge then went on to reject suggested yardsticks for measuring what is an "issue" by reference to what was or might have been in a list of issues. He went on to conclude that the particular point in that case, whether the defendant had assumed responsibility for the loss was an "issue" within the meaning of the sub-section rather than simply an argument in the broader issue of foreseeability, at [21]:
"The assumption of responsibility question, as it was identified and presented by PIC on this application is, to my mind, an "issue" within the meaning of sub-section 68(2)(d). It is not simply a way of presenting the question of foreseeability, and not simply an argument in support of a contention that losses were not within the First Limb or the Second Limb of Hadley v Baxendale. It can be difficult to decide quite where the line demarking issues from arguments falls, but here almost the whole of Dow's claim could have depended (and on the Tribunal's other conclusions did depend) upon how the assumption of responsibility question was resolved. I accept PIC's submissions about whether it was an issue because this accords with what I consider to be the ordinary and natural meaning of the word, and I find support for this conclusion in that, as I see it, fairness demanded that the question be "dealt with" and not ignored or overlooked by the Tribunal, assuming it was put to them."
Having found that that issue had been put to the tribunal, the learned judge went on to deal with the third issue about whether the tribunal had "dealt with" the issue in two paragraphs which are of some assistance in the present case, [26] and [27]:
"26 Sub-section 68(2)(d) is about the Tribunal "dealing with" issues. The question whether an issue was dealt with depends upon a consideration of the award: as Mr Gavin Kealey QC said in Buyuk Camlica Shipping Trading and Industry Co Inc v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm) at paragraph 38:
'It is not sufficient for an arbitral tribunal to deal with crucial issues in pectore, such that the parties are left to guess at whether a crucial issue has been dealt with or has been overlooked: the legislative purpose of section [68(2)(d)] is to ensure that all those issues the determination of which are crucial to the tribunal's decision are dealt with and, in my judgment, this can only be achieved in practice if it is made apparent to the parties...
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