Rustal Trading Ltd v Gill & Duffus SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Moore-Bick J. |
| Judgment Date | 13 October 1999 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 October 1999 |
Moore-Bick J.
Queen's Bench Division (Commercial Court).
Arbitration — Shipping — Arbitration under rules of Refined Sugar Association — Whether award should be set aside because of doubts over arbitrator's impartiality — Whether objection barred because applicant took part in arbitration proceedings without making objection — Whether applicant could have discovered irregularity with reasonable diligence — Arbitration Act 1996, s. 24, 68, 73.
This was an application under s. 68 of the Arbitration Act 1996 to set aside an award on the grounds of serious irregularity, namely justifiable doubts as to the ability of the arbitrator to act impartially.
The respondent, “GD”, sold a cargo of sugar to the applicant, “Rustal”, c & f free out of Port Qasim. The sale contract provided for demurrage to be paid by Rustal. When the vessel arrived at Port Qasim three other vessels had arrived ahead of her and she did not complete discharging within the laytime, giving rise to a claim for demurrage. Rustal refused to pay on the ground that the delay in berthing was caused by the presence of two stowaways on board the vessel. The dispute went to arbitration under the rules of the Refined Sugar Association (“RSA”) and one of the arbitrators was “S” a director of “CR Sugar”. CR Sugar had previously had a dispute with “L”, who was responsible for the affairs of Rustal, in relation to demurrage incurred by another vessel at Port Qasim. Rustal's solicitor wrote to the RSA asking whether in the circumstances S could be wholly objective. RSA did not reply and the tribunal proceeded to award GD some US$200,000 by way of demurrage. Rustal applied under s. 68 of the Arbitration Act 1996 for the court to set aside the award on the ground of justifiable doubts as to S's impartiality. GD argued that there were no such doubts and that in any event Rustal's complaint was barred by s. 73(1) of the Arbitration Act 1996 because Rustal had continued to take part in the arbitration after it knew or could have discovered the grounds for the irregularity of which it complained.
Held dismissing the application:
1. The test to be applied under s. 68 of the Arbitration Act 1996 was the same as that for removal of an arbitrator under s. 24 for lack of impartiality which was the same as the common law test for bias. (R v GoughELR[1993] AC 646 and Laker Airways Inc v FLS Aerospace Ltd[1999] CLC 1124 applied.)
2. Rustal failed to show that there were any solid grounds for doubting S's impartiality. In the case of a trade tribunal the fact that an arbitrator might previously have had commercial dealings or disputes with one or both parties was known and accepted and had never been regarded as sufficient of itself to raise a doubt about his ability to act impartially. However there could be disputes which were outside the general run of disputes and gave rise for instance to lasting animosity, and the court had to decide whether viewed objectively there were justifiable doubts, given that bias could be unconscious. The evidence relating to the earlier dispute involving L and S did not indicate that it was out of the ordinary run of disputes.
3. In any event Rustal's complaint was barred by s. 73(1) of the Arbitration Act 1996. Rustal did not make a complaint within s. 73(1) until after publication of the award. The irregularity was S's lack of impartiality not his failure to resign from the tribunal. If Rustal's objection to S's lack of impartiality was well-founded the irregularity existed from the moment of S's appointment. Rustal continued to take part in the proceedings without formally objecting to S's position. The solicitor's letter amounted to a step in the proceedings, but in any event a party continued to take part in proceedings unless it made clear that it was withdrawing. Whether the irregularity was S's lack of impartiality or his failure to resign from the tribunal, Rustal could with reasonable diligence have discovered the grounds on which its objection to S was based so as to enable its objection to be made well before the award was published.
The following cases were referred to in the judgment:
Bremer Handelsgesellschaft mbH v Ets Soules et CieUNK [1985] 1 Ll Rep 160.
Laker Airways Inc v FLS Aerospace Ltd [1999] CLC 1124.
R v GoughELR [1993] AC 646.
Tracomin SA v Gibbs Nathaniel (Canada) LtdUNK [1985] 1 Ll Rep 586.
Michael Nolan (instructed by Lloyd & Co) for the applicant.
Andrew Baker (instructed by Turner & Co) for the respondent.
Moore-Bick J: This application arises out of an arbitration under the rules of the Refined Sugar Association (the “RSA”) in which the present respondent, Gill & Duffus SA, as seller claimed to recover from the applicant, Rustal Trading Ltd, as buyer demurrage due under a contract made in July 1996 for the sale of a cargo of white crystal sugar of Brazilian origin c & f free out Karachi or Port Qasim. As is usual in such cases, the contract provided for the vessel to be discharged within an agreed period and for demurrage to be paid by the buyer in accordance with the terms of the charterparty governing the carriage of the goods if that period was exceeded. The ultimate purchaser of the cargo was a Pakistani company called Mirza Sugar Mills Ltd.
The essential facts giving rise to the dispute are set out in the award. They are not a matter of any controversy and can be summarised quite briefly. The sugar was shipped at Santos on the vessel Prometheus which arrived at Port Qasim on 18 September 1996. During the voyage two stowaways were found on board, neither of whom had any documents. The master duly reported their presence to the vessel's managers and a few days before the vessel reached Port Qasim he also reported it to the vessel's agents there, Marine Transport Agencies (Pvt) Ltd (“MTA”). At the time of the vessel's arrival there was a certain amount of congestion at Port Qasim. In particular, three other vessels had arrived ahead of the Prometheus. One of these, the Huron, was carrying pig iron; the other two, the Rallia and the Mattz Vega, were carrying sugar. All three vessels berthed ahead of the Prometheus which was delayed until 27 October. Although the vessel did not complete discharging within the laytime, Rustal disputed liability for demurrage on the grounds that she would have been able to berth immediately on arrival and would not then have incurred demurrage if it had not been for the presence of the two stowaways.
From the outset the progress of the arbitration gave rise to certain difficulties. In particular, in September 1998 Rustal asked the RSA to direct that there should be an oral hearing at which its case could be presented by leading counsel, but in a letter from the secretary dated 2 December 1998 that application was refused, somewhat to Rustal's dismay. There were in addition other disagreements in relation to procedural matters to which I need not refer in any detail. Then on 26 January 1999 the RSA informed the parties of the names of the arbitrators appointed to hear the dispute. One of them was Mr Robin Shaw, a director of CR Sugar Trading Ltd. The RSA fixed a hearing on documents alone for 17 February. In support of its case Rustal relied primarily on a statement from Mr Khan, a representative of MTA who had been at Port Qasim at the time in question. His evidence was to the effect that the Prometheus had originally been granted priority over two of the vessels which had arrived ahead of her, the Mattz Vega and the Rallia, because their documents were not in order, but that she had lost her turn when the port authority learned about the existence of the stowaways. Rustal also relied on evidence obtained from the port authority itself. For its part Gill & Duffus relied on evidence from its own protecting agents, “GAC”, evidence from James Finlay, Karachi Club correspondents whom it had instructed to carry out an investigation into the cause of the delay, a statement from one of its directors, Mr Brewster, setting out information which he had obtained from the charterers of the Mattz Vega, ED & F Man, and a statement from Mr Andrew Duncan of ED & F Man confirming that information. All this evidence was before the tribunal in documentary form when it met to...
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