Sim Swee Joo Shipping Sdn Bhd v Shirlstar Container Transport Ltd
| Jurisdiction | England & Wales |
| Judge | Mance J. |
| Judgment Date | 17 February 1994 |
| Date | 17 February 1994 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court)
Mance J.
Richard Lord (instructed by Norton Rose) for Sim Swee Joo.
Gavin Geary (instructed by Holman Fenwick & Willan) for Shirlstar.
The following cases were referred to in the judgment:
Baytur SA v Finagro Holding SAELR [1992] QB 610; [1992] 1 LI Rep 134.
Brandt's (William) Sons & Co v Dunlop Rubber Co LtdELR [1905] AC 454.
Compania Colombiana de Seguros v Pacific Steam Navigation Co LtdELR [1965] 1 QB 101.
Performing Right Society Ltd v London Theatre of Varieties LtdELR [1924] AC 1.
Weddell v J A Pearce & MajorELR [1988] Ch 26.
Zambia Steel & Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 LI Rep 225.
Arbitration — Jurisdiction — Two linked agreements for hire of containers with purchase option — Arbitration clause in one agreement — Twenty containers purchased with assignment of rights under agreement — Sale of containers negotiated — Dispute over sale referred to arbitration by assignee — Whether arbitration proceedings and award a nullity — Whether defendants entitled to treat proceedings as a nullity in view of participation in proceedings.
This was a motion seeking a declaration that an arbitration award was not binding for want of jurisdiction on the ground that no arbitration agreement between the parties existed when the arbitration began.
A company, Shirlstar Container Transport Ltd (“Shirlstar”), entered into an interrelated long-term agreement and lease agreement on 1 March 1985 for the hire of 100 containers from a company, Containerworld Leasing Ltd (“CCL”), with a purchase option. The long-term agreement incorporated the terms of the lease agreement, which included an arbitration clause. In October 1988 CCL went into liquidation, having delivered only 20 containers. Shirlstar bought those containers and became the equitable assignees of CCL's rights under the agreements. There was a dispute as to whether there was a legal assignment. In June 1990, Shirlstar, in the course of negotiations to sell the containers to a company, Sim Swee Joo Shipping Sdn Bhd (“SSJ”), informed SSJ that all CCL's rights in the containers had been sold to Shirlstar. In September 1991 Shirlstar as assignee of CCL's rights, started arbitration proceedings against SSJ without joining CCL as a party. Shirlstar appointed a sole arbitrator, under s. 7 of the Arbitration Act 1950, who issued his award in favour of Shirlstar. SSJ asked the court for a declaration that the award was not binding.
Held, dismissing the claim:
1 Where an equitable assignee of the whole of a legal chose in action wished to pursue his claim by litigation or arbitration he was required as a rule of practice to join his assignor as a party. That rule could be waived where it was not necessary, in particular when there was no risk of a separate claim by the assignor.
2 Accordingly the arbitration proceedings begun by Shirlstar as equitable assignees were not a nullity. It was for the arbitrator to decide whether joinder of CCL was necessary to enable an award to be made to Shirlstar. Since he had concluded that CCL need not be joined, it followed that the award was binding between the parties.
3 The award was in any event binding since there was an ad hoc submission to the arbitrator's jurisdiction. SSJ was precluded from challenging the arbitrator's jurisdiction, having taken part in the proceedings over a long period without disputing the arbitrator's jurisdiction.
Mance J: The court has before it an originating motion seeking a declaration that an award by Mark William Hamsher dated 21 October 1993 is not binding. The grounds are that he lacked jurisdiction, as, at the time of the purported commencement of arbitration proceedings, no arbitration agreement (or any other agreement) was in existence between the plaintiffs, who were respondents in the purported arbitration and whom I shall call “SSJ”, and the defendants, who were claimants and whom I shall call Shirlstar.
A further claim included in the same motion for leave to appeal from the award has been dismissed by order of Saville J dated 21 December 1993.
The present application is supported by affidavit sworn 17 December 1993 by SSJ's solicitor, Jacqueline Anne Fry, and opposed by two affidavits, one sworn 24 December 1993 by Shirlstar's operations manager, Simon Robert Merriam, and the other sworn 30 December 1993 by Shirlstar's solicitor, Caroline Maria Murphy. I take the facts as they appear from these affidavits and the documents referred to in them.
In brief Shirlstar entered into an interrelated long-term agreement and lease agreement each dated 1 March 1985 under which they were to hire 100 containers from a company called Containerworld Leasing...
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