Sino Channel Asia Ltd v Dana Shipping and Trading Pte Singapore and Another
| Jurisdiction | England & Wales |
| Judge | The Hon Sir Bernard Eder |
| Judgment Date | 20 May 2016 |
| Neutral Citation | [2016] EWHC 1118 (Comm) |
| Docket Number | Case No: CL-2016-000063 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 May 2016 |
[2016] EWHC 1118 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
The Hon Sir Bernard Eder
Case No: CL-2016-000063
Michael Coburn QC (instructed by Bryan Cave) for the Claimant
Chirag Karia QC (instructed by Holman, Fenwick Willan LLP) for the Defendants
Hearing date: 20 April 2016
This hearing concerns the status of arbitration proceedings purportedly commenced by the First Defendant, Dana Shipping and Trading Pte Singapore ("Dana"), against the Claimant, Sino Channel Asia Limited ("Sino Channel") in connection with disputes arising under a contract of affreightment ("COA") dated 9 April 2013 between Dana as owner and Sino Channel as charterer. As appears more fully below, Dana appointed Christopher J Moss as their arbitrator and emailed their notice of arbitration to a man called Mr Daniel Cai calling upon Sino Channel to appoint their arbitrator. It is common ground that Mr Cai was not an employee of Sino Channel but an employee of a different company, Beijing XCty Trading Limited ("Beijing XCty"). It is Sino Channel's case that Mr Cai had no authority to accept service on Sino Channel's behalf; that therefore such purported service was ineffective; and that, as a result, Sino Channel did not respond because they were unaware of the arbitration and did not participate in it. In the event, Mr Moss took on the role of sole arbitrator and subsequently made an award in Dana's favour on 3 February 2015, with a correction made on 15 June 2015 (the "Award"). The Award was sent to Sino Channel (by hard copy to its address in Hong Kong) and received by them. This was the first Sino Channel had heard of the arbitration.
It is against that background that Sino Channel now applies for a declaration and order pursuant to s72(1)(b) or (c) of the Arbitration Act 1996 (the "Act") which provides in material part as follows:
" 72. Saving for rights of person who takes no part in proceedings
(1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question:
…
(b) whether the tribunal is properly constituted, or
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement,
by proceedings in court for a declaration or injunction or other appropriate relief."
The declaration and order as sought in the Claim Form issued on behalf of Sino Channel was in relevant part as follows:
" … a declaration that the [Award]…was made without jurisdiction and is of no effect and an order setting aside the Award accordingly …"
At the outset, I should mention a threshold point as to whether it is, in any event, open for the Court to grant such declaration and order under s72(1) in the context of the Act as a whole and having regard, in particular, to the terms of s72(2) which provides as follows:
"(2) He also has the same right as a party to the arbitral proceedings to challenge an award—
(a) by an application under section 67 on the ground of lack of substantive jurisdiction in relation to him, or
(b) by an application under section 68 on the ground of serious irregularity (within the meaning of that section) affecting him;
and section 70(2) (duty to exhaust arbitral procedures) does not apply in his case."
In this context I was referred to the judgments of Christopher Clarke J in The Eastern Navigator [2006] 1 Lloyd's Rep 537 at [56]–[59] and Walker J in The Prestige [2014] 1 Lloyd's Rep 137 at [59]–[78] and [82]–[84]. As appears from these cases, one possible view is that s72(1) is primarily intended to deal with the position at an interlocutory stage i.e. before any award has been made; that it has no application once an award has been made; and that, once an award has been made and a party seeks to "challenge" an award and to obtain an order setting it aside, such challenge cannot be made under s72(1) but must be made pursuant to s72(2) of the Act i.e. by an application under s67 and/or s68 of the Act. If that is right, Sino Channel's application under s72(1) would seem to fail in limine. A related issue is whether there are any time limits for bringing such application. That is potentially relevant because, as appears below, Sino Channel's application was issued approximately 11 months after the date of the original Award and seven months or so after the date of the correction to the Award i.e. well beyond the statutory time-limit of 28 days for bringing any application under s67 and/or s68 of the Act.
However, as to the first point, for the reasons given by Walker J. in The Prestige, I agree that there is no necessity to confine s72(1) to the position before the issue of an award. As to the second point, it is noteworthy that although s70 imposes strict time limits for any application or appeal under ss 67, 68 or 69, there is no equivalent time limit stipulated for any application under s72(1). This is presumably because, as recognised by Walker J. at [82], those who do not participate in the arbitral proceedings are entitled to wait until an application to enforce. For these reasons, it would seem to follow that any application under s72(1) is not subject to any time limits. I proceed on this basis.
In the alternative to its application under s72(1), Sino Channel applies under s67 of the Act for an order setting aside the Award on the ground that the Tribunal lacked jurisdiction; and/or under s68(2)(a) and (b) of the Act for " … an order setting aside the Award as there was serious irregularity affecting the proceedings on the grounds that [Dana] failed to serve any effective notices relating to the alleged arbitration on [Sino Channel] and/or because communications from Mr Cai to the arbitrator were fraudulent which caused a substantial injustice to [Sino Channel] as it had no opportunity to present its case". In that context, Mr Coburn QC accepts that such applications are out of time and in so far as may be necessary seeks an extension of time under s79 and/or s80(5) of the Act.
In summary, it is Dana's case that (i) Mr Cai had actual implied authority and/or ostensible authority to receive notice of arbitration on behalf of Sino Channel; and/or (ii) that such authority was subsequently ratified by Sino Channel. On that basis, Mr Karia QC submits that (quite apart from the controversial issues referred to above and, in particular, any question of time limits) the application under s72(1) of the Act must, in any event, fail on its merits, as must the alternative applications under s67 and/or s68 of the Act.
The Facts
So far as the factual evidence is concerned, the parties have served a number of witness statements. In particular, Sino Channel relies upon certain statements of Jung Byung Dug ("Mr Jung"), the Director of Sino Channel; and a statement of Serena Cooke, a solicitor employed by Bryan Cave who has the conduct of the matter on behalf of Sino Channel. Dana relies upon a statement of Konstantinos Christides, Dana's Head of Operations; a statement of Christos Stamatou, a broker at Lynx Freight & Trading SA ("Lynx"), Dana's chartering brokers; and Dimitrios Exarchou, a partner in Holman, Fenwick & Willan ("HFW") who has the conduct of the matter on behalf of Dana. In addition, the evidence included certain affidavits previously sworn for the purposes of related proceedings in the High Court of the Hong Kong Special Administration Region as referred to below.
The main facts, from the perspective of Sino Channel, are set out in the statement of Mr Jung. The position taken by Dana is that, subject to one irrelevant exception, there was no need for oral evidence or disclosure. On that basis, it was common ground that I should proceed on the basis that what is set out in the statements and earlier affidavits served by Sino Channel is true. Accordingly, the following summary of facts is taken largely from the parties' skeleton arguments.
Mr Jung is Korean. After attending a Korean university he worked for a Korean corporation and became the Chief Financial Officer of its Hong Kong subsidiary. In 2007 he left to set up his own trading company, Sino Channel, but he remained in Hong Kong. Sino Channel is a Hong Kong registered company. Apart from Mr Jung, it has three employees, all Hong Kong residents.
In about 2009, Mr Jung was approached by Mr Zhou Wen Li ("Mr Zhou"), the director and owner of Beijing XCty. Mr Jung had encountered him during the course of his (Mr Jung's) previous employment.
Beijing XCty is a Chinese company, registered in the PRC and with a Beijing address. Mr Zhou is its legal representative.
Mr Zhou asked if Sino Channel would provide Beijing XCty the same sort of " letter of credit financial services" as had been provided by Mr Jung's previous employers. Mr Jung agreed to do so.
In essence, the " services" in question involved Beijing XCtyY arranging back-to-back sale and purchase contracts which would be concluded in the name of Sino Channel. Sino Channel would handle the financial (letter of credit) side of the transaction and Beijing XCty would handle the operational side.
As between Sino Channel and Beijing XCty, Sino Channel would be entitled to receive US$ 1 per metric tonne. Subject to that, Beijing XCty would be entitled to the difference between the buying price and the (higher) selling price.
Mr Cai appears to have joined Beijing XCty in around 2011/2012. Mr Jung met him on a few occasions and...
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