Stellar Shipping Company LLC v Hudson Shipping Lines
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen,RE,Re |
| Judgment Date | 18 November 2012 |
| Neutral Citation | [2010] EWHC 2985 (Comm) |
| Docket Number | Case No: 2010–946 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 November 2012 |
[2010] EWHC 2985 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before: The Honourable Mr Justice Hamblen
Case No: 2010–946
Simon Bryan QC (instructed by Mays Brown) for the Claimant
James Drake (instructed by Lax and Co) for the Defendant
Hearing dates:
Judgment Approved by the court for handing down
Mr Justice Hamblen:
The Application
Stellar Shipping Co LLC (“Stellar”) apply under section 67 of the Arbitration Act 1996 challenging the Award and Amended Award of Kenneth Rokison QC, Christopher Moss and Mark Hamsher (“the Tribunal”) dated 14 May 2010 and 12 August 2010 respectively on the grounds that the Tribunal lacked substantive jurisdiction because no arbitration agreement was ever entered into between Stellar and Hudson Shipping Lines (“Hudson”) in respect of an alleged guarantee by Stellar, of the obligations of Phiniqia International Shipping Co (“Phiniqia”) under an alleged Contract of Affreightment between Hudson and Phiniqia.
The Issue
The essential issue before the Court can be shortly stated:
“Did Stellar enter into an arbitration agreement with Hudson in respect of the alleged contract of guarantee between Stellar and Hudson?”
If it did not then the Tribunal lacks jurisdiction, and Stellar are entitled to the relief sought in the Claim Form. If it did then the challenge to jurisdiction fails. Stellar contend that no such arbitration agreement was entered into because (1) no contractual relationship of any kind was entered into between Stellar and Hudson and (2) if it was it did not include any arbitration agreement. Hudson questioned whether the first ground was open to Stellar on this application but I am satisfied that it is part of the general challenge to jurisdiction which they are entitled to make.
The nature of the current hearing
It is well established that the application under section 67 of the Arbitration Act 1996is a re-hearing and not an appeal or review—See, for example, Electrosteel Casting Ltd v Scan-Trans Shipping & Chartering [2003] 1 Lloyd's Rep. 190, 197 and the authorities there referred to by Gross J. Accordingly it is for the Court to decide afresh whether or not there was a concluded arbitration agreement between Hudson and Stellar giving jurisdiction to the Tribunal.
The Background to the Arbitrations
This application challenging the Tribunal's substantive jurisdiction arises out of the arbitration commenced by Hudson against Stellar, which is itself effectively an accessory arbitration to one ongoing between Hudson and Phiniqia. In the Hudson/Phiniqia arbitration Hudson claim some US$3.4 million from Phiniqia alleging that Phiniqia agreed to enter into what was expressed in the contemporary correspondence as a charterparty between owners and charterers (but in terminology terms is more accurately characterised as a Contract of Affreightment) (“COA”) for four voyages, and failed to proceed after the first voyage. Phiniqia contend that there never was a concluded COA—“subjects” were never lifted, accordingly that tribunal lacks jurisdiction. If there was a COA, Phiniqia say that their failure to proceed with later voyages was not culpable—owing to severe whirlwind damages force majeure prevented further liftings, or the COA was frustrated. In addition they contend that Hudson failed to provide a valid nomination for the second lifting. There are also issues as to the quantum of Hudson's claim.
Phiniqia are not party to the arbitration out of which the arbitration application before the Court arises, and accordingly are not before the Court. The tribunal in that arbitration (the same constitution as the Tribunal) has yet to rule on Phiniqia's defences including jurisdiction. In such circumstances it should be made clear that no findings I make affect other parties (and other contracts) which are not before the Court.
The Hudson/Stellar arbitration comes about because Hudson allege that Stellar guaranteed Phiniqia's obligations under the alleged COA. There are a large number of issues in play in the Hudson/Stellar arbitration including whether either of the people at various times alleged to be Stellar's agents for the purpose of (i) concluding the guarantee and/or (ii) providing a memorandum of it (Mr Habib of Phiniqia's chartering arm, Stellar Chartering and Mr Michalopoulos of Velos) had authority.
The arbitration had a complicated procedural history that culminated in a ruling by the Tribunal that the following issues be determined as preliminary issues:
(1) “The Statue of Frauds issue” (whether the documents relied upon as a guarantee comply with the requirements of section 4 of the Statute of Frauds);
(2) “The issue of Separability”;
(3) “Was an arbitration agreement made or incorporated into any agreements concluded on 9, 14 or 18 June?” (This preliminary issue was to be considered on the basis, agreed by Stellar solely for the purposes of the preliminary issue, that the allegation set out in paragraph 28(c) of Lax & Co's submissions of 4 March 2009, namely that on 18 June Mr Habib told Mr Michalopoulos that Hudson's latest proposal regarding the form of guarantee as set out in their email of 13 June was acceptable, was correct.)
(4) “The “present guarantee” issue” (whether it was merely an agreement to agree).
These issues formed a combination of jurisdictional issues ((2) and (3)) and substantive issues ((1) and (4)) which had the common factors that (i) they could be determined on the basis of the documents attached to the submissions, and (ii) if any of them was found in Stellar's favour they would be determinative of the arbitration in Stellar's favour. The Preliminary Issues proceeded on the basis of the assumption (contrary to Stellar's case) that Mr Habib had authority to act on behalf of Stellar (which was left over for future determination). This meant that whatever the findings of the Tribunal on these issues, important matters would remain for future determination (including on questions of authority) and thus as to whether there was in fact a binding COA between Phiniqia and Hudson, and a binding guarantee between Stellar and Hudson (whatever prima facie findings were made).
The issues were heard on 22 March 2010. Hudson and Stellar were represented by counsel. The Award was issued on 14 May 2010, and after submissions in relation to corrections under section 57 of the Arbitration Act 1996 and rule 25 of the LMAA Rules, an amended Award and Reasons were issued on 11 August 2010. The Tribunal held that “ the arbitration agreement was incorporated into the COA and encompassed Stellar's obligation to guarantee performance by Phiniqia”( para 8(A)(3) of the Award). They gave detailed Reasons for their findings on the preliminary issues (extending to some 66 paragraphs).
The Fixture
A threshold matter arises as to the evidence. Stellar argue that the Court should not look at the run of fixture correspondence but should limit itself to the communications that “crossed the line” between the parties. This was not the position taken by them at the arbitration and its appropriateness is disputed by Hudson. However, in principle I consider that Stellar are correct that an objective approach has to be taken in circumstances where the issue is what was agreed and what is the meaning and the effect of what was agreed and I propose to adopt such an approach.
It would appear that the origin of the fixture was an approach in April 2008 by Vassilis Michalopolous of Velos Chartering (“Velos”) to Jeff Czarnota at Maritime Brokers & Consultants, Inc (“MBC”) in relation to a suitable vessel for the carriage of coal in bulk from Vietnam to Egypt.
It is Hudson's case that Velos (based in Athens) made the approach for Phiniqia, and MBC (based in Chicago) were the brokers for Hudson (also in Chicago). It was Stellar's case before the arbitrators that Velos were not brokers for Phiniqia/ Stellar but merely intermediate brokers passing messages up and down the line. The Tribunal did not determine this issue, nor is it necessary to do so for the purpose of the present application.
On 17 April 2008, MBC “bid firm” for the fixture, a COA between Phiniqia as Charterers and Hudson as Owners covering four shipments of 30,000mt 15% more or less “FAIRLY EVENLY SPREAD MAY 2008 – MARCH 2009” of coal in bulk from Vietnam to Egypt at a freight rate of USD 63 per mt. MBC asked Velos to “PLS ADVISE FULL STYLE/ BACKGROUND” for Phiniqia. The firm bid was on the basis of a Gencon charterparty and provided inter alia as follows:
(Subject: PHINIQIA/HUDSON SHIPPING LINES FIRM OFFER):
“RE: PHINIQUIA/HUDSON SHIPPING LINES FIRM OFFER
FURTHER TO OUR VARIOUS EXCHANGES, HUDSON SHIPPING LINES ARE PLSD TO BID FIRM AS FOLLOWS
CHRTS: PHINIQIA INTL SHIPPING, DUBAI (PLS ADVISE FULL STYLE/BACKGROUND)
OWNERS: HUDSON SHIPPING LINES.
…..
VASSILIS—TRIED TO KEEP THE ABOVE AS SIMPLE AS POSSIBLE. PLSD TO HAVE CHRTS FIRM COUNTER AND WE CAN TRY TO PUT THIS DEAL ON SUBS.”
Subsequent emails would similarly refer to “PHINIQIA/HUDSON” as the “Subject” and to “CHRTS: PHINIQIA INTL SHIPPING, DUBAI” and Stellar submitted that this made it clear that any reference to charterers in the body of the exchanges was intended to refer to Phiniqia.
On 21 April 2008 Velos responded with an Accept/Except (“A/E”) counter at a rate of US$55. The terms included the following clause on arbitration: “ARB ENGLISH LAW” and attached the requested “BACKGROUND REF”.
The “BACKGROUND REF” was provided as an attachment entitled “Stellar BG”. It stated inter alia:
“ Tradeline LLC—Group Profile
Tradeline is part pf the Majid Saif Al-Ghurair group of companies based in the United Arab Emirates. One of the largest...
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