Sea Trade Maritime Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd (No.1)
| Jurisdiction | England & Wales |
| Judgment Date | 24 February 2006 |
| Neutral Citation | [2006] EWHC 578 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No.11 of 2006 |
| Date | 24 February 2006 |
[2006] EWHC 578 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
St. Dunstan's House
Mr. Justice Christopher Clarke
Case No.11 of 2006
MR. T. BRENTON QC and MR. D. BAILEY (instructed by Fox Williams) appeared on behalf of the Claimant.
MR S. MORIARTY QC and MR. D. DALE (instructed by Richards Butler) appeared on behalf of the Defendant.
(As approved by the Judge)
MR. JUSTICE CLARKE:
On 29 th May 1997, the vessel ATHENA, which was owned by Sea Trade Maritime Corporation (which I will call "Sea Trade"), was damaged, allegedly by an explosion caused by Tamil Tiger Terrorists when she was at Trincomalee in Sri Lanka. Sea Trade presented a war risk claim to the Hellenic Mutual War Risk Association (Bermuda) Limited (which I will call "the Association") which insured the vessel against war risks.
Sea Trade's claim accepted that Sea Trade had failed to give the notice required under the Association's rules that the vessel was going to Sri Lanka, which was, at the time, an additional premium area. The directors of the Association were, however, invited to exercise their discretion under the rules to accept the claim. The directors decided that the Association should make a discretionary payment up to the amount of $3.4 million in respect of the casualty, and in due course the Association made that payment in two tranches. Although invited to reconsider, the directors did not agree to the Association making any further payment.
Thereafter, Sea Trade commenced three sets of legal proceedings in Greece against the Association and some of its directors for declining to pay in full. Each of the last two was commenced after the withdrawal of the immediately preceding proceedings. These were followed by further proceedings in New York. The last of the Greek proceedings is still on foot. The New York proceedings were stayed by an order of the New York Supreme Court, on the ground that rule 44 of the Association's rules called for arbitration in London. Appeals to the Appellate Division of the New York Supreme Court and the New York Court of Appeals failed.
Thereafter, arbitration proceedings were commenced against Sea Trade by the Association. Sea Trade continued to contend that the arbitration tribunal had no jurisdiction over it. In January 2005 the tribunal, consisting ofMr. Jonathan Hirst QC, Mr. George Henderson and Sir Christopher Staughton (the third arbitrator and Chairman), ordered the trial of a number of preliminary issues, including all issues going to the jurisdiction of the tribunal. The hearing of those issues took place in May and June 2005. On 1 st July 2005 the tribunal issued its first interim award. The tribunal found unanimously in the Association's favour on all issues going to jurisdiction, save for one minor one, and on the other non-jurisdictional issues the subject of the hearing.
Sea Trade then began an arbitration claim (the first arbitration claim) in which it asked for the whole of the award of 1st July 2005 to be set aside for lack of substantive jurisdiction, for leave to appeal under s. 69 in respect of a number of issues determined against it by the tribunal, and for the award to be set aside in two specific respects for serious irregularity.
On 25 th November of 2005, Morison J. gave directions for dealing with the first arbitration claim. Those directions included, firstly, providing for the trial of a number of preliminary issues in relation to issues of jurisdiction, secondly, a stay of the serious irregularity question, and, thirdly, a direction that Sea Trade's application for permission to appeal should, with one exception, be dealt with on paper. On 17 th February of this year, Langley J. dealt with the paper application and refused permission to appeal. The s. 69 application that was not to be dealt with on paper was due to be determined today but that application has been abandoned.
Paragraphs 99 to 101 of the award of 1 st July read as follows,
"99. We reserve our decision as to costs, how they shall be borne and who shall assess them (except for the costs of the tribunal) until some future occasion.
"100. We assess the costs of the tribunal in the sum [a sum is mentioned and then another sum for room hire plus Value Added Tax, if applicable] … which shall be borne for the time being by the parties in equal portions, provided that if either party shall have borne more than an equal share, they shall be reimbursed forthwith as to the excess together with interest at 4 per cent per annum from the date of payment to the date of reimbursement.
"101. This award is final as to what it decides. Any remaining issues which we have to decide shall be determined on a further occasion if required."
Sea Trade have what has been described as a broad ground for challenging the tribunal's decision, namely, that it lacks jurisdiction to make an order as to costs for the same reason as it lacked jurisdiction on the substantive dispute. That broad ground is not now before me. Sea Trade have, however, a narrower ground of objection. They contend that in the events which have happened, the tribunal lost the power to make any order as to costs. They rely in this respect on the provisions of s. 57 of the Arbitration Act 1996. That section reads as follows:
"1. The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.
"2. If or to the extent there is no such agreement, the following provisions apply.
"3. The tribunal may on its own initiative or on the application of a party:
"(a) correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or
"(b) make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in the award. These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.
"4. Any application for the exercise of those powers must be made within 28 days of the date of the award or such longer period as the parties may agree.
"5. Any correction of an award shall be made within 28 days of the date the application was received by the tribunal or, where the correction is made by the tribunal on its own initiative, within 28 days of the date of the award or, in either case, such longer period as the parties may agree.
"6. Any additional award shall be made within 56 days of the date of the original award or such longer period as the parties may agree.
"7. Any correction of an award shall form part of the award."
No application was made by the Association to the tribunal that it should exercise powers under s. 57 within 28 days of the date of the award. The Association's application to the tribunal to deal with the question of costs appears to have been made at the earliest by their solicitor's letter of 29 th September 2005. Nor did the tribunal make any award of its own initiative within 56 days of the original award. Accordingly, so it is submitted, it was, by the end of 2005, simply too late for the tribunal to make an additional award of costs. The relevant time limits had all expired and, in the absence of the agreement of the parties, could not be...
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