Transfield Shipping Inc. (Applicant/Claimant) v Chiping Xinfa Huayu Alumina Company Ltd (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 22 December 2009 |
| Neutral Citation | [2009] EWHC 3629 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: 2009 Folio 1660 |
| Date | 22 December 2009 |
[2009] EWHC 3629 (QB)
Before: Mr Justice Christopher Clarke
Case No: 2009 Folio 1660
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR S.J.PHILLIPS, Q.C. (instructed by Richards Butler) appeared on behalf of the Claimant
MR SEAN O'SULLIVAN (instructed by Stephenson Harwood) appeared on behalf of the Defendant
Approved Judgment
This is an application for an anti-suit injunction restraining the respondent, Chiping Xinfa Huayu Alumina Co Ltd (“Chiping”), from taking any steps other than steps to abandon or discontinue the relevant proceedings in relation to the action which Chiping has commenced in China, which is due to be tried on 28 December this year.
Background
The applicant, Transfield Shipping Inc (“Transfield”), is a Panamanian corporation and a shipping company whose activities are based in Hong Kong. Chiping is an aluminium importer based in the Shandong Province in the People's Republic of China.
In late 2005, Transfield entered into two voyage charters, which I will call the 2005 charters, with Liaocheng Xinfa Huayu Alumina Co Ltd (“Liaocheng”). These contracts, which were on amended 1976 Baltic and International Maritime Conference Uniform General Charter (GENCOM) terms, both contained London arbitration clauses and were performed. According to the evidence of Mr Shepherd of Richards Butler, Transfield thought that the Liaocheng was essentially the same company as Chiping. It is not in fact the same company, although the two companies apparently have a common shareholder.
The recap for the first charter had specified arbitration in London, English law and “Other terms n conditions as per owr's gencon cp”. Transfield and Liaocheng later signed and stamped an amended pro forma 1976 GENCOM form, with Transfield's usual rider clauses. The recap for the second charter also provided for English law and arbitration and “OTHERWISE AS PER OWRS PERFORMED CP”. The parties later signed and stamped an amended pro forma 1976 GENCOM form, with Transfield's usual rider clauses.
In late July 2008 there were negotiations between the present parties in relation to a possible contract of affreightment in relation to the carriage of a series of cargos of bauxite in bulk from India to China. On 1 August 2008, Chiping entered into a contract to purchase 400,000 metric tons of bauxite from Honor Resources International Co Ltd “Honor Resources”), FOB Jalgad, India.
By the end of July 2008, the parties had reached agreement on the key terms of the contract of affreightment.
July
On 29 July, Mr Samuel Yu of Transfield sent a recap to Mr Zhang of Chiping, recording what had been agreed. This recap began with the words:
“MANY THANKS FOR YOUR EFFORTS SO FAR. WE WOULD LIKE TO MAKE THE FOLLOWING RECAP.”
In the email, Transfield indicated that it was also providing the recap by fax and invited Chiping, if the recap was agreeable, to give a confirmation by return by signing and stamping the fax and sending it back to Transfield's Beijing office.
The recap referred to a “PRO FORMA C/P PER OWNER'S PERFORMED GENCOM C/P”, but no such charter party, or no charter party identified as such, had at that stage been provided to Chiping. The recap also provided “RECAP SUBJ TO CHTRS RECONFIRMATION BEFORE 1800 HRS ON 29 JULY 2008” and also provided “SUBJS (sic) DETAILS”. Chiping responded in an email later that day to propose some changes in the terms suggested in the recap.
August
There were then some further discussions between the parties on 30 July and 1 August 2008 by email. On the afternoon of 1 August 2008, a scanned version of the recap, now signed at the foot by Transfield, was sent to Chiping. It was still said to be “SUBJS DETAILS” and no pro forma charter party had yet been provided. Chiping signed, stamped and returned the recap to Transfield. Transfield submits that it was then that a contract was made.
Mr Yu of Transfield's evidence is that the inclusion of the words “SUBJS DETAILS” was “strictly in error”. In the arbitration proceedings to which I shall shortly refer, there is a claim for rectification. The inclusion of the words is said to be in error as being inconsistent with (a) the effort put in by the parties to reach agreement; (b) the manner of its conclusion by recap, referring to owner's performed GENCOM charter party, as had happened in respect of the 2005 charters; and (c) the signing and stamping of what is said to be the contract. Reliance is also placed on the fact that Chiping had contracted with Honor Resources and needed to agree a contract of affreightment and also on what happened when Chiping sought to extricate itself from the agreement.
Mr Zhang of Chiping's evidence is that he understood that there was an agreement in principle on the main terms, subject to negotiation on further terms, and that that was his understanding of the meaning of the phrase “SUBJS DETAILS”.
Transfield submits that the words “PRO FORMA C/P PER OWNER'S PERFORMED GENCOM C/P” refer to the amended 1976 GENCOM charter party on whose terms the 2005 charters had been concluded. Mr Zhang of Chiping had been personally involved in the negotiation of those contracts. Moreover, on the evidence, Transfield submits, there was no other charterparty between Transfield and Chiping or Liaocheng or any associated company to which reference could, looking at the matter objectively, have been made.
August
On 4 August, a draft charterparty form (using GENCOM 1976) was emailed to Ms Chen of Chiping for the purpose of agreeing the details. The next day she responded with some initial points, including a request for the deletion of the P & I bunkering clause.
August
On 6 August, Transfield provided a further charterparty party form, this time based on the GENCOM 1994 form, which, as completed, provided for English law and London arbitration. According to Transfield, this happened because in a telephone conversation on 5 August Mr Yu of Transfield had agreed to Ms Chen's request for that GENCOM form to be used. According to Mr Yu, Ms Chen made no reference to the arbitration clause at this stage. In the 6 August email, Mr Yu had also responded to the comments made by Ms Chen on 5 August agreeing to one of them and disagreeing with the others.
August
On 7 August, Ms Chen proposed some further adjustments to the draft agreement. One was that the arbitration clause should provide for arbitration in Hong Kong, rather than in London.
There was then a telephone conversation between Mr Yu and Ms Chen. According to Mr Yu, he explained that London was the most appropriate and ordinary place for arbitration and Ms Chen agreed to maintain London as the seat.
According to Ms Chen, there was a short conversation, the gist of which was as follows. Mr Yu said that he had received her email and asked whether she intended to change the seat of the arbitration from London to Hong Kong. She said yes and he asked why. She said that Chiping was more familiar with Hong Kong, that it was more convenient because it was closer to China and also that Chiping had specified Hong Kong in a number of contracts. Mr Yu then said that Transfield believed that London was cheaper than Hong Kong and was in many respects a better choice. She then asked for some time to discuss the matter with her superior, Mr Zhang, to which Mr Yu agreed.
Mr Yu followed this conversation up with a further email, in which Transfield agreed with two of Ms Chen's proposed amendments. The email ended with the words:
“3. Per our telcon, we maintain London. Therefore, charter party is all clean.”
Transfield maintains that, if no contract had been made before, a contract was concluded on 7 August.
Chiping did not respond to that message. Transfield relies on that as indicating that Chiping accepted that there was a contract. But Chiping says that no reply was ever sent because Ms Chen still needed to speak to Mr Zhang, who was away on compassionate leave following the death of his mother until 19 August.
Posting of the charterparty and Mr Zang's return
In the meantime, Transfield posted a clean copy of the draft charter party to Chiping for signature on 15 August. Chiping did not, however, sign it.
By the time Mr Zhang returned, movements in the aluminium market were such that it was becoming less likely that Chiping's potential purchase of the Indian bauxite would go ahead as envisaged.
Late August
According to Transfield, in late August Mr Zhang of Chiping spoke to Mr Zhang of Transfield and asked for a reduced freight rate in the light of the falling market. Nothing was agreed and Chiping was asked to put its proposal in writing. It was not suggested that there was no contract in existence.
According to Mr Zhang of Chiping, he was telephoned in late August by Mr Zhang of Transfield, who asked him why the draft charter party had not been signed. Mr Zhang of Chiping explained that as a result of the collapse in the aluminium market, Chiping was not in a position to conclude the agreement. Mr Zhang of Transfield responded by saying that in his view there was a binding agreement and he asked Chiping to put its position in writing.
Chiping complied with this request. In an email whose subject was “Suggestion of cancelling India contract of carriage by sea”, Mr Zhang said:
“Faced with the tremendous pressure of production costs in a poor market for oxidised...
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