West of England Ship Owners Mutual Protection and Indemnity Association (Luxembourg) v Hellenic Industrial Development Bank SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Clarke J. |
| Judgment Date | 02 July 1998 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 02 July 1998 |
Queen's Bench Division (Commercial Court).
Clarke J.
Simon Crookenden QC (instructed by Bentleys Stokes & Lowless) for the plaintiff.
John Lockey (instructed by Eversheds) for the first defendant.
The following cases were referred to in the judgment:
Cremer (Peter) GmbH & Co v Sugat Food Industries Ltd (“The Rimon”)UNK [1981] 2 Ll Rep 640
Frotanorte, The [1995] CLC 999; [1997] CLC 230 (CA)
Nea Agrex SA v Baltic Shipping Co Ltd (“The Aghios Lazaros”)ELR [1976] QB 933
Swiss Bank Corp v Novorissiysk Shipping Co (“The Petr Schmidt”) [1995] CLC 62
Vosnoc Ltd v Transglobal Projects Ltd [1997] CLC 1345; [1998] 1 WLR 101
Shipping — Agency — Arbitration — Limitation — Whether P & I club entitled to recover calls from bank as owner of ship — Whether operator of ship had authority to enter bank as member of club — Whether bank bound by arbitration clause in club rules — Whether club's claims time barred or whether arbitration already commenced — Limitation Act 1980, s. 34(3)(a).
This was an action raising issues whether the first defendant bank was properly entered as a member of the plaintiff P & I club as owner of the Argostoli and was bound by the arbitration clause in the club rules.
The plaintiff club sought to recover from the bank unpaid calls in respect of a number of vessels entered in classes I and II of the club for protection and indemnity and for freight, demurrage and defence risks respectively. The claims related to vessels managed or operated as a fleet of inter-island ferries by HCS, a wholly owned subsidiary of the bank. The bank had resolved that HCS should be put into liquidation. The club claimed not against HCS but against the bank on the basis that the bank was entered as a member of class I in respect of one of the vessels, the Argostoli, of which the bank was the owner. The entry contained a fleet clause providing that each member was liable for calls in relation to other vessels in the fleet, even if owned by someone else.
In 1985 the bank became mortgagee in possession of the Argostoli. The vessel was then managed or operated by HCS and that remained the case after the bank bought the vessel and was registered as owner in 1986. Although the bank had intended formally to charter the vessel to HCS or contribute the vessel to the share capital of HCS, that had never been done and HCS had always managed the vessel under an informal arrangement for the bank as owner, evidenced by a protocol signed by the bank in 1991. The bank's case was that HCS was operating the Argostoli for its own account and not on account of the bank, and it relied on the fact that HCS had demise chartered the vessel to another operator. The bank therefore denied that HCS had authority to make it a member of the club. The club said that HCS had actual or ostensible authority to enter the bank as a member. The club also relied on art. 105.3 of the Greek Code of Private Maritime Law which provided that where a person operated a ship not owned by him for his own account that fact had to be declared jointly by that person and the owner and that if no such declaration was made the owner (i.e. the bank) was deemed to operate the ship for its own account.
The club argued that if the bank was properly entered as a member it was bound by the arbitration agreement in the club rules and the club sought the appointment of an arbitrator under s. 10 of the Arbitration Act 1950 in respect of its class I claims. The bank argued that the class I claims were time-barred because the club had never served a notice requiring the bank to agree to the appointment of an arbitrator, and there was therefore no point making an order under s. 10.
Held, granting declarations accordingly:
1. HCS had authority as a matter of Greek law to enter the vessel in the club and commit the bank as member to pay the calls in accordance with the club rules. That was express actual authority based on the only agreement supported by the evidence, namely the oral agreement referred to in the 1991 protocol. That showed that the vessel was to be delivered to HCS and thereafter operated by HCS on behalf of the bank. Despite many discussions, subsequent attempts by the bank to transfer or demise charter the vessel to HCS failed. If the vessel had been operated by HCS on its own behalf HCS would have entered her with the club on the basis that HCS was the member or that HCS and the bank were joint members. The demise charter of the vessel by HCS did not mean that HCS was itself the disponent owner: HCS entered into the charter on behalf of the bank as undisclosed principal. Alternatively, the express actual authority was simply to operate and manage the vessel on behalf of the bank and it was implicit in that arrangement as a matter of Greek law that HCS had authority (implied actual authority) to bind the club.
2. Article 105.3 of the Greek Code of Private Maritime Law also applied to deem the vessel to be operated for the account of the bank and to give HCS authority as operator to bind the bank as shipowner. That was not ostensible authority under English law, which required a holding out by the shipowner and reliance by the club, but a statutory deeming creating a presumption which the bank had failed to rebut.
3. The bank was bound by the arbitration clause in the club rules. The arbitration agreement and the authority to make it had to be in writing under Greek law. The arbitration agreement itself was sufficiently evidenced in writing and the 1991 protocol conferred sufficiently wide authority on HCS to enter into the arbitration agreement with the club and was written evidence of that authority.
4. It was arguable that correspondence from the club's solicitors, an originating summons seeking an order appointing an arbitrator and the writ in the action made it clear to the bank that the club was requiring the bank to agree to the appointment of an arbitrator and was sufficient to satisfy the terms of s. 34(3)(a) of the Limitation Act 1980. The correct course was to appoint an arbitrator under s. 10 of the Arbitration Act 1950 who would have to decide inter alia whether the bank's time bar point succeeded.
Clarke J: The plaintiff club (“the club”) wishes to recover unpaid calls in respect of a number of vessels entered in classes I and II of the club for protection and indemnity and for freight, demurrage and defence risks respectively. The class I claims relate to a total of nine vessels. All the vessels were managed or operated by Hellenic Coastal Shipping SA (“HCS”). Only two of the vessels were owned by HCS. Of the seven others, two were owned by each of Naxos Shipping Co SA, Shipping and Tourist Co of Samos and Ikaria SA and Chios Shipping SA and one, the Argostoli, was owned by the defendant bank (“the bank”). The class II claims relate only to the Argostoli and the Ionis. HCS was a wholly owned subsidiary of the bank. On 18 January 1990 the bank resolved that HCS should be put into liquidation. Subsequent steps were taken to that end, although whether or not HCS has been dissolved I do not know.
The club's claim is not brought against HCS but against the bank on the basis that the bank was entered as a member of class I as from 1 June 1987. The entry was renewed as from 20 February each year thereafter until 6 February 1991 when it was cancelled by the club for non-payment of calls. The certificate of entry which evidences the initial entry in June 1987 describes the member as the bank. The bank denies that HCS or the brokers had authority to make it a member of the club or alternatively to do so on terms that it would be liable for calls. The club says, on the other hand, that HCS had actual authority to enter the bank as a member or alternatively that it had ostensible authority to do so.
It is common ground that the bank purchased the Argostoli at a public auction which was carried out under the auspices of the Greek court on 18 May 1986. The bank was registered as the owner of the vessel in the Greek register as from 4 June 1986. It remained the registered owner at all material times thereafter. It is also common ground that the question whether HCS had actual authority to contract on behalf of the bank is governed by Greek law. Oral evidence of Greek law was given on behalf of the club by Professor Stathopoulos. He is a distinguished Greek lawyer whose evidence was in the end accepted both by the club and the bank because after he had given his evidence the bank decided not to call the Greek law expert who was advising it, namely Mr George Economou.
The club's case on actual authority is put in two ways. The first is that the club had the relevant authority because the bank had agreed that HCS should manage the vessel in its name and on its behalf as shipowner. The second is that HCS had implied actual authority to the same effect by reason of art. 105 of the Greek Code of Private Maritime Law, which provides as follows:
“1. A person who operates a ship not owned by him for his own account (charterer by demise), must declare it in writing jointly with the owner of the ship, to the port authorities where the ship is registered.
2. The declaration, containing the name, citizenship and the domicile of the charterer by demise (operator), the duration of the charter by demise as well as the description of the ship, is recorded in the Registry and in the certificate of the ship's Registry.
3. Where such declaration is not made, the owner of the ship is deemed to operate her for his own account.”
It is common ground that HCS was not registered as the operator of the vessel. The club says that in these circumstances the bank as owner is deemed to operate her for its own account and that it follows that HCS had implied actual authority to enter the vessel in...
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