World Trade Corporation Ltd v C Czarnikow Sugar Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Colman |
| Judgment Date | 18 October 2004 |
| Neutral Citation | [2004] EWHC 2332 (Comm) |
| Docket Number | Case No: 2004 FOLIO 275 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 October 2004 |
[2004] EWHC 2332 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Colman
Case No: 2004 FOLIO 275
Mr Sailesh Panchmatia, a director, with permission of the Court represented the Claimant
Mr Simon Rainey QC and Mr Nicholas Craig (instructed by Richards Butler) for the Respondent
Reasons for Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Colman J.
Introduction
This is an application under Section 68 of the Arbitration Act 1996 ("the 1996 Act") to remit to the Panel of three arbitrators of the Refined Sugar Association a final award dated 27 February 2004 whereby they awarded to the Claimants ("WTC") US$39,600 plus US$13,800 simple interest up to the date of the award. The respondent in the arbitration – defendants to this application – were C Czarnikow Sugar Ltd ("Czarnikow"). By a contract dated 10 April 1996 Czarnikow sold to WTC 10,000 mt of sugar comprising 7000 mt of Thai raw sugar and 3000 mt of Thai white sugar on CIFFO East African port terms. It was a term of the contract that WTC would make a US$350,000 deposit which was to stand as security for their performance. It was further a term of the contract that WTC would pay by means of a letter of credit to be opened, as the arbitrators found, prior to shipment. The arbitrators found that WTC did not open a letter in accordance with an extension of time granted by Czarnikow and that in failing to do so WTC was in repudiatory breach of the contract. They further held that Czarnikow accepted that failure as terminating the contract. Czarnikow sold the sugar to the buyers at a price below the contract price.
In the arbitration WTC claims that Czarnikow was in repudiatory breach in terminating the contract and claimed damages, asserting that the contract price was below the market price at the date of the breach and also claiming reimbursement of the US$350,000 deposit. Czarnikow alleged that the market price, as evidenced by its two substitute sale contracts, was below the contract price and claimed damages for breach which they said exceeded US$350,000. The main issues included whether the contract terms as varied included a requirement that a letter of credit should be opened by 21 June 1996 and what loss had been suffered by Czarnikow. WTC submitted that Czarnikow could have sold the sugar to substitute buyers at a higher price than was achieved.
After a paper hearing the arbitrators concluded that Czarnikow were entitled to treat the contract as terminated and that the contract price exceeded the market price to the effect that Czarnikow were entitled to damages for breach but that their damages were less than US$350,000. Accordingly, they awarded to WTC the amount by which their deposit exceeded Czarnikow's damages.
Threshold Points
It is submitted on behalf of Czarnikow that given that under Section 68(1) the right to apply under that section is subject to the restrictions in Section 70(2), this application is barred. Section 70(2) provides:
"An application or appeal may not be brought if the applicant or appellant has not first exhausted:-
(a) any available arbitral process of appeal or review, and
(b) any available recourse under section 57 (correction of award or additional award)."
It is submitted that in the present case it was open to WTC to apply to the tribunal under Section 57(3) which provides:
"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."
WTC had failed to apply to the tribunal under (a) or (b). Accordingly, WTC was precluded from applying to remit the award under s.68 on the grounds of serious irregularity.
Investigation of the nature of the three groups of criticisms of the Award put forward as the grounds for this application and which are more fully discussed later in this judgment, demonstrates that they are all based on submissions that, in arriving at their conclusions on the facts, the arbitrators decided against the weight of the evidence. The applicants put forward particular features of the evidence in the witness statements and documents put before the arbitrators as grounds for the submission that the arbitrators failed to deal with all the issues put before them. In arriving at their conclusions as to certain material questions of fact they had not considered documents or other written evidence placed before them or had not attached sufficient weight to such documents or evidence.
I am not able to accept the submission that this kind of criticism falls within Section 57(3). The omission to attach weight or sufficient weight to particular evidence in arriving at a conclusion on a question of fact is, in my judgment, not a basis for deploying Section 57(3)(a). An award which determines a question of fact relevant to an issue to be decided and in doing so, gives weight to some evidence but fails to give weight to or even mention other evidence cannot normally be treated as containing any ambiguity at all. It is not the case that the award or the findings are capable of more than one meaning. The need for clarification does not arise, because the arbitrators have by definition arrived at a clear and unambiguous conclusion on the relevant question of fact. They are under no duty to deal with every possible argument on the facts and to explain why they attach more weight to some evidence than to other evidence. Unless their award is so opaque that it cannot be ascertained from reading it by what evidential route they arrived at their conclusion on the question of fact there is nothing to clarify. To arrive at a conclusion of fact expressly on the basis of evidence that was before them does not call for clarification for it is unambiguously clear that they have given more weight to that evidence than to other evidence.
In this connection, it is clear that arbitrators are not in general required to set out in their reasons an explanation for each step taken by them in arriving at their evaluation of the evidence and in particular for their attaching more weight to some evidence than to other evidence or for attaching no weight at all to such other evidence.
The starting point for the construction of section 57(3) is paragraph 58 of the Report of the Departmental Advisory Committee:
"The Court does not have a general supervisory jurisdiction over arbitrations. We have listed the specific cases where a challenge can be made under this clause. The test of "substantial injustice" is intended to be applied by way of support for arbitral process, not by way of interference with that process. Thus it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the Court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened cannot on any view be defended as an acceptable consequence of that choice."
It must not be forgotten that the facility under section 57(3) is made available to facilitate such limited supervisory jurisdiction as is provided for. This jurisdiction may well normally require that there should be available to the court the arbitrators' reasons for arriving at their conclusions on the issues in the reference which are free from clerical mistakes or errors arising from an accidental slip or omission and free from ambiguities, as provided for in Section 57(3)(a). Thus, for example, the right to apply under sections 67, 68 and 69 is by section 70(2) expressly made subject to the applicant's having first exhausted recourse under section 57. However, the ambiguities which are relevant for this purpose are those which go to the arbitrators' conclusions on those issues raised by the claim and defence and by any reply to the defence. Thus, in Torch Offshore LLC v. Cable Shipping Inc [2004] EWHC 787 (Comm), upon which Mr Simon Rainey QC, on behalf of Czarnikow, strongly relied, one of the issues before the arbitrator was whether a particular misrepresentation as to the strength of the deck of the vessel subsequently time chartered had induced the charterers to enter into the time charter. The charterers (Torch) alleged that they had been induced to enter into the charter by that misrepresentation. The owners put this in issue. The arbitrator did not mention this point in his reasons and it was impossible to tell what view he had taken. This was clearly potentially a failure to deal with an issue within section 68(2)(d). Cooke J. observed at paragraph 28:
"If however Torch had reverted to him, applying for clarification as to whether he had decided against it on inducement by the second representation, it would have been clear in this court whether or not he had determined the issue. It seems to me that section 57(3)(a) can be used to request further reasons from the arbitrator or...
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