P v Q, Court of Appeal - Commercial Court, June 11, 2018, [2018] EWHC 1399 (Comm)

Resolution Date:June 11, 2018
Issuing Organization:Commercial Court
Actores:P v Q

Neutral Citation Number: [2018] EWHC 1399 (Comm)





Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 11 June 2018

Before :

Sir Richard Field (sitting as a Deputy High Court Judge)

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Between :

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Michael Nolan QC (instructed by Mills & Co Solicitors Ltd) for P

Christopher Jay (instructed by Barrett Solicitors) for Q

Nevil Phillips (instructed by Reed Smith Richards Butler Hong Kong) for R

Julian Kenny QC (instructed by Winter Scott LLP) for S

Hearing dates: 14,15 May 2018

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  1. The parties to these proceedings were parties to back-to-back voyage charters based on the Norgrain 1973 form and occupying the middle of a charter chain. The charters Save for that between R and S, referred to below, which provided in Cl 44b simply ``ARBITRATION IN LMAA LONDON, ENGLISH LAW TB APPLIED'' included in Clause 44b Clause 44 (b): ``London. All disputes arising out of this contract shall be arbitrated at London and, unless the parties agree forthwith on a single Arbitrator, be referred to the final arbitrament of two Arbitrators carrying on business in London who shall be Members of the Baltic Mercantile & Shipping Exchange and engaged in the Shipping and/or Grain Trades, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire. No award shall be questioned or invalidated on the ground that any of the Arbitrators is not qualified as above, unless objection to his action be taken before the award is made. Any disputes arising under this Charterparty shall be governed by English law''. an arbitration clause stipulating that all disputes arising out of the contract should be arbitrated at London by each of the arbitrators appointed by the parties with power to appoint an Umpire and, in addition, the following time bar in Clause 67:

    Any claim other than the demurrage claim under this contract must be notified in writing to the other party and claimant's arbitrator appointed within thirteen (13) months of the final discharge of the cargo and where this provision is not complied with, the claim shall be deemed to be waived and absolutely barred.

  2. The running order in the charter chain of the charterparties referred to in paragraph 1 was as follows. At the top of the middle section is the voyage charter made between China National Chartering Co Ltd (``Sinochart Beijing'') as Disponent Owners and P. Next down the line is the charterparty made between P as Disponent Owners and Q. Next down is the charterparty made between Q as Disponent Owners and R. And last down the line is the charterparty made between R as Disponent Owners and S.

  3. The ``Head Owners'' at the top of the entire chain were Sea Dolphin Shipping Ltd (``Sea Dolphin'') which had concluded a time charter with Pan Ocean Shipping. Pan Ocean Shipping had in turn concluded a time charter with Polaris Shipping which was the Head Disponent Owner. It would seem that the voyage charterers at the bottom end of the chain were ADM Intermare.

  4. The cargo of 52,000 mt of Distillers Dried Grain Solubles (``DDGS'') shipped under the charterparties in the chain was finally discharged by the nominated vessel, the ``CAPETAN GIORGIS,'' at Nansha, China on 16 October 2015.

  5. On 9 September 2016, Xiamen C & D Agricultural Product Co Ltd, the holders of the bills of lading covering the cargo, issued a Statement of Claim in proceedings brought in the Xiamen Maritime Court against Sea Dolphin claiming that the cargo had been delivered in a damaged condition caused by over-heating.

  6. On 16 November 2016, Polaris Shipping gave notice to Sinochart Beijing of a claim and commenced proceedings against them.

  7. On 16 November 2016 at 6.44 pm, after P's office had closed for the day, an email arrived sent on behalf of Sinochart Beijing which recited the arbitration clause in the charterparty between it and P and continued: ``Disputes have arisen under the CP and our Members have appointed Mr Alan Oakley as their arbitrator in respect of all and any disputes whatsoever (including but not limited to cargo claim) arising under the CP .... For avoidance of doubts, please treat this letter as our Members' notice of commencement of arbitration and written notification of claims to you in accordance with the CP''.

  8. The email sent on behalf of Sinochart Beijing first came to the notice of P's staff the following morning on 17 November 2016, by when the 13 month time limit in Clause 67 time had expired. No-one at P or at Q or R had any prior knowledge about a claim being made for breach of any of the charterparties in the chain whether in respect of the cargo or otherwise.

  9. On 17 November 2016, P informed Q by email that it had received the notice sent on behalf of Sinochart Beijing and asked for: (a) details of the full charterers' chain; (b) whether those charterers had received notice of a claim; (c) information concerning the cargo claim; and (d) whether Q had received a similar notice.

  10. Q did not respond to P's email. At 0941 hours on 17 November 2016, Q received an email from the brokers between them and P stating that P had received from Sinochart Beijijng the previous day a notice of appointment of an arbitrator. The same day, Q passed on this message to R and appointed Barrett Solicitors to act in the matter. Also on the same day (17 November 2016), Mr Dominic McAleer of Barrett Solicitors appointed Mr Timothy Rayment as Q's arbitrator and via an email to B & J Shipping, the brokers between Q and R, gave notice to R of this appointment and of a claim in connection with the carriage and/or damage to the DDGS cargo. This email was received by R at 6.43 pm on 17 November 2016 and read for the first time the following day. By letter dated 30 November 2016, R's solicitors, Reed Smith Richards Butler Hong Kong (``Reed Smith'') contended that Q's notice sent on 17 November 2016 was not an effective notice of commencement of arbitration on the ground that B & J Shipping did not have authority to receive it on behalf of R. Barrett Solictors refuted that contention but on 30 November 2016 they replied to Reed Smith serving a fresh notice of Q's claim and commencement of arbitration without prejudice to their position that the notice served on R on 17 November 2016 was a valid notice.

  11. Between 17 and 24 November 2016, P attempted to obtain further details of the claim from the brokers that had acted for it in respect of the charterparties with Sinochart Beijing and Q. On 23 November 2016, following earlier telephone calls to both brokers, they sent a message to Q stating that they had been trying to find out more detail about the claim but there was a lack of information from the Owners. Their understanding (based on information provided unofficially over the telephone) was that the arbitration related to a cargo claim of discoloured DDGS at the discharge port between the Head Owners and the Charterers. Once they knew more, they would inform Q. In the meantime, they asked Q to revert with the full charterparty chain as they had previously requested. They also asked for details of the Head Charterers. On 23 November 2016, P's operations department informed their legal department about the message received from Sinochart Beijing on 16 November 2016. The legal department checked the terms of the charterparty and became aware of the terms of Clause 67. They then contacted their P & I Club who instructed Mr Williams of Mills & Co, solicitors. On 25 November 2016, Mr Oakley having been appointed as P's arbitrator, P's legal department sent a notice to Q commencing arbitration. On 30 November 2016, P appointed Mr Rayment as their arbitrator in the arbitration with Sinochart Beijing.

  12. At 1102 hours on 17 November 2016, R received notice of P's email to Q sent earlier that day giving notice of the claim made by Sinochart Beijing and asking for information. At 1843 hours on the same day, R received notice of Q's claim against R. Thereafter, R attempted to obtain information on the claim and on 28 November 2016 instructed Reed Smith as their solicitors who, on 29 November 2016, appointed Mr Clive Aston as R's arbitrator in the dispute with S. On 1 December 2016, R's solicitors served notice on S of its claim and the commencement of arbitration.

  13. Having served notice of claims on their counterparty charterers after the expiration of the 13 month time limit set in Clause 67, all of the claimant disponent owners now apply for declarations that their claims made against those charterers have been brought in time, notwithstanding the wording of Clause 67.

  14. In the alternative, if their claims have not been brought in time, the claimants apply pursuant to section 12 of the Arbitration Act 1996 (``the Act'') for a sufficient extension of the time for commencing arbitration to validate the notices of arbitration they served on the defendant charterers or for such further time as the Court sees fit.

  15. In light of the fact that the relevant charters were all on back-to-back terms, it was agreed by the parties that counsel for P, Mr Nolan QC, should take the lead in advancing the case for the declarations sought and in the alternative for extensions of time under section 12 of the Act. Counsel for the other claimants therefore limited their submissions to specific additional matters, including in particular the facts relevant to their clients' section 12 applications.

  16. In the alternative, the parties beneath P in the chain submitted that the claims made against them from above were irretrievably out of time and contended that no extension under s. 12 should be granted to parties above them in the chain. Mr Kenny QC for S took...

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