Transgrain Shipping BV v Deiulemar Shipping SpA & Anor [2014] EWHC 4202 (Comm)

[2014] EWHC 4202 (Comm)Case No 2014 FOLIO 481
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND
IN THE MATTER OF AN ARBITRATION
Venue Royal Courts of Justice, Rolls Building, 7 Rolls Buildings, Fetter Lane, London EC4A 1NLDate 15/12/2014
Before
THE HONOURABLE MR. JUSTICE TEARE
Between
TRANSGRAIN SHIPPING BVClaimant(1) DEIULEMAR SHIPPING SpA (in liquidation)Defendants(2) ELENI SHIPPING LTDDefendant
Thomas Macey-Dare (instructed by Clyde & Co LLP) for ClaimantClare Ambrose (instructed by Thomas Cooper LLP) for Second DefendantHearing Hearing dates: 8 December 2014
JudgmentMr. Justice Teare :
[1]Between May and December 2010 the vessel ELENI P was hijacked by pirates. Unsurprisingly that event has given rise to disputes between those involved in owning and chartering the vessel. By March 2014 the resolution of those disputes had progressed as far as asking the arbitral tribunal to make findings as to who the arbitrators were and who the parties were. The tribunal helpfully determined those questions by an award dated 20 March 2014. This is an application pursuant to section 67 of the Arbitration Act 1996 to set aside that award on the grounds that the tribunal lacked jurisdiction to make it.

The charters, the arbitration clauses and the commencement of the arbitration

[2]The Second defendant, Eleni Shipping Limited (“Eleni”), is the registered owner of the vessel ELENI P. Eleni time chartered the vessel to the First Defendant, Deiulemar Shipping SpA, (“Deiulemar”) by a charter dated 8 May 2009. Deiulemar sub-chartered the vessel to the Claimant, Transgrain Shipping BV (“Transgrain”) by a charter dated 15 October 2009. Transgrain sub-sub-chartered the vessel to Vista Shipping Ltd. (“Vista”) by a charter dated 20 April 2010. The charterparties were on back to back terms save for the period and the rate of hire.[3]Those terms provided for arbitration in London but there were two sets of arbitration terms which, in some respects, were inconsistent with each other. Thus one set of terms (clause 75) provided for a tribunal of two arbitrators and an umpire in the event of disagreement and another set of terms (the BIMCO arbitration clauses) provided for three arbitrators. In addition, whilst clause 75 provided that if party A commenced arbitration and appointed an arbitrator but party B failed to appoint an arbitrator then party A could appoint an arbitrator on behalf of party B, the BIMCO arbitration clauses provided that in such an event party A could appoint its arbitrator as sole arbitrator. Also, clause 75 contained a substantive time bar (claims to be made within 13 months of redelivery) whilst the BIMCO arbitration clauses did not. It is necessary to set out the competing terms of the charterparty: “17. That should any dispute arise between Owners and the Charterers, See Clause 75 ………… Additional Clauses 29 to 100, both inclusive, as attached, The General Average Clause, and Arbitration Clauses, New Jason Clause, Both to Blame Collision Clause, Himalaya Clause, General Clause Paramount, US/Canadian Clause Paramount where applicable, BIMCO Double Banking Clause shall be deemed to form part of this Charter Party and shall contain in the Bills of Lading hereunder. BIMCO Bunker Fuel Sulphur Content Clause for Time Charter Parties 2005, BIMCO Bunker Quality Control for Time Charter, BIMCO Stevedore Damage Clause, BIMCO Hamburg Rules, BIMCO ISM Clause, BIMCO US Customs Advance Notice/AMS Clause for Time Charters, BIMCO Himalaya Clause, BIMCO ISPS/MTSA Clause, BIMCO US Anti Drug Abuse Act 1986 Clause for Time Charters, BIMCO US Trade – Unique Bill of Lading Identifier Clause, as attached, are to form part of this Charter Party. …….. Clause 40 – Stevedore Damages The Charterers are not to be held responsible for any damages to the vessel incurred during loading and discharging operations, unless Master advised the Charterers or their agents or the party causing the damages within 24 (twenty four) hours after the damage done to the vessel for which they are liable and endeavours to obtain, if at all possible, their admission of liability. Hidden damage are to be notified within 24 (twenty four) hours after discovery, but in any case not later than the completion of the captioned voyage plus one week. Copies of correspondence together with the original letters acknowledging liability, if obtained, to be sent to the Charterers as soon as possible. Should the damages affect the seaworthiness or commercial operations of the vessel, then those damages are to be repaired at the Charterers’ risk and expense and prior to redelivery or latest prior sailing port of occurrence if damages affect vessel’s seaworthiness/class, and the vessel remaining on hire without interruption. The Charterers are to settle the stevedore damages with the Owners upon receipt of the repair invoice, whether the Charterers have settled with the sub-Charterers/Stevedore or not. The Charterers shall have the liberty to redeliver the vessel without repairing the damages for which the Charterers are responsible, as long as the damages do not affect the vessel’s seaworthiness/commercial operations, but the Charterers guarantee to reimburse costs of repair against production of repair bills by repairers or dockyard unless otherwise agreed, whether such repair bills/claims have been presented to the Charterers within the time limit as per Clause 75 or not. However, time used not to count. …….. Clause 56 – Protective Clauses The General Average and Arbitration Clause, New Jason Clause, Both to Blame Collision Clause, Clause Paramount, US Clause Paramount, Canadian Clause Paramount, whichever applicable, shall be deemed to form part of this Charter Party and shall be contained in the Bills of Lading issued hereunder, Conwartime 2004 also to form part of this Charter Party, and Voywar 2004 for Bills of Lading issued hereunder. …….. Clause 75 – Arbitration Both parties hereby agree that any disputes arising out of this contract, where all claims below USD 100,000 (One Hundred Thousand Dollars) excluding interest and cost, shall be settled as per current LMAA Small Claims Procedure. Any dispute arising out of this Contract where the amount in dispute exceeds USD 100,000 (One Hundred Thousand Dollars) shall, 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 Exchange or the London Maritime Arbitrators Association, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire who shall be a member of the Baltic Exchange or the London Maritime Arbitrators Association to sit with them during the determination of the dispute. Upon the application of any of the parties the Arbitrator or Arbitrators (as the case may be) shall have the power to order the arbitration to be consolidated or held simultaneously with any other arbitration or arbitrations directly, or indirectly, involving the parties to this contract. Either party hereto may call for such arbitration by service upon any Officer of the other, wherever he may be found, of a written notice specifying the name and address of the Arbitrator chosen by the first moving party and a brief description of the disputes or differences which such party desires to put the arbitration. If the other party shall not, by notice served upon an Officer of the first moving party within 20 (twenty) calendar days of the service of such first notice, appoint it’s Arbitrator to arbitrate the dispute or differences specified, then the first moving party shall have the right without further notice to appoint a second Arbitrator, who shall be a disinterested person with precisely the same force and effect as if said second Arbitrator has been appointed by the other party. Any claims must be made in writing and Claimant’s Arbitrator appointed within 13 (thirteen) month of redelivery and where this provision is not complied with the claim shall be deemed waived and absolutely barred and the parties hereto specifically hereby agree not to make any application to any court to seek any extension thereof (mutually agreed extensions, however, being permitted) save that in respect of cargo claims to include claims for any indemnity in respect thereof, the time bar (2 years) in Clause 1 (IV) in the Inter-Club Produce Exchange Agreement as amended 1996, shall apply. This Charter Party shall be governed and construed in accordance with English Law. Any dispute arising between Owners and Charterers under this Charter Party is to be referred to arbitration in London, one Arbitrator to be appoint by Owners and the other by the Charterers, and in case the Arbitrators shall not agree then to the decision of an Umpire to be appointed by them, the award of the Arbitrators or the Umpire to be final and binding on both parties the Arbitrators (and Umpire, if appointed) are to be shipping men and members of the LMAA. If the two Arbitrators fail to agree on an Umpire, the president of the London Maritime Arbitrators’ Association is to nominate an Umpire. This Charter Party is to be governed by, and any arbitration hereunder is to be decided in accordance with English Law. …….. BIMCO ARBITRATION CLAUSES Dispute Resolution Clause English Law, London Arbitration(a) This contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within 14 the days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of USD 50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.(b) Notwithstanding the above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In case of a dispute in respect of which arbitration has been commenced under the above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator’s costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration.” (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits) Clause 40 – Stevedore Damages Clause 56 – Protective Clauses Clause 75 – Arbitration BIMCO ARBITRATION CLAUSES Dispute Resolution Clause

English Law, London Arbitration

[4]Following the release of the vessel by the pirates the vessel was redelivered under all three charterparties on 18 January 2011.[5]Transgrain commenced an arbitration against Deiulemar on 27 October 2011. By an email sent on that date Transgrain gave notice that it had commenced arbitration in respect of all disputes arising out of and/or connected with the sub-charter and that Mr. Graham Clark had been appointed on the current LMAA terms. The email went to say: Without prejudice to our clients’ appointment for the purpose of interrupting any limitation period: As the sums in dispute are relatively modest we would invite you to agree Mr. Clarke as sole arbitrator. Alternatively, we would invite your proposals for sole arbitrator so that we may consider them with our client. If you are not prepared to agree a sole arbitrator we call upon you to nominate your arbitrator within 20 calendar days of the date of this message absent which our client will appoint a second arbitrator on your behalf without further notice to you.[6]The reference to 20 days and to the appointment of a second arbitrator in default suggests that Transgrain had in mind clause 75 of the sub-charter.[7]On 6 January 2012 Transgrain commenced an arbitration against Vista under the sub-sub-charterparty and appointed Mr. Clark its arbitrator. The notice was in the same terms as Transgrain’s email to Deiulemar.[8]On 17 January 2012 Eleni informed Deiulemar that it had commenced arbitration under the head charter and had appointed Mr. Farrington as its arbitrator. Eleni said:
“In accordance with the terms of the above Charter Party we hereby invite you, Deiulemar Shipping SpA to proceed with the appointment of your own arbitrator within 20 calendar days of today. Unless you appoint your own arbitrator and give notice that you have done so within 20 calendar days of today we will proceed with the appointment of Mr. Farrington as a sole arbitrator in this matter. ”
[9]The reference to 20 days suggests a reference to clause 75 whilst the reference to a sole arbitrator suggests a reference to the BIMCO arbitration clause.[10]On 25 January 2012 Vista informed Transgrain that they had appointed Mr. Buchan as their arbitrator.[11]On 26 January 2012 at 1037 Deiulemar confirmed to Mr. Farrington that they had appointed him as their arbitrator under the sub-charter with Transgrain. At 1206 Mr. Farrington confirmed his acceptance of that appointment. At 1237 Deiulemar informed Transgrain of Mr. Farrington’s appointment. They added: The disputes to be the subject of arbitration include without limitation the claim for additional crew bonus of US$419k, the disputed claim for underperformance following the ship’s release from the pirates, and disputes arising out of Charterers’ failure to supply bunkers to the vessel at Singapore to reach the disport. We hereby invite Charterers to appoint an arbitrator within 20 calendar days pursuant to clause 75 of the charter. Should Charterers fail to do so we shall proceed without further notice as permitted under the charter. To ensure that the Tribunals up and down the charterparty chain are back-to-back, we would strongly encourage Charterers to revert with details of their nominated arbitrator within 7 days.[12]On 26 January 2012 at 1544 Transgrain’s solicitor Clyde & Co. informed Mr. Buchan that he had been appointed by Transgrain as Deiulemar’s arbitrator in these terms: We are instructed by Transgrain Shipping BV, charterers of the Vessel under the above- captioned Charter. We write to inform you that our client has today appointed you as arbitrator on current LMAA terms in respect of all disputes arising out of and/or connected with the above-captioned Charter. Our client’s counter-party is Dieulemar SpA, disponent owners of the Vessel. For your information, on 27 October 2011 our client appointed Graham Clark as arbitrator in respect of all disputes under the Charter. Under clause 75 of the Charter, Dieulemar were obliged to appoint an arbitrator within 20 calendar days, failing which our client has the right to appoint a second arbitrator with the effect as if appointed by Dieulemar. Dieulemar did not appoint an arbitrator and so our client has today appointed you on their behalf. We attach copies of our client’s appointment of Mr Clark and the Charter for your file. Finally, we confirm that this appointment is effectively “back to back” with your appointment on 24 January 2012 by MFB on behalf of their client, Vista Shipping Ltd, in relation to their charter of the vessel from our client by way of a charterparty dated 20/04/10. Please confirm acceptance of your appointment.[13]At 1646 Clyde & Co. advised Dieulemar of that appointment in these terms: We write further to our previous correspondence regarding the above Charter, including our notice of arbitration dated 27 October 2011 (the “Notice”). You were obliged to appoint an arbitrator within 20 days of the Notice but you have failed to do so. Accordingly, we write to inform you that, in accordance with clause 75 of the Charter, our client has today appointed Mr Bruce Buchan as second arbitrator in respect of all disputes arising out of or in connection with the Charter. The appointment is on current LMAA terms.[14]On 14 February 2012 Deiulemar’s solicitor Reed Smith emailed Clyde & Co. as follows: We understand that you have been instructed on behalf of Transgrain Shipping BV in respect of disputes regarding the above matter. We have been assisting Deiulemar. Our clients sent a message to your clients on 17 January 2012, passing on notice that, under the head charter, arbitration had been commenced by the appointment of David Farrington as arbitrator (attached). No response was received from your clients. Accordingly, on 26 January 2012, our clients appointed David Farrington as arbitrator under the sub charter. Notification was sent through broking channels on 26 January 2012 at 1139 GMT (attached), passed by brokers to your clients at 1147 GMT (attached). At 1707 GMT, our clients received a message from your firm through broking channels, advising that your clients had sent notice of arbitration on 27 October 2011 and that our clients had not responded with their own appointment, as a result of which Bruce Buchan had been appointed as second arbitrator by your clients. Plainly our clients notified your clients of the appointment of their own arbitrator under the charter before receiving notification of the appointment of Bruce Buchan. Accordingly, we consider that Bruce Buchan was not validly appointed and that the Tribunal properly consists of the first arbitrator, who we understand to be Graham Clark, and David Farrington. It will assist the quick resolution of this matter in any case if the tribunals up and down the charterparty chain are back-to-back. Please could you confirm that the above is agreed. Our intention is then to appoint Graham Clark up the charterparty chain. We look forward to hearing from you. Kindly revert within tomorrow, 15 February 2012, so that we can promptly make the necessary appointment under the head charter.[15]The time bar provided by clause 75 expired on 18 February 2012.[16]The circumstances in which Mr. Farrington and Mr. Buchan were appointed on 26 January 2012 have given rise to an arid dispute as to the individuals who made up the tribunal under the sub-charter. Transgrain contend that the tribunal consisted of Mr. Clark and Mr. Buchan. Deiulemar contended that the tribunal consisted of Mr. Clark and Mr. Farrington.

The insolvency of Deiulemar

[17]In July 2012 Deiulemar presented a voluntary bankruptcy petition in Italy. In September 2012 Eleni gave notice to Transgrain that it was exercising its lien on sub-hires. In October 2012 Dieulemar was adjudged bankrupt in Italy. In March 2013 the trustees in bankruptcy of Dieulemar applied to the Companies Court in England for an order recognising the Italian bankruptcy proceedings as the foreign main proceedings pursuant to the Cross-Border Insolvency Regulations 2006. Mann J. made such an order on 11 April 2013.[18]In May 2013 Eleni issued an application in the sub-charter arbitration seeking to be joined as a claimant in its capacity as equitable assignee of Deiulemar’s claims under the sub-charter. At the same time it claimed US$5.56m which it was alleged was due from Transgrain by way of sub-charter hire in respect of the period during which the vessel had been detained by the pirates. No such claim had previously been advanced by Deiulemar.[19]In October 2013 Deiulemar executed a statutory assignment of Deiulemar’s claims against Transgrain in favour of Eleni.

The award

[20]At some stage in 2014 the tribunal in the sub-charter arbitration was asked to rule on the appointment of the arbitrators and the validity and effect of the legal assignment. By an award dated 20 March 2014 the tribunal ruled on both issues. As to the first point the tribunal considered that the BIMCO Arbitration Clauses should prevail over clause 75 so that the reference was to three arbitrators. The tribunal considered that Mr. Clark had been appointed by Transgrain on 27 October 2011 and that Mr. Farrington had been appointed by Deiulemar on 26 January 2012. They appointed Mr. Buchan as third arbitrator. As to the second point the tribunal ruled that the assignment was effective and that the sub-charter reference could proceed directly between Eleni as assignee and Transgrain.[21]The tribunal’s decision as to the arbitration clause has not been accepted by Transgrain. I was told that until the tribunal mentioned the BIMCO Arbitration Clauses in its award no mention of them had been made of them by either party. Transgrain says that the point is significant because if clause 75 does not apply then Transgrain will not be able to rely upon the 13 month time bar in clause 75 in order to defeat Eleni’s $5.56m. claim which it has sought to introduce into the arbitration. Thus the decision by the tribunal on the identity of the arbitrators making up the tribunal has now given rise to a further dispute between the parties, namely, whether the applicable arbitration regime is clause 75 of the sub-charter or the BIMCO arbitration clauses.

The applicable arbitration clause

[22]The court has jurisdiction pursuant to section 67 of the Arbitration Act 1996 to decide whether a tribunal consisting of Mr. Clark and Mr. Farrington as the party-appointed arbitrators and Mr. Buchan as the third arbitrator appointed by the party-appointed arbitrators had jurisdiction to make the award. The process is not by way of appeal from the tribunal’s decision but by way of a re-hearing.[23]In order to decide the question of jurisdiction it is first necessary to decide whether the applicable arbitration clause is clause 75 or the BIMCO Arbitration Clauses. Deciding that issue will determine whether the agreed tribunal consists of three arbitrators or of two arbitrators and an umpire.[24]Mr. Macey-Dare on behalf of Transgrain said that the applicable arbitration clause was clause 75. The basis of his submission was that the insertion of the words “See clause 75” in clause 17 of the sub-charter was the clearest possible expression of the parties’ specific intention. Had they intended that the BIMCO Arbitration Clauses applied they would have had said “See BIMCO Arbitration Clauses”. Mr. Macey-Dare characterised the reference at the end of the NYPE form to the “Arbitration Clauses” as general words of incorporation incapable of displacing the specific effect of clause 17. However, the BIMCO Arbitration Clauses are set out at the end of the charter and Mr. Macey-Dare submitted that the most obvious and sensible way to construe the charter is that clause 75 is the applicable arbitration provision, that part (b) of the BIMCO Arbitration Clauses dealing with mediation is the applicable mediation provision but that part (a) dealing with arbitration is inapplicable.[25]Miss Ambrose on behalf of Eleni submitted that the tribunal had reached the right decision. She submitted that at the end of the NYPE form and at the end of the charter the parties had specifically identified the BIMCO Arbitration Clauses in the typed wording whereas clause 75 was merely one of seventy or so clauses included by general words of incorporation. That, she said, should be given greater weight than the amendment of clause 17 to refer specifically to clause 75. In addition she submitted that any ambiguity should be resolved in favour of a construction which does not incorporate a time bar, that clause 75 has a curious second part which contains no default procedure and that it is unlikely that the parties intended to adopt that rather than the BIMCO industry standard clauses. In circumstances where it was common ground that the mediation part of the BIMCO Arbitration Clauses was incorporated it is unlikely that the parties intended the arbitration part to be discarded.[26]There is helpful guidance from Rix J. in Finagra v OT Africa Line [1998] 2 Lloyd’s Rep.622 at p.629 as to how to resolve inconsistencies between the parties’ agreed terms. Rix J. said that whilst each case turns on its own special factors a number of lessons could be learned from the authorities, the most relevant for present purposes being these. A specifically negotiated clause is likely to take precedence over the merely incorporated. In the case of irreconcilability precedence will be given to what is written or stamped or typed over what is merely printed. One set of incorporated rules may oust another set where they cannot live together but that may be a comparatively rare event. More commonly, the courts seek to give effect to both of them. Finally, clear words are required for a time bar so that in case of doubt or ambiguity the conflict must be resolved in favour of the longer time limit.[27]The present case is one in which the parties have chosen to agree terms which, in certain respects, are inconsistent with each other. For example, clause 75 provides for two arbitrators and an umpire whilst the BIMCO clauses provide for three arbitrators. The default provisions are also different. The parties cannot have intended that both should apply. In those circumstances the court must endeavour to discover their objective intention.[28]Mr. Macey-Dare’s starting point is cogent. When amending clause 17 the parties chose to refer to clause 75. Moreover, the time bar in clause 75 is also mentioned in clause 40. Miss Ambrose’s starting point is also cogent. The parties set out in terms the BIMCO Arbitration Clauses at the end of the charter and also referred to those clauses in clause 56.[29]However, it is, I think, difficult to know whether, when clause 17 was amended, clause 75 was chosen in preference to the BIMCO arbitration clauses or whether the insertion of clause 75 in clause 17 (and the reference to it in clause 40) was part and parcel of the incorporation of a number of clauses (about 70) which included clause 75. If the words “see clause 75” had been inserted in clause 17 as a deliberate choice in favour of clause 75 over the BIMCO Arbitration Clauses one would have expected the parties to have deleted all reference in the charter to the BIMCO Arbitration Clauses. They did not do so. That suggests to me that the parties chose to incorporate two inconsistent sets of arbitration rules without appreciating the inconsistencies between them. I was therefore not persuaded that I should regard the amended clause 17 as a “specifically negotiated clause” which should take precedence over the BIMCO clause as a “merely incorporated clause”.[30]Both clause 75 and the BIMCO arbitration clauses referred to the LMAA. Clause 75 referred to the LMAA Small Claims Procedure and to the arbitrators being members of the LMAA. The BIMCO Arbitration Clauses also referred to the LMAA Small Claims Procedure and to the arbitration being conducted under the terms of the LMAA. Thus, on any view, the parties envisaged the arbitration being conducted in accordance with the LMAA Rules. At the date of the charter the relevant LMAA Rules were those published in 2006. They note, at the end, that BIMCO has adopted an arbitration clause providing for arbitration and mediation which the LMAA recommend for future use. That form of clause is the one set out in the charter. This supports Miss Ambrose’s description of the BIMCO arbitration clauses as the “industry standard” and, in my judgment, is a powerful indication that the parties, by contemplating that the arbitration would be conducted by members of the LMAA, probably intended (assessed objectively) that the BIMCO Arbitration Clauses were the applicable clauses.[31]Further, the BIMCO Arbitration Clauses are in two parts. Part(a) deals with arbitration and part(b) deals with mediation. Mediation is now a well accepted adjunct to both litigation and arbitration. One would expect commercial parties to value the benefits of a mediation and that is a further indication that the parties’ objective intention was that the BIMCO Arbitration Clauses were the applicable clauses. This seems to be much the more likely objective intention than Mr. Macey-Dare’s suggestion that the parties intended the arbitration regime in clause 75 but the mediation regime in the BIMCO Arbitration Clauses.[32]For these reasons I have concluded that the inconsistency between the parties’ incorporation of clause 75 and of the BIMCO Arbitration Clauses should be resolved in favour of the BIMCO Arbitration Clauses. It follows that, in agreement with the tribunal, I consider that the applicable arbitration regime required three arbitrators.[33]In reaching my decision I have not had regard to the principle mentioned by Rix J. that clear words are required for a time bar and that in the event of doubt or ambiguity the conflict should be resolved against the time bar in question, in this case, the 13 month time limit in clause 75. Whether or not the parties are to be taken to have agreed a 13 month time limit for claims (even if the BIMCO Arbitration Clauses are applicable) will be a matter for the tribunal to rule upon. The tribunal has not done so and has expressly said that the award does not deal with any of the substantive issues arising out of Eleni’s substantial claim for hire. In those circumstances it would not be appropriate for this court to express any view on that question. It must be decided by the tribunal in due course.

The identity of the arbitrators

[34]The next question is who the arbitrators were. There is no dispute that Transgrain appointed Mr. Clark. Mr. Macey-Dare submitted that Deiulemar’s appointment of Mr. Farrington on 26 January 2012 was ineffective because it was the appointment of Mr. Farrington in a fresh arbitration commenced by Deiulemar and that Transgrain’s (later) appointment of Mr. Buchan as Deiulemar’s arbitrator was effective. I accept that a linguistic analysis of the text used by Deiulemar supports that submission but I am unable to accept that that is how Deiulemar’s actions on 26 January 2012 should be regarded. Transgrain had commenced arbitration, appointed their arbitrator and called upon Deiulemar to appoint their arbitrator. Deiulemar did so on 26 January 2012, not appreciating, it would seem, that Transgrain had already commenced arbitration. But there can have been no sense or purpose in having two arbitrations between Transgrain and Deiulemar dealing with the consequences of the hijacking of the vessel by pirates in 2010. In my judgment the objective and sensible analysis of Deiulemar’s actions on 26 January 2012 is that they were appointing their arbitrator in the arbitration between them and Transgrain pursuant to the sub-charter.[35]This approach to Deiulemar’s appointment of Mr. Farrington is supported by the approach of the courts when considering the form of words necessary for the commencement of arbitration. In The Agios Lazaros [1976] 2 Lloyd’s Rep.47 Goff LJ said that the adoption of the wrong form of words would not make the communication a nullity. It would be no more than an irregularity capable of being remedied. Shaw LJ said that the form and words of a communication commencing arbitration do not call for an excessively strict scrutiny. Regard should be had to the substance. This decision was closely analysed by Rix J. in The Smaro [1999] 1 Lloyd’s Rep. 225 at pp.231-233. Rix J. concluded that the ultimate lesson to be learned was that the wording of a notice commencing arbitration need not be regarded strictly or formulaically. It was sufficient to have regard to its substance. I consider that the same approach should be applied when considering whether Deiulemar’s appointment of Mr. Farrington on 26 January 2012 was in substance an appointment of its arbitrator in the arbitration commenced by Transgrain. I consider that it was and that it is not to be regarded as ineffective in that regard simply because, as a matter of form, the appointment was purporting to commence an arbitration rather than respond to an arbitration already commenced by Transgrain; cf The Petr Schmidt [1995] 1 Lloyd’s Rep.202 at p.207.[36]I therefore agree with the tribunal who also concluded that Mr. Clarke had been appointed by Transgrain and that Mr. Farrington had been appointed by Deiulemar. They in turn appointed Mr. Buchan as third arbitrator and, in the light of my judgment, that appointment was effective.

Estoppel

[37]Mr. Macey-Dare submitted that in any event Eleni (and Deiulemar) are estopped by convention from denying that clause 75 contains the applicable arbitration regime. He submitted that it was obvious from Transgrain’s email dated 27 October 2011 and from Clyde & Co.’s email sent on 26 January 2012 at 1544 on behalf of Deiulemar that there was a common assumption, which crossed the line, that clause 75 was the applicable arbitration provision. If Eleni (or Deiulemar) were entitled to resile from that assumption Transgrain would suffer prejudice in that it could not rely upon, or there was a serious risk that it could not rely upon, the 13 month time bar provision in clause 75 to defeat Eleni’s substantial new claim. It would therefore be exposed to a substantial claim to which it would otherwise have a good defence and might be unable to pass on that liability to Vista because Vista could rely on clause 75 in the Vista arbitration.[38]None of these factual matters has been considered by the arbitral tribunal. If Transgrain wish to allege in the arbitration that Eleni/Deiulemar are estopped from denying that Eleni’s claim is time barred that is a matter which ought to be considered by the tribunal rather than by this court. But in any event, even if the factual basis for the suggested estoppel can be established, I do not consider that it can assist Transgrain on this section 67 application which is concerned with the jurisdiction of the arbitrators.[39]The jurisdiction of the arbitral tribunal springs from the parties’ agreement in the charterparty. In my judgment, and for the reasons I have endeavoured to express, that agreement is in the form of the BIMCO Arbitration Clauses and is not in the form of the arbitration clause in clause 75. An estoppel cannot create an agreement; see SmithKlineBeecham PLC v Apotex Europe Ltd. [2007] Ch.71 at paragraph 107 and Chitty on Contracts Vol.1 para.3-113. The arbitrators’ jurisdiction is founded in the parties’ agreement that disputes should be referred to arbitration in accordance with the BIMCO Arbitration Clauses. An estoppel operating between the parties cannot found the arbitrators’ jurisdiction since an estoppel cannot create an agreement. I am therefore unable to accept that Transgrain’s position on this jurisdiction application can be assisted by any estoppel. Mr. Macey-Dare did not accept that he was using an estoppel to create an agreement. He said it was common ground there was an arbitration agreement; the dispute was as to the terms of the agreement. I do not consider that this is a realistic or sensible distinction; an arbitration agreement without any terms is not an agreement. But the question of the arbitrators’ jurisdiction is different from the question whether, on the facts of the case, Eleni/Deiulemar is estopped from contending that its claim is not time barred. Whether such estoppel exists will be a matter for the tribunal to consider in the event that Transgrain alleges an estoppel when it pleads its case.

Conclusion

[40]It follows that this application for an order setting aside the award of the arbitral tribunal must be dismissed.[41]Miss Ambrose made interesting submissions as to the scope of the powers to vary the award in the event that the court had found that the applicable arbitration agreement was clause 75 and/or that the appointed arbitrators were Mr. Clark and Mr. Buchan, rather than Mr. Clark and Mr. Farrington. It was suggested that the court could uphold the award but vary the roles of the individual arbitrators (by saying, for example, that the appointed arbitrators were Mr. Clark and Mr. Buchan and that Mr. Farrington was the umpire). Mr. Macey-Dare said that the court had no power of “transubstantiation”. However, in the light of my judgment there is no need for me to discuss the extent of the court’s power to vary the award had I reached a different judgment on the jurisdictional issues.

Cited in 1 later judgment