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Fehn Schiffahrts GmbH & Co KG v Romani SpA [2018] EWHC 1606 (Comm)

In this case, the Commercial Court allowed a challenge pursuant to s69 Arbitration Act 1996 and remitted an arbitral award to a Tribunal for further consideration. 

In the underlying arbitration, Charterers had brought an action against Owners in respect of the alleged unauthorised fumigation of a cargo, which Charterers claimed had resulted in loss and damage. Owners inter alia disputed Charterers’ title to sue. Charterers had claimed that they had title to sue either pursuant to an assignment from the consignee, or pursuant to the Charterparty in their own right. 

The majority Award was unclear on its face as to which party suffered loss allegedly caused by the fumigation (the consignee or the Charterers). By virtue of a clarification under s57 of the Act, the Tribunal clarified that it had found title to sue for the Charterers based on the assignment from the consignee. Owners argued that the consignee had suffered no loss.

Owners brought a s69 challenge, based on the following question of law: can a party (A) assigned rights (the "assignee") claim substantial damages in circumstances where the assignor (B) has suffered no loss and would be entitled (at most) to nominal damages (when the situation is not within any known exception to the principle that an assignee cannot acquire rights more valuable than those of the assignor)?

Mrs Justice Moulder held that, on the face of the Award, she could not determine whether the Tribunal (in its majority) had answered the question of law correctly. If in fact the consignee had suffered no loss (which issue was not apparent on the face of the Award), then the Tribunal had answered the question incorrectly. Moulder J also held  that the court could not uphold the Award on the basis that Charterers had title to sue under the Charterparty.  

In these circumstances, based on the authority of The Johnny K [2016] EWHC 134 Comm, the issue could be remitted to the Tribunal for reconsideration.  

This case clarifies that, even when an Award may be unclear in its reasoning, a section 69 challenge is not precluded. The Court may remit an Award where there is reason to believe on the face of the Award, that the Tribunal erred in answering the relevant question of law, but where it cannot be established definitively from the Award that the Tribunal has in fact so erred. The judgment can be found at the bottom of this page.

Angharad Parry appeared for the Appellant (instructed by Davies Battersby). Malcolm Jarvis appeared for the Respondent (instructed by Field Martin).

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