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Transgrain Shipping BV v (1) Deiulemar Shipping SpA (in liquidation) (2) Eleni Shipping Ltd

Subject: Arbitration; Shipping

Keywords: Arbitration; Charterparty; challenge to jurisdiction; s67 Arbitration Act 1996; estoppel

Summary: The dispute was as to the jurisdiction of an arbitral tribunal appointed under a time charter.  The Claimant applied for an order under section 67 of the Arbitration Act 1996 setting aside an award made by that tribunal finding that it had jurisdiction to determine the parties’ disputes.  The Second Defendant defended the application since it had taken an assignment of the First Defendant’s rights.

The charterparty contained two arbitration clauses that were inconsistent with each other.  In particular one arbitration clause (clause 75) provided for two arbitrators and an umpire whereas the other (the BIMCO arbitration clause) provided for three arbitrators.  Clause 75 also contained a substantive time bar provision and it was this aspect that led to the dispute on jurisdiction.

Teare J concluded that objectively the parties must have intended for the BIMCO arbitration clause to apply.  One consideration was that both clauses referred to the London Maritime Arbitrators Association (LMAA) and the BIMCO arbitration clause was recommended for use in the applicable LMAA rules.  Further the BIMCO arbitration clause provided for mediation and the parties would have intended to incorporate both the arbitration and mediation regime.

The Claimant also relied upon correspondence under which both parties allegedly proceeded under a common assumption that clause 75 contained the applicable arbitration agreement.  The Claimant contended that this gave rise to an estoppel by convention precluding the Defendants from denying that clause 75 applied.  Teare J rejected this argument on grounds that an estoppel operating between the parties cannot found the arbitrators’ jurisdiction since an estoppel cannot create an agreement. 

A further issue arose as to which arbitrators had been properly appointed.  There was no dispute that the Claimant had appointed the first arbitrator X in October 2011, giving notice that that failing a corresponding appointment within 20 days it would make a default appointment.  On the morning of 26 January 2012 the First Defendant appointed arbitrator Y and gave a similar notice to the Claimant that it would make a default appointment.   By coincidence, on the afternoon of the same day the Claimant appointed arbitrator Z as a default appointment.  The Claimant contended that arbitrator Z was correctly appointed and that arbitrator Y had only been appointed in a new and separate arbitration.   Teare J found that the objective and sensible analysis, following the approach in The Agios Lazaros [1976] 2 Lloyd’s Rep. 47 and The Smaro [1999] 1 Lloyd’s Rep. 225, was that the First Defendant had appointed arbitrator Y as the second arbitrator on 26 January 2012.

Member of Chambers: Clare Ambrose for the successful Second Defendant (instructed by Thomas Cooper LLP)