Neutral Citation Number: [2018]
EWHC 1370 (Comm)
Case No: CL-2018-000021
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
COMMERCIAL COURT
(QBD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Date: Friday, 13th April 2018
Before:
MR. JUSTICE PHILLIPS
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Between:
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A
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Claimant
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B
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Defendant
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Digital Transcription
by Marten Walsh Cherer Ltd.,
1st Floor,
Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.
Telephone No: 020
7067 2900. Fax No: 020 7831 6864 DX 410 LDE
Email: [email protected]
Web: www.martenwalshcherer.com
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MR. JAMES WATTHEY (instructed by Sach Solicitors) for
the Claimant
MR. ADAM WOOLNOUGH (instructed by Tatham Macinnes) for
the Defendant
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JUDGMENT APPROVED
MR. JUSTICE PHILLIPS:
1.
This is an arbitration claim under section 67 of the Arbitration Act
1996 (“the Act”) challenging an Award issued on 15 December 2017 by which the
Tribunal ruled that it lacked jurisdiction over the underlying dispute.
2.
The dispute arose in relation to a charterparty entered on 16 June 2015
between the parties by which the claimant, as owners, chartered a vessel to the
defendant for a voyage (“the Charterparty”). The Charterparty was essentially
on the Asbatankvoy form, with amendments, and was in the Russian language, notwithstanding
that the governing law was that of England.
3.
The Charterparty was in two parts, with an express provision that if
there was a conflict between Part I and Part II, then Part I would take
precedence. Part I Clause J contained a provision, the Russian version of which
is as follows:
“J.
Распределение
общей аварии
и арбитражное
разбирательство:
”
распределение
общей аварии
в соответствии
с йорк-
антверпенскими
правилами 1994 г.
арбитражное
разбирательство
–
Лондонский
международный
арбитражный
суд, в
соответствии
с
законодательством
Великобритании”
4.
The appropriate translation of that clause is hotly disputed between the
parties, but it is agreed that the literal wording is, in English, as follows:
“Arbitration proceedings – London international arbitration court, in
accordance with the laws of Great Britain …”
5.
Clause 24, which was in Part II of the Charterparty, provided as
follows, the parties having agreed the translation in the following terms:
“Arbitration. Any disagreements and disputes … arising out of
the C/P are to be resolved by arbitration in New York or London,
according to which of these places is provided for in Part I … by a tribunal of
three people, one appointed by the owners, one by the charterers, and one
appointed by the two arbitrators elected in such a way.”
6.
A dispute arose under the Charterparty, the details of which are not relevant
for present purposes. The claimant purported to commence arbitration
proceedings in London by appointing Alan Oakley as their nominated arbitrator. Mr
Oakley accepted the appointment on the basis of LMAA Terms 2012. The defendants
appointed Mr. Bruce Harris. Mr. Harris also accepted his appointment on LMAA
Terms 2012. At that time the defendant made no reservation as to either jurisdiction
or as to the terms on which either arbitrator was appointed.
7.
Thereafter, the defendant made an application challenging the
jurisdiction of the arbitrators under section 31 of the Act. The defendant’s
initial contention was that the reference in Clause J to “London international arbitration
court” was effectively meaningless and ineffective. The specific term they used
was “pathological”, submitting that there was no such body. The response from
the claimant was that the clause simply provided for arbitration in London
before an arbitral body and that, therefore, the arbitrators did have jurisdiction.
Further, the arbitrators had accepted on LMAA Terms and the parties had not
demurred.
8.
In their careful, detailed and fully reasoned Award the arbitrators
referred to the fact that they themselves had obtained comments from Russian speaking
solicitors in London upon the translation of Clause J and had further asked for
the parties’ comments on what they had been informed. The Arbitrators were
impressed by the fact that if the term “London Court of International
Arbitration” (i.e. the LCIA, the well-known body that does exist) was to be
translated into Russian, the word order would be different in that language and
that only the first word would be capitalised; in other words, the result would
be the formulation which was used in Clause J, or something very similar.
9.
In view of that approach, the arbitrators had no hesitation in finding,
leaving aside Clause 24, that the intention of Clause J was to refer disputes
to the LCIA. They then went on to hold that Clause 24 did not affect that
conclusion. Clause 24 was in direct conflict because it provided for the
appointment of arbitrators by the parties, whereas the LCIA Rules provide that
the LCIA will appoint arbitrators, albeit taking into account any agreement or
nomination by the parties. Accordingly, the conflict provision came into play
such that Clause J must prevail and, in those circumstances, the arbitrators
held that they did not have jurisdiction over the dispute. The arbitrators so
awarded and declared and directed that the claimant pay the defendant’s costs
of the reference with interest.
10.
This application was made by arbitration claim form issued on 12 January
2018. The claimant submits that the arbitrators were wrong to determine the construction
of Clause J in isolation and by effectively reverse engineering the translation
of the English term “London Court of International Arbitration”, submitting
that they should have looked at the proper purposive construction of the clause
in the light of the contract as a whole. The defendant submits that the
arbitrators’ analysis was entirely right; that the words used in Clause J, to
be given their full effect, can only be referring to the London Court of
International Arbitration; that if the intention was simply to refer to ad hoc arbitration
in London the words “international arbitration court” are surplusage; and
further, that the whole of Clause J would effectively be surplusage as all that
the claimant relies upon could be found in Clause 24. It is also submitted
that Clause 24 is not inconsistent with that interpretation because the LCIA
will give effect to any agreement between the parties when it comes to
appointing the appropriate tribunal. The defendant therefore submits that the
arbitrators were entirely right in their conclusion albeit possibly for
slightly different reasons.
11.
In my judgment the proper approach, at least in the first instance, is
to look at the provisions of the contract as a whole in construing their
meaning. Although the conflict provision cannot be ignored, it only comes into
effect if there is indeed a conflict between the relevant provisions. In
determining whether there is a conflict, one must first construe the clauses.
That requires taking them together. Particularly where, as it seems to me is
plainly the case here, there is an ambiguity in Clause J, it is not right to
ignore Clause 24 in determining the proper meaning of Clause J. It is only if
those two clauses cannot be read together that the conflict provision, which
provides that Clause J take priority, comes into effect.
12.
Further, in my judgment, construing a clause in a foreign language where
there is doubt as to the proper translation requires the court to reach its
final determination as to the meaning of the clause by way of combined process
of assessing the evidence as to the translation together with the usual tools
of construction. The end purpose of a process of construction is to reach a
proper interpretation of the meaning and effect of the contract as agreed by
the parties.
13.
I do not consider that the use of the words in this case clearly
indicates a choice of the LCIA, using that term as shorthand for the well-known
arbitral body. If the phrase used had been exactly that which was used by the
LCIA in its own Russian version, that is, with each relevant word starting with
a capital letter and using a different Russian word for “Arbitration”, then I
consider that it might have been clear that the intention was to refer to the
LCIA. Instead, the words used are capable of referring either to the LCIA or,
more generally, to an international arbitral body in London appointed ad hoc by
the parties. That ambiguity falls to be resolved.
14.
The parties have presented alternative translations. At the end of the
day neither of them can be conclusive as to what was the intention of the
parties. Looking at the matter more broadly, I take into account the following
factors. First, that the parties have agreed in Clause 24 a mechanism for
appointment of arbitrators which would not be necessary or indeed appropriate
if the simple agreement was to proceed by LCIA arbitration. Clause 24 is more
applicable to an ad hoc arbitration, particularly as (in its printed form prior
to the striking out of the reference to New York) it anticipates that there may
be an arbitration in either New York or London. I consider that Clause 24 is
inconsistent with an LCIA arbitration, as did the arbitrators. Reading Clause
J together with Clause 24 would suggest that LCIA arbitration was not intended.
15.
Secondly, it seems to be at least common ground that LCIA arbitration
for maritime disputes arising out of a voyage charterparty would be unusual,
although the defendant’s evidence is that it is not highly unusual and it is
certainly known. Nevertheless, I consider it is at least doubtful that the
parties would have intended to limit themselves to an LCIA arbitration in a
case such as this.
16.
Thirdly, I consider that if it had been the intention to specify LCIA
arbitration then more care would have been taken to ensure that the wording
used did so specifically identify that body. As I have already indicated, the
words used do not mirror the Russian version used by LCIA itself, nor do they
take any simple step which could have been used, for example, by putting the
words “LCIA” in brackets or making reference to English words so as to put the
matter beyond doubt.
17.
In summary, although the matter is by no means beyond doubt, I have
concluded on the balance of probabilities that that parties’ intention was not
to refer specifically to LCIA arbitration but to an ad hoc arbitration in
London by way of international arbitration before a tribunal appointed pursuant
to the mechanism set out in clause 24. The parties are agreed that the word
used in Russian translated as “court” is capable of referring to a range of
bodies, including tribunals. I am satisfied that that is the intention here. I
therefore disagree with the conclusion of the arbitrators that they do not have
jurisdiction because it was an LCIA arbitration clause.
18.
Mr. Woolnough, for the defendant, mounts an alternative argument to
support the decision on a different ground. He submits that, even if this was
an ad hoc arbitration clause, it does not permit or require the defendants to
agree to arbitration on LMAA Terms and therefore these arbitrators, he submits,
do not have jurisdiction, having only accepted their appointment on terms which
were not agreed.
19.
I accept Mr. Watthey’s submission for the claimant that jurisdiction and
procedural terms are different issues. There is no doubt that London
arbitrators appointed pursuant to Clause 24 do have jurisdiction. The question
about whether or not there is agreement to the arbitrators proceeding on LMAA
Terms therefore must be looked at ignoring the question of jurisdiction which I
have found the arbitrators would otherwise have.
20.
The question is addressed in the decision of Saville J (as he then was) in
Fal Bunkering of Sharjah v. Grecale Inc. of Panama [1990] 1 Lloyds LR
369. In that case Saville J found that the appointment of LMAA arbitrators did
not per se mean that the parties had agreed to LMAA Terms in itself, although
he recognised that that might one day become the case. But he went on to say
this at the bottom of the right-hand column of page 373:
“If a proposed arbitrator makes clear that his acceptance of
appointment is on the basis that the LMAA Terms are to apply to the reference,
then the party seeking the appointment must either accept this condition or
look elsewhere. If nothing more is said or done but the appointer treats the
appointment as duly made, he will doubtless be taken to have accepted the
condition, at least as between him and his arbitrator. If the other party
has, by this or other means, also agreed the same with his arbitrator, then it
would be but a short step to conclude that the reference was governed by the
terms, either on principles akin to those applied in Clarke v. Dunraven
[1897] AC 59, or on the basis that each arbitrator was respectively vested with
authority to agree with the other on behalf of his respective appointer that
the arbitration was to be conducted in accordance with the LMAA Terms.”
21.
That reasoning, in my judgment, is conclusive that both parties have
agreed with their arbitrator and therefore with each other through the
respective arbitrators to LMAA Terms applying. Given that I have ruled that
there is no merit in the jurisdiction dispute, that is exactly the position
which applies in this case. Mr. Woolnough submitted that Saville J’s reasoning
in that case was obiter, which indeed it was. However, it seems to me that it
is, nevertheless, reasoning which is entirely unobjectionable which I would
adopt in this case and apply.
22.
For those reasons the claimant’s application succeeds. The arbitrators’
Award is to be set aside and I determine that the arbitrators do have
jurisdiction and that this arbitration is to proceed on LMAA Terms 2012.
(For
continuation of proceedings: please see separate transcript)
