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Thursday, 30 October 14
DOES A LOU ARBITRATION AGREEMENT FOR THE UNDERLYING CARGO CLAIM COMPLETELY REPLACE THE BILL OF LADING ARBITRATION CLAUSE? - INCE &CO
 KNOWLEDGE TO ELEVATE
In the context of cargo claims brought under four bills of lading, the Commercial Court has recently considered whether an arbitration provision in a Club Letter of Undertaking (LOU) had entirely replaced the arbitration agreement in the bills of lading. If it had not, the Cargo Interests may have been faced with a time bar argument in respect of some of their claims. Luckily for them, the Court found in their favour.
The background facts
The dispute arose out of a shipment of a cargo of bagged rice from Thailand to Nigeria pursuant to four Congenbill 1994 bills of lading.
There was a head time charterparty, a sub-trip time charterparty and a sub-sub voyage charterparty. The first two charterparties provided for LMAA arbitration in London, with the LMAA Small Claims Procedure (SCP) to apply to claims of less than US$100,000. The sub-sub voyage charterparty provided for Singapore arbitration. All three charterparties were governed by English law. Each bill of lading incorporated the “Law and Arbitration Clause” of the “Charterparty, dated as overleaf”, but no charterparty was actually identified (by date).
Cargo damage was alleged upon discharge, and the Cargo Interests sought security from the Owners for their claims under the bills of lading. The Owners’ P&I Club issued a LOU which, among other things, confirmed the Owners’ agreement that the Cargo Interests’ claims (to which the LOU would respond if they succeeded) would be referred to LMAA arbitration in London before three arbitrators and that English Law would apply (including the Hague-Visby Rules and the English Carriage of Goods By Sea Act 1992). The Cargo Interests commenced arbitration under the standard LMAA Terms, but no references were made under the SCP.
The Owners argued that the commencement of arbitration was invalid because the Cargo Interests should have commenced four separate arbitrations (not one) of which some should have been under the SCP (before a sole arbitrator) because the claim values under some of the bills of lading were apparently less than US$100,000; and so the arbitrators had no jurisdiction to decide the claims in this arbitration (and the Cargo Interests were time-barred from commencing new arbitration proceedings to correct this). The Owners argued this on the basis that (1) the head time charterparty’s law and jurisdiction provisions had been incorporated into the bills of lading; and (2) its SCP provision for claims for less than US$100,000 survived the LOU – which amended the bills of lading’s arbitration provision in some limited respects but left the SCP provision intact.
The Cargo Interests argued that the LOU’s arbitration provision had replaced the bills of ladings’ arbitration provision entirely.
The Tribunal’s decision
The majority arbitrators held that they had jurisdiction to hear a bill of lading claim for more than US$100,000, but (as the Owners were arguing) no jurisdiction to hear a claim for less than this sum. That said, they could not say which claims they could hear because the Cargo Interests had not set out the claim amount under each bill of lading.
The minority arbitrator held that the Tribunal had jurisdiction to decide all of the bill of lading claims (as the Cargo Interests were arguing).
The Commercial Court decision
The Court agreed with the Cargo Interests that the LOU’s arbitration provision had replaced the bills of lading’s arbitration provision entirely such that the arbitration had been validly commenced. The Court’s reasoning was as follows:
There was no reason in principle why this should not be the case, and the authorities relied upon by the Owners to the contrary did not directly apply here. The LOU’s arbitration provision operated comfortably as a new and free-standing agreement which was comprehensive – dealing with the (London) seat of the arbitration; the (LMAA Terms) arbitration procedure; the number of arbitrators (three, appointed in the usual way); the time for appointing the second arbitrator (14 days); and the law governing the dispute (English law, including the Hague-Visby Rules and the Carriage of Goods by Sea Act 1992).
This was also the natural meaning of the LOU’s arbitration provision.
With this in mind, there was no apparent reason why the parties should not have intended this. On the contrary, there were good reasons why they should:
the arbitration agreement would in this way be found in one document (the LOU) rather than two (the LOU and the bill of lading/head charterparty clause);
the parties knew that some of the modest claims would be less than US$100,000 and would therefore have mentioned the SCP in the LOU if they intended it to apply;
it made no sense for them to have been agreeing to four arbitrations under different LMAA procedures; and
it was in fact arguable that the voyage charterparty’s Singapore arbitration provision actually applied instead of the head charterparty’s London/SCP arbitration provision – as to which any dispute was removed if the LOU’s arbitration provision replaced it entirely.
Comment
The Court would seem to have made a common-sense decision giving effect to the words used in the LOU and, apparently, to what the parties would have intended.
Whilst not relevant to the decision reached, the Court’s comment in passing that the Owners “may well be right”, subject to some scope for disagreement, that the head time charterparty’s arbitration provision would initially have been incorporated into the bills of lading (rather than the voyage charterparty’s arbitration provision) might be questioned in future cases; there is both textbook authority and case law to the effect that if there is a sub-voyage charterparty, the arbitration provision in that sub-charterparty (not that of the head time charterparty) is incorporated into the bill of lading, consistent with the bill of lading’s phrase “freight payable as per cp dated ”.
Source: INCE &Co / Hellenic Shipping News
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Thursday, 22 December 22
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Thursday, 22 December 22
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Thursday, 22 December 22
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Thursday, 22 December 22
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- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
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- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
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- Orica Australia Pty. Ltd.
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- Parliament of New Zealand
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- The University of Queensland
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- Meralco Power Generation, Philippines
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- Cigading International Bulk Terminal - Indonesia
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- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
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- Petron Corporation, Philippines
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- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Economic Council, Georgia
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- Minerals Council of Australia
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- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
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- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
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