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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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Friday, 02 December 22
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Wednesday, 30 November 22
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- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
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- Sical Logistics Limited - India
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- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
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- The State Trading Corporation of India Ltd
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- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
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- McConnell Dowell - Australia
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- IHS Mccloskey Coal Group - USA
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- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
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- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
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- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
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- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
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- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
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- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
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- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
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- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
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- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Singapore Mercantile Exchange
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- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
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- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
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