Arbitrators to decide limitation

IF it is a matter involving factual questions or substantial contractual issues, and if one of the parties objects under Section 9 of the Arbitration Act 1996 to the matter being considered other than by arbitrators, then a dispute as to whether or not an arbitration agreement is time-barred by limitation should be decided by arbitrators rather than by the high court.

So held Mr Justice Mance in the Queen's Bench Division (Commercial Court) when dismissing the application of Grimaldi Compagnia di Navagazione Spa for an extension of time under Section 12 of the 1996 Act in its arbitration against Sekihyo Lines Ltd, and in allowing Sekihyo's cross-application under Section 9 for a stay of Grimaldi's application for a declaration that the Hague Rules incorporated in the schedule to the Carriage of Goods by Sea Act 1971 were incorporated into the arbitration agreement.

Grimaldi had chartered Sekihyo's vessel, which sank with the loss of some of Grimaldi's possessions. Grimaldi applied for arbitration under arrangements provided for in the charter party.
Sekihyo contended that Grimaldi's attempt to bring the matter to arbitration was out of time because the Hague Rules, which included a one-year limitation in Article 111 Rule 6, had been incorporated into the charter party. Furthermore, Sekihyo did not consider the items which had been lost to be capable of attracting the operation of limitation on the grounds that they were not "goods" in the sense envisaged by Article 111 Rule 6.

Mr Justice Mance said that the 1998 case of Vosnoc Ltd v Transglobal Projects Ltd exemplified the continuing practice under Section 12 of the 1996 Act. There, the plaintiff sought first a declaration that it had commenced proceedings within the one-year limit, which it was common ground applied, and second - in case it was held that the proceedings had not been so commenced - an extension of time under Section 12. The judge had refused the declaration but granted the extension sought. Both parties there were evidently content to have the court determine the applications for all the relief sought. In the present case, the respondents were not.
The present case possessed a feature which did not appear to have been present in any previous case. The respondent had issued its own application for an order staying the applicant's application.

In many cases, of which the present was an example, the issues arising from the suggestion of a time bar involved important and essentially substantive contractual issues. Whether the Hague Rules were incorporated depended on the proper construction of the agreed terms of the charter.

If they were incorporated, the question arose of whether and to what extent the claims related to goods to be delivered within Article 111 Rule 6. Both these questions were of potential significance for the standard of any responsibility on the respondent's part for loss or damage.

Whether the goods related to "goods" for delivery, so as to bring Article 111 Rule 6 into play, might also benefit from more detailed consideration of factual aspects of the alleged claims, only sparsely investigated in the affidavit evidence before the court.

Those were all matters which the parties must be taken to have assumed would normally be investigated before arbitrators rather than the courts.

It was difficult to see why, unless both parties were content, they should suddenly become matters for the court to determine, merely because the claimant might need, if he was wrong on them, to seek the court's exercise of discretion under Section 12.
(The Times Law Reports)

Liability limited before established
Caspian Basin v Bouygues Offshore and Utisol Transport v Bouygues Offshore

THERE was no jurisdictional bar to the court's grant of a limitation of liability decree under the Merchant Shipping Act 1995, before liability had first been established or admitted.

So held the Court of Appeal in London when, among other things, dismissing an appeal by Bouygues Offshore SA, the owner of the barge Bos 400, against the decision of Mr Justice Rix in the Admiralty Court of the Queen's Bench Division in 1997.

Mr Justice Rix had granted applications from plaintiffs Caspian Basin Specialised Emergency Salvage Administration and Utisol Transport Contractors Ltd, for declarations limiting their liability, if any, in connection with the total loss of the barge in June 1994, when it was driven ashore onto rocks in stormy conditions as it approached Cape Town. Maximum liability was limited to £521,538.

The court also overturned an injunction ordered by the English court restraining Bouygues from pursuing its claim against Utisol in South Africa.

The barge, registered in France, was under tow from the Congo to Cape Town by a tug owned by Caspian and time-chartered by Utisol. Bouygues claimed damages from Utisol and from Caspian for the alleged negligent handling of the tow and tug, for misrepresentation of the tug's capacity and for recision of the towage contract, which was the only link with England as it required the parties to the contract to submit to the exclusive jurisdiction of the English courts.

Caspian and Utisol were entitled to limit their liability under English and South African law. England had adopted the Convention on Limitation of Liability for Maritime Claims 1976, scheduled to the 1995 Act, under which the limit was higher but more difficult for Bouygues to break.
South Africa still adopted the International Convention relating to the Limitation of Liability of the owners of Seagoing Ships 1957 by which the lower limit only operated if the shipowner or charterer proved the absence of actual fault or privity on their part.
(The Times Law Reports)

Signed and sealed

THIS was an action filed before the Dubai courts by a consignee against a carrier for compensation for shortages and damage to goods shipped in a sealed container for shipment from Taiwan to Sharjah.

The Dubai Court of Cassation, in a judgment delivered in favour of the consignee against the carrier, held that the Dubai courts have jurisdiction to hear the matter even if the consignment was shipped to Sharjah, on the ground that the bill of lading was endorsed in Dubai, thus conferring jurisdiction on the Dubai courts over the case by virtue that part of the contract was executed in Dubai.

The Court of Cassation further held that the carrier was liable for the shortfall in and damage to the goods as there was no special provision in UAE maritime law governing the shipment of goods by container. The court added that the carrier was responsible for compensating the consignee for the shortage and damage to the goods, absent any specific reservation in the bill of lading.
(Al Tamimi & Co, Dubai)

Not going live

AN exporter was not entitled to recover damages for loss caused by the decision of a harbour board not to allow the shipping of live animals for slaughter in breach of its statutory duty under Section 3 of the UK Harbour Docks and Piers Clauses Act 1847.

Mr Justice Tucker so held in the Queen's Bench Division on a preliminary issue that Section 33 of the 1847 act did not confer upon the plaintiff a private law right to claim damages from Dover Harbour Board.

The plaintiff was an exporter of live animals to continental Europe for slaughtering or fattening. Its claim against the defendant arose as a result of activities of animal rights protesters which prompted the defendants to resolve that the harbour should not be used for the shipping of live animals for slaughter. This caused difficulties for the plaintiff in that it was prevented from exporting sheep from Dover, the shortest sea route, and suffered loss as a result.

The court found that the statutory duty imposed by Section 33 was not enacted for the protection of a limited class, rather it was a regulatory provision intended for the benefit of society as a whole.

The purpose of Section 33 was to impose a general administrative function involving the exercise of administrative discretion. In those circumstances, it would be very unusual to find that a breach of statutory duty gave rise to a remedy in damages.

Section 33 was open to any aggrieved person to apply with little delay for judicial review and, if appropriate, to seek a declaration of injunctive relief.
(The Times Law Reports)

Limiting liability
Owners of the ship "Herceg Novi" v Owners of the ship "Ming Galaxy"

THIS case involved the right of shipowners to limit liability for maritime claims in a country where the 1957 Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships applied, and where it was agreed that the appropriate forum for trial of the action was that country.

In considering whether to stay proceedings brought against shipowners in England, said the Court of Appeal, it was not correct to say that the 1976 Convention on Limitation of Liability for Maritime Claims, which applied in England and which allowed for a higher limit of liability, automatically represented an internationally sanctioned and objective view of where substantial justice was now viewed as lying and should prevail so that it could be said that the party bringing the English action would be deprived of a legitimate juridical advantage in the form of the higher limit of liability if a stay on the English proceedings was granted.

The appeal court accordingly allowed an appeal by Yangming Marine Transportation Corporation of Taiwan, the owner of the Ming Galaxy, which collided with the Herceg Novi in the Singapore Straits in 1986 in an incident which sank the latter vessel and gave rise to these proceedings. It was held that Singapore was the more appropriate forum for hearing the dispute.
(The Times Law Reports)