Tribunal’s Jurisdiction: Mills & Co. Successful in High Court Arbitration Appeal
April 26th, 2023
Judgement has been handed down in favour of the defendant in this challenge to an arbitration award on jurisdiction under s.67 of the Arbitration Act 1996. The successful defendant was represented by Rebecca Jacobs - 7KBW, instructed by Andreas Welz and Holly Mayne of Mills & Co.
This was an appeal from an arbitration Award in which the Tribunal (Mr Duncan Quinan and Mr Christopher Moss) had found that it did not have jurisdiction to resolve the underlying dispute between the parties. The Claimant had commenced arbitration proceedings pursuant to the arbitration clause of a contract, the 2018 Memorandum of Understanding (“2018 MOU”). However, the Tribunal found that the Claimant had not established that it was a party to the 2018 MOU.
The 2018 MOU was a vessel sharing agreement under which a number of shipping lines collectively operated a container line service. Each of the members of the consortium provided one or more vessels in exchange for an agreed allocation of slots on the other vessels in the service. At the relevant time, the Claimant was not a named party to the 2018 MOU, but was intended to become one, and was subsequently made a named party to a subsequent agreement, the 2020 MOU. The Claimant had, however, arranged to purchase slots on a cycle of the service under the 2018 MOU.
The Claimant appealed to the High Court under s.67 of the Arbitration Act 1996, which effectively allows a full re-hearing of all issues. In practical terms this means (as was the case here) that an arbitration claimant can advance new arguments and adduce evidence, which was not put before the Tribunal, including witness evidence.
The Claimant argued that the Tribunal’s award should be set aside on the following basis:
(a) That there was an express agreement between the parties that the Claimant was a party to the 2018 MOU.
(b) Alternatively, there was an implied contract on the terms of the 2018 MOU.
(c) Alternatively, the Defendant was estopped from denying that the Claimant was a party to the 2018 MOU, either by way of promissory estoppel, estoppel by convention or an equitable duty to speak.
The Defendant responded:
(a) There was no agreement that the Claimant be a party to the 2018 MOU. At the relevant time, the Claimant had simply made a purchase of slots as a third party.
(b) There was no intention that the terms of the 2018 MOU would apply to the slot purchase, much less the arbitration clause.
(c) The Claimant did not join the service as a member until a later date.
(d) As to estoppel, an estoppel was being used to create a cause of action, which was impermissible, but in any event the requirements of none of the species of estoppel relied upon were met.
Mrs Justice Dias accepted the Defendant’s submissions. She held that:
(a) At the relevant time, the Claimant was not yet a party to the MOU: the contract between the parties, under which it had taken slots on the vessels in the service, was one for the purchase of slots by the Claimant as third party.
(b) That contract was not on the terms of the 2018 MOU, either expressly or impliedly, and there nothing to suggest that the parties intended the arbitration clause in the 2018 MOU to apply to it in circumstances where the 2018 MOU itself was not applicable.
(c) As to estoppel, none of the estoppels relied upon could be established: there was no relevant promise for the purposes of a promissory estoppel; there was no assumption of responsibility for the purposes of an estoppel by convention; there was no reliance or unconscionability; and no duty to speak arose in the context of this case.
Accordingly, the Tribunal had no jurisdiction and the Claimant’s s.67 application failed.
The question under consideration in this case was a “deceptively simple” one which ultimately required detailed investigation of the facts and the underlying principles of contract law. The arguments advanced by the parties’ Counsel and the commentary provided by Mrs Justice Dias provide a helpful overview of the principles to be considered when it is unclear what, if any, contract has been concluded and what are its relevant terms.
Applications under s. 67 are currently one aspect of the Arbitration Act 1996 which is subject to the Law Commission’s ongoing consultation into potential reforms. These include a proposal that s.67 applications should be by way of an appeal rather than a re-hearing. Under that proposal the court would in general no longer allow evidence which was not before the Tribunal and its approach would be limited to a review of the Tribunal’s original decision. It will therefore remain to be seen whether s.67 appeals proceed in the same way for much longer.
This article was prepared by Holly Mayne. Holly frequently advises on various aspects of contractual interpretation in the shipping law context.
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