Tag: Arbitration

Arbitration agreements — a simple little question

A nice little point from the Privy Council today. A shareholders’ agreement says, “any party may submit the dispute to binding arbitration”. Does this mean (I) neither party is allowed to sue in the courts at all; (II) either party can sue to his heart’s content, but the defendant can stop the action in its tracks, provided he himself brings arbitration proceedings; or (III) either party can sue, but the defendant can demand that the plaintiff arbitrate or shut up? The answer is (III). Moral: draft your arbitration agreements with clarity. Lawyers can pick a hole in (almost) anything.

See Anzen v Hermes One [2016] UKPC 1, available as ever on BAILII.

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No loss, no damages: latest from the CA

Christmas reading from the English CA for charterparty buffs and damages enthusiasts. In The New Flamenco [2015] EWCA Civ 1299 , decided a couple of days ago, a cruise ship under time-charter at a highish rate was wrongfully redelivered a couple of years early. That’s OK, said the owners: we’ll just have those two years’ lost profits, please (there being no relevant market). Not so fast, say the charterers. You sold the ship on redelivery for a very tidy sum: had we given her back at the proper time the market would have collapsed and you’d have got many millions of dollars less for her — a figure that dwarfs any profits lost. In fact you should be d****d grateful to us for breaking our contract, since you’re actually a great deal better off than if we’d kept it.

Arbitrators hold for the charterers; Teare J on appeal for the owners. In a rare reversal of Teare J, the CA restore the arbitrators’ decision. Whatever the case where there is a market rate, in non-market cases where the claimant claims on the basis of profits lost, the general British Westinghouse rule applies and any gains resulting are in account. A salutary reminder from Longmore LJ at [29]: “compensation for actual loss is the underlying principle and … in this connection, it is the available market rule that is a gloss on that underlying principle.” Verb sap.

Happy Christmas to all.

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Anti-suit injunctions (or rather anti-enforcement injunctions) again

An international high-net-worth employment case decided last week, Ecobank Transnational Inc v Tanoh [2015] EWCA Civ 1309 (accessible on the excellent BAILII website), has a good deal of meat for international transaction lawyers too. The CEO of a Togolese bank had a contract of employment governed by English law and with a provision for arbitration of differences in London under the UNCITRAL Rules. In early 2014, following a textbook exercise in corporate character assassination, he was fired. He immediately sued in Togo for wrongful dismissal, and shortly afterwards in the Ivory Coast for defamation, recovering a cool $11 million-odd in the former, and in the latter about $15 million. Both courts held that under their respective laws the arbitration provision could not deprive them of jurisdiction. The employer claimed arbitration, and in April 2015 sought an anti-enforcement injunction in respect of the Togolese and Ivorian proceedings (i.e. an anti-suit injunction for the time after judgment has been obtained). The CA held an anti-enforcement injunction available on principle, but upheld its refusal on the grounds of delay.

Essentially this judgment makes clear a number of points of very general application. First, s.32 of the Civil Jurisdiction and Judgments Act 1982, dealing with the question of the recognition in England of foreign proceedings brought in breach of jurisdiction or arbitration agreements, is likely to precluded recognition of the relevant proceedings. Despite the exception to non-recognition where the jurisdiction / arbitration agreement is “illegal, void or unenforceable or was incapable of being performed”, it is irrelevant that an arbitration agreement is ineffective under the law of the place where the proceedings are brought or the law of the place where the contract was made. What matters is its enforceability under English law. Secondly, if people agree under a contract governed by English law to arbitrate disputes, the English courts will have little compunction where appropriate in granting anti-suit or anti-enforcement relief. Such relief is not as such a breach of the rules of comity: as Christopher Clarke LJ pertinently pointed out, the preservation of overseas judicial amour propre is not a particularly important aim these days. Thirdly, however, delay in seeking relief continues highly relevant, both on general equitable grounds and also because it is undesirable to render fruitless the expenditure of large amounts of curial time and litigants’ cash on ultimately unproductive proceedings abroad. In short, while anti-enforcement injunctions remain possible, in practice they are likely to be rare, as litigants will normally be expected to act earlier in the judicial process.

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Don’t be late. Arbitrate.

We are all familiar with the ‘Italian Torpedo’ where a party to a contract containing an arbitration clause commences proceedings in a jurisdiction which will not recognise its effect. The Africa Reefer [2015] EWHC 1950 (Comm), provides a salutary lesson against overconfidence that one’s chosen court will, indeed, determine that arbitration does not apply.

Pears were carried from Argentina to Antwerp under a bill of lading incorporating a charterparty subject to London arbitration. The bill of lading was subject to the Hague-Visby Rules and a one year time limit. The claimants commenced proceedings in Belgium and the parties awaited the final report of the court surveyor. After this was produced the defendant, in November 2012, served a defence objecting to the jurisdiction of the Belgian courts on the grounds that the dispute was subject to London arbitration. The claimants took no steps to commence arbitration, confident that it would succeed on this point under article 96 of the Belgian Private International Code and article 91 of the Belgian Maritime Law. Much to their surprise, in 2014 the Belgian court found for the defendant.

In 2015 the claimants sought an extension of time of three years and eight months for commencing arbitration relying on s.12(3) (b) of the Arbitration Act 1996 which provides for the court to order that an extension be given where: “the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question”. Burton J declined to grant the requested extension. There was no conduct by the defendants upon which the claimants could rely which made it unjust to hold the claimants to the one year time limit. The defendants had been entitled under Belgian law to participate in the Belgian proceedings up until the time when they raised the jurisdiction objection in November 2012, and it was common ground that by doing so the defendants had not waived their right to claim arbitration. Thereafter, the claimants took no steps to commence arbitration until their rude awakening in 2014 when the Belgian court found for the defendant.

Get your skates on for an anti-suit injunction

The English courts may be very willing on principle to give you an anti-suit injunction against someone who sues elsewhere while putting up two fingers to a binding London arbitration clause. But you must play your part and act quickly. You can’t lackadaisically ask the foreign court to decline jurisdiction and then seek to injunct the other guy in London several months later when it’s apparent that it won’t. A hapless shipowner found this out on his unlucky Friday 13. For details see Essar Shipping Ltd v Bank of China Ltd [2015] EWHC 3266 (Comm) (13 November 2015), available on BAILII.

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The Chartered Institute of Arbitrators (CIArb) Awards Department of Shipping and Trade Law with Recognised Course Provider Status

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The International Commercial Arbitration module offered by the Department of Shipping and Trade Law, College of Law, Swansea University is recognised by the Chartered Institute of Arbitrators as equivalent to member-level education (module 2) offered by the CIArb.

This effectively means that starting from the 2015-2016 academic year, LLM students at the Department of Shipping and Trade Law who manage to successfully complete the International Commercial Arbitration module will be eligible to apply for exemption from level 2 education requirements of CIArb membership, allowing them to apply to be awarded the level of Member of the Institute or MCIArb.

The CIArb, with 13,000 members active in various form of alternative dispute resolution in 120 countries, is the foremost professional institution working for global promotion, facilitation and development of all forms of private dispute resolution through an international network of 37 branches. Membership of the CIArb is available at three levels of Associate, Member and Fellow.

The module co-ordinators of the International Commercial Arbitration module, Drs. Leloudas and Tabari, were very pleased with the decision of the Chartered Institute of Arbitrators to afford this opportunity to LLM students at Swansea. This is yet another illustration of the reputation that Swansea LLM degrees enjoy. There is no doubt that this development will make the International Commercial Arbitration module even more popular among students in the years to come.