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Web alert: The MV Ocean Glory – can arbitrators unilaterally bring London proceedings to a close, when neither party has requested the same?

News & Insights 17 December 2014

This case related to a shipment of animal feed under a voyage charter

This case[1] related to a shipment of animal feed under a voyage charter (VC), from the Ivory Coast to Morocco. The VC incorporated a London arbitration clause; it also included a time bar provision under which any, and all, claims had to be lodged within six months from the last day of discharge. The ship lost its rudder and was towed to Morocco to complete the voyage. Discharging operations were significantly delayed.
Immediately following discharge the owner appointed an arbitrator and gave notice to the charterer, asking it do the same. No particular dispute or claim was specified in the owner’s arbitration notice. The charterer, in turn, appointed its own arbitrator and a tribunal was thus constituted. The owner then applied for a partial award for outstanding demurrage and, in its claim submissions, asked the tribunal to reserve jurisdiction in relation to ‘any other claims’ – including cargo damage claims which might be brought against them in the near future by the receivers of the cargo. These claims were not, however, particularised or quantified. The charterer asked for all the owner’s claims to be dismissed on merits.
The tribunal published a ‘final arbitration award’ which awarded the owner its claimed demurrage. With regard to the other potential claims, the tribunal held that its jurisdiction would not be reserved given the length of time since the cargo had (then) been discharged and the absence of any evidence that there would be future cargo claims against the owner. The tribunal envisaged that if there were any further claims these could be brought in new (and separate) arbitration proceedings. The effect of this award was to exhaust the jurisdiction of the tribunal.
The owner sought to have the award remitted back to the tribunal on the basis of serious irregularity, under Section 68 of the Arbitration Act 1996. The owner argued that the tribunal had failed to comply with its general duty under s.33 Arbitration Act to act fairly and impartially, because it had adopted a course of action that was not advocated by either party and had not given the parties any opportunity to comment on this proposed course of action.
The High Court in England granted the owner’s application. Despite the uncertainty in the claim submissions, the parties had proceeded on the basis that other claims under the VC could be presented to the tribunal in due course. The course adopted by the tribunal, in proceeding to a final award, had not been argued or indeed even requested by either party. Furthermore, the High Court held that the arbitration tribunal should have at least given the parties an opportunity to address this issue, before it decided to unilaterally act in such a way as to bring the arbitration to a final close. The High Court held that the effect of the Final Award was to cause substantial injustice to the owner – in that any subsequent claim would be considered time barred under the VC.
The Standard Club has considerable in house legal expertise and handles numerous arbitrations, in various jurisdictions, every year. The club is always on hand to assist its members. If in any doubt, the reader should contact the authors of this article, or their usual club contact.

1. Lorand Shipping Ltd v. Davof Trading (Africa) BV (The ‘MV Ocean Glory’) - [2014] EWHC 3521 (Comm)

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