TTMI SARL v Statoil ASA

This is a challenge pursuant to section 67 of the Arbitration Act 1996 (hereafter “the 1996 Act”) to the decision of an arbitrator, Mr William Robertson, in an award dated 2 September 2009, revised on 12 October 2009 pursuant to section 57 of the 1996 Act. The claimant, TTMI Sarl (hereafter “TTMI”), a Swiss company, challenges the decision to strike out its claim against the defendant, Statoil ASA (hereafter “Statoil”), a Norwegian company, under a charter-party on the Shellvoy 5 form, clause 43(c) of which provides for London arbitration. No charter-party was drawn up let alone signed, and TTMI relied on a fixture recap email. Mr Robertson struck out the claim on the ground that there was no contract between TTMI and Statoil, and thus no arbitration agreement between them. The underlying dispute is a claim by TTMI of US $322,789.06 in demurrage under a single voyage charter-party of the Sibohelle which was fully performed.

In the recap email TTMI’s brokers, Galbraith’s, mistakenly recorded Sempra Energy, at that time TTMI’s ultimate parent company, as the vessel’s time-chartering owner. TTMI’s case is that notwithstanding the mistake, there was a binding charter-party of the Sibohelle between it and Statoil. Alternatively it submits that a contract between it and Statoil was formed by performance of the voyage by it and Statoil’s payment of the freight due to it, or that the recap email should be rectified to show it as the time-chartering owner. Statoil denies that there was a contract between it and TTMI because it believed it was contracting with Sempra Energy and that the charterparty was performed by Sempra Energy acting as the time chartering owner.

The evidence on behalf of TTMI consists of a statement of Chris Goforth, its chartering manager dated 5 March 2009, and of Robert Marr, a partner of Clyde & Co. LLP dated 30 September 2009. On 18 March 2011 I refused an application to adduce a second witness statement of Mr Goforth dated 14 March 2011. That statement, however, was in the CMC bundle. The evidence on behalf of Statoil consists of a statement of Glenn Winter, a partner of Winter Scott, dated 16 November 2009.

On 11 November 2010 Christopher Clarke J ordered that, having regard to the nature of the dispute and the amount at stake, the section 67 hearing was to take place by reference to the documents and the evidence which were before the arbitrator and on three factual assumptions, made only for the purposes of this application. The factual assumptions are that:

“(a)

The claimant instructed shipbrokers, Galbraith’s, to charter the vessel to the defendant;

(b)

Galbraith’s erroneously named Sempra Energy, not the claimant, as “T/C owner” in the recap email dated 26 October 2005 and timed 11:44am;

(c)

Galbraith’s had no instructions or authority to enter into a charter-party on behalf of Sempra Energy”.

As is usual in cases such as this, the facts are complicated by the number of intermediaries between the owners and charterers and the structure of the Sempra group of companies. The ultimate parent company of the Sempra group is Sempra Energy USA, a Californian company. At the material times TTMI was part of the Sempra group and its tanker chartering arm. In 2001 it agreed with two other companies in the group, Sempra Energy Trading Corp. and Sempra Oil Trading Sarl (which are defined in that agreement as “Sempra”), to charter vessels as principal to meet the needs of “Sempra” (as so defined). Sempra Energy Trading Corp. is an energy trading utility based in California which did not carry out maritime transport business.

On 12 October 2005 TTMI took the Sibohelle on time charter from Sibodouze A/S. TTMI’s performance under the charter was guaranteed by Sempra Energy USA. Mr Goforth, the claimant’s chartering manager, on behalf of TTMI, instructed Galbraith’s with a view to entering a sub-charter on the spot market. On 12 October Galbraith’s included the Sibohelle in a list of vessels available, and described the contact as “Sempra”.

Statoil was interested in a sub-charter. It is agreed by the defendant for the purposes of this application (Statement of Case, paragraph 19(3)(a)) that TTMI instructed Galbraith’s to charter the vessel to Statoil and it was TTMI’s intention to enter into a charter-party of the vessel with Statoil. Emails dated 13 October from Statoil’s chartering brokers, PF Bassoe, to Galbraith’s, and an undated email from Galbraith’s to Mr Goforth show that a number of terms (including amendments to the Shellvoy 5 charter party terms and laydays as 11 to 13 November) had been agreed. The emails state “[p]leased to confirm fixture with subjects stem/suppliers/receivers and CMA [charterers’ management approval] to be declared latest 5 pm London Monday 17^th October 2005”. The charterer is named as “Sempra” and the charter-party date is “TBA”.

On 17 October 2005 two recap or recapitulation emails were sent. The first is an internal one, timed at 15:47 from Galbraith’s to “Sempra Trading Geneva” and marked “Attn. Chris Goforth”. It “confirmed” a fixture for the carriage of condensate from Norway to the US Gulf on board the Sibohelle between Statoil as the charterer and naming “Sempra Energy” as the time-chartering owner, the charter-party date as 17 October 2005, and the laydays are 13 to 15 November, a change to the dates in the earlier email. The second email, timed at 16:27, is from PF Bassoe sent to Navion, Statoil’s managing agent, and, “crossing the line” between the parties, to Galbraith’s. It stated “[p]leased to confirm the fixture with all subjects lifted”. It records that the charterer is “Navion Chartering for and behalf of Statoil ASA” and the time-chartering owner (the “T/C owner”) is “Sempra Energy”. It also records that the charter-party form is “Shellvoy 5”, the charter-party date is 17 October 2005, the cargo is “PC/Min 65,000 MT” “clean condensate”, the laydays are 13 to 15 November, and the freight rate is “WS 305”. The section “Navion amendments to Shellvoy dated July 2002”, lists the clauses of the charter-party form and, against clause 43 (which inter alia provides for London arbitration), states “OK”.

There are also email confirmations timed and dated 09:25 on 18 and 11:44 on 26 October 2005 respectively from Navion on behalf of Statoil to PF Bassoe, and from Galbraith’s to Kathy Cody, an employee of Sempra Group but marked as “To TTMI Sarl”. These emails do not “cross the line” between the parties. Both identify the charterer and the T/C owner in the same way as in the 16:27 email sent by PF Bassoe to Galbraith’s on 17 October; i.e. as Sempra Energy. Kathy Cody forwarded the email sent to her to the vessel’s master describing it as the “fixture note for your next employment”.

Mr Goforth states (first statement, paragraph 11) that, on behalf of TTMI, he instructed Simon Romer Lee, a shipbroker at Galbraith’s, to conclude the fixture. As to the cause of Galbraith’s’ mistake, he states (first statement, paragraphs 13 - 14) that Mr Romer Lee explained to him that it came about because Galbraith’s consulted INTERTANKO’s website Q88.com, which provided information about tanker ships, to obtain details about the Sibohelle. Q88.com erroneously named Sempra Energy as the vessel’s time chartering owner. The error was repeated in Galbraith’s’ recaps, and was not spotted and corrected.

The voyage – from Kaarstoe in Norway to Houston in Texas – was performed. The Notices of Readiness, tendered by the Master on 13 November and 7 December and accepted at Kaarstoe on 18 November, and at Houston on 10 December, referred to the “terms and conditions of Charter Party/Contract dated 17 October 2005” and identified TTMI as the time charterer. They identified Navion Charterers, Statoil’s managing agent, as the voyage charterer and they were accepted by Navion’s local representatives. The cargo was discharged by 0012 on 12 December 2005. The statement of facts issued at Kaarstoe on 19 November by Tesma Singapore Pte Ltd identified the charterer as “T/C Sempras Energy” and that issued at Houston on 12 December by Barwill Agencies was addressed to “Sempra Trading”.

An invoice dated 13 December for freight in respect of the “voyage: Karsto / Houston” was sent to “Navion Chartering for and on behalf of Statoil ASA”. The invoice was issued on Sempra Energy Trading’s paper but it stated the “total amount due TTMI” and the account name at the specified bank account at JP Morgan Chase Bank to which payment was to be made was “TTMI Sarl”. The freight was calculated by reference to a rate of US $3.05, the rate specified in the recap email. Statoil did not query this invoice and paid the freight to TTMI. Its case (see Statement of Case, paragraph 24(8)) is that it was not aware that the charter party was performed by TTMI acting as the time chartering owner and believed that it was performed by Sempra Energy acting as the time chartering owner.

On 16 December 2005, Galbraith’s sent its invoice to TTMI Sarl. Mr Coldrick, on behalf of TTMI, submits that this shows that it was acting for TTMI throughout. PF Bassoe initially sent its commission invoice to Sempra Energy Trading at Galbraith’s address on 20 December 2005 and Galbraith’s forwarded this to TTMI on 23 December. There were further communications between the parties. On 16 January 2006 Clyde & Co, TTMI’s solicitors, made the demurrage claim and sent it to Navion “for and on account of Statoil”. The demurrage and laytime statement showed the owners as Sempra Energy and the invoice was issued under the heading “Sempra Energy c/o Clyde & Co.” Clyde & Co’s covering letter, however, stated that it was “instructed by TTMI to resolve their demurrage disputes”.

There would appear to have been further discussions about the invoices because, on 24 April 2006 PF Bassoe issued a credit invoice to Sempra Energy Trading and a fresh invoice to TTMI. On 8 May 2006 it sent a chasing email to Galbraith’s, referring to the credit and the new invoice “with corrected owners’ style” and stated the invoice had not been paid. Mr Coldrick submitted that this showed that what was intended throughout was that the contract was with the entity within the Sempra Group that was the disponent owner of the vessel. In an email timed at 12:07 on 25 May 2006 Kathy Cody apologised for the delay in payment and stated that Galbraith’s invoice had been set up for payment on 31 May and “just waiting for co-broker to be set up in the system and will then process”. There is no indication in the material before me that this invoice was not paid by TTMI.

The arbitrator concluded that there was no contract between the parties and therefore no arbitration agreement because Sempra Energy did not contract as TTMI’s agent. He found that, although there may have been an error on the part of Galbraith’s in naming Sempra Energy as a contracting party in the email confirmation, this error was not known to Statoil. The consequence was that TTMI was not the principal under the charter-party and the fixture was concluded between Sempra Energy and Statoil. Although the arbitrator found it “very telling that Galbraith’s have made it clear … that TTMI were the time chartering owners and Sempra were only a guarantor …” he found nothing in the fixture recap to lead him to conclude that Sempra were only a guarantor of TTMI’s performance as “there is no mention of this important fact”. TTMI challenges Mr Robertson’s award on the ground that he erred in his conclusion as to his jurisdiction.

The approach in a challenge under section 67 of the 1996 Act

In Dallah Real Estate v Government of Pakistan [2010] UKSC 46, albeit in the context of a challenge under section 103(2)(b) of the 1996 Act at the time of attempted enforcement, Lord Collins of Mapesbury stated at [96] that “The consistent practice of the courts in England has been that they will examine or re-examine for themselves the jurisdiction of arbitrators” and the question “can arise in a number of contexts, including a challenge to the tribunal’s jurisdiction under section 67 of the 1996 Act.” Lord Saville of Newdigate stated at [160] that whether an arbitrator has jurisdiction is a matter that the court must consider for itself. This reflects and confirms the decisions of the Commercial Court since the decision of Rix J as he then was in Azov Shipping Co. v Baltic Shipping Co. [1999] 1 Lloyd’s Rep. 68. Accordingly, the function of the Court is to re-hear the case rather than to review the arbitrator’s decision.

The issues:

In the present case the re-hearing has been by reference only to the documents and the evidence which were before the arbitrator and on the three factual assumptions I have set out at [4]. I have referred in [2] to the three issues in this case. They are:

Was a contract concluded between TTMI and Statoil on or shortly before 17 October 2005?

TTMI’s case (Statement of Case, paragraph 18.2) is that Statoil contracted with the vessel’s “disponent owner … and/or the Sempra Group company which had instructed Galbraith’s to negotiate a sub-charter of the vessel”. Mr Coldrick submitted that the mistake by Galbraith’s in recording the identity of the chartered vessel’s time chartering owner in the recap email does not mean that there is no contract.

There are two stages to Mr Coldrick’s analysis. The first seeks to distinguish this case from Shogun Finance Ltd v Hudson [2003] UKHL 62; [2004] 1 AC 919 in which it was stated (1) the identity of a party (in that case, the hirer under a hire-purchase agreement) falls to be ascertained by construing the document (per Lord Phillips of Worth Matravers at [167] and [178]); (2) “where the party is … specifically identified in the document oral or other extrinsic evidence is not admissible” (per Lord Hobhouse of Woodborough at [49]); and (3) “where there is an alleged contract reached by correspondence, offer and acceptance must be found, if they are to be found at all, in the terms of the documents” (per Lord Walker of Gestingthorpe at [188]). The second stage is that (see skeleton argument, paragraph 32) “this case is best regarded as an undisclosed principal case: TTMI’s existence as principal was not disclosed but nevertheless it in fact was the true principal”.

The starting point for the first stage is (see skeleton argument, paragraphs 24-32) that a recapping email is not a contractual document naming the contracting parties and dispositive as to their identity but a recapitulation of what had previously been agreed orally. This is said to be particularly so where, as in this case, there are a number of recapping emails. For this reason, Mr Coldrick submitted that this case is distinguishable from Shogun Finance Ltd v Hudson in which there was a signed contract making it clear who the parties were, and where a rogue fraudulently sought to give the impression that he was someone else. The statements in that case to which I have referred thus do not control the outcome in this case.

Moreover, relying on Shogun Finance Ltd v Hudson, per Lord Walker of Gestingthorpe at [184] and [190], Mr Coldrick submitted that even where there has been significant negotiation in writing, the question of to whom any written offer or acceptance was made or directed remains relevant. He also submitted (citing Lord Walker of Gestingthorpe at [185] – [187]) that where the material which is said to give rise to the alleged agreement is not solely the result of negotiations in writing, “the proper approach will usually be to apply a strong presumption that the party in question intended to contract with the person with whom he was in fact dealing”. In the present case, he argued, “Statoil in fact dealt (albeit via brokers) with TTMI throughout. Sempra Energy was, apart from the error in the recapping emails, simply not part of the picture.”

Mr Coldrick submitted that The Rhodian River and The Rhodian Sailor [1984] 1 Lloyd’s Rep. 373 and The “Double Happiness” [2007] 2 Lloyd’s Rep. 131 show that, in the context of negotiations for a charter-party, what will generally be of importance to the charterer is that its counterparty is the disponent owner, rather than its particular corporate identity. In The Rhodian River and The Rhodian Sailor two one-ship companies respectively owned and would shortly own the two vessels and the same brokers acted for both companies. After all the substantive terms of a charter of The Rhodian Sailor (owned by “the Sailor company”) were agreed, the charterers’ brokers asked for the full name of the owners and the owners’ brokers mistakenly gave them the name of “the River company” which owned The Rhodian River. Bingham J stated (at 377) that the agreement as understood and intended on both sides was that a charter-party should be entered into between the charterers and “those who would shortly be taking over [The Rhodian Sailor] as owners or disponent owners”.

In The “Double Happiness” the disponent owners’ brokers told the charterers’ brokers that the vessel being fixed was “a Golden Ocean vessel” but did not name any particular “Golden Ocean” company as the disponent owner. After terms were agreed on 7 March 2005 the owners’ brokers sent the charterers’ brokers a draft of the head charter-party which misnamed the charterer. After the error was spotted the owners’ brokers informed the charterers’ brokers of the correct name and no objection was raised. Langley J stated (at [41]) that “the documents and evidence are overwhelmingly to the effect that at 7 March 2005 both parties intended to fix the vessel and had a common understanding that they had done so. The obvious concern of both was that the fixture should be made with the disponent owner. Who that was, was neither here nor there provided it fulfilled [the charterers’] concern that it was a member of the Golden Ocean group.”

In the present case TTMI was the Sibohelle’s disponent owner and Mr Coldrick submitted that (by contrast with the case of Said v Butt [1920] 3 KB 497) there was no evidence that the identity of the disponent owner was important to Statoil. He invited me to infer from the fact that the email on the 17 October was a recap that an oral agreement had been entered into before that date, and from the references to “Sempra” in the emails dated 13 October, that there was no reference to a particular company within the Sempra group as the disponent owner which Statoil intended to contract with.

It is the fact that it is Sempra Energy and not TTMI which is named in the recap as the time-chartering owner that leads to the second stage of Mr Coldrick’s analysis, that this is best regarded as a case of an undisclosed principal. He relied on the statement of the law by Diplock LJ in Tehran-Europe Co. Ltd. v S.T. Belton (Tractors) Ltd. [1968] 2 QB 545, 555, that “in the case of an ordinary commercial contract [the] willingness of the other party [to treat as a party to the contract anyone on whose behalf the agent may have been authorised to contract] may be assumed by the agent unless either the other party manifests his unwillingness or there are other circumstances which should lead the agent to realise that the other party was not so willing”. He submitted that, since Galbraith’s acted on behalf of TTMI and were authorised to do so, in the absence any manifestation of unwillingness by Statoil or other circumstances indicating that it was not willing to deal with a party which authorised Galbraith’s, TTMI is entitled to sue as an undisclosed principal.

Mr MacDonald Eggers submitted that, although the undisclosed principal point was taken before the arbitrator, and rejected, it was not pleaded in the present application and that, to deal with it comprehensively, Statoil would need to adduce evidence of surrounding circumstances that showed it was not prepared to deal with TTMI. I recognise that there will usually be negotiations leading to an agreement by telephone, email or fax, which is recorded in a recap and that such an agreement can be inferred from the parties’ conduct and documents. However, assuming the point is sufficiently pleaded by the words I have set out from paragraph 18.2 of TTMI’s statement of case (see [18]), I have concluded, after some hesitation, that, on the evidence before me, I am unable to accept Mr Coldrick’s submission that there was a contract formed between the parties on or before 17 October. There was no material change in the positions between 17 and 26 October.

The reason for my hesitation is that it is common for charter-parties to be concluded by an exchange of emails or faxes, with the terms being recapitulated in a “fixture recap”, and they can be concluded orally and recapitulated. Mr Coldrick invited me to infer an oral contract made prior to the recap. There is, however, no evidence as to when such a contract was made, who acted on behalf of Galbraith’s, what Galbraith’s said to PF Bassoe about who they were acting for, and there are no references in the documents to negotiations. All there is, is the inference that can be drawn from the differences between the contents of the recap email dated 13 October and those of that dated 17 October that there must have been some discussion of terms. But there is, for instance, no reference in the documents to negotiations on the telephone and importantly no evidence from Galbraith’s or in Mr Goforth’s first statement that there was an oral contract. (I observe that, although it is not in evidence the claimant is not assisted by Mr Goforth’s second statement. In it he stated (paragraph 22) that he cannot recall how he gave Galbraith’s TTMI’s instructions but “it is likely that I discussed with Galbraith’s and gave instructions by telephone”.) Although in the earlier emails the reference is to “Sempra” rather than a specific company, there is then a gap in the documentary evidence between 13 and 17 October. The only documents with a generic reference to “Sempra” are the emails dated 13 October which were subject to a number of matters including charterers’ management approval. By 17 October when the “subjects” were removed and the laydays altered, the time chartering owner was stated to be “Sempra Energy” a specifically identifiable corporate entity in the Sempra Group. (Again, the claimant would not be assisted by Mr Goforth’s second statement, which, in paragraphs 24 – 25, states that he believes that TTMI “would have instructed Galbraith’s that these changes were acceptable” but that he believes the change in the identity of the time chartering owner was simply “a factual error in recording information” (emphasis added)).

There is also no evidence from the documents that Galbraith’s gave any indication to PF Bassoe that it was acting on behalf of TTMI. So, for example, PF Bassoe’s email timed at 15:47 on 17 October was sent to “Sempra Trading Geneva” and marked “Attn. Chris Goforth”. Moreover, given that Mr Romer Lee stated that Galbraith’s relied on the information obtained from the Q88.com website, they may have passed that information on to PF Bassoe.

A closer examination of The Rhodian River and The Rhodian Sailor and The “Double Happiness” shows that the present case differs materially from those cases. In The Rhodian River and The Rhodian Sailor Bingham J stated (at 375) that “a bargain had in all essentials been made” two days before the charterers’ agents asked for the owners’ “full style”. He also stated (at 376 column 2) that his “clear opinion” that the charterers’ intention was to contract with the party for whom the owners’ brokers were acting was derived from the telex messages but that inference was “strengthened by the belief that a charterer would prefer to contract with a party who had the power as well as the duty to perform”. The factor which strengthened the inference may be present in this case (although in that case the two alternative contracting parties were both one-ship companies whereas, as Mr MacDonald Eggers observed, Sempra Energy is a very substantial company whereas TTMI is a company whose performance of the head charter had to be guaranteed by Sempra Energy). But the factor from which Bingham J derived the inference is not. I am unable to derive an intention to contract with whoever Galbraith’s were acting for from the emails.

As to The “Double Happiness”, the contrast is sharper because of documents and evidence which Langley J described as “overwhelmingly” to the effect that the parties understood that they had fixed the vessel and that the fixture was made with whoever was the disponent owner. That evidence included (see [14]) a telephone conversation between the brokers in which the charterers’ broker asked who the owner of the vessel was, was told that it was “a Golden Ocean vessel”, and did not ask for the name of the particular company. It also included (see [19]) the agreement to the terms of the fixture was one between “the disponent owners (still unnamed)” and the charterers, and the disponent owner was not identified in the subsequent recap. Thirdly, (see [15] and [43]) the name in the draft of the head charter-party which was attached to the recap and relied on by the charterers after spot rates fell significantly was the name of a non-existent company.

The important difference between those cases and this is the evidence in both those cases showed that the charter-party was agreed or substantially agreed before the issue of the name of the time-chartering owner arose. Moreover, in The “Double Happiness” the name which was subsequently erroneously given to the charterers was of a non-existent entity. In the present case, it is not possible to say that the bargain had been made in all its essentials prior to 17 October and at a time when “Sempra” rather than “Sempra Energy” was named as the time-chartering owner. Even where a written recap is preceded by an oral agreement, the importance of the terms of the written recap should not be underplayed. In Papas Olio JSC v Grains & Fourrages SA Toulson LJ stated ([2009] EWCA Civ. 1401, [2010] 2 Lloyd’s Rep. 152 at [28]) of such a case that “it is of no practical importance whether the situation is analysed as the parties having entered into a partly oral and partly written contract or as having entered into a written contract. Probably the better analysis is that the written document fulfils a dual function; it both confirms evidentially the making of the oral agreement but also supersedes the oral agreement in that it provides a document to which the parties thereafter look as the expression of their bargain.”

Papas Olio JSC v Grains & Fourrages SA did not, however, involve an issue as to the identity of one of the parties to a contract or a difference, whether by mistake or otherwise, between what was agreed orally and what was put into writing. It concerned whether an appeal was out of time because the award of a FOSFA first tier arbitration tribunal had been sent to the seller at the address recorded in the written contract which was in fact an out of date address. Accordingly, it did not address the issues addressed in The Rhodian River and The Rhodian Sailor and The “Double Happiness” and some care must be taken in applying what Toulson LJ said to a case where what has been written differs from what had previously been agreed orally as the result of a mistake. But here, for the reasons I have given, I am not able to infer a prior oral agreement.

Absent evidence of the sort that was present in The Rhodian River and The Rhodian Sailor and The “Double Happiness”, one is left with the terms of the recap email on 17 October which states that the time-chartering owner “is Sempra Energy” and the statements in Shogun Finance Ltd v Hudson which I have set out at [19], in particular those of Lord Hobhouse of Woodborough and Lord Phillips of Worth Matravers about the position where the identity of a party is specifically identified in the document. Recaps are, in such cases, sometimes described as the charter-party: see, for example, The “Epsilon Rosa” [2002] 2 Lloyd’s Rep 81 at [23] and [29]; [2003] 2 Lloyd’s Rep. 509 at [31] – [32]. In a case such as this, where the evidence does not enable the court to identify or infer a prior oral agreement, the written document does not fulfil the evidential function of confirming the making of an oral agreement but is in fact the main if not the only expression of the parties’ bargain. The recap, which was the document relied upon by TTMI before the arbitrator, can for material purposes be regarded as the charter-party.

For these reasons I accept Mr MacDonald Eggers’s submission that TTMI’s contention that Statoil contracted with the vessel’s disponent owner or the Sempra group company which had instructed Galbraith’s to negotiate a sub-charter is fundamentally at odds with and undermined by the express terms of the recap email.

I turn to the submission that TTMI is entitled to sue as an undisclosed principal. This can be disposed of shortly. It is clear from The Jascon 5 [2006] Lloyd’s Rep. IR 531 that it is the position of the party named in the contract (here Sempra Energy) rather than the authority and intention of the placing broker that “is determinative in deciding whether or not a person who claims to be an undisclosed principal … can take the benefit of the contract”: see Cooke J at [57]. In the Court of Appeal, Moore-Bick LJ (with whom Waller and Richards LJJ agreed) stated (at [26]) that what matters for the purpose of determining whether a person can enforce a contract as an undisclosed principal “is the authority and intention of the person in whose name the contract is made”.

There is no evidence that Sempra Energy was authorised to act as the agent of TTMI through Galbraith’s or did so act. The 2001 agreement (see [5]) disclosed pursuant to an order of the arbitrator provided for TTMI to act as agent for the specified companies in the Sempra group and, as the arbitrator found (Award page 22), provides no support for the contention that Sempra Energy, TTMI’s ultimate parent company at the material times, entered into the charter-party as agent for TTMI. That is conclusive of this issue.

The Court of Appeal decision in Boston Fruit Co v British & Foreign Marine Insurance Co. [1905] 1 KB 637, on which Mr Coldrick relied as showing that, if Galbraith’s, as sub-agents, intended to contract on behalf of an undisclosed principal, the principal can sue on the contract, is not of assistance. The insurance brokers who made the contract in that case were sub-agents, as, on this analysis, Galbraith’s were, but they made the contract in their own name and in the names of “all and every other person or persons to whom the subject matter does, may, or shall pertain”. That case was therefore not one involving an undisclosed principal but one involving unnamed principals. Moreover, and importantly, the broker was named as a party to the contract (as Sempra Energy was in the present case) and manifestly purported to act as an agent for the specified class of unnamed principals (which Sempra Energy did not in the present case).

The undisclosed principal analysis has an additional difficulty. To regard TTMI as an undisclosed principal means, as Mr Coldrick accepted, that Galbraith’s acted as TTMI’s sub-agent but acted directly on behalf of Sempra Energy, which was TTMI’s head agent. But the factual assumptions upon which this application has been made (see [4]) include the assumption that Galbraith’s had no instructions or authority to enter into a charter-party on behalf of Sempra Energy. Accordingly, as well as there being no evidence that Sempra Energy was authorised to act or did act as TTMI’s agent, this factual assumption requires me to proceed on the basis that Galbraith’s itself had no authority to act on behalf of Sempra Energy.

Did a contract between the parties come into existence by conduct because the

The documents show that: (1) TTMI ordered the vessel to lift the cargo provided by Statoil; (2) the Notices of Readiness were tendered on behalf of TTMI by the Master on 13 November (Kaarstoe) and 7 December (Houston) and accepted on 18 November (Kaarstoe) and 10 December (Houston) by the relevant port facilities; (3) an invoice for freight sent by Sempra Energy Trading Corp. stated the “total amount due TTMI” and required payment to an identified bank account stated to be in TTMI’s name; (4) Statoil paid the freight as demanded; and (5) PF Bassoe, Statoil’s brokers initially invoiced Sempra Energy Trading Corp. but subsequently issued a new invoice to TTMI which it later described as “with corrected owners’ style”. There is no suggestion that, contrary to the indication in Kathy Cody’s email (see [14]), the process of paying this invoice was not completed.

Before dealing with the submissions, I observe that, although the arbitrator records the fact that the charter-party had been fully performed and freight paid, and refers to the Notices of Readiness and other documents, the conclusion section of his award does not explicitly consider the question whether there was a contract formed by performance. His focus was as to whether there was a contract formed by the recap email, whether that email should be rectified, and whether TTMI was entitled to sue as an undisclosed principal.

It was submitted by Mr MacDonald Eggers that Statoil’s conduct did not objectively communicate its intention to accept TTMI’s offer to charter the vessel to it because it believed it had contracted with Sempra Energy and, in the light of the recap email, was entitled to so believe. Moreover, he relied on the statement of facts issued at the loading and discharging ports (see [11]) which respectively referred to “T/C Sempras Trading” and “Sempra Trading”, and the fact that the demurrage statement referred to “Sempra Energy” as owners and the invoice was issued under the heading “Sempra Energy c/o Clyde & Co.”. He submitted that it was natural for Statoil to assume that the freight invoice issued by Sempra Energy Trading Corp. was issued on behalf of Sempra Energy and, since there might be a number of reasons Statoil was asked to pay another company, the fact it was asked to pay TTMI did not mean that it believed it was contracting with TTMI. As to the Notices of Readiness, Mr MacDonald Eggers did not accept they were signed by agents on behalf of Statoil. Alternatively, he submitted that, since Statoil was not named in them, only its managing agent, Navion, there was no reason for it to believe that TTMI was the agent of the T/C owner.

Finally, Mr MacDonald Eggers made two submissions about the terms of any contract between the parties created as a result of their performance. First, he submitted (skeleton argument paragraph 60) that, even if such a contract did come into existence “it does not follow that it would be on the terms set out in the emails dated 17^th and/or 26^th October 2005, even less the severable arbitration clause contained within the emails”. Secondly, he submitted that in respect of any contract which came into existence by performance there is no arbitration agreement in writing sufficient for the 1996 to apply and that TTMI therefore has no right to apply for relief under section 67 of the Act.

It is common ground between the parties that courts have regarded the fact that services are rendered, work undertaken, or payment is made as “a very relevant factor” in deciding whether a binding contract is made. Most of the cases concern conduct by one or both parties after incomplete negotiations or in situations in which the terms that have been negotiated are uncertain, or where an agreement has been made “subject to contract” but no formal contract has been drawn up before the services are rendered, the work is undertaken, or the payment is made: see RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co. KG (UK Production) [2010] UKSC 14, 1 WLR 753 at [45] – [55] in which Lord Clarke of Stone-cum-Ebony, who gave the judgment of the Supreme Court, analysed the authorities including the important judgments of Robert Goff J in British Steel Corp. v Cleveland Bridge and Engineering Co. Ltd. [1984] 1 All ER 504 and Steyn LJ in Trentham (G Percy) v Archital Luxfer Ltd. [1993] 1 Lloyd’s Rep. 25. In the latter case the third of the four matters Steyn LJ at 27 identified as of importance was the fact that a transaction is executed rather than executory which he stated can be “very relevant”. The fact the transaction is performed on both sides will, he stated, make it difficult to submit that the contract is void for vagueness or uncertainty, makes it easier to imply a term resolving any uncertainty, or alternatively may make it possible to treat a matter not finalised in negotiations as inessential.

Mr MacDonald Eggers seeks to distinguish this case from those cases because here the issue is not one of incompleteness or uncertainty but mistake. But Upton-upon-Severn RDC v Powell [1942] 1 All ER 220 suggests that the same broad approach can also apply where one or both the parties are mistaken about the basis upon which the services are rendered, work undertaken, or money paid. In that case Powell sent for the Upton fire brigade wrongly believing he was entitled to the services of that fire brigade without charge, and the fire brigade rendered the services in the belief that it was answering a call within its own area for which there would be no charge. It was held that Powell was contractually bound to pay despite the fact that neither he nor the Upton fire brigade thought they were entering a contract. Where, as in that case, neither party believes he is entering into a contract it is preferable to regard any liability as founded on restitution rather than contract, and the contractual solution adopted may reflect the relative underdevelopment of restitution at the time of the decision. However, where, as in the present case, both parties believe they are performing under a contract and the issue is only whether one has been concluded before performance starts, and with whom, the position is different.

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co. KG (UK Production) concerned the installation of two production lines at one of the defendant’s factories. It was stated at [54] that “whether the court will hold that a binding contract was made depends upon all the circumstances of the case” of which performance of the work is but one. In that case the price was agreed and included in a letter of intent, one party invoiced the other for percentages of the price and sums were paid by the other party, and there was an agreed variation to the order in which the production lines were to be installed. It was also stated (see [58]) that in such circumstances “the no contract solution is unconvincing”.

Notwithstanding the attractive way in which Mr MacDonald Eggers made his submissions on this issue and the references to Sempra Energy Trading Corp and Sempra Energy in the invoices, I accept Mr Coldrick’s submissions. In ascertaining what, objectively speaking, Statoil’s intention was, Mr MacDonald Eggers to some extent focused on the terms of the recap dated 17 October and the statement in it that the “T/C owner is Sempra Energy”. But, as the cases on incomplete contracts show, once there has been part performance that is “a very relevant factor” and reference to such performance is important in determining the objective implications of Statoil’s post 17 October conduct.

In this case Statoil in fact dealt with TTMI throughout. For the reasons I have given, no executory contract was created between them on or shortly before 17 October. But, having regard to all the circumstances of the case since then, I have concluded that, objectively viewed, a contract was formed between them. I refer in particular to the combination of the fact that TTMI instructed the vessel to take on Statoil’s cargo, the Notices of Readiness which were accepted on behalf of Statoil’s managing agents identified TTMI as the time charterer, the full performance of the voyage, the demand that freight be paid to TTMI in terms which stated the “total amount due TTMI” and requiring payment to TTMI’s bank account, and the payment of the freight by Statoil to TTMI. The statements of facts were not operative contractual documents. Sempra Energy Trading Corp. was not the company with which Statoil states that it believed it had contracted; it is just another member of the Sempra group of companies, albeit with the word “Sempra” in its name.

As to when such a contract was formed, this was when the freight was paid, if not when the first Notice of Readiness identifying TTMI as the time charterer was accepted by representatives of Navion who are Statoil’s managing agents, or when the cargo was loaded. In concluding that a contract was formed I have not taken into account what subsequently happened in relation to PF Bassoe’s commission (see [13] – [14]), although it is consistent with my conclusion. There also appears to have been performance by payment of the commission to Statoil’s brokers, PF Bassoe. PF Bassoe accepted that it had mistakenly invoiced Sempra Energy Trading when it issued its credit note to that company and issued a fresh invoice for commission to TTMI. There was no suggestion by PF Bassoe at that time (four months after the freight invoice had been issued and paid by Statoil to TTMI) that the contract was not with TTMI but with Sempra Energy.

I also reject Mr MacDonald Eggers’s submissions that any contract created by performance would not be on the terms set out in the emails dated 17^th and/or 26^th October 2005 and that the arbitration agreement is insufficiently evidenced in writing for the 1996 Act to apply. As to the first of these, while the detailed terms of the contract are a matter for the arbitrator, both parties proceeded on the basis that the terms recorded in the recapping emails applied and that they were performing the transaction reflected in them. The Notices of Readiness (accepted on behalf of Statoil by its managing agent’s local representatives) refer to the “the terms and conditions of” the recap email “dated 17 October 2005”, albeit referring to them as “Charter Party/ Contract”. Moreover, the freight invoice refers to a transaction concluded by Navion for and on account of Statoil and the freight was calculated, demanded and paid in accordance with the terms of the recap.

As to the second, Mr MacDonald Eggers submitted that, by section 5 of the 1996 Act, the provisions of Part I of the Act apply “only where the arbitration agreement is in writing”, and that any contract between the parties which came into existence by performance is not an agreement “by reference to terms which are in writing” within section 5(3) so that there is no arbitration agreement in writing sufficient for the 1996 to apply. Accordingly, he submitted TTMI has no right to apply for relief under section 67 of the Act. He maintained that, Zambia Steel & Building Supplies Ltd v. James Clarke & Eaton Ltd. [1986] 2 Lloyd’s Rep. 225 and The “Botnica” [2006] EWHC 1360 (Comm), which Mr Coldrick relied on as showing that section 5 incorporates an “ extremely wide concept of ‘agreement in writing’” are distinguishable. This is because those cases involved terms, including an arbitration clause, being proposed by one named party to another named party who accepted the terms by its performance or conduct whereas here the recap email of 17 October was objectively an agreement between Sempra Energy and Statoil, not one between TTMI and Statoil. In fact in The “Botnica” was concerned with whether a requirement of signature had been waived and is not of assistance on the question before me.

Mr MacDonald Eggers relied on Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AA v Sometal SAL [2010] EWHC 29 (Comm), to show that a more restrictive approach to incorporation is adopted where the issue is whether the parties have incorporated the terms of a contract between two other parties than where the issue is whether they have incorporated the terms of a previous contract between them. In that case Christopher Clarke J stated (at [34]) that in the former situation “clear words” are needed because arbitration clauses are not “germane or directly relevant to” the main subject of the contract, are “ancillary provisions”, and “oust the jurisdiction of the courts”. See also the reference to the need for “specific words of incorporation” in Aikens, Lord and Bools, Bills of Lading (2006), 7.99(5). I consider that these requirements are satisfied in this case. I have referred to the reference in the Notices of Readiness to the “the terms and conditions of” the recap email “dated 17 October 2005”. Those terms and conditions included an explicit reference to clause 43 of the Shellvoy 5 charter-party form containing the arbitration clause and the notation “OK” against it.

Had I concluded that the references in the Notices of Readiness did not suffice to constitute the contract an agreement “by reference to terms which are in writing”, I would have accepted Mr Coldrick’s submission that there was an unwritten agreement on the terms of the recap emails which included the arbitration clause. Accordingly, I would have held that, as a result of the saving in section 81 of the 1996 Act, the arbitration could proceed at common law.

Before leaving this point, I add that in the circumstances of this case, i.e. full performance of the voyage, delivery of the cargo and payment of freight at the contractual rate, a non-contractual conclusion might be thought to be commercially sub-optimal. Since the development of the modern law of restitution, a conclusion that no contract had arisen as a result of the performance does not mean that there would be no liability at all. As shown by British Steel Corp. v Cleveland Bridge and Engineering Co. Ltd., an obligation in restitution may arise, and that will afford a performer or part-performer some protection. For example, on the facts of the present case restitutionary analysis would probably prevent Statoil from recovering the freight paid to TTMI, or had it not paid the freight, would probably have entitled TTMI to a quantum meruit as reasonable recompense. But restitutionary analysis has its limits. As Mr Coldrick observed, had the cargo been contaminated or the voyage charterer been entitled to despatch, subject, in the case of contamination, to a claim in tort, Statoil would have been unprotected.

Should the recap email be rectified to show the correct time chartering owner?

In view of my conclusion that a contract was formed by performance, it is not necessary to decide this question. What is submitted on behalf of TTMI is that, if necessary, the recap email should be rectified to show TTMI as the vessel’s time-chartering owner. Mr Coldrick accepted (skeleton argument, paragraph 60(a)) that the key question is whether the continuing common intention was to contract with the disponent or time-chartering owner. My conclusion that, at the time of the recap email, there was no such continuing common intention is, leaving aside other difficulties which Mr MacDonald Eggers identified in his written and oral submissions, in practical terms almost fatal to the contention there should be rectification. Mr Coldrick also relied (skeleton argument, paragraph 60(c)) on the freight invoice and its payment and the Notices of Readiness, the matters which have led me to conclude that a contract came into existence by performance. But my conclusion on those matters means that rectification is not necessary and is probably inappropriate.

For the reasons given, the award must be set aside and the matter remitted to the arbitrator to proceed in the light of my findings.