Case No 2015 Folio 519
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE BURTON
Between :
Expofrut SA & Others | Claimants |
- and - | |
(1) Melville Services Inc (2) Lavinia Corporation | Defendants |
Robert Thomas QC (instructed by Gateley Plc) for the Claimants
Sean O'Sullivan QC (instructed by Sach Solicitors) for the Defendants
Hearing dates: 22 June 2015
Judgment
Mr Justice Burton :
This has been an application by the Claimants for an extension of time of some three years and eight months in respect of the expiry of the one year Hague/Hague Visby limitation period in accordance with the terms of Arbitration Clause 19 in the relevant Charter Party incorporated by the relevant Bills of Lading. The Claimants pursued their claims in respect of damage to a consignment of fresh pears shipped from Argentina to Antwerp on board the AFRICA REEFER in the Belgian courts, which have now found that the claims were required to be brought in arbitration.
There are two significant factors:
(i) The provisions of s.12 of the Arbitration Act 1996 are more restrictive than the earlier provisions of s.27 of the Arbitration Act 1950. The provision upon which alone the Claimants can rely is by reference to s.12(3)(b), namely “that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question”.
(ii) It is common ground that by participating in the Belgian proceedings, and only taking the point within those proceedings that the dispute should be arbitrated once the Court Surveyor procedure had concluded and pleadings were required to be served, the Defendants did not waive their right to claim arbitration nor submitted to the jurisdiction of the Belgian Court.
It is necessary to consider the authorities under s.12 which are neither contentious nor numerous. Both parties have referred to Merkin Arbitration Law at paras 14.35 – 13.57 and the Claimants have referred to Ambrose & Maxwell, London Maritime Arbitration 3rd Ed Ch 9. The authorities indicate:
As I said earlier, s.12 was intended to restrict the circumstances in which an extension could be granted: see The Catherine Helen [1998] 2 Lloyd’s Law Rep 511 at 520 per Geoffrey Brice QC:
“In my judgment, reading s.12 as a matter of ordinary English, it is not open to the Court to extend time now because the Court concludes in general terms that it would be just to do so. Thus the whole climate of extending time in arbitral proceedings has changed strikingly and one must conclude that such extensions nowadays will probably be very much the exception rather than the rule.”
In Thyssen v Calypso Shipping [2000] 2 Lloyd’s Law Rep 243 at paragraph 24 David Steel J said that:
“It is common ground (indeed it is notorious) that [s.12] was introduced with a view to restricting the circumstances in which time might be extended as compared with the scope of s.27 of the Arbitration Act 1950 ”
Mere silence by the other party is not sufficient. See The Catherine Helen at 522 and Harbour & General v Environment Agency [2001] Lloyd’s Law Rep 65 at 73 per Colman J: “mere silence or failure to alert the claimant to the need to comply with the time-bar could not render the barring of the claim unjust”. See also “The Lake Michigan” [2010] 2 Lloyd’s Law Rep 141 at para 46 per Gross J and Merkin at para 13-53.
There must be conduct by the other party, not necessarily wrongful or blameworthy or constituting an estoppel, but it must be in some way causative: “The Lake Michigan” at paragraph 46:
“Some conduct must be shown that is causative of the failure to comply with the time-bar or related to the injustice which would arise if relief is not granted: . . . that conduct however need not amount to an estoppel or something akin to it.”
So silence coupled with some causative conduct may be sufficient, as in The Lake Michigan:
“48. . . I doubt that mere silence on the part of Baffin in the face of 6 March Notice – had matters rested there – could assist the Claimants . . .
49. There remains, however, the 11 March conversation . . .
50. To my mind, the facts of the 11 March conversation (as found) are striking. I start with what was not said. Given the conversation which did take place, the obvious, fair and natural thing for Mr Morland to have said was . . .
51. . . the reasonable impression created by the 11 March conversation was that the Club was taking instructions as to the substance of the notice rather than the procedural propriety of its service . . .
52. Pulling the threads together, the course taken by the 11 March conversation meant that if a point was to be taken on the Club lacking authority to accept service of the 6 March Notice, it was only fair that something should then have been said. However inadvertent, the failure to do so, against a background of the Club taking instructions on the Notice, was misleading.”
Delay by the parties seeking the extension may be relevant or even determinative: Merkin 13 – 55 and SOS Corporación Alimentaria v Inerco Trade [2010] EWHC 162 (Comm).
I have also considered The Port Mostyn [2003] WL 2207 3889 and Anglian Water Services Ltd v Laing O'Rourke Utilities Ltd [2010] EWHC 1529 (TCC).
Proceedings were commenced by the Claimants in Belgium on 17 February 2010. The Defendants played a full part in those proceedings, including participating with, and challenging, the Court Surveyor’s role in those proceedings. There were 16 meetings with the Court Surveyor. His interim report was dated 19 May 2011, to which both sides contributed, and there was a final report on 13 February 2012. Eventually the Defendants were required to serve their defence on 14 November 2012 and they then objected to the jurisdiction of the Belgian Courts. It is common ground that they did not need to object before then, and were entitled to take the various steps they did in relation to the Court Surveyor, and await the outcome of his report (which was in the event favourable to the Claimants) before serving a defence, at which stage they were required to take any jurisdictional point. A similar scenario in Belgium was discussed by this Court in “The Skier Star” [2008] 1 Lloyd’s Law Rep 652.
As I said earlier, there is no suggestion that the Defendants waived their rights. In Belgian law the issue of jurisdiction or assertion of arbitration requires to be included in the defence, and that is when they did so. When the Defendants did take this objection to the jurisdiction, and asserted that the dispute was subject to arbitration, the Claimants did not at that stage seek to commence arbitration nor seek an extension to do so – although they were already over a year out of time. The position which the Claimants took in the Belgian proceedings was that the arbitration clause did not apply in the Belgian courts because of the effect of Article 96 of the Belgian Private International Code and Article 91 of the Belgian Maritime Law. They argued this question of jurisdiction in the Belgian court and lost on 24 June 2014, when the Belgian court ruled that the dispute was required to be resolved in arbitration and not in the Belgian courts. The Claimants lodged an appeal against the first instance decision on 19 September 2014, and the appeal remains to be heard. But at that stage the Claimants issued a Notice of Arbitration, and sought unsuccessfully to persuade the Defendants to agree to a stay and then similarly unsuccessfully sought a stay from the Arbitrators: and on 22 April 2015 the Claimants issued this application.
I refer to the evidence of the two Belgian lawyers representing the parties. The relevant passages of their evidence are as follows:
“(i) Mr Yves de Cocker for the Claimants in his first witness statement (“DC1”) said as follows:
12 . . . until the Defendants took the point some 2 and a half years after the commencement of the Belgian proceedings – and despite the fact that . . . I would have expected them to take the point much earlier – the Claimants had believed that there was no dispute as to the jurisdiction of the Belgian Courts.
. . .
21. As part of this application [to reduce the amount of the security given in respect of the arrest of the vessel] there was . . . no suggestion that the Belgian Courts did not have jurisdiction. I should make it clear that this would not, as a matter of Belgian procedure, be a ground for objecting to or setting aside the arrest . . . but it would certainly have been possible and not unusual for this point to be made clear if that was the Defendants’ position . . .
. . .
27. [In respect of the appointment of the Court Surveyor] . . . It would have been possible for the Defendants in the Belgian proceedings to argue that since the substantive claim would be heard in London Arbitration, it would make no sense to appoint a Belgian Court Surveyor . . .
28. I am not saying that any such arguments would necessarily have succeeded. However they would certainly have been relevant to the Court’s consideration of the application to appoint a Court Surveyor and the Defendants’ failure to make any reference to any jurisdictional objection either in this context or in the context of the arrest proceedings most certainly gave us the impression that no issue was being taken with the Belgian Courts jurisdiction.
29. This impression was reinforced when, instead of objecting to the appointment of the surveyor, on the following day, the shipowners (i.e. the First Defendant) represented by Mr de Paep of the law firm, Wijffels, served a writ against Wiljo, an Antwerp bunker supplier, seeking to bring them into the Belgian Court survey proceedings. In that writ the shipowners made no objection or even a reservation as to the jurisdiction of the Court.
. . .
32. . . There was an “introductory” hearing on 2 March 2010. The shipowner was represented by Mr de Paep. At that hearing, he made no reservation in relation to jurisdiction. The case [that is, the case on the merits] was then postponed sine die pending the outcome of the Court survey.
33. Again it is important to explain that, although Belgian procedure did not oblige the Defendants to raise any jurisdictional objection at this stage, it would have been possible – and in my experience, not unusual, - for shipowners to object to the adjournment and instead to ask for the jurisdiction issue to be dealt with as a preliminary issue in order to avoid the unnecessary cost and delay of the lengthy Court survey procedure . . .
. . .
46. . . at no stage [during the Court Surveyor proceedings] was any reservation made as to the Belgian Court’s jurisdiction and it would have made no sense for the Defendants to participate in this lengthy process if an objection to the Belgian Court’s jurisdiction was to be made.
. . .
87. Although, as a matter of Belgian procedure, they were not obliged to do so any earlier, for the reasons I have set out above, there were a number of occasions on which I would have expected the Defendants to raise their objection to the jurisdiction of the Belgian Court and their failure to do so led me to believe that there was no issue in this regard.”
(ii) In his witness statement Mr Philip Vanlommel, the Belgian lawyer for the Defendants said (in relevant respect) as follows:
“5. A few days later, I was asked to advise on the procedure generally in such cases and how and when Owners should file their intended jurisdictional challenge. This is always done after the conclusion of the Court Surveyor’s investigation, which has nothing to do with the substantive merits of the claim. He is appointed by the court at the request of the Claimants. His mission is simply to determine cause and extent of damage . . . It is a peculiar feature of Belgian procedure that time for formally contesting jurisdiction does not arise until after the conclusion of the court survey procedure, and that mere participation in that procedure does not amount to submission to the jurisdiction of the Belgian courts. It is unnecessary - and indeed quite out of place - for a defendant to reserve its position on jurisdiction when involved in a court survey. This is never done in my experience. The Court Surveyor has no say in such issues, and the Belgian system leaves intact all of the parties’ legal rights, notwithstanding their participation in the survey.
6. There is no set time for concluding a court survey of this type. I agree with Mr De Cocker . . . that they can often take more than two years, depending on the nature of the case. A party wishing to challenge the court’s jurisdiction will plead this challenge at the beginning of his defence on the substantive issues. This is never done until after the Court Surveyor’s report has been finalised and the Claimants have applied to the court to set the calendar for the proceedings on the merits. For this reason, I would have expected Mr De Cocker to have protected time in London at the appropriate stage . . . in case the Belgian court decided to decline jurisdiction.
. . .
11. At paragraphs 20-21, Mr De Cocker says that Owners made no reservation of their position on jurisdiction or the Claimants’ title to sue in their application to reduce the amount of security he was requesting . . . I made that application on Owners’ behalf and agree that no such reservation was made. However, in my view, it would be meaningless to do it and I have never seen it done. It is certainly not required under Belgian law. Security arrests are dealt with by the Arrest Judge. He is not interested in issues of that kind, any more than the Court Surveyor.
12. . . The merits of the case were not required to be addressed until after Mr De Cocker applied to the court to set the timetable in April 2012.
13. At paragraph 27, although Mr De Cocker appears to concede in his following paragraph that it is almost certain to have failed, he says that Owners could have resisted the appointment of a court surveyor by arguing that the substantive claim should be heard in London. Whilst I agree that it was open to them to try, I too would have expected them to fail. Indeed, the Commercial Court of Ghent (Dendermonde Division) has recently dealt with such an application in a similar case (dated 17.02.15 docket number C/15/000l) in which the claimant cargo interests had applied for the appointment of a Court Surveyor to inspect and report on damage to a consignment of bananas and the defendant Owners tried to stop the survey on the basis of a London arbitration clause in the bills of lading. The Belgian court dismissed the application holding that it had jurisdiction to appoint a court surveyor and that appointing a Court Surveyor did not conflict with arbitration proceedings. . . .
14. At paragraph 29, Mr De Cocker suggests that his “impression” that Owners would not challenge jurisdiction was “reinforced” when instead of objecting to the appointment of the court surveyor, Mr De Paep served a writ against the bunker supp1ier, Wiljo, again without making any reservation as to jurisdiction. Again, I disagree that it would have been appropriate or necessary to do so. The sole purpose of this application was to join Wiljo to the court survey proceedings. It had nothing to do with the merits. In fact, Wiijo were never involved in the proceedings on the merits. Accordingly, under Belgian law, Owners could not be
said to be submitting to the court’s jurisdiction on the substantive merits by doing this.
15. At paragraph 32, he seeks to rely on the fact that Mr De Paep did not make any reservation as to jurisdiction at the initial hearing on 2 March 2010, but I would not have done that either, since it was simply unnecessary under Belgian law (as Mr De Cocker acknowledges in the first sentence of paragraph 33).
16. At paragraph 33, Mr De Cocker says that Owners could have objected to the adjournment of the proceedings and asked for the issue of jurisdiction to be dealt with as a preliminary issue in order to avoid the cost and delay of the court survey procedure, and that this would not have been unusual in his experience.
17. This again does not accord with my own experience, and, had Owners proceeded with such an application, I would have expected it to fail because, as already explained, the court survey procedure is unrelated to the substantive merits and a Claimant is entitled to invoke it in any case where cargo is discharged damaged in Belgium. The issue of jurisdiction is entirely separate from and irrelevant to this. It is standard procedure to postpone the case sine die pending the publication of the Court Surveyor’s report. After all, he may exonerate the carrier, in which case the claim may be dropped without the need for the carrier to incur costs in challenging the jurisdiction.
18. As to the rest of Mr De Cocker’s statement, I would simply comment that I cannot understand how he can allege that he was led to believe by anything Owners/I said or did or failed to say or do that Owners would not object to the Belgian court’s jurisdiction. I believe that he knew very well that they would do so when the time came. I also believe that he would have been very surprised had owners not done this, since it is very common for Owners or carriers in such cases to challenge the jurisdiction of the Belgian Courts. This is something that a specialised lawyer should simply expect and be prepared for.
(iii) Mr de Cocker in his second witness statement (“DC2”) responded materially as follows:
“37. Although, as explained in my previous statement, nothing obliged the Defendants to object to the jurisdiction of the Belgian Court during the Court Survey proceedings, there is also nothing that prohibits them from doing so . . .
. . .
46. I was also aware at the time from my involvement in other cases that the Defendants could easily have taken steps in the UK to protect their position, either by starting arbitration or by applying to the High Court. Once again they did nothing and Mr Sach [the Defendants’ English lawyer] does not explain why not. [It is difficult to know what Mr de Cocker has in mind: there was no onus on the Defendant to start arbitration proceedings as they would be the target of a claim: and although at the time of The Skier Star, which Mr de Cocker seems to have in mind, it would have been possible to obtain an anti-suit injunction from an English Court, by 2010 in the light of Turner v Grovit HL [2005] 1 AC 101 this would no longer have been possible].
. . .
68. With regard to [Mr Vanlommel’s] paragraph 5, I do not agree that if a party intends to challenge the jurisdiction that this is always done after the conclusion of the court surveyor’s
investigation.
69. As Mr Vanlommel indicates correctly (and I explained in my first statement) the court survey proceedings and the proceeding on the merits of the claim are two separate proceedings. This means that a party who is determined to challenge the jurisdiction, can do it in the pending procedure on the merits at any time just by submitting brief written submissions. As explained in my first statement, a jurisdictional objection can also be raised in the context of the Court Survey proceedings. There is no provision in Belgian law which prohibits owners from doing so and there is no provision in Belgian law that states that owners have to wait till the Court Surveyor has submitted his final report.
70. It is in the sole discretion of owners when they do this and whether to do it at the beginning of the proceedings on the merits or, to wait to raise that issue in the first pleading to be submitted on the first time line ordered by the Court in the proceeding on the merits. It is absolutely not correct to say that it is a peculiar feature of Belgian proceeding that the time for formally contesting jurisdiction does not arise until after conclusion of the Court Survey proceedings. A concrete example of this is The Skier Star where the issue of jurisdiction was expressly raised whilst the Court Survey process was still running. Mr Vanlommel is, therefore, wrong to say that the issue of jurisdiction is never raised during that process.
71. . . .the Writ served by the shipowners in the Skier Star case in respect of an indemnity claim that they made against a third party . . . expressly states that jurisdiction is not accepted. . . The Court should note that Mr de Paep represented shipowners in that case too so it was certainly my experience of him that, contrary to what Mr Vanlommel says, he would raise the issue of jurisdiction before the end of the Court Survey process if appropriate.
. . .
79. As I set out in my first statement, I agree that it is not required under Belgian law that Owners should have made a reservation on the jurisdiction before the judge of arrest or before the Court Surveyor but, equally in paragraph 11 Mr Vanlommel does not appear to disagree with me that Belgian law does not prohibit them from doing so. Whether this would have been successful is not, in my view, relevant. The issue of jurisdiction would have been relevant as I explained in my first statement and what is apparently accepted is that under Belgian Law you can raise that issue.
. . .
82. As to paragraph 13, I understand that Mr Vanlommel agrees that it was open to his clients to try to resist the appointment of the Belgian Court Surveyor by challenging the Belgian jurisdiction. Whilst I do not accept his suggestion that such an application is almost certain to have failed, his reference to a recent case shows that, contrary to what he says elsewhere, it is not unheard of for such objections to be raised at an early stage. In fact, the case which he refers to was decided this year, which shows that as of this year, the argument was considered to be both a sensible and prudent one to raise. . .
83. Turning to paragraph 14, the writ against the bunker supplier WILJO was served without making any reservation as to jurisdiction. Again, although such a reservation would not have been necessary, by doing so, the Defendants would have made it known very clearly that they intended to challenge jurisdiction. I refer again to paragraph 71 above and point out that although Mr Paep did make such a reservation in the very similar writ that he issued against FAVV in the Skier Star case, he chose not to do so in this case.
84. The same goes for paragraph 15. It is maybe not necessary under Belgian law to do so but there is nothing stopping the Defendants from doing so and for a party arguing that it was their firm determination from the early beginning of this file to challenge the Belgian jurisdiction, it is hard to understand why they did not make this clear.
. . .
87. . . If the Defendants had been opposed to Belgian jurisdiction from the outset, it would have made a great deal of sense for them to have done so much earlier”.
The Defendants actually say that they instructed their Belgian lawyers to make plain that they reserved their rights in respect of arbitration, and that the lawyers did so. However:
(i) insofar as this occurred it was by an ‘unofficial’ letter between lawyers, which is equivalent to a without prejudice communication, which cannot at Belgian Law be disclosed or used in Court without the agreement of the Dean of Antwerp Bar, which agreement, although now sought, has not been given.
(ii) the Claimants’ lawyers deny receiving this letter or having any of a number of other discussions which the Defendants’ lawyers allege, although the Defendants have disclosed communications between them and their lawyers which corroborate at least that the Defendants’ lawyers were instructed to make such reservation.
A good deal of the skeleton arguments prior to the hearing was concerned with this issue, and the hearing opened with consideration of it. A letter from the Dean had been received, which did not give her consent, although she emphasised that (as in relation to the English concept of waiving privilege expressly or impliedly in without prejudice communications) a recipient of such a communication would not be able to assert anything inconsistent with its contents. Mr Thomas QC for the Claimants submitted that there would or might be some documents which the Claimants too would wish to put forward but were not thus able to do so. He submitted that either I should put all such evidence from my mind in deciding the case, or an adjournment should be given in order to find a way in which all documents relevant to the issue on both sides could be addressed. I was wholly unpersuaded by the latter suggestion, not only because, in the absence of consent by the Dean it would appear difficult to find a way to follow that course, and further in any event the light of the Claimants’ denial that such letter was received there would or might need to be an issue of fact tried in any event.
I resolved that the right course was not to grant such an adjournment and to decide this application on the basis that:
(i) I would not admit any such evidence, thus leaving it that there was no evidence that the Defendants had expressly reserved their position.
(ii) I would also not consider the further evidence as to the instructions given by the Defendants to their lawyers, on the basis that the Claimants would not allege that the Defendants had deliberately chosen not to challenge the jurisdiction or had chosen to conceal their intention to contest the jurisdiction.
The issue is thus simply whether there was as between the Claimants and Defendants conduct by the Defendants which made it “unjust to hold the other party to the strict terms” of the time limit.
I turn to consideration of this question. The following is quite clear:
(i) The Defendants did not need to take any steps one way or the other as to jurisdiction/arbitration prior to the stage at which they did take such steps, in their pleadings in November 2012.
(ii) The Claimants had, as is made clear in paragraph 39 of DC1, a “firm view” that Articles 96 and 91 applied so as to disentitle the Defendants from relying on the terms of the Bill of Lading and thus the arbitration clause, because “a claim for loss or damage to cargo discharged at a Belgian port is subject to the jurisdiction of the Belgian court, and a third party holder of a Bill of Lading cannot be bound to submit to a non-Belgian jurisdiction by reason of a clause in the Bill of Lading”. This turned out (on the decision of the first instance Belgian court) to be wrong. But it is clear that that “firm view” drove Mr de Cocker’s conduct of the proceedings.
Apart from the fact that apparently Mr de Paep, the then lawyer for the Defendants, had in a different case on behalf of different clients 5 years earlier reserved the issue of jurisdiction when joining a third party and did not do so in this case, there is no conduct alleged by the Defendants, and certainly none that is inconsistent with their entitlement to act exactly as they did, without committing themselves as to jurisdiction one way or the other. As I have set out above in some detail, the evidence of Mr de Cocker is that by reference to the practice of the Belgian courts the Defendants were not obliged to take the jurisdiction point prior to the time they did (DC1 paragraphs 33 and 87) that there was nothing that prohibits the Defendants from that course (DC2 paragraphs 37 and 69), that there was nothing stopping them from doing so (DC2 paragraph 84), that it is however not always done at that stage (DC2 paragraph 68), that it is not unheard of to do it earlier (DC2 paragraph 82), that it would have been possible to do it earlier (DC1 paragraph 27) and that “it would have made a great deal of sense for them to have done so much earlier” (DC2 paragraph 87).
I am satisfied that there was no conduct by the Defendants upon which the Claimants can rely by virtue of the fact that the Defendants did, as they were entitled under Belgian law, participate in the Belgian proceedings up until the time when they took the relevant objection in November 2012. Nothing in the evidence supports the submission put forward by Mr Thomas in his skeleton argument at paragraph 12 that “the Claimants say they had assumed that the Defendants had no issue with Belgian jurisdiction” until this point: or at least, if they did so assume, they had no entitlement to do so and nothing that the Defendants did in any way caused or contributed to such assumption.
There was in my judgment a deliberate decision by the Claimants to pursue the Belgian proceedings without consideration of the chance that the Defendants would take the arbitration point, seemingly confident in the success of their arguments by reference to Articles 97 and 91, referred to above. In paragraph 88 of DC1, Mr de Cocker said “had the jurisdiction of the Belgian courts been called into question at any earlier time, I believe that I would have immediately sought advice from English solicitors and would have taken steps to protect the Claimants’ position in English arbitrations”. When the Defendants did take the point in November 2012, Mr de Cocker did not take such steps, but rather in my judgment remained confident that the Claimants would succeed in the Belgian Courts, and only considered arbitration when, no doubt to their surprise, their case before the Belgian Courts failed.
By reference to s.12(3)(b) it is the conduct of the Defendants which must make it unjust to hold the Claimants to the time limit, and I do not find that there was any such conduct. As for discretionary matters, I do not consider that the merits can affect my conclusion. I cannot help noticing that in The Lake Michigan, extracts from the judgment in which I have set out at some length in paragraph 3(iii) above, the delay was 8½ hours (paragraph 52). As for the delay here, I am satisfied that the Claimants have delayed since November 2012. That was the date when the Claimants could have alleged that, to their surprise, the Defendants were after all objecting to the jurisdiction and claiming arbitration, and sought an extension. Even had they done so in November 2012, they would, for the reasons I have given, be unlikely to have succeeded. But by April 2015 they are in my judgment certainly not entitled to an extension.
Consequently I dismiss the Claimants’ application.