Fiona Trust & Holding Corp & Ors v Privalov & Ors

Eight of the claimants in this action (the “Owners”) apply for relief that is intended to enable them to pursue monetary claims against three of the defendants (the “Charterers”) if they establish that they have validly rescinded charterparties entered into with the Charterers. The question whether the Owners were entitled to rescind the charterparties has been referred to arbitration, but the Owners want to pursue in these proceedings what I shall call “consequential monetary” claims if they succeed in the reference. They seek various forms of orders to clear the way for these claims, but they are all devices to achieve this same purpose. The Charterers contend that it is not open to the Owners to pursue consequential monetary claims because of an order that I made on 10 December 2010 after delivering a judgment, [2010] EWHC 3199 (Comm) (the “December 2010 judgment”) following a trial between October 2009 and July 2010. They rely in particular on paragraph 6 of the order: “The claims against [inter alios, the Charterers] are dismissed in so far as they are based on the following alleged schemes (as defined in the judgment herein): … the Sovcomflot time charters scheme …”. The order was perfected on 16 December 2010. The Owners ask me to clarify its meaning or to vary or correct it.

It is difficult to deal with the applications without expressing my views on matters properly to be decided in the arbitration, partly because, I understand, the Owners are also seeking to introduce into the reference consequential monetary claims that are similar, if not identical, to those that they plan to pursue in the litigation. I asked the parties whether they agreed that I should determine matters arguably covered by the arbitration agreement,but Mr Steven Berry QC, who represented the Charterers, made clear that they do not consent to “any matter of which the tribunal is seized, or is potentially seized, being taken out of the arbitration”, and they are, of course, entitled to take that stance. Respect for the independent tribunal generally means that a court will not express any views at all about referred issues, but I have not been able to avoid this. But I have sought not to decide any such issues.

The claimants in these proceedings are OAO Sovcomflot (“Sovcomflot”), who are a Russian ship-owning and ship-operating company, and subsidiaries of Sovcomflot, including Fiona Trust & Holding Corporation (“Fiona”), Sovcomflot’s principal operating subsidiary. Their claims were brought against Mr Yuri Nikitin, persons with whom Mr Nikitin was said to have conspired, including Mr Dmitri Skarga, and companies through which Mr Nikitin was said to have operated, including the so-called “Standard Maritime Defendants”. The Owners are subsidiaries of Sovcomflot and the Charterers are Standard Maritime Defendants. At para 47 of my December 2010 judgment, I explained various allegedly corrupt “schemes between defendants” about which there were claims, including what I labelled the “Sovcomflot time charters scheme”, which I described in these terms:

“‘Sovcomflot time charters’ scheme … relates to agreements that were made between 2001 and 2004 whereby certain of the claimants hired eight vessels to Standard Maritime defendants on time charterparties and also granted options to extend the period of hire of some of them. The charterparties and options are said to have been designed, at least in some cases, to benefit the Standard Maritime defendants and correspondingly to have been to the disadvantage of the claimants. The claimants claim some $219 million in respect of these allegations.”

The charterparties included an arbitration agreement in these terms:

"(a)

This charter shall be construed and the relations between the parties determined in accordance with the laws of England.

(b)

Any dispute arising under this charter shall be decided by the English courts to whose jurisdiction the parties hereby agree.

(c)

Notwithstanding the foregoing, … either party may, by giving written notice of election to the other party, elect to have any such dispute referred . . . . to arbitration in London, one arbitrator to be nominated by Owners and the other by Charterers, and in case the arbitrators shall not agree to the decision of an umpire, whose decision shall be final and binding upon both parties. Arbitration shall take place in London in accordance with the London Maritime Association of Arbitrators, in accordance with the provisions of the Arbitration Act 1950, or any statutory modification or re-enactment thereof for the time being in force. …”

The Owners claim that on 12 April 2006 they rescinded the charterparties on the grounds that they had been induced by bribery by Mr Nikitin of Mr Skarga, who was the Director-General of Sovcomflot at the relevant time. On 23 April 2006, they specifically elected to rescind the arbitration agreements, if they had not already done so. The Charterers sought to invoke the arbitration agreements, and on 25 April 2006 nominated Mr Mark Hamsher to arbitrate. On 12 June 2006, the Owners brought proceedings under section 72 of the Arbitration Act 1996 seeking to restrain the arbitration proceedings on the basis that the charterparties, including the arbitration agreements, had been rescinded for bribery. By a notice dated 11 July 2006 the Charterers applied for an order that “the proceedings (insofar as they concern the dispute as to the entitlement of the owners to rescind the charter agreements with respect to the vessels or the arbitration agreements described below, and the validity of any such rescission) be stayed pending the determination by award in the arbitration proceedings commenced by [the Charterers]”. Morison J upheld the Owners’ application ([2006] EWHC 2583 (Comm)) and refused any stay, but his decision was reversed by the Court of Appeal ([2007] EWCA Civ 20), who ordered that the Owners’ “claims for rescission of the various charterparties … entered into between them and the [Charterers] be stayed pursuant to s.9 of the Arbitration Act 1996”.

Longmore LJ delivered a judgment of the court. Having concluded (at para 41) that “The claim to rescission should be stayed ...”, the Court referred (para 42) to arguments advanced by the Charterers that “even if the owners had been in theory entitled to rescind the relevant charterparties and the agreements to arbitrate contained in them, on account of the alleged bribery by or on behalf of Mr Nikitin, they were not in fact so entitled because three of the five charterparties had been wholly performed and the remaining five partly performed so that restitutio in integrum was impossible and rescission therefore unavailable” and “arguments about delay and acquiescence”. The Court said (at para 43) that these arguments did not need to be considered in view of their other conclusions, but made this observation:

“But their existence prompts us to wonder what relief the claim for rescission could give to the owners beyond what is already available to them under the heads of their claims for damages for conspiracy, damages or restitution in respect of the bribes and for account of profits. As far as we can see a claim to have successfully rescinded the arbitration agreements would have as its only practical effect the result that the charterers would be prevented from arbitrating the claims that they have against the owners (eg claims for any balance of account alleged to be due from owners at the end of the charters and the claim which has resulted from the grounding of the “Tropic Brilliance”)”.

The Court then said (at para 44):

“For our part, we see no reason why the charterers should be prevented from arbitrating these claims; if the arbitration tribunal decides that the charters were indeed procured by bribery they will be able to decide what consequence that conclusion has on any claims which the charterers might otherwise legitimately have”.

At para 45, in the last paragraph headed “Conclusion”, the Court said that it would substitute for the order of Morison J “an order that the owners [sic] claims for rescission be stayed…”.

The decision of the Court of Appeal was affirmed by the House of Lords, ([2007] UKHL 40) on 17 October 2007. In his speech Lord Hoffmann said this (at para 13):

“In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction.”

After the decision of the House of Lords, the Owners appointed their arbitrator, Mr Alistair Schaff QC, and the two arbitrators appointed a third, Mr Christopher Moss. (Technically, I think, they were appointed in different arbitrations in respect of each charterparty: therefore there are references to “arbitrations” in some documents.)

These proceedings, and three associated actions, came to trial on 1 October 2009. The particulars of claim were, so far as is material for present purposes, in the same form as when the stay application and the section 72 application were before Morison J, the Court of Appeal and the House of Lords. In a section of the particulars of claim headed “The Time Charters” the claimants pleaded the charterparties and related agreements between the Owners and the Charterers, and then alleged that by causing or permitting them Mr Skarga had acted in breach of fiduciary and other duties owed to the Owners and others. They said, “It is the Claimants’ case that this conduct on the part of Mr Skarga is explicable only on the basis that throughout the [relevant] period … he had been receiving bribes and other benefits from Mr Nikitin and his companies”; and that therefore some of the defendants, including the Charterers, were liable for damages for fraud and conspiracy and to give an account of profits and to pay equitable compensation for dishonestly assisting Mr Skarga to breach his fiduciary duties. There was then a subsection headed “Rescission” in which it was pleaded that five vessels were still chartered on 12 April 2006 and that by service of an amended pleading the Owners “elected to rescind ab initio the Ongoing Charters entered into by them … and to seek consequential accounts of profits and losses as the court may consider appropriate”. The pleading continued:

“For the avoidance of doubt, until there is a final and binding adjudication as to whether this is a valid rescission and/or whether the respective Claimants should be permitted to rescind the charters, and, if so, on what terms, the respective Claimants will continue to make the chartered vessels available for the use of the charters on the present terms save as to the rate of hire, the period of the charter and the provisions for arbitration. If the final and binding adjudication on this issue is in favour of the Claimants, the charterers’ use of the ships will cease (if the period of the respective charters is still extant), save to the extent that the adjudication determines otherwise. In the interim, the hire payable under the charters will be accepted by the respective Claimants as payments on account of a quantum meruit claim for the use of the vessels and/or as payments on account of the claims against the charterers. No proceedings or other steps will be taken to recover the ongoing difference between the rate of hire in the existing charters and the anticipated quantum meruit award until there has been a final and binding adjudication on the issue of whether there has been a valid rescission. These actions by the respective Claimants are not, and shall not be taken as, an affirmation of the charters. If the final and binding adjudication determines that there has been no valid rescission of the charters, the owners will continue to honour the terms of the charters.”

The claimants pleaded under the heading “Quantum” alternative calculations of amount of profits that the Charterers would make to the end of the charter periods and the amount of losses that the Owners would suffer (including profits foregone) before then.

By the prayer to the particulars of claim the claimants sought this relief against the Charterers:

“55G A declaration that the charters referred to in [the “The Time Charters” section] have been validly rescinded including the provisions contained therein relating to arbitration.

55GA A declaration pursuant to section 72 of the Arbitration Act 1996 that there are no valid and arbitration agreements in respect of the said charters. ….

55GB Alternatively a declaration that the disputes which have arisen are not matters with [sic] the relevant arbitration clauses. ….

55GC An injunction restraining [the Charterers] from commencing or continuing any purported arbitration proceedings. ….

55H All necessary and consequential accounts and inquiries.

55I An award by way of quantum meruit for the continued use by [Charterers] of [vessels] as from 12 April 2006.

55J A declaration that [the Charterers] are liable to account to [claimants] as constructive trustee for dishonest assistance in the breaches of fiduciary duty by Mr Skarga pleaded herein.

55K Further and/or alternatively a declaration that [the Charterers] are liable to account to [claimants] for the profits obtained as a result of the payment of bribes or other benefits or inducements, to Mr Skarga, or to any company or entity which Mr Skarga controlled.

55L Alternatively a declaration that [the Charterers] are liable to account to [claimants] for the losses caused or profits forgone by reason of their entry into transactions procured by the payment of bribes to Mr Skarga as aforesaid.

55LA Further and/or alternatively damages for conspiracy to injure and the tort of fraud.”

I should refer to two other points about the pleading:

Before describing the trial, I should refer to the arbitral proceedings. In written submissions of 25 May 2007 (that is, after the Court of Appeal decision and before the hearing in the House of Lords) the Owners made representations about the procedure to be adopted in the reference, and they contended that “following the service by the Owners of their points of claim … the arbitrations should be stayed until after judgment has been given in the trial that will take place in the Commercial Court”. They said that:

“If the arbitration is to go ahead, it will mirror almost entirely the proceedings that will take place in the Commercial Court. As almost all the issues to be determined in the arbitrations will be determined between the Owners and the Charterers by the Commercial Court and will raise a res judicata in respect of those issues, and as the claims in the arbitration, namely, rescission, is [sic] a relatively minor claim compared to the many other claims to be determined in the Commercial Court, it cannot make any sense at all for time and expense to be incurred in pursuing the issue of rescission in the arbitration prior to the Commercial Court giving judgement after trial”.

After the decision of the House of Lords, on 23 and 24 January 2008, there was a procedural hearing before the Tribunal, and the Owners, represented by Mr Andrew Popplewell QC, made submissions in support of their written contentions. They argued that the arbitration proceedings were “a complete waste of time”, and submitted:

When Mr Schaff asked whether the quantum meruit claims would arise only if “there had been a rescission”, Mr Popplewell confirmed:

“The quantum meruit claim arises because there have not been stayed any of the monetary claims, including the financial consequences of rescission, ie restitutio in integrum, which is the claim for all accounts and inquiries. That is logically sensible because the court is going to be dealing with all these money claims in any event, and that is why I say to you if you were to go ahead and decide today that the charters were validly rescinded, it has to go back to the High Court to deal with the financial consequences of that, not merely as a matter of the other time charter claims, but also because the consequential claims – quantum meruit and all necessary accounts and inquiries – the restitutio in integrum process is still in court. That has not been stayed, and quite sensibly not been stayed because the court is dealing with all the quantum aspects. … The question of whether there is an entitlement to the relief, the remedy of rescission, I accept is not in the High Court and has been stayed. But whether there is an entitlement to rescind is part and parcel of what the court will in fact be deciding, ie rescindability, if I can put it that way, for the reasons that I have just been developing. That is why, at least potentially, we have to engage on affirmation in the High Court proceedings, because it has not been raised here”.

On 4 February 2008 the Tribunal ordered that the “procedural timetable for the resolution of the rescission claims (and all issues relating thereto) shall progress in tandem with the procedural timetable set out in [these] proceedings, but with a view to any arbitration hearing which may still be required to determine the rescission claims (or any issues relating thereto) in light of the outcome of the High Court proceedings to come on after the resolution of those High Court proceedings”.

So matters in the reference rested when these proceedings came to trial. At para 311 of their written opening submissions for the trial the claimants explained the stay under section 9 of the 1996 Act and arbitration proceedings in these terms:

“The Court of Appeal (upheld by the House of Lords) stayed in favour of arbitration … the claims as between the shipowning companies and the chartering companies for rescission of the time charters; … but not any of the other claims arising out of the time charters, so that there is no stay in relation to any claims for monetary relief arising out of the time charters, nor for any claims between parties other than the shipowning and chartering parties. … The arbitration tribunal has ruled that any issues which may be required to determine in the light of the outcome to these proceedings in court, be so determined after the final resolution of the court proceedings. This was on the basis that it was envisaged that these court proceedings would effectively dispose of all the issues of substance between the parties in relation to the time charterers”.

The claimants referred to the Tribunal’s case management order of 4 February 2008, explaining that it was made “on the basis that it was envisaged that these court proceedings would effectively dispose of all the issues of substance between the parties in relation to the time charters”. In schedule 12 to their submissions at paras 8 and 9 the claimants wrote that the Court of Appeal had ordered that “the Owners’ claims for rescission of the charterparties be stayed. ... Importantly, at no stage was any application sought or obtained to stay the claims for damages or other monetary relief contained within the scope of the time charter claims”. This clearly included claims about the alleged scheming between defendants that did not depend on establishing that the elections to rescind were valid, such as the claims for accounts for an account for dishonest assistance in Mr Skarga’s breaches of fiduciary duty. I was not told that it also included the consequential monetary claims, which were contingent on establishing this. (Of course, the quantum meruit claim was still in the prayer, but so too were the claim for a declaration that the charters had been validly rescinded, which had undeniably been stayed, and relied which had already been refused in the section 9 and section 72 applications.)

As far as I recall what happened over five years ago (an impossible exercise daily demanded by the courts but more usually of witnesses than the bench), nothing was said during the trial about contingent claims for consequential monetary relief, by way of either accounts and inquiries or quantum meruit. The Owners rely on this exchange that I had with Mr Popplewell during closing oral submissions when there was discussion of rescission and equitable compensation in lieu of rescission in the context of the newbuildings scheme. Mr Popplewell said (“subject to correction”) that a rescission claim arose only in that context “apart from the time charters”. I then observed, “You are not claiming anything in lieu of rescission – … that has gone off [to arbitration], equitable compensation and all, hasn’t it? Until the arbitrators have decided whether you had a claim for rescission, I can’t decide whether to order anything in lieu of it”. Mr Popplewell responded that he saw “a good deal of force in that”, and that the claimants would proceed on that basis unless he indicated otherwise. He did not do so.

It is said by the Owners that I thereby indicated that “questions of financial relief in relation to the rescission of the time charterers were to await the Tribunal’s determination of the prior issue of the entitlement to rescind”. I cannot accept that. First, the exchange was not about remedies consequential on rescission, but remedies in lieu of rescission. In any case, no claim for a remedy in lieu of rescission of the charters had been pleaded in these proceedings (the only such claim was in relation to impugned deals in the newbuildings scheme), and I observed that that was unsurprising given that an arbitral decision was needed before it sensibly could be.

At the trial before me the claimants (including the Owners) confined their case with regard to the Sovcomflot time charters scheme (and other schemes) to one that Mr Nikitin and Mr Skarga had acted dishonestly. As I said in the December 2010 judgment at para 5, the claimants made clear when they opened the case at trial that the claims against the defendants were pursued on the basis of dishonesty, which in the case of the claims relating to the Sovcomflot time charter scheme meant that they were pursued on the basis that both Mr Skarga and Mr Nikitin were dishonest. I rejected the relevant allegations of dishonesty, and (at paras 1485 and 1486) I reached these conclusions about the case against Mr Skarga:

“The only basis upon which the claims were pursued against Mr. Skarga was that he dishonestly advanced the interests of Mr. Nikitin or the Standard Maritime defendants in relation to the schemes or dishonestly acted in relation to them against the interests of Sovcomflot or other companies in the group. I therefore reject the claims against him. ….

I add that, even if I had not reached the conclusions that I have about the allegations of dishonesty, the cases against Mr. Skarga would have faced formidable, and in my judgment insuperable, difficulties. In brief, leaving aside any time-bar defences under Russian law, I make these observations about the claims against Mr. Skarga:

i)

Any claim by Sovcomflot would be governed by Russian law. Sovcomflot would need to show that they suffered loss as a result of some breach of duty on the part of Mr. Skarga, and in my judgment they have not established such a causal connection….

I went on to say this (at para 1488) about the claims against Mr Nikitin and the Standard Maritime Defendants:

“It follows from my conclusions about Mr Skarga … that some of the claims against Mr Nikitin and other defendants are to be dismissed because they were pursued only on the basis that Mr Skarga … had acted dishonestly and in breach of duty by favouring the interests of Mr Nikitin and the Standard Maritime defendants and against the interests of the Sovcomflot group …. This applied to the claims in respect of … the Sovcomflot time charters scheme ….”

Therefore, when at the end of my judgment I summarised my conclusions (at para 1563), they included that the claims against “the other defendants [including the Charterers] are to be dismissed in so far as they are based upon these schemes”, which “schemes” included the Sovcomflot time charters scheme. I asked “for counsel’s assistance to draft an order to give effect to this judgment”.

On 10 December 2010 I was presented with a draft order, which Mr Graham Dunning QC, counsel for Mr Skarga, introduced without dissent from other parties as one “that the parties have engaged in substantial discussions about”. Nothing of significance was said about its terms in court on 10 December 2010. It included what became paragraph 6 of my order, the relevant part of which I have set out at paragraph 1 of this judgment. My order provided for a further hearing “for consideration of [inter alia] the remedies that the Claimants are able to elect; … the precise terms of the relief to which the claimants are entitled (including for the avoidance of doubt matters of quantum) …”. When the case came before me in February 2011 nothing was said that is relevant for present purposes.

I need to say something about what claims were stayed by the Court of Appeal (which is, of course, a different question from what disputes or disputed claims were referred to the arbitrations). I shall not firmly determine what the Court of Appeal’s order means: the Tribunal might be required to do so, and I do not wish to create a res judicata that would compromise the efficacy of the arbitration agreements. But I cannot properly deal with the applications before me without indicating pretty clearly how I would interpret it.

The order was that “the [Owners’] claims for rescission of the various charterparties (and the addenda there to [sic]) entered into between them and the [Charterers] be stayed”. It is to be interpreted “in an objective fashion having regard to the judgment to which it was intended to give effect and to the matters to which it relates” (per Patten LJ in Quest Advisors Ltd v McFeely, [2011] EWCA Civ 1517 at para 36). Here the order relates inter alia to (i) the particulars of claim and especially the prayer, and (ii) the Charterers’ application for a stay.

As appears from the parts of the judgment that I have set out at para 6 above, the Court of Appeal used two expressions, “claims to rescission” and claims for rescission”, the latter of which was used in the order, and clearly no distinction between them was intended. Both expressions might most precisely and narrowly cover what Snell’s Equity (33^rd Ed, 2015) at para 15-012 calls “judicial rescission”: an order which itself terminates the contract. No such order was sought in the particulars of claim: the Owners’ pleaded case was that they had made an election to effect (again in Snell’s terminology) “self-help rescission”, the prayer including relief by way of a declaration that they had done so “validly”. This being so, what was covered by the expression “claims for rescission”? The Charterers had applied to stay “the proceedings (insofar as they concern the dispute as to the entitlement of the owners to rescind the chartered agreements … and the validity of any such rescission) …”. To my mind nothing in their judgment suggests that the Court of Appeal intended to do other than to grant the stay that was sought, and it might seem most natural to interpret it as intending to grant just that. If so, it is relevant that the application was for a stay that would, I think probable, cover the consequential monetary claims: they concerned the validity of the elections to rescind because they depended on the charterparties being validly rescinded. After all, Lord Hoffmann would surely not have spoken in the terms that I have cited at para 7 if he had thought that the Charterers had applied for and been granted a stay of the claim for a declaration that the Owners had validly rescinded the charterparties but not consequential monetary claims. (By the time of the House of Lords hearing the Owners had made their written procedural submission to the Tribunal, but apparently the House of Lords were not apprised of them.)

However, these applications were presented to me on the basis that it is common ground between the Owners and the Charterers that only the claim for a declaration that the charters have been validly rescinded had been stayed, and that the consequential monetary claims were not. It is clear that this is the position that the Owners were taking in the reference, but I question whether that this is really the meaning of the Court of Appeal’s order. Further, at the trial I was not given to understand by either party that the consequential monetary claims were being pursued or to be pursued in the litigation, or that either party thought that they were. I have explained why I do not accept that this was indicated by (i) the claimants’ written opening, or (ii) the exchange during closing submissions. It has not been suggested that otherwise the consequential monetary claims were mentioned during the trial. In my December 2010 judgment I reached conclusions on what I understood were all the claims in the litigation that had not been stayed. I did not refer to the consequential monetary claims because I understood them to be stayed.

I had to consider what law governed the issues before me, and I decided that (inter alia) the issues relating to the Sovcomflot time charters scheme were governed by Russian law. However, at para 90 of my judgment said this: “All contracts which might be invalidated are governed by English law by the express choice of the parties. In the case of the time charters, disputes about their validity are covered by arbitration agreements and are to be determined in a reference: … .   Mr. Berry argued that nevertheless any issues about consequential financial liability after a contract is invalidated are to be determined by Russian law, and so the compensation that may be recovered is defined and limited by article 179 [of the Russian Civil Code]”. I considered and rejected his argument, and said that “I therefore need not consider any issue about what damages or compensation could be recovered in Russian law under article 179, and I decline to do so”. Mr Dominic Dowley QC, who represented the Owners, argued that, because I considered Mr Berry’s submission, I must have recognised that the consequential relief claims were before me (and not stayed). I reject that: Mr Berry’s argument was a general one that issues relating to financial consequences of a rescission claim were governed by article 179, even if issues about whether a contract had been or could be effectively invalidated (or rescinded) were governed by English law, and I rejected that. I observed in that context that questions about the validity of the charters was covered by the stay, but there were rescission claims relating to the newbuilding scheme. On no view, therefore, did the stay dispose of Mr Berry’s argument. I therefore went on to consider and reject it.

I come to the various applications that the Owners now make, which Mr Dowley identified as follows in his written and oral submissions:

I am not obliged to exercise any of these powers: they are all discretionary. I am not persuaded that I should exercise them with a view to enabling the Owners to pursue claims for consequential monetary relief in these proceedings. If the claims were stayed, they cannot do so: there has been no application to lift the stay. If they were not stayed, they came on for trial with the other claims in 2009: no order that they be tried separately had been sought or made. It is not open to a party (or even to all the parties) to decide without reference to the court not to argue all their claims at trial and then to require of the court a separate trial of them. Given the findings that I made at trial, the consequential monetary claims could be pursued only on the basis that Mr Skarga was honest: I have made a finding that he was, by which the parties are bound. However, if any consequential monetary claims were not stayed, they were covered by the claimants’ statement, made when the consequential monetary claims came on for trial with the other claims, that, so far as relevant, their claims were pursued only on the basis that Mr Skarga and Mr Nikitin were dishonest. Any other bases for the relevant claims was abandoned: it is not now open to the claimants to resurrect them. This reasoning and this conclusion does not depend on what the order of 10 December 2010 means, and it would not be affected by any change in the wording of the order or clarification of its meaning.

As I see it, the real question, therefore, is whether I should grant any of the applications because it would assist the arbitration proceedings to do so. I decline to use any power under CPR 3.1 for this purpose: those powers are given to the court to manage litigation before it, and I am not persuaded that, even if it is ever permissible to deploy them for collateral purposes, that it would be right to do so in this case,

As for the Owners’ other applications, I first take the application for a declaration about the meaning of the order of 10 December 2010. I observe that in the Quest Advisors case (cit sup) Patten LJ expressed regret (at para 34) that the question what the judge intended was not referred back to the same judge, but I cannot believe that Patten LJ thought that it would be in point for the judge to have made a declaration as to his subjective intention: it would have been irrelevant. I take it that Patten LJ had in mind either that the judge could have clarified his order under CPR 40 BPD 4.5, or that the judge would have had background information whereby he could more quickly and efficiently have determined the objective meaning of his order. However that might be, in my judgment it would not be right to make a declaration of the kind sought. Its only purpose would be to inform a determination as to whether on its true construction my order gives rise to an argument of merger or some other species of estoppel per rem judicatam that the Charterers can invoke to defend a claim in the reference for consequential monetary relief. However, that would be a dispute that the parties agreed be decided in arbitration, and it would not be proper to override that agreement.

Mr Berry submitted that it is not open to me to exercise powers to vary or clarify paragraph 6 of my order of 10 December 2010 because it came to be included by agreement between the parties. He argued that it can be changed only if the parties’ agreement is vitiated for some legally recognised reason, such as mistake, and that the Owners have not contended that it is. He cited what Floyd J said in Leo Pharma A/S v Sandoz Ltd, [2010] EWHC 1911, which concerned an application under CPR 40.12:

“It is important to note that it is not every failure of an order to give effect to the intention of the court which can be corrected under the rule. The operation of the rule is limited to accidental slips or omissions. It is common for the court to encourage parties to agree matters of detail in the drawing up of its order with the proviso that the parties may mention the matter again to the court in the event of disagreement. Whilst in such circumstances it could be said that the court had no specific intention at the time it spoke its order, a subsequent agreement as to the form of order would plainly be within the intention of the court, and such an agreement could not, as it appears to me, be corrected under the slip rule. There is neither a failure to reflect the intention of the court, nor any accident or slip. Another quite common case is where the parties agree to a minute of order which is inconsistent with an order spoken by the judge: for example a longer period of time than the judge allowed for some act to be performed. A party who had agreed such a variation cannot seek to revert to the original time on the basis that it had not been the intention of the court to extend the time. There is no accidental slip or omission in the order.

Counsel for [the defendant] suggested that the answer to this is that the matters of detail such as this could be worked out between the parties, but that it was not open to the parties to include a new matter of substance which is not part of the intention of the court. I reject that submission. Matters deliberately included by the parties in an order drawn up and sealed by the court do not constitute accidental slips or omissions within the rule. It is different where, as in Bristol Myers [2001] R.P.C. 45, the order had an unexpected and unintended effect inconsistent with the court’s intention”. (at paras 17, 18).

The position in this case is different from that discussed by Floyd J. The slip rule is used to deal with errors and omissions that result from “accidents” on the court’s own part as well as those of the parties. In the example given by Floyd J of the parties agreeing a longer time than the judge had allowed, such an agreement is so common that it would be implicit in the judge’s order that he was content for the parties to agree adjustments of this kind: it was “within the intention of the court”, even though the court had “no specific intention at the time it spoke its order”. There would therefore be no accident on the part of the judge in endorsing the parties’ agreement. But here my judgment did not invite the parties to agree what they saw fit in light of it, but asked for the assistance of counsel to draft an order to give effect to the judgment. I did not give the parties licence to agree that the court should make an order that did not do so. It is commonplace for a judge to seek such assistance of counsel. For my part, I do not think that counsel are then always acting as agents for the parties: for example, on occasions counsel might assist even though the client has withdrawn instructions. I acknowledge that in this case Mr Dunning referred to discussions between the parties, but I do not think that much can be read into that. In any case, I endorsed the relevant part of the order on the basis that it gave effect to my judgment, and I cannot accept that, if through the parties’ agreement it did not do so, therefore there was no “accidental slip or omission” within the meaning of CPR 40.12.

However, I am not satisfied that there was any relevant slip or omission for another reason. My intention was to dismiss all the claims in the four actions before me that had not been stayed except only in so far as I made an order for relief on them. As I see it, my order did give effect to that intention.

My order did not, however, deal specifically with the possibility, which had not occurred to me, that the parties believed that the monetary relief claims were not stayed and that there were therefore claims in the proceedings that had not been advanced during the trial. If I had appreciated that the parties believed this, I would, I think, have included some words in my order to the effect that, if and in so far as they were not covered by the stay, they were dismissed. I am not persuaded that the slip rule in CPR40.12 is designed to cover this situation, or that it should so used. But should I spell this out using the inherent power referred to in CPR 40 BPD4.5 (and of which the slip rule may seen simply as a specific aspect: Zuckerman on Civil Procedure (3^rd ed, 2013) para 23.34)? I think that the power is wide enough to allow me to do so, but what has troubled me more is whether to exercise it would inappropriately trespass on the arbitrators’ territory. After all, the inherent jurisdiction is a power to enable the court properly and effectively to fulfil its own role as a court of law: Halsbury, Laws of England, (5^th Ed, 2009) vol 11 para 15. The court has no inherent or general power to supervise arbitrators or to assist them to do what the court considers just: Bremer Vulkan Schiffbau und Machinenfabrik v South India Shipping Corp Ltd, [1981] AC 909, 979B-F.

Nevertheless, I have concluded that it would be proper to use the inherent jurisdiction to clarify the position about the consequential monetary relief claims. As I see it, the purpose and effect of doing so is not to intervene in or interfere with what the parties have entrusted to arbitration or to intrude in the reference, but to prevent the litigation, and in particular the order of 10 December 2010, hampering the arbitral process because it gives room for the parties to dispute the meaning effect of paragraph 6.

I have concluded that I should therefore exercise my inherent power to specify the intention that I have explained at para 34. (Perhaps tempting ironic fate) I invite counselto assist by drafting a minute of order simply to give effect to this judgment.