BULK & METAL TRANSPORT (UK) LLP V VOC BULK ULTRA HANDYMAX POOL LLC

[2009] EWHC 288 (Comm), Queen’s Bench Division, Commercial Court, His Honour Judge Mackie QC, 20 February 2009

Arbitration – Appeal on point of law – Limitation of actions – Message by owners stating intention to commence arbitration for loss for hire claim – Whether amounting to notice of arbitration – Whether counterclaims relating to cargo within  arbitration notice – Arbitration Act 1996, sections 14(4) and 69 – Hague Rules, article III rule 6

The parties entered into a time charterparty. They agreed that all disputes would be arbitrated in London, and that if they could not agree on a sole arbitrator then each would appoint an arbitrator and the arbitrators had power to appoint an umpire. The agreement was subject to the Hague Rules, article III rule 6 of which imposes a one year limitation period for cargo claims. The owners sought unpaid hire and sent a message to the charterers on 2 November 2006 demanding payment within seven days and identifying three possible arbitrators. The charterers did not pay and did not agree on an arbitrator, so by a further message on 13 November 2006 the owners appointed their arbitrator. The charterers counterclaimed for cargo losses, but those claims were time-barred unless arbitration had been validly commenced on 2 November 2006 and the arbitration notice encompassed the counterclaims. The arbitrators ruled against the charterers, who obtained permission to appeal under section 69 of the Arbitration Act 1996. HHJ Mackie QC held that counterclaims were not time-barred. (1) Under section 14(4) of the 1996 Act arbitration proceedings were treated as having commenced when a notice in writing is served requiring the appointment of an arbitrator. The message of 2 November 2006 was to be construed broadly and flexibly, and viewed objectively constituted a valid arbitration notice. (2) The notice encompassed unrelated counterclaims.