TSAVLIRIS SALVAGE (INTERNATIONAL) LTD V THE GRAIN BOARD OF IRAQ

[2008] EWHC 612 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Gross, 1 April 2008

Arbitration – Salvage – State immunity – Salvage agreement entered into by ship managers – Cargo owners claiming not to be bound by salvage agreement – Whether agreement binding on cargo owners – Whether cargo owners entitled to state immunity – Whether award should be set aside for want of jurisdiction – Whether award should be enforced – Whether freezing injunction should be granted – Lloyd’s Open Form Salvage Agreement – International Convention on Salvage 1989, Article 6(2) - Merchant Shipping Act 1995 – State Immunity Act 1978, sections 9, 10 and 14 – Arbitration Act 1996, sections 5, 66 and 67

A vessel carrying a cargo of wheat ran aground off Kuwait en route to Iraq. The vessel’s managers signed a Lloyd’s Open Form salvage agreement under which the claimants undertook to salvage the vessel and cargo. The LOF contained an arbitration clause for arbitration in London. The cargo owners refused to provide security when the cargo was unloaded and arbitration proceedings were later commenced against them. The arbitrator found for the claimants. The cargo owners sought to have the award set aside under section 67 of the Arbitration Act 1996 for want of jurisdiction, and the claimants sought to enforce the award under section 66. Gross J held that the award was valid and should be enforced, and also that a freezing injunction should be granted. The court ruled as follows.