LAVENDER SHIPMANAGEMENT INC V IBRAHIMA SORY AFFRETEMENT TRADING SA AND OTHERS

[2020] EWHC 3462 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Calver, 16 December 2020

Arbitration - Jurisdiction - Error of law - Whether arbitration clauses in bills of lading had been consolidated - Whether tribunal validly appointed - Whether time for commencing arbitration had been extended - Arbitration Act 1996, sections 67 and 69

A cargo of rice was carried from Myanmar to Guinea under a voyage charterparty containing an English law and London arbitration clause. Five bills of lading were issued, and they each incorporated the terms of the charterparty including the law and arbitration clause. Following discharge on 30 October 2017, the cargo was found to be short, damaged and wet. The loss was assessed at US$165,208.96. The shipowners' P&I Club issued a letter of undertaking (LOU) on 5 April 2018 providing security for the claims. The LOU stated: "claims shall be subject to English law and shall be brought in arbitration proceedings in London". The shipowners' agreed to two extensions of time, up to 30 April 2019. The cargo claimants purported to commence arbitration by notice dated 29 April 2019. This provided that an arbitrator had been appointed in respect of the claims under the ad hoc arbitration agreement in the LOU or alternatively, under the charterparty, and that the claimants were agreeable to their arbitrator acting as sole arbitrator if the LMAA Small Claims Procedure applied (contrary to what they believed). The shipowners appointed their own arbitrator under a reservation of rights and contested jurisdiction. The tribunal issued a majority award on 2 March 2020 holding that jurisdiction existed. The shipowners appealed against the award on two jurisdictional grounds and sought permission to appeal for error of law.