High Court Rules On Inconsistency In Charterparty Arbitration Clauses And Applicable Curial Law - March 2015

Author:Ms Halani Lloyd, Lianjun Li, Nick Shaw, Danielle Anderson and Min Li
Profession:Reed Smith
 
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The High Court has held that where a clause provides for an "arbitration to be held" in a given jurisdiction, there is an implied choice that the laws of that place will be the curial law - that is, the law governing the procedure or conduct of the arbitration - and further, that this implied choice is not lightly displaced.

Facts

In Shagang South-Asia (Hong Kong) Trading Co. Ltd v Daewoo Logistics Corp. [2015] EWHC 194 (Comm), Shagang (Charterers) sought to challenge the jurisdiction of a sole arbitrator appointed by Daewoo Logistics (Owners) after a dispute arose between the parties in connection with an alleged shortlanding of a cargo of steel products.

By a fixture note of April 2008 (Fixture Note), the parties agreed the following arbitration clause:

"23. ARBITRATION: ARBITRATION TO BE HELD IN HONG KONG. ENGLISH LAW TO BE APPLIED.

24. OTHER TERMS/CONDITIONS AND CHARTER PARTY DETAILS BASE ON GENCON 1994 CHARTER PARTY."

Clause 19 of Part 1 of the Gencon 1994 form (the Gencon form) provided three potential provisions for law and arbitration, including, under clause 19(a), arbitration in London before three arbitrators, with English law to apply as both the curial law as well as the substantive proper law of the charterparty. However, the parties failed to indicate which such provision should apply (having failed to complete any of the boxes in Part I of the Gencon form). In default of entry, clause 19 provided that clause 19(a) shall apply.

Owners appointed an arbitrator in London and, after Charterers failed to appoint their own arbitrator, Owners purported to appoint their arbitrator as sole arbitrator. Upon being challenged by Charterers' lawyers as to its jurisdiction, the Tribunal published an award, concluding that the arbitration was subject to the English Arbitration Act, that clause 19(a) of the Gencon form applied and thus that the Tribunal had been properly constituted.

Charterers applied to the High Court under s.67 of the Arbitration Act 1996, appealing the award. They argued that clause 23 of the Fixture Note provided for arbitration in Hong Kong subject to the curial law of Hong Kong, and that clause 19 of the Gencon form was inconsistent with clause 23 and therefore could not have founded the sole arbitrator's jurisdiction.

Issues and Decision

The primary issue was whether arbitration under the contract was subject to English or Hong Kong curial law.

In considering the issues, the judge noted the distinction between:

The...

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