Uni-ocean Lines Private Ltd v. Jaguar Shipping Corporation Ltd

HCCL000057/1984

Head-note

Commercial law - Voyage charter-party - "CENTROCON"-style arbitration clause for any disputes arising under the charter - Claim-barring provision unless claim in writing and arbitrator appointed within 12 months of final discharge of cargo.

Freight claim by owner - Effect of admission by charterer of owner's claim after expiration of time bar - Owner then seeking to recover freight by writ - S. 6A of Arbitration Ordinance, Cap. 341 - non-domestic arbitration - Charterer seeking stay in favour of arbitration - Whether any "dispute" to be arbitrated - Waiver - Estoppel.

By a writ dated 8th June 1984, the Plaintiff, a Singapore ship owning company, claimed' a sum of money for balance of freight under a voyage charter party on the revised Gencon form made in Hong Kong on 11th September 1980 with the Defendant, a Hong Kong Company, for the carrying of a cargo of rice from Japan to Bangladesh aboard the Plaintiff's vessel the "LICHIANG". The charter party included a "CENTROCON" -style arbitration clause as follows:

"Arbitration as per English law in London. Any dispute arising under this charter to be referred to Arbitration in London .... Any claim must be made in writing and the claimants must appoint their Arbitrator within 12 months of the date of final discharge, otherwise the claim shall be deemed waived and absolutely barred"

The cargo was finally discharged on 15th November 1980, so that claims became time barred on 15th November 1981. Neither did the Defendant admit the Plaintiff's claim to freight prior to that date, nor was any arbitrator appointed.

By a letter and accompanying document dated 21st March 1983, the Defendant made what the Plaintiff contends is an admission to the Plaintiff that the sum claimed is due. There was no evidence of the Plaintiff having relied on that purported admission.

Without taking any other-step in the action, the Defendant applied for a stay under S.6A of the Arbitration Ordinance, Cap. 341, contending there was a dispute to be referred to arbitration. It was common ground the arbitration agreement was non-domestic.

The Defendant contended the Plaintiff's claim was time-barred, and even apart from the time-bar, the Defendant did riot admit to the court that the money claimed was due.

According to the Plaintiff, there was no dispute referable to arbitration because the Defendant alleged admission of 21st March 1983 either (i) prevented the time bar from running or (31) entitled the Plaintiff to rely on waiver or estoppel by virtue of the Plaintiff forbearing to seek an extension of time for the appointment of an arbitrator under S.29 of the Arbitration Ordinance.

Held, the Defendant's application for a stay of the litigation succeeded because (i) an admission of liability made after the expiration of the contractual time bar did not prevent the Defendant from relying on the time bar unless waiver or estoppel operated in the Plaintiff's favour, and (ii) there was insufficient material to find any such waiver or estoppel in the circumstances of the present case. (Tradax Internacional S. A. v. Cerrahogullari T.A.S. (The "M. Eregli") 1981 2 LL. L. R. 169 explained; Alma Shipping Corporation v. Union of India (The "Astraea") 1971 2 LL. L. R. 494 applied.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: The Hon. Rhind, J. in Court

Date of hearing: 14.12.1984

Date of delivery of Judgment: 4.1.1985

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JUDGMENT

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1. This is an application to stay litigation in favour of non-domestic arbitration.

2. The Plaintiff is a Singapore-based ship owning company. By a voyage charter party made in Hong Kong on the revised Gencon form and dated the 11th September 1980, the Defendant, which is a Hong Kong-based company, chartered the Plaintiff's vessel "Lichiang" for a voyage from Japan to Bangladesh for the purpose of carrying a cargo of rice at a freight rate of U.S.$35 per metric ton.

3. One of the clauses of the charter party provided as follows:-

"Arbitration as per English law in London.

Any dispute arising under this Charter to be referred to Arbitration in London, one Arbitrator to be nominated by the Owners and the other by Charters, and in case the Arbitrators shall not agree then to the decision of the Umpire to be appointed by them, the Award of the Arbitrators or the Umpire to be final and binding upon both parties. Any claim must be made in writing and the claimants must appoint their Arbitrator within 12 months of the date of the final discharge, otherwise the claim shall be deemed waived and absolutely barred.

Arbitrators and an Umpire shall be commercial men."

This is, in essence, the well-known "Centrocon" arbitration clause.

4. As the vessel finally discharged its cargo in Bangladesh on the 15th November, 1980, claims became time-barred under the Arbitration Clause on the 15th November, 1981. No Arbitrator was appointed during that time.

5. By its writ dated 8th June 1984, the Plaintiff claims the sum of U.S.$16, 207.61 in respect of the balance of freight due. In its Points of Claim, the Plaintiff refers to a Statement of Account dated 18th February 1981 showing the balance of freight due from the Defendant to the Plaintiff, but the Points of Claim do not seek to plead that the Defendant made any admission about the freight due during the twelve month contractual limitation period. However, in an affidavit filed for the purposes of the present application, a contention is put forward on the Plaintiff's behalf that in a letter and accompanying document both dated 21st March, 1983 the Defendant admitted to the Plaintiff that a sum of US$17, 477. 68 was due to the Plaintiff for freight.

6. Any such admission would, of course, be outside the contractual limitation period.

7. Not only does the Defendant dispute that the letter and accompanying document can be construed as an admission in the way the Plaintiff contends, but also, if I understood the Defendant's Counsel correctly, the Defendant makes no admission now as to the freight claimed by the Plaintiff, irrespective of any limitation defence.

8. Without taking any other step in the action, the Defendant, on the 10th July 1984, took out the summons presently before the court for a stay of the action on the basis that there was a non-domestic arbitration agreement to which Section 6A of the Arbitration Ordinance, Cap. 341, applied.

9. I set out Section 6A, which is as follows: -

It is common ground that the arbitration clause in the charter party was of the non-domestic variety.

If Section 6A of the Arbitration Ordinance does apply, then a stay is mandatory. However, the Plaintiff denies that Section 6A applies to the situation between the parties because, according to the Plaintiff, "..... there is not in fact any dispute between the parties with regard to the matter agreed to be referred."

10. The first string to the Plaintiff's bow is to the effect that there is no dispute because of the alleged admission by the Defendant in the letter and accompanying document, dated 21st March 1983. Even if the Plaintiff is correct in asserting that the letter and accompanying document constituted an admission, that in my view, avails the Plaintiff nothing in the circumstances of the present case. Had the Defendant made an admission during the currency of the contractual limitation period (i.e. before 15th November 1981), there can be no doubt that the time bar would have ceased to operate. The authority for that is Tradax International S.A. v. Cerrahogullari T.A.S. (The "M Eregli") 1981 2LL.L.R. 169. The Plaintiffs seek to extend the principle of that case by saying, in effect that exactly the same result is reached if the admission is made after the time bar expires. Support is said to be found for that proposition according to the Plaintiff in the following passage from the M Eregli: -

"Where an arbitration clause contains a time limit barring all claims unless an arbitrator is appointed within the limited time, it seems to me that the time limit' can only be ignored on the ground that there is no dispute between the parties if the claim has been admitted to, be due and payable. Such an admission would, in effect, amount to an agreement to pay the claim, and there would then clearly be no further basis for referring it to arbitration or treating it as time barred if no arbitrator is appointed. But if, as here, a claim is made and is neither admitted nor disputed, but simply ignored, then I think that the time limit clearly applies and that the claimant is obliged (subject to any possible extension of time) to appoint an arbitrator within the limited time."

11. In my view, that passage is clearly against the Plaintiff. It is implicit in the passage that only admissions made during the currency of the limitation period will have the effect of avoiding the time bar.

12. One has only to look at the facts in The "M Eregli" to realize that only pre-time limit admissions are operative. Counsel for the defendant in the "M. Eregli" admitted that, apart from the limitation defence, the money claimed was due and payable to the plaintiff, but, despite that admission, the defendant was still allowed to rely on the time bar. Leaving aside for the moment such questions as waiver, and estoppel, I cannot in principle see why a plaintiff who has the benefit of an admission in a letter sent after the expiry of the time bar should be in any better position than a plaintiff who can point to his opponent's admission in the face of the Court.

13. Having failed in its opening shot, the Plaintiff now needs to resort to the second string to its bow which is to the effect that, by making the alleged admission when it did on the 21st March 1983, the Defendant waived or estopped itself from reliance on the time bar. For the Plaintiff to have any hope of establishing waiver or estoppel, the Plaintiff must at the very least show that it would now be unfair for the Court to allow the Defendant to claim the protection of the time bar. Such unfairness normally takes the form of a plaintiff having relied on a defendant's representation, and in some way having acted to his detriment thereby. That requires at least a scintilla of evidence or at least circumstances from which a reasonable inference arises.

14. Before me there is no evidence; only a bland assertion to the effect that the Plaintiff must have been prejudiced by the Defendant's admission because its effect would be to cause the Plaintiff to forebear from applying for an extension of time under Section 29 of the Arbitration Ordinance in relation to the time bar provision. Perhaps the alleged admission did have that effect, perhaps it did not. Apart from reliance on the alleged admission, a whole host of reasons could exist to explain why the plaintiff did not seek an extension of time. There is simply insufficient material to justify my concluding that the Plaintiff has been prejudiced.

15. Unless the evidence were completely clear - and that is certainly not the position in the case before me - I would be most reluctant to see the Court drawn into a consideration of whether waiver or estoppel had been established for the Purpose of arriving at a conclusion that there was no dispute. Issues such as waiver or estoppel should normally be left for the Arbitrator to decide where the parties have opted for an arbitration forum by their contract.

16. On the material before me there was simply insufficient material for me to come anywhere near holding that either waiver or estoppel was established so as to preclude the existence of a dispute.

17. Moreover, on the authority of Alma Shipping Corporation v. Union of India (The "Astraea") 1971 2 Lloyd's Law Reports 494, I incline to the view that there can only be a waiver in relation to a claim barring clause like the one I am considering if there is a new agreement supported by consideration. The Plaintiff is obviously not in that position. I also agree with what that case indicates are the requirements for an estoppel, namely a representation to a plaintiff which that plaintiff acts upon to his detriment.

18. In view of the foregoing, I cannot accede to the Plaintiff's submission that there is not in fact any dispute between the parties. I therefore make the order for a stay prayed by the Defendant.

Representation:

Mr. C. Smith (instructed by Ince & Co.) for the Plaintiffs.

Mr. C. Sussex (instructed by Sinclair Roche) for the Defendants.