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36 Stone counsel on both sides of successful arbitration award challenge

5th June 2020

A judgment resulting in the successful s67 challenge of an arbitration award was given today.  The judgment in MVV Environment Ltd v NTO Shipping, was handed down by HHJ Pelling QC and answered the question as to whether or not a party appearing as shipper on a bill of lading is a contractual party to a contract of carriage and whether or not assent can be inferred from silence. 

Thomas Steward and Professor Charles Debattista appeared on opposite sides of a ruling that saw  had the rarely seen consequence of overturning an LMAA arbitration decision.

Thomas, instructed by Jonathan Spencer and Rebecca King at Simmons & Simmons and led by Simon Rainey QC, represented the claimant MVV.  MVV convinced HHJ Pelling QC that a final award on jurisdiction issued in a previous LMAA arbitration was incorrect and that MVV had not been party to the arbitration agreement evidenced by a bill of lading.

The main issues of the matter highlighted a dearth of previous case law, namely the circumstances in which a party named as ‘shipper’ on a bill of lading may be held not to be a counterparty to the contract of carriage. Initially the arbitration tribunal found against the applicants, holding that they did have jurisdiction.  Today’s judgment overturns that decision.

The case itself dates back to January 2017 when the Nortrader, anchored off Plymouth with a cargo of unprocessed incinerator bottom ash (U-IBA), suffered 2 explosions in quick succession. The first explosion was in the forecastle store and the second in the cargo hold. The chief engineer, in the forecastle store at the time, suffered second degree burns. The vessel suffered extensive damage rendering it out of service for over 3 months.

NTO, the vessel’s owner began an LMAA arbitration against MVV claiming damages caused by the two explosions. The bill of lading for each U-IBA shipment listed MVV as ‘shipper’. The bill of lading for the shipment incorporated a law and jurisdiction clause from a charterparty that provided for a London seated arbitration. This seat was challenged on the grounds that the MVV was not actually the ‘shipper’ and therefore was not party to the contract of carriage and thus, not party to any arbitration clause. The arbitration Tribunal held that MVV was indeed the shipper and that it did have jurisdiction. However, MVV subsequently brought a successful challenge in the Commercial Court, under s. 67 of the Arbitration Act 1996.

The case is important for the shipping industry in confirming that the contract of carriage is concluded before the bill of lading evidencing its terms is issued, and it is open to a party to show that is has been wrongly identified as a party to the contract of carriage. The word ‘shipper’ is only a starting point in determining the actual parties.  It is also important in confirming that bills of lading follow ordinary contractual rules and that, just as with any other contract, silence on its own cannot confer authority on an agent to bind someone as a party.

 

You can see a copy of the Judgement here


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