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Charles Holroyd succeeds in having arbitration award set aside

01st Feb 2022

DHL Project & Chartering Ltd v Gemini Ocean Shipping Co Ltd [2022] EWHC 181 (Comm)

Charles Holroyd represented DHL Project & Chartering Ltd in arbitration claims under sections 67 and 69 of the Arbitration Act 1996.  DHL had been found liable in an arbitration commenced by the Owners of the “Newcastle Express” for repudiating an alleged charterparty.  DHL challenged the arbitration award under s. 67 Arbitration Act on the grounds that there was never a concluded fixture or a concluded arbitration agreement because the fixture was agreed “on subs” (specifically, subject to shipper/receivers’ approval), this created a precondition to any contract arising and the “sub” was never lifted.   If, contrary to this, the arbitrator had jurisdiction, then DHL contended that he made an error of law in finding that there was a concluded charterparty.

The Owners argued that the “subject” did not give rise to a pre-condition to contract, but a condition subsequent, and that it had to be read together with provisions in an incorporated pro-forma charterparty which had the effect that the shipper/receivers’ approval could not be unreasonably withheld.

Mr Justice Jacobs upheld DHL’s case on the s. 67 application and would also have upheld the s. 69 application if he had concluded that the arbitrator had jurisdiction.  In doing so the judge followed Foxton J.’s analysis in The “Leonidas”  [2020] EWHC 1986 (Comm) as to the nature and effect of a “subject” of this type.  Properly understood, it was not a third-party subject, but a pre-condition to contract which persisted until the subject was “lifted” by DHL, irrespective of any decisions by the shipper or receivers.  Jacobs J. also followed Eder J’s decision in The “Pacific Champ” [2013] EWHC 470 (Comm) in holding that a “subject” of this type also created a pre-condition to the conclusion of a binding arbitration agreement.  The arbitrator therefore had no jurisdiction, and his award was set aside.

Charles Holroyd was instructed by Reed Smith LLP (Sally-Ann Underhill and Gaby Sweidan).

Please view the judgment here.