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The Ocean Glory (Lorand Shipping Ltd v Davof Trading)

30th Oct 2014

The Ocean Glory concerned a challenge to an arbitral award on the ground of serious irregularity under section 68 of the Arbitration Act 1996. The Commercial Court considered and affirmed the duty incumbent on arbitrators to give notice to the parties where they intend to adopt a course of action which neither party had advocated, and without giving them an opportunity to make submissions on the proposal.

The arbitration arose under a voyage charterparty containing a provision that all claims had to be brought within 6 months of the completion of discharge. The Owners commenced arbitration against the Charterers, sought an interim (or, as the Arbitration Act terms it, “partial”) award on demurrage, and asked the Tribunal to reserve jurisdiction over all other disputes, including an indemnity in respect of any cargo claims made against the Owners. The Tribunal, however, published a final award and refused to reserve its jurisdiction. The effect of the time bar was that the Owners were unable to commence a fresh arbitration, and so were shut out from pursuing indemnity claims.

Eder J, sitting in the Commercial Court, held that the Tribunal’s actions constituted a serious irregularity. Although the threshold under section 68 was very high (as notably held by Tomlinson J in the ABB v Hochtief case), where a tribunal wished to adopt a course of action that had not been advocated by either party, a failure to give the parties a chance to make representations on that course might amount to a breach of the Tribunal’s duties to act fairly under section 33 of the 1996 Act and therefore constitute a serious irregularity. Eder J also held that the requirement under section 68 to show “substantial injustice” did not require the Court to be satisfied that the Tribunal would have reached a different view if it had given the parties an opportunity to make submissions; it sufficed that it might realistically have done so. Benjamin Parker represented the successful Owners in the Commercial Court hearing.

A copy of the judgment may be accessed here.

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