Tue, 13 February, 2018
(This blog was first published on the Practical Law Arbitration Blog on 5 February 2018. To view the original post. please click here.)
Section 31(1) provides:
“An objection that the arbitral tribunal lacks substantive jurisdiction at the outset of the proceedings must be raised by a party not later than the time he takes the first step in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal’s jurisdiction”.
Section 73 provides:
“(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection –
(a) that the tribunal lacks substantive jurisdiction,
he may not raise that objection later…”
Provision is made in some arbitration rules as to when challenges to the tribunal’s substantive jurisdiction must be made. In the event of a conflict between the arbitration rules and the AA 1996, it falls to be considered how that conflict should be resolved and, therefore, when the party challenging jurisdiction must raise its objection for it to be in time.
This question was recently considered by Phillips J in A v B, in respect of an arbitration under the London Court of International Arbitration (LCIA) Rules 2014. The relevant facts were as follows:
The issues that therefore arose were whether A’s jurisdictional challenge was too late by reference to Article 23.3 of the LCIA Rules 2014 and, if it were, was the Article valid insofar as it required a challenge to be made within a shorter period of time than the AA 1996. The tribunal held that the challenge was too late as it should have been made no later than the date of A’s response but Phillips J held that the challenge had been in time.
Article 23.3 provides:
“An objection by a respondent that the Arbitral Tribunal does not have jurisdiction shall be raised as soon as possible but not later than the time for its Statement of Defence…”
B argued that A had lost the right to challenge jurisdiction because:
The judge held that service of the statement of defence was the first step in the proceedings to contest the merits in an LCIA arbitration such that Article 23.3 followed the structure and effect of sections 31(1) and (2) of the AA 1996.
The key question, therefore, was whether the wording “as soon as possible” present in Article 23.3 but absent in the AA 1996 ought to be read as introducing a stricter requirement than section 31(1) of the AA 1996, such that, if a challenge was not made “as soon as possible”, the respondent lost the right to object, even if the time for service of the statement of defence had not yet passed. The judge held that it did not have that effect because:
He therefore concluded that Article 23.3 had the same effect as section 31(1) of the AA 1996. It was thus unnecessary for him to consider whether, had the Article provided for a shorter time for making objections, it would have been valid given the mandatory nature of the provisions of the AA 1996. His obiter view was that it would not have been valid because section 73(1) had the effect that an objection could permissibly be brought within the longest of the various times set out therein. In other words, if “such time as is allowed by the arbitration agreement” was shorter than “any provision of this Part”, that is, section 31(1), the challenge would be in time if brought within the period established by the latter.
The following points emerge:
Firstly, a respondent to an arbitration on the LCIA Rules 2014 will not lose the right to object to the tribunal’s jurisdiction if it fails to raise its objection “as soon as possible” provided that:
Secondly, the precise circumstances in which the parties can legitimately agree to depart from the times for making a challenge set out in the AA 1996 remain uncertain. The judge’s obiter view was that they could do so only if the timings agreed by the parties were more generous to the party raising the complaint. However, it is not obvious from the language of section 73(1) that that is a correct interpretation, as it reads in words that are not present. Further, the fact the parties’ agreement gives more not less time to make the challenge does not change the nature of section 31(1) from a mandatory provision.
Thirdly, whether the parties can legitimately agree to extend the time for making a challenge beyond the taking of the first step in the proceedings to contest the merits remains potentially important, even in the context of LCIA arbitration. The judge was dismissive of the argument that A first contested the merits upon service of the response, denying liability on the basis that “it is not seriously arguable that the time for making an objection under section 31(1) expires on the service of that predominantly formal document rather than on the service of the Statement of Defence”. However, it has been left open in the context of the International Chamber of Commerce (ICC) Rules whether – depending upon its content – the service of an answer to a request can amount to the first step in the proceedings to contest the merits: see Republic of Sudan v Imagesat International NV. It is, therefore, theoretically possible that a party to an LCIA arbitration could, depending on the content of its response to a request for arbitration, take a first step in the proceedings to contest the merits.
Finally, the sensible course remains that, if at all possible, a respondent should raise its challenge at the earliest possible opportunity. This means that, whether the arbitration is on LCIA or (especially) ICC terms, the soundest approach is to raise it in the response or answer to request for arbitration respectively.
Paul is an experienced junior barrister practising across a wide range of commercial disputes. He appears regularly in the High Court (mainly the Commercial and Mercantile Courts) and in domestic and international arbitrations. Paul has also twice appeared in the Court of Appeal as sole counsel in addition to a number of other appearances alongside a leader.
Paul has particular expertise in shipping and maritime law in all its aspects, commodities, shipbuilding, energy and insurance disputes. He also has significant experience of procedural issues commonly arising in commercial litigation, including seeking and resisting injunctive relief (e.g. freezing, anti-suit and asset disclosure orders) and jurisdictional challenges (both in Court and arbitration).
He is recommended by Who's Who Legal: UK Bar, the Legal 500 and Chambers UK as a leading junior barrister. His significant experience of working for Chinese clients is reflected by his recommendation in the Legal 500 in its Asia Pacific rankings.
Wed, 07 February, 2018
The Requirements for (a) Valid and Effective Commencement of LCIA Arbitration and (b) When a Challenge to Jurisdiction Must be Made under the LCIA Rules
Summary: The LCIA Arbitration Rules (currently the 2014 revision) provide for a simple and well drafted procedure for the commencement of arbitration.
The recent decision of A v B  EWHC 3417 (Comm), handed down on 21st December 2017 (and therefore perhaps escaping attention in the immediate Christmas rush), illustrates that failure to follow this simple procedure will result in a purported commencement of arbitration being wholly ineffective. This may have potentially highly significant consequences where the soi-disant “commencement” takes place hard up against the date of the expiry of a limitation period, statutory or contractual. The decision demonstrates that appeals to the ‘flexibility’, which may have a place in the very different context of arbitration where there are no rules or requirements as to how the arbitration is to be commenced (as in Easybiz Investments v Sinograin (The Biz)  1 Lloyd’s Rep. 688), have no traction where the manner of commencement is defined by institutional arbitration rules, which have either been complied with or not.
The decision also sheds valuable light on when (i.e. how early) a challenge to jurisdiction must be made under the LCIA Rules and the correct construction of Article 23.2 of the LCIA Rules.
Simon Rainey QC is counsel in the separate contested LCIA sub-arbitration by A against C, referred to in the judgment, and in applications currently before the Commercial Court related to that purported arbitration.
B was party as seller to two separate contracts, one concluded in September 2015 and the second in October 2015, for the sale of parcels of crude oil on FOB terms. Each separate contract was subject to an LCIA arbitration clause. A, as buyer, on-sold the parcels by two separate sub-contracts on substantially identical terms save as to price. A failed to pay the price and B sought to commence arbitration to recover the price.
Article 1 of the LCIA Rules provides that “Any party wishing to commence arbitration under the LCIA Rules … shall deliver to the Registrar of the LCIA Court … a written request for arbitration (the “Request”) containing or accompanied by” and then setting out the basic core details relied upon as giving rise to the claim or dispute and as supporting the submission of that claim or dispute to LCIA arbitration.
Inexplicably B filed a single Request on 23rd September 2016 against A under Article 1 by which B purported to commence a single arbitration for the amounts claimed under the two separate contracts as if under a single contract and, in particular, as if under arbitration agreement. A single arbitration registration fee was paid under Article 1.1(vi) of the LCIA Rules.
A in its turn commenced a separate LCIA arbitration against C) on 31st October 2016), adopting an equally single form Request on the same ‘single claim and arbitration agreement’ basis. C challenged the jurisdiction of the Tribunal in the A vs C reference on the basis that A’s purported Request for Arbitration was invalid and ineffective to commence arbitration.
A sought to adopt the same argument against B. However, by this stage, A had already served its Response under Article 2 of the LCIA Rules (on 31st October 2016). That contained a generic reservation of rights (summarised by the Judge as “(i) stating that the Response should not be construed as submission to any arbitral tribunal's jurisdiction to hear the claim as currently formulated; and (ii) reserving A's rights to challenge the jurisdiction of the LCIA and any arbitral tribunal appointed” ). But no specific challenge to the Tribunal’s jurisdiction on the basis that B’s Request was invalid and ineffective to commence arbitration was made by A in the Response. That specific challenge, passing on the point taken by C against A, was not made by A vis-à-vis B until shortly before A was due to serve its Statement of Defence and therefore well after the Response.
B argued that under Article 23.3 of the LCIA Rules A’s challenge to jurisdiction on the grounds of an ineffective Request for Arbitration came too late.
The LCIA Tribunal (Ian Glick QC; David Mildon QC and William Rowley QC) agreed, holding that A should have raised its challenge in its Response, at the latest, and that it was too late to raise that challenge in its Statement of Defence.
A applied under section 67 of the Arbitration Act 1996 on the basis that the B’s Request was ineffective; that the Tribunal had no jurisdiction and that its determination was invalid.
This, the threshold question as to whether the Tribunal enjoyed jurisdiction over A at all, turned on Article 1.1 of the LCIA Rules. Given the parties’ arbitration agreement was on the basis of arbitration under the LCIA Rules, the Rules governed the manner in which arbitration was to be commenced.
Article 1 provides that a party wishing to commence arbitration is to file a Request for Arbitration which is to be accompanied by (a) “the full terms of the Arbitration Agreement (excepting the LCIA Rules) invoked by the Claimant to support its claim, together with a copy of any contractual or other documentation in which those terms are contained and to which the Claimant's claim relates” (Article 1.1(ii)) and (b) “a statement briefly summarising the nature and circumstances of the dispute, its estimated monetary amount or value, the transaction(s) at issue and the claim advanced by the Claimant” (Article 1.1(iii)). In addition under Article 1.1(vi) “the registration fee prescribed in the Schedule of Costs” is to be paid the LCIA with the submission of the Request.
B accepted (inevitably) that an arbitration can only encompass a dispute arising under a single arbitration agreement (recorded at ).
As there were two separate contracts and two separate arbitration agreements forming part of each contract, albeit in identical form, two separate Requests were therefore necessary, one under each contract and arbitration agreement.
Phillips J. had little difficulty in dismissing B’s case that its single Request was to be read as a Request validly commencing two separate arbitrations, one under the September and the other under the October contract; in other words that while the Request was expressed in the singular, it could be and should be read as a double Request.
The problem for B was that its Request was, as the Judge summarised at , specifically drafted on the basis of a single Request referring a single dispute under a single contractual regime and, critically, under single arbitration agreement, to a single arbitration, with B as claimant thereby being entitled to pay a single arbitration fee.
The Judge summed up the ordinary objective interpretation of the Request and its language (drafted, as he pointed out, by lawyers) in these terms: “In my judgment, and given the analysis of the LCIA Rules and their effect above, a reasonable person in the position of the recipient would have understood the Request as starting one single arbitration. The Request makes no reference to the commencement of more than one arbitration, but refers throughout to "the Arbitration Agreement". The Request also claims one single amount of damages, refers to "the seat of the arbitration", "the language of the proceedings", "the governing law of the arbitration agreement" and payment of "the fee prescribed by the Schedule of Cost", being a reference to the fee for a single arbitration. It is entirely clear that the intention was to commence a single arbitration and no reasonable reader would conclude otherwise. Indeed, the LCIA itself regarded it as commencing just one arbitration.”
B’s ambitious argument that a Request for Arbitration under Article 1.1 of the LCIA Rules was nevertheless to be read in the light of section 61(c) of the Law of Property Act 1925 which provides that “in all deeds, contracts, wills, and other instruments […] the singular includes the plural and vice versa” was rejected by Phillips J. as having “no merit whatsoever” .
As the Judge pointed out, this would mean that multiple different arbitrations could be commenced under one registration and one registration fee. Further, the language of Article 1.1 made it clear that a Request was singular and that the arbitration commenced by it was equally singular, not multiple or permitting the commencement in the Claimant’s sole option of as many concurrent or consolidated arbitrations in one Request as it wished.
In seeking to remedy deficiencies in the commencement of arbitration, resort was made by B to the decision of Hamblen J. in The Biz  1 Lloyd’s Rep. 688.
This was a very different case in which claims under 10 different contracts (10 separate bills of lading), each with its own identical arbitration agreement, were the subject of one notice of appointment of an arbitrator under each agreement in respect of each claim. There were no rules or requirements as to how arbitration was to be commenced and, accordingly, the default regime in section 14 of the Arbitration Act 1996 governed the position. Hamblen J held that the requirements of section 14 had to be construed broadly and flexibly concentrating on the substance and not the form of the notice.
Phillips J. held at  that, while that approach was unimpeachable per se, it could not assist B in the different context where detailed arbitration rules defining the way in which arbitration had to be commenced were in place and governed now a claim was to be referred to arbitration.
Even if B’s Request was ineffective such that the Tribunal could have no jurisdiction, B contended in any event that A had lost its right to challenge jurisdiction.
Its case rested upon Article 23.2 of the LCIA Rules which provide in so far as material that: “An objection by a respondent that the Arbitral Tribunal does not have jurisdiction shall be raised as soon as possible but not later than the time for its Statement of Defence […].” [Emphasis added.]
B relied on the Tribunal’s view that this required an “as soon as possible” response in all cases, such that if a party receiving a Request for Arbitration considered it to be misconceived in jurisdictional terms, then it had to raise that objection “immediately”. This would require a challenge to jurisdiction to be made under the LCIA Rules potentially earlier even than the filing under Article 2 of the Response to the Request for Arbitration but in any event certainly no later than taking the challenge in and as part of the Response, such that a Respondent could not leave the taking of a challenge to the Tribunal’s jurisdiction to its Statement of Defence.
Even leaving to one side the relevant statutory background, the Court found this to be a difficult argument simply on the wording of Article 23.3 itself which refers expressly to the Statement of Defence in terms as being the final cut-off point.
As the Judge stated at : “the better construction of Article 23.3 is that it excludes "untimely objections", that phrase relating back to the requirement that an objection shall be not later than the time for its Statement of Defence. Whilst the Article stipulates that objections shall be raised as soon as possible, it does not state a sanction for non- compliance, the sanction for untimely objections being provided by or implicit in the words "not later than" which apply to the time for the Statement of Defence. Had the intention, in 2014, been to introduce a new and much stricter requirement, complete with heavy sanction, it would surely have been done with far clearer words”.
The Judge supported that construction by the approach taken to a similar type of clause (: “as soon as reasonably practicable and in any event within 30 days”) in AIG Europe (Ireland) Ltd v Faraday Capital Ltd  2 CLC 770.
The Court’s view was further supported by the statutory context in which Article 23.3 was to be construed.
The Court recorded the fact that the Tribunal had cross-checked its construction of Article 23.3 against section 73(1) of the Arbitration Act 1996 which provides that where a party takes part in the arbitral proceedings “without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part” any objection to jurisdiction, the right to object is lost. The Tribunal viewed the requirement of “as soon as possible” as meaning just that with this being consistent with the “forthwith” element in section 73. It was therefore not open to a party to reserve jurisdiction at the response stage and then take it at the defence stage: it had to take it immediately but at the latest in and by the Response.
Phillips J. noted that the Tribunal had however not considered section 31(1) of the 1996 Act which specifically addresses when an objection to jurisdiction must be taken as the default position and which is referred to in section 73(1) (:“without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part”, emphasis added). Section 31(1) provides that an objection to jurisdiction “must be raised … not later than the time he takes the final step in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal’s jurisdiction.” This follows Article 16(2) of the UNCITRAL Model Law save that the reference to it being not later than the statement of defence in the Model Law was replaced by a reference to the final contesting of the merits. As the Departmental Advisory Report on the Arbitration Bill records, the only reason for this change was the avoidance of the impression “that every arbitration requires some form of formal pleading or the like”.
The Judge held that, reading Article 23.3 of the LCIA Rules in its proper context, it was highly unlikely (indeed the Judge put it thus: “it is inconceivable”) that the LCIA had intended some new and stricter regime departing dramatically from section 31 and requiring a challenge even before Response or appointment of an arbitrator, even though both of those steps could not by themselves amount to a waiver of the right to challenge jurisdiction and even though the LCIA Rules provide that the omission to serve any Response does not affect the respondent’s position as to the denial of any claim (Article 2.4).
Permission to appeal was refused by the Judge and so the decision is effectively final on the points it determines.
The Judge’s decision on both issues should therefore be carefully noted.
First, it makes it clear that commencement of arbitration under the LCIA Rules is a straightforward process as defined in Article 1.1 where a claim or set of claims under one contract governed by an LCIA arbitration agreement is referred to arbitration by a Request and that if there are separate contracts and separate arbitration agreements, separate arbitrations must be commenced. Subsequent consolidation of the separate arbitrations is a different matter, with the necessary consents: the LCIA Rules provide for this in terms in Article 22.1(ix).
Secondly, it now clarifies the correct construction of Article 23.3 of the LCIA Rules (newly amended in the 2014 revision). While jurisdictional challenges must be made at an early stage in arbitral proceedings, the long-stop approach of requiring them to be made no later than the contesting of the merits and the time for the Statement of Defence which amounts to a step in the proceedings is consistent with the provisions of the Arbitration Act 1996 and similarly worded provisions.
Simon Rainey QC
Tue, 16 January, 2018
We are delighted to announce that Quadrant Chambers has been nominated for Chambers of The Year at the Lexis Nexis Legal Awards 2018. The awards ceremony will take place on Thursday 15th March 2018 at the Sheraton Grand London, Park Lane.
A full list of the nominations can be viewed here.
Thu, 11 January, 2018
Stephanie Barrett and Claudia Wilmot-Smith have written this article, first published in the December edition of the Journal of International Banking & Financial Law. To read the PDF, please click here.
“Contra proferentem” is shorthand for the Latin maxim verba cartarum fortius accipiuntur contra proferentem (literally “the words of documents are to be taken strongly against the one who puts forward”). This principle has a long history, dating from Roman times [ a ].
Under English law, the “contra proferentem” principle is used to describe two related rules of contractual construction [ b ] that (i) in case of doubt, a contractual provision is construed against the party which drafted it or put it forward for inclusion in the contract [ c ]; and (ii) ambiguities in exclusion or limitation clauses are resolved against the party seeking to rely on the clause to diminish or exclude its liability. This article focuses on the position regarding exclusion, limitation or indemnity clauses, which are common in complex financial contracts.
Historically, and especially in the context of consumer contracts, the Courts approached exclusion clauses with hostility. They adopted strained constructions to find ambiguity, which would then allow them to construe exclusions or limitations contra proferentem, so as to preclude a party from excluding or limiting their liability beyond a level which the Court deemed “fair”. The classic statement in Canada Steamship Lines Ltd v. The King  AC 192 that “If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens” was often relied upon to argue that if a clause did not on its face refer to negligence it was, at the least, ambiguous whether such liability was excluded; that such a clause should be construed contra proferentem; and that the result was that liability for negligence was not excluded. This approach was rejected in cases following the Unfair Contract Terms Act 1977, which gave the Courts powers to deal with certain types of unreasonable exclusion clauses.
Unfortunately the words contra proferentem are sometimes used in a loose fashion and/or to refer to separate principles of law. For example, the contra proferentem principle is sometimes conflated with the rule that clear words are required before a party is taken to have abandoned one or more remedies which would otherwise be available for a breach of contract.
It should also be noted that there are some specific rules of construction (similar to contra proferentem) governing certain types of clause common in financial transactions. For example, there is a line of cases suggesting that an express exclusion of liability for “consequential loss” does not exclude liability for any loss which arises directly and naturally in the ordinary course of events from the breach. This cuts down the scope of the exclusion significantly from what the natural meaning of the words might have suggested.
The Supreme Court in recent years has decided a number of cases concerning the proper approach to contractual construction. Most recently, in Arnold v Britton and Wood v Capita the Court has emphasised that the starting point is always the natural meaning of the words used by the parties. That language is to be construed in the context of the contract as a whole against the admissible factual matrix, and with the commercial implications of each rival construction being tested. Contractual construction is a unitary exercise, with the various elements being balanced.
The interaction between these ordinary principles of contractual interpretation and the contra proferentem principle is an important issue, but unfortunately the cases and commentators do not speak with one voice in this regard. Given that the starting point is meant to be the words used by the parties, and that the context of the contract and commercial implications of each rival construction are already factored in when determining the true construction of a clause, it might be thought that the rule about construing a clause “contra proferentem” are rarely, if at all, going to be determinative. All linguistically plausible and commercially sensible constructions of the words used should have already been considered at the first stage.
The contra proferentem principle only applies where the wording in question is still ambiguous, even after this approach has been followed. It is not appropriate to use the principle itself to create or magnify an ambiguity. The first task is always to construe the clause applying the principles set out in Arnold and Wood, even if this task is not straightforward.
Use of the contra proferentem rule to police the scope of an exclusion clause makes most sense in cases where one set of terms has been imposed wholesale by party A on a much weaker party B, and those terms include wide-ranging exclusions of A’s liability. In a commercial case, however, contracts are often negotiated between two sophisticated parties, rather than being presented and accepted on a “take it or leave it” basis. Moreover, commercial contracts often contain language which on a true construction constitutes a deliberate allocation of risks and liabilities, including the use of exclusion clauses or mutual indemnities. In many cases parties may have adjusted their remuneration or insurance arrangements on the basis of that agreed allocation. The approach of strained constructions in order to resort to application of the “contra proferentem” rule where the language is not itself ambiguous threatens the freedom to contract in this manner.
It is therefore unsurprising that there have been many judicial statements over the years casting real doubt on the role of the contra proferentum rule in commercial cases. It has more than once been described as being a rule of “last resort” and has been said to be “of uncertain application and little utility in the context of commercially negotiated agreements”.
Such pronouncements have not, however, prevented application of the principle in some commercial cases. One recent example of the principle being applied in a commercial context (specifically a share purchase agreement) is Nobahar-Cookson & Anor v Hut Group Ltd. Briggs LJ held that the principle remains of utility in the context of exclusion clauses, even in commercial cases. However, His Lordship also confirmed that:
“This approach to exclusion clauses is not now regarded as a presumption, still less as a special rule justifying the giving of a strained meaning to a provision merely because it is an exclusion clause. Commercial parties are entitled to allocate between them the risks of something going wrong in their contractual relationship in any way they choose. Nor is it simply to be mechanistically applied wherever an ambiguity is identified in an exclusion clause. The court must still use all its tools of linguistic, contextual, purposive and common-sense analysis to discern what the clause really means…”
An ambiguity in the meaning of a clause “may have to be resolved by a preference for the narrower construction, if linguistic, contextual and purposive analysis do not disclose an answer to the question with sufficient clarity”. This formulation accords with Lord Neuberger MR’s previous statement that, “‘rules’ of interpretation such as contra proferentem are rarely decisive as to the meaning of any provisions of a commercial contract. The words used, commercial sense, and the documentary and factual context, are, and should be, normally enough to determine the meaning of a contractual provision.”. The other two Judges sitting with Briggs LJ agreed with the result, but stated that they placed greater emphasis on the “commerciality” of the various constructions put forward. This suggests that they were less convinced of the utility of the contra proferentem principle.
The application of this principle of construction to complex commercial contracts was revisited in two subsequent Court of Appeal cases, which both confirmed that the Court will not use the principle to cut down even broad exclusions of liability if the wording is clear.
In Transocean Drilling UK Ltd v Providence Resources Plc, the Court of Appeal held that the meaning of the clause in question (an exclusion of defined consequential losses in a drilling rig hire agreement) was clear, and that there was therefore no room for the application of contra proferentem. The Judge had incorrectly started with the contra proferentem principle, rather than construing the clause in context first, and had in effect had altered the parties’ bargain. Moore-Bick LJ was keen to stress that commercial parties are entitled to agree to give up contractual rights. His Lordship also thought that contra proferentem had no role to play in typical “knock for knock” type arrangements negotiated between parties of equal bargaining power, whereby sophisticated schemes of mutual indemnities are provided in respect of loss arising from certain causes, even if the party seeking an indemnity is at fault. Such clauses favoured both parties equally and therefore should not be construed narrowly.
Similarly, in Persimmon Homes Ltd v Ove Arup the Court of Appeal, referring to Transocean, held that the meaning of the exclusion clause in issue was clear and that therefore the contra proferentem rule was not applicable. In Jackson LJ’s view: “exemption clauses are part of the contractual apparatus for distributing risk. There is no need to approach such clauses with horror or with a mindset determined to cut them down”.
The application of the contra proferentem rule in the context of complex international financial transactions was recently considered by the Court of Appeal in Taberna Europe CDO Plc v. Selskabet af 1 September 2008 A/S (formerly Roskilde Bank A/S) (In Bankruptcy)  QB 663. The claimant (Taberna) had entered into a secondary market purchase from Deutsche Bank of certain subordinate loan notes originally issued by Roskilde. It claimed that it had done so in reliance on certain representations contained in an investor presentation document, which was published on Roskilde’s website. These representations were said to have been false, and Taberna claimed damages under s.2(1) of the Misrepresentation Act 1967.
Both the judge at first instance (Eder J) and the Court of Appeal (the lead judgment being given by Moore-Bick LJ) recognised that by publishing the investor presentation on its website, Roskilde was actively inviting potential investors (of which Taberna was one) to make use of the information contained therein for the purpose of deciding whether to invest in its subordinated securities generally. As a result, the representations it contained were made by Roskilde to Taberna when considering whether to invest in its debt generally, including the subordinated loan notes.
There were numerous strands to Roskilde’s defence. Relevantly here, it relied on a number of disclaimers published on the back page of the investor presentation. These included the disclaimer that “no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, …” and that “neither the bank or any officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this presentation for any purpose…” (emphases supplied) Roskilde argued that the effect of these disclaimers was to exclude any liability that it might otherwise have had under s.2 (1) of the 1967 Act.
Eder J was prepared to assume that these disclaimers were exclusion clauses on which Roskilde could rely, and which satisfied the requirements of reasonableness. However, he also held that they were to be construed contra proferentem, and were insufficiently clear to exclude liability for damages for misrepresentation under s.2 (1) of the Misrepresentation Act 1967.
Roskilde successfully appealed this point. Moore-Bick LJ noted that whilst judges have historically invoked the contra proferentem rule as a useful means of controlling unreasonable exclusion clauses, “[t]he modern view, however, is to recognise that commercial parties (which these were) are entitled to make their own bargains and that the task of the court is to interpret fairly the words they have used. The contra proferentem rule may still be useful to resolve cases of general ambiguity, but ought not to be taken as the starting point: see, for example, The Hut Group Ltd v. Nobahar-Cookson  EWCA Civ 128 and Transocean Drilling UK Ltd v. Providence Resources plc  2 All ER (Comm) 606. In my view [the disclaimers] are couched in language that makes it quite clear that Roskilde accepts no responsibility for the information contained in the investor presentation. There is no ambiguity of the kind that can properly be resolved by invoking the contra proferentem rule.” (at )
Nor was Taberna assisted by the suggestion in Canada Steamship that a clause will not be interpreted in a way that excludes negligence liability unless it specifically purports to do so, or there is no other basis of liability on which it could operate. Moore-Bick LJ noted the recognition in subsequent cases (in particular those decided since the introduction of UCTA, although he made no reference to that Act) “that parties to commercial contracts are entitled to determine for themselves the terms on which they will do business.” (at ).
The task of contractual construction (of which the application of the contra proferentem rule plays a part) is to determine what these terms are. To say that the court’s task is to “interpret fairly the words they have used” is to beg the question as to what is “fair”. Moore-Bick LJ’s points are perhaps not best understood as general guidance on the correct approach to contractual construction. Rather, they highlight that the courts should not use the contra proferentem rule as a means of re-drawing the parties’ bargain to reflect the terms on which the court thinks that they “should” do business, on the basis that the result conforms to some perceived standard of “fairness”.
This judgment, together with Moore-Bick LJ’s earlier judgment in the Transocean case, has prompted some practitioners in the field to question whether there is still a place for this “rule” in the construction of modern complex banking and finance contracts. These are precisely the sorts of contracts that Moore-Bick LJ was considering when he spoke of exclusion clauses as a means by which parties allocate risk, an exercise that they should be free to do without the fear of judicial intervention.
This does not represent a change in the law. The contra proferentem “rule” has not been discarded from the contractual construction rulebook. Rather, the case is illustrative of a further deprecation of the practice whereby the courts “read an ambiguity into [a clause] by the process of strained construction which was deprecated by Lord Diplock  A.C. 827, 851C in Securicor 1 and by Lord Wilberforce in Securicor 2  1 W.L.R. 964, 966G.”, in order to justify their resort to a contra proferentem construction. Judges who wished to police the parties’ ability to exclude their liability had to strain to find such ambiguity precisely because the “rule” has always been one of last resort.
Moore-Bick LJ gave short shrift to the notion that the relevant disclaimers of liability should be construed contra proferentem because he did not think that they were ambiguous. If contracts are clearly drafted, limitations and exclusions of liability should escape judicial intervention in the guise of contra proferentem construction. Conversely, however, a practitioner considering whether they have any prospects of successfully relying on the rule to preclude their contractual counterparty from excluding or limiting their liability may find that the first instance decision is worth considering.
Eder J ruled that disclaimers of “any liability whatsoever arising directly or indirectly from the use of this provision for any purpose”; and the statement that the bank accepted “no liability whatsoever” were “to be construed contra proferentem and, as such, the words used are insufficiently clear to exclude liability for damages for misrepresentation under s2(1) of the 1967 Act.” (at ). Yet it is hard to see how the words could have been any clearer. Indeed, they are almost textbook examples of “words which clearly indicate an intention to exclude all liability without exception,” including negligence. That Eder J was nonetheless willing to reach the conclusion he did suggests that there may still be first instance judges (or arbitrators) who will be able to persuade themselves of an ambiguity that does not really exist if they are of the view that the “merits” require it. Such decisions may not survive the Court of Appeal. However, as Briggs LJ’s judgment in The Hut Group shows, in cases where the ambiguity is genuine, and the judge is able to see the commercial logic behind both parties’ rival constructions, the contra proferentem principle is still a useful aid to construction.
Stephanie’s practice encompasses a wide range of commercial litigation and arbitration, particularly in the commodities, international trade, shipping, transport, aviation, energy and insurance sectors. She regularly advises on issues of contract and tort law in a wide spectrum of commercial disputes such as sale of goods and supply of services, carriage of goods by road (both domestic and international). Stephanie has experience of assisting with issues of conflicts of laws and jurisdiction both in an EU and non-EU context, and in relation to both contract and tort. She has advised on issues such as service out of the jurisdiction, and incorporation of jurisdiction and arbitration clauses into contracts.
She is recommended as a leading junior barrister in Chambers & Partners UK and Legal 500. "...Excellent advocate, who is extremely hard working and easy to work with."... "Very strong and very responsive...." (Chambers, UK 2017)
Claudia has a broad and international commercial practice, covering banking and finance, international trade, professional negligence, cross-border insolvency, shipping, and insurance and reinsurance.
She has appeared as sole and junior counsel in the Court of Appeal, High Court (primarily in the Commercial Court and Chancery Division), and before arbitral tribunals under the rules of a range of international organization rules. Many of her cases raise conflict of laws issues, and she is experienced in obtaining, and resisting applications for, anti-suit and anti-enforcement injunctions.
[ a ] See Oxonica Energy Ltd v Neuftec Ltd  EWHC 2127 (Pat) (Prescott QC).
[ b ] See Chitty on Contracts (32nd ed. 2015) at para 15-012.
[ c ] Determining the identity of the “proferens” or “proferentes” (i.e. “the one who puts forward”) can give rise to difficulty. Some cases identify the party who prepared the contract or a particular clause, others the party who benefits from the clause. As noted in The Interpretation of Contracts (Lewison ed.) at pg 391, this ambiguity has led to differing formulations of the contra proferentum principle.
 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd  AC 689 (HL). The Nobahar-Cookson case cited below is an example of a Court appearing to make this error cf per Moore-Bick LJ in Transocean (also cited below) at -.
 i.e. that the exclusion is only of loss recoverable under the second limb of Hadley v. Baxendale (1854) 9 Ex. 341; 156 ER 145. See Croudace Construction Ltd v Cawood’s Concrete Products Ltd  2 Lloyd’s Rep. 55 (CA) and following cases. Such an approach is open to the criticism that it uses the terms “consequential loss” to mean something fundamentally different from its generally understood meaning in the law of damages: see e.g. MacGregor on Damages at 3-014. However, recent decisions suggest that some of these cases would not be decided in the same way today (see per Moore-Bick LJ at  in Transocean, cited below).
  AC 1619
  2 WLR 1095
 For instance, at para 7-015 of Treitel on the Law of Contract (14th ed.) and at pg 11 of  133 LQR 6, Professor Peel suggests that contra proferentem may have a role in the construction of an exclusion clause even if the clause is not ambiguous. That does not, it is suggested, reflect the current state of English law.
 See e.g. per Mance LJ in Sinochem International Oil (London) Co Ltd v Mobil Sales & Supply Corp  1 Lloyd’s Rep. 339 (CA) at .
 per Gloster J. in CDV Software Entertainment AG v Gamecock Media Europe Ltd  EWHC 2965 at .
  1 CLC 573
 at 
 at 
 K/S Victoria Street v. House of Fraser  Ch 497 at 
  2 Lloyd’s Rep. 51 (CA)
 See .
  EWCA Civ 373
 At .
 per Lord Diplock in George Mitchell (Chesterhall) Ltd v. Finney Lock Seeds Ltd  2 AC 803 at 814
 Chitty cites words such as “no liability whatever”, “under no circumstances”, “all liability”, all loss “howsoever arising” from “any cause whatsoever” as examples of “words which clearly indicate an intention to exclude all liability without exception”, including negligence. The basis upon which the words in Taberna can be distinguished from these textbook examples is not clear.
Mon, 01 January, 2018
We are delighted to welcome specialist banking and commercial team of Paul Downes QC, Emily Saunderson, Stewart Chirnside and Joseph Sullivan to chambers. They are highly respected for their expertise in commercial, banking & finance and civil fraud disputes.
“We are delighted to be joining Quadrant Chambers. As a leading international disputes set with an excellent reputation for being commercially focused, we are confident that this move will provide a strong platform for top level commercial work in this next phase of our careers.” Paul Downes QC
“It is a pleasure to welcome this outstanding banking and commercial team to Quadrant Chambers. We are delighted that such a high calibre experienced team of barristers have decided to join Quadrant, adding further depth to Chambers”. Luke Parsons QC, Head of Quadrant Chambers
Paul Downes QC is a tough commercial litigator specialising in banking and finance, commercial fraud and international trade. Before coming to the Bar, Paul worked for Barclays Bank and was an assistant examiner for the Chartered Institute of Bankers. Clients find his combination of commercial understanding, practical experience and user-friendly approach invaluable. He is recommended as a leading silk in banking & finance and commercial dispute resolution in Chambers & Partners UK and for banking & finance, commercial litigation, financial services and civil fraud in the Legal 500.
"He is a phenomenal advocate with a fiercely legal mind who absorbs material in record time." (Banking & Finance, Chambers & Partners UK Bar 2018)
Emily Saunderson is a commercial practitioner specialising in commercial fraud and banking and finance. Prior to the Bar, Emily was a financial journalist, covering the global derivatives markets. She brings a strong understanding and insider’s perspective on financial markets to her legal practice. She is recommended in Chambers & Partners for commercial dispute resolution and in the Legal 500 for banking & finance and financial services.
‘Technically outstanding, with a very sound grasp of copious quantities of fine detail.’ (Banking & Finance, Legal 500 2017)
Stewart Chirnside specialises in commercial litigation, including banking and finance, commercial fraud, professional negligence, property damage and product liability. Before coming to the Bar, he worked as a strategy and risk management consultant in the financial services industry. He is recommended in Chambers & Partners for commercial dispute resolution and is ranked in the Legal 500 for banking & finance, financial services and professional negligence.
‘He has courtroom gravitas well beyond his years and he is an even match for many silks.’ (Banking & Finance, Legal 500 2017)
Joseph Sullivan specialises in commercial law, banking and finance, commercial fraud and professional negligence. He appears regularly in the High Court and the Court of Appeal for claimants and defendants both as sole counsel and as part of a counsel team. He is recommended for banking & finance in the Legal 500.
‘Absolutely terrific; he is very clever and thorough, and an absolute delight to work with.’ (Banking & Finance, Legal 500 2017)
2017 saw two new commercial silks for Quadrant Chambers, with the elevation of Michael McParland QC and Robert-Jan Temmink QC and in May, commercial chancery specialist Nicola Allsop also joined the team. Retired Supreme Court justice Lord Clarke of Stone-cum-Ebony joined ‘Arbitrators at 10 Fleet Street’, the specialist arbitrator wing set up by Quadrant Chambers. In February 2018 Thomas Macey-Dare and Yash Kulkarni will be appointed silk.
We are recommended in the UK, Asia-Pacific and Global legal directories and as a leading set in the fields of commercial dispute resolution, aviation, commodities, energy, insurance & reinsurance, international arbitration, shipping and travel. Quadrant was named International Arbitration Set of the Year at the 2017 Legal 500 UK Awards and were runner up for Chambers of the Year at The Lawyer Awards 2017 and the British Legal Awards 2017.
Mon, 18 December, 2017
This decision of the Court of Appeal provides important clarification in relation to the apportionment of liability for cargo claims under the New York Produce Exchange Form Inter-Club Agreement. It confirms that apportionment depends upon the identification of the cause of the underlying claim in question, without any regard to questions of legal or moral culpability. This is of considerable practical importance given that the founding purpose of the Inter-Club Agreement was to provide a “mechanistic” formula which allows claims to be apportioned between P&I Clubs on a ‘knock for knock’ type basis, ideally without reference to arbitration or Court procedures. In that regard it is a decision which it is expected will be welcomed.
The Owners of the vessel “Yangtze Xing Hua” had chartered her for a time charter trip, on an amended New York Produce Exchange form, carrying soya bean meal from South America to Iran. The charterparty incorporated the 1996 version of the New York Produce Exchange Form Inter-Club Agreement (“the ICA”).
The vessel arrived off the discharge port in Iran in December 2012. The charterers had not been paid by the receivers, and they ordered the vessel to wait, ultimately for over 4 months. During this time parts of the cargo started to overheat. When discharge finally took place a claim was made by the receivers against the vessel for cargo damage, which was settled by the owners for over €2.5m. The owners claimed that sum together with unpaid hire from the charterers.
The parties were in agreement that liability fell to be determined according to the ICA. In particular, by reference to paragraph 8(d) of the ICA, which provides for apportionment as follows:
(8) Cargo claims shall be apportioned as follows:
(a) Claims in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel:
save where the Owner proves that the unseaworthiness was caused by the loading, stowage, lashing, discharge or other handling of the cargo, in which case the claim shall be apportioned under sub-Clause (b).
(b) Claims in fact arising out of the loading, stowage, lashing discharge, storage or other handling of cargo:
unless the words “and responsibility” are added in Clause 8 or there is a similar amendment making the Master responsible for cargo handling in which case:
save where the Charterers proves that the failure properly to load, stow, lash, discharge or handle the cargo was caused by the unseaworthiness of the vessel in which case:
(c) Subject to (a) and (b) above, claims for shortage or over carriage:
unless there is clear and irrefutable evidence that the claim arose out of pilferage or act or neglect by one or the other (including their servants or sub-contractors) in which case that party shall bear 100% of the claim.
(d) All other cargo claims whatsoever (including claims for delay to cargo):
unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of the one or the other (including their servants or sub-contractors) in which case that party shall then bear 100% of the claim.
The question was first considered by a panel of experienced commercial arbitrators. The charterers contended that the cargo damage had been caused by the negligence of the crew in failing properly to monitor the cargo temperatures. The tribunal rejected this, and found that the cause of the damage was a combination of the inherent nature of the cargo (and its oil and moisture content) together with the prolonged period at anchor at the discharge port.
Furthermore, the charterers had contended that the word “act” in clause 8(d) of the ICA meant a “culpable” act and, therefore, that in the absence of any finding that the charterers had been at fault in ordering the vessel to wait offshore for a prolonged period, the proviso to clause 8(d) did not apply, and the correct apportionment was 50/50. The tribunal rejected this argument, and held that there was no requirement of culpability.
The charterers’ appeal was rejected by Teare J, who upheld the award of the arbitrators and held that clause 8 of the ICA was not concerned with “fault” but was rather a mechanism for assigning liability for cargo-claims by reference to the cause of the damage to the cargo regardless of fault.
The charterers appealed to the Court of Appeal, arguing as they had before the tribunal and the Judge that the proviso to clause 8(d) required a culpable act and that, indeed, culpability was a trigger for apportionment throughout the apportionment regime set out in sub-clauses 8(a), (b), (c) and (d).
The owners, on the other hand, contended that the ICA was concerned to identify the cause of the underlying claim, and that no part of clause 8 relied upon culpability or fault as a criterion for apportionment. Therefore, the word “act” in the phrase “act or neglect” in sub-clause 8(d) meant any causative act, whether culpable or not.
Longmore LJ began by reiterating the underlying rationale and purpose of the ICA, drawing upon the well-known judgments of Robert Goff J and Kerr LJ in The Strathnewton  2 Lloyd’s Rep. 296 and  1 Lloyd’s Rep. 219, and that of Hobhouse J in The Benlawers  2 Lloyd’s Rep. 51 to the effect that the ICA was primarily for the benefit of the parties’ insurers, and had the character of a ‘knock-for-knock’ type agreement. The Court then considered the various arguments deployed by the charterers in support of their appeal.
First, the charterers argued that in previous versions of the ICA (namely the 1970 and 1984 incarnations) apportionment was predicated on fault, and there had been no intention on the part of the framers of the ICA to abandon that requirement in the 1996 version of the agreement. However, the Court held that the “archaeology” of the ICA did not assist. There had been substantial changes between the 1984 and 1996 versions, and the effect of the changes was clear.
Second, the charterers contended that claims arising out of unseaworthiness and/or error or fault in navigation or management of the vessel under sub-clause (a) and claims arising out of cargo operations under sub-clause (b) were concerned with fault, and that therefore it would be inconsistent if sub-clause (d) was not. The owners however met this contention by arguing that fault was not in fact a requirement in any of the sub-clauses of clause 8, and that the correct interpretation of the clause, consistently with the underlying rationale and purpose of the ICA, was that it was concerned to identify the cause of the cargo claim which fell to be apportioned. The Court of Appeal agreed with the owners. Sub-clauses (a), (b) and (c) encompassed fault, but did not require it.
The critical factual question under clause 8 was that of causation. The question was: did the claim “in fact” arise out of the act, operation or state of affairs described? It did not depend upon legal or moral culpability. Furthermore, there was not any stated or obvious criterion against which such culpability, if relevant, could be judged.
Third, the charterers contended that an approach to apportionment based on causation would be hard to apply in practice. The Court of Appeal disagreed. Many separate areas of the law had worked out how causation is to be dealt with, and maritime law was no exception. Longmore LJ gave the example of an implied (or any express) indemnity given to shipowners for following orders of the charterers in a time charterparty was an example close to the present case.
The charterers also argued that the effect of interpreting the word “act” in clause 8(d) to mean any act, whether culpable or not, would lead to unacceptably wide liability on the part of charterers. This too the Court of Appeal rejected. Hamblen LJ observed that causation was an important limiting factor, and that clause 8(d) was a sweeping up provision, which only applied when there was no apportionment under sub-clauses (a), (b) or (c).
The appeal was therefore dismissed, and the decision of the tribunal and Teare J. upheld.
Although the decision focussed upon the meaning of the word “act” in sub-clause 8(d) of the ICA, in question was the overall operation of clause 8 as a whole, and whether culpability was, as the charterers contended, a “trigger” of apportionment throughout. Had that contention been accepted it would have had far reaching consequences for the settlement of cargo claims between P&I Clubs under the ICA, and also as between owners and charterers, given that the ICA is commonly incorporated into time charters on the New York Produce Exchange form.
It may be, as the charterers contended, that identifying the effective cause of a claim can raise difficult questions which are not always straightforward to resolve. However, the introduction of a requirement of culpability would surely have served only to add an additional layer of complexity, that would have made it more difficult, not less, for apportionment of claims to be resolved in the “mechanistic” and on the “knock-for-knock” basis which the framers of the ICA intended.
The decision of the Court of Appeal, that the ICA is concerned with causation and not culpability as the criterion for apportionment is consistent with the previous approach to earlier versions of the ICA in The Strathnewton and The Benlawers, and also supports the underlying rationale and purpose of the agreement. It is expected therefore that it is a decision that P&I Clubs are likely to welcome.
Stewart acted for the defendent owners, instructed by Bentleys, Stokes & Lowless.
Stewart is a commercial barrister, specialising in commercial law, mainly focussing on commercial litigation and international arbitration. He has extensive trial, interlocutory and arbitration experience, and also undertakes advisory work and drafting. His takes a commercially driven approach tailored to the practical needs of his clients, and aims to deliver excellence in the services he provides. He is particularly adept at dealing with complex technical disputes. He is consistently recommended in the legal directories as a leading junior.
"...He is an excellent advocate and particularly skilled in cross-examination; he knows shipping law inside out..." (Legal 500, 2017)
Fri, 15 December, 2017
Tom Macey-Dare is a leading commercial junior specialising in shipping, international trade, energy, insurance and international arbitration. He is recognised as a leading junior by the Legal 500 UK / Asia Pacific in International Arbitration and Shipping, and by Chambers UK / Global in Shipping & Commodities.
Consistently recommended as a 'Leading Junior' in the legal directories for Commercial Litigation, Commodities, Shipping and Information Technology, Yash Kulkarni has a broad commercial practice covering international trade, banking, information technology, insurance and insolvency. He is described by Chambers UK as: "...a formidable opponent… quick and clever, as well as wonderfully approachable and easy to work with.”
Thu, 14 December, 2017
We are thrilled to announce that Simon Rainey QC and Simon Croall QC have been featured in the Lloyd's List Top 10 Maritime Lawyers of 2017. The top 10 maritime lawyers is one section of their feature on 2017's Top 100 most influential people in shipping.
For the full list, please click here.
Simon Rainey QC
Simon Croall QC
Simon Rainey QC is one of the best-known and most highly regarded practitioners at the Commercial Bar with a high reputation for his intellect, advocacy skills, commercial pragmatism and commitment to client care. He has established a broad commercial advisory and advocacy practice spanning substantial commercial contractual disputes, international trade and commodities, shipping and maritime law in all its aspects, energy and natural resources and insurance and reinsurance. He appears in the Commercial Court and Court of Appeal and also the Supreme Court. He has extensive experience of arbitration, regularly appearing before all of the main domestic and international arbitral bodies and trade associations. He particularly relishes complicated legal disputes and also cross-examination, especially in cases involving heavy expert evidence, of both technical disciplines and foreign law. He is well-known as a cheerful and easy to work with team player who rolls his sleeves up in long and complex trials and arbitrations.
He is frequently appointed as arbitrator (LCIA, ICC, LMAA, SIAC, UNCITRAL and ad hoc, sitting both sole and as co-arbitrator) and has given expert evidence of English law to courts in several countries. He also sits as a Recorder in the Crown Court and as a Deputy High Court Judge (Queen’s Bench and Commercial Court).
He has been cited for many years as a Leading Silk in the areas of Shipping, Commodities, Commercial Litigation and Dispute Resolution, International Arbitration, Energy and Natural Resources, and Insurance and Reinsurance by Chambers & Partners and/or Legal 500. He is also recognised as one of the Top 10 Maritime Lawyers of 2017 by Lloyds List.
Simon Croall is an established commercial silk who has appeared in every court (including twice in the last 12 months in the Supreme Court). He is a sought after trial advocate as well as being respected in the appellate courts. In recent years much of his work has been in the context of International Arbitrations.
He led the team for Owners in landmark House of Lords case on remoteness in contract damages Transfield Shipping v Mercator Shipping ("The Achilleas")  1 AC 61. Recent reported highlights include another important case on damages Fulton Shipping v Globalia (The New Flamenco) in both the Court of Appeal  EWCA 1299 and below  2 Lloyd’s Rep. 230, Essar Shipping v Bank of China  EWHC 3266 on factors relevant to the grant of anti suit injunctions, AET Inc v Arcadia Petroluem (“The Eagle Valencia”)  2 Lloyd’s Rep. 257 (Court of Appeal), Mediterranean Salvage v Seamar  2 Lloyd's Rep. 639/  2 All ER 1127 (Court of Appeal) on implied terms and Dalwood Marine v Nordana Lines (“The Elbrus”)  2 Lloyd’s Rep. 315.
Simon is particularly well known for his experience in the following fields: dry shipping and commodities, commercial litigation, International Arbitration, energy, insurance and Information Technology (see for example De Beers v Atos Origin  BLR 274, a claim arising out of a large scale IT project). He also has a global practice with a depth of experience working with Chinese and south east Asian clients.
This was recognised by his ranking as a leader in International Arbitration by Chambers Asia Pacific 2018 and in International Arbitration (both Commercial and Shipping) the Legal 500 Asia Pacific Guides.
He is also a recommended leader in 2016 for Shipping and Commodities (Legal 500 and Chambers UK), Commercial Litigation (Legal 500), Energy (Legal 500) and Information Technology (Legal 500 and Chambers UK). He was also ranked amongst the top 6 most highly regarded silks in International Trade and Commodities by Whos Who Legal UK Bar 2016.
Tue, 12 December, 2017
This blog first appeared on the Practical Law Arbitration Blog on 12 December 2017 and can be viewed here (includes links to PLC sources).
Despite the tensions that sometimes arise in the relationship between national courts and the institutions of international arbitration, one critical area of cooperation is the support that national courts provide by way of interim relief. One of the most obvious examples of that relief is the granting of freezing injunctions and disclosure orders restraining a respondent from disposing of its assets, pending the outcome of a reference and identifying the scope of those assets. Depending on the nature of the case and the location of the respondent, it may be that such relief is sought in more than one jurisdiction.
As a matter of English law, the jurisdiction to grant interim relief is constrained by the requirements of section 44, of the Arbitration Act 1996 (AA 1996). Specifically, where the case is not one of urgency, the court may only act with the permission of the tribunal or with the agreement in writing of the other parties (section 44(4)). Where the case is one of urgency, the court may, on the application of a party, make orders for the preservation of evidence or assets (section 44(3)). However, in any case, the court may only act if and to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively (section 44(5)).
The requirements of sections 44(3) and (5) have taken on an increasingly important significance with the wider availability of emergency relief from tribunals. The leading international arbitral institutions offer varying procedures for emergency interim relief, especially at the time when the tribunal has not yet been formed. Obvious examples include the emergency arbitrator powers found in the rules of institutions such as the London Court of International Arbitration (LCIA), International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC), Kuala Lumpur Regional Centre for Arbitration (KLRCA) and many others, as well as powers for the expedited appointment of the tribunal found in some institutional rules, such as those of the LCIA.
There are, of course, difficult questions that may arise as to whether emergency relief from the tribunal is a viable alternative to seeking similar relief from the national court. Such questions include:
Nevertheless, the availability of emergency interim relief from the tribunal is now a factor which parties have to take into account when asking the court for such relief as part of establishing both that the requirement of urgency and that the requirements of section 44(5) are met. Two decisions of the High Court illustrate the type of problems that can arise.
In Seele Middle East Fze v Drake & Scull Int SA Co, the court was asked for injunctive relief granting the claimant access to a site overseas for the purposes of obtaining documents needed to answer the defendant’s case. The arbitration agreement between the claimant and the defendant provided for arbitration under ICC Rules, but a version of those rules which pre-dated the introduction of that institution’s emergency arbitrator regime. The judge accordingly held that he did not have to consider for the purposes of section 44(5) whether an emergency arbitrator would have been able to act effectively. However, it is clear from the tone of the judgment that, had relief been available from an emergency arbitrator, that was a factor which the judge would have considered relevant as to whether the requirements of section 44(5) were met and whether injunctive relief was therefore available.
Gerald Metals SA v Timis & others concerned applications for freezing injunctions against an individual and against a trust in support of claims for breach of contract, deceit and procuring breach of contract. The underlying arbitration agreement governing the relationship between the claimant and the trust provided for LCIA arbitration in respect of the substantive dispute. The claimant had applied for the appointment of an emergency arbitrator or expedited formation of a tribunal under the LCIA Rules, which the LCIA refused. The judge considered the relationship between section 44 and the relevant emergency arbitrator provisions, holding that there could be circumstances where the need for relief was so urgent that the power to appoint an emergency arbitrator was insufficient; for example where relief was required without notice. The judge also considered that the test for urgency under section 44(3) and what counts as an emergency for the LCIA Rules is in practice the same, namely whether effective relief could not otherwise be granted within the relevant timescale. Considering section 44 against the background of the LCIA Rules, the judge held that it was only where any emergency or expedited powers available under the relevant arbitral rules are inadequate or where the practical ability to exercise those powers was lacking, that the court may act under section 44. The judge went on to hold that the only inference which could be drawn from the refusal of the LCIA to appoint an emergency arbitrator or expedite the formation of the tribunal was that in light of undertakings given by the trust, such emergency relief was not required. Against that background, the judge held that the court had no power to grant a freezing injunction against the trust.
The powers of national courts and tribunals or emergency arbitrators to grant emergency interim relief are well-used. Deciding whether to use those powers separately or in combination may not be straightforward, not least for the reasons outlined above. What is, however, clear is that where relief is sought from the national courts which might otherwise be available under the governing institutional arbitration rules, a party will have to demonstrate with evidence why relief from the arbitration tribunal or an emergency arbitrator is not sufficient. This may be a question of timing, a question of the reach of any arbitral relief, a question of enforceability or a combination of factors, but the evidence must enable a judge to be satisfied that the requirements of sections 44(3) and (5) of the AA 1996 are met, such that relief from the court can be properly granted.
Nigel's commercial practice predominantly covers the fields of shipping, energy and insurance law. He appears before the Commercial and Admiralty Courts, in arbitration (both domestic and international) and before the appellate courts. Nigel accepts appointments as an arbitrator and has acted as a mediator and as a party's representative in mediations. He has experience of public inquiries having appeared for the government in the three most recent shipping formal investigations. Nigel is recommended as a leading silk in Chambers & Partners UK Bar and Global and in Legal 500 UK Bar and Asia-Pacific editions.
"Very user-friendly. He gets to grips with things well and provides a good service." "Flexible, accommodating, patient and easy to work with." (Chambers UK, 2018)
Mon, 04 December, 2017
We are delighted to announce that Luke Parsons QC was awarded The Legal 500, Shipping Silk of the Year 2018.
Luke is Head of Quadrant Chambers and a Commercial and Admiralty silk whose practice encompasses insurance and reinsurance, international trade, energy, sale of goods, banking, commercial contracts, and shipping. Shipping Silk of the Year at the Chambers UK Bar Awards, 2014, Luke is ranked by Chambers UK. Legal 500 UK, Chambers Global and the Legal 500 Asia Pacific legal directories. He has been described by the directories as: “…an excellent team leader and team player…who gives pragmatic, sound, commercial advice…” Legal 500 2014 and “very persuasive in advocacy, down-to-earth and easy to work with…..he has the ability to boil down different issues into a few important points that are easy for clients to understand.” Chambers UK 2016.
Luke is often called in to handle the highest value, most complex claims, involving coordinating large teams of experts and has acted on many precedent-setting cases in the High Court, and Court of Appeal.
Given the frequently international dimension of his practice, Luke has extensive experience in dealing with foreign law and multi-jurisdictional disputes. In particular he frequently acts in arbitrations with a cross-border element and is experienced in making applications to the High Court in support of English arbitrations and also in support of foreign arbitrations in the English courts and advises on the enforcement of awards under the New York Convention.
Before coming to the Bar, Luke worked with a firm of international Lloyd’s brokers and then with a multi-national underwriting company. This experience in the London and International Markets assists with his practical and commercial approach to disputes whilst maintaining the intellectual rigour for which he is well-known.