The dispute over jurisdiction arose in circumstances where the appellant repairer sought to recover sums alleged to be due under a contract for works to a rig. The appellant issued proceedings against four defendants including the respondents, the Singaporean owner of the rig and its holding company. In order to establish that the respondents were party to the contract and to the jurisdiction agreement contained in it, the appellant had to show that the respondents were undisclosed principals to the contract. It was common ground that there was no direct evidence on this issue. The appellant alleged that the evidence was such that the court could infer that the respondents were party to the contract.

Both at first instance and on appeal, there was a dispute as to the elements of the test to be met by the appellant if it was to establish that the High Court had jurisdiction under Art. 25 of the Recast Brussels Regulation. That dispute focussed on the substantive meaning of the phrases ‘good arguable case’ and ‘much the better argument’ and on whether the test for jurisdiction has two discrete parts or one part with composite ingredients.

At first instance, the judge treated the test as having two discrete parts, namely a claimant has to establish that it has a good arguable case and that it has much the better argument. On the evidence, he held that the appellant could establish a good arguable case against the rig owner but failed to show that it had the better argument. He held the appellant failed in both respects in its attempt to establish jurisdiction against the holding company. In assessing the evidence, the judge rejected an argument from the respondents that the terms of the contract were such as to exclude the possibility of undisclosed principals or were at least strongly indicative that the respondents were not party to the contract.

On appeal, the appellant sought to argue that the question of who had the ‘better argument’ was an unjustified gloss on the good arguable case test, which should not in any event be applied where the evidence was incomplete or contradictory. The appellant also argued that the judge had erred in his evaluation of the evidence. The respondents challenged the judge’s approach to the significance of the contract terms and in particular the entire agreement clause in those terms.

The Court of Appeal dismissed the appeal. In doing so, the court considered and applied the judgments of the Supreme Court in Brownlie (2017) and Goldman Sachs (2018).

The Court emphasised that disputes over jurisdiction should be determined with dispatch and should not become a distraction from the main event. It recognised that courts have nevertheless struggled to find a test, which encapsulates in readily workable language what the test is and how it should be applied.

Having considered the authorities, the Court held that the test for jurisdiction is now the three-limbed test described by Lord Sumption in Goldman Sachs. A claimant asserting jurisdiction must establish:

1. A plausible evidential basis for the application of a relevant jurisdictional gateway;
2. If there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so;
3. If the nature of the issue and the limitations of the material available at the interlocutory stage is such that no reliable assessment can be made, there will be a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.

This three-limbed test is a confirmation of the relative test in Canada Trust requiring a claimant to show that it has the better argument based on plausible evidence. The burden of proof remains on a claimant but the test is context specific and flexible. A court must be astute not to express any view on the ultimate merits of the case. The word ‘much’ has now been laid to rest.

In relation to limb (ii) of the test, the Court has expressly acknowledged that it is an instruction to courts to seek to overcome evidential difficulties and arrive at a conclusion if they reliably can. A court is to use judicial common sense and pragmatism. Attempts by claimants to seek extensive disclosure and then rely on a defendant’s refusal to give such disclosure as evidence of an uncooperative attitude were deprecated. Limb (iii) of the test addresses the situation where it is not possible for a court to assess the relative merits of each party’s case at an early interlocutory stage. A claimant still has to establish a sufficiently plausible evidential basis for the application of a jurisdictional gateway.

In considering the test, the Court also made a number of other findings on matters which commonly arise in jurisdictional disputes.

In relation to Art. 25 of the Recast Brussels Regulation, the test is the same regardless of the domicile of the parties and requires a claimant to demonstrate consensus over a jurisdiction agreement clearly and precisely.

Former case law on service abroad being an exercise of an exorbitant jurisdiction no longer applies to raise the bar for establishing jurisdiction.

An appellate court should be reticent in interfering with a judge’s evaluation of the evidence particularly where a judge has addressed complex facts in close detail.

The Court of Appeal differed from the judge on the weight to be given to the contract’s express terms. Where the contract terms identified the parties to the contract and contained an entire agreement clause, those are relevant factors to be taken into account when assessing jurisdiction and were strongly indicative that the alleged agents did not intend to act on behalf of undisclosed principals when entering the contract.

The Court dismissed the appeal with costs.

A copy of the judgment is available here. 

Nigel Cooper QC, instructed by Michelle Yong and Mary Dodwell of Stephenson Harwood, acted for the Respondents.

Michael Nolan QC, instructed by David Leckie, Tom Roberts and Emily Newey of Clyde & Co, acted for the Appellant.

Nigel Cooper QC

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's shipping & commodities work covers most aspects of international trade and the carriage of goods (including international sales disputes and all forms of bill of lading and charterparty disputes); shipbroking and management including related fraud and professional negligence claims; shipbuilding (including superyachts) and off-shore construction; ship sale and purchase; limitation and collision actions, pollution and, occasionally, Merchant Shipping Act offences. In addition to his commercial shipping practice, Nigel has a specialist interest in disputes in the yachting and marine leisure market. In the energy sector, Nigel's work covers both upstream and downstream aspects of the industry. He has advised on disputes relating to drilling and exploration, to production and to the sale and purchase of energy products as well as on related issues such as the enforcement of related guarantees and the insurance of drilling units. Nigel's insurance & reinsurance practice extends to policy disputes in both the non-marine and marine sectors.

In the wider commercial arena, Nigel has considerable experience of handling cases that are factually and technically complex with a corresponding level of documents. He is known for being approachable, and believes in working as a team with those instructing him.

To view Nigel's full profile, please click here.

nigel.cooper@quadrantchambers.com

Michael Nolan QC

Michael Nolan’s practice covers all aspects of the law relating to ships, the international carriage and sale of goods, insurance and reinsurance, harbour law, commercial contracts, private international law and professional negligence. He appears regularly in arbitration, is a supporting member of the LMAA , a member of the SCMA and accepts appointments as an arbitrator. He is a member of COMBAR and was on the executive committee from 1998 to 2001. He has strong links with Singapore and travels there regularly.

He is recommended for Shipping and Commodities in the current editions of Chambers UK, for Shipping and International arbitration in Legal 500 UK and for Shipping (International Arbitration) in Legal 500 Asia Pacific.

To view Michael's full profile, please click here.

michael.nolan@quadrantchambers.com

Paul Downes QC

Paul specialises in commercial law, and has specific expertise in banking and finance-related matters.

After taking Silk in 2010, his reputation as a tough, commercially-minded barrister has continued to grow.

Before coming to the Bar, Paul worked for Barclays Bank and was an assistant examiner for the Chartered Institute of Bankers. A direct understanding of the commercial and financial worlds means clients benefit from a practical and user-friendly approach. Paul has also acted as an expert witness overseas in relation to banking regulation in the UK, and is lead contributor to Butterworths LexisNexis Encyclopedia on Forms and Precedents.

Paul also handles general commercial litigation, international trade, media and entertainment, and professional negligence. He acts as an arbitrator in LMAA shipping disputes, commercial disputes and insurance disputes.

He is recommended as a leading silk for commercial dispute resolution in Chambers & Partners UK Bar 2019 and for Banking & Finance, Commercial Litigation, Financial Services and Fraud: Civil in Legal 500 2019. 

To view full website profile, please click here.

Emily Saunderson

Emily is a general commercial practitioner specialising in commercial fraud, and banking and finance. She has broad experience in obtaining urgent injunctive relief including freezing orders, asset preservation orders and delivery up orders. Emily’s banking and finance practice has a particular emphasis on financial derivatives instruments, and she is familiar with standard form contracts including the ISDA Master Agreement.

Emily is ranked in the latest edition of Chambers & Partners in commercial dispute resolution and she is recommended as a leading junior in banking and finance and financial services by the Legal 500, where she is described as “technically outstanding, with a very sound grasp of copious quantities of fine detail.”

She has experience in cases involving contractual interpretation and rectification; dishonest assistance; fraud; bribery; fraudulent trading; rights of set-off; contractual estoppel; rights under contracts of indemnity; and guarantees.

Before embarking on a career in law, Emily was a financial journalist covering the global derivatives markets. She brings a strong understanding and useful insider’s perspective on financial markets to her legal practice.

To view full website profile, please click here.

Nichola Warrender

Nichola is an experienced junior who enjoys a broad commercial litigation and arbitration practice with particular emphasis on shipping, carriage of goods, commodities, shipbuilding, energy and construction and related insurance and finance disputes.

Nichola undertakes drafting and advisory work in all of her practice areas.  She regularly appears as an advocate in the High Court and in arbitration, as sole counsel and as a junior.  She has a good balance between led and non-led work and is frequently recommended as a junior by those with whom she has previously worked.

Nichola is a meticulous and persuasive advocate with a wide range of experience within her fields of specialism and in more general commercial disputes.  Many of her cases involve issues of jurisdiction, private international law or require careful analysis of complex factual, expert and technical or legal issues.  She has experience in various forms of pre-emptive remedies such as freezing orders, anti-suit injunctive and other pre-action relief and has obtained or resisted most forms of pre-trial applications.

Nichola adopts a modern, efficient and user-friendly approach to her work. She is a team player who works well with others to efficiently manage and prepare a case for trial/arbitration.  Nichola believes in combining a good command of the issues and commercial understanding of her clients’ needs with sound intellectual legal analysis and practical advice.  She aims to deliver thorough, well-prepared and effective presentation of the case both on paper and in person to achieve the best results for her clients. 

Nichola is happy to be instructed on urgent matters and at short notice when available. 

To view full website profile, please click here.

Chris has a broad practice encompassing all areas of commercial law, with a particular focus on dry shipping, commodities, energy, and insurance disputes. He has appeared extensively in the Commercial Court, representing clients at all stages of proceedings, from urgent pre-action interlocutory applications all the way through to trial. Chris also appears regularly in both domestic and international arbitrations, and has undertaken cases before tribunals in London, Zurich and Hong Kong.

..."Excellent. User-friendly and bright."... "He impresses both in his written advice and in his advocacy. He prepares well and gives great service."... (Chambers UK, 2019)

‘He is outstanding in his legal analysis and presentation of cases before tribunals.’ (The Legal 500 2019)

"...He has a razor-sharp mind and is very thorough. He comes up with brilliant arguments and gets great results."... "A good strategist..." (Chambers UK, 2018)

> view Chris's full profile

chris.smith@quadrantchambers.com

The awards will be presented at a cocktail reception held at The Great Hall, Guildhall on Wrednesday 6th February 2019. A full list of the award winners can be found here.

Simon Croall QC

Simon Croall is an established commercial silk who has appeared in every court (including two recent appearances 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.

Recent reported highlights include Fulton Shipping v Globalia (The New Flamenco), a leading case on damages and mitigation, in the Supreme Court [2017] 1 WLR 2581, Court of Appeal [2016] 1WLR 2450 and below [2014] 2 Lloyd’s Rep. 230; Mitsui v Beteiligungsgesellschaft (“The Longchamp”) in the Supreme Court [2018] 1 Lloyd’s Rep. 1, addressing novel issues under the York Antwerp Rules in the context of piracy, and Court of Appeal [2016] 2 Lloyd’s Rep. 375; Aldcroft v International Cotton Association [2018] QB 725 (on restraint of trade in the context of arbitration); Jiangsu Shagang Group v Loki Owning (MV Pounda) [2018] EWHC 330 (agency issues in the context of long term contracts) and Essar Shipping v Bank of China [2016] 1 Lloyd’s Rep. 427 on factors relevant to the grant of anti-suit injunctions. In earlier highlights he led the team for Owners in landmark case on remoteness in contract damages Transfield Shipping v Mercator Shipping (“The Achilleas”) [2009] 1 AC 61. 

Simon is particularly well known for his experience in the following fields: Information Technology (see for example De Beers v Atos Origin, a claim arising out of a large scale IT project), Commercial litigation, International Arbitration, Energy, Shipping & Commodities and Insurance. He also has a global practice with a depth of experience working with Chinese and South East Asian clients in particular.

> view Simon Croall's profile

simon.croall@quadrantchambers.com 

The Problem: the Abuse of Section 68

Under section 68 of the Arbitration Act 1996, a right to challenge an award lies in a range of narrowly defined situations which have been summarised as dealing with the case where something has gone “badly wrong” with the due process in relation to the conduct of the arbitration or the rendering of the award. The applicant must establish a serious irregularity of a type falling within one or more of the sub-paragraphs under section 68(1) and, in addition, that that irregularity has caused substantial injustice. The Court’s jurisdiction is to be exercised only “in extreme cases”.

Given, however, the restricted right to challenge an award on its merits, which is confined to errors on questions of law which can get through the eye of the section 69 needle, parties frequently resort to dressing up a case, which is in reality a challenge to the substance of what the tribunal has decided, as a section 68 challenge for serious irregularity in the conduct of the arbitration. A common guise adopted for this is the argument mounted under s 68(2)(d) of the 1996 Arbitration Act, that the tribunal has failed to deal with all the issues that were put to it, which has resulted in the party suffering substantial injustice. (See e.g. Orascom TMT Investments v. Veon Ltd [2018] EWHC 985 (Comm) and Reliance Industries Limited v. The Union of India [2018] EWHC 822 (Comm).)

The Solution: Paragraph O8.5 of the Commercial Court Guide

The Commercial Court has previously referred to the large number of section 68 applications made and to the fact that the great majority of these are obviously unsustainable. The Court has adopted a summary procedure for hopeless applications. Paragraph O8.5 of the Commercial Court Guide provides that “If the nature of the challenge itself or the evidence filed in support of it leads the Court to consider that the claim has no real prospect of success, the Court may exercise its powers under rule 3.3(4) and/or rule 23.8(c) to dismiss the application without a hearing.” In practice, the application is responded to briefly by the respondent, by “a respondent’s notice to that effect together with a skeleton argument (not exceeding 15 pages) and any evidence relied upon”), the applicant answers this in writing and the Court may dismiss the application on the papers.

As the first of the recent decisions has noted, “There is no reason why the court should not exercise its powers for summary dismissal on paper where the appropriate test is met and over the years the court has tended to do so more and more in the light of the raft of unmeritorious applications that are made under section 68” (: see Asset Management Corporation of Nigeria v Qatar National Bank [2018] EWHC 2218 (Comm), per Sir Jeremy Cooke at [38]).

So far, so good.

But where the Court makes an order dismissing the application without a hearing, the applicant has the right under Paragraph O8.5 to apply to the Court to set aside the order and to seek directions for on oral hearing of its section 68 application.

It is here that problems can potentially arise. It is difficult to gauge how often this right is sought to be exercised. In Asset Management, Sir Jeremy Cooke (with many years of first-hand experience in the Commercial Court) noted that “For the most part, where such an application was summarily dismissed, my experience was that they were infrequently pursued” [38].

The Remaining Problem … a Full Re-run at an Oral Hearing?

But exercised that right certainly is, at least by certain applicants. The problem is then whether, having had the application thrown out on paper as unarguable, the applicant is nevertheless still able to have what virtually amounts to a full section 68 hearing, almost invariably with the same result of testy dismissal, but only after all the costs and inconvenience of a full hearing.

The two recent decisions illustrate considerable differences of approach by Commercial Court judges to this problem and suggest that practitioners can certainly expect some further changes or clarifications of Paragraph O8.5 when the Commercial Court Guide undergoes its next revision.

(1) In Asset Management v Qatar National Bank, a hopeless section 68 application based on section 68(1)(d) and “issues” allegedly not dealt with but which plainly had been addressed by the tribunal, Carr J. dismissed the application on paper. Asset Management renewed its application and sought an oral hearing. It failed, the application being described as “wholly without merit”. Looking at the judgment, the application appears to have been almost fully argued out as if a ordinary section 68 application.

Sir Jeremy Cooke emphasised that there was, in his view, a real and important role for the oral hearing.

While he recognised that the Court could refuse an oral hearing, notwithstanding O8.5, this would only occur in exceptional cases, i.e. “unless the underlying application was seen as something akin to vexatious”. Otherwise, the “usual” course was to proceed to an oral hearing. The Judge did not define the nature of that hearing but from what Sir Jeremy states, it is clear that he was envisaging a fully contested hearing and that he considered that this gave the Court an important cross-check. At [41], he extolled the benefits and essential justice of this type of oral hearing as he saw them:

“ […] my understanding of the general practice is that where a hearing is sought by party, it would usually be granted by the court. This is because the Court ordinarily proceeds by way of oral hearing so that parties’ positions can be advanced and tested in a manner not always so readily achieved on paper. Questions can be asked and answered which may throw a different light on matters. There is always the possibility of the Court misunderstanding the position without such an opportunity and the English Court tradition has always been one of oral argument and presentation. The exchange between counsel and judge in probing questions and receiving answers is beneficial to the administration of justice.”

(2) In Midnight Marine v Thomas Miller however, Males J. suggested that it was time for a rather different and more exacting approach.

In that case, a multiple section 69 and section 68 application was mounted by the applicant. The essence of the section 68 challenge was that the tribunal had exceeded its jurisdiction by holding that, if not time barred, the applicant’s claim against underwriters fell to be struck out for inordinate delay under section 41(3) of the 1996 Act because its position was to be seen as a defendant and not a claimant. The section 68 application was dismissed on paper as hopeless. The applicant renewed the application and the parties agreed upon a consent order providing for a full hearing, which was approved by the Court. After that full hearing, the application was again dismissed as without merit.

Males J. expressed his concern at the very outset of his judgement:

“[3] The procedure in paragraph O8.5 the Commercial Court Guide for dismissal of a section 68 application at a hearing is intended to be a summary procedure for identifying and disposing economically and promptly of hopeless applications. The provision for an oral hearing of an application to set aside a dismissal on paper should not lead to a major escalation in the costs incurred in dealing with unmeritorious section 68 challenges

[4] I am concerned that in the present case the application to set aside the dismissal on paper has been argued as fully as the section 68 application itself would have been. If that were to become the standard procedure, the availability of a procedure for dismissal on paper would achieve nothing.”

After dealing with the merits of the applications, he proposed a more restrictive and structured approach to section 68 renewed applications.

He pointed out that the ‘paper stage’ and a dismissal on paper at the first stage of O8.5 was concerned solely with the arguability of the section 68 application and whether or not it had a realistic prospect of success, nothing more.

From that starting point, he explained why it would never be appropriate to have a full section 68 type hearing on the renewed oral application under O8.5: this was because the issue remained the same short one: did the applicant have an arguable case or not? That could be addressed in a summary manner, similar to that adopted for applications for permission in other contexts (e.g. as formerly to the Court of Appeal and as in judicial review applications).  

“But it must be remembered that the question at that oral hearing will simply be whether there is a real prospect of success such that the case should be allowed to go forward to a full hearing of the section 68 application. If the oral hearing for which paragraph O8.5 provides becomes effectively a full hearing of the section 68 application preceded by a further round of submissions and evidence, the objective of weeding out hopeless applications at an early stage by a prompt and economical procedure will have been frustrated.” [38]

Males J. suggested a new approach which would effectively dispense with a contested oral hearing [39]. The features of the new procedure would be:

1. Only a short hearing, “typically no more than 30 minutes”.
2. Listed before the judge who has dismissed the application without a hearing (who would therefore be already familiar with the issues).
3. No further written submissions save for a statement by the applicant as to why the Judge’s reasons for dismissal were contested.
4. Perhaps most revolutionary (and as odds with the approach endorsed in Asset Management) “in general respondents should not attend or, at any rate, should not recover their costs if they do”: this being justified by the fact that “bearing in mind the limited nature of the issue, i.e. whether the claim has a real prospect of success, and that respondents will already have made submissions on the point in writing”.
5. Special cases might exceptionally need to be dealt with differently but this procedure should otherwise apply generally.

The Way Ahead?

It seems clear that this suggested way forward will certainly be tabled for consideration by the Commercial Court judges and users, given that Males J. stated that the matter “merits further consideration by the judges of this court”.

There is much to be said for the Males J. approach.

In restricting as much as possible the disruption in and delays to the enforcement of an award which are occasioned by unmeritorious challenges, the Court supports English arbitration and allays concerns that English seated arbitrations are too exposed to judicial challenge. 

The exploration of the issues on the proposed section 68 application, which Sir Jeremy Cooke thought potentially valuable, is fully catered for by the “short hearing” at which the applicant will have its case tested by the Judge who has already fully read in and at which the applicant will be able, if possible, to show that an initial view on paper that the case is hopeless is wrong. The prospect of this limited further stiff hurdle will probably discourage all but the most dogged and desperate or those who are faced with the rare case of an unduly harsh paper determination. Paragraph O8.5 already makes it clear that indemnity costs will usually await the applicant who chooses to roll the dice a second time.

Simon Rainey QC

Simon Rainey QC is one of the best-known and most highly regarded practitioners at the Commercial Bar noted for his intellect and advocacy. He has extensive experience of international arbitration, regularly appearing as advocate under all of the main international arbitral rules (LCIA; SIAC, UNCITRAL; ICC, Swiss Rules etc) and also sitting as arbitrator.

Current examples of his work as counsel are in arbitration before the Permanent Court of Arbitration in a US 13billion gas supply dispute; under Nigerian Law and seat in relation to an offshore oilfield redetermination dispute between oil majors, under UNCITRAL Rules in a mining supply take or pay dispute involving one of the world’s leading mine conglomerates; an ICC arbitration concerning a new mine development in Russia and an ICC Dubai seat arbitration involving specialist offshore vessels and in associated s67 and s68 LCIA challenges in the A v B [2017] EWHC 3417 (Comm) litigation in the Commercial Court. Recent arbitral appointments include an ICC Paris seat arbitration concerning a power station failure, a French law and seat arbitration relating to an oil rig drilling contract, an offshore construction contract claim under SIAC Rules and a long-term ore supply contract claim under Swiss Rules.

He is highly ranked by Chambers and Partners and Legal 500 as a first division international arbitration specialist (“Highly regarded for his expertise in handling high-profile international arbitrations in connection with complex oil and gas, banking and finance and trade issues. He is well known for his prowess in advising and representing clients in disputes in countries as far flung as Turkey, Russia, the USA, China and India” 2018; “Incredibly good, with a particular skill in reducing the complicated to the elegantly simple, which when you're trying to present a case to a tribunal or court is one of the more valuable things you need to have” 2018; “Clearly now one of the top commercial silks and a delight to work with.” 2018; “A mixture of brilliance and brevity, his written submissions are like poetry” 2018), He was nominated for “International Arbitration Silk of the Year” 2017 and again in 2019 by Legal 500 and has also been awarded “Shipping & Commodities Silk of the Year” 2017 by both Chambers & Partners and Legal 500.

He sits as a deputy High Court Judge in the Commercial Court and is Honorary Professor of Law, Business and Economics, University of Swansea.

> To view Simon's full website profile, please click here.

> simon.rainey@quadrantchambers.com

Simon Rainey QC gave some background to the debate. The 2018 International Arbitration Survey (often referred to as the White &Case/Queen Mary survey) asked respondents whether they would like to be given the option of evaluating arbitrators at the end of proceedings. 80% of (the 922) respondents said that they would, though sub-group results differed: 65% of full-time arbitrators expressed their preference for providing an assessment of their peers, whereas 90% of in-house counsel said that they would like to provide an evaluation of arbitrators. The survey noted that this was up from 75% in the 2010 survey, which had looked at the question of feeding back to arbitrators from a corporate view, stating:

“The 2010 survey, which measured corporate views… Almost a decade later, the current results show that corporations (through their in-house counsel) have an even stronger wish to become involved in this process”.

The respondents who answered “yes” to providing feedback were asked a follow-up question as to how they would like to provide such an assessment. They were given a choice of three options, plus a blank space for new suggestions. The overall results showed that reporting to an arbitral institution (provided the arbitration was on an institution’s rules) would be by far the preferred method of providing assessment of arbitrators (at 88%). All sub-groups were in favour of reporting to arbitral institutions. There was a difference in sub-groups as to whether feedback should then be subject to public review or simply feedback to the arbitrator in question.

The debate

It was against the results of the White & Case/Queen Mary Survey that the panel looked at the issue of feeding back to arbitrators and posed the questions: Why? When? How? Whose feedback?

First, Paula Hodges QC addressed the question of why providing feedback on arbitrators would be a good idea. She began by commenting on the proliferation of feedback in modern life and then addressed arbitral feedback from the perspectives of the parties, counsel, the institutions and the arbitrator(s).

The general theme underlying all perspectives was that feedback enabled arbitrators to improve and develop their skills. That in turn promoted confidence in the arbitral system, which is beneficial given the proliferation of arbitral institutions. It also assisted in promoting party autonomy and would help institutions with their future arbitral appointments. It might also assist parties with decisions on party appointments, either through information from the institutions or from publicly available information about arbitrators (if feedback was given on a public platform). Publicly available feedback might also help address the current problems with diversity in arbitrator appointments.

Paula also addressed the potential drawbacks of feeding back to arbitrators. In particular, she considered that context was key and that any form of publicly available feedback (which was available for future disputes) may not give an accurate or complete picture because, for example, the parties will not be able to see whether delay is caused by all three arbitrators or only one.

The other concern Paula identified was that if arbitrators were conscious of their performance being publicly judged, they may shy away from making hard (or robust) decisions for fear of getting a bad write-up. She concluded by quoting Alan Bennett in Writing Home, where he said: “When people are on their best behaviour they aren’t always at their best.”

Damian Honey then looked at when to feedback to arbitrators was appropriate:

• At the end of proceedings but before the award.
• Continually throughout the arbitration.
• After the award.

His preference was before the award, because a party’s views post award were coloured by the outcome. Pre-award, their evaluation was neutral. This left the difficulty that there would then be no feedback on the quality of decision-making. He had concerns about giving continual feedback throughout the proceedings because it might (on a practical level) become unmanageable, increase cost and delay resolutions. There were also concerns about whether providing feedback would, or would be seen to, influence decisions made by the tribunal as it went along. He looked at what other jurisdictions do, with a particular focus on Hong Kong and Finland.

Paula Hodges QC then considered how feedback should be given. The Arbitrator Intelligence Questionnaire was discussed. She highlighted the inherent difficulties of access to data without the surrounding context of the particular dispute. For example, heavy disclosure previously ordered in a complex fraud case might not be a real guide to an arbitrator’s usual practice. She also discussed the divergence in the approaches of the major arbitral institutions with regards to seeking feedback. She opined that the arbitral institutions had a role to play in receiving feedback which would assist them, both in relation to institutional appointments in the future but also party appointments where parties asked the institutions for a steer on who to appoint. It is important to give contextual feedback whilst preserving the confidentiality of an arbitration’s proceedings. There was general consensus in the audience that it should be through the arbitral institution (if the arbitration was being conducted on institutional rules). Word of mouth was also important, so where parties were looking for recommendations of arbitrators to appoint they sought feedback from colleagues. Indeed, that fed into responses to one of the other questions on the White & Case/Queen Mary survey, which found that the majority of respondents identified “word of mouth” followed by “from internal colleagues” as the main sources of information about arbitrators.

In this context, the panel discussed their concerns about putting up in-depth profiles on websites which set out, for example their approach to case management in arbitrations. This was because each case was different and, in accordance with section 33 of the English Arbitration Act 1996, a tribunal had a duty to adopt procedures suitable to the circumstances of a particular case so a one-size-fits-all approach to case management, for example was inappropriate.

Ruth Hosking then looked at the question of whose feedback we should be interested in. She noted that the respondents to the White & Case/Queen Mary survey were mainly lawyers, with only about 10% of the phase one participants being in-house counsel. She noted that whilst feedback from legal users of the system and arbitrators themselves was important and valuable (and not to be underestimated), feedback from the ultimate users (and funders) of the system was also valuable, and important and  there was potential for their voices to get lost in discussions about feeding back. If feedback was to be given by the underlying parties (rather than their lawyers) and their funders (if any), there was a case for feedback to be given during the arbitral reference; otherwise, feedback did not help the current client in the current dispute.

The discussion was then opened to the floor. The debate was lively and participants gave a range of views as to when and how feedback should be given. For example, some argued that if arbitrators start to make decisions in order to receive good feedback, they may become reluctant to make difficult decisions during the arbitration. However, the general consensus was that feeding back to arbitrators was a good idea.

Saira Paruk

Saira practises in all of Chambers’ key areas of work as both sole counsel and as a junior.

Saira regularly appears in the Commercial Court and in arbitrations in a wide range of commercial disputes including shipping, carriage of goods, shipbuilding, insurance and reinsurance, and private international law.  She also has extensive experience of interlocutory matters of all kinds including jurisdictional challenges, freezing orders and injunctions.

Saira’s recent reported cases include Polaris Shipping Co Ltd v Sinoriches Enterprises Co Ltd (The "Ocean Virgo") [2015] EWHC 3405 (Comm) successfully appealling an arbitration award, Carlos Soto SAU v AP Moller-Maersk A/S (The SFL Hawk) [2015] EWHC 458 (Comm) as sole counsel in a Commercial Court trial, Crowther & Another v Rayment & Another [2015] EWHC 427 (Ch) as sole counsel successfully resisting the appointment of an arbitrator.

> view Saira's full profile

saira.paruk@quadrantchambers.com

The Court of Appeal on 11^th December 2018 (Etherton, Gross and Flaux LJJ) upheld Teare J.’s judgment and held that

1. Firstly, provided only that the property (generally a ship) is within the scope of an action in rem and there has been procedural compliance with the rules, arrest is as of right. No judicial discretion is involved - and no question arises of requiring a cross-undertaking in damages from the arresting party as the price of issuing the warrant of arrest.
2. Secondly, no damages can be claimed for wrongful arrest absent malice (bad faith) or (effectively) gross negligence on the part of the arresting party: Willers v Joyce [2016] UKSC 43 ; [2016] 3 WLR 477.
3. Thirdly, once a vessel has been arrested, the settled, usual practice of the Admiralty Court is that the vessel will not be released unless the shipowner provides security for the underlying claim or in cases of abuse of process: the security required must cover the amount of the claim, plus interest and costs, on the basis of the arrestor’s reasonably arguable best case.

However, in an important departure, the Court of Appeal held that although a Judge might have power to depart from the usual practice of not ordering release of a vessel from arrest absent provision of sufficient security, a Court “would [have to] think long and hard before departing from the usual practice”.

The Court of Appeal questioned why the position of a party making a maritime arrest (where a cross-undertaking is not generally required) should continue to diverge from that of a claimant obtaining a freezing order where a cross-undertaking in damages is invariably required and forms part of the standard form of freezing order. This is particularly the case where an arrest may bear more harshly on a shipowner than a freezing order.

This was because

1. A freezing order ordinarily has exceptions for ordinary business expenses which is not mirrored in an arrest;
2. Under an arrest a shipowner loses the use of a profit-earning asset but will continue to be liable for various expenses relating to the vessel under arrest.
3. Although the security required to release a ship from arrest is limited to the amount of the claim, plus interest and costs, on the basis of the claimant’s reasonably arguable best case the ship arrested may well be considerably more valuable than the claim. By contrast a freezing order will be limited by the Court to the estimated amount of the claim, plus interest and costs.

However the Court of Appeal was prepared to preserve the existing law and practice relating to arrest for the following reasons:-

1. The availability of arrest provides the unique feature of the claim in rem and it is what makes the action in rem unique or distinctive;
2. Of there was a discretion to release from arrest without provision of security requirement of a cross-undertaking to make or continue an arrest would become routine;
3. The remedy of arrest or even the threat of arrest, is effective in compelling the provision of some other security;
4. A ship arrest is asset specific; it does not “freeze” or paralyse the entirety of the shipowner’s business in the same manner as a freezing order might do.
5. The analogy between maritime arrests and interlocutory injunctions, in particular the freezing injunction, is neither exact nor compelling;
6. Although an arrest has not been a requirement for establishing Admiralty jurisdiction since 1883 there has been no reconsideration of its availability in England.
7. There is no, or no significant, pressure from the maritime industry for a change in the balance struck on arrest.
8. The maritime industry via P&I Clubs and hull underwriters routinely give undertakings either to avoid arrest or to secure release from arrest.

The Court of Appeal held that the fact that a one-ship owning company could not of itself put up alternative security to obtain the release of the vessel was not a relevant factor taking the case out of the normal practice of the Admiralty Court.

This is a significant “win” for those with arrestable claims who are likely to obtain jurisdiction and security against a vessel as of right. In most cases where a ship is available to be arrested an arrest should generally be sought in preference to a freezing injunction.

Jonathan Chambers

Jonathan has a broad practice covering all aspects of commercial and transport law.  

He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior, with Chambers UK (2018) commenting “A tenacious advocate with an admired intellectual capacity. His redoubtable practice focuses on complex cases involving personal injury and fatality”  and “He is easy to work with and responsive. He quickly identifies the issues”  and Chambers UK (2016) commenting that he is “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2016) describing him as “Very well prepared”

Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.

Jonathan acts on behalf of shipyards, ship-owners, rig owners, crewing agencies and shipping unions and the Royal Yachting Association. He is involved in a large volume of wet and dry shipping cases including cargo claims, pilotage, collisions and groundings. International ship-building, rig-construction and repair cases are also a strong feature of his practice.

He frequently acts in inquests involving aviation and maritime incidents and the civil claims which follow.

> click to view Jonathan's full profile

jonathan.chambers@quadrantchambers.com

Upholding the cargo claimants’ appeal, the Supreme Court has held that, as a bailee, a carrier is liable for loss or damage during the voyage unless it proves on the balance of probabilities that the loss or damage was not caused by any breach by it of its Article III.2 cargo care duties, or that one of the defences in Article IV.2 applies. In order to bring itself within one of the Article IV.2 defences, the carrier must also prove that the loss or damage was not caused by its own negligence or breach of Article III.2. In practice, the burden is therefore on the carrier in any cargo claim to disprove causative negligence.

In reaching that conclusion, the Supreme Court has overturned the decision of the Court of Appeal in The Glendarroch [1894] P 226, which had proven controversial for more than a century, and rejected dicta, previously thought to be authoritative, of the House of Lords in Albacora SRL v Westcott & Laurence Line Ltd 1966 SC(HL) 19 and of the High Court of Australia in Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The Bunga Seroja) [1999] 1 Lloyd’s Rep 5.

The judgment also illustrates, again, the high threshold which must be met before an appellate court can interfere with primary findings of fact. Although Lord Sumption expressed some doubt about the weight given to the evidence by the Judge at first instance, he was clear that there had been no sound legal basis for the Court of Appeal to interfere with those findings. The Supreme Court therefore restored the findings made by the Judge at first instance.

The facts and decisions below

The claim in Volcafe was a routine low value cargo claim. It concerned condensation damage to a number of cargoes of coffee beans, which had been stuffed into containers by the carrier. Coffee beans, a hygroscopic cargo, emit moisture during carriage which causes inevitable condensation on the walls of the container. The damage caused by the condensation can be mitigated by lining the containers with paper or card. The carrier argued that the condensation damage was caused by an inherent vice of the cargo, its inherent propensity to emit moisture, and that it was therefore entitled to rely on the defence in Article IV.2(m) of the Rules. The cargo claimants argued that the carrier had failed to apply sufficient card or paper to the walls of the container.

At first instance, the Judge decided the claim on the burden of proof. He held that proof of damage gave rise to an evidential inference that the damage had been caused by a breach of the carrier’s obligations under Article III.2, and that the carrier had not displaced that inference by showing that it had complied with its obligations under Article III.2. In those circumstances, it could not rely on the Article IV.2(m) defence.
The Court of Appeal overturned the Judge’s decision. It accepted the cargo interests’ argument that the carrier, as a bailee, bears a legal burden of bringing itself within one of the defences in Article IV.2. Applying the long-standing decision in The Glendarroch, Flaux J (giving the leading judgment) held that the carrier could establish a ‘prima facie’ case of inherent vice merely by proving that the moisture which caused the damage had originated in the goods themselves. The burden would then ‘shift’ to the cargo interests to prove that the cause of the damage was not inherent vice, but some failure by the carrier to exercise reasonable care.

The Supreme Court’s decision

(1) On the burden of proof in a cargo claim

In the Supreme Court, the argument concentrated on whether the Court of Appeal had been right to hold that the carrier bears a legal burden, or whether (as the Judge at first instance had held) the carrier’s burden was merely an evidential one (as arguably suggested by Albacora v Westcott & Laurence and The Bunga Seroja).

The Supreme Court held that the carrier’s burden was legal. The contract of carriage is a contract of bailment, and the carrier is therefore a bailee. The bailee’s reverse burden of proof is not displaced by anything in the Hague Rules. Like any other bailee, a carrier is therefore liable for damage to goods in its possession unless it can prove that the damage was not caused by any breach of the required standard of care, or unless it can bring itself within a contractual exclusion clause.

The Court rejected the carrier’s argument that the positive obligations of cargo care under the Hague Rules are inconsistent with any continuing role for common law bailment principles: the Court held that the Rules are “not exhaustive of all matters relating to the legal responsibility of carriers for the cargo”. Where the Rules are silent, English common law continues to apply.

Because the carrier as a bailee bears the legal burden, it must therefore prove on the balance of probabilities that that the loss or damage was not caused by any breach of Article III.2, or that one of the defences in Article IV.2 applies. The Supreme Court held that “so far as [Albacora v Westcott & Laurence and The Bunga Seroja] suggest that the cargo owner has the legal burden of proving a breach of article III.2, they are mistaken”.

(2) On the burden of proof under Article IV.2 defences and The Glendarroch

In The Glendarroch (a pre-Hague Rules case), the Court of Appeal had held that where a cargo claimant alleged that the carrier could not rely on the perils of the sea defence because of its own negligence, the burden of proving negligence was on the cargo claimant: negligence was “an exception to an exception”.  

Lord Sumption described the The Glendarroch as “technical, confusing, immaterial to the commercial purpose of the exception and out of place in the context of the Hague Rules”, and declined to follow it. He held that there is no general principle of law that a cargo claimant bears the burden of proving negligence. If the carrier seeks to rely on one of the defences in Article IV.2, the carrier must prove that the effective cause of the loss or damage was the excepted peril, and not the carrier’s own negligence or breach of Article III.2.

(3) On ‘inherent vice’ under Article IV.2(m) and generally

The Supreme Court judgment also provides useful guidance on the meaning of inherent vice. As an alternative ground for the decision, the Court held that inherent vice meant the unfitness of the goods to withstand the ordinary incidents of the voyage, given the degree of care which the shipowner is required by the contract to exercise in relation to the goods. To establish the defence, the carrier would therefore have had to prove either that the shipowner provided the contractual degree of care, or that even had it done so the damage could not have been prevented. As it had not proven either of those matters (on the Judge’s findings of fact), it could not rely on the defence.

The impact of the decision

The decision is a landmark one which brings decisive clarity to a much debated area, both generally in relation to the burden of proof upon the cargo claimant and the carrier in a case of cargo damage and in particular in relation to the correct application of the Article IV.2(m) defence of inherent vice.

The universal approach adopted to the pleading of any standard Hague or Hague-Visby Rules cargo claim is likely to undergo rapid reappraisal. Cargo claims will now proceed on the basis that the cargo claimant is able to rely on proof of damage to the cargo as setting up, by itself, a sustainable cause of action, which casts the legal burden on the carrier in all cases to disprove negligence.  A different approach will also need to be taken to the pleading by carriers of Article IV.2 defences with the necessary particularisation in most cases of how (well) the goods were carried and cared for.

> Download a copy of the Judgment

Appeared for the Appellants:

John Russell QC

John is an experienced and determined commercial advocate and has acted as lead Counsel in numerous Commercial Court trials, international and marine arbitrations and appellate cases, including in the Supreme Court. He has also appeared as counsel in inquests and public enquiries.

He relishes both detailed legal argument and cross-examination of lay and expert witnesses. He will always ensure that a client's case is presented in the most persuasive manner possible, both in writing and orally.

John provides advice to a wide range of clients. He combines first rate technical legal analysis with a pragmatic, commercial, problem solving approach to cases.

John accepts instructions in many fields of commercial dispute resolution with a particular focus on shipping, commodities, international trade,  marine insurance, aviation and travel.

He is ranked in the Legal 500 and Chambers & Partners in Shipping, Commodities, Aviation and Travel.

To view full website profile, please click here.

Benjamin Coffer

Ben is described by the directories as  "a rising star" (Legal 500, 2019); “a standout shipping and commodities junior" (Chambers & Partners, 2018) and “a star of the future” (Chambers & Partners, 2017). He is also recognised as a leading junior in the Legal 500 Asia Pacific Guide. Ben undertakes the full spectrum of shipping work, including every species of charterparty and bill of lading claim, as well as shipbuilding and ship finance disputes. He has developed a particular specialisim in cases involving carriage of goods under the Hague and Hague-Visby Rules, and has appeared in several of the leading cases on such claims in recent years.

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Appeared for the Respondents:

Simon Rainey 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 and commercial pragmatism. He has a broad commercial advisory and advocacy practice spanning substantial international contractual disputes, energy and natural resources, trade and commodities, and shipping and maritime law in all its aspects, in arbitration and at all Court levels. His practice involves a steady diet of high profile and high value commercial fraud cases, typically involving heavy interlocutory stages centred around pre-emptive strike applications such as worldwide freezing injunctions and anti-suit and other injunctive relief, a recent example of which is the hard fought Gerald Metals v Timis litigation in England, Cayman and the BVI (2017-2018). He has been cited for many years as a Leading Silk in Commercial Litigation / Dispute Resolution by Chambers and Legal 500. He also sits as a Deputy High Court Judge in the Commercial Court. "A fantastically intelligent and tactically astute barrister who is immensely erudite." (Chambers UK 2019); ‘Absolutely charming and probably the best cross-examiner I’ve ever seen.’ (Legal 500 2019).

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David Semark

David ‘Produces excellent work and represents exceptional value for an experienced litigator.’ (Legal 500 2015). A former army officer David also previously trained in the Shipping Department of one of South Africa's leading maritime and international trade firms, before joining and later becoming a partner at what is now known as Reed Smith. He retrained as a barrister and became a member of Quadrant in 2010.

David specialises in commercial law, with a particular emphasis on shipping and maritime law (especially dry shipping disputes), international trade and commodities, jurisdictional disputes and insurance. Although his practice is primarily as an advocate, he is also an LCIA arbitrator.

He is the co-author of P&I Clubs: Law and Practice (2010, 4th ed.) and Maritime Letters of Indemnity (2014, 1st ed.)

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The top 10 maritime lawyers is one section of their feature on 2018's Top 100 most influential people in shipping. For the full list please click here.