Alphapoint Shipping Ltd v Rotem Amfert Negev Ltd & Anor

Applications under sections 69 and 68 of the Arbitration Act 1996 involve distinct judicial inquiries. A section 69 application tests the legal correctness of the award on the facts found by the arbitrators. A section 68 application examines whether procedural circumstances amounted to serious irregularity causing substantial injustice. Acceptance of a notice of readiness may start laytime without waiving the charterers’ right to rely on an unfitness breach or an express clause interrupting time. Where such a clause applies, deduction depends on the fact of crew failure and resulting lost time, not on proof of financial loss. An arbitrator need not determine factual issues irrelevant to the reasoning supporting the award.

The shipowners sought remission of an arbitration award under section 68 of the Arbitration Act 1996. The award substantially rejected their demurrage claim arising from contamination of cargo by barley residues left in the vessel’s holds, allowing only US$4,505.20. The shipowners alleged serious irregularity because the arbitrators had failed to address estoppel and waiver arguments and had relied on speculative matters concerning another vessel, the VANA. They also challenged the arbitrators’ treatment of contractual provisions concerning clean holds, crew failure and damages. Leave to appeal under section 69 had first been refused. The central issue was whether any alleged irregularity caused substantial injustice.

1. Leave to appeal under section 69 had been refused. The section 69 process examines the award on the basis of the arbitrators’ findings of fact. It does not investigate the circumstances in which the award was made or procedural irregularity. Section 68 provides a separate, self-contained regime.

2. Where applications under sections 68 and 69 are heard together, the court may determine the section 69 application first. That will often be logical because the legal error identified on the facts found may bear directly on whether a procedural irregularity caused substantial injustice. In some cases, however, the section 68 application should be determined first.

3. Acceptance of a notice of readiness after a superficial inspection represented only that, so far as the charterers knew, the vessel was ready to load. It did not represent that there had been no breach of the clean-holds obligation in clause 23(b), or no prior crew failure within clause 25. Laytime therefore began to run, but the charterers were not estopped from relying on those breaches or contractual provisions.

4. Clause 25 operated automatically where crew failure caused delay in loading. The relevant deduction was measured by lost time, not by the charterers’ net financial loss. The arbitrators were therefore entitled to conclude that the shipowners’ estoppel arguments did not require findings about whether cleaning had become more time-consuming after loading began.

5. The alleged benefit from the VANA concerned only the quantification of damages for breach of clause 23(b). The charterers had the burden of proving their damages, while the shipowners had to adduce evidence supporting any reduction. The arbitrators’ speculative observations about possible countervailing costs were superfluous because the shipowners had produced no evidence establishing a benefit requiring deduction.

6. No serious irregularity causing substantial injustice was established. Even if there had been an irregularity concerning the quantum of damages, clause 25 independently entitled the charterers to the same reduction in demurrage. The section 68 application was dismissed and the award was not remitted.

The judgment records that Tomlinson J directed the section 69 leave application to be heard with the section 68 application. Leave to appeal was refused before the section 68 hearing. No separate appellate decision is stated.