Primetrade AG v Ythan Ltd

On an appeal under section 67 of the Arbitration Act 1996, an appellant may develop arguments falling within a broadly identified ground of jurisdictional objection previously raised before the arbitrators. Section 73 prevents entirely new grounds, subject to its statutory exception, but does not require the original argument to have been formulated narrowly.

Where goods covered by bills of lading have been totally lost, section 5(2)(c) of the Carriage of Goods by Sea Act 1992 may govern the acquisition of holder status. A transfer made solely to facilitate an insurance settlement did not make the transferee a holder, and alternatively did not transfer rights of suit under section 2(2). A request for security by letter of undertaking, even with an implied threat of arrest, was not a formal claim under section 3(1)(b).

The Owners of the vessel Ythan commenced arbitration against Primetrade AG, alleging that the shipment of dangerous HBI fines caused the vessel’s loss. Primetrade challenged the tribunal’s substantive jurisdiction.

The arbitrators unanimously held that Primetrade had become the lawful holder of the bills of lading. By a majority, they held that Primetrade had made a claim under the contracts of carriage and was therefore subject to the bills’ arbitration clauses. One arbitrator dissented on that issue.

Primetrade appealed under section 67 of the Arbitration Act 1996. The issues were whether new holder arguments and evidence were admissible, whether Primetrade had become holder and obtained rights of suit under the Carriage of Goods by Sea Act 1992, and whether its conduct amounted to making a claim under section 3(1)(b).

1. Section 73 and new objections. The appeal under section 67 was a rehearing, but section 73 required a party participating in the arbitration to raise every ground of objection to jurisdiction before the tribunal. The relevant grounds were to be identified broadly, rather than treated as if they were pleadings. Primetrade’s new arguments concerning sections 5(2)(c) and 2(2) remained within its existing ground that it was not a holder with rights of suit. Those arguments could therefore be advanced. New evidence was admissible because no prejudice had been shown, although the court retained procedural control and could refuse evidence causing substantial prejudice.
2. Holder status and rights of suit. Section 5(2)(c) applied where the goods had been permanently lost. The relevant transaction was the transfer of the bills from UBS to Marsh. It occurred solely to enable Primetrade to obtain an insurance settlement, and was not a transaction which would have made Primetrade a holder under section 5(2)(b) had the goods still existed. Primetrade therefore did not become holder. Alternatively, if it became lawful holder, section 2(2)(a) prevented rights of suit transferring because the relevant arrangement was made after the contractual right to possession of the goods had ceased.
3. Making a claim. Applying the approach in Borealis AB v Stargas Ltd (the “Berge Sisar”) [2002] 2 AC 205, section 3(1)(b) required a formal claim asserting the carrier’s legal liability, involving a positive and sufficiently final election to enforce contractual rights. An arrest would ordinarily satisfy that requirement. The request for an LOU was different: it was a contractual security arrangement, the possible claimants were not identified, and no one was committed to commencing proceedings. The request therefore did not amount to making a claim.
4. Primetrade obtained no rights of suit and did not become subject to the liabilities under the bills as if it had been a party. The arbitrators consequently lacked substantive jurisdiction over the Owners’ claims.

• Arbitration tribunal. The arbitrators unanimously found Primetrade to be the lawful holder of the bills. By a majority, they held that it had made a claim and was bound by the arbitration clauses; the third arbitrator dissented on that issue.
• High Court (Commercial Court). Primetrade’s section 67 appeal was allowed. The court held that the tribunal had no substantive jurisdiction.