Bernuth Lines Ltd v High Seas Shipping Ltd

Under the Arbitration Act 1996, service of a notice commencing arbitration may be effected by any recognised and effective means of communication. Email is not inherently ineffective. Service may be valid where the message is sent to an address held out as the recipient’s address, received by that system, and not rejected, even if internal staff ignore it or fail to forward it. The address need not previously have been notified for use in the particular dispute. The court rejected the Civil Procedure Rules 1998 as an appropriate benchmark for service in arbitration. An internal failure to deal with a properly delivered email does not invalidate service.

High Seas Shipping Ltd obtained an LMAA Small Claims Procedure award against Bernuth Lines Ltd for hire and related sums. The arbitration had been commenced by email sent to an address published by Bernuth as its email address. Bernuth applied to set aside the award, contending that the notice had not been effectively served and that the tribunal lacked jurisdiction. It relied principally on sections 67, 68 and 72 of the Arbitration Act 1996. The central issue was whether the email notice validly commenced the arbitration.

1. Service under section 76. The application was refused. Section 14(4) of the Arbitration Act 1996 required service of written notice requiring agreement to the appointment of an arbitrator. The email satisfied the writing requirement under section 5(6). Section 76(3) deliberately permits service by any effective means.
2. Email is capable of being an effective means of service. The relevant question is whether it was sent to the intended recipient’s actual email address, received by that system, and delivered through a recognised method of communication. There may be cases involving multiple departmental or overseas addresses where delivery to one address is ineffective. This was not such a case. Bernuth had held out the address as its only email address, and the messages were received rather than rejected.
3. The fact that clerical staff treated the emails as spam or failed to refer them to legal or managerial personnel was an internal failing. It did not invalidate service. The reasoning in The Pendrecht [1980] 2 Lloyd’s Rep 56, concerning receipt of a telex outside office hours, supported that conclusion.
4. The court declined to use the Civil Procedure Rules 1998 requirements for electronic service as an arbitration benchmark. Civil litigation serves a wider range of litigants, whereas arbitration commonly involves commercial parties with access to lawyers. Section 76 was intended to operate more broadly.
5. Obiter observations. The court considered that the LMAA Small Claims Procedure could apply where the amount claimed by either party in the arbitration did not exceed US$50,000. A claimant could initially commence under that procedure despite an earlier counterclaim exceeding that sum; if a counterclaim over US$50,000 was put forward in the arbitration, the procedure would cease to apply. Paragraph 5(i) of the Procedure was also considered broad enough to include the initiating communication.
6. The court observed that a complaint that proceedings were never validly constituted would ordinarily concern substantive jurisdiction under section 67, rather than serious irregularity under section 68. Since service was valid, the award remained undisturbed.