Exfin Shipping (India) Ltd v Tolani Shipping Co Ltd

Whether an arbitration clause referring any dispute confers jurisdiction is a matter of construction, assessed in the contractual and factual context. A dispute may exist even where liability and the amount due are admitted. An admitted claim that remains unpaid is still a dispute if one party demands immediate payment and the other refuses or fails to pay. It would make little commercial sense for admitted but unpaid claims to fall outside arbitration while defended claims arising under the same contract remained arbitrable.

The charterers applied under section 67(1) of the Arbitration Act 1996 to set aside an arbitral award for want of substantive jurisdiction. The owners had obtained an award for admitted demurrage under a charterparty containing an arbitration clause covering any dispute arising under the charter.

The charterers accepted liability, the amount due and the payment date, but had not paid the balance. The issue was whether that admitted but unpaid claim constituted a dispute sufficient to confer jurisdiction on the arbitrator.

1. Application dismissed. The arbitral tribunal had jurisdiction to determine the owners’ claim for admitted but unpaid demurrage.
2. The expression any dispute in an arbitration clause is construed in its contractual and factual context. The court derived no assistance from authorities concerned with whether a claim had been admitted where the present issue was different.
3. Commercial considerations supported a broad construction. If an award were unavailable for an admitted but unpaid claim, the parties would be forced to use court proceedings for such claims while arbitrating defended claims under the same contract. That would create uncertainty about forum, limitation and the effect of admissions.
4. The reasoning in The Halki, concerning the commercial sense of giving arbitrators jurisdiction over claims which a party had refused to pay, was applicable. A refusal to pay an admitted sum could be characterised as a dispute just as much as a refusal to admit a valid claim.
5. Wealands v CLC Contractors did not require a different result. The statement relied upon was sufficient for the issue decided there, where payment or non-payment was not in issue, and did not address the present circumstances. Glencore v Agros also supported the conclusion, although its payment clause expressly deemed a dispute to arise on non-payment.
6. The charterers were ordered to pay the owners’ costs assessed on the indemnity basis in the sum of £6,200.