ASM Shipping Ltd. of India v TTMI Ltd. of England

A party’s failure to pay a money order does not, without more, justify debarring it from being heard. The court must consider whether the default is contumacious, whether the party is able to comply, the relationship between the proceedings, and whether debarring would promote or impede justice. The discretion to refuse a hearing for contempt is exceptional and must be exercised proportionately. The court has no power under the Arbitration Act 1996 to debar a party from advancing claims in arbitration where the tribunal’s jurisdiction derives from the parties’ agreement and the Act supplies the tribunal’s own sanctions.

The owners of the vessel AMER ENERGY applied under section 24 of the Arbitration Act 1996 to remove two arbitrators. They also sought to debar the charterers from resisting that application and from advancing their claims in the arbitration, alleging contempt arising from non-payment of an enforcement order concerning an arbitral freight award.

The charterers contended that they lacked available assets and had substantial counterclaims and costs claims against the owners. The court considered whether the enforcement order created a money judgment, whether any non-compliance was sufficiently contumacious, and whether the court had jurisdiction to exclude the charterers from the arbitration.

1. The debarment application failed. The order granting permission to enforce the freight award under section 66(1) of the Arbitration Act 1996 was not itself a money judgment against the charterers and did not require them to comply with the arbitral award. Section 66(2), which permits judgment to be entered in terms of an award, was distinct. A strict approach was appropriate where contempt was relied upon.
2. Even assuming that failure to pay the relevant sum amounted to breach of the order, non-payment of a money judgment was not automatically a contempt warranting debarment. The authorities showed that inability to pay and absence of contumacy were material. The charterers had no clear present entitlement to recover the freight without possible set-off, and their conduct was not equivalent to deliberately flouting the court’s authority.
3. The court retained a discretion whether to hear a party in contempt. The principles discussed in Hadkinson v Hadkinson [1952] P 285, Bettinson v Bettinson [1954] P 465, The Messiniaki Tolmi [1981] 2 Ll Rep 595 and X Ltd v Morgan Grampian [1991] 1 A.C.1 required grave considerations, a connection between the contempt and the relief sought, and a proportionate response. The section 24 application was brought by the owners and concerned alleged bias; refusing to hear the charterers would impede rather than promote justice.
4. The court had no statutory or inherent power to debar the charterers from pursuing their claims in the arbitration. Section 41(7) provided the tribunal with powers for non-compliance with its orders. Sections 44 and 44(5) supplied limited court powers in support of arbitration, but did not authorise exclusion from arbitral proceedings. Richco International Ltd v International Industrial Food Co. SAL [1989] 2 Lloyd’s Rep 106 depended on the different statutory wording of the Arbitration Act 1950 and did not justify the orders sought.
5. The charterers were therefore not debarred from resisting the section 24 application or from pursuing their claims in the arbitration.

The judgment records earlier procedural decisions in the same arbitration, including dismissal of the owners’ section 68 challenge and refusal by the Court of Appeal of permission to appeal. The charterers’ separate appeal was abandoned after it was recognised that permission from the High Court was required under section 44(7) of the Arbitration Act 1996.