Bulk & Metal Transport (UK) Llp v Voc Bulk Ultra Handymax Pool Llc

Section 14(4) of the Arbitration Act 1996 requires a broad and flexible assessment focused on substance rather than form. A communication is sufficient where, read objectively and in context, it identifies the dispute, invokes the arbitration agreement, requires the recipient to appoint an arbitrator or agree to an appointment, and makes the intended commencement sufficiently clear. The notice need not use formulaic language or itself constitute the tribunal. A conditional notice may suffice where it requires arbitration if a settlement demand is not met by a stated deadline.

The charterers appealed under section 69 of the Arbitration Act 1996 from an interim award holding that their claims were time-barred under Article III rule 6 of the Hague Rules. The tribunal had decided that solicitors’ communications dated 2 November 2006 did not commence arbitration under section 14(4), and that arbitration commenced only with a later communication dated 13 November 2006.

The appeal concerned whether the earlier communication was a sufficient notice under section 14(4), and whether, if so, the charterers were barred from relying on their claims in defence of the owners’ claims.

1. Appeal allowed. The communication dated 2 November 2006 complied with section 14(4) of the Arbitration Act 1996. The answer to both questions of law was yes.
2. Section 14(4) must be interpreted broadly and flexibly, concentrating on substance rather than form. The question is whether the communication objectively required the other party to appoint an arbitrator or agree to an appointment in respect of the identified dispute. A strict, technical, legalistic or formulaic approach is inappropriate.
3. The communication identified the owners’ claim, stated that arbitration would be commenced if payment was not made within seven days, invited agreement to a sole arbitrator, and stated that the owners would otherwise appoint their own arbitrator. That was sufficient notice. The reference to a conditional settlement opportunity did not prevent commencement of arbitration when the period expired.
4. Commencing arbitration under section 14(4) is distinct from taking a later step to constitute the tribunal. The notice need not itself appoint an arbitrator or complete the tribunal’s constitution. The later appointment of an arbitrator on 13 November 2006 did not prevent the earlier communication from satisfying section 14(4).
5. The court also rejected the owners’ submission that the charterers remained barred from relying on their claims in defence. The issue involved mixed fact and law and the arbitrators had undertaken the same or a materially similar exercise to that identified in The “Standard Ardour” and The “World Ares”. Costs were determined. Permission to appeal was provisionally refused under section 69(8).

1. Arbitration tribunal: In a first interim award dated 13 May 2008, the tribunal held that the charterers were time-barred and that arbitration had commenced only on 13 November 2006.
2. High Court (Commercial Court): Mrs Justice Gloster granted permission to appeal on 15 October 2008. His Honour Judge Mackie QC allowed the appeal and answered both questions of law in the charterers’ favour.