Lantic Sugar Ltd & Anor v Baffin Investments Ltd

Service of a notice commencing arbitration must be effected on the correct party, or on an agent with actual or ostensible authority to accept service. The flexible method of service permitted by Arbitration Act 1996, s 76 does not remove that requirement. Under s 12(3)(b), an extension of an agreed time bar requires conduct by the party relying on the bar, or its agent, which contributes to the failure to comply or makes it unjust to enforce the bar. Mere silence, participation in negotiations, absence of prejudice and the shortness of the delay are insufficient. Conduct which creates a misleading impression about an agent’s authority to accept service may satisfy the statutory test.

The claimants sought a declaration that arbitration proceedings concerning cargo damage had been commenced in time, or alternatively an extension of time under ss 12 and 76 of the Arbitration Act 1996. The defendant shipowner contended that notices sent to its protection and indemnity club and related companies did not constitute service on the shipowner, and that the club lacked authority to accept service. The notices sent directly to the shipowner were received after the contractual time bar. The central issues were whether service had been effected in time, whether the club had actual or ostensible authority to accept service, and whether the defendant’s conduct made it unjust to enforce the time bar.

1. Service. The notices had not been served on the defendant by the contractual deadline. Section 76 permits a flexible and effective means of service, but does not dispense with service on the correct legal person. Knowledge within a corporate group that arbitration was contemplated did not amount to service on the shipowner. Separate corporate personality remained decisive.
2. Authority. The club had no actual authority to accept service. Its authority to deal with letters of undertaking, settlement negotiations and extensions of time did not, without more, represent that it could accept service of originating process. The claimants therefore failed on both service and authority.
3. Extension of time. Section 12(3)(b) imposes a stricter test than s 27 of the Arbitration Act 1950. The court must identify conduct by the party relying on the time bar, or its agent, which is causative of the failure to comply or connected with the injustice of enforcing the bar. Mere silence, failure to give a warning, settlement negotiations, a short delay or absence of prejudice is insufficient.
4. On the particular facts, the 11 March conversation went beyond silence. The club acknowledged the notice and said that it was taking instructions about the appointment of an arbitrator, without explaining that it lacked authority to accept service. This created a misleading impression and contributed to the claimants’ failure to serve the defendant in time. The statutory test was therefore satisfied, and time was extended under s 12. The parties were invited to draw up the order and address costs.

First-instance decision. No prior or appellate decision is stated in the judgment.