Buyuk Camlica Shipping Trading & Industry Co Inc v Progress Bulk Carriers Ltd

Under section 68(2)(d) of the Arbitration Act 1996, an arbitral tribunal must deal with every essential issue necessary for a fair determination of the dispute. It need not address every argument or subsidiary line of reasoning. A genuinely unresolved essential issue must be made apparent to the parties; the court should not speculate that it was silently rejected. Section 57 is available to clarify ambiguity or inadequate reasoning, but not where the tribunal has simply failed to determine an essential issue. A section 69 challenge succeeds only where the tribunal’s legal conclusion is obviously wrong. Extensions of the statutory time limit require cogent reasons, and the policy of finality in arbitration weighs heavily against permitting a party knowingly to let the time limit expire.

The Owners chartered the vessel Hilal I to the Charterers under two time charterparties. The parties later orally varied the charterparties to permit HBI and DRI cargoes to be carried from specified ports. An arbitral tribunal found that the Owners had breached those agreements and that the vessel’s misdescribed moulded depth had contributed to the resulting inability to load the cargoes.

The Owners applied under sections 68 and 69 of the Arbitration Act 1996, out of time, alleging that the tribunal had failed to deal with essential issues and had erred in awarding damages. They also sought extensions of time under section 80(5) and CPR 62.9. The central issues were whether the tribunal had dealt with all essential issues, whether its damages conclusion was obviously wrong, and whether time should be extended.

1. Section 68 application. The tribunal had dealt with the principal issues: the oral variations, the refusals to load, causation, the safe port and impossibility arguments, and breach of the vessel’s description warranties. The Owners’ complaints largely concerned arguments rather than issues. A tribunal is not required to address every argument: [2004] EWHC 1019, [1985] 3 All ER 119 and [2003] EWCA Civ 84.
2. The tribunal had, however, failed to deal expressly with the Owners’ waiver defence based on the Charterers’ alleged knowledge of the vessel’s true dimensions and air-draft limitations. Waiver was an essential issue because it was relevant to the actionable breach of warranty. Section 68(2)(d) requires such an issue to be determined and communicated, even if the argument appears weak. The court must not speculate that the tribunal silently rejected it. This was an irregularity, but not a serious irregularity causing substantial injustice. The waiver case was incapable of reasonable argument on the evidence.
3. Section 57 and section 70. Section 57 permits clarification of ambiguity or inadequate reasoning, but does not apply to a straightforward failure to determine an essential issue. For the other complaints, any ambiguity or lack of clarity should first have been addressed through section 57 and rule 25 of the LMAA Rules. Section 70 therefore barred those aspects of the challenge.
4. Section 69 application. The tribunal’s conclusion that the Charterers were entitled to damages from the combination of the Owners’ refusal to perform and their breach of the vessel’s description warranty was not obviously wrong. The Owners could not rely on physical impossibility or unsafety resulting from their own breach to avoid liability for the specific promise to load. The Charterers’ reliance on the contractual description was not essential where they had relied on the Owners’ specific oral agreements.
5. Extension of time. The five-week delay was not excessive, but the Owners knowingly allowed the 28-day period to expire, offered no reasonable excuse, and delayed a further three weeks after receiving the Awards. The applications were weak and the policy of finality prevailed. The applications for extensions and, alternatively, the section 68 and 69 challenges were dismissed.

First-instance decision on applications under sections 68 and 69 of the Arbitration Act 1996, and applications for extensions of time under section 80(5) and CPR 62.9. The Owners’ applications were dismissed.