M.H.Progress Lines SA v Orient Shipping Rotterdam BV & Ors

Where a charterparty incorporates the Inter-Club Agreement 1996, its specific time-bar provision governs recovery claims under that agreement where it conflicts with a general charterparty arbitration time bar. The conflict is resolved by clause (2) of the Inter-Club Agreement 1996, which gives its terms precedence over contrary charterparty provisions. The charterparty’s general arbitration machinery may continue to apply, but its shorter time bar need not apply to Inter-Club Agreement claims. The construction is assessed by reading the charterparty and incorporated agreement as a whole and by asking how they would be understood by a reasonable commercial person.

The owners appealed under section 69 of the Arbitration Act 1996 against an award determining preliminary issues arising in two related arbitrations. The dispute concerned the interaction between an amended Centrocon arbitration clause in the head charterparty and the Inter-Club Agreement 1996, incorporated by a clause requiring cargo claims to be settled under that agreement.

A cargo claim was settled by the sub-charterers, who sought recovery up the charterparty chain. The relevant charterparty arbitration clause required claims to be made and an arbitrator appointed within 12 months of final discharge. The Inter-Club Agreement provided a 24-month notification period, subject to a 36-month period where the Hamburg Rules applied. The central issue was which time bar governed claims under the Inter-Club Agreement.

1. Appeal dismissed. The arbitrators had reached the correct conclusion that the 12-month time bar in paragraph [2] of clause 39 did not apply to claims under the Inter-Club Agreement 1996.
2. The charterparty and the incorporated agreement had to be read as a whole. Clause (6) of the Inter-Club Agreement imposed a time bar requiring written notification within 24 months of delivery, or 36 months where the Hamburg Rules or implementing national legislation applied. Paragraph [2] of clause 39 imposed a different requirement: a claim had to be made in writing and arbitration commenced within 12 months of final discharge.
3. Those requirements were contrary to one another. Clause (2) of the Inter-Club Agreement expressly provided that its terms applied notwithstanding anything contrary in the charterparty, and specifically that its time bar applied notwithstanding any contrary charterparty provision. It therefore resolved the conflict in favour of clause (6).
4. The apparently broad words “any claim” in paragraph [2] of clause 39 did not alter that conclusion. They had to be read with clauses (2) and (6) of the Inter-Club Agreement. Paragraphs [1] and [3]–[5] of clause 39 could apply to Inter-Club Agreement disputes, but the parties intended a separation between the arbitration machinery and the inconsistent time bar in paragraph [2].
5. The construction was commercially coherent. The 24-month notification period allowed a party time to notify an apportionment claim after the period for third-party cargo claims had expired. Applying the 12-month charterparty bar could produce an uncommercial result by requiring notification before the third-party claim period had ended.
6. The earlier Inter-Club Agreement authorities supported the conclusion. Strathnewton and Benlawers showed that the agreement operated as an independent code cutting across inconsistent charterparty provisions. Mary Elle was distinguishable because it concerned an earlier agreement lacking clause (2). The general interdependence between paragraphs [1] and [2] of a Centrocon clause, recognised in Evje, did not apply where the incorporated agreement showed a contrary intention.

• High Court (Commercial Court): Appeal under section 69 of the Arbitration Act 1996 dismissed. The court upheld the arbitrators’ conclusion on the applicable time bar.