Ispat Indurstries Ltd v Western Bulk PTE.Ltd

Section 68 of the Arbitration Act 1996 is a longstop remedy for extreme procedural failures causing, or likely to cause, substantial injustice. A tribunal must decide every essential issue, but need not address every argument, evidential concern or reason advanced by a party.

A time charter trip remains a time charter unless the contract clearly provides otherwise. Intended cargo and voyage instructions do not necessarily create an irrevocable election. Ancillary foreign security proceedings do not breach an arbitration clause unless they seek to have the merits determined elsewhere. The orthodox remoteness test remains generally applicable; assumption of responsibility requires specific consideration only in unusual cases.

The claimant charterer challenged an arbitral award under sections 68 and 69 of the Arbitration Act 1996. The award had upheld the owner’s claim for damages following the charterer’s cancellation of a time charter trip and had dismissed the charterer’s counterclaim arising from foreign Rule B attachment proceedings.

The charterer alleged procedural irregularities concerning mitigation evidence, disclosure and the admission of a witness statement. It also appealed on questions concerning the construction of the charterparty, the effect of foreign security proceedings on the London arbitration clause, and remoteness of damages under The Achilleas. The court dismissed both applications.

1. Section 68 challenge. The tribunal had dealt with the essential mitigation issue by considering whether the owner had acted reasonably and giving reasons at paragraphs 108–125 of its award. It was not required to answer every argument or explain why it rejected the dissenting arbitrator’s concerns about witness reliability. Any omission would in any event not constitute a serious irregularity without substantial injustice to the charterer. Section 68 is an exceptional longstop remedy.
2. The disclosure application did not remain to be determined as an application for an order. The charterer had elected instead to invite adverse inferences. The tribunal had considered the disclosure criticisms and was entitled to conclude that they did not establish unreasonable mitigation. The admission of the witness’s second statement was a case-management decision and did not deprive the charterer of a reasonable opportunity to deal with the evidence.
3. Construction. The fixture recap incorporated a time charter form and provided for a time charter trip. The references to intended cargo and intended voyage identified the charterer’s intention when contracting; they did not restrict the charter to carriage of iron ore from Vizag to Mumbai. The charterer remained entitled, and obliged where necessary, to seek another lawful cargo within the contractual trading limits. In any event, the intended voyage became possible after 7 January 2008, and the delay was not frustrating.
4. Security and arbitration. Ancillary proceedings to obtain security for an English arbitration are not a breach of the arbitration clause where the merits remain for the agreed tribunal. The second Rule B attachment might have been unreasonable under New York law, but there was no evidence that the owner sought determination of the merits outside the London arbitration.
5. Remoteness. The damages awarded, measured by the hire for the minimum expected charter duration, satisfied the orthodox remoteness test. The loss was a not unlikely consequence of early redelivery and there was no basis for treating the case as one of the unusual cases requiring separate analysis of assumption of responsibility.
6. The applications under sections 68 and 69 were dismissed.

The judgment concerned a challenge and appeal from an arbitral award dated 5 March 2010. The High Court dismissed both applications.