Hyundai Merchant Marine Co. Ltd v Americas Bulk Transport Ltd (Re: PACIFIC CHAMP)

On a challenge to an arbitration award under the Arbitration Act 1996, the court must determine whether an arbitration agreement existed on the evidence and construction of the parties’ communications. Where the alleged charter and arbitration agreement are contained in the same recap, a failure to reach consensus on the proposed charter may also prevent any arbitration agreement from arising. A full rehearing under section 67 is not confined to the tribunal’s view of the evidence. Contractual subjects must be construed from their wording and commercial context. A subject relating to review and back-to-back terms may incorporate an identified proforma charterparty where that is the proper construction. Leave to appeal under section 69 requires a question of law, obvious error or serious doubt, and general public importance.

Hyundai Merchant Marine Company Ltd challenged an arbitration award concerning an alleged time charter of the vessel Pacific Champ to Americas Bulk Transport Ltd. The tribunal had declared that a binding contract was concluded, treating the recap’s reference to review of the owners’ head charterparty on a back-to-back basis as referring to a proforma charterparty.

HMM applied under sections 67, 68 and 69 of the Arbitration Act 1996. It argued that there had been no consensus, that the contractual subjects had not been satisfied, that no sufficiently detailed charterparty had been agreed, and that the tribunal had failed to deal with material issues. The central issue was whether the parties had reached consensus before the second recap was sent.

1. Section 67 challenge allowed. The court conducted a full rehearing, following Dallah Real Estate v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763. The questions whether a binding fixture and a binding arbitration agreement existed stood or fell together.
2. The second recap did not contain or evidence a binding contract. On the balance of probabilities, HMM had not confirmed before the recap was sent that carriage of HBI was permitted under the bareboat charterparty. The contemporaneous telephone records and surrounding documents supported HMM’s account, notwithstanding difficulties and changes in the evidence.
3. There was therefore no consensus between the parties. Since the alleged charter and arbitration agreement were contained in the same recap, there was also no binding arbitration agreement. The separability principle in section 7 did not produce a different result on these facts. The approach provisionally considered in UR Power GMBH v Kuok Oils & Grains PTE Ltd [2009] 2 Lloyd’s Rep 495 was distinguishable, as was the reasoning relied on from Pacific Interlink SDN BHD v Efko Food Ingredients Ltd [2011] EWHC 923 (Comm).
4. It followed that the tribunal lacked jurisdiction. The award was to be set aside or varied, and HMM was entitled to a declaration that no valid binding contract had been concluded.
5. Alternatively, assuming that the second recap recorded agreement, the court rejected HMM’s arguments on construction. Item 12 referred to the proforma charterparty, and “BTB” incorporated it subject to review and reconfirmation. Item 12 and Item 13 operated as a concluded contract subject to a condition subsequent, rather than leaving either party free to withdraw before reconfirmation.
6. The section 68 application consequently fell away. Leave to appeal under section 69 was refused because the proposed questions were not of general public importance and the tribunal’s decision was not obviously wrong.

The dispute originated in arbitration. The tribunal declared that a valid and binding contract had been concluded and reserved other issues. The High Court conducted a full rehearing under section 67 of the Arbitration Act 1996, rejected that conclusion, and ordered consequential relief. The section 68 application fell away and permission to appeal under section 69 was refused.