The Bank of Tokyo-Mitsuibishi UFJ Ltd v The Owners of the MV Sanko Mineral

A contractual time bar requiring arbitration within a specified period remains effective despite foreign insolvency proceedings. Proceedings may be commenced to preserve the claim where permitted by the Cross-Border Insolvency Regulations 2006, but a later application to commence an in rem claim does not revive a claim already barred by contract.

Where the Admiralty Court has sold a vessel, claims in rem are transferred to the sale proceeds. A holder of a statutory right of action in rem may commence proceedings within the period fixed by the sale order, subject to section 21(4) of the Supreme Court Act 1981.

The former owner of the vessel applied to strike out or withdraw a caution lodged by Glencore against release of proceeds from the Admiralty Court sale and sought payment out to the trustee in Japanese reorganisation proceedings.

Glencore claimed damages for delayed discharge under a contract of carriage. The contract required arbitration in London within 12 months of final discharge. Glencore submitted its claim in the Japanese reorganisation but did not commence arbitration. The issues were whether the contractual time bar had been displaced by the foreign insolvency procedure and whether Glencore could preserve or enforce a statutory right of action in rem after the court-ordered sale.

1. The arbitration time bar. Under English law, a contractual provision requiring arbitration within 12 months, with failure resulting in an absolute bar, must be complied with. The insolvency procedure for proving claims does not itself displace that contractual bar. Article 20(4) of the Cross-Border Insolvency Regulations 2006 permitted proceedings necessary to preserve the claim. Glencore’s later application under the sale order could not revive the claim, which was already barred.
2. The court declined to decide whether Glencore could nevertheless succeed in Tokyo under Japanese law. That question concerned the effect of the Japanese insolvency procedure and lacked evidence of Japanese law.
3. The statutory right of action in rem. Glencore’s proposed route to enforcement against the proceeds was not itself a claim in rem within CPR Part 61. A caution under CPR 61.8(2) could be requested only by a person claiming a right to an Admiralty action in rem satisfying section 21 of the Supreme Court Act 1981.
4. Nevertheless, the established Admiralty principle that claims in rem transfer to the proceeds of a court sale affects section 21(4). A claimant with a statutory right of action in rem may issue the claim after the vessel’s court sale, provided it does so within the period fixed by the sale order. The owner of the proceeds may be treated as the beneficial owner of the vessel for section 21(4) purposes.
5. Payment out was conditional on the trustee holding the proceeds separately to the order of the Tokyo court, with a sufficient sum remaining in court to protect the Bank’s unresolved priority claim.

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