Transgrain Shipping BV v Deiulemar Shipping SpA & Anor

Where contractual documents contain inconsistent arbitration provisions, the court must ascertain the parties’ objective intention by construing the documents as a whole. Specific wording may ordinarily take precedence over general incorporation, but that approach depends on the circumstances. Industry-standard terms, related contractual provisions and the commercial coherence of the contract may show that the parties intended one incorporated regime to prevail. A court deciding jurisdiction under section 67 of the Arbitration Act 1996 conducts a rehearing, not an appeal. An arbitrator’s appointment and a notice commencing arbitration should be assessed substantively rather than formulaically. Estoppel cannot create or supply the agreement from which arbitral jurisdiction derives.

The claimant sought under section 67 of the Arbitration Act 1996 to set aside an arbitral award concerning the constitution of a tribunal and the effect of an assignment. The vessel had been subject to successive charterparties containing both clause 75 and BIMCO arbitration clauses, which provided inconsistent procedures and tribunal structures.

The tribunal held that the BIMCO clauses applied, that the reference required three arbitrators, and that the relevant arbitrators were Mr Clark, Mr Farrington and Mr Buchan. The claimant argued that clause 75 applied and that Mr Buchan, rather than Mr Farrington, had been appointed for the defendant. The central issues were the applicable arbitration regime, the validity of the appointments and whether estoppel could assist the claimant.

1. The application was dismissed. The section 67 process was a rehearing of the jurisdictional question, rather than an appeal from the tribunal’s decision.
2. The charterparty incorporated two inconsistent arbitration regimes. Clause 75 provided for two arbitrators and an umpire, whereas the BIMCO clauses provided for three arbitrators and different default procedures. Both regimes could not operate together, so the court had to ascertain the parties’ objective intention.
3. Although a specifically negotiated clause will commonly prevail over a merely incorporated term, the reference to clause 75 had to be assessed against the continued references to the BIMCO clauses, their inclusion in the charterparty, the related reference in clause 56, and the parties’ adoption of LMAA procedures. Those matters indicated that the BIMCO clauses were intended to apply. The applicable regime therefore required three arbitrators.
4. The defendant’s appointment of Mr Farrington was effective. In substance, it was an appointment in the arbitration already commenced by the claimant, despite the form of the communication suggesting that a fresh arbitration was being commenced. The court applied the substantive approach reflected in The Agios Lazaros [1976] 2 Lloyd’s Rep. 47 and The Smaro [1999] 1 Lloyd’s Rep. 225. The appointment was not invalid merely because it was expressed imperfectly.
5. The party-appointed arbitrators therefore appointed Mr Buchan as third arbitrator, and that appointment was effective.
6. Any estoppel based on an assumed application of clause 75 was a matter for the tribunal when considering the substantive time-bar issue. It could not assist on the jurisdiction application because arbitral jurisdiction derives from the parties’ agreement, and an estoppel cannot create that agreement. The court relied on SmithKline Beecham PLC v Apotex Europe Ltd [2007] Ch. 71.

The arbitral tribunal issued an award dated 20 March 2014 determining the applicable arbitration regime, the constitution of the tribunal and the effect of an assignment. The High Court dismissed the claimant’s section 67 application to set aside that award.