Hellenic Petroleum Cyprus Ltd & Anor

A challenge under section 67 of the Arbitration Act 1996 is a complete rehearing. The court must decide for itself whether the tribunal had jurisdiction and is not bound by the tribunal’s factual or legal conclusions. Commercial parties may create hybrid charter arrangements that do not fit conventional categories, and the court must give effect to the bargain actually made. A sham requires a common intention that documents create an apparent legal relationship different from the parties’ intended relationship. Acceptance by conduct requires clear conduct objectively intended to accept the offer. Continued performance on different contractual terms, coupled with reservations or rejection, will not ordinarily establish acceptance of a later draft agreement.

Hellenic Petroleum Cyprus Limited applied under section 67 of the Arbitration Act 1996 to set aside an award made in favour of Premier Maritime Limited. Premier claimed damages for repudiation of an alleged two-and-a-half-year time charter of the LPG tanker NAVIGAS 1. The arbitrator concluded that the parties had agreed a London arbitration clause and awarded Premier US$672,685 plus interest and costs.

Hellenic contended that the parties had only entered an indefinite interim arrangement, documented by fixture recaps incorporating an amended BPVoy 4 form, and had never agreed the later long-term charter or its arbitration clause. The central issues were whether a long-term charter had been agreed and, alternatively, whether Hellenic had accepted the draft charter by its subsequent conduct.

1. Rehearing under section 67. The application was a complete rehearing. The court was required to reach its own decision on jurisdiction and was not bound by the arbitrator’s findings of fact or law. The tribunal’s reasoning could be considered for assistance, but had no binding legal or evidential effect.
2. Nature of the interim arrangement. The parties’ arrangement was of indefinite duration and had characteristics of both a time charter and a voyage charter. Commercial parties are free to adopt contractual structures outside conventional categories. The fixture recaps and attached BPVoy 4 terms, as varied orally as to payment, were intended to have contractual effect. They were not a sham because there was no common intention to create merely an apparent contractual relationship.
3. No long-term charter. There was no agreement in principle, or agreement on commercial terms, for a two-and-a-half-year charter at the meeting on 24 September 2010 or in the subsequent telephone calls. Hellenic had consistently made a long-term charter conditional on a supply agreement with Synergas. The proposed commitment would also have required approval which was never obtained.
4. No acceptance by conduct. Acceptance of the drafts sent on 27 and 28 September 2010 could only have been inferred from conduct. Objectively, Hellenic’s communications, continued use of the vessel under the existing recaps and BPVoy 4 terms, and subsequent rejection of the proposed long-term arrangement were inconsistent with acceptance. The later recaps referring to the increased daily rate did not alter that conclusion.
5. Disposition. Premier’s claim that there was a binding long-term charter containing an arbitration clause failed. The award of 4 June 2014 was of no effect because the arbitrator lacked substantive jurisdiction, and it was set aside under section 67. The section 69 application therefore did not arise.

The judgment was a first-instance determination of Hellenic’s section 67 challenge to the arbitration award dated 4 June 2014. The court held that the arbitrator lacked substantive jurisdiction and set the award aside.