Glencore International AG v PT Tera Logistic Indonesia & Anor

For limitation purposes, arbitral proceedings are commenced in respect of a matter when the notice objectively communicates that matter in its contractual context. Where claims and counterclaims arise from one set of facts and form part of a balance of accounts or netting-off, a notice referring to “claims” or “all disputes arising under the contract” will ordinarily include the counterclaim. The absence of an identified counterclaim when the notice is served does not, in that context, prevent the tribunal acquiring jurisdiction over it. The court must avoid an over-legalistic construction and consider what objectively passed between the parties.

The appellant was respondent in two arbitrations concerning charterparty payments for delay. The respondents’ notices referred to arbitration proceedings in respect of “claims” under the contracts. The appellant appointed an arbitrator in relation to “all disputes arising under the contract”. After the contractual limitation periods had expired, the appellant advanced counterclaims for MV Demurrage against claims for FC Detention.

The arbitral tribunal was divided. The majority held that the counterclaims were time-barred; the dissenting arbitrator considered them within the references. Permission to appeal was granted under section 69 of the Arbitration Act 1996. The central issue was whether the notices interrupted time in respect of the counterclaims under section 14(4).

1. The appeal was allowed. The notices referring to “claims” and “all disputes arising under the contract” included the counterclaims for MV Demurrage.

2. The question was one of the tribunal’s jurisdiction. Applying Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour) and Bulk & Metal Transport (UK) LLP v VOC Bulk Ultra Handymax Pool LLC (The VOC Gallant), the notice had to be construed objectively by examining what passed between the parties and the words in their context. The court rejected an over-legalistic analysis, consistent with Cantillon Limited v Urvasco Limited.

3. The contractual context was decisive. Delay could generate monetary obligations on either side of an account, with a net balance payable. In that setting, it was commercially unlikely that MV Demurrage and FC Detention would be treated as separate matters for the reference, potentially requiring separate tribunals. The notices therefore ordinarily sufficed to interrupt time for the counterclaims under section 14(4) of the Arbitration Act 1996.

4. The fact that no counterclaim had been indicated when the notices were served did not alter that conclusion. A reference to all claims and counterclaims could generally cover a later-identified counterclaim, and “all disputes arising under the contract” was no narrower in this respect.

5. The court declined to decide whether a bare reference to “claims” would always suffice, because that question was unnecessary. The decision was an answer in law on the particular balance-of-account facts, although the reasoning would apply in many similar commercial cases.

Permission to appeal was granted by a Commercial Court judge under section 69 of the Arbitration Act 1996. The Commercial Court determined the question of law arising from the majority decision of the arbitral tribunal and held that the counterclaims were within the references.