P v Q

A clear contractual time bar is ordinarily given its literal meaning, even where it operates within a chain of back-to-back charterparties and makes it impossible to pass on a claim in time. The commercial benefits of certainty and finality may justify that result. Relief under section 12 of the Arbitration Act 1996 depends on circumstances outside the parties’ reasonable contemplation, a contemplation that the time bar might not apply, and justice. A claimant seeking an extension must also act expeditiously and in a commercially appropriate manner after learning of the claim. Delay after notice may make an extension unjust.

The proceedings concerned three linked arbitrations arising from back-to-back voyage charters. Each charter contained a clause requiring written notification of claims and appointment of the claimant’s arbitrator within 13 months of final discharge, failing which the claim was waived and absolutely barred.

P, Q and R served notices after the contractual period and sought declarations that their claims were in time. Alternatively, each sought an extension under section 12 of the Arbitration Act 1996. The central issues were the construction of the time bar and whether extensions should be granted.

1. The applications for declarations that the notices were served in time were refused. Clause 67 was clear and unambiguous. It had to be construed literally, consistently with The Himmerland, The Stephanos and The Evje. The fact that the charters formed part of a back-to-back chain did not justify implying a qualification.

2. The parties accepted the commercial advantages of a strict time bar, including certainty as to outstanding claims and avoidance of difficulties in dealing with stale claims. They therefore assumed the risk that a claim received near the end of the period could not be passed up or down the chain in time. If that risk was unacceptable, the parties should have agreed an appropriate contractual modification.

3. The reference in The Himmerland to statutory relief for undue hardship was not part of the reasoning on construction. The same literal construction followed independently. The court would have reached the same construction even though relief under section 12 of the Arbitration Act 1996 was narrower than relief under the earlier legislation.

4. Bede Steam Shipping Co Ltd v Bung Y Born was treated as heterodox. The court rejected its suggestion that the word claim in the Centrocon clause could bear a meaning other than its ordinary meaning. A dispute may exist even where a debtor has admitted the debt but failed to pay it, as illustrated by Exfin Shipping (India) Ltd Mumbai v Tolani Shipping Co Ltd.

5. For section 12, the relevant circumstances included those causing or significantly contributing to the failure to comply. The circumstances were outside the parties’ reasonable contemplation because it was relatively exceptional for notice of a cargo claim to arrive after business hours on the final day of the time bar. The parties would have contemplated that the bar might not apply in those circumstances.

6. Nevertheless, an applicant in a charter chain must act expeditiously and commercially appropriately after learning of the claim. P’s delay was unjustified, so its application was refused. Q acted promptly and obtained an extension to 30 November 2016. R waited too long before instructing solicitors and serving notice, so its application was refused.