Sonact Group Ltd v Premuda Spa "Four Island"

A settlement of outstanding charterparty accounts may remain subject to the arbitration clause in the underlying charterparty, even though it creates a new cause of action. There is no bright-line rule that a new legal relationship displaces the original arbitration agreement. The question is whether, objectively, the parties intended the clause to continue to apply. A broad and commercially realistic construction may be given to a notice of arbitration, provided it identifies the dispute with sufficient clarity. A claim for an agreed settlement sum may properly be described by reference to the underlying demurrage and heating claims. A section 67 challenge to an arbitration award is a rehearing, and the court determines jurisdiction for itself.

The claimant charterer challenged under section 67 of the Arbitration Act 1996 an award requiring it to pay US $600,000, interest and costs. The award concerned an agreed sum representing settlement of the owner’s demurrage and heating-cost claims under a voyage charterparty.

The claimant argued that the settlement agreement contained no arbitration clause and that the notice of arbitration had referred only to the original charterparty claims. The arbitrators held that the charterparty arbitration clause applied and that the notice was effective. The central issues were whether the arbitration clause extended to the settlement agreement and whether the notice validly referred the settled claim.

1. Challenge dismissed. The court conducted a rehearing of the jurisdiction issue under section 67 of the Arbitration Act 1996, determining the matter independently of the arbitrators’ decision, although their reasoning was persuasive.
2. The email exchange was an informal and routine arrangement to finalise sums due under the charterparty. Objectively, the parties intended the charterparty’s English-law and arbitration provisions to continue to apply if the agreed sum was not paid. The settlement created a new cause of action, but that did not prevent the arbitration clause from covering the claim.
3. There was no bright-line rule that a settlement agreement or other new legal relationship necessarily displaced an arbitration clause in the underlying contract. The commercial context supported the conclusion that arbitration remained the parties’ chosen neutral forum and avoided the commercially unrealistic result that the owner would have to pursue court proceedings.
4. The notice of arbitration was effective. Although it referred to demurrage and heating costs rather than expressly to the agreed sum, commercial parties could properly regard the settled sum as a claim for those underlying matters. This was consistent with the broad and flexible approach to notices of arbitration in The Lapad and subject to the limits recognised in Finmoon Ltd v Baltic Reefers Management Ltd.
5. Alternatively, the arbitration clause permitted further disputes under the charter to be specified after commencement. The agreed sum concerned the tidying up of accounts and resolution of outstanding charterparty claims, and therefore arose under the charterparty within the approach in Fiona Trust & Holding Corp v Privalov.
6. The court declined to decide whether the LMAA Terms 2012 independently extended the tribunal’s jurisdiction, since the challenge failed on the charterparty arbitration clause and notice grounds.