Cockett Marine Oil DMCC v Ing Bank NV & Anor

On a challenge under section 67 of the Arbitration Act 1996, the court rehears the jurisdiction issue afresh. Contractual terms may be incorporated through exchanges which objectively show that negotiations continued after an apparent acceptance, and acceptance of goods may constitute acceptance where the seller has clearly specified that consequence. A hyperlink to standard terms may provide sufficient incorporation. A course of dealing may incorporate terms where repeated transactions would lead a reasonable person to conclude that they govern the parties’ relationship. A contractual mechanism for varying terms because a physical supplier insists that its terms also bind the buyer is engaged only by such insistence. Whether an assignee may invoke the arbitration agreement concerns the validity of the arbitration agreement under sections 30 and 67. Commercial descriptions of supply contracts as sales may remain effective for construing security documents, even where the contracts are not sales under the Sale of Goods Act 1979.

The claimants challenged two arbitration awards under section 67 of the Arbitration Act 1996. The awards concerned bunker supplies to the vessels ZIEMIA CIESZYNSKA and MANIFESTO. The tribunal held that the contracts incorporated O.W. Bunker Group’s 2013 standard terms, including London arbitration clauses, and that it had jurisdiction. The claimants contended that the terms were not incorporated, or had been varied by the physical suppliers’ terms. They also challenged the tribunal’s conclusion that ING Bank had become assignee of the contractual claims. The court had to determine whether the arbitration clauses were incorporated, whether they had been varied, and whether the assignment issue fell within the court’s jurisdiction under section 67.

1. Challenge dismissed. The court was required to rehear the jurisdiction issue under section 67 of the Arbitration Act 1996.

2. In the ZIEMIA CIESZYNSKA transaction, the parties’ email exchanges had to be assessed objectively. Although the buyer’s message stating that it confirmed its order was capable of acceptance, the subsequent nomination added terms and requested the seller’s terms and conditions. Objectively, the parties had continued negotiating and had not yet concluded a binding agreement.

3. The seller’s sales order confirmation was at least arguably a counter-offer. It expressly incorporated the 2013 standard terms, identified acceptance by conduct, and provided a hyperlink to the terms. Applying Impala Warehousing and Logistics v Wanxiang Resources [2015] EWHC 25 (Comm), reference to terms available on a website was sufficient. Acceptance of the bunkers, without objection to the stated mechanism, accepted the terms.

4. The same result followed for the MANIFESTO transaction. The exchanges had to be read together and objectively. The 2013 terms were accepted by conduct when the bunkers were accepted.

5. Alternatively, the terms were incorporated into the ZIEMIA CIESZYNSKA contract by course of dealing. The relevant inquiry, stated in Balmoral Group Ltd v Borealis [2006] 2 Lloyd’s Rep 629 and adopted in SKNL (UK) Ltd v Toll Global Forwarding [2013] 2 Lloyd’s Rep 115, was whether the parties’ words and conduct would lead a reasonable person to believe that the terms governed their legal relationship. Nine previous transactions, each referring to the terms without objection, satisfied that inquiry.

6. Clause L4 did not vary the London arbitration clause. It applied only where the physical supplier insisted that the buyer from O.W. Bunker was also bound by the supplier’s terms. The suppliers had insisted that O.W. Bunker itself be bound, but had not insisted that the claimants also be bound. Nor did the relevant supplier terms provide a law or jurisdiction provision capable of variation.

7. The assignment issue was within sections 30 and 67. A valid arbitration agreement, in this context, had to be effective between the alleged assignee and the defendant. A v B [2017] 1 Lloyd’s Rep 1 concerned a different, new objection to the tribunal’s power to substitute a claimant. It did not decide that the validity of an assignment could never form part of the question whether there was a valid arbitration agreement.

8. The Omnibus Security Agreement assigned rights under supply contracts relating to the sale of oil products. That commercial description remained effective even though the Supreme Court had held in PST Energy 7 Shipping LLC v OW Bunker Malta [2016] UKSC 23 that the bunker contracts were not contracts of sale for the purposes of the Sale of Goods Act 1979. ING Bank therefore held a valid assignment and the arbitrators had jurisdiction to award in its favour.

First instance decision. The judgment states that the arbitration tribunal had previously determined that it had jurisdiction, but no separate lower-court judgment was under appeal.