The court rejected the challenge and upheld the tribunal’s reasoning, noting the following points in its judgment: The claimant then renewed its challenge to the tribunal’s jurisdiction under section 67 of the Arbitration Act 1996. The tribunal awarded the defendant the agreed sum. The novation argument was similarly rejected and the claimant did not pursue it further. Claims for demurrage were “part and parcel of operating and chartering ships” and people in the industry would be “astonished” to be told that the arbitration clause did not govern the settlement agreement. The tribunal held that the parties’ unexpressed but clear intention was that the settlement agreement should be governed by the same dispute resolution mechanism as the charterparty under which the underlying claims had arisen.
The tribunal held that it had jurisdiction to determine the claim, noting that while the settlement agreement was not contained in a separate document, the parties had exchanged views and achieved a meeting of the minds.
City trminal on abiration plus#
The defendant therefore issued a notice of arbitration which referenced a “number of claims against charterers, including a demurrage claim, a claim for heating costs, a claim for a penalty, a claim for interest and costs, plus various other matters…” The claimant argued that the tribunal did not have jurisdiction as the settlement agreement did not provide for London arbitration and the charterparty had been novated. The claimant agreed to settle the claim for US$600,000, but ultimately failed to make the agreed settlement payment. The defendant made a claim of US$718,948.08 for demurrage and US$190,200 for heating costs. London was chosen as the seat of arbitration.Ī dispute arose under the charterparty. “Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration in the City of New York or in the City of London whichever place is specified in Part I of this charter….before a board of three persons….Until such time as the arbitrators finally close the hearings either party shall have the right by written notice served on the arbitrators….to specify further disputes or differences under this Charter for hearing and determination.” The charterparty contained an arbitration clause which provided that: The claimant charterer and defendant owner entered into a voyage charterparty under which the defendant chartered its motor tanker the “Four Island” to the claimant for a voyage between two Russian Far Eastern ports. The case highlights the English court’s pragmatic and pro-arbitration approach, but also serves as a reminder of the importance of always including express dispute settlement provisions in settlement agreements and other ancillary contractual documents. The parties clearly intended the arbitration clause to apply to claims relating to the settlement agreement and, therefore, the challenge to jurisdiction was rejected. On the facts, the settlement agreement was no more than an informal routine arrangement to settle sums under the charterparty. The court held that the arbitration clause in the charterparty applied to the settlement agreement. In Sonact Group Limited v Premuda Spa EWHC 3820, the English High Court confirmed that an arbitral tribunal had jurisdiction over a dispute arising from an informal settlement agreement - despite the fact that the agreement did not contain an arbitration clause.
Home > Dispute Resolution > Arbitration Without an Express Arbitration Clause Arbitration Without an Express Arbitration Clauseīy Latham & Watkins LLP on FebruPosted in Dispute ResolutionĪrbitral tribunal had jurisdiction despite the lack of an express arbitration clause.
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