Arbitration Case Notes: Implied request to appoint arbitrator sufficient to commence arbitration

Allianz Versicherungs AG and Others v Fortuna Co Inc (QBD (CommCt)) [1998] AllER (D) 505

Charles M Willie & Co (Shipping) Ltd v Ocean Laser Shipping Ltd and G Roussos Sons SA and Another v Charles M Willie & Co (Shipping) Ltd (QBD (CommCt)) [1998] AllER (D) 526

Commentary

The above two decisions are noteworthy in that they both within days of each other disapproved of the decision in Vosnoc Ltd v Transglobal Projects Ltd [1998] 2 AllER 990 that an arbitration notice must expressly call on the respondent to appoint an arbitrator to stop time from running under the Limitation Act 1980 and instead found that an implied request to appoint an arbitrator was sufficient to commence the arbitration. The resulting uncertainty means that it remains strongly advisable and good practice for claimants to draft their arbitration notice in terms expressly requesting the respondent to appoint its arbitrator.

Decision

The Allianz court relied on the authority of Nea Agrex SA v Baltic Shipping Co Ltd [1976] 2 AllER 842 and found that, although the arbitration notice did not expressly call upon the respondents to agree to the appointment of a sole arbitrator or to name their arbitrator, it was sufficiently clear from the terms and context of the arbitration notice that the applicants were invoking the arbitration agreements and by implication called upon the respondents to take steps in response to constitute a tribunal. The notice was therefore sufficient to commence the arbitration and the claim not time barred.

The court in the Charles Willie (Shipping) case relied upon the same authority when finding that a notice which could be construed expressly or implicitly as a request for a dispute to be submitted to arbitration was sufficient to commence arbitration.

Background

In the Allianz case the bills of lading incorporated the Hague or Hague Visby Rules as appropriate and claims for damage to cargo were therefore subject to a 12 month time limit. Shortly before expiration of the time bar, the applicant’s solicitors sent a notice to the vessels P&I Club giving notice of the appointment of an arbitrator. The notice did not expressly call upon the respondents to appoint their arbitrator. Nevertheless, the respondents appointed an arbitrator and the arbitration proceeded until the respondents invoked the Vosnoc decision, argued that the arbitration notice was insufficient to commence the arbitration and the claim had therefore become time barred. The applicants applied for a declaration that the arbitration was commenced prior to expiration of the time bar.

The dispute in the Charles Willie (Shipping) case arose from a memorandum of agreement for the sale of a motor vessel. Willie were the sellers, Roussos the buyers and Ocean Laser the company nominated by Roussos to take delivery and transfer of the vessel. When the dispute arose, arbitrators were appointed by Willie and Roussos. The arbitrator appointed by Roussos was invited to accept appointment as Ocean Laser’s arbitrator in relation to disputes under the memorandum of sale. Notice of this was given to Willie and their arbitrator but Ocean Laser did not expressly request Willie to appoint an arbitrator. A third arbitrator was appointed in accordance with the agreed appointment procedure and the arbitration proceeded. The arbitrators ruled that they had jurisdiction to determine Ocean Laser’s claims. Willie applied to the court for a declaration that Ocean Laser had not commenced an arbitration.

For further information on any of the above topics please contact Neil Aitken or Charles Spragge in the International Arbitration Group at Cameron McKenna, Tel: 44 171 367 3000, Fax 44 171 367 or by e-mail to [email protected] or to [email protected].

Article date: 16 January 1999