DMC Category Rating: Confirmed

This case note is based on an Article in the May 2004 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website.

Facts
Minermet chartered a vessel from Luckyfield under a Gencon charterparty. Clause 19 of the charterparty provided that it would be governed by English law and that any dispute would be referred to arbitration in London. Unless the parties agreed on a sole arbitrator, each would appoint one arbitrator and the two arbitrators would appoint a third. When one party received the nomination of the other party's arbitrator, it had 14 days to appoint its own arbitrator "failing which the decision of the single arbitrator appointed shall be final".

On 3 July 2003, solicitors acting for Luckyfield wrote to Minermet's solicitors putting forward a claim of just under US$70,000 demurrage due under the charter. The letter nominated Mr Oakley as Luckyfield's arbitrator and referred to clause 19 and the 14-day time limit. There then followed correspondence in which Minermet put forward a counterclaim and disputed the calculation of laytime.

On 28 July 2003, Luckyfield's solicitors notified Mr Oakley and told Minermet's solicitors that, since Minermet had not appointed their arbitrator within the 14 days, Mr Oakley would be acting as sole arbitrator. Minermet immediately responded, purporting to nominate their own arbitrator.

Mr Oakley ruled that he had been properly appointed, but Minermet challenged that ruling on the grounds there had been a serious irregularity in the proceedings, namely a failure to comply with the general duty of fairness in Section 33 of the Arbitration Act. It also clamed Mr Oakley had not had substantive jurisdiction to make his ruling.

Judgment
The court disagreed. Luckyfield was under no duty to warn of their intention to appoint Mr Oakley as sole arbitrator after the 14-day period had expired. In any event, their first fax made it plain that this is what would happen unless Minermet nominated its arbitrator within the time limit. Clause 19 of the Gencon charter was perfectly clear. Although many arbitrators in his situation might have tried to persuade their nominating party to agree to a late nomination, Mr Oakley's appointment as sole arbitrator was valid and it followed that he had substantive jurisdiction to rule on his jurisdiction.

Section 79 of the Arbitration Act gives the court power to extend any time limit if satisfied that a substantial injustice would otherwise be done. But there was no evidence of any such substantial injustice. The application was dismissed.