Oceanografia v. DSND Subsea
Claire Blanchard, instructed by Ince & Co. for the respondent, DSND
TIME CHARTERPARTY: FORMATION OF CONTRACT: ARBITRATION CLAUSE: JURISDICTION OF ARBITRATOR TO HEAR CLAIM: CONTRACT "SUBJECT TO SIGNING" BY BOTH PARTIES: FAILURE TO SIGN CONTRACT: PARTIES PROCEEDED TO PERFORM CONTRACT: WAIVER BY ELECTION OF "SUBJECT TO SIGNING" PROVISION
The Court held that although the terms of this charterparty required the signature of both parties for it to become effective, the charterer had, by its conduct, clearly chosen to waive its right to rely on the signing provision. The charterparty, including the arbitration clause, was, therefore, binding on both the parties.
DMC Category Rating: Confirmed
This case note is based on an Article in the August 2006 Edition of the ‘Marine Bulletin’, published by the Marine team at the international firm of lawyers,DLA Piper. DLA Piper is an International Contributor to this website.
Nevertheless, it made a mobilisation payment to DSND on 13 September and the vessel arrived in the Gulf and went on hire on 9 October 2001. By 16 November, however, it was clear the FMA would not agree to an extension. DSND notified Oceanografia and confirmed that demobilisation would have to start on 15 December. On 20 December, the parties signed an off-hire statement: "The vessel has completed her services according to a charter agreement dated 28 August and is off-hire from the agreed handover time above".
Oceanografia did not pay sums due under the charterparty and DSND began arbitration proceedings. The first issue was whether the tribunal had jurisdiction since the charterparty containing the arbitration agreement had never been signed by Oceanografia.
The arbitrators held that the terms of the charterparty required the signature of both the parties to become binding, but that Oceanografia had waived its right to rely on this requirement and so was bound by its terms, including the arbitration agreement. Oceanografia appealed under section 67 of the Arbitration Act 1996.
The "signing subject"
The judge acknowledged that it was rare in the shipping world for there to be a "signing subject" of this sort, but the clear and obvious meaning of the words was that there would not be a binding contract until that "subject" had been fulfilled.
A waiver by election requires a party to choose between two inconsistent or mutually exclusive courses. The party making the waiver must have sufficient knowledge of its right and make a clear and unequivocal representation (whether express or implied) that it does not intend to rely on that right.
In this case, the judge was satisfied that these conditions were met. Oceanografia had made a clear choice between two inconsistent courses - insisting on the requirement for signature, or abandoning the requirement so that there was a valid and binding contract. It was clear from the evidence that Oceanografia understood at the time that it had a right to refuse to sign the charter terms, but its conduct was a clear and unequivocal representation that it had chosen not to rely on that right. Both parties had continued as if the charterparty was binding on them - even to the extent of an off-hire agreement in accordance with its terms. The arbitrators, therefore, had jurisdiction to hear the dispute.
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