Thyssen Canada v. Mariana Maritime

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DMC/SandT/05/22
Thyssen Canada Limited v Mariana Maritime SA and another
English High Court: Queen’s Bench Division: Commercial Court: Cooke J.: 23 February 2005: [2005] EWHC 219 (Comm)
N Hamblen QC and C Hanley, instructed by Jackson Parton Solicitors for the claimant cargo interests, Thyssen
Stephen Hofmeyr QC and Gavin Geary, instructed by Ince & Co, for the respondent shipowners, Mariana Maritime
ARBITRATION: APPEAL UNDER S.68 ARBITRATION ACT 1996: WHETHER AWARD OBTAINED BY FRAUD OR CONTRARY TO PUBLIC POLICY: WHETHER RIGHT TO OBJECT LOST UNDER S.73(1): TAKING PART IN THE PROCEEDINGS: TIME LIMIT FOR APPEAL UNDER S.70(3): WHETHER GROUNDS FOR EXTENSION UNDER S.80(5)
Summary
In this case, the judge held that a party who had continued to take part in arbitration proceedings without making an objection that there had been an irregularity under s.68 (2)(g) of the Arbitration Act 1996 (award being obtained by fraud or being procured in a manner contrary to public policy – in this case, fabricated evidence) lost its right to raise that objection under s.73(1) of the Act*. Participating in proceedings, the judge held, includes the period between the hearing and publication of the award – even if no action is required of the parties in that interval

DMC Category Rating: Confirmed

This case note is based on an Article in the April 2005 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website

Background
The claimants, owners of cargo on board the vessel "Mariana", pursued a claim against the shipowners in respect of cargo damage caused by a fire, which, they alleged, had been deliberately started by the owners. Alternatively, they alleged, the vessel was unseaworthy. Shortly before the arbitration hearing, however, the claimants dropped the allegation that the fire had been caused deliberately.

An arbitration award was made on 16 January 2004 and collected by both parties jointly on 26 March 2004. On 29 June 2004, a second award was made on costs. The arbitrators found against the cargo owners, holding that the vessel was seaworthy and the owners were not liable for the cargo damage.

In July 2004, the cargo owners challenged the award under section 68 of the Arbitration Act 1996, claiming there had been a serious irregularity. They said that, shortly after the hearing finished on 6 November 2003, they obtained information that the actual cause of the fire was hot work (cutting and welding) on board the vessel, but that the supporting evidence only became available after the publication of the award.

Serious irregularity under section 68 includes "the award being obtained by fraud or the way in which it was procured being contrary to public policy". Where public policy is cited, it will normally be necessary to satisfy the court that some form of reprehensible or unconscionable conduct has taken place (Profilati v Paine Webber [2001] 1 LLR 715).

Any challenge, however, must be brought within 28 days of the date of the award (section 70(3)). In addition, under section 73, if a party "takes part, or continues to take part, in the proceedings" without making an objection that there has been an irregularity, it may not raise it later, unless, at the time, it did not know and could not with reasonable diligence have discovered the grounds for the objection. Taking part in the proceedings includes the period between the end of the hearing and the publication of the award (Profilati).

Judgment
On the facts, the court found that the cargo owners obtained information about the hot work in November 2003. It was clear that they could with reasonable diligence have substantiated this information and discovered (within the meaning of s.73 of the Act) the grounds of their objection long before they did. But they decided not to adduce this evidence prior to publication of the award and no challenge was made until July 2004.

In the judge's view, there was no doubt that the claimants had continued to participate in the proceedings during the period between the hearing and the publication of the award and by taking up the award on 26 March 2004.

A last-ditch application to extend the 28-day time limit under s.70(3) also failed because the claimants had not acted reasonably in delaying. Consequently, they had lost their right to challenge the award.

*S.73(1) of the Arbitration Act 1996 reads:

"If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection –
…..
(d) that there has been any other irregularity affecting the tribunal or the proceedings,

he may not raise that objection later, before the tribunal or the court, unless he shows that , at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection."

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