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SC Rolinay Sea Star SRL v. The Owners of the Ship "Bumbesti"
and others.
(England and Wales) High Court (Queens Bench Division, Admiralty
Court), Atkins J., 21st June 1999.
International arbitration award -
award concerned disputes arising under charterparty - vessel arrested
as security for the claim in action on award - whether Admiralty Court
had jurisdiction in rem to hear and enforce a claim to enforce
an arbitration award by arrest of ship - s. 20(2)(h), Supreme Court
Act 1981 - The Beldis [1936] P 51 (CA), applied - The Saint
Anna [1983] 1 WLR 895 distinguished - whether vessel should be
released because the Claimant already had sufficient security for its
claim to enforce the award.
Facts:
The Defendant, a Romanian Corporation, chartered its vessel "Dacia"
to the Claimant. The charter was governed by Romanian law and provided
for the arbitration of disputes in Romania. Disputes arose in which
the Claimant, as charterer, alleged that the Defendant had wrongfully
terminated the charter. The Claimant obtained two awards (No 1 and No
12) in its favour under which it was awarded damages of about
US$424,000 plus stamp duty and lawyers' fees and the Defendant was
ordered to return the vessel for the balance of the charter period.
The Claimant took various steps to enforce the awards as a result
of which two other bulk carriers owned by the Defendant were seized in
Constantza, Romania, pursuant to orders of the Constantza court, with
a view to their sale if the awards were not honoured. As a further
measure of enforcement the Claimant commenced proceedings in the High
Court in England, which were stated to be "founded on" Award
No 12. On the following day the Defendant's vessel "Bumbesti"
was arrested in Liverpool. The sworn evidence leading to the arrest
stated that Award No 12 remained wholly unsatisfied and that the aid
of the court was sought to enforce payment of or security for the
same; the sum of US$300,000 being sought.
The court considered the following issues.
a) Whether the Admiralty Court had jurisdiction in rem to
hear and determine a claim to enforce and arbitration award (Award No
12) under s. 20(2)(h) of the Supreme Court Act 1981. This provided
that the Admiralty Court had jurisdiction to hear and determine
"any claim arising out of any agreement relating to the carriage
of goods in a ship or to the use of hire of a ship".
b) Assuming that the Admiralty Court did have jurisdiction, whether
"Bambesti" should be released from arrest because the
Claimant already had adequate security for its claim to enforce Award
No 12, because of the detention of the two vessels in Constantza, so
that the arrest of "Bumbesti" was an abuse of the process of
the court.
Held:
On issue (a), the Admiralty Court did not have jurisdiction in this
matter since a claim on an arbitration award was not a claim within s.
20(1)(h) of the Supreme Court 1981. An action on the award clearly
"arose out of" the agreement to refer disputes that had
arisen under the charterparty to arbitration. But that agreement was
not, itself, "an agreement in relation to the use of hire of a
ship" because the arbitration agreement was a contract distinct
from the principal contract, the charterparty. The arbitration
agreement was, at least, one step removed from the use or hire of a
ship and the breach of contract on which the claim in these
proceedings was founded had nothing to do with the use or hire of the
ship. It concerned the implied term to fulfil any award made pursuant
to the arbitration agreement. This was the conclusion reached by the
court in The Beldis [1936] P 51 (CA), when considering the
predecessor of 20(1)(h) of the Supreme Court 1981, and there were no
material distinctions in the current wording. Neither, contrary to the
suggestion in The Saint Anna [1983] 1 WLR 895, was the decision
in The Beldis inconsistent with Bremer Oeltransport GmbH v.
Drewry [1933] 1 KB 753 (CA). Accordingly, the arrest of the vessel
could not be maintained in respect of this claim.
Issue (b) only arose if the court was wrong on issue (a), but
having regard to the amount of Award No 12, the Claimant was
legitimately entitled to seek security of US$300,000. On the evidence
available to the court, the two vessels "arrested" on the
order of the Constantza court had a sale value of between US$300,000
and 340,000, enough to meet the Claimant's claim. There was some doubt
as to the nature of the protection given by the order of the
Constantza court but, given the nature of undertakings that the
Defendant was prepared to give not to disturb the enforcement
proceedings against those two vessels, it provided adequate security
for the Claimant's claim. In consequence, it would be appropriate to
release the "Bumbesti" from arrest.
For the Claimant: Mr C Smith (instructed by Messrs Hill Dickinson
(Liverpool)). For the Defendant: Mr D Garland (instructed by Messrs
Ince & Company).
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