A rose is still a rose by any other name: A party’s name though misdescribed is still a party to and bound by the arbitration agreement

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The recent decision of Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd [2012] FCA 696 concerned an award debtor’s challenge to the enforcement proceedings brought by the award creditor, with the award debtor arguing that it was not a party to the arbitration agreement.

Although ultimately unsuccessful on this ground, the case is a clear reminder that the grounds for refusing to enforce a foreign arbitral award as laid down in the International Arbitration Act 1974 (Cth) (IAA), is exhaustive.

The case also demonstrates the importance of identifying a party’s name to an arbitration agreement with precision.

Background

The applicant (DKN) applied to the Federal Court pursuant to section 8 of the IAA for orders recognising and enforcing two arbitration awards that were made in London in its favour. The awards determined a claim by DKN for demurrage payable under a charterparty (Charterparty) between itself and the charterer, “Beach Building and Construction Group (on which Bowen Basis Coal Group forms a part), Australia”, in respect of delays to the vessel at both the load and discharge ports. The award debtor named in the awards was the respondent, Beach Building & Civil Group Pty Ltd (Beach Civil), which contended that it was not bound by the awards simply because it was not named as a contracting party on the face of the Charterparty. DKN submitted (as it did successfully before the arbitrator in London) that regardless of this misdescription, it was the common intention of those who negotiated the terms of the Charterparty that the charterer under the Charterparty would be Beach Civil.

Beach Civil still a party

As required by section 9(1) of the IAA, DKN produced to the Court a duly certified copy of the Charterparty and a duly certified copy of each of the awards. DKN’s production of those documents constituted prima facie evidence that each award was made as it purports to have been made and in pursuance to the arbitration clause of the Charterparty. The Court noted that these matters also inevitably imply that Beach Civil was the charterer under the Charterparty.

Beach Civil made no attempt to demonstrate by evidence that it was not truly the charterer, but merely pointed to the description of the charterer in the Charterparty to support its assertion that it was not named as the charterer. The Court was of the opinion that this assertion, without more, was insufficient to overcome the prima facie evidence produced by DKN.

Applying the UK decision in Dardana Ltd v Yukos Oil Co [2002] 2 Lloyd’s Rep 326, Foster J was satisfied that through production of the documents, DKN have established that the arbitrator had “purported” to act pursuant to the arbitration agreement and thus it was sufficient to move the relevant enquiry and the onus of proof onto the award debtor. Accordingly, it was up to Beach Civil to make out one of the grounds to refuse enforcement of the awards pursuant to sections 8(5) and 8(7) of the IAA, which as section 8(3A) points out, are exhaustive grounds.

Beach Civil sought to argue pursuant to section 8(5)(b) of the IAA that because it was not a party to the Charterparty, it was not bound thereby, with the consequence that the arbitration agreement relied upon was not valid under the law expressed in the agreement to be applicable to it (English law), or indeed, under Australian law. The Court quickly disposed of Beach Civil’s submissions, holding that the error in misdescribing the charterer, of which DKN’s evidence was uncontested, could easily be remedied by applying appropriate rules of construction. Alternatively, since Beach Civil did not choose to challenge the arbitrator’s jurisdiction before the English Commercial Court, notwithstanding that that avenue was open, it cannot now challenge the first award in which the arbitrator exercised its power to rectify the misdescription in the Charterparty by specifying Beach Civil as the charterer under the Charterparty.

Preclusion or limitation of jurisdiction void

Although Beach Civil failed in playing the “name game”, it was ultimately triumphant in convincing the Court that the awards should nevertheless not be enforced in an Australian court. The Court held that the Charterparty was “a sea carriage document” and that section 11 of the Carriage of Goods by Sea Act 1991 (Cth) operated to render the Charterparty’s arbitration clause, which required disputes to be arbitrated in London, to be of no effect in so far as it purported to preclude or limit the jurisdiction of Australian courts. It follows that DKN cannot rely on the arbitration clause as the source of the arbitrator’s jurisdiction and power to make the awards. Accordingly, the arbitrator had no power to render Beach Civil liable to pay any of the amounts awarded against it.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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