The Law Commentary which appeared in the January 1998 issue of News and Views was wrongly attributed to me.

Although I would be happy to claim authorship, if there is anyone who reads the column they would immediately realise that the style was not mine. I personally found it to be far more readable and instructive. The Sopex Oils case may be one of the important judgments to emerge in respect of the 1996 Act. It is a good thing that it has appeared when the Act is still new.

D S Jerram Ashtead

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Vosnoc Ltd v Transglobal Projects Ltd QBD; 23 July 1997 TLR 27 August 1997 p31

This case has some significance in determining the date of commencement of arbitral proceedings under s.14 of the 1996 Act, which may be important for the purpose of contractual or statutory limitations.

The contract, for supply of pipes, contained a provision that all disputes were to be referred to arbitration by three arbitrators, one appointed by each party and the third appointed by the two chosen. Some of the pipes were alleged to be damaged.

In September 1995, Vosnoc wrote to Transglobal stating inter alia: "By this letter, the dispute between our respective companies is referred to the arbitration of three arbitrators in London ...". In March 1997, Vosnoc nominated their arbitrator and called upon Transglobal to do similarly. Transglobal’s solicitors responded saying that the letter of September 1995 did not satisfy the requirements necesary to commence arbitration. By then it was outside the contractual period for commencing arbitration.

Held:

The precise wording of the arbitration clause could be significant in that it could include the implication that the recipient should appoint its arbitrator or propose arbitrators for agreement. The court was swayed by the wording of s.14 by which the default date for commencement is based, in all three instances, on the appoint ment of the Arbitrator, not on a demand that the matter be referred. Although the Arbitrator has no power under the Act to extend the time for commencement, s.12(2) clearly envisages that there may be an arbitral process available, possible by way of Rules.

Halki Shipping Corporation v Sopex Oil Ltd. QBD Admiralty Court 7 July 1997

Arbitrators will have to deal with matters equivalent to summary judgment and interim relief. When I first heard of this judgment I was most surprised as it appeared to overturn the ‘usual’ approach of an application for summary judgment under RSC O.14 (with alternative of interim relief under O.29) being countered by application for a stay for arbitration and the matter largely turning on whether there was a dispute (or a triable issue); which all semed sensible - if there is no triable issue (eg when the defence is a sham) then there is no dispute on which to base the arbitration. This concept began to be undermined in Hayter v Nelson (1990) when it appeared that any dispute would be sufficient to obtain a stay for arbitration but, at that time, the Court still had a discretion which has disappeared under the 1996 Act.

The charter-party between Halki and Sopex included an arbitration clause. Disputes arose regarding demurrage which Sopex never properly defended. Three days before the trial, Halki issued a summons under RSC O.14 seeking summary judgment. Although Sopex sought an adjournment of the summons, their principle submission was that the Court had no jurisdiction in this action but must grant a stay under s.9 of the Arbitration Act 1996.

The stay was granted. The judge identified two questions; whether, under a true construction of the arbitration clause, the matter could be referred to arbitration and whether the arbitration agreement is null and void, inoperative or incapable of being performed. He also decided that whether a stay should be granted depended solely on the first question.

Although the matter appears simple, the judgment runs to 21 pages but is well worth reading to follow the logic of Mr Justice Clarke who appears to have identified and answered all queries which naturally arise from this decision. Although (only) a first instance judgment, it appears that this is a proper statement of the law and parties will have to refer their ‘summary judgment’ cases to arbitration whenever there is an arbitration clause (unless of course they take the risk that the other party may not make a cross application). The judge made certain comments which are worthy of note: "there is no reason why arbitrators should not make interim awards just as quickly as the courts can give judgment under RSC O.14"; "arbitrators have ample powers to proceed without delay, as for example by making interim awards"; "arbitrators have power to make interim awards under s.47 and, with the consent of the parties, provisional awards under s.39 of the Act". Faced with the summary judgment/interim relief scenario, it is unlikely that the parties will agree to provisional awards after the dispute has arisen and it is therefore a power which needs incorporation of Rules. Arbitrators are likely to be wary of making an award on the particular issue under s.47 as this would be final in respect of its content but, of necessity, would be made on restricted evidence. The ability of arbitrators to act in the way which the judge envisaged may also be hampered by provisions of the contract and/or any applicable Rules. Under current JCT contracts, failure to pay a certificate prior to practical completion could be dealt with under O.14 as the arbitration provisions are not applicable but a similar dispute after practical completion would have to be referred to arbitration. Under current JCT Rules, the arbitrator can easily be constrained to inappropriate procedures and timetable, unless the parties agree (which is unlikely). Although this decision is apparently good for arbitration, it is probable that problems (unless attended to by the drafters of contracts and Rules) will probably lead to difficulties in practice which will be bad for the reputation of arbitration. How many arbitrators, with current restrictions of contract and Rules, can really say that they could deal with summary judgment/interim relief as effectively as the courts?