TTMI v Statoil
TTMI Sarl v Statoil ASA
Queen’s Bench Division (Commercial Court): Beatson J:  EWHC 1150 (Comm): 9 May 2011
Mr Emmet Coldrick, instructed by Clyde & Co, for the Claimant TTMI Sarl
Mr Peter MacDonald Eggers, instructed by Winter Scott, for the Defendant Statoil ASA
ARBITRATION: JURISDICTION: PROPER PARTY TO CHARTERPARTY: DISPONENT OWNER WRONGLY IDENTIFIED IN RECAP EMAILS: UNDISCLOSED PRINCIPAL: RECTIFICATION: CHARTERPARTY CREATED BY CONDUCT OF THE PARTIES
TTMI Sarl was the disponent owner of the vessel, and it intended to sub-charter it to Statoil ASA. However, in the recap emails, TTMI’s broker wrongly identified the vessel’s disponent owner to be Sempra Energy, i.e. TTMI’s ultimate parent company. The Commercial Court held that on a proper understanding of the dealings and correspondence between TTMI and Statoil, Sempra Energy was the proper party to the charterparty. However, as TTMI and Statoil had performed the voyage contemplated in the recap emails in accordance with its terms, a charterparty was nevertheless formed between them by conduct. These recap emails would constitute a proper arbitration agreement for the purpose of the Arbitration Act 1996 as they contained references to the arbitration clause in the Shellvoy 5 form. The decision of the arbitrator to strike out TTMI’s claim for demurrage for lack of jurisdiction was thus set aside.
This note has been contributed by Ken To-ching Lee, LLB(Hons), PCLL (University of Hong Kong), BCL(Oxon) and barrister-at-law in Hong Kong.
The Claimant, TTMI Sarl, was the tanker chartering arm of the Sempra group of companies. Its ultimate parent company was Sempra Energy USA.
On 12 October 2005, TTMI took “The Sibonhelle” on time charter from Sibodouze A/S. TTMI’s performance under the charter was guaranteed by Sempra Energy. TTMI instructed Galbraith’s with a view to sub-chartering the Vessel on the spot market. Galbraith’s accordingly included the Vessel in a list of vessels available and described the contact as “Sempra”. The Defendant, Statoil ASA, was interested in sub-chartering the Vessel; and it was TTMI’s intention so to sub-charter. A number of terms were actually agreed in email correspondence between Statoil’s brokers and Galbraith’s on 13 October, including various amendments to the Shellvoy 5 charter party terms and laydays; but Galbraith’s mistakenly stated Sempra Energy to be the time-chartering owner based on the erroneous information on INTERTANKO’s website Q88.com.
In further recap emails between the parties dated 17 October 2005, Sempra Energy was again stated to be the time-chartering owner.
The sub-charter voyage was then performed. The Notices of Readiness tendered by the Master on 13 November and 7 December 2005 referred to “the terms and conditions of Charter Party/Contract dated 17 October 2005” and identified TTMI as the time charterer. The statement of facts issued by Statoil’s agents at the loading port and the discharging port, on the other hand, identified Sempra Energy as the charterer.
Subsequently, an invoice for freight dated 13 December was sent to Statoil’s agent. The invoice was issued on the paper of Sempra Energy Trading, a company within the Sempra Energy group. But it stated “total amount due TTMI” and the bank account to which payment was to be made belonged to TTMI. Statoil did not query this invoice and paid the freight to TTMI. On 16 December 2005, Galbraith’s sent its invoice to TTMI. Statoil also sent its commission invoice to Sempra Energy Trading at Galbraith’s address, and Galbraith’s forwarded this to TTMI.
On 16 January 2006, TTMI’s solicitors, Clyde & Co, made a claim in demurrage for US$322,789.06 and sent it to Statoil. The demurrage and laytime statement showed the owners as Sempra Energy and the invoice was issued under the heading “Sempra Energy c/o Clyde & Co.” Clyde & Co’s covering letter, however, stated that it was “instructed by TTMI to resolve their demurrage disputes.”
The demurrage dispute was referred to arbitration in London under the arbitration clause in Clause 43(c) of the Shellvoy 5 charterparty. The parties agreed that no charterparty was actually drawn up, and TTMI attempted to sustain the existence of a contract with Statoil on the basis of the fixture recap emails. The arbitrator held that looking at the course of dealing between the parties and the recap emails, the charterparty was formed between Sempra Energy and Statoil. TTMI’s claim was accordingly struck out as there was no contract, and thus no arbitration agreement, between TTMI and Statoil.
TTMI challenged the arbitrator’s decision pursuant to section 67 of the Arbitration Act 1996. Its case was that notwithstanding Galbraith’s mistake in naming Sempra Energy as the charterer, there was a binding a binding charterparty of the Vessel between it and Statoil. Alternatively, a contract was formed between them due to the performance of voyage and Statoil’s payment of freight; or that the recap emails should be rectified to show it as the time-chartering owner.
For the purpose of the present hearing, the parties agreed that Galbraith’s had no instructions or authority to enter into a charter-party on behalf of Sempra Energy.
Beatson J set aside the arbitrator’s decision.
The Court firstly noted that, as the issues in this case touched on the jurisdiction of the arbitrators, following the approach adopted by the UK Supreme Court in Dallah Real Estate v Government of Pakistan  1 AC 763, it was entitled to re-hear the case rather than to review the arbitrator’s decision.
On the first issue of whether the recap emails showed a concluded contract between TTMI and Statoil, Beatson J noted that it was common for charterparties to be concluded orally or by an exchange of emails or faxes, with the terms being recapitulated in a fixture recap. The recapping emails were not contractual documents naming the contracting parties and dispositive as to their identity but a recapitulation of what had previously been agreed. In the present case, although there were differences in the terms contained in the email recaps dated 13 October and 17 October, the recaps did not refer to any intervening negotiations. There was no evidence of the negotiations, or of when a contract was agreed upon, or that Galbraith’s gave any indication to Statoil that it was acting on behalf of TTMI. Rather, Galbraith’s simply relied on the mistaken information from Q88.com, and Statoil’s agent sent the email recap dated 17 October to “Sempra Trading Geneva”.
Thus, it could not be inferred that a contract was concluded orally before 17 October. As held in Shogun Finance Ltd v Hudson  1 AC 919, the identity of the parties to a contract could only be ascertained by construing the contractual document, and no extrinsic evidence was admissible. Accordingly, the email recaps could for material purposes be regarded as the charterparty, and the time-chartering owner was Sempra Energy as identified.
The Court also rejected the argument that TTMI was entitled to sue as the undisclosed principal. In determining whether an undisclosed principal existed, the Court would look at the authority and intention of the party named in the contract, and not of the agent: see The Jason 5  Lloyd’s Rep IR 531. However, there was no evidence that Sempra Energy was authorised to act as TTMI’s agent. This was also contrary to the agreed assumption between the parties that Galbraith’s had no instructions or authority to enter into a charterparty on behalf of Sempra Energy.
Beatson J also expressed in obiter that at the time of the recap emails, there was no common intention between the parties that Statoil was to contract with the disponent or time-chartering owner (i.e. TTMI). The claim for rectification thus failed.
However, a binding contract was nevertheless formed between TTMI and Statoil by reason of the performance of the voyage. TTMI instructed the Vessel to take on Statoil’s cargo; the Notices of Readiness accepted on behalf of Statoil identified TTMI as the time charterer; the freight demand stated the “total amount due TTMI”; payment was required to be made and was actually made to TTMI’s account. All these showed that Statoil had been dealing with TTMI throughout, and the transaction had now been executed. These were “very relevant factor” in determining whether a contract had been formed by conduct. Looking at all the circumstances of the case, Beatson J was of the view that a contract must have been formed between TTMI and Statoil when the freight was paid, if not when the first Notice of Readiness was accepted by Statoil’s agents, or when the cargo was loaded. Both parties proceeded on the basis that the terms recorded in the recap emails applied and they were performing the transaction reflected in them.
The reference in the Notices of Readiness to the “terms and conditions” of the recap email dated 17 October 2005 included reference to Clause 43 of the Shellvoy 5 charterparty, and would constitute sufficient arbitration agreement for the purpose of the Arbitration Act 1996. In any event, the arbitration could proceed at common law pursuant to section 81(1)(b) of the 1996 Act.
Thus, the arbitrator’s decision to strike out TTMI’s claim was set aside, and the case would be remitted to the arbitrator.