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            "303": {
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                "title": "Regal Seas Maritime v Oldendorff Carriers - The New Hydra",
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                        "*": "DMC/SandT/21/\n\n'''England'''\n\n'''Regal Seas Maritime S.A. v Oldendorff Carriers GmbH & Co KG (The \u201cNew Hydra\u201d)'''\n\n'''English Commercial Court: Teare J: [2021] EWHC 566 (Comm): 11 March 2021'''\n\nJudgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2021/566.html\n\nMichael Coburn QC (instructed by HFW LLP) for Regal (Owners)\n\nChris Smith QC (instructed by MFB Solicitors) for Oldendorff (Charterers)\n\n'''TIME CHARTER: RATE OF HIRE BASED ON AVERAGE OF LAST 15 DAYS\u2019 PUBLISHED 4 TIME CHARTER ROUTES OF BALTIC CAPESIZE INDEX (\u201cBCI\u201d) PLUS 4% FOR VESSEL SIZE ADJUSTMENT: VESSEL WAS 179,258 DEADWEIGHT TONNES (\u201cDWT\u201d): BCI \u2018BENCHMARK\u2019 VESSEL WAS 172,000 DWT WHEN CHARTER AGREED: BCI \u2018BENCHMARK\u2019 VESSEL CHANGED TO 180,000 DWT DURING CHARTER PERIOD: WHETHER AN IMPLIED TERM THAT VESSEL SIZE ADJUSTMENT WOULD BE REASONABLY AMENDED IF \u2018BENCHMARK\u2019 VESSEL SIZE CHANGED DURING CHARTER PERIOD: SECTION 69 APPEAL ON POINT OF LAW UNDER ARBITRATION ACT 1996'''\n\n'''Summary'''\n\nThe High Court, in finding for Owners, held that, where a period time charter was for 3 to 5 years and provided for the hire rate to be based on a defined index rate which included an adjustment for the difference between size of the index vessel and the vessel chartered but made no provision for what would happen if the index vessel size changed during the charter period, there was a term to be implied into the charter that the hire rate was to be based upon the average of the published routes of the index and, if necessary, a reasonable size adjustment to reflect any difference in earning capacity resulting from the difference in size.\n\nCase note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, LMAA Supporting Member and International Contributor to DMC\u2019s Case Notes\n\n'''Background'''\n\nRegal entered into a period time charter of their capesize bulk carrier \u201cNew Hydra\u201d with Oldendorff on an amended NYPE form dated 22 November 2013 for three years, plus an option in Oldendorff\u2019s favour to extend the charter by two further periods of one year.  The hire rate, in order to share the risks and benefits of large movements in the market, was based on the Baltic Capesize Index (\u201cBCI\u201d) and stated:\n\n\"Hire payable every 15 days in advance including overtime. The gross daily hire to be calculated basis the average of the 4 Baltic Cape Size Time Charter routes published by the Baltic Exchange over the previous 15 days plus 4% for size adjustment.\"\n\nThe BCI was based on a \u2018benchmark\u2019 172,000 (\u201c172\u201d) deadweight tonnes (\u201cDWT\u201d) vessel using data from Baltic shipbroker market panellists over four time charter routes.  The Baltic Exchange in December 2013 announced that the BCI would be changed, which eventually resulted in the \u2018benchmark\u2019 vessel being revised to 180,000 (\u201c180\u201d) DWT, which was just slightly larger than \u201cNew Hydra\u201d \u2013 179,258 DWT.  There was also an addition time charter route later added to the original four used to calculate the BCI published daily rate.  \u201cNew Hydra\u201d was delivered into Oldendorff\u2019s service on 14 January 2014.\n\nBecause there were forward freight agreements (\u201cFFAs\u201d) that remained open based on the prior BCI, and so would require an appropriate index conversion to continue to exist for the 172 rate pending all FFAs being closed out in due course, the Baltic Exchange formulated a basis for a dollar differential rate, so that BCI 180 rates could be converted to BCI 172 rates for the FFAs.\n\nThe change to the BCI in fact made no difference to the manner in which Regal calculated and Oldendorff paid hire under the charter, with Regal continuing to use the same methodology defined in the charter after the changes to the BCI took effect.  In due course, Oldendorff exercised its option in November 2017 to extend the charter by a period of one year on the same terms as before.\n\nHowever, Regal later alleged that the parties had been calculating the hire due for the previous three years in the wrong way.  Oldendorff did not agree.  As a result, the dispute was submitted for determination in accordance with the London arbitration and English law dispute resolution agreement in the charter.\n\nRegal took the position that Oldendoff should have been paying hire, since the change to the BCI took effect in August 2015, on the basis of the 180 rate plus 4% or, alternatively, at the 180 rate with a reasonable size adjustment (being nil as the DWT of \u201cNew Hydra\u201d was almost that of the new BCI \u2018benchmark\u2019 vessel).\n\nOldendorff took the position that hire should have continued to be calculated in exactly the same manner in which it had been done before; namely, using the 172 rate as the base rate and adding 4%.  Until December 2017, this involved the parties adopting the 172 rate as actually published by the Baltic.  Thereafter, the parties were to use the Baltic fixed dollar differential and apply that to the published daily rate for the 180 rate (which is how the parties had in fact calculated the hire due from January 2018 until July 2018).\n\nThe Tribunal found in favour of Oldendorff, as a result of which Regal, who claimed that hire had been substantially underpaid over a number of years, sought to challenge the award on a point of law under section 69 of the Arbitration Act 1996.\n\n'''Judgment'''\n\nThe Judge first outlined the facts (above) and then, before determining the issue in light of the parties\u2019 respective contentions, set out the correct approach to determining the true meaning of the contract.\n\nIn essence, the Court must ascertain what a reasonable person, who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of contracting, would have understood the contracting parties to have meant by the language used (fn.1).\n\nHaving pointed out that neither party\u2019s approach to the interpretation of the charter was free from difficulties, the Judge noted that, before the implication of a term could be considered, it was first necessary to construe the language of the hire clause (fn.2).\n\nAs a matter of language, observed the Judge, the words \u201cplus 4% for size adjustment\u201d did not allow for any adjustment other than plus 4%.  However, that linguistic meaning gave rise to the difficulty that if the Baltic altered the benchmark vessel the stated differential would produce an inappropriate adjustment.  That would not be consistent with business common sense.\n\nWhat would be consistent with common sense is that the \u201cplus 4% for size adjustment\u201d was intended to apply to the benchmark vessel at the date of the charter; namely, 172,000 DWT.  That, the Judge considered, was the intended meaning of the stated size adjustment.  On that basis the hire clause made no provision for the size adjustment in the event that there was a change to the benchmark vessel.  Having so construed the hire clause there was, in the Judge\u2019s view, scope for an implied term that the appropriate size adjustment in the event of a change to the size of the benchmark vessel was intended to be a reasonable adjustment.\n\nThe Judge next noted that there are some circumstances in which the law will imply what is reasonable, where there is to be future performance over a period but the contract is silent on some detail, as the parties may be unable or may not wish to specify many matters of detail, leaving the detail to be adjusted in the working out of the contract, and the Court will assist the parties to do so (fn.3).\n\nWith the above in mind, the Judge observed that the size of the benchmark vessel had been increased in 2004 from 161,000 DWT to 172,000 DWT.  So, by the date of the charter, the size of the benchmark vessel had not been changed for almost 10 years.  The formula adopted by the parties for determining the rate of hire was clear.  It involved using the average of the 4 routes published by the Baltic and then applying a size adjustment to that average.  The parties agreed upon an appropriate size adjustment for the benchmark vessel current at the date of the charter but made no provision for the size adjustment in the event that the size of the benchmark vessel were increased.\n\nIn that context, the Judge was of the view that, unless the term suggested by Regal was implied, the hire provision would not be capable of being applied in the events which happened after July 2015.  That could not have been what the parties intended.  Oldendorff suggested that there was no need to imply Regal\u2019s  suggested term to \u201csave\u201d the charter because it would be saved on their contruction.  However, the Judge was unable to accept Charterers\u2019 construction.\n\nThe published 172 4TC figure derived from the average for the 180,000 DWT benchmark vessel less a discount calculated by reference to rates before July 2015 could not be brought within the words used by the parties, \"the average of the 4 Baltic Cape Size Time Charter routes published by the Baltic Exchange over the previous 15 days\".  Thus, held the Judge, the suggested implied term was necessary to make the agreed hire clause work in the events which happened after July 2015.  The term was to be implied to give \u201cbusiness efficacy\u201d or \u201ccommercial or practical coherence\u201d to the charter (fn.4).\n\nAs a result, the Judge considered that, far from subverting the hire clause and the parties\u2019 bargain, the implied term ensured the charter continued to operate for the period intended by the parties.  It would also be difficult to see how a hire rate based on the new benchmark vessel as reasonably adjusted to reflect any difference in earning capacity could fairly be said to give rise to a windfall to Regal.\n\nAccordingly, the Judge held that the Tribunal was wrong to consider that there was no implied term of the charter in accordance with Regals\u2019 alternative case.\n \nAs a result, the Award was set aside and the case remitted to the arbitration Tribunal to determine the other defences of contract variation and estoppel that Oldendorff had raised.  The judge noted, however, that \u2013 if neither defence succeeded - it would be necessary, unless Oldendorff  agreed that no size adjustment was required given that the chartered vessel was almost a 180,000 tonnes vessel, for the Tribunal to determine what reasonable size adjustment, if any, was required to reflect the difference in earning capacity in July 2015 when the benchmark vessel was changed.\n\n'''Comment'''\n\nThis judgment, in which a term was held to be implied despite the complexity of the dispute, provides an interesting contrast with the recent judgment in The \u201cSmart\u201d [2021] EWHC 1157 (Comm) [[https://www.onlinedmc.co.uk/index.php/Alpha_Marine_v_Minmetals_Logistics_Zhejiang_-_The_Smart]], which held that no term was to be implied into that charter.\n\nAs the present case shows, it is only if the contract is, in effect, silent on the precise issue that arises that a term may be implied if it is necessary to make the contract work, if it would otherwise lack practical or commercial coherence.\n\nHowever, the exercise required to determine whether a term is to be implied remains mercurial, absent an authority sufficiently on all fours with the case in hand, because the legal test is somewhat qualitative in its nature.\n\nIn such scenarios, what is required, for this unitary exercise involving an iterative process, is to check the rival meanings against the provisions of the contract and to investigate their commercial consequences (fn.5).\n\n\nFootnote 1:  Financial Conduct Authority v Arch Insurance [2021] UKSC 1, [47].\n\nFootnote 2:  Marks and Spencers v BNP Paribas [2016] AC 742, [26]/[27].\n\nFootnote 3: Hillas v Arcos [1932] 147 LT 503, p514, and Mamidoil v Okta [2001] EWCA Civ 406, [69].\n\nFootnote 4: Ibid. fn.2, [21].\n\nFootnote 5: Re Sigma Finance Corp [2009] 1 All ER 571, [12]."
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            "299": {
                "pageid": 299,
                "ns": 0,
                "title": "Republic of Sierra Leone v SL Mining Limited",
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                        "*": "DMC/Arbn/21/05\n\n'''England'''\n\n'''Republic of Sierra Leone v SL Mining Limited [2021] EWHC 286 Comm, 15 February 2021'''\n\n'''In the High Court of Justice, Queen\u2019s Bench Division, Commercial Court: Sir Michael Burton GBE, Sitting as Judge of the High Court'''\n\nCharlie Lightfoot instructed by Jenner & Block (London) LLP, for the Claimant \n\nAli Malek QC, Tom Sprange QC and Kabir Bhalla instructed by King and Spalding International LLP, for the Defendant \n\n'''CONTRACTUAL DISPUTE BETWEEN PARTIES: MULTI-TIER DISPUTE RESOLUTION PROVISION: PARTIES TO FILE FOR ARBITRATION IF NO AMICABLE SETTLEMENT REACHED WITHIN 3 MONTHS: NON-COMPLIANCE WITH MULTI-TIER DISPUTE RESOLUTION PROVISION: WHETHER NON-COMPLIANCE VITIATED TRIBUNAL\u2019S JURISDICTION: WHETHER NON-COMPLIANCE A MATTER OF ADMISSIBILITY: CHALLENGING AN AWARD UNDER SECTION 67 OF THE ARBITRATION ACT 1996'''\n \n'''Summary'''\n\nThis was a case where the respondent to an arbitration challenged the jurisdiction of the tribunal under section 67 of the Arbitration Act 1996 on the basis of non-compliance with a multi-tier dispute resolution provision. The English Commercial Court held that there was no basis for a challenge to the Partial Final Award under section 67 of the Arbitration Act as non-compliance with a multi-tier dispute resolution provision is an issue of admissibility rather than jurisdiction.\n\nCase Note contributed by Sri Azali BB (Human Resource Management & Business Law), Paralegal at Penningtons Manches Cooper LLP Singapore.\n\n'''Background'''\n \nThe proceedings concerned a dispute which arose out of the suspension and subsequent cancellation of a 25-year mining licence and licence agreement (MLA) granted by Republic of Sierra Leone to SL Mining Ltd. The mining licence agreement contained a multi-tier dispute resolution provision, namely clause 6.9 (c), which stated that: \n\u201cIn the event that the parties shall be unable to reach an amicable settlement within a period of 3 (three) months from a written notice by one party to the other specifying the nature of the dispute and seeking an amicable settlement, either party may submit the matter to the exclusive jurisdiction of a Board of 3 (three) Arbitrators who shall be appointed to carry out their mission in accordance with the International Rules of Conciliation and Arbitration of the\u2026 ICC\u2026\u201d \u2013see fn.1.\n\nFollowing the cancellation of the mining licence agreement by Sierra Leone, SL Mining issued a formal Notice of Dispute on 14 July 2019. On 20 August 2019, SL Mining filed an Application for Emergency Measures under the International Chamber of Commerce (ICC) Emergency Arbitration Rules. The ICC Emergency Arbitration Rules required SL Mining to file its Request for Arbitration (RFA) within 10 days of the Application for Emergency Measures \u2013 which in this case, meant that the RFA had to be filed by 30 August 2019. SL Mining proposed to defer service of its RFA to 14 October 2019 (which was the end of the 3-month cooling off period referred to in clause 6.9) but Sierra Leone refused that proposal. Hence, SL Mining served its RFA on 30 August 2019 and the arbitration commenced around 5 weeks before the end of the cooling off period. \n\nSierra Leone challenged the jurisdiction of the Tribunal on the basis that no arbitration proceedings could be commenced before 14 October 2019, being 3 months from the Notice of Dispute. The Tribunal concluded in the Partial Final Award that the multi-tier dispute resolution provision had indeed been complied with and that SL Mining\u2019s claim was admissible. \n\n'''Challenging the Partial Final Award and the Issues of Law'''\n\nSierra Leone challenged the Partial Final Award in the English Commercial Court under section 67 of the Arbitration Act 1996 (the \u201cAct\u201d) \u2013 see fn.3 - which allows a party to challenge the jurisdiction of the Tribunal. The issues of law before the English Commercial Court were:\n\n(i)\twhether Sierra Leone\u2019s challenge to the alleged prematurity of the RFA was a challenge to the substantive jurisdiction of the Tribunal and thus within section 67;\n\n(ii)\tif so, had there been consent by Sierra Leone to the issue of the RFA or waiver of any condition precedent to the commencement of arbitration proceedings, if needed;\n\n(iii)\twhat was the proper construction of the multi-tier dispute resolution clause; and\n\n(iv)\tdid SL Mining breach that clause. \n\n'''Decision of the English Commercial Court'''\n \nOn issue (i), the Commercial Court found that there was no basis to challenge the award under section 67 of Act. A challenge under section 67 had to be a challenge to the substantive jurisdiction of the Tribunal as defined by section 30 of the Act.\n \nIn particular, Sierra Leone relied on section 30(1)(c) \u2013 see fn.2 - of the Act to argue that the case was not submitted in accordance with the arbitration agreement, as the multi-tier dispute resolution clause was not complied with. This argument was, however, rejected, because there is a clear distinction between admissibility and jurisdiction. If the issue relates to whether a claim should not be heard by arbitrators at all or at least not yet, the issue is one of admissibility \u2013 the decision of the Tribunal is final and section 30(1)(c) does not apply. If the issue relates to whether a claim could not be brought to arbitration, the issue is ordinarily one of jurisdiction and hence subject to further recourse under section 67 of the Act. In this case, the issue was not whether the claim was arbitrable, but whether the claim was presented too early \u2013 a question of admissibility, and this was a matter for the Tribunal to determine rather than the court. Therefore, section 30(1)(c) and section 67 does not apply. \n\nMoreover, the Judge found that international authorities and commentaries support the case that alleged non-compliance with multi-tier dispute resolution provisions does not relate to the question of the Tribunal\u2019s jurisdiction. In supporting his decision, the Judge cited two recent decisions of the Singapore Court of Appeal in BBA v BAZ [2020] 2 SLR 453 and BTN v BTP [2020] SGCA 105  which found that cases involving alleged premature arbitration/fulfilment of pre-conditions to arbitration such as time limits, were matters of admissibility and not jurisdiction.\n \nOn issue (ii), the court had found that by rejecting SL Mining\u2019s proposal to defer service of the RFA to 14 October 2019 and instead insisting on service of the RFA on 30 August 2019, Sierra Leone had waived its right to assert non-compliance with the three-month cooling off period. \n\nOn issues (iii) and (iv), the court found obiter that there was no breach of the multi-tier dispute resolution clause. On its proper construction, clause 6.9 was not an absolute bar to bringing proceedings within three months. Instead, the three-month cooling off period was a window in which the parties could explore settlement and, in the event that the objective of an amicable settlement could not be achieved, proceedings could indeed be brought before the end of the cooling off period. Given the evidence and facts of the case, the Judge found that as at 30 August 2019, there was no chance of an amicable settlement by 14 October 2019 - even if the three-month period had not been waived by Sierra Leone. Therefore, there had been no failure to comply with clause 6.9(c). \n\n'''Comment'''\n\nThis decision provides clarity regarding the distinction between admissibility and jurisdiction in English arbitration law, namely that questions of compliance with multi-tier dispute resolution provisions are a procedural matter which will be determined by the Tribunal and that non-compliance with a multi-tier dispute resolution provision is not a basis on which to challenge the jurisdiction of the Tribunal before the English Court under section 67 of the Act. The judgment here also provides a clearer understanding and interpretation of a multi-tier dispute resolution clause \u2013 that a cooling-off period or an obligation to negotiate does not constitute an absolute bar to the commencement of arbitration proceedings.\n\n\nFn.1.\t6.9 Interpretation and Arbitration \n\na) Except as may be otherwise herein expressly provided, this Agreement shall be construed, and the rights of [the Claimant and the Defendant] hereunder shall be determined, according to the Laws of Sierra Leone.\n\nb) The parties shall in good faith endeavour to reach an amicable settlement of all differences of opinion or disputes which may arise between them in respect to the execution performance and interpretation or termination of this Agreement, and in respect of the rights and obligations of the parties deriving therefrom.\n\nc) In the event that the parties shall be unable to reach an amicable settlement within a period of 3 (three) months from a written notice by one party to the other specifying the nature of the dispute and seeking an amicable settlement, either party may submit the matter to the exclusive jurisdiction of a Board of 3 (three) Arbitrators who shall be appointed to carry out their mission in accordance with the International Rules of Conciliation and Arbitration of the\u2026 ICC. \u2026\u2026 \n\nd) In the event of any notified dispute hereunder, both parties agree to continue to perform their respective obligations hereunder until the dispute has been resolved in the manner described above.\n\nArbitration Act 1996 \n\n30\tCompetence of tribunal to rule on its own jurisdiction.\n\n(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to \u2013\n \n(a) whether there is a valid arbitration agreement\n \n(b) whether the tribunal is properly constituted, and \n\n(c) what matters have been submitted to arbitration in accordance with the arbitration \nagreement\n\n67\tChallenging the award: substantive jurisdiction\n\n(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court \u2013 \n\n(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or \n\n(b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction."
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