Ocean Perfect Shipping v Dampskibsselskabet Norden AS
Ocean Perfect Shipping Limited v Dampskibsselskabet Norden AS
English Queen’s Bench (Commercial Court): Teare J:  EWHC 3368 (Comm): 6 December 2019
Mr Charles Priday and Mr Jason Robinson, instructed by Sach Solicitors, for the Claimant Owners, Ocean Perfect
Mr James Shirley, instructed by MFB, for the Defendant Charterers, Norden
Ms Emily Wilsdon, instructed by The Government Legal Department, for the MAIB
BRITISH REGISTERED VESSEL: GROUNDING WHILST ON CHARTER: MARITIME CASUALTY: MARINE ACCIDENT INVESTIGATION BRANCH (MAIB) SAFETY INVESTIGATION REPORT: MERCHANT SHIPPING (ACCIDENT REPORT AND INVESTIGATION) REGULATIONS 2012: WHETHER ARBITRATION JUDICIAL PROCEEDINGS: WHETHER REPORT TO BE ADMITTED: COURT’S PERMISSION: DISCRETION
The Commercial Court was asked to consider whether a safety investigation report produced by the Marine Accident Investigation Branch (“MAIB”) could be admitted in evidence in an arbitration. The court held that arbitrations fall within the definition of “judicial proceedings” in the Merchant Shipping (Accident Reporting and Investigation) Regulations 2012, reg.14(17). As such, the court’s permission was required under reg.14(14) to admit into the arbitration a MAIB report. In this case, permission was refused because the interests of justice in admitting the report into arbitration did not outweigh the prejudice or likely prejudice to any future accident safety investigation or relations between the UK and another state or international organisation.
This note has been contributed by Candice Lau, BBA(Law), LLB (HKU), LLM (Cantab), a barrister at Alan Leong SC’s Chambers, Hong Kong.
A British registered vessel, which was under charter, twice ran aground in the course of entering the port of Umm Al Quwain in the United Arab Emirates. The MAIB investigated the circumstances of the grounding to see what lessons could be learned with regard to improving the safety of shipping. The MAIB eventually completed its investigation and issued a report (“MAIB Report”).
The claimant owners commenced arbitration proceedings against the defendant charterers, alleging that the grounding had been caused by a breach of warranty on the part of the charterers that the port to which the vessel was directed by them was safe, and that such breach had caused financial loss to the owners.
The owners wished to refer to the MAIB Report at the arbitration proceedings. The charterers and MAIB objected to it, on the basis that, under the Merchant Shipping (Accident Reporting and Investigation) Regulations 2012, Reg.14(14), the court must give permission before the MAIB Report could be admitted into the arbitration, and that such permission should be refused. The owners argued otherwise, saying that the court’s permission was not required and that any decision as to admissibility of the MAIB Report was a matter for the arbitration tribunal; further, if the court’s permission were required, the court should grant permission in the interests of justice.
Regulation 14(14) of the Merchant Shipping (Accident Reporting and Investigation) Regulations 2012 provides that:
“If any part of any document or analysis it contains to which this paragraph applies is based on information obtained in accordance with an inspector’s powers under sections 259 and 267(8) of the Act, that part is inadmissible in any judicial proceedings whose purpose or one of whose purposes is to attribute or apportion liability or blame unless a Court, having regard to the factors mentioned in regulation 13(5)(b) or (c), determines otherwise.”
Regulation 14(17) defines “judicial proceedings” as including
“Any civil or criminal proceedings before any Court or person having by law the power to hear, receive and examine evidence on oath.”
Regulation 13(5) provides that:
“Subject to paragraph (6), no order must be made under paragraph (2) unless the Court is satisfied, having regard to the views of the Chief Inspector, that the interests of justice in disclosure outweigh any prejudice, or likely prejudice, to –
b. any future accident safety investigation undertaken in the United Kingdom; or
c. relations between the United Kingdom and any other State, or international organization.”
The owners brought an application referring the matter to the court for determination.
Teare J dismissed the owner’s application.
In determining whether arbitration falls within the definition of “judicial proceedings” in reg.14(17), the court first noted that the definition of judicial proceedings is not exclusive. Judicial proceedings are said to “include” any civil or criminal proceedings before any Court or person having by law the power to hear, receive and examine evidence on oath.
The court considered the reason for the general inadmissibility of the parts of the MAIB report which are based upon information obtained in accordance with the inspector’s power. If such parts of the report were admissible then, in the future, those asked to provide information to the MAIB as to a maritime casualty might be unwilling to do so. This reasoning applies equally whether the civil dispute about liability is determined in court or in arbitration, suggesting that both the courts and arbitral tribunals were intended to be encompassed within the phrase “judicial proceedings”.
Further, the court held that the proceedings before the arbitral tribunal were also judicial in character. The arbitral tribunal has a duty to conduct the arbitral proceedings fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent; see Arbitration Act 1996, s.33. The rule that those performing duties of a judicial character are not liable in damages for negligence in the performance of such duties applies equally to arbitrators. Moreover, the arbitrators determine disputes about civil liability “having by law the power to hear, receive and examine evidence on oath”; see Arbitration Act 1996, s.38(5). There may be certain contexts where the phrase “civil or criminal proceedings” is not apt to include arbitration proceedings but that was not so in the present case. While arbitral proceedings are private and consensual pursuant to s.34 of the Arbitration Act 1996, they remain “judicial” and arbitrators are not entitled to ignore Reg.14(14).
For the above reasons, Teare J held that arbitration falls within the definition of “judicial proceedings” in Reg.14(17).
The court was then required to decide whether it should exercise its discretion to admit the MAIB Report. The question was whether the interests of justice in admitting the MAIB report into the arbitration outweighed any prejudice or likely prejudice to any future accident safety investigation or relations between the UK and another state or international organization: reg.13(5). In answering this question, the court was mandated by the 2012 Regulations to have regard to the views of the Chief Inspector of the MAIB. The evidence from the Chief Inspector was that the admission of the MAIB report would be likely to prejudice future accident safety investigations, by diminishing the MAIB’s ability to have candid and detailed conversations with witnesses and to have ready and unqualified access to accident sites, as well as the ability to fulfil its statutory function and enhance the safety of all those at sea. The court also noted that notwithstanding the fact that arbitration proceedings are private and confidential, a decision of the court to allow the MAIB report to be admissible would be in the public domain.
Further, after consideration of counsel’s submissions regarding the interests of justice in making use of the MAIB report for the purpose of cross-examination, Teare J was unconvinced and held that in this case, the interests of justice in testing the factual and expert evidence by reference to the MAIB report did not outweigh the likely prejudice to future accident investigations and the UK’s relations with another state or international body. As a result, Teare J refused to exercise discretion and refused to grant permission to admit the MAIB report into the arbitration proceedings.
This is the first occasion on which the use of MAIB reports in a private and confidential arbitration has arisen for decision. Unfortunately, the owners only made this application a week before the arbitration hearing. Throughout the judgment, Teare J criticised the lateness of the owners’ application. The lateness of the application had created difficulties for both the court and the parties.
In light of this judgment, parties and their legal representatives are advised to make their applications for an order under Reg.14(4) well in advance of the hearing.