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DMC/Arbn/21/04
'''England'''
(Charterparty)
Clause 38 – BIMCO standard law and arbitration Clause 2009
BIMCO Standard Law and Arbitration Clause 2009 to apply – English Law, London arbitration.
4. We warrant that we have received irrevocable authority from the Shipowners to give this letter of undertaking in these terms…
This Letter of Undertaking is not to be considered an admission of liability and is written entirely without prejudice to any rights, defences, immunities or limitations which the shipowners may have, none of which are regarded as waived."
The Cargo Claimants sought an extension of time around the end October for bringing proceedings in respect of the damaged cargo. ETIC, acting on behalf of the Owners, agreed to two time extensions to the Cargo Claimants (the first dated 23 October 2018 until 30 January 2019 and the second dated 14 January 2019 until 30 April 2019). The material terms of the first extension were that ETIC was:
"authorised by the Owners to agree an extension of time up to and including… 30 January 2019 in favour of [the first Defendant/first Claimant in the arbitration] and their subrogated underwriters for commencement of proceedings as per the above Bills of Lading in respect of the claim for alleged loss, shortage and/or damage to cargo in so far as they can be properly proceeded against…"
A second extension was granted on identical terms, save as to the date to which time was extended.
(i) There was no arbitration agreement providing for a three-man Tribunal or for a consolidated reference; the LOU contained no such arbitration agreement:-
a. There are special benefits afforded by the SCP and Owners would not have given them up without good reason.
b. The LOU could not be a freestanding agreement; it referred to a properly constituted London Arbitral Tribunal which was a reference to clause 69 of the Charterparty.
'''Judgment'''
The Court dismissed the s.67 application on the validity of the arbitration agreement and on the notice of arbitration. The Court held that the LOU was an agreement to consolidate all of the claims in respect of the entire cargo.
'''Comment'''
The case demonstrates that the Court is prepared to take a commercial approach when construing terms of an LOU.
