Singapore Arbitration 2/23

The case involves a  fixture recap email dated 9 January that included specific terms as well as terms of the Gencon 1994 form. The cargo was to be loaded in Vietnam and delivered to a port in China. However, the charterers failed to provide the cargo despite repeated requests from the owners even after the laycan period.

The arbitration agreement, as per the charterparty’s clause 17, stipulated that any dispute arising from or in connection with the contract would be resolved in Singapore, governed by English law, and under the rules of the Singapore Chamber of Maritime Arbitration (SCMA). The claimant initiated arbitration on 28 April, but the charterers did not respond within the required 14 days, leading to the claimant’s appointed arbitrator assuming the role of sole arbitrator.

Clause 17 of the charterparty provided as follows:

ANY AND ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS CONTRACT, INCLUDING ANY QUESTION REGARDING ITS EXISTENCE, VALIDITY OR TERMINATION, SHALL BE REFERRED TO AND FINALLY RESOLVED BY ARBITRATION IN SINGAPORE IN ACCORDANCE WITH THE ARBITRATION RULES OF THE SINGAPORE CHAMBER OF MARITIME ARBITRATION (‘SCMA RULES’) FOR THE TIME BEING IN FORCE AT THE COMMENCEMENT OF THE ARBITRATION, WHICH RULES ARE DEEMED TO BE INCORPORATED BY REFERENCE IN THIS CLAUSE.

BUT THE SUBSTANTIVE LAW OF THE CONTRACT SHALL BE ENGLISH LAW.

FOR THE AVOIDANCE OF DOUBT THE TRIBUNAL SHALL CONSIST OF THREE ARBITRATORS. THE CLAIMANT SHALL APPOINT ITS NOMINATED ARBITRATOR FROM THE LIST OF APPROVED ARBITRATORS FROM THE SCMA WEBSITE AND SHALL NOTIFY THE RESPONDENT OF THE SAME BY EMAIL OR FAX OR LETTER.

WITHIN 14 DAYS THE RESPONDENT SHALL APPOINT ITS NOMINATED ARBITRATOR FROM THE APPROVED LIST OF ARBITRATORS FROM THE SCMA WEBSITE AND SHALL NOTIFY THE CLAIMANT OF THE SAME BY EMAIL OR FAX OR LETTER. IF THE ARBITRATORS ARE UNABLE TO REACH A UNANIMOUS DECISION THEN THEY SHALL APPOINT A THIRD ARBITRATOR TO PRESIDE.

IN AN INSTANCE IN WHICH THE RESPONDENT FAILS TO APPOINT ITS OWN ARBITRATOR WITHIN THE 14 DAYS SO PRESCRIBED WITHIN THIS CLAUSE THEN THE CLAIMANTS ARBITRATOR SHALL STAND AS SOLE ARBITRATOR WITHOUT FURTHER ORDER AND HIS DECISION SHALL BE BINDING ON BOTH PARTIES.”

Despite numerous attempts to involve the charterers in the arbitration process, including serving notices and attempting communication, the charterers refused to participate. The tribunal, in accordance with SCMA Rules and the UNCITRAL Model Law in the International Arbitration Act 1994 article 25(b) and (c), proceeded in rendering an award.

The claimant stated that charterers had an absolute obligation to provide cargo for loading and the claimant was entitled to recover losses due to the charterers’ breach. The claimant sought damages for loss of profit, waiting costs, and costs associated with seeking a mitigation substitute voyage. The tribunal found in favor of the claimant, stating that the charterparty had been breached by the charterers, and awarded the reliefs claimed, excluding pre-award interest.

Commentary

The arbitrator’s comments emphasize the uncommon occurrence of parties refusing to participate in arbitrations and highlights the importance of proper communication and adherence to rules to prevent potential challenges to the award’s enforcement. This includes the obligation of the participating party and the tribunal to follow procedural rules diligently, as default awards are not automatically granted in arbitration.

The arbitration illustrates the consequences of a party’s refusal to participate in arbitration, and emphasizes the importance of adherence to procedural rules and effective communication to ensure a fair and enforceable outcome for all parties.

Award

The tribunal ordered the respondent to pay principal damages of US$225,277.99, interest of US$5,376.08 on the principal amount, claimant’s legal costs of US$11,830, the tribunal’s costs incurred by the claimant of US$5,300, as well as interest and fees.