The recent case of Expofrut SA & Others v (1) Melville Services Inc. & Another (2015) serves as a reminder to claimants of the importance of choosing the correct forum in which to commence proceedings in circumstances in which a tight limitation period applies, and there is uncertainty as to whether their claim may be subject to English law and arbitration.
The case concerned a claim brought by Claimant cargo interests against a Defendant shipowner for cargo damage. The contract of carriage was governed by the Hague/ Hague Visby Rules and accordingly a limitation period of one year in which to commence proceedings applied. The Claimant duly commenced proceedings in Belgium within the limitation period. In accordance with Belgian Court procedure, a Court surveyor was appointed to produce a report, and both sides actively contributed to this process. It was not until service of the Defence Submissions two and a half years later that the Defendant challenged the jurisdiction of the Belgian Courts in favour of arbitration governed by English law (as a matter of Belgian law, they were under no obligation to challenge jurisdiction prior to this point). After a further one and a half years, the Belgian Courts ruled in favour of the Defendant on this point, and the Claimant applied to the English High Court for an extension of time in which to commence arbitration, citing s.12 of the Arbitration Act 1996. By the time of the application, the Claimant’s claim was already out of time by three years and eight months.
Section 12 Arbitration Act 1996
The provision on which the Claimant sought to rely, s.12(3)(b) Arbitration Act 1996, states that the High Court may extend the deadline for commencing arbitration under a contractual arbitration clause if “the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question.” This provision is drafted more narrowly than the equivalent provision in the Arbitration Act 1950, which allowed for an extension if “undue hardship would otherwise be caused”, and will therefore only bite in a more limited range of circumstances.
Mr Justice Bolton concluded that the Defendant had not, by its conduct, made it unjust to hold the Claimant to the one year limitation period and, accordingly, the Claimant’s application was dismissed. This may seem surprising, in view of the fact that the Defendant engaged fully in the Belgian proceedings for two and a half years without openly expressing any objection to the jurisdiction of the Belgian Courts. However, Mr Justice Bolton held that the mere silence of the Defendant was not sufficient to amount to “conduct” and that as a matter of Belgian law, the Defendant had been under no obligation to contest jurisdiction prior to service of its Defence Submissions. The ruling underlines the literal approach taken by the Courts in interpreting the intentionally restrictive wording of section 12 of the Arbitration Act 1996. It also highlights the need for claimants to ascertain the correct jurisdiction in which to commence a claim prior to expiry of the limitation period even where proceedings are on foot in another jurisdiction, where there is a possibility that the claim could be subject to English law and arbitration.