Expofruit SA & Ors v. Melville Services Inc & Anor (Africa Reefer) [2015] EWHC 1950 (Comm)

The Commercial Court recently refused the Claimant’s application for a time extension for commencing arbitration in London, despite the Defendants having participated in Belgian court proceedings for the best part of three years before disputing the jurisdiction of the Belgian Court.  

The background facts

The underlying dispute between the parties arose from damage to a cargo of pears shipped from Argentina to Antwerp on board the Africa Reefer under a charterparty containing an arbitration clause. That clause was incorporated into the contract of carriage by the relevant bills of lading.

The Claimants commenced proceedings in the Belgian courts on 17 February 2010. The Defendants participated in these proceedings before objecting to the Belgian Court’s jurisdiction in November 2012. By that time, the Claimants had already missed the one year Hague/Hague-Visby time limit for commencing arbitration by more than a year. The Defendants argued that the dispute should be resolved in arbitration, whereas the Claimants argued that, under Belgian law, the arbitration clause did not apply.

The Belgian Court found, on 24 June 2014, that arbitration was the correct forum to hear the dispute. The Claimants appealed against that decision in September 2014 in Belgium and at the same time issued a Notice of Arbitration in London.

The Claimants then made an application to the English Court on 22 April 2015, pursuant to s.12 of the Arbitration Act 1996 (“the Act”), for an extension of 3 years and 8 months in respect of the one-year time limit for commencing arbitration. Specifically, the Claimants’ application relied on s.12(3)(b) of the Act, which provides that the Court may grant an extension for beginning arbitral proceedings where “the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question.”

It was common ground between the parties that the time for formally contesting jurisdiction in Belgium is when filing the Defence, after the conclusion of the Court Surveyor’s investigation, and that in participating in the Court Surveyor’s investigation, the Defendants neither waived their right to claim arbitration, nor submitted to the jurisdiction of the Belgian Court.

The Defendants submitted that they had in fact reserved their position in respect of arbitration at the outset of the Belgian proceedings, but this was disputed by the Claimants and the Commercial Court found that exchanges between the parties in relation to this issue were inadmissible. The question that fell to be determined by the English Court was, therefore, simply whether the Defendants’ participation in the Belgian proceedings made it unjust for them to hold the Claimants to the one-year time limit in the arbitration clause.

The Commercial Court decision

In finding in favour of the Defendants and rejecting the application for an extension of time, the Court noted in particular that the Defendants had followed the normal procedure in Belgium and had not been obliged to contest jurisdiction any earlier than they did, that the Claimants’ decision to litigate in Belgium was based on their “firm view” that the arbitration clause did not apply, and that the Claimants had not sought to commence arbitration when the Defendants first contested the Belgian Court’s jurisdiction. The Court therefore concluded that the Claimants could not rely on the conduct of the Defendants as having caused them to miss the time limit for commencing arbitration.

Comment

This judgment demonstrates that s.12 of the 1996 Act is much more restrictive than the position before the Act and extensions are now said to be “the exception rather than the rule”. In summary, the courts have decided that silence, or a failure to draw a claimant’s attention to the need to comply with a limitation period, will not make it unjust for a defendant to later rely on the time-bar. Further, the defendant’s conduct, whilst not necessarily wrongful or blameworthy, must be causative of the claimant’s failure to comply with the time-bar. Should the claimant delay in seeking the requested extension then this in itself may be relevant or even determinative.