Section 72 of the Arbitration Act 1996 allows a party that has not participated in arbitration proceedings to challenge an award in court and ask for ‘appropriate relief’.
The first step in arbitration proceedings is service of an arbitration notice. If service of this notice is not effective, the arbitration proceedings that follow and the resulting award might be set aside by the court.
The Arbitration Act 1996 allows parties to agree on a manner of service, failing which a notice must be served ‘by any effective means’. It is well established that service via email, a common industry practice, can be an effective method of service (Bernuth Lines Ltd -v- High Seas Shipping Ltd (The Eastern Navigator) (2006)). However, as discussed in Glencore Agriculture BV -v- Conqueror Holdings Ltd (2016), it is also important that the recipient of the email has authority to receive legal notices. If not, service will be invalid.
Glencore Agriculture BV (Glencore) applied to the English High Court to set aside an arbitration award in favour of Conqueror Holdings Ltd (Conqueror). Glencore had received the final arbitration award by post and, according to its own submissions, had no knowledge of the arbitration proceedings which led to the award.
The arbitration was commenced by Conqueror in 2016 due to a dispute under a charterparty relating to Glencore’s charter of the vessel “AMITY”.
Conqueror sent the arbitration notice to the email address of an employee of the operational department of Glencore. This email address was a company email address of Glencore, allocated to, as it turned out, a former employee in question and Conqueror had previously communicated with the employee through that email address.
Glencore did not respond to that arbitration notice. Conqueror proceeded with appointing a sole arbitrator and submitting claim submissions.
The arbitration concluded with the sole arbitrator issuing a final award in favour of Conqueror. Throughout the arbitration proceedings there was no participation by Glencore.
High Court proceedings
The issue before the High Court was whether or not service of the arbitration notice to the email address of Glencore’s employee was effective.
Glencore argued that agency principles should apply and that the recipient of the legal notice must have actual, implied or ostensible authority to accept service. However, the employee in question did not have such authority.
Conqueror stated that because the employee’s email address was a company email address, service should be deemed effective. Reliance was placed on Bernuth Lines Ltd -v- High Seas Shipping Ltd (2006), where it was held that service to a company’s generic email address can in the right circumstances be effective service, regardless of whether it had been presented as an official address for accepting service of legal notices.
The Court agreed with Glencore that agency law applied, even though the person in question in the present case was not an agent but an employee. Further, the court held that there was a difference between a generic email address and an email address specific to a particular individual.
The Court found that the employee in question did not have express, implied or ostensible authority to accept service. The Court referred to Eder J’s dicta in Sino Channel -v- Dana Shipping (2016) that:
‘even where an employee or agent has a wide general authority to act on behalf of his employer/principal, such authority does not (without more) generally include an authority to accept service of a notice of arbitration.’ (Note that the judgment in Sino Channel -v- Dana Shipping has since been overturned, although Eder J’s dicta quoted above has not been disapproved by the appeal court).
The arbitration award was consequently set aside.
As most contracts and charterparties do not contain express provisions for the service of legal notices, the fall-back position is to serve by any effective means. Although the law has moved considerably with the times in accepting service by email, there is a high threshold to be met before an individual is deemed to be authorised to accept service.
The consequences of invalid service of an arbitration notice are not only limited to having to carry the costs for a wasted arbitration. It is also possible that by the time it becomes apparent that service was ineffective, the initial claim is time barred. This issue is of particular importance with regard to trade association arbitration, many of which usually provide for shorter time limits than the default, statutory, sixyear limit for contractual claims under English Law.
The most cautious approach would be to include a service provision in the applicable contract; alternatively to provide a ‘notices’ clause in the contract with details as to whom any and all notices under the contract should be sent. If this is not possible, parties are best advised to serve arbitration notices by post to the company’s registered address at the same time as sending it to a generic email address which has been promulgated by the counterparty as an official company’s email address (for example on its website).