Glencore Agriculture B.V. v Conqueror Holdings Limited (m/v Amity) [2017] EWHC 2893 (Comm)

The Commercial Court has recently allowed an application to set aside an arbitration award on the grounds that the arbitration notice had not been properly served as it was sent to the email address of a junior employee. The Court held that the employee had neither actual (whether express or implied) authority, nor ostensible authority, to accept service.

The background facts

The Claimants voyage chartered the vessel from the Owners. A dispute arose between the parties in relation to delays at the load port, with the Owners seeking to claim damages for detention and the Charterers refusing to pay. The Owners purported to commence arbitration by serving notice on the email address of one of the Charterers’ employees, who had sent a few operational email messages to the Owners at the time that the delays at the load port had arisen. The claim submissions and several other messages were also subsequently sent to his email address, notwithstanding that no response whatsoever was received to any message. Subsequent evidence from the Charterers indicated that that individual was a relatively junior employee in the operations department with a largely back office role. It also later transpired that the employee had left the Charterers’ employ sometime after the notice of arbitration had been sent to his email address.

The Charterers did not engage with the arbitration and the Owners obtained an award in their favour. The Charterers subsequently sought to have the award set aside on the grounds that the arbitration notice had not been properly served on them.

The Commercial Court decision

The Court found in favour of the Charterers and set aside the award.

The Court indicated that sending the notice of arbitration to the email address of an employee of the Charterers would not of itself constitute sufficient service. There was a distinction to be drawn between an email address that is a personal business address of an individual, and one that is generic – for instance, one that has been promulgated by the organisation or identified on its own website (e.g. info@domainname.com). Where an individual email address is used, the sender will reasonably expect the email to be opened and read by the named individual. A promulgated generic email address gives rise to the legitimate expectation that communications relating to that business will come to the attention of a person internally authorised to deal with them. However, as in this case the notice of arbitration was sent to an individual, the Court had to consider whether that individual had authority to accept service of legal process. This brought into play agency principles.

Reference was made to the recent Commercial Court and Court of Appeal decisions in Sino Channel Asia Ltd v. Dana Shipping and Trading PTE Singapore, in which it was emphasised that accepting service of originating process is a serious matter and that there was a clear distinction between general authority to conduct business and particular authority to accept service of legal process.

Actual authority may be express or implied. It is express when it is given by expressed words. As to implied authority, an agent has (1) authority to do whatever is ordinarily incidental to what he is expressly authorised to do; and (2) such authority as is to be inferred from the conduct of the parties and the circumstances of the case.

The Court here held that the Commercial Court reasoning in Sino Channel (a case that was reversed on appeal on the facts) was correct, namely 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”.

In this case, the Charterers’ employee had no actual authority (whether express or implied) to accept service of legal process because his role within the company was related to the conduct of the company’s ordinary commercial activities, which are different and distinct from those functions involving dispute handling or dispute resolution. On the facts, the Court found also that the employee had no ostensible authority to accept service of the notice of arbitration.

Comment

This decision is a particularly useful reminder of the importance of identifying whether the party or individual being served with a notice of arbitration has authority to accept service of legal process. The fact that a certain individual has handled the matter at the time of the dispute does not necessarily imply that the individual has authority to accept service. When in doubt, it is advisable to serve the notice of arbitration by post at the company’s registered address and/or on generic email addresses that have been promulgated by the organisation as the company’s email address.