In Classic Maritime Inc v Lion Diversified Holdings Berhad and Limbungan Makmur SDN BHD  EWHC 1142 (Comm), the second Defendant, Limbungan, applied for a stay of High Court proceedings in favour of arbitration under section 9 Arbitration Act 1996. In support of its application, Limbungan relied on an arbitration clause in a contract of affreightment (COA) between Limbungan and the Claimant, Classic Maritime. Classic Maritime contended that the COA had been varied by a guarantee given by the first Defendant, Lion. The guarantee, under which Lion guaranteed the obligations of Limbungan, contained an English courts law and jurisdiction clause and provided that Classic Maritime could pursue actions against Lion and Limbungan together or separately. Classic Maritime submitted that as the guarantee had been procured by Limbungan in relation to the COA in dispute, Limbungan had impliedly consented to a variation of the arbitration clause contained in the contract and had agreed to being sued in the English courts either jointly or separately.
The court rejected the notion that the terms of the guarantee could vary the terms of the contract between Classic Maritime and Limbungan. Cooke J noted that such a variation cannot be lightly implied and looked at the negotiations both in relation to the COA and the guarantee. He found that Lion did not purport to commit Limbungan to an English law clause and nor was there any basis for finding that Limbungan had agreed to be bound by the English law clause contained in the guarantee. There was nothing to indicate that Limbungan had wished to be or had agreed to be sued in the English courts. Accordingly, Cooke J granted a stay of the proceedings against Limbungan in relation to the COA in favour of arbitration.