State immunity and salvage

In Tsavliris Salvage (International) Ltd v The Grain Board of Iraq [2008] EWHC 612 (Comm) the defendant sought to contest the enforcement of an arbitration award against it on the ground that the arbitrator had no jurisdiction, either because the defendant was not a party to the arbitration agreement or because it was entitled to state immunity.

Tsavliris: the facts

On 28 August 2006 the vessel MC Altair and her cargo of some 50,150.274 metric tonnes of wheat, while en route from Rostock to Umm Qasr (in Iran), ran aground in Kuwaiti waters. Attempts to refloat her were unsuccessful. On 1 September 2006 the owners, through the managers of the vessel, entered into a salvage agreement with Tsavliris. This was in Lloyd’s Open Form 2000 Edition and was on a ‘no cure no pay’ basis. Tsavliris undertook to use best endeavours to salve the property and to take it to a place of safety. The agreement was stated to be governed by English law and contained an arbitration clause requiring arbitration in London under the Lloyd’s Standard Salvage and Arbitration Clauses and Lloyd’s Procedural Rules.