FIMBANK PLC V KCH SHIPPING CO LTD

[2020] EWHC 1765 (Comm), Queen’s Bench Division, Commercial Court, Mrs Justice Cockerill, 3 July 2020

Arbitration – Charterparty – Arbitration commenced against wrong party – Contractual twelve-month time bar – Extension of time – Arbitration Act 1996, section 12

The claimant bank was the holder of bills of lading in respect of a cargo of coal shipped from Indonesia to India. The bills contained a London arbitration clause and incorporated the Hague-Visby Rules, article III rule 6 of which imposed a one-year time bar from completion of delivery. The cargo was carried on the vessel Giant Ace, owned by Mirae Wise SA (MW) and bareboat chartered to KCH. There were also two sub-charters. The cargo was delivered against letters of undertaking rather than the bills, and the bank’s lawyers issued a letter before action to MW in the mistaken belief that MW had been the carrier. Time was extended on behalf of the owners, who were not identified. The bank issued an arbitration notice in June 2019, within the extended limitation period, but only against MW and not KCH even though the bank’s lawyers had become aware by that time that KCH had been the carrier. In the present proceedings brought in November 2019, the bank applied to the High Court for an extension of time for commencing arbitration against KCH, under section 12(3) of the Arbitration Act 1996, on the alternative grounds: (a) “that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time” and (b) “that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question”.