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ASSIGNMENTS, ASSIGNEES AND THE BURDEN OF AN ARBITRATION CLAUSE

Lloyd's Maritime and Commercial Law Quarterly

ASSIGNMENTS, ASSIGNEES AND THE BURDEN OF AN ARBITRATION CLAUSE

CH Tham*

It is trite that only “benefits” but not “burdens” can be assigned. However, it is thought that the “burden” of arbitration agreements still “binds” assignees of choses in action which fall within their ambit, even where the assignee must have taken the assignment while ignorant of the arbitration agreement. In The Jay Bola, Hobhouse LJ explained why this is so by drawing an analogy with the equitable rule that equities arising between debtor/obligor and the assignor shall also bind the assignee. That explanation has been criticised. It has also been confused with the “principle of conditional benefit and burden” set out by Megarry V-C in Tito v Waddell (No 2). By examining the reasoning in The Jay Bola more deeply, its distinctiveness and consistency with the proposition that burdens cannot be assigned becomes clear.
* Professor of Law, Yong Pung How School of Law, Singapore Management University. Many thanks are owed to Professor Adrian Briggs, Professor Robert Stevens and Associate Professor Darius Chan for their comments and suggestions in response to earlier drafts of this article, but all errors remain my own.
The following abbreviations are used:
Bowstead & Reynolds (2021): P Watts and FMB Reynolds, Bowstead & Reynolds on the Law of Agency, 22nd edn (London, 2021);
Enka Insaat: Enka Insaat ve Sanayi AS v OOO “Insurance Company Chubb” [2020] UKSC 38; [2020] 2 Lloyd’s Rep 449; [2020] Bus LR 2242; [2020] 1 WLR 4117.
Guest (2021): YK Liew, Guest on the Law of Assignment, 4th edn (London, 2021);
Jay Bola, The: Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading GmbH [1997] 2 Lloyd’s Rep 279 (CA);
Judicature Act 1873, or 1873 Act: Supreme Court of Judicature Act 1873;
Leage, The: Rumput (Panama) SA and Belzetta Shipping Co SA v Islamic Republic of Iran Shipping Lines (The Leage) [1984] 2 Lloyd’s Rep 259;
Liew (2021): YK Liew, “Explaining Assignments of Arbitration Agreements” (2021) 80 CLJ 101; LPA 1925: Law of Property Act 1925;
Merkin & Flannery (2014): R Merkin and L Flannery, Arbitration Act 1996, 4th edn (Abingdon, 2014);
Prestige, The: The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain (The Prestige) [2021] EWCA Civ 1589; [2022] 1 Lloyd’s Rep 539;
Smith & Leslie (2018): M Smith and N Leslie, The Law of Assignment, 2nd edn (Oxford, 2018);
Tham (2019): CH Tham, Understanding the Law of Assignment (Cambridge, 2019);
Tolhurst (2016): G Tolhurst, The Assignment of Contractual Rights, 2nd edn (Oxford, 2016);
Tito v Waddell (No 2): Tito v Waddell (No 2) [1977] 1 Ch 106;
Ust-Kamenogorsk: Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35; [2013] 2 Lloyd’s Rep 281; [2013] Bus LR 1357; [2013] 1 WLR 1889.
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