JOL AND ANOTHER v JPM

[2023] EWHC 2486 (Comm), King's Bench Division, Commercial Court, Mr Justice Foxton, 9 October 2023

Arbitration – Interim relief from court – Whether court should order return of vessels – Arbitration Act 1996, sections 38 and 44

The owners bareboat chartered two vessels to the charterers.

The vessels were sub-chartered to GHH, and were sub-sub-chartered to PPM and were then further time-chartered. The obligations of the charterers were guaranteed by SRS, which owned 77.4 per cent of GHH and were 100 per cent owners of the charterers and PPM. The head bareboat charters contained termination events which permitted the owners to give notice of termination and to demand redelivery at a safe port at the charterers' expense: one of those termination events was SRS's shareholding falling below 77.4 per cent. Due to financial problems, by September 2023 the termination event had occurred. The owners contended that they had served a notice of termination.

Each of the parties appointed an arbitrator in readiness for LMAA arbitration. The owners applied to the court under section 44(3) of the Arbitration Act 1996 seeking interim orders that the charterers were to redeliver the vessels or at least to take "all and any steps" to do so. Section 44(3) provided that if the case was one of urgency an application could be made to the court without the consent of the tribunal or other party and the court was empowered to "make such orders as it thinks necessary for the purpose of preserving evidence or assets". By section 44(5) the power could be exercised "only if or to the extent that the arbitral tribunal … has no power or is unable for the time being to act effectively".

Foxton J refused the orders.

(1) It was not disputed that the word "assets" in section 44(3) encompassed contractual rights. However, caution was required in that an interim order might in practice be final and undermine the role of the arbitrators.

(2) The arbitrators had no power to grant interim relief themselves: section 38 did not confer such power and there was nothing in the LMAA Rules that permitted them to do so.

(3) In the present case there was no urgency. The arbitrators could in principle produce a final award within a relatively short period, and in the meantime there was no demonstrable risk to the vessels.