Excel Exports Co (S) Pte Limited v The Ship 'Xing Zhi Hai' (IMO 9728356)

[2020] NZHC 3292

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1680

[2020] NZHC 3292

BETWEEN

EXCEL EXPORTS CO (S) PTE LIMITED

Plaintiff

AND

THE SHIP “XING ZHI HAI” (IMO 9728356)

Defendant

Hearing:

9 December 2020

Appearances:

P Davies for the plaintiff

B J Marten and M W McCarthy for the defendant

Judgment:

14 December 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 14 December 2020 at 4.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

Fee Langstone, Auckland Izard Weston, Auckland

EXCEL EXPORTS CO (S) PTE LIMITED v THE SHIP “XING ZHI HAI” (IMO 9728356) [2020] NZHC 3292

[14 December 2020]

[1]                 In this proceeding, the plaintiff (“Excel”) seeks to recover USD 2,007,132.13 as the value of some 43,000 pine logs carried on board the defendant ship Xing Zhi Hai for TPT Shipping Limited from ports in Tauranga and Marsden Point on 16 and 22 February 2020 respectively for discharge in India.

[2]                 On the present application, the ship’s owner seeks the proceeding be stayed under article 8(1) of Schedule 1 to the Arbitration Act 1996,1 which provides:

A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.

(Emphasis added.)

The italicised passage is additional to the corresponding words of the Model Law.

Background

[3]                 Excel alleges the cargo was discharged to a third person. The cargo was carried on terms of bills of lading held by Excel, intending Excel had rights to the cargo’s possession. (On the strength of the claim, the ship was arrested but since has been released on alternative provision of security.)

Discussion

[4]                 There accordingly are two questions for my determination: is the matter in issue in the proceeding the subject of an arbitration agreement? And (there being no argument as to any agreement’s nullity) is there in fact any dispute for reference to arbitration?

1      A note to Schedule 1 explains:

The provisions of this schedule correspond, for the most part, to the provisions of the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985, and approved by the General Assembly of the United Nations on 11 December 1985 (General Assembly Resolution 40/72). Certain changes have been made to amend or supplement the provisions of the Model Law in its application to New Zealand. The original numbering of the articles of the Model Law and their paragraphs has been retained.

—is there an arbitration agreement?

[5]                 The bills of lading are expressed in terms of “Freight payable as per CHARTER PARTY dated 20/01/2020”, on conditions of carriage including “All terms and conditions, liberties and exceptions of the Charter Party … including the Law and Arbitration Clause are herewith incorporated”. They appear to be in standard form for use with charter parties made under “Congenbill edition 1994”.

[6]                 For the ship’s owner, Xingzhi Shipping Limited, Boya Ni deposes the ship was time-chartered to Yangtse Navigation (Asia) Co Limited under a charter party dated 22 January 2020, which in turn entered into a voyage charter with TPT Shipping Limited. The latter is described as “Charter Party dated 20-JAN-2020 … [o]therwise as per Yangtse Navigation / TPT last done fixture with logical amendments as per main terms agreed”. That “last done fixture” is said to be a charter party dated 14 October 2019 between Yangtse Navigation and TPT Shipping.

[7]                 Excel objects to Boya Ni’s evidence as hearsay. I prefer to regard it as an expression of the ship owner’s comprehension, rather than necessarily being “offered in evidence at the proceeding to prove the truth of its contents”.2 Thus the ship’s owner comprehends the bills of lading incorporate the 14 October 2019 charter party’s clauses 60, titled “Arbitration” and including “[a]ny dispute arising from or in connection with this Charter Party shall be referred to arbitration in London”, and 61, titled “Governing law” and stating “This Charter Party shall be governed in all respects by the law of England”. So far as it goes, that is admissible evidence.

[8]                 For Excel, Pauline Davies argues the bills of lading’s reference to a singular “Law and Arbitration Clause” is not met by the 14 October 2019 charter party’s separate arbitration and governing law clauses. Be that as it may, the bills of lading at least refer to arbitration, which must carry some meaning. Excel offers no alternative to the ship owner’s comprehension that is to arbitration in London. It is a matter of construction for the arbitral tribunal, whether there or elsewhere (depending on the “Law and Arbitration Clause”), in determining its own jurisdiction.3

2      Evidence Act 2006, s 4(1), definition of “hearsay statement”.

3      Arbitration Act 1996, sch 1 art 16(1).

[9]                 I need not go further than to assess if there is a prima facie case for the existence of an applicable arbitration agreement,4 as consistent with policy in favour of parties’ autonomy to “use of arbitration as an agreed method of resolving commercial and other disputes”.5

[10]              Prima facie, the bills  of  lading’s  incorporation  of  a  charter  party  dated  20 January 2020, “including the Law and Arbitration Clause”, is itself an arbitration agreement:6

… an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not”.

On their face, the bills of lading’s incorporation of a clause so titled carries the inference the parties have agreed to submit disputes to arbitration. It is the “ordinary and natural meaning” of the use of the words “Arbitration Clause”, “a powerful, albeit not conclusive, indicator of what the parties meant”.7

—is there a dispute?

[11]              Article 8(1)’s reference to “any dispute” is narrowly to be construed. 8 It is not determined by availability of an arguable defence.9 The existence of an unadmitted claim will do,10 at least in circumstances in which such was to leave the claim unresolved.11 That is to say the claim must be “disputable”;12 one in which it is not “immediately demonstrable either that the defendant is not acting bona fide in

4      Ursem v Chung [2014] NZHC 436, [2014] NZAR 1123 at [32]. Phillip Green (ed) Green & Hunt on Arbitration Law & Practice (online looseleaf ed, Thomson Reuters) at [ARSch1.8.02], David AR Williams and Amokura Kawharu Williams & Kawharu on Arbitration (2nd ed, LexisNexis, Wellington, 2017) at [3.12] and [4.13.1].

5      Arbitration Act 1996, s 5(a).

6      Section 2(1), definition of “arbitration agreement”. See also sch 1 art 7(1): “an arbitration agreement may be in the form of an arbitration clause in a contract”.

7      Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand [2014] NZSC 147, [2015] 1 NZLR 432 at [63].

8      Zurich Australian Insurance Ltd t/a Zurich New Zealand v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383 at [36].

9 At [51].

10 Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) at [68]; affirmed on appeal in Amec Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA Civ 291. See also Haliki Shipping Corp v Sopex Oils Ltd [1998] 1 WLR 726 (CA).

11 Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454 (CA) at 471.

12   Zurich Australian Insurance Ltd t/a Zurich New Zealand v Cognition Education Ltd, above n 8, at [36].

asserting that there is a dispute or that there is, in reality, no dispute”.13 The ‘added words’ filter out game-playing,14 rather than establish any “departure from the approach required under art 8(1) of the Model Law”.15

[12]              Here, absent admission, even if its possession of the bills of lading incontrovertibly establishes its right in law to possession of the logs as Excel contends, it must prove the latter possession is unavailable to it in fact, and causing loss. That is the subject matter of any dispute. Under the Model Law and the Act, on request, the parties then are to be referred to applicable arbitration.

[13]              I therefore need not further to address Excel’s objection to the ship owner’s reply evidence, which I admitted on the basis Excel’s notice of opposition put existence of any dispute in issue. As s 8(1)’s negative stipulation, the Court’s prospective ‘finding’ there is “not in fact any dispute” between the parties falls more naturally on opposition to the otherwise mandatory stay.

Result

[14]              The proceeding is stayed, and the parties referred to arbitration in terms of the bills of lading.

Costs

[15]              In my preliminary view, as the successful party, the ship’s owner is entitled to 2B costs and disbursements on steps taken in the application. That is because, so far as I can tell, no step in this averagely complex application required other than a normal amount of time.

[16]              If that is not accepted by the parties, or they cannot otherwise agree, I reserve costs for determination on short memoranda of no more than five pages – annexing  a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by the ship’s owner within ten working

13 At [52].

14 At [39].

15 At [49].

days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.

—Jagose J