Courtesy of Mr. Reid, though “the imagery comes from NASA’s Moderate Resolution Imaging Spectroradiometer (MODIS) satellite’s Rapid Response System which provides near real-time imagery of the Earth’s surface.”

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English arbitrations are generally certain, final and enforceable. They can be appealed in only limited circumstances, principally if the panel has erred as to its jurisdiction or on some point of English law or, and more rarely, if there has been some “serious irregularity affecting the tribunal, the proceedings or the award” (Arbitration Act 1996 s.68(1)).

Compania Sud-Americana de Vapores SA -v- Nippon Yusen Kaisha [2009] EWHC 1606 (Comm) is a rare instance of such an “irregularity” appeal coming before the courts.

Facts

Briefly, in September 2002 Compania Sud-Americana de Vapores SA (CSAV) and Nippon Yusen Kaisha (NYK) entered into an agreement (the SGEX agreement) for a joint trans-Pacific container service agreement with Kien Hung Ltd (KHL). Unhappy with KHL’s performance, on 7 April 2003 both CSAV and NYK served termination notices on Kien Hung, NYK relying on clauses 2.1 (90 days notice) and 11 (insolvency or change of control) and CSAV on clause 11 alone. The SGEX agreement itself ostensibly remained in place, and meetings ensued between CSAV and NYK over the next few months to explore the possibilities for replacing KHL. In the end, only NYK went ahead, with new partner Hamburg Sud.

Disputes then arose between CSAV and NYK, including in particular as to whether and when valid notice had been given terminating the SGEX agreement itself (rather than simply KHL’s involvement in it). The disputes were arbitrated in London. NYK claimed that it had given valid notice to terminate when it served notice on KHL, on 7 April 2003, and that the SGEX Agreement terminated 90 days later, on 6 July. CSAV denied this and counterclaimed damages for repudiatory breach.

The arbitration

NYK’s pleaded case included an allegation that the parties had jointly agreed to terminate the SGEX agreement during a meeting on 5 June 2003. Yet thereafter NYK gave every indication that the point was not being pursued: first, its chief witness averred in his statement that that pleading was mistaken (because it was based on incorrect facts); in opening oral submissions it did not rely upon or even refer to that point; and finally, when CSAV suggested that the point ought to be taken as abandoned, it made no response at all and certainly did not assert to the contrary.

However, on the fifth day of the arbitration and after its own witnesses had been dealt with, NYK itself raised the point in cross-examination of CSAV’s witnesses and was allowed to proceed despite objections from CSAV.

The arbitrators dismissed all of NYK’s defences to the counterclaim except that based on the 5 June agreement, and on a 2-to-1 margin ruled in favour of NYK on that basis.

The appeal

CSAV challenged the award under section 68 of the Arbitration Act 1996 on the ground that the arbitrators had relied upon a matter which CSAV had been given no chance to rebut and had thus acted contrary to the natural justice requirement in section 33 of the 1996 Act.

The relevant part of s.68 reads as follows:

“(1) A party to arbitral proceedings may…apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

…

(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant

(a) failure by the tribunal to comply with section 33 (general duty of tribunal);

…”

Section 33 of the Act basically provides that the tribunal shall act fairly and impartially and allow each side reasonable opportunity to present its case, adopting the correct procedures.

The hurdle is high in such cases and s.68 “is really designed as a long stop only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected” (para. 280 of the report of the Departmental Advisory Committee). The court had to decide, first, if there had been an irregularity and, second, if there had been, whether that “affected” the award.

The decision

The court found that there had been an irregularity. NYK argued that there had been no express abandonment of the case and cited the “Marie H” [2001] Lloyd’s Rep 707, 710 case in which the judge held that it is doubtful whether “anything short of unconscionable conduct would justify the court in setting aside the Award“. This was an unfortunate line for NYK to pursue because the court here expressly found that CSAV had made its understanding of the issue–and its importance to the case–so clear “that a reasonable person present would have concluded that the silence by NYK’s lawyers after the comments made by CSAV at the hearing in their presence and in the presence of the tribunal meant that NYK was not pursuing the argument based on an agreement on 4/5 June“. In other words, NYK and its lawyers can have been under no misapprehension that CSAV thought the point had been abandoned yet took no steps to disabuse them or the tribunal of that incorrect notion.

However, Beatson J went on to find that, notwithstanding the irregularity, the award would not be set aside because there was no substantial injustice to CSAV – the arbitrators had been entitled to conclude that they would have reached the same decision on the other evidence that the SGEX agreement had been terminated on 5 June 2003. The question here was this: Could what CSAV had been deprived of have made a difference to the final outcome? In the peculiar circumstances involved here, the answer was no.

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Legal 500 have given Sedgwick London an excellent write-up in their latest edition, under the Insurance and Reinsurance Litigation section:

Sedgwick Detert Moran & Arnold LLP has an excellent practice, with clients appreciating, among other things, its international reach. Sarah Hills is ‘very detail orientated’ while new addition to the team Jolyon Patten offers ‘sensible and commercial solutions’. It represented a large Bermuda insurer in respect of its insured’s involvement in the Buncefield oil depot explosion.

And, at the risk of own-trumpet-blowing, I am also happy to see my name again on the Legal 500 list of Leading Individuals for Insurance and Reinsurance Litigation.

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Well, yes, it has been pretty quiet here on ReRisk for a while and I could give you all some spiel, but basically I’ve been busy, then on holiday (twice) and so forth, and now I’m back, but even more basically…not much has happened in the Reinsurance (legal) world for a while, with the notable exception of

WASA -V- LEXINGTON

but it’s been so absolutely, comprehensively done to death already by every single commentator that I’m not going to say any more.

Let’s trust that as the dog days of Summer pass and we move into the new term there’ll be more to report. I should have one of the first cases in the new Supreme Court coming up soon, so that should be ink to the pen.

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No, this isn’t a story about how junior assistants (yes, I think they still do have them) are made to work 27 hours a day at this top tier City law firm, but rather that, a long time ago, Mr Freshfield had some clients who had links to the slave trade.

The FT today reveals that Freshfield
>and his sons had several slave-owner clients, mostly based in the Caribbean. The lawyers acted as trustees of the owners’ estates and in one case tried to claim unpaid legal fees for the firm through the government scheme set up to compensate owners after abolition.

Given the then-pervasive nature of the slave trade in British society, this seems to me not un-akin to marvelling nowadays that a lawyer has clients with links to the haulage industry. That is not remotely to excuse the practice of slavery, which must, in any culture at any time, be abhorrent. But to indulge in hand-wringing now seems to me questionable. To paraphrase from William Monahan’s generally good script in Kingdom of Heaven, “those who gave offence are not now alive; nor those who were offended”.

Mind you, it’s topical because I was lunching with a friend the other day who noted that his business card did not bear the full address of the company for fear of ramifications, given that the company has a large presence in the US. The offending part of the address? “Plantation Place”. I guess it plays differently in the States, where the ghastly realities of slavery were much closer to home.

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Even though from a software engineer’s perspective, this essay by Rands is one of the best things I’ve read about what it really means to manage people on a day-to-day basis.

The money quote?

Leadership is not just about effectively getting stuff done, but demonstrating through your composure that you aren’t rattled by the freakish.

And I like this on meetings:

You go to a lot of meetings. You already knew this, but Managers Go to Meetings. Meetings are the bane of my existence and I consider it my personal goal to kill as many possible, but I still go to a lot of meetings. As best I can tell, there are two useful types of meeting: alignment and creation. Briefly:

Alignment meetings sound like this: “It’s red, are we all in agreement it’s red? Ok, swell. Wait, Phil thinks it’s blue. Phil, here are the 18 compelling reasons it’s red. Convinced? Done now?”

Creation meetings sound like this: “We need more blue. How are we going to do that? Phil, you’re our blue man. What should we do here?”

Top marks, Rands.

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Willis offer an assessment of how the reinsurance industry is surviving the credit crunch. Key points:

1. Reinsurers’ balance sheets have stood up pretty well, especially compared to the parlous situation in the capital markets.
2. Access to capital is going to remain tight, so reinsurers are being cautious about risk exposure.
3. So prices are going up, especially in capital intensive lines (like US cat)
4. Primary carriers are looking for more reinsurance, so as to reduce their risk.
5. But those same carriers are still not charging enough on their own inwards business.
6. The lack of trust in credit rating agencies means that carriers appear to be spreading reinsurance purchasing wider, and syndicating more, rather than lobbing everything into 2 or 3 carriers alone. This means more opportunity for the smaller RI carriers (and more work for brokers).

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Continental Airlines flight 1404 was taking off from Denver, headed to Houston, when it veered off the runway and crashed. 38 people were injured, none seriously.

One of the passengers posted only-just-after-event messages (tweets) on Twitter about his experiences – a fine example of Web 2.0 almost operating on the Other Side.

“Holy f***ing sh*t I was just in a plane crash!” conveys a certain immediacy, I think. Poor soul couldn’t even get a drink at the bar afterwards!

Thanks to Bruce Carton for the steer.

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The City is getting to be a cold and windy place for many nowadays.

In homage, here is this Holga-ised shot taken from my office, with that Berlin-in-the-60s feel about it.

Brrrr.

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As of Friday, a $10,000 investment in the S.& P. stock market index* would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years.

Makes you think, doesn’t it?

Source: NY Times

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