ASM Shipping Ltd of India v TTMI Ltd of England [2005] APP.L.R. 10/19 - PDF

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JUDGMENT : Morison J : Commercial Court. 19 th October This is an application made under section 68 of the Arbitration Act The arbitration arose out of disputes between owners A.S.M. Shipping
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JUDGMENT : Morison J : Commercial Court. 19 th October This is an application made under section 68 of the Arbitration Act The arbitration arose out of disputes between owners A.S.M. Shipping Ltd of India [ʹthe ownersʹ] and charterers, T.T.M.I. Ltd of England [ʹthe charterersʹ]. The essential ground upon which this application is based is that one of the three arbitrators, namely X QC [nominated by the other two arbitrators] should have recused himself. The Ownersʹ principal witness was a Mr Moustakas. In a previous arbitration, X QC had been involved as an advocate on behalf of other charterers against other owners. In that arbitration serious allegations had been made against Mr Moustakas. 2. The background to the arbitration can be taken from a judgment of Mr Justice Christopher Clarke on a matter relating to security for costs. He said: ʺ2. The background to this application is as follows. On 11th December 2002 TTMI Ltd. chartered from ASM Shipping Ltd. of India the AMER ENERGY to carry a cargo of gas oil from one or two safe ports in the Arab Gulf to one or two safe ports in the Red Sea or Egyptian Mediterranean. The vessel was described in the fixture recap as ʺexpected ready around 20th December all going wellʺ and the laycan dates were 25th December to 27th December. The vessel was at this time anchored at Fujairah undergoing repairs. Whilst there, she was arrested by Shell on 7th November for bunkers and on 26th November by Inchcape for services, those arrests being in respect of very modest sums. 3. The arrests were not lifted until 2nd January 2001 and she departed from Fujairah the next day. She arrived at the nominated load port of Mina al-ahmadi only on 6th January The charterers claimed that by reason of the vesselʹs late arrival they suffered substantial losses because of an increase in the price of the cargo and because they lost their intended purchase contract. The dispute was referred to arbitration in March The owners counterclaimed that they were entitled to substantial unpaid freight and demurrage. The cargo was in the end carried to Indonesia. 4. During the course of the still unconcluded arbitration, the arbitrators have made a number of awards. On 26th April 2001 the Tribunal made an award in ownerʹs favour in respect of freight in the sum of US$640,100 together with interest at 7.5 per cent to be compounded at three monthly rests and costs. By an agreement between the parties a sum of $707,500 was paid into a joint interest-bearing escrow account at the Royal Bank of Scotland on 28th June On 23rd October 2002 owners applied to the Tribunal for an immediate award in their favour in respect of the demurrage claimed of $202,390. On 18th November 2002 the Tribunal dismissed that application and ordered the owners to pay to the charterers their costs of the application for such an award. 5. There has been a substantial dispute as to whether the owners had properly complied with their obligation to give disclosure. The Tribunal made serious criticism of the ownersʹ behaviour in this respect and on 16th July 2004 ordered them to pay all the charterersʹ costs relating to the charterersʹ application for disclosure of ownersʹ files within 14 days of the amount of those costs being fixed. 6. On 24th September the Tribunal made another award in which they declined to review or withdraw their July award and in which they determined that the charterersʹ costs covered by that July award were 14, They ordered the owners to pay those costs plus interest together with 9,085.00, the costs of the September award, making 23, in all. They also ordered owners to pay the charterersʹ costs of the application to review the earlier award. 7. On 23rd December 2004 the Tribunal determined a number of preliminary issues largely in the charterersʹ favour holding, amongst other things, that owners had been obliged to ensure that the vessel embarked upon her approach voyage within such time that it was reasonably certain that she could arrive at the load port so as to comply with the laycan of 20th to 27th December and holding that an exceptions clause in the charter did not avail the owners for their failure so to do. The owners took up this award in January 2005 paying the cost of the same, that is to say, 43,600.ʺ 3. The parties were notified of Xʹs appointment as third arbitrator on 4 August 2004, by which date the hearing of a number of preliminary issues had been fixed for three days, between 5 to 7 October On 27 September 2004, Mr Siberry QC, who had been retained by owners in this dispute and was instructed to act for them at the forthcoming hearing, informed his instructing solicitors that he would be unable to represent them at the hearing because of a family bereavement. He suggested that a request be made for a Arbitration, Practice & Procedure Law Reports. Typeset by NADR. Crown Copyright reserved. 1 short adjournment. A letter was sent to X QC on that day and by letter dated 28 September the application was rejected. With great reluctance a new QC was retained at short notice. The hearing commenced on 5th October and Mr Moustakas was due to give evidence shortly after lunch that day. During the morning, the ownersʹ solicitor [Mr Zaiwalla] greeted X QC and Mr Moustakas, having inquired who he was, told Mr Zaiwalla that X QC had close connections with the charterersʹ solicitors [Waterson Hicks] and suggested that an objection to X QC continuing to act as an arbitrator should be made. Mr Zaiwalla was not, at that time, aware of the grounds for his clientʹs misgivings and because the time for the hearing had arrived there was no opportunity to discuss what Mr Zaiwalla had been told with leading counsel, Mr Simon Crookenden QC, although it was mentioned to him. 4. Mr Moustakas had also spoken to Mr Zaiwallaʹs assistant and had told her that X QC had been instructed on the ʹBʹ case by Messrs Waterson Hicks, the charterersʹ solicitors, and that in that case serious allegations of a personal nature had been made against Mr Moustakas. Waterson Hicks were acting for the charterers in this arbitration. That evening, Mr Moustakas had not completed his evidence and the case was to resume the next day. Mr Zaiwalla considered the position and concluded that had X QC been involved as Mr Moustakas was saying then he surely would have recused himself and that he could not talk with Mr Moustakas about this, to make further inquiries, as he was in the middle of his evidence. It was only after Mr Moustakas had completed his evidence that X QC intervened and said he wanted to make a disclosure about his involvement with the B case against Mr Moustakas and he invited the parties to consider what he had said. At that stage Mr Zaiwalla immediately took instructions from Ownersʹ representatives and was instructed to object to X QC continuing to sit as an arbitrator. Mr Crookenden QC suggested that as he had not had time or the opportunity to consult with his clients, the hearing should continue with Owners reserving their position on their stated objection to X QC continuing to sit. 5. Later that day, ownersʹ solicitors wrote to X QC setting out their reservations about him continuing to sit. The essence of the objection is to be found in the third, fourth and fifth paragraphs of that letter: ʺWe have now spoken with Mr Moustakas and he tells us that all his papers have been sent by him to his Greek Lawyer and, therefore, he is not in a position to immediately provide us with documents concerning the nature of the allegations which Waterson Hicks had made against him in the case of the vessel B. However, we understand from Mr Moustakas that in that case, like in this case, Waterson Hicks had mounted an attack on their opponent alleging impropriety in giving discovery and in the correspondence had personally accused Mr Moustakas of producing fraudulent and fabricated documents and had threatened forensic investigation to verify the authenticity of those documents in Mr Moustakasʹ file. In other words in that case Waterson Hicks had alleged a criminal act on part of Mr Moustakas. In the end Mr Moustakasʹ file was disclosed and we are told nothing of interest was found and the allegations were totally unfounded. As you had acted for Waterson Hicksʹ clients in the B case, it is most likely that Waterson Hicks would have mentioned those unfounded allegations against Mr Moustakas to you in the course of your instructions. This in Ownerʹs view would have made you unsuitable to accept a judicial office in a case where you knew that Mr Moustakas was going to be one of the two key witnesses for one of the parties. In the circumstances, we would request you to please provide full documents concerning the B and provide details of each and every allegation which were made by your then instructing solicitors Waterson Hicks against Mr Moustakas. In the event that you do not have the documents then would you be so good to request your instructing solicitors Waterson Hicks in the B case to make available the documents. Perhaps, Waterson Hicks could check with the partner concerned and confirm that what is said above is indeed correct about the nature of the allegation they have made against Mr Moustakas in the B case.ʺ 6. At the beginning of the third day, the charterers told the ownersʹ representatives that if X QC recused himself they would agree to the arbitration continuing with the two other arbitrators. That was agreed in principle, but was not put to the Tribunal as X QC indicated that he was not intending to stand down. He had prepared a lengthy statement which he read out. 1. I have now had the opportunity to refresh my memory by reviewing my own papers in the B overnight and consider further the position in relation to Mr. Moustakas. For reasons which will become apparent I do not have public documents in relation to the case or indeed any of the papers sent to me in connection with it, but for reasons which will also become apparent I do not consider that a matter of concern. Arbitration, Practice & Procedure Law Reports. Typeset by NADR. Crown Copyright reserved. 2 2. The B involved a dispute in arbitration between Owners and Charterers under a charter in which Mr. Moustakas was the broker. The dispute appears to have concerned, among other things, an issue as to the terms of the charter in circumstances where there was no signed charter document, not an uncommon factor. 3. I became involved in the case shortly before the hearing of an application to the High Court under section 43 of the Arbitration Act 1996 for Mr. Moustakas to produce his fixture file. I was not originally instructed in the matter and indeed did not prepare the application; other Counsel were previously (and for that matter subsequently) involved who were unavailable for the hearing. 4. The application was a perfectly standard application for production of documents. 5. As I indicated yesterday, production was being resisted on the grounds of confidentiality and privilege. The application raised no allegations of impropriety, let alone criminal conduct, on the part of Mr. Moustakas that I am aware of. As is perfectly normal in such cases, the production of the whole file was considered important so that the chronological sequence of documents be retained. 6. The application came on before Cresswell J who promptly indicated in argument that he felt matters of privilege and confidentiality were properly to be addressed by the Tribunal before whom the substantive hearing was to take place. He accordingly urged the parties to reach accommodation with each other. Discussions were held between the respective lawyers so far as I am aware, Mr. Moustakas was not present and I have never met him before this hearing or had any contact with him as far as I am aware. This makes somewhat surprising the suggestion in Mr. Zaiwallaʹs fax of 6 October 2004 that Mr. Moustakas reacted to having seen me in the corridor, since I am not aware of his having set eyes on me before. In any event, a consent order was agreed between the lawyers whereby the file would be produced to the Tribunal on certain terms. 7. I made no further application. I am aware of the fact that there was a complaint that the consent order was not complied with. I did not make the application or applications, if there was more than one, relating to that as the Counsel previously involved resumed conduct of the case and I was in any event taken up with other matters and unable to assist. I have absolutely no idea whether the complaint of non-compliance with the consent order was good or bad or as to what happened on any subsequent application or applications as I have not since been involved in the case and as I indicated earlier I have not retained the papers I was sent. 8. Mr. Zaiwalla yesterday raised the suggestion of criminal allegations. I cannot hazard what they might be, save I suppose criminal contempt for non-compliance with the consent order. As I have indicated, I do not know what happened in relation to the allegation of non-compliance with the order. I note however from Mr. Zaiwallaʹs fax to me, copied to the other members of the Tribunal and to Waterson Hicks, of 6 October 2004 that the file was subsequently disclosed and nothing of interest was found. I have no reason to doubt that. I do not recall making or Waterson Hicks or their clients making any allegation of producing fraudulent and fabricated documents and threatening forensic investigation and there is no reference to this in the preparatory note of oral submissions which I prepared for the hearing, but again I have no basis for thinking that any such allegation, even if made, was ever substantiated. There does appear to have been an argument raised by the other side in that case and contested by Waterson Hicksʹs clients that 2 documents were shams drawn up at a later date. I have no idea what happened, if anything, to that allegation but it was certainly not one being made by or on behalf of Waterson Hicksʹs clients. 9. As far as I am concerned nothing relating to that case gives rise to any doubt in my mind as to the propriety of Mr. Moustakaʹs conduct. 10. The question has been raised as to why I did not raise the matter earlier. The simple answer is that I did not have my short involvement in the B case in mind and had simply not made any connection with a Mr. Moustakas who was to be a witness in this case until shortly before I raised the matter with the parties. My involvement in the B related to an utterly innocuous hearing applying for a 3rd party to produce documents in respect of which he expresses perfectly proper and common place reservations about confidentiality and privilege and the facts had made no profound impression on me. The first occasion on which I made the connection was when Mr. Moustakas towards the very end of the second day of his evidence referred, it seemed to me somewhat pointedly, to another case to do with the production of a file which for the first time rang bells with me. 11. Mr. Moustakasʹs evidence finished a few minutes later and I immediately raised the matter with my co-arbitrators and made a declaration to the parties to address the matter. Arbitration, Practice & Procedure Law Reports. Typeset by NADR. Crown Copyright reserved. 3 12. I considered then and I still consider now that there is no basis for recusing myself as I do not believe that any circumstances exist which give rise to justifiable doubts as to my impartiality. Indeed, I believe that it would be thoroughly inappropriate to recuse myself in the absence of any such circumstances and in the light of the extent of my involvement at the stage reached in the proceedings so far. 13. I observe from Mr. Zaiwallaʹs fax of 6 October 2004 that Mr. Moustakas had raised my involvement in the B before he began to give evidence. I do not consider that anything that has emerged since has altered the position. If there was an objection to be made it could and should have been made then and could have been addressed then. Owners were clearly at the very least put on inquiry simply on the basis of what Mr. Zaiwalla says in his fax. 14. I also observe that Mr. Zaiwallaʹs fax of 6 October 2004 suggests some similarity of tactics on the part of Waterson Hicks in making allegations about impropriety in connection with disclosure. It is a feature of a very large number of cases these days that such allegations are made, they are not the trademark of any one firm. 15. I have already addressed the question of the extent of my connections with Waterson Hicks and produced the necessary and relevant figures which frankly speak for themselves: since February 1994 I have been instructed as counsel by Waterson Hicks on 10 cases and as mediator in one case; over the same period I have been instructed to act in over 400 cases. Mr. Zaiwalla asks for written disclosure of the number of cases in which I have acted for Waterson Hicksʹs clients in the last two years. Other than the B, my only other work for Waterson Hicks in the last two years was appointment as mediator on 27 November 2003 for a mediation which took place on 3 December Without wishing to cause any offence to Waterson Hicks, my professional contact with them (as the figures show) is very small in the context of my practices as a whole, representatives of their firm are amongst the approximately 500 people who attend my Chambersʹ summer party and I have no personal contact with any person at Waterson Hicks. I have also met them at public professional functions such as the LMAA dinner; I have also in fact sat with Mr. Zaiwalla at an LMAA dinner and enjoyed a perfectly pleasant evening, though he seems to have no recollection of the occasion, a matter which I certainly do not hold against him. 17. I have read Mr. Zaiwallaʹs account of a matter concerning the clerksʹ room at 20 Essex Street. I had no previous knowledge of this prior to Mr. Zaiwallaʹs letter. I am grateful to be made aware of it and will, with the consent of both parties, pass Mr. Zaiwallaʹs letter to my Head of Chambers for further investigation, though it appears rightly that the Owners do not make any complaint of my position in relation to that. 18. I consider that we should now get on with this case; this unfortunate distraction has absorbed a lot of time and energy. I am satisfied that there is no basis for any objection to my continuing and considerable basis for objecting to my ceasing to do so. I consider it would be wrong in principle for me to recuse myself and the Owners dealing fairly with the situation should now acknowledge the same.ʺ 7. There was subsequent correspondence about X QCʹs impartiality. The owners and X QC maintained their previously expressed views. It is X QCʹs contention that his connection with the B was not a relevant connection; he maintains that he was ʺunawareʺ of the allegations made against Mr Moustakas in the B case and that ʺhad I recused myself a substantial way into the hearing and an umpire had to be reappointed, costs would indeed have been wastedʺ. ʺOn the basis of the information provided by the Claimant and for the reasons already given I did not think I was entitled to recuse myself.ʺ The partiesʹ submissions 8. For the Owners, Mr Beloff QC said that he wished to rely on two matters, separately or cumulatively: namely ʺapparent biasʺ on the part of the tribunal and their refusal of an adjournment when requested following Mr Siberry QCʹs inability to present ownersʹ case through no fault of his own. He submitted that both grounds could be categorised as examples of a breach of the rules of natural justice or fairness. Section 1(1) of the 1996 Act provides as one of the foundations of the provisions of the Act, the principle that the object of arbitration is to ʺobtain the fair resolution of disputes by an impartial tribunal without unneces
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