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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Sino Channel Asia Ltd v Dana Shipping and Trading PTE Singapore & Anor [2016] EWHC 1118 (Comm) (20 May 2016) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2016/1118.html Cite as: [2016] Bus LR 778, [2016] EWHC 1118 (Comm), [2016] WLR(D) 291 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
SINO CHANNEL ASIA LTD |
Claimant |
|
| and |
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DANA SHIPPING AND TRADING PTE SINGAPORE DANA SHIPPING AND TRADING SA |
Defendants |
____________________
Chirag Karia QC (instructed by Holman, Fenwick Willan LLP) for the Defendants
Hearing date: 20 April 2016
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
The Hon Sir Bernard Eder:
Dana
Shipping and Trading Pte Singapore ("
Dana"),
against the Claimant,
Sino
Channel
Asia
Limited ("
Sino
Channel")
in connection with disputes arising under a contract of affreightment ("COA") dated 9 April 2013 between
Dana
as owner and
Sino
Channel
as charterer. As appears more fully below,
Dana
appointed Christopher J Moss as their arbitrator and emailed their notice of arbitration to a man called Mr Daniel Cai calling upon
Sino
Channel
to appoint their arbitrator. It is common ground that Mr Cai was not an employee of
Sino
Channel
but an employee of a different company, Beijing XCty Trading Limited ("Beijing XCty"). It is
Sino
Channel's
case that Mr Cai had no authority to accept service on
Sino
Channel's
behalf; that therefore such purported service was ineffective; and that, as a result,
Sino
Channel
did not respond because they were unaware of the arbitration and did not participate in it. In the event, Mr Moss took on the role of sole arbitrator and subsequently made an award in
Dana's
favour on 3 February 2015, with a correction made on 15 June 2015 (the "Award"). The Award was sent to
Sino
Channel
(by hard copy to its address in Hong Kong) and received by them. This was the first
Sino
Channel
had heard of the arbitration.
Sino
Channel
now applies for a declaration and order pursuant to s72(1)(b) or (c) of the Arbitration Act 1996 (the "Act") which provides in material part as follows:
"72. Saving for rights of person who takes no part in proceedings
(1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question:
(b) whether the tribunal is properly constituted, or
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement,
by proceedings in court for a declaration or injunction or other appropriate relief."
Sino
Channel
was in relevant part as follows:
" a declaration that the [Award]...was made without jurisdiction and is of no effect and an order setting aside the Award accordingly ..."
"(2) He also has the same right as a party to the arbitral proceedings to challenge an award
(a) by an application under section 67 on the ground of lack of substantive jurisdiction in relation to him, or
(b) by an application under section 68 on the ground of serious irregularity (within the meaning of that section) affecting him;
and section 70(2) (duty to exhaust arbitral procedures) does not apply in his case."
In this context I was referred to the judgments of Christopher Clarke J in The Eastern Navigator [2006] 1 Lloyd's Rep 537 at [56]-[59] and Walker J in The Prestige [2014] 1 Lloyd's Rep 137 at [59]-[78] and [82]-84]. As appears from these cases, one possible
view
is that s72(1) is primarily intended to deal with the position at an interlocutory stage i.e. before any award has been made; that it has no application once an award has been made; and that, once an award has been made and a party seeks to "challenge" an award and to obtain an order setting it aside, such challenge cannot be made under s72(1) but must be made pursuant to s72(2) of the Act i.e. by an application under s67 and/or s68 of the Act. If that is right,
Sino
Channel's
application under s72(1) would seem to fail in limine. A related issue is whether there are any time limits for bringing such application. That is potentially relevant because, as appears below,
Sino
Channel's
application was issued approximately 11 months after the date of the original Award and seven months or so after the date of the correction to the Award i.e. well beyond the statutory time-limit of 28 days for bringing any application under s67 and/or s68 of the Act.
Sino
Channel
applies under s67 of the Act for an order setting aside the Award on the ground that the Tribunal lacked jurisdiction; and/or under s68(2)(a) and (b) of the Act for "
an order setting aside the Award as there was serious irregularity affecting the proceedings on the grounds that [
Dana]
failed to serve any effective notices relating to the alleged arbitration on [
Sino
Channel]
and/or because communications from Mr Cai to the arbitrator were fraudulent which caused a substantial injustice to [
Sino
Channel]
as it had no opportunity to present its case". In that context, Mr Coburn QC accepts that such applications are out of time and in so far as may be necessary seeks an extension of time under s79 and/or s80(5) of the Act.
Dana's
case that (i) Mr Cai had actual implied authority and/or ostensible authority to receive notice of arbitration on behalf of
Sino
Channel;
and/or (ii) that such authority was subsequently ratified by
Sino
Channel.
On that basis, Mr Karia QC submits that (quite apart from the controversial issues referred to above and, in particular, any question of time limits) the application under s72(1) of the Act must, in any event, fail on its merits, as must the alternative applications under s67 and/or s68 of the Act.
The Facts
Sino
Channel
relies upon certain statements of Jung Byung Dug ("Mr Jung"), the Director of
Sino
Channel;
and a statement of Serena Cooke, a solicitor employed by Bryan Cave who has the conduct of the matter on behalf of
Sino
Channel.
Dana
relies upon a statement of Konstantinos Christides,
Dana's
Head of Operations; a statement of Christos Stamatou, a broker at Lynx Freight & Trading SA ("Lynx"),
Dana's
chartering brokers; and Dimitrios Exarchou, a partner in Holman, Fenwick & Willan ("HFW") who has the conduct of the matter on behalf of
Dana.
In addition, the evidence included certain affidavits previously sworn for the purposes of related proceedings in the High Court of the Hong Kong Special Administration Region as referred to below.
Sino
Channel,
are set out in the statement of Mr Jung. The position taken by
Dana
is that, subject to one irrelevant exception, there was no need for oral evidence or disclosure. On that basis, it was common ground that I should proceed on the basis that what is set out in the statements and earlier affidavits served by
Sino
Channel
is true. Accordingly, the following summary of facts is taken largely from the parties' skeleton arguments.
Sino
Channel,
but he remained in Hong Kong.
Sino
Channel
is a Hong Kong registered company. Apart from Mr Jung, it has three employees, all Hong Kong residents.
Sino
Channel
would provide Beijing XCty the same sort of "letter of credit financial services" as had been provided by Mr Jung's previous employers. Mr Jung agreed to do so.
Sino
Channel.
Sino
Channel
would handle the financial (letter of credit) side of the transaction and Beijing XCty would handle the operational side.
Sino
Channel
and Beijing XCty,
Sino
Channel
would be entitled to receive US$ 1 per metric tonne. Subject to that, Beijing XCty would be entitled to the difference between the buying price and the (higher) selling price.
Sino
Channel's
other employees, Lau King Kwong, known as "Joe". There was evidence before the Court of
various
exchanges of Skype messages over the period 2012-2015. They involve mundane liaison in the light of the shared responsibility for the transactions in question.
Sino
Channel.
This was unusual (since all previous sale contracts had been on a C&F basis) but Mr Jung was prevailed upon by Mr Zhou and did what he was asked.
Sino
Channel
was not itself involved in the negotiation of the COA. Rather, it appears to have been negotiated through brokers i.e. Lynx for
Dana
and Triton for
Sino
Channel.
However, Mr Jung signed it and it bears
Sino
Channel's
corporate stamp.
Sino
Channel
fully accepts (and has never denied) that it became bound by the COA as the result of signing it.
Venezuela
to China, to be carried in five shipments over the period June to October 2013.
Sino
Channel
and Beijing XCty that the latter rather than the former would handle the day-to-day operation of the COA.
Dana
initially involved its P&I Club and later its solicitors, HFW.
Dana
evidently obtained two email addresses personal to Mr Cai,
viz
danielcaix@hotmail.com and danielcaix@
vip.sina.com.
(To avoid any confusion, it should be noted that the "sina" in the latter is nothing to do with
Sino
Channel
but is simply a Chinese internet service provider.)
various
exchanges between
Dana's
side and Mr Cai, as well as a meeting in late 2013 in Shenzhen, China, between him and a Mr Hodgins of
Dana.
The dispute, however, was not resolved. None of this was known to
Sino
Channel
at the time; Mr Jung had been told by Mr Zhou in May or June of 2013 that there had been some problems with the COA but these were nothing to worry about.
Dana
as "Daniel of
Sino
Channel
Asia";
and the evidence also shows that
Dana
and Lynx and been informed by
Sino
Channel's
brokers (Triton) that Mr Cai was "Charterers' guy". However, Mr Coburn QC submitted that it was relevant to bear in mind the following:
i) Mr Cai made it clear toDana
that he was a mainland Chinese national, with a passport issued in Shanghai;
ii) Citing
visa
difficulties, he announced himself to be unable to meet in either Singapore or Hong Kong, as
Dana
had proposed;
iii) In the context of arranging an invitation letter (required for
Dana's
representative to enter China), he referred to "a hong kong company named
sino
![]()
channel";
![]()
iv) The company name and address he provided for the purposes of the invitation letter was that of Beijing XCty.
v)
The invitation letter was on Beijing XCty headed paper. It was signed by Mr Zhou and described Mr Cai as "our representative".
vi)
It was clear that Mr Cai was not the ultimate decision maker.
Dana
purported to commence arbitration proceedings by an email dated 4 February 2014 sent to danielcaix@
vip.sina.com.
Dana
to their brokers (Lynx) and forwarded by them to
Sino
Channel's'
brokers, Triton. There is no record of it being forwarded by Triton to
Sino
Channel;
but the evidence is that in effect it would probably have been forwarded by Triton to Mr Cai. For the avoidance of doubt, I should explain that Mr Karia QC does not rely on this email through the broking chain as constituting the relevant notice of the commencement of the arbitration to
Sino
Channel.
However, he does rely on the foregoing as evidence of Mr Cai's actual implied or ostensible authority to receive the notice on behalf of
Sino
Channel.
Dana
validly
to commence an arbitration against
Sino
Channel
at this stage. This was because
Dana
had already commissioned and obtained reports from a company called "Infospectrum" which contained sufficient information to effect
valid
service on
Sino
Channel.
In particular, although the reports contained certain inaccuracies, there is no doubt that they showed that Mr Jung was (a) the 100% shareholder of
Sino
Channel;
(b) one of its two directors (the other being Son Kwan Tae, another Korean); and (c) the general manager of
Sino
Channel.
In addition, they showed (i)
Sino
Channel's
registered and trading address in Hong Kong, at which service could straightforwardly have been effected under s76(4)(b) of the Act; and (ii) an email address stated to be
Sino
Channel's
email address, namely hkscal@gmail.com (which Mr Coburn accepted could have been used to effect
valid
service).
vip.sina.com.
i) On 12 February 2014 he emailedDana/HFW
to the effect it was not good to solve the dispute by arbitration and he would try to persuade "someone important" (presumably Mr Zhou) to accept a new long term agreement.
ii) On 19 February 2014 he emailed
Dana/HFW
asking for an extension of time to appoint an arbitrator.
iii) On the same day he sent a fax to the arbitrator (Mr Moss) also asking for an extension of time to appoint an arbitrator.
Sino
Channel's
paper and to bear its signature and stamp. However, as Mr Jung explains, it is in fact a fairly crude cut-and-paste job. Mr Cai evidently felt the need to pretend that his message was an official message from
Sino
Channel,
endorsed by Mr Jung and duly stamped, when in fact it was no such thing.
vip.sina.com)
which resulted in the purported appointment of Mr Moss as sole arbitrator.
Sino
Channel's
side of the arbitration, Mr Moss made debarring orders and in the end the Award in
Dana's
favour for damages in the sum of US$ 1,680,404.15 plus interest and costs.
Dana
to
Sino
Channel
at its registered office in Hong Kong where it was received on 30 June 2015 and then forwarded immediately to Mr Jung by email. It is Mr Jung's evidence that he did not fully understand the Award or its ramifications as he assumed that for any legal proceedings to have been started they would have had to have been notified to
Sino
Channel;
that he passed the Award immediately to Mr Zhou by email; that he received no response from Mr Zhou but asked him about it "some time later" in Beijing, PRC when he asked him "what the Award was about"; that Mr Zhou told him to "ignore it", that he (Mr Zhou) was dealing with it and that it was not necessary for him (Mr Jung) to do anything about it. Mr Jung gives a fuller explanation in paragraph 19 of his statement as follows:
"19. Since Mr Cai had been mentioned on several occasions and seemed to be playing a prominent role in the Award, I asked Mr Zhou about Mr Cai and his role in the Award. Mr Zhou told me that Mr Cai had already left Beijing XCty in late 2014 or early 2015 (I cannot recall the exact time). He could not locate Mr Cai and did not know his whereabouts. Mr Zhou told me that he also did not have notice of the arbitration and that Mr Cai was not authorised to handle arbitration matters. According to Mr Zhou Mr Cai was acting without the authority of Mr Zhou or Beijing XCty. Mr Zhou assured me that he would settle the Award. I heard nothing further from Mr Zhou."
Sino
Channel
did nothing further until after the commencement of enforcement proceedings in Hong Kong when Mr Jung sent an email to Mr Moss on 29 October 2015 informing him that
Sino
Channel
had not received any notice of the arbitration and did not have information relating thereto. This prompted a brief response from Mr Moss which is not relevant. Subsequently, Mr Zhou provided a written "Confirmation" dated 3 November 2015 that he and Beijing XCty would "solve the case" and "not make any harm" to
Sino
Channel.
That undertaking has not been honoured.
Sino
Channel
applied to set aside that Order. That application was originally due to be heard on 16 March 2016. However, in the event that application was adjourned on certain terms for reasons given in a Judgment of the High Court (Mimmie Chan J) delivered on 14 March 2016. In the course of that Judgment, the Judge expressed certain tentative
views
which were initially relied upon by Mr Karia QC. However, as he readily accepted, it is ultimately for this Court to determine the issues arising on the present applications.
viz:
i) Did Mr Cai/Beijing XCty have implied actual authority to receive the notice of arbitration on behalf ofSino
![]()
Channel
?
ii) Did Mr Cai/Beijing XCty have ostensible authority to receive the notice of arbitration on behalf of
Sino
![]()
Channel
?
iii) Ratification.
Implied Actual Authority
Sino
Channel
and Beijing XCty. Whereas actual express authority is given by express words, implied actual authority "is inferred from the conduct of the parties and the circumstances of the case": see Hely-Hutchinson
v
Brayhead Ltd [1968] 1 QB 549, 583 (CA), per Lord Denning MR. To determine the extent of Beijing XCty's implied actual authority, the Court must examine "what the actual circumstances of the relationship between [the agent Beijing XCty] and the [principal
Sino
Channel]
may show" and consider what authority Beijing XCty "took and was allowed to take" from
Sino
Channel.
Implied actual authority will arise from the principal acquiescing in the agent's exercise of authority: see, Hely-Hutchinson at 587, per Lord Wilberforce.
Dana's
case that Mr Cai had implied actual authority to receive the notice of arbitration on
Sino
Channel's
behalf, Mr Karia QC submitted as follows:
i)Sino
![]()
Channel's
role in the COA was limited to "lending" its name to Beijing XCty by signing the COA. It delegated everything else relating to the COA to Beijing XCty: in Mr Jung's own words "It was not necessary for me or [
Sino]
to do anything else".
ii)
Sino
![]()
Channel
completely delegated the negotiation of the COA to Beijing XCty. Again in Mr Jung's own words, it was not concerned with "who was responsible for the negotiation of the Charterparty [i.e. the COA] [or] how the Charterparty was being negotiated".
iii)
Sino
![]()
Channel
never even had any communication with its brokers (Triton) who were negotiating the COA on its behalf, save when sending them the signed COA.
iv)
Sino
![]()
Channel
was not concerned with anything following the conclusion of the COA: as Mr Jung explains, Beijing XCty "would not keep me informed of the details and performance of the transactions and I would not ask Mr Zhou anything about these".
v)
Even when
Sino
![]()
Channel
learnt of "some problems" relating to the COA, it completely delegated the resolution of those problems to Beijing XCty. Thus, Mr Jung states that he "did not pay too much attention" to those problems and apparently did not even ask Mr. Zhou what those problems were.
vi)
Like with every other aspect of the COA,
Sino
![]()
Channel
delegated the resolution of such disputes entirely to Beijing XCty. I consider this broad proposition further below. However, it is fair to say that so far as the notice of arbitration is concerned (i) Triton have confirmed that, as far as can be remembered, all messages they received regarding the arbitration were passed to "charterers"; and (ii) since Mr Jung's own evidence is that
Sino
![]()
Channel
did not receive the initial notice of arbitration at the time, the inference must be that it was passed to Beijing XCty. On this basis, Mr Karia QC submitted that (i) this demonstrated that
Sino
![]()
Channel's
own broker (Triton) regarded Beijing XCty as the relevant party to whom the notice of arbitration should be forwarded and (ii) such fact strongly supported the conclusion that Beijing XCty had the necessary implied actual authority.
vii)
So complete was
Sino
![]()
Channel's
delegation of all matters concerning the COA to Beijing XCty that, even after receiving the adverse Award against
Sino
![]()
Channel,
![]()
Sino
![]()
Channel
decided to "ignore it" and delegated Beijing XCty to "deal with it".
very
broad terms, Mr Coburn QC accepted that Beijing XCty and, in particular, Mr Cai had generally been responsible for the negotiation of the COA and subsequent matters relating thereto. However, he submitted, in effect, that service of notice of commencement of arbitration proceedings was of an entirely different character; and that in the absence of explicit authority to accept service, it would be both extraordinary and unprecedented if service could
validly
be effected on company X by sending an email to a junior employee of company Y, even if that employee was in practice handling the contract in question, and even if there was a relatively close relationship between companies X and Y.
"76. Service of notices etc
(1) The parties are free to agree on the manner of service of any notice or other document required to be given or served in pursuance of the arbitration agreement or for the purposes of the arbitral proceedings.
(2) If or to the extent that there is no such agreement the following provisions apply.
(3) A notice or other document may be served on a person by any effective means.
(4) If a notice or other document is addressed, pre-paid and delivered by post-
(a) to the addressee's last known principal residence or, if he is or has been carrying on a trade, business or profession, his last known principal business address, or
(b) where the addressee is a body corporate, to the body's registered or principal office,
it shall be treated as effectively served."
v
Baffin Investments Ltd ("The Lake Michigan") [2009] EWHC 3325 (Comm), [2010] 2 Lloyd's Reports 141 from which he derived the following propositions:
i) First, the fundamental requirement is that service should be effected on the relevant party itself, or an agent with actual or ostensible authority to receive service. (Para 39.)ii) Second, even though s76 may operate in certain respects more flexibly than the CPR court regime for service (in particular, service by email is in principle acceptable), that does not obviate the need for the party itself (or an agent with actual or ostensible authority to accept service) to be served properly. In this context, as in others, "separate corporate personality cannot simply be ignored". (Para 39.)
iii) Third, the requirement is that a party should actually be served, rather than merely become aware that there has been purported service. (Para 40.)
iv) Fourth, a P&I Club will not generally have authority, actual or ostensible, to accept service on behalf of a member, even if it has been given authority to deal with a wide range of matters including e.g. settlement negotiations. (Para 44.)
v)
Fifth, the position of a P&I Club in that regard is broadly analogous to that of solicitors, where again "even a wide general authority to deal with a case on behalf of a client will not (without more) translate into authority to accept service of originating process." (Para 44.)
virtue
of the terms of Clause 55 of the COA, once that notice is served and the other party does not appoint its arbitrator within the stipulated 14 day period, the first appointed arbitrator becomes sole arbitrator
vested
with important statutory powers by
virtue
of the terms of the Act. Such powers would, of course, include the general powers exercisable by the tribunal under s38 of the Act. Similarly, once the tribunal is constituted, the parties are subject to the general statutory duties under s40 of the Act. Further, the effect of s58(1) of the Act is to render any award made by the tribunal final and binding both on the parties and on any persons claiming through or under them subject to any legitimate challenge as contemplated by s58(2) of the Act. These are all important legal consequences of the effect of serving a notice of arbitration.
Sino
Channel's
brokers) appear to have passed the notice of arbitration to Beijing XCty supports the conclusion that Beijing XCty are properly to be regarded as having the necessary implied actual authority to receive such notice on behalf of
Sino
Channel.
However, there was no direct evidence from Triton; and, on reflection, it seems to me that such action may simply have been taken by Triton without any thought simply because all messages connected with the COA were routed in this way. A mistake of that kind is perhaps unsurprising as was the mistake in The Lake Michigan as referred to by Gross J at [45]. However bearing in mind my earlier comments and whatever the reason here for Triton's action, I remain unpersuaded that such action (even taken with all the other evidence) is sufficient to lead to the conclusion that Beijing XCty had implied actual authority to receive the notice on behalf of
Sino
Channel.
Equally, I do not consider that Mr Jung's response on receipt of a hard copy of the Award would justify such conclusion.
Sino
Channel
in connection with the COA, I am not persuaded that Beijing XCty or Mr Cai had any implied actual authority to accept notice of arbitration on behalf of
Sino
Channel.
Ostensible authority
v
Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 503 504:
"The representation which creates "apparent" authority may take avariety
of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal's business has usually "actual" authority to enter into."
virtue
of the principal acquiescing in his activities, it can be said that that the principal has in effect caused the representation to be made. In support of that submission, Mr Karia QC relied on the explanation given by Lord Pearson in Hely-Hutchinson
v
Brayhead Ltd [1968] 1 QB at 593A-D in the following terms:
"I agree entirely with what Diplock L.J. [in Freeman & Lockyer] said that such representation has to be made by a person or persons having actual authority to manage the business. Be it supposed for convenience that such persons are the board of directors. Now there is not usually any direct communication in such cases between the board of directors and the outside contractor. The actual communication is made immediately and directly, whether it be express or implied, by the agent to the outside contractor. It is, therefore, necessary in order to make a case of ostensible authority to show in some way that such communication which is made directly by the agent is made ultimately by the responsible parties, the board of directors. That may be shown by inference from the conduct of the board of directors in the particular case by, for instance, placing the agent in a position where he can hold himself out as their agent and acquiescing in his activities, so that it can be said they have in effect caused the representation to be made. They are responsible for it and, in the contemplation of law, they are to be taken to have made the representation to the outside contractor." (Emphasis added.)
Sino
Channel
placed Beijing XCty (and thereby Mr Cai) in a position in which it could "hold [itself] out as [
Sino
Channel's]
agent" and acquiesced in its activities "so that it can be said [
Sino
Channel
has] in effect caused the representation to be made."
various
statements and affidavits submitted and relied upon by Mr Karia QC were as follows:
i) In general terms,Sino
![]()
Channel
placed Beijing XCty in the position it did and allowed it to handle all matters relating to the COA, including the resolution of disputes and the receipt of the arbitration notice.
ii) As explained above, it is Mr Jung's own evidence in his 1st and 5th affidavits in the Hong Kong action that
Sino
![]()
Channel
completely delegated the negotiation and operation and indeed all aspects save for signing the contract of the COA and all earlier agreements to Beijing XCty. In addition, the affidavits of
Dana's
witnesses show that
Sino
![]()
Channel
allowed Beijing XCty complete control over the COA and allowed it to appoint Mr Cai as "Charterers' guy" under the COA.
iii) On 4 April 2013, prior to the conclusion of the COA,
Sino
![]()
Channel's
brokers (Triton) named Mr Zhou (of Beijing XCty) as the relevant contact.
iv) At all times, Triton understood and communicated to Lynx and
Dana
that Beijing XCty were acting for and on behalf of the charterers,
Sino
![]()
Channel.
![]()
v)
![]()
Sino
![]()
Channel's
brokers (Triton) passed on Mr Cai's contact details at Beijing XCty as
Sino
![]()
Channel's
contact to
Dana's
broker, Mr Stamatiou of Lynx.
vi)
On 13 June 2013, Triton wrote to Lynx describing Mr Cai as "CHRTRS GUY".
vii)
Indeed, Mr Cai was the only person from
Sino
![]()
Channel's
side Mr Stamatiou of Lynx had any dealings with and who Triton advised him represented the charterers; at no point did he receive any indication that Mr Cai was not an employee of
Sino
![]()
Channel
or lacked any authority.
viii)
Despite the fact that
Sino
![]()
Channel
was the contracting party under the COA, Mr Jung had no communications whatsoever with
Dana,
![]()
Sino
![]()
Channel's
contractual counterparty. Instead,
Sino
![]()
Channel
delegated all such communications to Beijing XCty and Mr Cai,
Dana's
sole contact there.
ix) On
Sino
![]()
Channel's
own case, their own brokers (Triton) also understood that Beijing XCty and Mr Cai were authorised to receive the notice of arbitration because they forwarded that notice to Beijing XCty.
x) Beijing XCty and Mr Cai therefore appeared to
Dana
"to be acting on behalf of and with authority from"
Sino
![]()
Channel.
![]()
xi) Mr Cai signed himself "Daniel of
Sino
![]()
Channel
![]()
Asia".
![]()
xii) Beijing XCty's Mr Zhou then sent an email inviting
Dana's
Mr Hodgins to meet with Mr Cai in China.
xiii) That email was sent by Ms Li Xuemei, whose email signature stated "
Sino
![]()
Channel
![]()
Asia
Co. Ltd," and Mr Cai then confirmed that Ms Li was his assistant.
xiv) Mr Cai held a business card naming him as an employee of Bow Steel Limited (an affiliated company/subsidiary of
Sino
![]()
Channel)
and his LinkedIn profile showed him to be Bow Steel's
Vice
President/General Manager.
xv) The Hong Kong address and telephone number shown on Mr Cai's business card are
Sino
![]()
Channel's
address and telephone number.
xvi)
Various
internet business directories show
Sino
![]()
Channel's
own Beijing address and telephone number to be those of Beijing XCty.
xvii) Mr Cai refers to himself as "Daniel cai [sic] of Beijing Branch" in correspondence with Mr Jung by Skype.
xviii) Infospectrum's August 2013 and March 2015 reports both record Beijing XCty and
Sino
![]()
Channel
as being affiliated companies under common ownership.
xix) All pre-arbitration correspondence and the efforts to resolve the dispute were with Beijing XCty/Mr Cai;
Sino
![]()
Channel
did not participate in any way.
value,
I see nothing which constitutes an express representation by
Sino
Channel
that Beijing XCty or Mr Cai had any authority to accept notice of an arbitration; nor that
Sino
Channel
put Beijing XCty or Mr Cai in a position where the latter could hold themselves out to such effect and
Sino
Channel
acquiesced in such activity. Any such representation could only arise by implication and, for reasons similar to those already considered in the context of the arguments relating to the alleged implied actual authority, I do not consider that such representation can be implied in the circumstances of the present case.
Ratification
v
Manches [2005] 2 Lloyd's Rep. 129, 155 156 at [97] (affirmed [2006] 1 Lloyd's Rep. 318 (CA)). The passages potentially relevant to the present case are the following:
"97. The relevant law relating to ratification was largely common ground, although there was some disagreement about the fine detail. The principles may be summarised as follows:
(ii) Where an act is done purportedly in the name or on behalf of another person but without his authority, that person may, by ratifying it, make it asvalid
and effectual as if it had been done with his authority, whether the person who did the act was exceeding his authority or had no authority at all. Ratification is equivalent to antecedent authority;
(iii) Ratification requires an unequivocal act. Thus although ratification may be express or may be inferred from conduct, the conduct amounting to ratification must amount to "clear evidence that [the principal] adopts or recognises such act or transaction in whole or in part"; see Bowstead paras 2-070 and 2-072-3.
(iv) Ratification is a unilateral act of will. There is no need for ratification to be communicated to the agent or anyone else.
(v)
Silence or acquiescence may also amount to ratification, depending on the surrounding circumstances. The principle is stated in Halsbury
vol
2(1), para 95:
Although ratification must be clear and must bear distinct reference to the facts of the particular case, it need not necessarily be proved by positive acts of adoption. In certain cases it is sufficient evidence of ratification that the intended principal, having all material facts brought to his knowledge and knowing that he is being regarded as having accepted the position of principal, takes no steps to disown that character within a reasonable time, or adopts no means of asserting his rights at the earliest time possible."
virtue
of the subsequent inaction and acquiescence on the part of
Sino
Channel
over a 4 month period i.e. from 30 June 2015 when Mr Jung received the Award by post until his email dated 26 October 2015 to the arbitrator after commencement of the enforcement proceedings.
Sino
Channel
unequivocally recognised the Award as being a binding Award
validly
arrived at by agreeing with Beijing XCty that Beijing XCty would pay it; that that agreement to pay the Award is inconsistent with
Sino
Channel
maintaining that the Award is not
valid
or binding; and that it is difficult to conceive of a clearer act of ratification.
i) It is clear from Mr Jung's own evidence that, when he received the Award on 30 June 2015, he knew (onSino
Chanel's case) that (a)
Sino
![]()
Channel
itself had not received the notice of arbitration or participated in the arbitration and (b) only Beijing XCty/Mr Cai had received that notice and had participated in the arbitration on
Sino
![]()
Channel's
behalf (on
Sino
Chanel's case) without authority to do so. In that context, Mr Karia QC relied, in particular, on the evidence of Mr Jung in paragraph 19 of his affidavit which I have already quoted above.
ii) If it had not authorised Beijing XCty to so act and if it did not adopt and recognise Beijing XCty's allegedly unauthorised acts,
Sino
![]()
Channel's
obvious and natural reaction would have been to immediately disown Beijing XCty's actions by notifying the Tribunal and
Dana
and commencing proceedings to set aside the Award. However,
Sino
![]()
Channel
did no such thing - even though it had all the Tribunal's contact details (including its email and fax number) and
Dana's
solicitors' address from the covering letter since 30 June 2015.
iii) Instead,
Sino
![]()
Channel
did nothing whatsoever to disown Beijing XCty's allegedly unauthorised actions for a period of 4 months: it did not contact
Dana
or the Tribunal to repudiate those actions or make any application to the Court to set aside the award. Indeed,
Sino
![]()
Channel
went even further by agreeing with Beijing XCty that Beijing XCty would "settle the Award".
iv) It was not until 29 October 2015 almost exactly 4 months later that
Sino
![]()
Channel
chose to question the effect of the Award on it by raising Beijing XCty's/Mr Cai's alleged lack of authority and
Sino
![]()
Channel's
lack of notice; and
Sino
![]()
Channel
did that only because it had learnt of
Dana's
enforcement proceedings in Hong Kong and wanted to prevent that enforcement.
v)
![]()
Sino
![]()
Channel
thereby clearly ratified Beijing XCty's and Mr Cai's receipt of the notice of arbitration and their participation in the arbitration on
Sino's
behalf. In particular, the requirements for ratification by silence and acquiescence set out in SEB Trygg at [97(
v)]
(quoted above) are satisfied in this case because (i) Mr Jung had "all material facts brought to his knowledge and [knew] that he is being regarded as having accepted the position of principal" when he received the Award on 30th June 2015; but (ii) he took "no steps to disown that character within a reasonable time" and failed to adopt any "means of asserting his rights at the earliest time possible".
vi)
This case is a fortiori the decision in Prince
v
Clark (1823) 1 B. & C. 186; 107 E.R. 70. In that case, the claimant's agent had (with authority) sold the claimant's goods in Calcutta but had then without authority invested the proceeds in sugar. The claimant learnt of the sugar investment on 29 May, but did not locate and notify the agent's agent in England until 7 August, some 2 months and 8 days later. The Court unanimously held that the claimant had ratified the agent's unauthorised investment in sugar by failing to disown the transaction within a reasonable time of learning of it. This was so even though the claimant did not know that the agent had a general agent in London because it was the claimant's duty to make such inquires. Abbott CJ explained that:
"The plaintiff certainly was not bound to accept the sugars. It was his duty, however, to notify his rejection of them within a reasonable time after he received intelligence of the purchase".
Silent Ratification
views
expressed by the editors of Arbitration Law at para 19.3 and also the observations of Lord Mance in Dallah Real Estate and Tourism Holding Company
v
The Ministry of Religious Affairs, Government of Pakistan [2011] 1 AC 763 at [23] where he stated:
"23 A person who denies being party to any relevant arbitration agreement has no obligation to participate in the arbitration or to take any steps in the country of the seat of what he maintains to be an invalid arbitration leading to an invalid award against him. The party initiating the arbitration must try to enforce the award where it can. Only then and there is it incumbent on the defendant denying the existence of anyvalid
award to resist enforcement."
very
brief reason, I reject Mr Karia QC's case on silent ratification.
Positive Ratification
very
least, a cautious approach. Be all this as it may and contrary to my original understanding, Mr Karia QC emphasised that his case was not that Mr Jung had ratified the Award but rather that he (Mr Jung) had ratified the authority of Beijing XCty/Mr Cai to receive the notice of arbitration thereby, in effect, giving Beijing XCty/Mr Cai an "antecedent authority".
Sino
Channel
maintaining that the Award is not
valid
or binding so far as
Sino
Chanel
Channel
is concerned still less that such "agreement" is to be regarded as an "unequivocal act" to such effect so as to give rise to any relevant ratification by
Sino
Channel.
Dana's
case on ratification.
Applications under sections 67 and/or 68 of the Act
Sino
Channel
would need an appropriate extension. Although
Sino
Channel
formally maintained its application for such extension, such application was addressed only briefly in Mr Coburn QC's skeleton argument; and, without conceding the point, he did not advance any oral submissions in support of such application. That was no doubt
very
sensible because in my judgment, such application was quite hopeless for the simple reason that applying well-established principles, there is no proper basis for extending time. I need say no more.
Conclusion
Sino
Channel
is entitled to an appropriate declaration and relief pursuant to s72(1) of the Act. At the
very
least, it is plain that this should include a declaration that the arbitral tribunal in this case was not properly constituted and that the Award was made without jurisdiction. In the course of the hearing there was some dispute between the parties as to whether, if the Court reached the conclusion just stated, the Court could or should also make a further order setting aside the Award. In my
view,
such an order follows as a matter of logic from the conclusion already stated and constitutes "other appropriate relief" within the express words of s72(1). On that basis, it is my conclusion that
Sino
Channel is also entitled to an order setting aside the Award. As for the applications under ss67 and 68, the application for an extension of time is rejected; and it follows that the substantive applications under ss67 and 68 must also be rejected.