Rate this article:  
Gard News 202, May/July 2011

High Court confirms substance of arbitration notice is more important than form.

The English High Court has recently provided some assistance as to the form of an arbitration notice in English arbitral proceedings and reinforced the view that the parties should concentrate on the substance of the notice rather than its form.1

The dispute in question arose after a vessel had lost its rudder whilst loaded with cargo.  Cargo interests purported to commence arbitration and appointed their arbitrator; there was one arbitration notice but there were ten bills of lading.  The shipowners contended that the notice, as served, was ineffective insofar as commencing arbitration was concerned, as there should have been ten notices, one for each bill of lading.  They did, however, appoint an arbitrator on a without prejudice basis.  The arbitrators found that they did have jurisdiction and the owners appealed to the High Court under section 67 of the Arbitration Act 1996, on the basis that the tribunal had no jurisdiction because it had not been properly appointed. 

The High Court judge in question reviewed the case law and, in particular, that concerning section 14 of the Arbitration Act 1996, and came to the view that the section in question would be satisified if the notice identified the dispute sufficiently and, further, made it clear that the person giving the notice intended to refer the dispute to arbitration.

Whilst the decision is to be welcomed - it provides for a commercial broad and flexible approach to the commencement of arbitration and the notice as required - it is probably just as important to remember that notices should be as specific as possible if one wishes to avoid having to contend with any such arguments.  As such, the notice should identify the dispute, the bill of lading, the charterparty, the time and place of the incident and, further, call upon the other party to appoint an arbitrator on their behalf within the timescale stipulated by the relevant arbitration provision.

1Easybiz Investments v Sinograin & Chinatex (the Biz) [2010] EWHC 2565.

Any comments to this article can be e-mailed to the Gard News Editorial Team.