Dera Commercial Estate v. Derya Inc [2018] EWHC 1673

In Dera Commercial Estate v. Derya Inc [2018] EWHC 1673, the Commercial Court considered several issues of interest arising out of Article III Rule 6 of the Hague Rules ( "Article III Rule 6"), in the context of a bill of lading for the carriage of maize destined for Jordan which, on arrival, was not allowed into the country by the Jordanian customs authorities, due to damage and "apparent fungus". Although, after various efforts to reverse the decision of the customs authorities, the local court gave permission to fumigate the cargo on board the vessel in the hope of preserving its condition, the vessel nevertheless sailed to Turkey, where the cargo was ultimately discharged and sold pursuant to a judicial sale order.

In the meantime, the cargo interests had brought proceedings in Jordan. Owners then commenced arbitration proceedings in London (as the bills of lading incorporated the arbitration clause from the charterparty) and obtained an anti-suit injunction (by consent) in respect of the Jordanian proceedings. The arbitration was commenced in October 2011, the cargo was discharged in March 2012, and the proceeds of sale transferred to the Owners in early 2013, but no steps were taken by either side in the arbitration until Owners served their Particulars of Claim in March 2015 seeking, inter alia, a declaration of non-liability. Dera served particulars of their cargo claim in June 2015.

The case raised questions as to: (i) whether there had been an inordinate and inexcusable delay pursuant to section 41(3) Arbitration Act 1996 ("AA") ; (ii) the impact of the one-year contractual time bar under Article III Rule 6; and (iii) whether such time bar applies in circumstances where there has been a geographic deviation.

The Tribunal had found that there was inordinate and inexcusable delay, and that the claim should therefore be struck out and extinguished. The case came before the Commercial Court, which went on to consider the following issues:

  1. Whether a claim which is particularised within the six year limitation period applicable to contractual claims pursuant to Section 5 Limitation Act 1980, can nevertheless be struck out for "inordinate delay" under Section 41(3) AA, because the parties have contracted for a shorter limitation period.

    The simple answer here was: yes, because the parties have contracted for a shorter limitation period, and the relevant limitation period, although not the only factor, must be taken into account when...

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