Service Of Arbitration Notice

Sino Channel Asia Ltd v Dana Shipping & Trading Pte Singapore Ltd & Anr [2017] EWCA Civ 1703

Background

The case looks at the question of when notices of arbitration passed to a counterparty's agent can be considered effective service on the counterparty in circumstances where that the agent is not authorised to receive the notice. It was held by the Court of Appeal that in this case, the agent possessed both implied actual and ostensible authority to receive the notice; however, this "rare case" was decided very much on its facts.

Dana (as Owner) had a claim against Sino (as Charterer) under a Contract of Affreightment ("COA") dated 9 April 2013. Sino's role in the negotiation was restricted to its director signing his name - it was fronting for a Chinese company, BX, which was to handle the day to day operation of the COA.

All but one of the communications following signature of the COA were between Dana and a Mr Cai of BX, though Dana believed they were in contact with employees of Sino and were completely unaware of BX's involvement. Indeed, Sino's broker informed Dana's broker that Mr Cai was Sino's representative or employee.

Dispute and previous proceedings

When disputes arose under the COA, Dana sent the notice of arbitration via the brokerage channel on the 4 and 5 February 2014. The brokers forwarded this to Mr Cai. Sino only became aware of the arbitration on or about 30 June 2015 when the Award was sent to their offices. Sino's position was that Mr Cai had not been authorised to handle arbitration matters and had been acting without the authority of Sino or BX.

On 28 January 2016, Sino, as a person alleged to be a party to arbitral proceedings but who had taken no part in the proceedings, applied to court under s 72 Arbitration Act 1996 for a declaration, questioning whether the tribunal was properly constituted and / or what matters had been submitted to arbitration.

The Commercial Court upheld all limbs of Sino's claim, holding that BX did not have authority to receive the notice on Sino's behalf.

Dana's appeal to the Court of Appeal rested on three grounds:

Did BX have implied actual authority to receive notice on Sino's behalf? Did BX have ostensible authority to receive notice on Sino's behalf? Ratification: assuming the answer to the first two points was 'no', had Sino ratified BX's receipt of notice? Court of Appeal Judgement

Dana's appeal was upheld in relation to the first two issues.

Implied actual authority

The court...