When Is An Appeal Under Section 69 Of The Arbitration Act 1996 Not A Section 69 Appeal?

• Published date: 22 April 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Arbitration & Dispute Resolution
• Law Firm: Quadrant Chambers
• Author: Mr Yash Kulkarni QC and Andrew Leung

OVERVIEW

Laysun Service Co Ltd v Del Monte International GmbH [2022] EWHC 699 (Comm), is a rare example of a case where permission was granted to appeal against an award in relation to questions of law which were ultimately held not to be questions of law at all, or premised on non-existent factual findings. In the course of reaching this decision, the Court also made some notable obiter observations as to the nature of the charterers' obligation to discharge cargo and the operation of force majeure.

Background to the dispute

The appeal arose out of a Contract of Affreightment between Laysun Service Co Ltd ("Owners") and Del Monte International GmbH ("Charterers") for the carriage of refrigerated bananas from the Philippines to Bandar Bushehr in Iran between 1 January 2018 and 31 December 2018 for a total of 36 voyages.

Charterers performed the first 17 shipments by carrying bananas sold by Charterers' sister company, Del Monte UAE, to two UAE companies, Prime and Marhaba, who, in turn sold the bananas to Iranian receivers. Charterers then stopped providing fruit for loading and Owners sued for their losses arising out of the remaining 19 unperformed shipments. Charterers denied liability under the force majeure provision at Clause 8 of the COA, relying on two grounds.

First, it was impossible to receive payments outside Iran with an Iranian link due to the Trump administration's increasingly hawkish stance against Iran, culminating in the US imposing sanctions against Iran (the "Payments Issue"). Prime and Marhaba were thus unable to make payments to Del Monte UAE. Absent payment, there would be no receiver able to present the bills of lading required for the cargo to be customs cleared before discharge.

Second, it was impossible to import bananas into Iran due to the Iran Government's imposition between April and at least June 2018 of various import permit restrictions (the "Import Permits Issue"). This prevented Charterers from discharging to Prime and Marhaba (and the Iranian receivers), and it was not an option for Del Monte UAE to find alternative customers in time to enable Charterers to continue to perform the COA before its expiry.

The Tribunal held in Charterers' favour on both the Payments Issue and the Import Permits Issue. Owners thereafter obtained permission to appeal under s.69.

Payments Issue

In relation to the Payments Issue, on appeal, Owners posed the question whether Charterers could invoke the force majeure clause because, due to...