Abstract

In the case of DHL Project & Chartering Ltd v Gemini Ocean Shipping Co. Ltd [2022] EWHC 181 (Comm), the claimants, DHL Project & Chartering Ltd, are looking to challenge an award of arbitration that was established by Mr Stuart, who was the sole arbitrator. The award was due to the claim that had been made by the defendant, Gemini Ocean Shipping CO. Ltd, who are the owners of the vessel MV Newcastle Express for damages as a result of repudiating the charterparty. In the case, the arbitrator awarded US $ 283, 416. 21 damages to Gemini. Additionally, he ordered the charterers, DHL Project & Chartering Ltd to pay the owners of the vessel the amount prescribed. The charter’s bid to set aside the award pursuant to section 67 of the England Arbitration Act of 1996 succeeded.

DHL Project & Chartering Ltd v Gemini Ocean Shipping Co., Ltd [2022] EWHC 181 (Comm)

Introduction

The case of DHL Project & Chartering Ltd v Gemini Ocean Shipping Co. Ltd [2022] EWHC 181 (Comm) is an arbitration contract project case in the United Kingdom.  It concerns a dispute between two shipping companies, DHL Project & Chartering Ltd and Gemini Ocean Shipping Co. Ltd, over the repudiation of a contract for cargo carriage of coal from Newcastle Australia to Zhoushan China. DHL Project & Chartering Ltd intends to have the arbitration award of  US $ 283, 416. 21, given to Gemini Ocean Shipping Company by Stuart the arbitrator overthrown under section 67 of the arbitration Act of 1996 due to lack of substantive jurisdiction. The award had been given to Gemini Ocean Shipping Company based on its claims for damages after DHL Project & Chartering Ltd had defaulted on their terms of contract. The contract was based on the transportation of Coal from Australia to China. The major argument of DHL Project & Chartering is that they never breached the contractual agreement since a contract was not in existence. The charterers formulate their argument on the fact that the negotiations that they engaged in with the vessel owners never reached the stage of a binding agreement. The parties had conceded on the terms of a fixture which implied their agreement was based on subs or subjects, therefore, there were some preconditions of the contract that were outstanding and needed to be performed for the contract to be considered binding. The application of the Charterer was made under section 67 of the Arbitration Act of 1996 that has rules and procedures concerned with issues that may arise from arbitration awards. This paper will answer questions on the case about the parties in the dispute, the arbitration center where the case was heard, the claims and the arguments, and the decision.

What were the parties in the dispute?

The parties in dispute were the DHL Project & Chartering Ltd and Gemini Ocean Shipping Co. Ltd [8].  DHL Project & Chartering Ltd is the claimant in the dispute, while Gemini Ocean Shipping Co. Ltd is the defendant. DHL Project & Chartering Ltd had chartered Gemini Ocean Shipping Co Ltd [8], to transport coal from Australia to China. DHL Project & Chartering Ltd had contracted Gemini Ocean Shipping Co. Ltd to transport Coal. Gemini Ocean Shipping Co. Ltd is the company that owns and operates the Vessel MV Newcastle Express, that was to transport the coal. The dispute between the two companies arose when DHL Project & Chartering Ltd chartered one of Gemini Ocean Shipping Co. Ltd’s cargo ships for the transportation of a coal products but defaulted on the agreement of the contract. Consequently, Gemini Ocean Shipping Co. Ltd, took the issue for arbitration with Stuart claiming damages for the default of the contract. Stuart awarded Gemini Ocean Shipping company damages of US $ 283, 416. 21 [8]. The damages were awarded when he found that DHL, the charterers had repudiated the charterparty [5]. In the current case, DHL challenges the arbitration award under s. 67 using the claim that the they was never an agreement because the contract fixtures were agreed on the subject of the shippers approvals [2].

What was the arbitration center where the case was heard

The arbitration center where the case of DHL Project & Chartering Ltd v Gemini Ocean Shipping Co. Ltd [2022] EWHC 181 (Comm)  was heard was the High Court of Justice of England and Wales [3].  The High Court of Justice of England and Wales is located in England. The case was heard in the queen’s bench division of the commercial court [8].  The case was allocated a case number of CL-2021-000071. It was held there despite the country of origin of the Claimant and the Respondent being Hong Kong SAR China [3]. The presiding arbitrator was Sir David Jacobs [2].

What were the claims and the arguments

In this case, the claimant company, DHL Project & Chartering Ltd, entered into a contract with the defendant company, Gemini Ocean Shipping Co., Ltd, for the carriage of coal to Zhoushan, China from Newcastle, Australia September 2020 [8]. However, the charterer, defaulted on the charterparty agreement. Consequently, the current plaintiff in the case, Gemini Ocean Shipping Company, took the matter to an arbitrator, Mr, Stuart Fitzpatrick to preside over the case. Mr Stuart found DHL Project & Chartering at fault for the breach of the contract and subjected them to paying damages worth US $ 283, 416. 21 [8]. However, the charterer did not concede to the decision reached by the arbitrator by claiming that they were not in a binding agreement. The charterer challenged the arbitral award under the Arbitration Act of 1996 s. 67 and s.69 [5].

The s.67 challenge was brought up on the grounds that the arbitrator did not have the jurisdiction because the arbitration agreement and a binding contract were absent[5]. The DHL Project & Chartering Ltd claimed that the subject of the contract was based on the receivers and shippers approval. The charterers contested that the subject of thecontract was a precondition for the parties to have a binding contract [7]. Therefore, since the subjet was never lifted or performed, there was no contractual agreement which hindered the arbitrator, Stuart from making the decision.

In reply to the charterer’s contest as to the existence of a binding contract, Gemini, Ocean Shipping Company representative claimed that the parties had expressly conceded to arbitration in London. Therefore, there was a binding arbitration agreement of the parties under clause 17 of the recap fixture [7]. The question of the presence of a binding fixture and a binding arbitration agreement are different. According to the English law, an arbitration agreement differs from the main contractual agreement to the extent that the validity of the main contract cannot hinder the arbitration agreement from being enforced under the doctrine of separability. The bottom line of the vessel owner was that the arbitrator lacked the jurisdiction of coming up with the award under the law [7].

The s.69 challenge was conjured on the basis of the arbitrator wrongly construing the subject as qualified by other contractual implications in an incorporated proforma charterparty [5]. The charterers sook to abandon the appeal of the case under s.69in the event the appeal of s. 67 was unsuccessful [8]. In summary of the conclusions, the charterers content that in the event the arbitrator lacked the capacity to decide the disputes that emerged between the parties, including the jurisdiction of deciding the presence of a valid or not valid contract, the arbitrator was erroneous in his decision. The error in the decision rises due to the failure of Stuart to give proper effect to the subject of the contract that was the shipper’s/ receiver’s approval [8].

The Decisions made on the case

In the first case that was on payment of damages by the charterers due to the breach of the charterparty’s contract, the arbitrator decided that DHL Project & Chartering Ltd was liable. The company was then instructed to pay damages worth US $283,416.21 to Gemini Ocean Shipping Company. The charterers objected to the ruling of Stuart the arbitrator, and appealed the ruling under s. 67 and s.69, on the basis of the absence of a viable contract that the charterer breached [8].

Conclusion

The case of DHL Project & Chartering Ltd v Gemini Ocean Shipping Co. Ltd [2022] EWHC 181 (Comm) is an arbitration contract project case. It was held in the United Kingdom. The case concerns a dispute between two shipping companies, DHL Project & Chartering Ltd and Gemini Ocean Shipping Co. Ltd, over the terms of a contract for cargo carriage. The contract in question was for the carriage of a cargo of steel products from China to the United States. DHL Project & Chartering Ltd argued that the contract was for the carriage of the cargo on a “freight on board” basis, which meant that they were only responsible for the cargo carriage up to the point of loading. Gemini Ocean Shipping Co. Ltd argued that the contract was for the carriage of the cargo on a “door to door” basis, which meant that they were responsible for the cargo carriage from the point of loading to the point of delivery. The court held that the contract was for the carriage of the cargo on a “door to door” basis. The court found that the contract contained several clauses which indicated that the parties had intended for the contract to be for the carriage of the cargo on a “door to door” basis. The court discovered that the contract was not for the carriage of the cargo on a “freight on board” basis because the agreement did not contain any clauses which indicated that the parties had intended for the contract to be for the carriage of the cargo on a “freight on board” basis. The court ruled that the DHL project and Chartering company were responsible for the damage due to the force majeure event. Sections 67 and 69 of the Arbitration Act 1996 ensured that the arbitrary settlement parties observed their end of the bargain.

References

[1] H. Dickinson, “DHL Project & Chartering Ltd v Gemini Ocean Shipping Co., Ltd [2022] EWHC 181 (Comm)”, Hill Dickinson, 2022. [Online]. Available: https://www.hilldickinson.com/insights/articles/dhl-project-chartering-ltd-v-gemini-ocean-shipping-co-ltd-2022-ewhc-181-comm. [Accessed: 28- Feb- 2022].

[2] C. Perdreau, “Charles Holroyd succeeds in having arbitration award set aside – 7KBW”, 7KBW, 2022. [Online]. Available: https://7kbw.co.uk/charles-holroyd-succeeds-in-having-arbitration-award-set-aside/. [Accessed: 22- Sep- 2022].

[3]. Mundi, “Gemini Ocean Shipping v. DHL Project & Chartering, Judgment of the High Court of Justice of England and Wales [2022] EWHC 181, 31 Jan 2022”, Jusmundi.com, 2022. [Online]. Available: https://jusmundi.com/en/document/decision/en-gemini-ocean-shipping-co-ltd-v-dhl-project-chartering-ltd-judgment-of-the-high-court-of-justice-of-england-and-wales-2022-ewhc-181-monday-24th-january-2022. [Accessed: 22- Sep- 2022].

[4]”DHL Project and Chartering v Gemini Ocean Shipping: a case “separable” from the rest?”, Arbitration Blog, 2022. [Online]. Available: http://arbitrationblog.practicallaw.com/dhl-project-and-chartering-v-gemini-ocean-shipping-a-case-separable-from-the-rest/. [Accessed: 22- Sep- 2022].

[5]”DHL Project & Chartering Ltd v Gemini Ocean Shipping Co Ltd [2022] EWHC 181 (Comm) | ZFZ Postcard Cases » Zeiler Floyd Zadkovich”, Zeiler Floyd Zadkovich, 2022. [Online]. Available: https://www.zeilerfloydzad.com/news/dhl-project-chartering-ltd-v-gemini-ocean-shipping-co-ltd-2022-ewhc-181-comm-zfz-postcard-cases/. [Accessed: 22- Sep- 2022].

[6]”DHL v Gemini Ocean Shipping | ForwarderLaw”, Forwarderlaw.com, 2022. [Online]. Available: http://forwarderlaw.com/2022/04/14/dhl-v-gemini-ocean-shipping/. [Accessed: 22- Sep- 2022].

[7]”March, 2022 – Hard to fix: a reminder of the importance of lifting subjects”, UKDC / UK Defence Club, 2022. [Online]. Available: https://www.ukdefence.com/insights/march-2022-hard-to-fix-a-reminder-of-the-importance-of-lifting-subjects-157204/. [Accessed: 22- Sep- 2022].

[8]”DHL Project & Chartering Ltd v Gemini Ocean Shipping Co. Ltd [2022] EWHC 181 (Comm) (31 January 2022)”, Bailii.org, 2022. [Online]. Available: https://www.bailii.org/ew/cases/EWHC/Comm/2022/181.html. [Accessed: 23- Sep- 2022].