Jiangsu Shagang Group Co Ltd v Loki Owning Company Ltd

Jiangsu Shagang Group Co Ltd v Loki Owning Company Ltd

The Owners failed to establish on a balance of probabilities that JSG, through SWM, authorised the Guarantee. There was an established procedure requiring express approval from JSG, which was not followed. The evidence did not support the existence of an authorising conversation or implied authority. Accordingly, there was no valid arbitration agreement between the Owners and JSG, and the arbitral tribunal lacked substantive jurisdiction.

Parties
Claimant / Respondent in the Arbitration: Jiangsu Shagang Group Co Ltd; Defendant / Claimant in the Arbitration: Loki Owning Company Ltd
Jurisdiction
England and Wales
Judgment Date
01 March 2018
Procedural Posture
Arbitration Challenge Under Arbitration Act 1996 S.67 / Judgment on Challenge to Arbitral Tribunal's Substantive Jurisdiction
Outcome
JSG's challenge to the arbitral award is allowed; the award is set aside for lack of substantive jurisdiction.
Legal Topics
Jurisdiction of Arbitral Tribunal, Authority to Bind Principal, Express and Implied Authority, Guarantee in Charterparty, Challenge Under Arbitration Act 1996 S.67
Arbitration Contract Law Agency Jurisdiction of Arbitral Tribunal Authority to Bind Principal Express and Implied Authority Guarantee in Charterparty Challenge Under Arbitration Act 1996 S.67

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Parties

Jiangsu Shagang Group Co Ltd

Claimant / Respondent in the Arbitration

Loki Owning Company Ltd

Defendant / Claimant in the Arbitration

Procedural Posture

Arbitration Challenge Under Arbitration Act 1996 S.67 / Judgment on Challenge to Arbitral Tribunal's Substantive Jurisdiction

Legal Issues

  1. 1 Whether Jiangsu Shagang Group Co Ltd (JSG) authorised Shagang Shipping Co Ltd (Shagang) to conclude a guarantee contract in the charterparty on behalf of JSG
  2. 2 Whether there was a valid arbitration agreement between the Owners and JSG

Ratio Decidendi

The Owners failed to establish on a balance of probabilities that JSG, through SWM, authorised the Guarantee. There was an established procedure requiring express approval from JSG, which was not followed. The evidence did not support the existence of an authorising conversation or implied authority. Accordingly, there was no valid arbitration agreement between the Owners and JSG, and the arbitral tribunal lacked substantive jurisdiction.

Court Disposition

JSG's challenge to the arbitral award is allowed; the award is set aside for lack of substantive jurisdiction.

Orders

  • No valid arbitration agreement between Owners and JSG; arbitral tribunal lacked jurisdiction over JSG.
  • Parties to agree on consequential matters including costs.