Sea Master Shipping Inc v Arab Bank (Switzerland) Ltd

Parties

Procedural Posture

Commercial Arbitration Challenge / High Court Judgment on Section 67 Arbitration Act 1996 Application

Legal Issues

1. 1 Whether the arbitral tribunal had jurisdiction to determine the Owners’ counterclaim for demurrage against the Bank under the second switch bill of lading
2. 2 Whether the Bank became an original party to the second switch bill of lading and thus liable under the contract of carriage and arbitration clause
3. 3 Whether the acquisition of rights under section 2 of COGSA 1992 makes the Bank a party to the arbitration agreement

Ratio Decidendi

The effect of section 2 of the Carriage of Goods by Sea Act 1992 is to make the lawful holder of a bill of lading a party to the arbitration agreement contained in the contract of carriage, with all mutual obligations to arbitrate disputes falling within its scope, irrespective of whether the holder has assumed substantive liabilities under section 3. The arbitral tribunal therefore had jurisdiction to determine whether the Bank had assumed liabilities under the second switch bill, and the section 67 application succeeds on the arbitrability issue.

Court Disposition

Section 67 application allowed on the arbitrability issue; tribunal has jurisdiction to determine the substantive issue.

Orders

• Section 67 application succeeds; the question of whether the Bank assumed liabilities under the second switch bill is for the arbitral tribunal to determine.