EXCEL EXPORTS CO (S) PTE LIMITED v THE SHIP “XING ZHI HAI” (IMO 9728356) [2020] NZHC 3292

EXCEL EXPORTS CO (S) PTE LIMITED v THE SHIP "XING ZHI HAI" (IMO 9728356) [2020] NZHC 3292[14 December 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-1680[2020] NZHC 3292BETWEEN EXCEL EXPORTS CO (S) PTE LIMITEDPlaintiffAND THE SHIP "XING ZHI HAI"(IMO 9728356)DefendantHearing: 9 December 2020Appearances: P Davies for the plaintiffB J Marten and M W McCarthy for the defendantJudgment: 14 December 2020JUDGMENT OF JAGOSE JThis judgment was delivered by me on 14 December 2020 at 4.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:Fee Langstone, AucklandIzard Weston, Auckland[1] In this proceeding, the plaintiff ("Excel") seeks to recover USD 2,007,132.13as the value of some 43,000 pine logs carried on board the defendant ship Xing ZhiHai for TPT Shipping Limited from ports in Tauranga and Marsden Point on 16 and22 February 2020 respectively for discharge in India.[2] On the present application, the ship's owner seeks the proceeding be stayedunder article 8(1) of Schedule 1 to the Arbitration Act 1996,1 which provides:A court before which proceedings are brought in a matter which is the subjectof an arbitration agreement shall, if a party so requests not later than whensubmitting that party's first statement on the substance of the dispute, staythose proceedings and refer the parties to arbitration unless it finds that theagreement is null and void, inoperative, or incapable of being performed, orthat there is not in fact any dispute between the parties with regard to thematters agreed to be referred.(Emphasis added.)The italicised passage is additional to the corresponding words of the Model Law.Background[3] Excel alleges the cargo was discharged to a third person. The cargo was carriedon terms of bills of lading held by Excel, intending Excel had rights to the cargo'spossession. (On the strength of the claim, the ship was arrested but since has beenreleased on alternative provision of security.)Discussion[4] There accordingly are two questions for my determination: is the matter inissue in the proceeding the subject of an arbitration agreement? And (there being noargument as to any agreement's nullity) is there in fact any dispute for reference toarbitration?1 A note to Schedule 1 explains:The provisions of this schedule correspond, for the most part, to the provisions of the ModelLaw on International Commercial Arbitration adopted by the United Nations Commissionon International Trade Law on 21 June 1985, and approved by the General Assembly of theUnited Nations on 11 December 1985 (General Assembly Resolution 40/72). Certainchanges have been made to amend or supplement the provisions of the Model Law in itsapplication to New Zealand. The original numbering of the articles of the Model Law andtheir paragraphs has been retained.—is there an arbitration agreement?[5] The bills of lading are expressed in terms of "Freight payable as perCHARTER PARTY dated 20/01/2020", on conditions of carriage including "All termsand conditions, liberties and exceptions of the Charter Party including the Law andArbitration Clause are herewith incorporated". They appear to be in standard form foruse with charter parties made under "Congenbill edition 1994".[6] For the ship's owner, Xingzhi Shipping Limited, Boya Ni deposes the ship wastime-chartered to Yangtse Navigation (Asia) Co Limited under a charter party dated22 January 2020, which in turn entered into a voyage charter with TPT ShippingLimited. The latter is described as "Charter Party dated 20-JAN-2020 [o]therwiseas per Yangtse Navigation / TPT last done fixture with logical amendments as per mainterms agreed". That "last done fixture" is said to be a charter party dated 14 October2019 between Yangtse Navigation and TPT Shipping.[7] Excel objects to Boya Ni's evidence as hearsay. I prefer to regard it as anexpression of the ship owner's comprehension, rather than necessarily being "offeredin evidence at the proceeding to prove the truth of its contents".2 Thus the ship's ownercomprehends the bills of lading incorporate the 14 October 2019 charter party'sclauses 60, titled "Arbitration" and including "[a]ny dispute arising from or inconnection with this Charter Party shall be referred to arbitration in London", and 61,titled "Governing law" and stating "This Charter Party shall be governed in all respectsby the law of England". So far as it goes, that is admissible evidence.[8] For Excel, Pauline Davies argues the bills of lading's reference to a singular"Law and Arbitration Clause" is not met by the 14 October 2019 charter party'sseparate arbitration and governing law clauses. Be that as it may, the bills of lading atleast refer to arbitration, which must carry some meaning. Excel offers no alternativeto the ship owner's comprehension that is to arbitration in London. It is a matter ofconstruction for the arbitral tribunal, whether there or elsewhere (depending on the"Law and Arbitration Clause"), in determining its own jurisdiction.32 Evidence Act 2006, s 4(1), definition of "hearsay statement".3 Arbitration Act 1996, sch 1 art 16(1).[9] I need not go further than to assess if there is a prima facie case for the existenceof an applicable arbitration agreement,4 as consistent with policy in favour of parties'autonomy to "use of arbitration as an agreed method of resolving commercial andother disputes".5[10] Prima facie, the bills of lading's incorporation of a charter party dated20 January 2020, "including the Law and Arbitration Clause", is itself an arbitrationagreement:6 an agreement by the parties to submit to arbitration all or certain disputeswhich have arisen or which may arise between them in respect of a definedlegal relationship, whether contractual or not".On their face, the bills of lading's incorporation of a clause so titled carries theinference the parties have agreed to submit disputes to arbitration. It is the "ordinaryand natural meaning" of the use of the words "Arbitration Clause", "a powerful, albeitnot conclusive, indicator of what the parties meant".7—is there a dispute?[11] Article 8(1)'s reference to "any dispute" is narrowly to be construed. 8 It is notdetermined by availability of an arguable defence.9 The existence of an unadmittedclaim will do,10 at least in circumstances in which such was to leave the claimunresolved.11 That is to say the claim must be "disputable";12 one in which it is not"immediately demonstrable either that the defendant is not acting bona fide in4 Ursem v Chung [2014] NZHC 436, [2014] NZAR 1123 at [32]. Phillip Green (ed) Green & Hunton Arbitration Law & Practice (online looseleaf ed, Thomson Reuters) at [ARSch1.8.02], DavidAR Williams and Amokura Kawharu Williams & Kawharu on Arbitration (2nd ed, LexisNexis,Wellington, 2017) at [3.12] and [4.13.1].5 Arbitration Act 1996, s 5(a).6 Section 2(1), definition of "arbitration agreement". See also sch 1 art 7(1): "an arbitrationagreement may be in the form of an arbitration clause in a contract".7 Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand [2014] NZSC 147, [2015]1 NZLR 432 at [63].8 Zurich Australian Insurance Ltd t/a Zurich New Zealand v Cognition Education Ltd [2014] NZSC188, [2015] 1 NZLR 383 at [36].9 At [51].10 Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) at [68];affirmed on appeal in Amec Civil Engineering Ltd v Secretary of State for Transport [2005] EWCACiv 291. See also Haliki Shipping Corp v Sopex Oils Ltd [1998] 1 WLR 726 (CA).11 Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454 (CA) at 471.12 Zurich Australian Insurance Ltd t/a Zurich New Zealand v Cognition Education Ltd, above n 8,at [36].asserting that there is a dispute or that there is, in reality, no dispute".13 The 'addedwords' filter out game-playing,14 rather than establish any "departure from theapproach required under art 8(1) of the Model Law".15[12] Here, absent admission, even if its possession of the bills of ladingincontrovertibly establishes its right in law to possession of the logs as Excel contends,it must prove the latter possession is unavailable to it in fact, and causing loss. That isthe subject matter of any dispute. Under the Model Law and the Act, on request, theparties then are to be referred to applicable arbitration.[13] I therefore need not further to address Excel's objection to the ship owner'sreply evidence, which I admitted on the basis Excel's notice of opposition putexistence of any dispute in issue. As s 8(1)'s negative stipulation, the Court'sprospective 'finding' there is "not in fact any dispute" between the parties falls morenaturally on opposition to the otherwise mandatory stay.Result[14] The proceeding is stayed, and the parties referred to arbitration in terms of thebills of lading.Costs[15] In my preliminary view, as the successful party, the ship's owner is entitled to2B costs and disbursements on steps taken in the application. That is because, so faras I can tell, no step in this averagely complex application required other than a normalamount of time.[16] If that is not accepted by the parties, or they cannot otherwise agree, I reservecosts for determination on short memoranda of no more than five pages – annexinga single-page table setting out any contended allowable steps, time allocation, anddaily recovery rate – to be filed and served by the ship's owner within ten working13 At [52].14 At [39].15 At [49].days of the date of this judgment, with any response and reply to be filed within fiveworking day intervals after service.—Jagose J