This week I’m discussing Glencore Agriculture BV v Conqueror Holdings Ltd, which is a case arising out of a voyage charterparty for the transportation of corn from the Ukraine to Egypt.
Some of you might be wondering how this is relevant to construction disputes, but I assure you it is, both in respect of arbitration and adjudication.
Glencore Agriculture BV v Conqueror Holdings Ltd
Glencore and Conqueror entered into a charterparty that provided for Conqueror to charter their vessel, AMITY, to Glencore to transport grain. Following an email instruction from Mr Oosterman of Glencore, the AMITY had remained in port in the Ukraine for 9.2 days longer than it should have done, and Conqueror claimed damages for this period of detention amounting to $43,176.27.
Conqueror’s representative sent a letter before action to Mr Oosterman’s email address but he did not receive a response. The charterparty included an arbitration clause that provided for disputes to be referred to arbitration “in London in accordance with LMAA terms 1997, English law to apply”. Therefore, Conqueror’s representative commenced arbitration proceedings by writing to Glencore asking it to agree to the appointment of a sole arbitrator. The letter was sent to Mr Oosterman’s email address, and once again no response was received.
Given the “radio silence” from Glencore, Conqueror appointed Mr Marshall as its own arbitrator (the arbitration agreement provided for a three-person arbitral tribunal if the parties could not agree on a sole arbitrator). In a letter sent by email to Mr Oosterman’s email address, Conqueror called upon Glencore to appoint its own arbitrator. Once again no response was received (you can see that a pattern is emerging here). Therefore, Conqueror appointed Mr Marshall as the sole arbitrator pursuant to section 17 of the Arbitration Act 1996.
Mr Marshall conducted the arbitration and both he and Conqueror continued to send correspondence, directions, and so on to Mr Oosterman’s email address, and surprise, surprise, there was no response. Indeed, Glencore says that it was unaware of the proceedings until it received the arbitration award by post.
High Court proceedings
Glencore applied to have Mr Marshall’s award set aside. The issue for the court to decide was whether the notice of arbitration and the notice under section 17 of the AA 1996 were validly served by being sent to Mr Oosterman’s email address:
- Glencore argued that the issues in the case were governed by the principles of agency. In particular, it contended that service was on Mr Oosterman and he had no actual or ostensible authority to receive documents in relation to arbitration proceedings. Accordingly, there was no valid service.
- Conqueror submitted that the principles of agency were not engaged because service was to a Glencore email address, and so on Glencore itself.
Popplewell J set out the relevant provisions of the AA 1996, including section 76 concerning the service of notices:
“76. Service of notices etc
(1) The parties are free to agree on the manner of service of any notice or other document required to be given or served in pursuance of the arbitration agreement or for the purposes of the arbitral proceedings.
(2) If or to the extent that there is no such agreement the following provisions apply.
(3) A notice or other document may be served on a person by any effective means.
(4) If a notice or other document is addressed, pre-paid and delivered by post:
(a) to the addressee’s last known principal residence or, if he is or has been carrying on a trade, profession or business, his last known principal business address, or
(b) where the addressee is a body corporate, to the body’s registered or principal office,
it shall be treated as effectively served.”
Popplewell J decided that the principles of agency were engaged because sending an email to an individual employee’s email address differs from sending it to a generic email address that might be on a firm’s website as the only email address of that particular company (such generic email addresses are commonly in the form of info@domainname). The judge said that where an email is sent to a generic email address, the sender can reasonably expect the person who opens the email to be authorised to deal with its contents, but whether an email sent to an individual employee’s email address constitutes good service:
“… must depend upon the particular role which the named individual plays or is held out as playing within the organisation.”
The judge decided that Mr Oosterman did not have actual authority to accept service of the notices, and nor did he have implied actual authority. Mr Oosterman was merely a representative of the operational department, and the fact that he had sent emails concerning the event giving rise to the dispute:
“… was not sufficient to give rise to the inference that he was cloaked with authority to assume the serious and distinct responsibility for accepting service of legal process.”
For the same reasons, the judge found that Mr Oosterman did not have ostensible authority, and he therefore concluded that the notice of arbitration and the notice under section 17 of the AA 1996 were not validly served.
Importance of serving notices correctly
The failure to validly serve the notice of arbitration cost Conqueror dearly, and this case is a salutary reminder of the importance of serving notices correctly.
However, in my view, this does not simply apply to arbitration proceeding, it applies to adjudication proceedings as well. In particular, I can see no reasons why the principles concerning notices in arbitration proceedings would not also apply to adjudication proceedings, and I note that section 115 of the Construction Act 1996 (which concerns the service of notices), is materially the same as section 76 of the AA 1996.
What lessons can parties to arbitration and adjudication proceedings learn from this case?
Well, in my humble opinion, I would suggest the following:
- Both Acts provide that the parties are free to agree on the manner of service of documents in arbitration and adjudication proceedings, so the first port of call is clearly the parties’ contract. Many standard forms and bespoke contracts contain such provisions, and they need to be strictly followed when serving notices in arbitration and adjudications proceedings.
- In the event that the parties’ contract does not contain service provisions then both Acts provide that service can be by “any effective means”, and this could clearly include email.
- However, do not assume that any email address will suffice for the service of documents in adjudication and arbitration proceedings. For example, while a sub-contractor might have been dealing with a main contractor’s quantity surveyor concerning the valuation of, say, a variation account, it cannot simply be assumed that the quantity surveyor has authority to accept service of notices of adjudication or arbitration in respect of disputes concerning that variation account. In such circumstances, the sub-contractor should check the main contractor’s website to see whether the relevant email addresses are set out and, if not, it might be best to do what Popplewell J suggests and send the notice to a generic email address, that is, info@domainname.
- Better still, the sub-contractor should serve a hard copy of the notice by post, as both Acts provide that this will constitute effective service.