[2025] EWHC 2126 (Comm)

It is for all those reasons that I refused Charterers’ Amendment Application. Their claim as pleaded stands in the Claim Form dated 6 August 2024. I turn on that basis to consider Owners’ Strike-Out Application.

The legal framework on strike-out applications (otherwise known as reverse summary judgment applications) is the same as that which applies on summary judgment applications which I set out above. Claims which are fanciful and which have no real prospect of success ought to be struck out.

CPR r.3.4(2)(a) provides that the court may strike out a statement of case if it appears to the court that the statement of case discloses no reasonable grounds for bringing or defending the claim. As Master Marsh said in MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch), at [32]:

“The test under CPR rule 3.4(2)(a) requires the court to be satisfied that the claim is ‘unwinnable’ where continuance of the claim is without any possible benefit to the respondent and would waste resources on both sides. … This sets a high hurdle for an applicant seeking to strike out a statement of case. There are some circumstances in which the applicant may not succeed in striking out a claim that is ‘bound to fail’ where the relevant area of law is subject to some uncertainty and is developing such that it is desirable that the facts should be found at a trial so that any further development of the law should be on the basis of actual and not hypothetical facts.”

Owners oppose Charterers’ claim under s.72(2)(a) of the 1996 Act and section O.8.6 of the Commercial Court Guide on two separate bases: first, Charterers’ participation in the arbitral proceedings which led to the Award, and, second, the claim has no real prospect of success.

Section O.8.6 of the Commercial Court Guide provides:

“The Court has power under rule 3.3(4) and/or rule 23.8(c) to dismiss any claim without a hearing. It is astute to do so in the case of challenges to awards under section 67 or 68 of the Act where the nature of the challenge or the evidence filed in support of it leads the Court to consider that the claim has no real prospect of success. If a respondent to such a challenge considers that the case is one in which the Court should dismiss the claim on that basis:

(a)

the respondent should file a respondent’s notice to that effect, together with a skeleton argument (not exceeding 15 pages) and any evidence relied upon, within 21 days of service of the proceedings on it;

(b)

the applicant may file a skeleton and/or evidence in reply within 7 days of service of the respondent’s notice.”

While the Commercial Court Guide specifically refers to challenges under s.67 or s.68 of the 1996 Act as amenable to such applications, I see no reason why the Court should not exercise its power under the same procedure in respect of a s.72 claim where it would exercise its power in respect of a s.67 challenge. The power is, in any event, based on the Court’s power under CPR r.3.3(4) and r.23.8(c) (which provides that the court may deal with an application without a hearing if it does not consider that a hearing would be appropriate).

It is a condition of a challenge under s.72 of the 1996 Act that a party “takes no part in the proceedings”.

In Sovarex SA v Romero Alvarez SA [2011] 2 Lloyd’s Rep 325, Hamblen J (as he then was, reviewing the authorities) said (my emphasis):

“23.

The cases therefore draw a distinction between protesting that the arbitration tribunal has no jurisdiction and asserting that the issue should be decided by some other court or tribunal and asking the tribunal to consider the issue of jurisdiction. In the latter case the party is likely to be held to have invoked the jurisdiction of the tribunal.

24.

Sovarex sought to rely upon the obiter comment made in Broda Agro v Alfred C Toepfer [2011] 1 Lloyd’s Rep 243 at 250, at [50] (Stanley Burnton LJ), where he said:

‘It may be difficult to distinguish between a letter that does no more than inform the arbitral tribunal, as a matter of courtesy, that the respondent does not accept its jurisdiction, and a submission that it has no jurisdiction. This is such a case.’

25.

… A ‘submission’ that the tribunal has no jurisdiction is made when you invite the tribunal to consider that issue and thereby invoke their jurisdiction to decide it.”

The position is as stated in Merkin and Flannery (op. cit.), at 72.2.1:

“A party cannot have its cake and eat it: it must really elect at the outset to snub the process entirely, or to engage, and if the latter, any engagement at all will cost that party the right to apply under section 72.”

Whether a party “takes no part in the proceedings” will all depend on the exact circumstances, and the correct interpretation of any such letter will depend upon the precise words used and the context in which they have been used.

Mr Bowen KC submits that, in corresponding with the Tribunal, Charterers did no more than make clear that they were protesting the Tribunal’s jurisdiction and asserting that Owners should withdraw their notice of arbitration. He submits that, in doing so, Charterers did not recognise that the Tribunal had jurisdiction, nor did they invite the Tribunal to consider or determine the issue. That correspondence was directed at explaining why Charterers were not going to participate in the arbitration, not at inviting any jurisdiction to be exercised. He submits that Charterers did not participate in the constitution of the Tribunal.

Mr Bowen KC took me to the following correspondence from Charterers’ solicitors to Owners’ solicitors to make good his point:

Mr Lamming seeks to persuade me otherwise. He says Charterers did not “take no part” in the proceedings, and its s.72 claim therefore fails. Mr Lamming submits Charterers provided the Interim Response in reply to Owners’ claim submissions, and confirmed that it was content for the Interim Response to be put before the Tribunal in reply to Owners’ request that Charterers confirm that these were intended to constitute submissions (albeit without any submission thereby to the jurisdiction). On 16 February 2024, Owners’ solicitors wrote to Charterers’ solicitors, saying (my emphasis):

“1.

We refer to your below interim response to the claim submissions of 17 January. We note that your clients deny liability and contest jurisdiction.

2.

The next step is to inform the appointed arbitrator of the parties’ respective positions, including your clients’ jurisdictional challenge. As such we will write to the arbitrator with you in copy. Before we send that message, we have noted that your interim response is marked ‘without prejudice’. We understand that to be a general reservation of all your clients’ rights, including as to jurisdiction rather than an assertion of privilege over the contents of your clients’ response to the claim submissions …

For the sake of good order, could you please confirm within Monday 19 February 2024, 4pm London to me, that your interim response is precisely that and is for submission to the Tribunal. We will write to the Tribunal after the aforementioned time and so look forward to your confirmation by then.”

Charterers’ solicitors replied the following day, saying (my emphasis):

“Your understanding is correct as to the reservation of our rights regarding the arbitrability of the captioned dispute. We object to the initiation of arbitration proceedings itself including the appointment of a Sole Arbitrator by you.

We reserve all our rights to challenge the jurisdiction of the Arbitral Tribunal.

Please note that we have no objections in forwarding the interim response dated February 13, 2024 by you to Mr. David Martin-Clark, however, the same does not amount to our client’s acceptance to submit itself to the arbitration proceedings initiated by you.”

Mr Lamming says the Tribunal was entitled to and did consider Charterers’ Interim Response to be Charterers’ defence in the absence of anything further served. Once this step had been taken, the onus was properly on Charterers to notify the Tribunal that their Interim Response was not in fact a defence and should not have been considered as such. Allowing the Tribunal to treat the Interim Response as a defence meant that Charterers did in fact have their cake (which they now seek by means of this claim also to eat): their numbered legal submissions were placed before the Tribunal and considered.

Further, Mr Lamming says Charterers’ solicitors in fact expressly sought a three-week extension from the Tribunal in order to serve Charterers’ submissions or application in response to Owners’ own application. He says this application can only be understood as taking part in the proceedings, including an avowed intention to “submit appropriate submissions/application before Mr. David Martin Clark”. Once this application for an extension had been made and granted, Mr Lamming submits it was no longer open to Charterers to resile silently or at all from its participation in the hearing.

It may well have been Charterers’ intention not to take part in the proceedings, but I consider that is what they in fact did. Having carefully considered the correspondence passing between Owners’ solicitors and Charterers’ solicitors, with Mr Martin-Clark being copied at times and him replying to all in giving directions for the conduct of the reference, it seems to me that Charterers’ application for an extension of time prejudiced Owners’ position to proceed with the reference and to enforce an award. As the learned authors of Merkin and Flannery say, Charterers were faced at the very outset to elect to snub the proceedings entirely, or to engage. Seeking an extension was, in my judgment, engaging in the arbitral process because it was an implicit acknowledgement of the process and inconsistent with the reservation of rights previously expressed. As to Mr Martin-Clark’s observation that Charterers had chosen not to participate in the reference, that accorded with what transpired insofar as the proceedings were concerned, but it did not reflect what Charterers’ solicitors did by taking part in the proceedings in seeking an extension of time. To my mind, “participating in” and “taking part in” the proceedings are two very different things.

By seeking the extension which they did, Charterers took part in the proceedings even though they may not have participated in the proceedings in the way in which Mr Martin-Clark meant: they did not engage in the proceedings other than permitting their Interim Response to be provided to him while they sought an extension of time pending English legal advice. This followed an application by Owners for an order that Charterers either serve the standard defence submissions or confirm that their Interim Response stood as such. In reply, Mr Martin-Clark sent a message to Charterers requiring them, if they wished to reply to the Owners’ application, to do so within that week. Their solicitors replied, saying :

“Our client is currently in the process of obtaining a legal opinion from counsel in London.

Therefore, our client requires three-week time extension to prepare and submit appropriate submissions/application before Mr. David Martin Clark, the Sole Arbitrator based on the opinion that our client procures from the counsel in London.”

The extension was granted by Mr Martin-Clark’s order of 6 March 2024. The need to obtain Mr Martin-Clark’s leave to do so was inconsistent with Charterers’ earlier reservations. They took part in the proceedings.

It follows that Charterers’ application under s.72(2)(a) must fail and their be claim struck out accordingly.

As permission to amend has not been granted, Mr Lamming submits Charterers’ claim should be struck out on the basis that it has no real prospect of success pursuant to CPR rr.3.3(4), 3.4(2)(a), 23.8(c), and/or section O.8.7 of the Commercial Court Guide. I accept that submission. Charterers must try to make good their pleaded case in the Claim Form without any allegation of dishonesty, solely on the basis that Mr Puria did not have authority to bind Charterers and no ratification of the Charterparty occurred.

Mr Bowen KC submits that, in the event the Amendment Application is refused, the unamended claim set out in the Claim Form should not be struck out because it is sufficiently particularised and discloses a claim that has a real prospect of success. That submission requires a careful analysis of the cause of action and the evidence which remains outwith the draft amended Claim Form and Mr Samuel’s witness statement of 26 September 2024, filed in support of the Amendment Application and after the Claim Form was filed on 6 August 2024.

As I mentioned at [‎14] above, CPR r.8.5(1) requires a claimant must file any written evidence on which he intends to rely when he files his claim form. Charterers did not. They have not sought permission to rely on Mr Samuel’s two witness statements filed thereafter. No evidence was filed in support of the claim until Mr Samuel’s witness statement dated 26 September 2024. Even if Mr Samuel’s evidence was admitted by the Court and accepted in its entirety at trial, at its highest all it would establish is that:

I do not consider the details of claim pleaded in the Claim Form to be sufficiently particularised for Owners to respond: see Khosravi v British American Tobacco Plc [2016] EWHC 123 (QB), where Sir David Eady (sitting as a Judge of the High Court) held that a claim form and particulars so lacking in particularity as to be hopelessly vague and uninformative would be struck out. Here, Charterers have failed to provide evidence on which they sought to rely at the time (and therefore now require permission) and, in any event, the allegations made in Mr Samuel’s witness statement dated 26 September 2024 go on to claims of fraud. No explanation – save for fraud – is given in the Claim Form for why Owners “would have been aware of the absence of any such resolution”.

In my judgment, the Tribunal was right to conclude that Mr Puria at all times had at least apparent authority to enter into the Charterparty, taking into account the use of the company stamp, the fact that Mr Puria was one of only two directors, the use of his company email address (including company email addresses other than his own in copy), the communication of other employees of Charterers, and the Mumbai Port authorisation obtained in the name of Charterers. Even if Charterers succeeded in showing that Mr Puria did not have apparent authority, there is no prospect of the Court doing anything other than holding, as the Tribunal did, that the Charterparty had been affirmed by Charterers’ (including people other than Mr Puria) various unambiguous commitments to Owners to perform the Charterparty after its entry into force. The test for affirmation is an objective one: see Suncorp Insurance and Finance Co Ltd v Milano Assicurazioni SpA [1993] 2 Lloyd’s Rep 225; and Chitty on Contracts (Sweet & Maxwell, 35th ed., 2024) at 22-033. Here it was plainly met.

Taking all those matters in the round, Charterers’ claim as set out in the unamended Claim Form has no real prosect of success. It must be struck out.

For all those reasons, Charterers’ Amendment Application is dismissed, and their claim is struck out pursuant to CPR rr.3.3(4), 3.4(2)(a), 23/8(c), and/or section O.8.7 of the Commercial Court Guide. I will make orders accordingly.

Charterers must pay Owners’ costs of and incidental to these two applications and the claim. Mr Lamming submits those costs should be paid on an indemnity basis pursuant to CPR r.44.4(1)(b), applying the principles set out by Miles J in Libyan Investment Authority v King [2023] EWHC 434 (Ch), at [11] to [20]. Before setting out and considering those principles, Miles J said this (at [10]):

“… the failure of a case of fraud or dishonesty is a factor that the court may take into account in deciding on the basis of assessment but there is no automatic or rule that the making of such allegations which fail at trial will justify an order for indemnity costs or even operate as a starting point in the sense that the paying party is then required to explain why indemnity costs are not appropriate. It is also right to recall that the default position is that standard costs are to be paid unless the court orders otherwise.”

I bear those cautionary words in mind.

Applying the factors set out by Miles J to this case:

Having considered the factors set out by Miles J in King, and bearing in mind the default position is that standard costs are to be paid unless the court orders otherwise, I can see no good or sufficient reason why Charterers should not pay Owners’ costs on the indemnity basis sought by Mr Lamming. I will order they do so, to be assessed if not agreed.