Neutral Citation Number: [2002] EWHC 1230 (Comm)
Case No: 2001 Folio No 1343 
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London WC2A 2LL 
Date: 21 June 2002 

Before:

THE HONOURABLE MR JUSTICE DAVID STEEL
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Between 

1) INTERNAUT SHIPPING LIIVVIITED GmbH 
(2) SPHINX NAVIGATION LTD OF LIBERIA
Claimants

‑ and –

FERCOMETAL SARL 
Defendants
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Simon Bryan (instructed by Ince & Co) for the Claimants
Hugo Page QC (instructed by Penningtons, Paris) for the Defendants
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 JUDGMENT

Mr Justice Steel:

BACKGROUND

1.	By a time charter dated the 19th December 1994, on the New York Produce Exchange form, Sphinx Navigation Limited (“Sphinx”) chartered the vessel ELIKON of which they were the registered owners, to Primary Industries (“Primary”). Primary arranged pursuant to that time charter for the carriage of a cargo of 12,000 metric tons of steel rods from Klaipeda to Algeria.

2.	It was the evidence of Mr Heinrichs, former managing director of Internaut Shipping Gmbh (“Internaut”), that Primary and Internaut then entered into a joint venture agreement whereby Internaut would fix the remaining space on the vessel (its summer dead weight being over 28,000 metric tons) and that the costs and revenue relating to any additional cargoes would be shared between them.

3.	It is Internaut’s case that, pursuant to this joint venture, Internaut as principal fixed the remainder of the space to Fercorizetal SA, the Defendants under a voyage charter dated the 27th December 1994. This part cargo consisted of three parcels of steel profiles totalling about 14,000 metric tons for discharge at Oran, Algiers and Skikda. The primary issue for the Court to determine is the identity of the counter party to the Defendants under this latter charterparty.

4.	The telexes culminating in the fixture were exchanged between Internaut on the one hand and Fersped acting on behalf of the Defendants on the other. Throughout these negotiations the vessel was referred to as “Internaut TBN built 1974 or younger”. Subject to agreement on the primary terms, it was otherwise common ground from the outset that the fixture would be “basically as per CP MV Hero dated 17th November 1994”.

5.	These negotiations took place between the 6th and 27th December 1994. By the 27th December the parties were duly agreed on the main terms “including stem/shippers/receivers approval: shippers approval to be lifted within three hours from the vessel’s latest nomination until 29th December 1994”. On the 29th December, Internaut nominated ELIKON and by telex dated the same day gave a full description of the vessel including a reference to the “owner’s company” being Sphinx. Against the background of earlier agreement that “ship owners to appear as owners in bills lading”, by yet a further telex that day Internaut notified Fersped “for B/L carrier please use Sphinx Navigation Ltd Liberia c/o Internaut Shipping GmbH”.

6.	Loading took place at Gdansk, being completed on the 11th January 1995. On the 2nd February 1995 a signed voyage Charterparty on the Gencon form, dated the 27th December 1994, was returned to Fersped by Internaut. Box 3, referring to “owners/place of business (Clause 1)”, contained the entry “Sphinx Navigation Ltd Liberia c/o Internaut Shipping GmbH”. Clause 1 of the standard form as amended read: 

1.   It is agreed between the party mentioned in Box 3 as Owners of the steamer or motor vessel named in Box 5 ... that the said vessel shall ... proceed to the loading port ...

Notably, the Charterparty was signed in the owner’s box in the name of Internaut Shipping without qualification.

7.	On the 14th February 1995 Internaut telexed Fersped to say:

“We regret having to inform you that when signing the Charterparty for this fixture following discrepancies have been found which are not in accordance with our negotiations: Box 3 delete “Sphinx Navigation Ltd Liberia c/o”.

8.	The vessel completed discharged of the cargo on the 4th March 1995 and three days later Internaut sent a fax to Fersped attaching a lay time calculation. showing a balance in favour of owners in the sum of US$148,916.67. The fax also explained that, in the alternative, there was a claim which the “Owners” wished to advance for breach of the “always accessible” provision in the Charterparty in relation to the delay in discharge.

9.	An arbitration was thereafter commenced on the 21st April 1995. This was achieved by the appointment of Mr J.A. Schofield as arbitrator on behalf of the “disponent owners”. This he acknowledged in his letter of the 11th April 1995 which reads:

“... I would be very pleased to and do hereby accept your appointment on LMAA terms as arbitrator appointed by your clients, the disponent owners of this vessel.”

10.	On the 21st April 1995 Gard, Jnternaut’s P. & I Club, notified Fercometal of Mr John Schofield’s appointment as “owner’s arbitrator.” The Defendants subsequently appointed Mr Bruce Harris as their arbitrator. Mr Robert Gainsford is the third arbitrator.

11.	Soon after the original arbitration was commenced Internaut commenced proceedings against the receivers in Algeria. There was then an application on the 11th September 1995 in the Algerian courts to join the Defendants to those proceedings. This prompted the immediate response from the Defendants’ solicitors:

“This application, made on behalf of Internaut, is not only unfounded, but is also contrary to the terms of the charterparty dated the 27th December 1994 between your company and our clients, Fercometal in accordance with which you have commenced arbitration proceedings in London.” 

12.	In the absence of a satisfactory response, the position as perceived by the defendants was reasserted in a fax dated the 20th September 1995:

“There are two straightforward and undeniable facts.

1.   Any dispute between Internaut and Fercometal is to be heard in arbitration in London and such proceedings have been commenced.

2.   Internaut are applying for our clients to be made subject to proceedings in Algeria those proceedings arising out of the execution of the Charterparty.”

13.	Defendants then commenced proceedings in the Commercial Court on the 26th September seeking an injunction against Internaut and Sphinx so as to restrain them from taking any further steps to join the Defendants to the Algerian proceedings. Potter J granted the injunction on the 26th September 1995 and it was duly served by the Defendants on Internaut. On the 9th October 1995 Messrs Ince & Co. informed the Defendants’ solicitors that they had been instructed by “Internaut, the disponent owners of Elikon, through their Club Gard” and reported that, as a result of the injunction, the application to join Fercometal to the Algerian proceedings was being withdrawn.

14.	The original arbitration proceeded. However, the points of claim in the arbitration were served in the name of Sphinx. It is this identification, that the Claimants say was a misnomer, which was later to form the basis of the arguments that have been raised before me. In the meanwhile, following service of points of defence, various preliminary issues were identified from those which Fercometal had raised by way of defence to the claim for demurrage. These were dealt with in an interim award of the Arbitrators dated the 23rd March 1999 in which the owners were largely successful. Fercometal applied for permission to appeal to the Commercial Court but, the Defendants having failed to prosecute that application, it was struck out by Longmore J on the 12th November 1999.

15.	There was in due course a successful application by the owners to amend the claim to advance a claim for damages for breach of the “always accessible” provision. Permission to amend was granted on the 3rd July 2000. Prior to that hearing, the Defendants’ solicitors had resurrected the matter of security for costs which had first been raised in December 1996. On the 7th June Messrs Ince & Co. had observed in this context:

“Contrary to Penningtons’ assertion, the Respondents are not automatically entitled to security for costs on the basis that the Plaintiffs are a company with an office in Liberia ...”

This was presumably a reference to Sphinx and not Internaut. But, in the event, the question for security for costs was stood over until after the service of the amended points of defence. Thereafter, following an extensive exchange of correspondence between the parties relating to matters of discovery, the Tribunal themselves wrote to the parties on the 17th August 2000 commenting:‑

“In the Charterparty, the Claimants are shown as Sphinx Navigation Ltd Liberia c/o of Internaut Shipping GmbH. Penningtons describe Internaut as the managers of Sphinx:

AA   Would Ince & Co please say whether this is correct and whether they accept that all documents in the possession and control of Internaut are disclosable

BB   We would also like to know what is the relationship between Internaut and Primary ...

CC   Do Internaut know how or have they ever had copies of the Charterparty and bills of lading for the Klaipeda and any other cargo carried on this voyage.”

17.	There ensued an increasingly ill-tempered series of exchanges between the parties, albeit not focusing on the matters raised by the arbitrators. It was not until December 19th 2000 that Messrs Ince & Co responded to the Tribunal’s questions as follows:‑

“... 2.   As a result of the investigating the questions raised by Mr Schofield, it has come to light that although the arbitration was commenced by us, on behalf of disponent owner, Internaut, another party (i.e. Sphinx) was named as Claimants in the claim submissions. This is a misnomer and our proposals for rectifying the position are set out below. Penningtons for Fercometal have at all times been aware that we were instructed by Internaut (see their fax of the 3rd October 1995 to Ince & Co) and indeed this was clearly explained in our fax of the 9th October 1995 to Penningtons. This goes to further illustrate that the naming of Sphinx Navigation as claimants in the points of claim was and is a misnomer.

3.   There are various outstanding matters and steps which need to be taken as a result of the above

(a) for the avoidance of any doubt Internaut request that Mr Schofield act in respect of Internaut’s claim in the existing arbitration against Fercometal

(b) amendment to the points of claim so that the Claimants are identified as Sphinx and Internaut are now necessary … 

In any event in order to protect Internaut’s position (without prejudice to application for leave to amend the points of claim/joinder application) we intend to appoint Mr Schofield as arbitrator on behalf of Internaut and call upon Penningtons to appoint Mr Harris ....”

18.	That same day Messrs Ince & Co wrote to Mr Schofield appointing him on behalf of Internaut in relation to the dispute “without prejudice to our application for leave to amend the points of claim and joinder application in the existing arbitration”. On being given notice of that new appointment, Messrs Penningtons awkwardly chose not to appoint Mr Harris as their arbitrator, but appointed Mr Mark Hamsher on the 26th December 2000. It is an equally depressing feature of this litigation that, despite the very modest sums that are at stake, the parties already have expended as much again on the arguments as to the disponent owners identity.

19.	On the 26th January 2001 Internaut applied for permission from the arbitrators for leave to amend the points of claim to add Internaut. Predictably, the application was opposed. Each party served detailed written skeleton arguments, most of the contents of which have been repeated for the purpose of the present hearing. On the 9th April 2001, the parties received a letter from Mr Gainsford on behalf of the arbitrators which said as follows: 

“While we see the attraction of acceding to the application, we have reluctantly come to the conclusion that we do not, in the circumstances, have power to make such an order, which would have the effect of including two different companies in the capacity of principal parties to the charterparty (and the arbitration agreement) when only one of them can have been such a party.

In the absence of any agreement giving us power to decide the issue as to which of those parties was the owner (or disponent owner) under the Charterparty and therefore party to the arbitration agreement, we cannot but think that the parties’ interest would be best served in seeking a decision from the court as to this and sooner rather than later.

In reaching the above conclusion we have not been influenced by yesterday’s fax from Penningtons. Further, as to their request for a reasoned award, we do not consider the matter for decision to be properly the subject of such document (reasoned or otherwise) and none will therefore be issued.

20.	In response to this letter Messrs Ince & Co wrote to Penningtons on the 9th May suggesting that the arbitrators be given jurisdiction to determine the parties to the charterparty and the agreement to arbitrate. Their proposal was rejected on the 7th June. The Defendants suggested that the matter should be dealt with by the court. The Claimants duly issued an application for the determination of various issues. True to form, the Defendants were not willing to consent to the order sought and, accordingly, there was a hearing on the 30th November 2001 following which Cresswell J made an order for the following issues to be determined:‑

1.   Whether the first Claimant (Internaut) or the second Claimant (Sphinx) or both Claimants are party to a Charterparty entered into between the Defendants (Charterers) and either or both Claimants in December 1994

2.   As to which of Internaut and Sphinx are party to the original arbitration (that is the arbitration commenced on the 21st April 1995).

3.   As to whether the arbitrators have power to grant permission to amend the Points of Claim in the original arbitration to substitute the name of Internaut for the name of Sphinx if Internaut applies to do so, and the arbitrators in the exercise of their discretion see fit to do so.

DISCUSSION

21.	It was the Defendant’s submission that, although the signature of Internaut was, viewed in isolation, wholly unqualified, it was clear by reference to Box 3 that it was signing in a representative capacity. Furthermore, by virtue of Clause 1, Sphinx were, so the argument ran the specified owners, albeit described as operating from Internaut’s address. The position was said to be confirmed by Clause 20 which described the beneficiaries of the freight payment once again as “Owners c/o Internaut Shipping GmbH”.

22.	Internaut’s response was to rely on three matters which individually or cumulatively was said to establish that Internaut was the contracting party:–

(a)   It was well established that a party who signs a contract in his own name is deemed to have contracted personally unless it is clear he executed it as agent only. 

(b)   The factual matrix in which the Charterparty was entered into further demonstrated, or at least confirmed, that Internaut was the contracting party and 

(c)   In the event of any ambiguity, extrinsic evidence was admissible which clearly demonstrated that Internaut were the disponent owners.

UNQUALIFIED SIGNATURE

23.	The general principle is set out in Scrutton on Charterparties 20th Edition Article 19:‑

“Where a person signs the charter in his own name without qualification, he is prima facie deemed to contract personally and, in order to prevent this liability from attaching, it must be clear from the other portions of the Charterparty that he did not intend to contract personally.”

24.	Indeed, even in circumstances where, within the body of the Charterparty, the signatory is described as “agent for” or “on behalf of’ a third party, it has been held that he remains personally liable: see Parker v. Winslow (1857) 9 Exchequer 942 and Cook v. Wilson (1856) 1 CB (NS) 153. A more modern example of the principle is to be found in The Frost Express [1996] 2 Lloyds Rep 373 where the relevant box for identifying the name and address of the owners was completed with the words “SG as agents for owners or disponent owners”. The charterparty was signed by SG’s managing director without qualification. SG were not in fact owners or disponent owners but pool managers. It was held they had contracted personally.

25.	The contents of Box 3 in the present Charterparty which refers to Sphinx as being “c/o” Internaut was a long way short of indicating “clearly” or “plainly” that Internaut were not personally liable. It does not even suggest that Internaut was merely an agent for Sphinx. To the contrary, the inference is that Sphinx was purporting to conduct its business on Internaut’s behalf.

THE FACTUAL MATRIX.

26.	It was Internaut’s evidence that it had previously chartered vessels to the Defendants and, indeed, the present charter was expressly based on one such, namely the Hero charterparty dated the 17th November 1994 in whch Internaut were named in Box 3. Furthermore, the context of the agreement reached in the pre-fixtured telexes strongly supports the proposition that Internaut were the disponent owners:–

(a)   The telexes from Fersped/Fercometal were responded to directly by Internaut without reference to any principal. 

(b)   The main terms were agreed in respect of an “Internaut TBN”.

(c)   All that remained outstanding was the nomination of the vessel: the response of Fersped to the nomination of ELIKON was “accept the vessel”: thus the nomination did not touch on the identity of the contracting parties.

27.	In my judgment all this material is admissible, albeit to be approached with caution: HM v. New Hampshire [2001] 2 LI Rep. 161 p. 179.

EXTRINSIC EVIDENCE

28.	If nonetheless the contents of Box 3 results in an ambiguity, extrinsic evidence is admissible to prove the true nature of the agreement: see Chitty on Contracts para. l2-113 12-120. In particular extrinsic evidence is admissible, to demonstrate that a person who expressly signed as an agent was in fact a principal: see Harpers & Co. v. Vigers Bros. (1909) 2 KB 549.

29.	The unchallenged evidence shows:

(a)   Internaut signed as principals not agents.

(b)   Internaut had no instructions to sign on behalf of Sphinx: to the contrary they had not even been in contract with Sphinx.

(c)   In any event, Sphinx had already time chartered the entire vessel to Primary.

(d)   Internaut were not authorised to contract on behalf of Primary’s behalf nor did it purport to do so.

(e)   Internaut nominated their own bank account to receive the freight.

CONCLUSION

30.	Against all this background I accept Internaut’s submission that they were the counterparty to the Defendants on the Charterparty. The answer to question 1 is accordingly Internaut. In my judgment this conclusion leads inexorably to the conclusion that the right answer to question 2 is also Internaut since the only fair construction of the exchanges in April 1995 leading to the appointment of the Tribunal was that the Arbitrators had been appointed to determine the disputes that had arisen between the parties to the Charterparty: see Unisys v. Eastern Counties [1991] 1 Lloyd’s Rep. 538. As regards question 3 it is agreed in these circumstances that the answer is Yes.