MV Cos Prosperity Phoenix Shipping Corporation v DHL Global Forwarding SA (Pty) Ltd and Another

• Jurisdiction: South Africa
• Citation: 2012 (3) SA 381 (WCC)

MV Cos Prosperity
Phoenix Shipping Corporation v DHL Global Forwarding SA (Pty) Ltd and Another
2012 (3) SA 381 (WCC)

2012 (3) SA p381

Citation	2012 (3) SA 381 (WCC)
Case No	AC 70/2011
Court	Western Cape High Court, Cape Town
Judge	Yekiso J
Heard	February 1, 2012
Judgment	December 2, 2011
Counsel	DJ Cooke for the applicant.; MJ Fitzgerald SC (with AM Smalberger) for the first respondent.; DA Gordon SC (with AWT Rowan) for the second respondent.

Flynote : Sleutelwoorde F

Arbitration — Recognition of foreign arbitration award — Award unenforceable if agreement on which based invalid or if recognition and enforcement of G award would be contrary to public policy — Lack of consensus rendering arbitration agreement unenforceable — Resulting award would not be recognised or enforced in South Africa — Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977, s 2 and s 4(1)(a)(ii).

Arbitration — Recognition of foreign arbitration award — Party resisting recognition H or enforcement of foreign award not obliged to seek to have award set aside in country in which it was made — May challenge award made in England in South African court even though he failed to do so in England despite statutory estoppel provided for in English Arbitration Act 1996 — Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977, s 2 and s 4(1)(a)(ii). I

Headnote : Kopnota

The parties were an engineering company that wanted to import machinery into South Africa (Bateman Ltd, the second respondent); the ocean carrier (charterer) who agreed to convey the cargo (Phoenix, the applicant); and the freight forwarder who booked the cargo (DHL, the first respondent). When Bateman Ltd cancelled the booking with DHL, Phoenix demanded J

2012 (3) SA p382

A payment from DHL and Bateman Ltd under the booking note issued by it. [*] Bateman Ltd resisted the claim on the ground that no agreement was ever concluded between it and either DHL or Phoenix. Phoenix then initiated arbitration proceedings in London in which the arbitrator found in favour of Phoenix that DHL had to pay Phoenix a certain amount in damages and that Bateman Ltd in turn had to indemnify DHL in respect of its liability to B Phoenix. Bateman Ltd did not contest the finding but persisted throughout in the view that, since it was not a party to any agreement containing an arbitration clause, the arbitrator had no jurisdiction over it.

Subsequently Phoenix and DHL, citing the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977, approached the Western Cape High Court for an order for the recognition and enforcement of the London C award. Bateman Ltd resisted on the grounds that it was never a party to an agreement containing a submission to foreign arbitration; that the arbitrator had accordingly lacked jurisdiction over it; and that the enforcement of the award would therefore be contrary to SA public policy. As against this, DHL (which did not oppose the order sought against it by Phoenix) relied on the booking note, which provided, inter alia, that the parties submitted to D London arbitration. DHL contended that the arbitrator had made an award against Bateman Ltd, and that Bateman Ltd had failed to satisfy the award, which the court was then obliged to enforce. On this basis it sought to intervene as co-applicant in the proceedings instituted by Phoenix.

Section 2 of the Recognition Act provides that a foreign award may be made an order of court and enforced in the same manner as any other judgment, E while s 4(1)(a)(ii) provides that the court may refuse to grant such an order if enforcement would be contrary to public policy in SA.

Held: A party resisting recognition or enforcement of a foreign arbitration award was not obliged to seek to set aside the award in the country where it was made before he was entitled to approach a South African court. Accordingly F Bateman Ltd could challenge the jurisdiction of the London arbitrator in the high court despite the statutory estoppel provided for in the English Arbitration Act 1996. The booking note issued by Phoenix did not in South African law constitute a binding contract of carriage for the transportation of Bateman Ltd's machinery in terms of which the parties submitted to arbitration: arbitration was characterised by its consensual basis, and in the G present case there was nothing to suggest that there ever was consensus — either between Bateman Ltd and DHL or between Bateman Ltd and Phoenix — to conclude a contract in terms of which the parties had agreed to submit to arbitration. Both the common law and the Recognition Act recognised the importance of an arbitration agreement as a prerequisite to the enforcement of the award, but in the instant matter it could not be H found as a matter of fact that there had been a valid agreement concluded between DHL and Bateman Ltd, submitting the parties to arbitration in terms of either English law or South African law. DHL had accordingly failed to allege and prove a valid agreement containing a submission to arbitration. Absent an arbitration agreement, no arbitrator could claim jurisdiction to determine a dispute, and an order for the recognition and enforcement of a foreign arbitral award which was on the face of it invalid I would be contrary to a legal order in any civilised country. Since DHL had failed to prove that the London arbitrator had jurisdiction to make the

2012 (3) SA p383

award in question, DHL's application to intervene as co-applicant in the A main application had to fail on this ground alone. In addition, a contract purportedly concluded between parties in circumstances in which consensus could not be proved was invalid, and the recognition and enforcement of an award derived from such an alleged agreement would offend against public policy as intended in s 4(1)(a)(ii) of the Recognition Act. DHL's application to intervene as co-applicant in the main application was B accordingly dismissed. (Paragraphs [43], [48] – [50], [53] and [58] – [63] at 394B – D, 395B – G, 396F – H and 397F – 398H.)

Cases Considered

Annotations:

Reported cases C

Southern Africa

Seton Co v Silveroak Industries Ltd 2000 (2) SA 215 (T): compared.

England

Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer D Holzwirtschaftsbertriebe Registrierte Genossenschaft mit Beschrankter Haftung [1953] 2 All ER 1039 (QB): dictum at 1040D – E applied

Dallah Real Estate & Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46: discussed and approved.

Statutes Considered

Statutes E

The Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977, s 2 and s 4(1)(a)(ii): see Juta's Statutes of South Africa 2010/11 vol 1 at 2-107.

Case Information

Application for recognition and enforcement of foreign arbitral award.

DJ Cooke for the applicant. F

MJ Fitzgerald SC (with AM Smalberger) for the first respondent.

DA Gordon SC (with AWT Rowan) for the second respondent.

Cur adv vult.

Postea (February 24). G

Judgment

Yekiso J:

[1] This is an application for the recognition and enforcement of a H foreign arbitral award. The application arises out of an award made on 16 March 2011 when Phoenix Shipping Corporation (Phoenix), a company duly incorporated in accordance with the laws of Delaware, United States of America, obtained a foreign arbitration award pursuant to proceedings conducted in the London Court of International Arbitration, based in London, United Kingdom, under the auspices of the I London Maritime Arbitrators Association. The parties to the arbitration proceedings were Phoenix Shipping Corporation (Phoenix), DHL Global Forwarding SA (Pty) Ltd (DHL) and Bateman Projects Limited, trading as Bateman Engineered Technologies (Bateman). The latter two companies are South African-based companies, having registered places of business at 10 Patrick Road, Jet Park, Boksburg North, in the province J

2012 (3) SA p384

Yekiso J

A of Gauteng and Founder 1 Building, Barttel Road, Beyers Park, Boksburg, in the province of Gauteng, respectively.

[2] In terms of the award:

[2.1]

DHL was obliged to pay Phoenix US$253 694, being an equivalent of an amount of R1 807 072,11 in accordance with the rate B of exchange prevailing at the date of the award, plus interest thereon at the rate of 4,5% per annum or pro rata compounded at three-monthly intervals from 5 May 2008 until date of payment. The terms of this contract were reflected on a contract of carriage referred to as 'the Recap'.

[2.2]

Bateman was obliged to indemnify DHL in respect of DHL's C liability to Phoenix (alternatively DHL was entitled to damages in a like amount) pursuant to a subcontract allegedly concluded between DHL and Bateman. The terms of this subcontract were reflected in a document referred to as the 'Conline booking 2000 booking note' dated 20 March 2008.

D [3] The remedy that Phoenix seeks, as against DHL, is to have the portion of the award made in its favour, referred to in para [2.1] of this judgment, made an order of court and, once made an order of court, the enforcement of such an order as provided in s 2 of the Recognition and Enforcement of Foreign Arbitral Awards Act 40 of 1977 (the Recognition Act). E

[4] DHL, on the other hand, seeks leave to intervene as a co-applicant in the proceedings instituted by Phoenix, and in so doing seeks, as against Bateman, an order that the portion of the award made in its favour, referred to in para [2.2] of this judgment, is made an order of court, and, F once made an order of court, for the enforcement of such an order as provided in s 2 of the Recognition Act.

[5] Bateman resists the relief sought by DHL against it on the basis that it never was a party to any agreement which...