England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		27 October 1998

The Hon. Mr. Justice Moore-Bick:

This matter comes before the court by way of an arbitration application under which the applicants seek a declaration that arbitration was commenced prior to the expiry of the one year time limit contained in Article III, r.6 of the Hague Rules and in the alternative an order extending time for the commencement of arbitration. The dispute between the parties arises out of the carriage of a cargo of fruit in the vessel Baltic Universal from Seattle and Port Canaveral to Rotterdam between December 1995 and January 1996. It is alleged that on arrival at Rotterdam the fruit was found to have suffered damage in the form of crushing caused by excessive movement during the course of the voyage. That in turn is said to have been the result of poor stowage. The first applicants are the insurers of the cargo, the second applicants are said to be the holders of the bills of lading and the third applicants forwarding agents instructed to handle the cargo at Rotterdam. There may be some question whether the second or third applicants are properly to be regarded as holders of the bills of lading, but I am not concerned with that for present purposes.

The cargo was carried under three bills of lading in similar, but not identical, form. The two bills of lading issued at Seattle were on the Congenbill form, 1978 edition. Each of them bore the typed notation

" All terms and conditions of the charterparty dated December 6, 1995 including the arbitration clause are fully incorporated into this bill of lading. "

The Conditions of Carriage printed on the reverse included the following:

" 8. Arbitration

All disputes arising out of this Bill of Lading shall be arbitrated at London and, unless the parties agree forthwith on a single Arbitrator, be referred to the final arbitrament of two Arbitrators carrying on business in London . . . . . . one to be appointed by each of the parties . . . . . "

The bill of lading issued at Port Canaveral, also on the Congenbill form, 1978 edition, contained on its face the same typed clause incorporating the terms of the charter of 6th December 1995. The Conditions of Carriage printed on the reverse did not, however, include any kind of arbitration clause. Each of the bills of lading contained a General Paramount Clause incorporating the Hague or Hague-Visby Rules as appropriate. It was common ground, therefore, that any claim for damage to cargo was subject to the twelve month time bar contained in Article III, r.6 of both the Hague and Hague-Visby Rules.

The vessel completed discharging in Rotterdam on 10th January 1996. A survey of the cargo was carried out but no steps were taken to pursue a claim by way of arbitration until January 1997. On 9th January 1997 the applicants' Dutch lawyers contacted solicitors in London, Waltons & Morse, asking them to take urgent steps to commence proceedings in view of the imminent expiry of the time bar. Accordingly, later the same day Waltons sent the following letter by fax to the vessel's P & I Club:

" Dear Sirs,

m.v. "BALTIC UNIVERSAL" - Bill of Lading ROT-6 16.12.95 at Seattle

Bill of Lading ROT-7 16.12.95 at Seattle

Bill of Lading PC-01 30.12.95 at Port Canaveral

We are instructed on behalf of the subrogated underwriters (Allianz in Hamburg) of two consignments of pears and a consignment of grapefruit carried from Everett and Port Canaveral to Rotterdam on board the m.v. "BALTIC UNIVERSAL", arriving in Rotterdam on 10th January 1996. On arrival, it was discovered that all consignments had been subjected to considerable physical damage and that a consignment of pears had been contaminated by hydraulic oil. Our clients have suffered losses in the sum of Dfl588,131.86.

We understand that the vessel is owned by Fortuna Co. Inc, and is managed by London Ship Managers Ltd. We further understand that the vessel is entered with the UK P&I Club. You have, of course, already been in correspondence with our clients' Dutch attorneys, Messrs Dolk Verburg Diamand.

We hereby notify you that in view of the expiration of the statutory time bar, we have appointed Mr. Michael Baskerville . . . . . . as arbitrator on behalf of our clients, Allianz, SFI Rotterdam B.V. and Overseas FSC B.V. in connection with all disputes arising under the three bills of lading referred to above.

We look forward to receiving your acknowledgment of safe receipt of this facsimile as soon as possible. We shall also be grateful to receive your confirmation that security will be provided in relation to these claims without further delay, failing which, we shall have no alternative than to seek to consider the arrest of one of the vessels in your Member's ownership. "

Also on 9th January Waltons wrote to Mr. Baskerville appointing him as arbitrator on behalf of the applicants.

On 10th January the UK P&I Club acknowledged receipt of Waltons' fax. They said that they were discussing the matter with their member and would respond in the near future. On 15th January the Club sent a proposed letter of undertaking for the applicants' consideration. There followed some telephone conversations concerning parallel proceedings which had been commenced in the Netherlands which led Waltons to write to the Club again on 20th January in the following terms:

" Further to our recent telephone conversations we have received confirmation from Dr. Dolk that the proceedings commenced in the Netherlands were issued purely to protect time. We shall therefore continue the Arbitration proceedings and would call upon you to agree to the appointment of Mr. Baskerville as sole arbitrator. "

On 24th January the Club notified Waltons of the appointment of Mr. O'Donovan as the respondents' arbitrator and a few days later it provided a letter of undertaking by way of security for the claim in terms which were acceptable to Waltons as the applicants' solicitors. Thereafter the arbitration proceeded at a leisurely pace for several months. There were negotiations between the parties and while they were going on neither side was particularly anxious to pursue the proceedings. On 18th September points of claim were served and the respondents indicated their intention to serve points of defence within 28 days. However, on 14th November, without any apparent warning, the respondents' solicitors, Jackson Parton, wrote to Waltons to say that in the light of the decision in Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 W.L.R. 101 they considered that the letter of 9th January 1997 was ineffective to commence arbitration proceedings with the result that the claim had become time barred on 10th January. That led in due course to the present application.

It was common ground that Article III, r.6 applies as a matter of contract to the claims under all three bills of lading and if the applicants fail to obtain a declaration that they commenced arbitration before the time limit expired they seek an extension of time under the appropriate statutory provisions. The respondents have given notice that under those circumstances they will wish to contend that the time bar has statutory, rather than merely contractual, force so that the court is unable to extend time to preserve the applicants' claims. Prior to the hearing of this application the parties had provisionally agreed that that question should be decided by the arbitrators and that I should be invited to deal with the application for an extension of time on the assumption that the time bar was purely contractual. However, the existence of a statutory time bar is of such significance when the exercise of the court's discretion is in issue that I did not think it satisfactory to entertain the application for an extension of time on that basis. Accordingly, I have at this stage only heard argument on the first part of the application (and argument on one issue relating to the application for an extension of time which is closely related to it) and have adjourned the remainder of the application.

The issue which arises for decision at this hearing is whether Waltons' letter of 9th January was sufficient to commence arbitration against the respondents so as to satisfy the requirements of Article III, r.6. The rule itself refers to the bringing of suit, but it is well established that it covers the commencement of arbitration where the parties have chosen that method of resolving their disputes. One might have thought that the manner in which arbitration is to be commenced was primarily a matter for agreement between the parties, and indeed that is now recognised to be so by section 14 of the Arbitration Act 1996 in relation to those arbitrations to which it applies. The 1996 Act also makes provision for those cases in which the parties have not agreed a method of commencing proceedings, but it did not come into effect until 31st January 1997 and the present case therefore falls to be decided by reference to the law in force before that date.

In Nea Agrex S.A. v Baltic Shipping Co. Ltd [1976] 1 Q.B. 933 this very question came before the Court of Appeal. The Aghios Lazaros was employed to carry a cargo of oranges from Greece to Rotterdam and/or Hamburg under a charter which contained a clause paramount and an arbitration clause in these terms:

" If any dispute arises during the performance of this charterparty and cannot be solved amicably, [the same] shall be referred to arbitration in London ".

The oranges were found to be damaged on arrival and as a result a dispute arose between the parties. The charterers through their agents wrote to the shipowners calling on them to take steps to resolve the dispute. They said

" Please advise your proposals in order to settle this matter, or name your arbitrators. "

One question which the court had to decide was whether by writing in those terms the charterers had done enough to commence arbitration so as to prevent the claim from becoming time-barred under Article III, r.6.

In the absence of authority as to when arbitration is commenced the court adopted the suggestion of the parties in that case that the provisions of the Limitation Act should be applied by analogy. Section 27(3) of the Limitation Act 1939 then in force provided as follows:

" . . . . . . an arbitration shall be deemed to be commenced when one party to the arbitration serves on the other party or parties a notice requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator . . . . . . "

These provisions were re-enacted with minor amendments as section 34(3) of the Limitation Act 1980 and are reproduced in substantially the same terms as part of the more extensive code to be found in section 14 of the Arbitration Act 1996.

By virtue of section 6 of the Arbitration Act 1950 the arbitration agreement in the Nea Agrex case was to be construed as providing for a reference to a single arbitrator. Accordingly, the correct method of constituting the tribunal was for the parties to agree on the identity of an arbitrator or, if they could not do so, apply to the court under section 10 of the Act. It follows that it was a case in which the charterers ought to have sent a notice to the shipowners requiring them to agree to the appointment of an arbitrator, either nominating the person they wished to see appointed or putting forward a list of names for consideration. However, the charterers appear to have been under the impression that the arbitration agreement provided for a three man tribunal, each party initially appointing the arbitrator of his choice, and so they called upon the shipowners to "name your arbitrators", i.e. nominate their member of the tribunal. (The suggestion that the letter should be read as meaning "provide us with your list of names for consideration" was rejected.) The letter did not, therefore, on any view comply with the strict requirements of section 27(3) of the Limitation Act. The question which the court had to consider was whether strict compliance was necessary or whether something less would do.

All the members of the court held that the charterers' letter was sufficient to satisfy the requirements of section 27(3), but they gave rather different reasons for their conclusions. Although Lord Denning M.R. accepted the need for a notice in writing, he considered it sufficient if the notice by implication required the other party to take the necessary step, whether to appoint his own arbitrator or to agree to the appointment of a sole arbitrator. He put the matter in this way at page 944G-945C:

" In order to commence the arbitration, there must, I think, be a notice in writing served by one party on the other party. This notice must contain a requirement. It must require the other party to do one or other of two things: either (1) "to appoint an arbitrator" or (2) "to agree to the appointment of an arbitrator."

The first alternative (1) is appropriate in a case where the reference is to two arbitrators, one to be appointed by each party. In such a case the arbitrations deemed to commence when the one party, expressly or by implication, requires the other party to appoint his arbitrator. If he simply says: "I require the difference to be submitted to arbitration in accordance with our agreement" that is sufficient to commence the arbitration: because it is by implication a request to the other to appoint his arbitrator.

The second alternative (2) is appropriate when the reference is to a single arbitrator. In such a case the arbitration is deemed to commence when the one party, expressly or by implication, says: "The time has come when we must submit the difference to arbitration in accordance with our agreement. I must ask you to agree to the appointment of an arbitrator." Now he cannot compel the other party to agree, or even to reply to the requirement. It seems to me that a notice which says: "I require the difference between us to be submitted to arbitration" is sufficient to commence the arbitration: because it is by implication a request to agree to the appointment of an arbitrator.

So in any case a simple notice in writing requiring the difference to be submitted to arbitration is deemed to be a commencement of the arbitration. "

It is clear from that passage that in Lord Denning's view no particular form of words is necessary provided that relevant communication contains a sufficiently clear notice to the other party that he is required to take the necessary step to submit the dispute to arbitration.

Goff L.J. dealt with the matter in a rather different way. He said at pages 949H-950D:

" This being so we have next to decide the question which did not arise before the judge, whether the charterers did, or failed to, commence arbitration within the year. For this purpose in my judgment one must apply the Limitation Act 1939, section 27(3) by analogy. That section poses some problems and there appears to be no authority as to its construction. It is, as the charterers submit, a "deeming section", but the question is whether, as they say, the methods prescribed are deemed to be sufficient without prejudice to any other way in which arbitration may in fact be commenced, or whether the statutory methods are the only ones for the purposes of limitation. In my view, the latter is correct, because the steps envisaged by the section are such as by their very nature would commence an arbitration and do not require to be deemed such, although I agree with Lord Denning M.R. that the necessary request may be implies. However, it is not necessary to reach a final decision on that point.

The section I think clearly envisages that a party who wishes to commence arbitration will, when there are to be arbitrators on both sides, call upon his opponent "to appoint an arbitrator", and when the reference is to a single arbitrator will call upon him "to agree to the appointment of an arbitrator." However, if he adopts the wrong course, that would not in my judgment make his requisition a nullity, or prevent arbitration commencing. It would be no more than an irregularity capable of being remedied. In the case of a single arbitrator the sensible course would be either to submit a name or names for approval, or to ask the other side to do so, but I am inclined to think that a formal notice, merely calling upon him to agree to the appointment of an arbitrator, would suffice to commence the arbitration, and so save the claim from becoming time barred, but this again we need not I think decide. "

It appears that Goff L.J. considered that the notice in that case was sufficient because it did expressly require the shipowners to take a step towards constituting the tribunal, albeit the wrong one, and so could be treated as irregular, but effective, rather than a nullity, but it also appears that he would, if necessary, have been prepared to approach the question on the broader basis which commended itself to Lord Denning M.R. I say that because as I read the passage in his judgment at page 950A-B, Goff L.J. agreed with Lord Denning that the necessary request could be implied. The point on which he considered it unnecessary to reach a decision was the effect of section 27(3).

Shaw L.J. adopted a very similar approach to that of Lord Denning M.R. He said at pages 954E-955A:

" It is to be observed that this [sc. section 27(3)] is a deeming provision designed to ascertain for the purposes of the Limitation Act 1939 the point of time at which an arbitration is to be regarded as having commenced. It does not exclude other direct means of establishing the commencement of an arbitration. If a general principle is to extracted from section 27(3) it seems to me that where a dispute arises which is within the scope of a pre-existing agreement to submit disputes to arbitration,then an arbitration is commenced when one party gives notice to the other party intimating that he proposes to invoke the arbitration agreement and requiring that other party to take some step towards setting an arbitration in train. By analogy with the procedure prescribed in section 27(4) of the Act of 1939, such a notice must be in writing and served in accordance with the rules there set out. The commencement of the arbitration would coincide with the service of the notice on the other party.

The giving of such notice is a matter inter partes and is a procedural and not a decisive step. Accordingly, its form and terms do not call for an excessively strict scrutiny. If, in substance, a party communicates (i) an intention to resort to arbitration and (ii) a requirement that the other party should do something on his part in that regard, this will in general suffice to define the commencement of arbitration or, for the purpose of article III, rule 6, of the Hague Rules, the date when "suit is brought."

Applying these principles to the present case, I would hold that the letter of May 31, 1972, addressed to the shipowners was sufficient to mark the commencement of the arbitration. "

Although by referring to the "substance" of the communication rather than to an "implied request" Shaw L.J. expressed himself in slightly different terms from Lord Denning M.R., his approach to the question seems to me to be fundamentally the same.

There has been some debate about how far it is permissible to stretch this approach, and in particular whether a simple notice of the kind envisaged by Lord Denning M.R. would suffice (see the comments of Kerr J. in Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 Lloyd's Rep. 653, 657-658 and Mustill & Boyd, Commercial Arbitration, 2nd ed. at page 199, note 4). However, the broad approach of the Court of Appeal in the Nea Agrex case, and in particular the judgment of Lord Denning M.R., has been applied in many subsequent cases, the most notable of which for present purposes is Peter Cremer G.m.b.H. & Co v Sugat Food Industries Ltd (The "Rimon") [1981] 2 Lloyd's Rep. 640 in which two telex messages containing the phrases

" . . . . . . settling of claims of both sides will be done by arbitrators according to gafta rules. "

and

" . . . . . . the point of who is to be blamed . . . . . . shall be decided by arbitrators. "

were held to be sufficient to commence arbitration for the purposes of the statutory instrument bringing the Arbitration Act 1979 into effect. It has therefore been widely accepted that a notice which communicates in substance, whatever words are used, that which is required by the relevant Limitation Act will be sufficient to stop time running. Accordingly, attention has been directed to the real meaning of the communication on which the claimant relies having due regard to the context in which it was sent. However, apart from making a passing appearance in Surrendra Overseas Ltd v Government of Sri Lanka which was decided on a different point, the question of principle does not appear to have been considered again until it arose in Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 W.L.R. 101. That case concerned a contract of affreightment for the carriage of pipes from Port Kembla in New South Wales to Kuantan in Malaysia. The contract contained an arbitration agreement which provided for disputes to be referred to a tribunal of three arbitrators in London, one to be appointed by each party and the third by the two so chosen. The Hague Rules were incorporated into the contract and thus the one year time limit in Article III, r.6 applied. After a dispute had arisen the claimants sent a letter to the respondents in which they said that the cargo carried on the vessel had been seriously damaged in the course of carriage and concluded in these terms:

" . . . . . . By this letter the dispute between our respective companies is referred to the arbitration of three arbitrators in London pursuant to the provisions of clause 17.8 [the arbitration clause] of the contract of affreightment . . . . . . "

Apart from that, however, no steps were taken to commence arbitration before the expiry of the time bar.

The claimants' letter seeking to refer the dispute to arbitration was couched in terms similar to those which Lord Denning M.R. in the Nea Agrex case had suggested would contain an implied requirement to appoint an arbitrator sufficient to satisfy the requirements of the Limitation Act. However, having considered the judgments in the Nea Agrex case in some detail, His Honour Judge Raymond Jack Q.C. concluded that it did not have that effect. Judge Jack Q.C. identified the question he had to decide as being whether a notice requiring differences to be submitted to arbitration satisfies section 34(3) of the Limitation Act 1980 because it carries with it by implication a request that the recipient appoint his arbitrator, and thus whether the judgment of Lord Denning M.R. should be followed on that point. He concluded that an implied request would not suffice.

Mr. Parsons for the applicants in this case submitted that Judge Jack's decision on this point was wrong and should not be followed. He submitted that whatever might be said about the particular form of the letter which the court had to consider in that case, it was part of the ratio of the Nea Agrex case that precise compliance with the terms of the Act by means of an express request is not required and that an implied request is sufficient. Mr. Picken, on the other hand adopted the reasoning of Judge Jack Q.C. He pointed out that only Lord Denning M.R. had suggested that an implied request would be sufficient and that in any event his views were obiter inasmuch as the charterers' letter in that case did specifically call on the shipowners to take steps by naming their arbitrator.

Judge Jack Q.C. approached the case before him on the basis that it was an open question whether, in order to stop time running under Article III, r.6, it is necessary to give notice in terms which expressly require the other party to take the steps referred to in the Limitation Act, or whether a notice which does so by implication will suffice. (That is not the same, of course, as the question whether a notice in the particular form suggested by Lord Denning M.R. would carry the necessary implication.) It is necessary, therefore, to see what the Court of Appeal did decide in the Nea Agrex case. It clearly did decide that strict compliance with the Limitation Act was not necessary, otherwise the charterers must have failed on that ground, but because of the different ways in which the members of the court expressed themselves it is a little more difficult to identify a common principle. Like Judge Jack Q.C. I think it is clear that Lord Denning M.R.'s judgment rests squarely on his acceptance of the proposition that the request to appoint an arbitrator may be implied, and I think it is equally clear that the judgment of Shaw L.J. rests on his conclusion that is sufficient for the requirement to communicated in substance. In my judgment this comes to much the same thing and there is, therefore, clearly a majority in support of the principle that it is necessary to look at the real meaning of the notice rather than merely the form of words used. The principle must go beyond a mere question of construction, as the facts of the case demonstrate, since the charterers' letter in that case could not easily be construed as requiring the shipowners to agree to the appointment of a sole arbitrator. For the charterers to succeed it was necessary for the court to accept that a notice requiring them to take steps of some kind towards making an appointment, albeit the wrong ones, was sufficient. Accordingly, I think that the Nea Agrex case is binding authority for the proposition that a notice in writing which, read in its context, makes it clear by whatever language that the sender is invoking the arbitration agreement and is requiring the recipient take steps in response to enable the tribunal to be constituted is sufficient to satisfy the requirements of section 34(3) of the Limitation Act 1980 and of Article III, r.6.

It follows that I am unable to agree with Judge Jack Q.C. that in a case such as the present the claimant must expressly call upon the respondent to appoint his arbitrator in order to commence arbitration. In my view the decision in the Nea Agrex case is authority to the contrary, and even if it were not binding it would be of the highest persuasive authority. Although notices of arbitration are often given by legal advisors, as happened in the present case, they are more often given by the parties themselves whose first language may often not be English and who may have little understanding of the technicalities of English law. What is important for them is not whether a notice contains a particular form of words but whether it makes it clear that the arbitration agreement is being invoked and that they are required to take steps accordingly. Provided that is done both the policy of the Act and the requirements of commercial life are satisfied. In my view, if the question did remain open, these considerations would point strongly in favour of adopting the approach of Lord Denning M.R. and Shaw L.J. which does not seem to me to run counter to the policy of the statutory provisions. I would respectfully suggest that it is wrong to say that English law has taken a policy decision, contrary to that reflected in Article 21 of the UNCITRAL Model Law, that in order to commence arbitration it is necessary to take a step towards constituting the tribunal, if by that is meant anything beyond invoking the arbitration agreement. Where the agreement provides for each party to appoint an arbitrator the first and most obvious step towards constituting the tribunal is for the claimant to appoint his own arbitrator, but that is not one of the requirements of section 34(3). Similarly, in the case where the parties have agreed to refer disputes to a named arbitrator the section does not require the claimant to notify the arbitrator that a dispute has arisen; it merely requires him to serve a notice on the respondent requiring him to submit the dispute to that person. Where the arbitration agreement provides for a sole arbitrator the notice must require the recipient to agree to the appointment of an arbitrator (though there is no requirement on the claimant to propose any names for the respondent's consideration), but although in this last case it can be said that a notice to agree is the first step towards constituting the tribunal, I think that all these cases are better viewed as different ways of invoking the arbitration agreement, in other words, of saying to the respondent, `I demand the right to have this dispute decided by arbitration as we agreed and require your co-operation in bringing that about'.

I approach the present application, therefore, on the basis of the principles which in my judgment are to be derived from the Nea Agrex case. However, before turning to the terms of the letter itself it is necessary to say something about the arbitration agreements. Each of the bills of lading incorporated the arbitration clause of a charterparty dated 6th December 1995, but apart from that the charter was not identified. The application was argued before me on the basis that this referred to a charterparty of that date on the Gencon form between Universal Reefers Ltd as owners and Scivik Shipping G.m.b.H. as charterers. At the last minute Mr. Picken suggested that there might be some other charter, also dated 6th December 1995, to which the reference might have been intended to apply and which might contain an arbitration clause in different terms. However, I have seen nothing to support that suggestion, and to be fair it was not seriously pursued.

The material part of the charterparty arbitration clause reads as follows:

" . . . . . . Unless the parties agree upon a sole arbitrator, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint a third arbitrator, the decision of the three-man tribunal thus constituted or any two of them shall be final. On receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall be final. "

Apart from the final sentence, therefore, this clause, although differently worded, provided for arbitration in the same manner as the arbitration clauses in the bills of lading. In each case the parties contemplated that there should be a sole arbitrator if they could agree on a suitable person, and if not, that there should be a three-man tribunal appointed in the usual way. There was some argument between the parties over the effect of the purported incorporation of the charterparty arbitration clause into the two bills of lading also which contained their own arbitration clauses, but that is not a question which I think it necessary to resolve for the purposes of this application. One way or another each of the bills of lading incorporated an agreement to arbitrate which provided for a sole arbitrator or, in default, for a three-man tribunal. Strictly speaking, therefore, I think that the applicants ought to have begun by giving the kind of notice which would be appropriate in the case of an agreement to refer disputes to a sole arbitrator. Only if the parties were unable to agree would the agreement for a three-man tribunal come into play. It is for this reason that I cannot accept Mr. Parsons' submission that the charterparty arbitration clause contemplated as the primary method of commencing arbitration the nomination by one party of his own arbitrator.

Mr. Picken drew my attention to a passage at page 199 of Mustill & Boyd where the learned editors say that a notice by the claimant that he himself has appointed an arbitrator is not a sufficient compliance with the statute. However, for my own part I doubt whether the position can be stated quite as simply as that in the light of the court's approach in the Nea Agrex case. Of course, in one sense it is necessary for the claimants to go further and require the respondents to appoint their arbitrator, but whether they have in fact made it clear that they are requiring the respondents to take some step themselves depends on what one can properly read into the message having regard to its terms and the context in which it was sent. Waltons' letter of 9th January 1997 was sent on the day before the one year time limit for commencing proceedings expired, and indeed it expressly referred to the expiry of time. The letter does not, of course, contain an express notice to the respondents requiring them to agree upon the appointment of a sole arbitrator or even to appoint their own arbitrator; insofar as it expressly required the respondents to do anything it was to acknowledge receipt and confirm that security would be provided. However, given its terms and the context in which it was sent I find it difficult to believe that the Club did not understand perfectly well what it was intended to convey. Indeed, when I asked Mr. Picken whether it could possibly be read otherwise than as a notice that the applicants were referring the dispute to arbitration and required the respondents to take appropriate action he was at something of a loss. In my view the letter gave clear notice to the Club on behalf of the respondents that the applicants were invoking the arbitration agreements in the bills of lading, that they had appointed their own arbitrator, and that they required the respondents to appoint their arbitrator so that the tribunal could be fully constituted and the proceedings got properly under way. If the arbitration agreement had provided simply for a three-man tribunal, therefore, I should have had little difficulty in holding that the notice, though undoubtedly poorly drafted, was adequate to satisfy the requirements of section 34(3) of the Limitation Act and thus sufficient to commence arbitration for the purposes of Article III, r.6.

Does it make any difference that Waltons in fact gave the wrong sort of notice? I do not think it does. It can be argued that the letter of 9th January does not on any view require the respondents to agree upon a sole arbitrator and that therefore one cannot find within it a notice of the kind required, but if I am right in the view I have taken of the letter, namely that it does by implication require the respondents to appoint their arbitrator, this case is for all practical purposes the same as Nea Agrex. The applicants did make it clear that they were invoking the arbitration agreements and did by implication call on the respondents to take steps in response in order to constitute the tribunal. In my judgment that was sufficient.

For these reasons I have reached the conclusion that the applicants' letter to the Club of 9th January 1997 was sufficient to commence arbitration and that consequently their claim is not time-barred. That makes it unnecessary for me to consider the effect of the letter of 20th January, but in view of the way in which the argument developed I propose to say a few words about it. Mr. Parsons submitted that whatever may be said about the letter of 9th January, the letter of 20th January did expressly call upon the Club to agree to the appointment of Mr. Baskerville and therefore did on any view expressly comply with the requirements of the Limitation Act. I think he is right about that. Mr. Picken sought to persuade me that the letter was wholly ineffective because it really fell between two stools: it could not be read as intending to commence arbitration because it refers to continuing the proceedings; but neither could it be read as seeking a response to the letter of 9th January because this time Mr. Baskerville was being put forward for the first time as sole arbitrator. I have to say that I should be very unwilling to take such a technical approach to a letter of this kind, the thrust of which is in my view quite clear. The applicants are saying that they intend to pursue their claim by way of proceedings and invite the respondents to agree to Mr. Baskerville's acting as sole arbitrator. Not to accept that letter as complying with the statutory requirements would be to take an unduly technical approach to the parties' communications.

It follows that in my judgment the applicants commenced arbitration on 20th January at the latest and accordingly that if it were necessary for them to make an application for an extension of time that application would fall to be made under section 27 of the Arbitration Act 1950 rather than section 12 of the Arbitration Act 1996.

This matter comes before the court by way of an arbitration application under which the applicants seek a declaration that arbitration was commenced prior to the expiry of the one year time limit contained in Article III, r.6 of the Hague Rules and in the alternative an order extending time for the commencement of arbitration. The dispute between the parties arises out of the carriage of a cargo of fruit in the vessel Baltic Universal from Seattle and Port Canaveral to Rotterdam between December 1995 and January 1996. It is alleged that on arrival at Rotterdam the fruit was found to have suffered damage in the form of crushing caused by excessive movement during the course of the voyage. That in turn is said to have been the result of poor stowage. The first applicants are the insurers of the cargo, the second applicants are said to be the holders of the bills of lading and the third applicants forwarding agents instructed to handle the cargo at Rotterdam. There may be some question whether the second or third applicants are properly to be regarded as holders of the bills of lading, but I am not concerned with that for present purposes.

The cargo was carried under three bills of lading in similar, but not identical, form. The two bills of lading issued at Seattle were on the Congenbill form, 1978 edition. Each of them bore the typed notation

" All terms and conditions of the charterparty dated December 6, 1995 including the arbitration clause are fully incorporated into this bill of lading. "

The Conditions of Carriage printed on the reverse included the following:

" 8. Arbitration

All disputes arising out of this Bill of Lading shall be arbitrated at London and, unless the parties agree forthwith on a single Arbitrator, be referred to the final arbitrament of two Arbitrators carrying on business in London . . . . . . one to be appointed by each of the parties . . . . . "

The bill of lading issued at Port Canaveral, also on the Congenbill form, 1978 edition, contained on its face the same typed clause incorporating the terms of the charter of 6th December 1995. The Conditions of Carriage printed on the reverse did not, however, include any kind of arbitration clause. Each of the bills of lading contained a General Paramount Clause incorporating the Hague or Hague-Visby Rules as appropriate. It was common ground, therefore, that any claim for damage to cargo was subject to the twelve month time bar contained in Article III, r.6 of both the Hague and Hague-Visby Rules.

The vessel completed discharging in Rotterdam on 10th January 1996. A survey of the cargo was carried out but no steps were taken to pursue a claim by way of arbitration until January 1997. On 9th January 1997 the applicants' Dutch lawyers contacted solicitors in London, Waltons & Morse, asking them to take urgent steps to commence proceedings in view of the imminent expiry of the time bar. Accordingly, later the same day Waltons sent the following letter by fax to the vessel's P & I Club:

" Dear Sirs,

m.v. "BALTIC UNIVERSAL" - Bill of Lading ROT-6 16.12.95 at Seattle

Bill of Lading ROT-7 16.12.95 at Seattle

Bill of Lading PC-01 30.12.95 at Port Canaveral

We are instructed on behalf of the subrogated underwriters (Allianz in Hamburg) of two consignments of pears and a consignment of grapefruit carried from Everett and Port Canaveral to Rotterdam on board the m.v. "BALTIC UNIVERSAL", arriving in Rotterdam on 10th January 1996. On arrival, it was discovered that all consignments had been subjected to considerable physical damage and that a consignment of pears had been contaminated by hydraulic oil. Our clients have suffered losses in the sum of Dfl588,131.86.

We understand that the vessel is owned by Fortuna Co. Inc, and is managed by London Ship Managers Ltd. We further understand that the vessel is entered with the UK P&I Club. You have, of course, already been in correspondence with our clients' Dutch attorneys, Messrs Dolk Verburg Diamand.

We hereby notify you that in view of the expiration of the statutory time bar, we have appointed Mr. Michael Baskerville . . . . . . as arbitrator on behalf of our clients, Allianz, SFI Rotterdam B.V. and Overseas FSC B.V. in connection with all disputes arising under the three bills of lading referred to above.

We look forward to receiving your acknowledgment of safe receipt of this facsimile as soon as possible. We shall also be grateful to receive your confirmation that security will be provided in relation to these claims without further delay, failing which, we shall have no alternative than to seek to consider the arrest of one of the vessels in your Member's ownership. "

Also on 9th January Waltons wrote to Mr. Baskerville appointing him as arbitrator on behalf of the applicants.

On 10th January the UK P&I Club acknowledged receipt of Waltons' fax. They said that they were discussing the matter with their member and would respond in the near future. On 15th January the Club sent a proposed letter of undertaking for the applicants' consideration. There followed some telephone conversations concerning parallel proceedings which had been commenced in the Netherlands which led Waltons to write to the Club again on 20th January in the following terms:

" Further to our recent telephone conversations we have received confirmation from Dr. Dolk that the proceedings commenced in the Netherlands were issued purely to protect time. We shall therefore continue the Arbitration proceedings and would call upon you to agree to the appointment of Mr. Baskerville as sole arbitrator. "

On 24th January the Club notified Waltons of the appointment of Mr. O'Donovan as the respondents' arbitrator and a few days later it provided a letter of undertaking by way of security for the claim in terms which were acceptable to Waltons as the applicants' solicitors. Thereafter the arbitration proceeded at a leisurely pace for several months. There were negotiations between the parties and while they were going on neither side was particularly anxious to pursue the proceedings. On 18th September points of claim were served and the respondents indicated their intention to serve points of defence within 28 days. However, on 14th November, without any apparent warning, the respondents' solicitors, Jackson Parton, wrote to Waltons to say that in the light of the decision in Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 W.L.R. 101 they considered that the letter of 9th January 1997 was ineffective to commence arbitration proceedings with the result that the claim had become time barred on 10th January. That led in due course to the present application.

It was common ground that Article III, r.6 applies as a matter of contract to the claims under all three bills of lading and if the applicants fail to obtain a declaration that they commenced arbitration before the time limit expired they seek an extension of time under the appropriate statutory provisions. The respondents have given notice that under those circumstances they will wish to contend that the time bar has statutory, rather than merely contractual, force so that the court is unable to extend time to preserve the applicants' claims. Prior to the hearing of this application the parties had provisionally agreed that that question should be decided by the arbitrators and that I should be invited to deal with the application for an extension of time on the assumption that the time bar was purely contractual. However, the existence of a statutory time bar is of such significance when the exercise of the court's discretion is in issue that I did not think it satisfactory to entertain the application for an extension of time on that basis. Accordingly, I have at this stage only heard argument on the first part of the application (and argument on one issue relating to the application for an extension of time which is closely related to it) and have adjourned the remainder of the application.

The issue which arises for decision at this hearing is whether Waltons' letter of 9th January was sufficient to commence arbitration against the respondents so as to satisfy the requirements of Article III, r.6. The rule itself refers to the bringing of suit, but it is well established that it covers the commencement of arbitration where the parties have chosen that method of resolving their disputes. One might have thought that the manner in which arbitration is to be commenced was primarily a matter for agreement between the parties, and indeed that is now recognised to be so by section 14 of the Arbitration Act 1996 in relation to those arbitrations to which it applies. The 1996 Act also makes provision for those cases in which the parties have not agreed a method of commencing proceedings, but it did not come into effect until 31st January 1997 and the present case therefore falls to be decided by reference to the law in force before that date.

In Nea Agrex S.A. v Baltic Shipping Co. Ltd [1976] 1 Q.B. 933 this very question came before the Court of Appeal. The Aghios Lazaros was employed to carry a cargo of oranges from Greece to Rotterdam and/or Hamburg under a charter which contained a clause paramount and an arbitration clause in these terms:

" If any dispute arises during the performance of this charterparty and cannot be solved amicably, [the same] shall be referred to arbitration in London ".

The oranges were found to be damaged on arrival and as a result a dispute arose between the parties. The charterers through their agents wrote to the shipowners calling on them to take steps to resolve the dispute. They said

" Please advise your proposals in order to settle this matter, or name your arbitrators. "

One question which the court had to decide was whether by writing in those terms the charterers had done enough to commence arbitration so as to prevent the claim from becoming time-barred under Article III, r.6.

In the absence of authority as to when arbitration is commenced the court adopted the suggestion of the parties in that case that the provisions of the Limitation Act should be applied by analogy. Section 27(3) of the Limitation Act 1939 then in force provided as follows:

" . . . . . . an arbitration shall be deemed to be commenced when one party to the arbitration serves on the other party or parties a notice requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator . . . . . . "

These provisions were re-enacted with minor amendments as section 34(3) of the Limitation Act 1980 and are reproduced in substantially the same terms as part of the more extensive code to be found in section 14 of the Arbitration Act 1996.

By virtue of section 6 of the Arbitration Act 1950 the arbitration agreement in the Nea Agrex case was to be construed as providing for a reference to a single arbitrator. Accordingly, the correct method of constituting the tribunal was for the parties to agree on the identity of an arbitrator or, if they could not do so, apply to the court under section 10 of the Act. It follows that it was a case in which the charterers ought to have sent a notice to the shipowners requiring them to agree to the appointment of an arbitrator, either nominating the person they wished to see appointed or putting forward a list of names for consideration. However, the charterers appear to have been under the impression that the arbitration agreement provided for a three man tribunal, each party initially appointing the arbitrator of his choice, and so they called upon the shipowners to "name your arbitrators", i.e. nominate their member of the tribunal. (The suggestion that the letter should be read as meaning "provide us with your list of names for consideration" was rejected.) The letter did not, therefore, on any view comply with the strict requirements of section 27(3) of the Limitation Act. The question which the court had to consider was whether strict compliance was necessary or whether something less would do.

All the members of the court held that the charterers' letter was sufficient to satisfy the requirements of section 27(3), but they gave rather different reasons for their conclusions. Although Lord Denning M.R. accepted the need for a notice in writing, he considered it sufficient if the notice by implication required the other party to take the necessary step, whether to appoint his own arbitrator or to agree to the appointment of a sole arbitrator. He put the matter in this way at page 944G-945C:

" In order to commence the arbitration, there must, I think, be a notice in writing served by one party on the other party. This notice must contain a requirement. It must require the other party to do one or other of two things: either (1) "to appoint an arbitrator" or (2) "to agree to the appointment of an arbitrator."

The first alternative (1) is appropriate in a case where the reference is to two arbitrators, one to be appointed by each party. In such a case the arbitrations deemed to commence when the one party, expressly or by implication, requires the other party to appoint his arbitrator. If he simply says: "I require the difference to be submitted to arbitration in accordance with our agreement" that is sufficient to commence the arbitration: because it is by implication a request to the other to appoint his arbitrator.

The second alternative (2) is appropriate when the reference is to a single arbitrator. In such a case the arbitration is deemed to commence when the one party, expressly or by implication, says: "The time has come when we must submit the difference to arbitration in accordance with our agreement. I must ask you to agree to the appointment of an arbitrator." Now he cannot compel the other party to agree, or even to reply to the requirement. It seems to me that a notice which says: "I require the difference between us to be submitted to arbitration" is sufficient to commence the arbitration: because it is by implication a request to agree to the appointment of an arbitrator.

So in any case a simple notice in writing requiring the difference to be submitted to arbitration is deemed to be a commencement of the arbitration. "

It is clear from that passage that in Lord Denning's view no particular form of words is necessary provided that relevant communication contains a sufficiently clear notice to the other party that he is required to take the necessary step to submit the dispute to arbitration.

Goff L.J. dealt with the matter in a rather different way. He said at pages 949H-950D:

" This being so we have next to decide the question which did not arise before the judge, whether the charterers did, or failed to, commence arbitration within the year. For this purpose in my judgment one must apply the Limitation Act 1939, section 27(3) by analogy. That section poses some problems and there appears to be no authority as to its construction. It is, as the charterers submit, a "deeming section", but the question is whether, as they say, the methods prescribed are deemed to be sufficient without prejudice to any other way in which arbitration may in fact be commenced, or whether the statutory methods are the only ones for the purposes of limitation. In my view, the latter is correct, because the steps envisaged by the section are such as by their very nature would commence an arbitration and do not require to be deemed such, although I agree with Lord Denning M.R. that the necessary request may be implies. However, it is not necessary to reach a final decision on that point.

The section I think clearly envisages that a party who wishes to commence arbitration will, when there are to be arbitrators on both sides, call upon his opponent "to appoint an arbitrator", and when the reference is to a single arbitrator will call upon him "to agree to the appointment of an arbitrator." However, if he adopts the wrong course, that would not in my judgment make his requisition a nullity, or prevent arbitration commencing. It would be no more than an irregularity capable of being remedied. In the case of a single arbitrator the sensible course would be either to submit a name or names for approval, or to ask the other side to do so, but I am inclined to think that a formal notice, merely calling upon him to agree to the appointment of an arbitrator, would suffice to commence the arbitration, and so save the claim from becoming time barred, but this again we need not I think decide. "

It appears that Goff L.J. considered that the notice in that case was sufficient because it did expressly require the shipowners to take a step towards constituting the tribunal, albeit the wrong one, and so could be treated as irregular, but effective, rather than a nullity, but it also appears that he would, if necessary, have been prepared to approach the question on the broader basis which commended itself to Lord Denning M.R. I say that because as I read the passage in his judgment at page 950A-B, Goff L.J. agreed with Lord Denning that the necessary request could be implied. The point on which he considered it unnecessary to reach a decision was the effect of section 27(3).

Shaw L.J. adopted a very similar approach to that of Lord Denning M.R. He said at pages 954E-955A:

" It is to be observed that this [sc. section 27(3)] is a deeming provision designed to ascertain for the purposes of the Limitation Act 1939 the point of time at which an arbitration is to be regarded as having commenced. It does not exclude other direct means of establishing the commencement of an arbitration. If a general principle is to extracted from section 27(3) it seems to me that where a dispute arises which is within the scope of a pre-existing agreement to submit disputes to arbitration,then an arbitration is commenced when one party gives notice to the other party intimating that he proposes to invoke the arbitration agreement and requiring that other party to take some step towards setting an arbitration in train. By analogy with the procedure prescribed in section 27(4) of the Act of 1939, such a notice must be in writing and served in accordance with the rules there set out. The commencement of the arbitration would coincide with the service of the notice on the other party.

The giving of such notice is a matter inter partes and is a procedural and not a decisive step. Accordingly, its form and terms do not call for an excessively strict scrutiny. If, in substance, a party communicates (i) an intention to resort to arbitration and (ii) a requirement that the other party should do something on his part in that regard, this will in general suffice to define the commencement of arbitration or, for the purpose of article III, rule 6, of the Hague Rules, the date when "suit is brought."

Applying these principles to the present case, I would hold that the letter of May 31, 1972, addressed to the shipowners was sufficient to mark the commencement of the arbitration. "

Although by referring to the "substance" of the communication rather than to an "implied request" Shaw L.J. expressed himself in slightly different terms from Lord Denning M.R., his approach to the question seems to me to be fundamentally the same.

There has been some debate about how far it is permissible to stretch this approach, and in particular whether a simple notice of the kind envisaged by Lord Denning M.R. would suffice (see the comments of Kerr J. in Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 Lloyd's Rep. 653, 657-658 and Mustill & Boyd, Commercial Arbitration, 2nd ed. at page 199, note 4). However, the broad approach of the Court of Appeal in the Nea Agrex case, and in particular the judgment of Lord Denning M.R., has been applied in many subsequent cases, the most notable of which for present purposes is Peter Cremer G.m.b.H. & Co v Sugat Food Industries Ltd (The "Rimon") [1981] 2 Lloyd's Rep. 640 in which two telex messages containing the phrases

" . . . . . . settling of claims of both sides will be done by arbitrators according to gafta rules. "

and

" . . . . . . the point of who is to be blamed . . . . . . shall be decided by arbitrators. "

were held to be sufficient to commence arbitration for the purposes of the statutory instrument bringing the Arbitration Act 1979 into effect. It has therefore been widely accepted that a notice which communicates in substance, whatever words are used, that which is required by the relevant Limitation Act will be sufficient to stop time running. Accordingly, attention has been directed to the real meaning of the communication on which the claimant relies having due regard to the context in which it was sent. However, apart from making a passing appearance in Surrendra Overseas Ltd v Government of Sri Lanka which was decided on a different point, the question of principle does not appear to have been considered again until it arose in Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 W.L.R. 101. That case concerned a contract of affreightment for the carriage of pipes from Port Kembla in New South Wales to Kuantan in Malaysia. The contract contained an arbitration agreement which provided for disputes to be referred to a tribunal of three arbitrators in London, one to be appointed by each party and the third by the two so chosen. The Hague Rules were incorporated into the contract and thus the one year time limit in Article III, r.6 applied. After a dispute had arisen the claimants sent a letter to the respondents in which they said that the cargo carried on the vessel had been seriously damaged in the course of carriage and concluded in these terms:

" . . . . . . By this letter the dispute between our respective companies is referred to the arbitration of three arbitrators in London pursuant to the provisions of clause 17.8 [the arbitration clause] of the contract of affreightment . . . . . . "

Apart from that, however, no steps were taken to commence arbitration before the expiry of the time bar.

The claimants' letter seeking to refer the dispute to arbitration was couched in terms similar to those which Lord Denning M.R. in the Nea Agrex case had suggested would contain an implied requirement to appoint an arbitrator sufficient to satisfy the requirements of the Limitation Act. However, having considered the judgments in the Nea Agrex case in some detail, His Honour Judge Raymond Jack Q.C. concluded that it did not have that effect. Judge Jack Q.C. identified the question he had to decide as being whether a notice requiring differences to be submitted to arbitration satisfies section 34(3) of the Limitation Act 1980 because it carries with it by implication a request that the recipient appoint his arbitrator, and thus whether the judgment of Lord Denning M.R. should be followed on that point. He concluded that an implied request would not suffice.

Mr. Parsons for the applicants in this case submitted that Judge Jack's decision on this point was wrong and should not be followed. He submitted that whatever might be said about the particular form of the letter which the court had to consider in that case, it was part of the ratio of the Nea Agrex case that precise compliance with the terms of the Act by means of an express request is not required and that an implied request is sufficient. Mr. Picken, on the other hand adopted the reasoning of Judge Jack Q.C. He pointed out that only Lord Denning M.R. had suggested that an implied request would be sufficient and that in any event his views were obiter inasmuch as the charterers' letter in that case did specifically call on the shipowners to take steps by naming their arbitrator.

Judge Jack Q.C. approached the case before him on the basis that it was an open question whether, in order to stop time running under Article III, r.6, it is necessary to give notice in terms which expressly require the other party to take the steps referred to in the Limitation Act, or whether a notice which does so by implication will suffice. (That is not the same, of course, as the question whether a notice in the particular form suggested by Lord Denning M.R. would carry the necessary implication.) It is necessary, therefore, to see what the Court of Appeal did decide in the Nea Agrex case. It clearly did decide that strict compliance with the Limitation Act was not necessary, otherwise the charterers must have failed on that ground, but because of the different ways in which the members of the court expressed themselves it is a little more difficult to identify a common principle. Like Judge Jack Q.C. I think it is clear that Lord Denning M.R.'s judgment rests squarely on his acceptance of the proposition that the request to appoint an arbitrator may be implied, and I think it is equally clear that the judgment of Shaw L.J. rests on his conclusion that is sufficient for the requirement to communicated in substance. In my judgment this comes to much the same thing and there is, therefore, clearly a majority in support of the principle that it is necessary to look at the real meaning of the notice rather than merely the form of words used. The principle must go beyond a mere question of construction, as the facts of the case demonstrate, since the charterers' letter in that case could not easily be construed as requiring the shipowners to agree to the appointment of a sole arbitrator. For the charterers to succeed it was necessary for the court to accept that a notice requiring them to take steps of some kind towards making an appointment, albeit the wrong ones, was sufficient. Accordingly, I think that the Nea Agrex case is binding authority for the proposition that a notice in writing which, read in its context, makes it clear by whatever language that the sender is invoking the arbitration agreement and is requiring the recipient take steps in response to enable the tribunal to be constituted is sufficient to satisfy the requirements of section 34(3) of the Limitation Act 1980 and of Article III, r.6.

It follows that I am unable to agree with Judge Jack Q.C. that in a case such as the present the claimant must expressly call upon the respondent to appoint his arbitrator in order to commence arbitration. In my view the decision in the Nea Agrex case is authority to the contrary, and even if it were not binding it would be of the highest persuasive authority. Although notices of arbitration are often given by legal advisors, as happened in the present case, they are more often given by the parties themselves whose first language may often not be English and who may have little understanding of the technicalities of English law. What is important for them is not whether a notice contains a particular form of words but whether it makes it clear that the arbitration agreement is being invoked and that they are required to take steps accordingly. Provided that is done both the policy of the Act and the requirements of commercial life are satisfied. In my view, if the question did remain open, these considerations would point strongly in favour of adopting the approach of Lord Denning M.R. and Shaw L.J. which does not seem to me to run counter to the policy of the statutory provisions. I would respectfully suggest that it is wrong to say that English law has taken a policy decision, contrary to that reflected in Article 21 of the UNCITRAL Model Law, that in order to commence arbitration it is necessary to take a step towards constituting the tribunal, if by that is meant anything beyond invoking the arbitration agreement. Where the agreement provides for each party to appoint an arbitrator the first and most obvious step towards constituting the tribunal is for the claimant to appoint his own arbitrator, but that is not one of the requirements of section 34(3). Similarly, in the case where the parties have agreed to refer disputes to a named arbitrator the section does not require the claimant to notify the arbitrator that a dispute has arisen; it merely requires him to serve a notice on the respondent requiring him to submit the dispute to that person. Where the arbitration agreement provides for a sole arbitrator the notice must require the recipient to agree to the appointment of an arbitrator (though there is no requirement on the claimant to propose any names for the respondent's consideration), but although in this last case it can be said that a notice to agree is the first step towards constituting the tribunal, I think that all these cases are better viewed as different ways of invoking the arbitration agreement, in other words, of saying to the respondent, `I demand the right to have this dispute decided by arbitration as we agreed and require your co-operation in bringing that about'.

I approach the present application, therefore, on the basis of the principles which in my judgment are to be derived from the Nea Agrex case. However, before turning to the terms of the letter itself it is necessary to say something about the arbitration agreements. Each of the bills of lading incorporated the arbitration clause of a charterparty dated 6th December 1995, but apart from that the charter was not identified. The application was argued before me on the basis that this referred to a charterparty of that date on the Gencon form between Universal Reefers Ltd as owners and Scivik Shipping G.m.b.H. as charterers. At the last minute Mr. Picken suggested that there might be some other charter, also dated 6th December 1995, to which the reference might have been intended to apply and which might contain an arbitration clause in different terms. However, I have seen nothing to support that suggestion, and to be fair it was not seriously pursued.

The material part of the charterparty arbitration clause reads as follows:

" . . . . . . Unless the parties agree upon a sole arbitrator, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint a third arbitrator, the decision of the three-man tribunal thus constituted or any two of them shall be final. On receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall be final. "

Apart from the final sentence, therefore, this clause, although differently worded, provided for arbitration in the same manner as the arbitration clauses in the bills of lading. In each case the parties contemplated that there should be a sole arbitrator if they could agree on a suitable person, and if not, that there should be a three-man tribunal appointed in the usual way. There was some argument between the parties over the effect of the purported incorporation of the charterparty arbitration clause into the two bills of lading also which contained their own arbitration clauses, but that is not a question which I think it necessary to resolve for the purposes of this application. One way or another each of the bills of lading incorporated an agreement to arbitrate which provided for a sole arbitrator or, in default, for a three-man tribunal. Strictly speaking, therefore, I think that the applicants ought to have begun by giving the kind of notice which would be appropriate in the case of an agreement to refer disputes to a sole arbitrator. Only if the parties were unable to agree would the agreement for a three-man tribunal come into play. It is for this reason that I cannot accept Mr. Parsons' submission that the charterparty arbitration clause contemplated as the primary method of commencing arbitration the nomination by one party of his own arbitrator.

Mr. Picken drew my attention to a passage at page 199 of Mustill & Boyd where the learned editors say that a notice by the claimant that he himself has appointed an arbitrator is not a sufficient compliance with the statute. However, for my own part I doubt whether the position can be stated quite as simply as that in the light of the court's approach in the Nea Agrex case. Of course, in one sense it is necessary for the claimants to go further and require the respondents to appoint their arbitrator, but whether they have in fact made it clear that they are requiring the respondents to take some step themselves depends on what one can properly read into the message having regard to its terms and the context in which it was sent. Waltons' letter of 9th January 1997 was sent on the day before the one year time limit for commencing proceedings expired, and indeed it expressly referred to the expiry of time. The letter does not, of course, contain an express notice to the respondents requiring them to agree upon the appointment of a sole arbitrator or even to appoint their own arbitrator; insofar as it expressly required the respondents to do anything it was to acknowledge receipt and confirm that security would be provided. However, given its terms and the context in which it was sent I find it difficult to believe that the Club did not understand perfectly well what it was intended to convey. Indeed, when I asked Mr. Picken whether it could possibly be read otherwise than as a notice that the applicants were referring the dispute to arbitration and required the respondents to take appropriate action he was at something of a loss. In my view the letter gave clear notice to the Club on behalf of the respondents that the applicants were invoking the arbitration agreements in the bills of lading, that they had appointed their own arbitrator, and that they required the respondents to appoint their arbitrator so that the tribunal could be fully constituted and the proceedings got properly under way. If the arbitration agreement had provided simply for a three-man tribunal, therefore, I should have had little difficulty in holding that the notice, though undoubtedly poorly drafted, was adequate to satisfy the requirements of section 34(3) of the Limitation Act and thus sufficient to commence arbitration for the purposes of Article III, r.6.

Does it make any difference that Waltons in fact gave the wrong sort of notice? I do not think it does. It can be argued that the letter of 9th January does not on any view require the respondents to agree upon a sole arbitrator and that therefore one cannot find within it a notice of the kind required, but if I am right in the view I have taken of the letter, namely that it does by implication require the respondents to appoint their arbitrator, this case is for all practical purposes the same as Nea Agrex. The applicants did make it clear that they were invoking the arbitration agreements and did by implication call on the respondents to take steps in response in order to constitute the tribunal. In my judgment that was sufficient.

For these reasons I have reached the conclusion that the applicants' letter to the Club of 9th January 1997 was sufficient to commence arbitration and that consequently their claim is not time-barred. That makes it unnecessary for me to consider the effect of the letter of 20th January, but in view of the way in which the argument developed I propose to say a few words about it. Mr. Parsons submitted that whatever may be said about the letter of 9th January, the letter of 20th January did expressly call upon the Club to agree to the appointment of Mr. Baskerville and therefore did on any view expressly comply with the requirements of the Limitation Act. I think he is right about that. Mr. Picken sought to persuade me that the letter was wholly ineffective because it really fell between two stools: it could not be read as intending to commence arbitration because it refers to continuing the proceedings; but neither could it be read as seeking a response to the letter of 9th January because this time Mr. Baskerville was being put forward for the first time as sole arbitrator. I have to say that I should be very unwilling to take such a technical approach to a letter of this kind, the thrust of which is in my view quite clear. The applicants are saying that they intend to pursue their claim by way of proceedings and invite the respondents to agree to Mr. Baskerville's acting as sole arbitrator. Not to accept that letter as complying with the statutory requirements would be to take an unduly technical approach to the parties' communications.

It follows that in my judgment the applicants commenced arbitration on 20th January at the latest and accordingly that if it were necessary for them to make an application for an extension of time that application would fall to be made under section 27 of the Arbitration Act 1950 rather than section 12 of the Arbitration Act 1996.