Ga-Hyun Chung v Silver Dry Bulk Co Ltd – QBD (Comm Ct) (Moulder J)  EWHC 1147 (Comm) – 17 May 2019
Arbitration – Jurisdiction – Validity of appointment of arbitrator – Whether claimant’s challenge was to “substantive jurisdiction” – Whether effect of Marshall Islands statute was to extend life of company after dissolution to enable arbitration proceedings to be served on it.
Homer Hulbert Maritime Co Ltd (“HH”) was a corporation incorporated in and under the laws of the Marshall Islands. HH filed articles of dissolution in the Marshall Islands on 28 February 2011. An arbitration arose out of the sale of a ship, by HH to Silver Dry Bulk Co Ltd., with allegations being made that the price was inflated due to a secret commission. The memorandum of agreement contained a London arbitration clause. The only parties to the memorandum of agreement were Silver Dry Bulk Ltd and HH.
A notice of arbitration was filed in October 2014 with the Attorney General of the Marshall Islands. HH did not respond. A sole arbitrator accepted the appointment on the basis that HH had not responded to the notice of arbitration or appointed its own arbitrator.
Subsequently the notice of arbitration was sent by the solicitors for Silver Dry Bulk to another company, which they believed to be the former owner of HH. This other company disputed the jurisdiction, and said that the Arbitrator had not been validly appointed.
HH’s statutory trustee, the Claimant Mr Chung, brought a jurisdictional challenge to the Award pursuant to s67 Arbitration Act 1996. Mr Chung argued that no arbitration was ever commenced against HH as HH had been finally dissolved and wound up some eight months before the notice of arbitration purported to commence the purported arbitration, on 28 October 2014. Accordingly, the arbitration was a nullity. The notice of arbitration served did not and could not validly commence arbitration.
The challenge was successful. The Court considered that the challenge fell squarely within s67: whether HH legally existed as an entity and could validly serve a notice of arbitration was a jurisdictional issue, not simply a question of fact for the Tribunal. Expert evidence was considered as to whether Marshall Islands law had extended the life of HH to enable service of arbitration proceedings on it. Mrs Justice Moulder found in favour of Mr Chung. She concluded that HH had ceased to exist by October 2014, and that therefore the notice of arbitration could not validly commence a valid arbitration. The Arbitrator therefore had not had jurisdiction, had not been validly appointed and his Award was a nullity.