The claimant owners of a vessel chartered it to the defendant. The claimant alleged that there had been repeated failures by the defendant to pay time charter hire and they gave notice of exercise of a lien over the cargo of crude oil owned by the defendant. The charter contained a London arbitration clause. The claimant commenced arbitration, claiming hire and other outstanding sums, either as sums due under the charter or by way of damages. The claimant obtained permission from the arbitral tribunal to apply to the court for an order under section 44 of the Arbitration Act 1996 for sale of the cargo. The defendant contended that there was no power to order the sale of a cargo under section 44(2)(d) unless the cargo was the “subject” of the arbitral proceedings; that, if there was such a power, it could only be exercised within the scope of CPR r 25.1(c)(v), which required either that the cargo was perishable (which it was not), or that there was some other good reason why it should be sold “quickly” and that, in any event, the exercise of such a power would be inappropriate in the circumstances.
On the application—
Held, application granted. There was a sufficient nexus between the cargo and the arbitral proceedings in circumstances such as the present, namely where a contractual lien was being exercised over a defendant’s goods as security for a claim which was being advanced in arbitration. That did not depend on whether there was formally a claim in the arbitration for a declaration that the claimant was entitled to exercise such a lien. It was sufficient that the lien was being exercised in support of the arbitral claim and that, as a result, there was an impasse between the parties pending issue of an award. There was power in the present case to order a sale pursuant to section 44 of the 1996 Act. “Good reason” for a quick sale was a jurisdictional requirement, but in practice, it overlapped with broader discretionary considerations. Considering the matter as a whole, there was no doubt that the sale of the cargo should now be ordered (paras 32, 33, 35, 43).
Michael Coburn QC and Rupert Hamilton (instructed by HFW) for the claimant.
Michael Davey QC and Nichola Warrender (instructed by Stephenson Harwood) for the defendant.