The Weekly Law Reports 16 January 1998

101
1 W.L.R.
A [QUEEN'S BENCH DIVISION]

* V O S N O C L T D . v. T R A N S G L O B A L P R O J E C T S L T D .

1997 July 4; 23 Judge Raymond Jack Q.C.

sitting as a High Court judge

B Arbitration—Notice—Validity—Plaintiffs' letter referring dispute to

arbitration—No express request to appoint arbitrator—Whether
arbitration commenced—Whether discretion to extend time—
Limitation Act 1980 (c. 58), s. 34(3)—Arbitration Act 1996
(c. 23), s. 12(3)
Under a contract of affreightment between the plaintiffs and
the defendants the latter were responsible for the loading and
C unloading of pipes shipped to Western Australia. The contract
provided for the reference of disputes to three arbitrators in
London, two of whom were to be appointed by the parties and
the third to be appointed by the two chosen arbitrators. A dispute
arose in respect of damaged pipes delivered on various dates
between 19 September and 8 November 1994. Having regard to
the limitation provisions of the 1922 Hague Rules, under which it
was necessary to bring proceedings within one year of delivery,
*-* the plaintiffs wrote to the defendants on 16 September 1995
asking for an extension of time. They received no reply and, on
19 September 1995, the plaintiffs faxed a letter to the defendants
stating that the dispute was thereby referred to the arbitration of
three arbitrators in London. The letter did not expressly request
the defendants to nominate an arbitrator. The defendants did not
respond and no further steps were taken until March 1997, when
E the plaintiffs appointed an arbitrator and requested the defendants
to do likewise. The defendants claimed that the plaintiffs' letter
of 19 September 1995 did not satisfy the limitation provisions of
the Hague Rules. The plaintiffs sought a declaration that the
dispute had been validly referred to arbitration on or before
19 September 1995, or alternatively an extension of time under
section 12(3) of the Arbitration Act 19961 to commence the
arbitration proceedings. For the purpose of the proceedings the
F parties accepted that the contract incorporated article III, rule 6
of the Hague Rules.
On the plaintiffs' claim:—
Held, (1) refusing the declaration, that before an arbitration
could be treated as having been commenced one party had to
serve on the other a notice which not only required the other
party to arbitrate, but which required him to appoint an
Q arbitrator; that a notice which did no more than state that the
dispute was referred to arbitration did not carry with it by
implication a request that the recipient appoint his arbitrator; and
that, accordingly, the plaintiffs' letter of 19 September 1995 was
insufficient to commence the arbitration (post, p. 110B-D, F-H).
Nea Agrex S.A. v. Baltic Shipping Co. Ltd. [1976] Q.B. 933,
C.A. considered.
(2) Granting an extension of time, that in determining whether
H to extend time under section 12(3)(a) of the Arbitration Act 1996
a court had to be satisfied that the circumstances were outside the
reasonable contemplation of the parties when they agreed to the
time bar and that an extension would be just; that the court was
entitled to have regard to the whole of the circumstances in which
the application for an extension arose; and that, accordingly,
since it was not clear in September 1995 that the plaintiffs' letter
1
Arbitration Act 1996, s. 12(3): see post, p. 111F-G.
 The Weekly Law Reports 16 January 1998
102
Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) |1998|
would be insufficient to commence arbitration proceedings, and ^
the defendants knew that the plaintiffs clearly intended to
commence arbitration proceedings, and in view of the substantial
nature of the plaintiffs' claim, it was just to grant an extension of
time (post, pp. 112A, E-F, 113E-F).

The following cases are referred to in the judgment:

Frota Oceanica Brasiliera S.A. v. Steamship Mutual Underwriting Association R
(Bermuda) Ltd. [1995] 2 Lloyd's Rep. 254
Libra Shipping and Trading Corporation Ltd. v. Northern Sales Ltd. [1981]
1 Lloyd's Rep. 273, C.A.
N.V. "Vulcaan" v. AIS Ludwig Mowinckels Rederi [1938] 2 All E.R. 152,
H.L.(E.)
Nea Agrex S.A. v. Baltic Shipping Co. Ltd. [1976] Q.B. 933; [1976] 2 W.L.R.
925; [1976] 2 All E.R. 842, C.A.
C
Petredec Ltd. v. Tokumaru Kaiun Co. Ltd. [1994] 1 Lloyd's Rep. 162
Surrendra Overseas Ltd. v. Government of Sri Lanka [1977] 1 W.L.R. 565;
[1977] 2 All E.R. 481; [1977] 1 Lloyd's Rep. 653

The following additional cases were cited in argument:

Bulgaris v. La Plata Cereal Co. S.A. (1947) 80 Ll.L.Rep. 455, D.C.
Comdel Commodities Ltd. v. Siporex Trade S.A. (No. 2) [1991] 1 A.C. 148;
D
[1990] 3 W.L.R. 1; [1990] 2 All E.R. 552, H.L.(E.)
Garrick Shipping Co. v. Euro-Frachtkontor G.m.b.H. [1989] 2 Lloyd's Rep. 316
Hookway (F. E.) & Co. Ltd. v. Hooper (H. W.) & Co. (Note) [1950] 2 All
E.R. 842, C.A.
Intermare Transport G.m.b.H. v. Naves Transoceanicas Armadora S.A. [1976]
1 Lloyd's Rep. 552
Kruidenier (H.) (London) Ltd. v. Egyptian Navigation Co. (No. 2) [1980]
2 Lloyd's Rep. 166 E
Liberian Shipping Corporation "Pegasus" v. A. King & Sons Ltd. [1967] 2 Q.B.
86; [1967] 2 W.L.R. 856; [1967] 1 All E.R. 934, C.A.
Moscow vlo Exportkhleb v. Helmville Ltd. [1977] 2 Lloyd's Rep. 121
Navigazione Alta Italia S.p.A. v. Concordia Maritime Chartering A.B. [1990]
2 Lloyd's Rep. 234
Sparta Navigation Co. v. Transocean America Inc. [1989] 1 Lloyd's Rep. 506
Steamship Co. of 1912 & Steamship Co. Svendborg v. Anglo-American Grain F
Co. Ltd. [1958] 2 Lloyd's Rep. 341, D.C.
Transpetrol Ltd. v. Ekali Shipping Co. Ltd. [1989] 1 Lloyd's Rep. 62

ORIGINATING SUMMONS
By an originating summons dated 13 March 1997 the plaintiffs, Vosnoc
Ltd., a company incorporated in Cyprus, sought a declaration, inter alia,
that all disputes between themselves and the English defendants, G
Transglobal Projects Ltd., under a contract of affreightment dated
23 August 1994 were validly referred to arbitration on or before
19 September 1995; alternatively, an extension of time for commencement
of arbitration proceedings by the plaintiffs against the defendants under
the contract of affreightment.
The facts are stated in the judgment. „

Simon Picken for the plaintiffs.

Richard Southern for the defendants.

Cur. adv. vult.

23 July. JUDGE RAYMOND JACK Q.C. handed down the following

judgment. By their originating summons the plaintiffs, Vosnoc Ltd.,
 The Weekly Law Reports 16 January 1998
103
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) ^'jac^Qx!
A claim a declaration that certain disputes between themselves and the
defendants, Transglobal Projects Ltd., were validly referred to arbitration
on or before 19 September 1995. That is the date of a letter sent by fax
from Vosnoc to Transglobal, and the dispute centres on the wording of a
paragraph in that letter. Vosnoc ask in the alternative for an extension of
time for the commencement of arbitration proceedings. Vosnoc is a
company incorporated in Cyprus and with an address in Nicosia.
" Transglobal is an English company with an address in Dartford.

The facts
The background to the matter is as follows. Vosnoc entered a contract
of affreightment with Transglobal dated 23 August 1994 for the shipment
of pipes. They were to be shipped by four vessels from Port Kembla in
New South Wales to Kuantan in Malaysia, where they were to be coated.
They were then to be shipped to Dampier or Port Hedland in Western
Australia where they were required for a pipeline. Transglobal were to be
responsible for the stevedoring, that is, the loading and unloading, the
stowage and unstowage, of the pipes.
Clause 17.8 of the contract provides for arbitration:
D "17.8 Should any dispute between the contractor and charterers, the
matter in dispute shall be referred to three persons in London, to be
appointed by each of the parties hereto and the third by the two
chosen. Their decision or that of any two of them shall be final and
for the purpose of enforcing any award their decision may be made a
rule of court. The arbitrators shall be shipping men. The arbitration
g is to be conducted in accordance with the rules of the London
arbitrators [sic]."
Clause 17.9 was in terms which it was accepted for the purpose of the
applications before me incorporated the 1922 Hague Rules. So, by
article III, rule 6, unless suit was brought within one year of delivery
Transglobal were discharged from all liability whatever in respect of the
p pipes. Mr. Picken, who appeared for Vosnoc, reserved their right to argue
in any arbitration that this was not so.
The dates of discharge in Western Australia were: vessel 1, 19-25
September 1994; vessel 2, 4-11 October; vessel 3, 17-22 October; vessel 4,
2-8 November. The contract provided for the inspection of the pipes
during discharge. Damage was- noted, which provides the basis of the
intended claims.
G
Between 30 September 1994 and 23 March 1995 there was
correspondence between Vosnoc and Transglobal concerning the claims.
On 16 September 1995 Vosnoc sent a letter by fax to Transglobal asking
for an extension of time to commence suit. The letter said:
"Karratha to Port Hedland gas pipeline project cargo damage claim:
We refer Transglobal to our facsimile transmissions dated . . . Due to
H the complexity of the claims, final adjustment in quantifying costs for
each of the consignments will not be accomplished within the (12)
month time period. We are requesting at this juncture an extension
of suit time of (1) year effective from 30 September 1995. . . . Should
you have any further questions please feel free to contact the
undersigned. We eagerly await your response."
There was none.
 The Weekly Law Reports 16 January 1998
104
V o s n o c Ltd
CkQC - v- Transglobal Projects Ltd. (Q.B.D.) [1998]
Three days later, on 19 September 1995, Vosnoc sent by fax from A
Singapore the letter to Transglobal which I mentioned at the start of the
judgment. It reads:
"Karratha . . . You are referred to the contract of affreightment
between our respective companies and made on 23 August 1994.
Pursuant to that contract of affreightment you were responsible, inter
alia, to load . . . During loading, stowage and the voyage and the g
unloading of the pipes serious damage was caused to the pipes in
consequence of which this company has suffered loss and damage
and has become liable to the owner and consignee of the pipes,
Pilbara Energy Pipeline Co. Pty. Ltd. Under the contract of
affreightment, pursuant to clause 17.8 thereof, it is provided that all
disputes to the arbitration of three persons in London. By this letter
the dispute between our respective companies is referred to the C
arbitration of three arbitrators in London pursuant to the provisions
of clause 17.8 of the contract of affreightment such arbitration to be
conducted in accordance with the rules of the London arbitrators."
The bottom of the letter had a space for a signature in acknowledgement
of receipt and it asked for that to be done by fax.
On the same date, 19 September 1995, proceedings relating to the D
damage to the pipes were commenced in the courts of South Korea
between Bredero Price (Malaysia) Sdn. Bhd. ("B.P.M.") and Yukong
Line Ltd. Transglobal had time chartered from Yukong the vessels to
perform their contract with Vosnoc. B.P.M. has the same holding company
as Vosnoc. Vosnoc had entered an agreement with B.P.M. whereby
Vosnoc were to arrange the transportation and stevedoring of the pipes £
and also their coating in Kuantan. The action in Korea is proceeding. It
is not in evidence what stage it has reached. The damages which Vosnoc
seek to claim against Transglobal are the sums of Aus.$801,055 and
U.S.S 155,216 which Vosnoc have had to pay, or are liable for, to B.P.M.
under Vosnoc's contract with B.P.M.
There was no response from Transglobal to Vosnoc's letter of
19 September 1995. Nor was anything done at this stage by either side to F
appoint arbitrators. On 25 September 1995 lawyers in Western Australia
acting for B.P.M., Cocks Macnish, wrote to Transglobal asking for
information as to the stevedores, which was given by letter of 6 October.
On 31 January 1996 they asked for further information, and wrote a
chasing letter on 15 February. On 22 February Transglobal responded
referring Cocks Macnish to their solicitors, Clifford Chance. On 1 March Q
Cocks Macnish copied to Clifford Chance their letter of 31 January and
asked for a reply as a matter of urgency. None was given. Meanwhile in
that February Clifford Chance had advised Transglobal on Vosnoc's letter
of 19 September 1995. The advice was given because Transglobal sent a
package of documentation to Clifford Chance which included the letter
and it was not specifically sought. The advice they gave is not known.
The next event is that on 6 March 1997 solicitors for Vosnoc, Richards H
Butler, asked Mr. Michael Ferryman if he would accept appointment as
arbitrator nominated by Vosnoc in respect of the relevant disputes. The
following day, 7 March, Mr. Ferryman accepted the appointment. Also
on 6 March 1997 Richards Butler wrote to Transglobal referring to the
contract of affreightment and Vosnoc's letter of 19 September 1995. They
stated that Vosnoc had appointed Mr. Ferryman as arbitrator and called
on Transglobal to appoint theirs. Clifford Chance replied on 11 March.
 The Weekly Law Reports 16 January 1998
105
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) JHCM}"™
A They said that the letter of 19 September did not satisfy the requirements
necessary to bring suit for the purpose of article III, rule 6 of the Hague
Rules. They also stated that without prejudice to that contention they had
appointed on behalf of Transglobal Mr. John Maskell as arbitrator.
Vosnoc's proceedings were issued on 13 March.
There was thus an 18-month gap between the letter of 19 September
1995 and any further step to progress an arbitration. There is no
B explanation for this in the evidence from Vosnoc. Mr. Southern has
submitted on behalf of Transglobal that the explanation has to be that
Vosnoc never intended to commence an arbitration by their letter of
19 September and did not think that they had done so. That cannot be
right. Whether or not the letter is effective for its purpose, the intention is
clear. Vosnoc had the one year time bar well in mind. That is why on
Q 16 September 1995 they wrote asking for an extension. That letter also
shows that for one reason or another they were not ready to proceed with
an arbitration once it was commenced. Having got no response to the
request for an extension Vosnoc wrote as they did on 19 September. The
intention was to protect their position by bringing suit within the year.
They intended to do so by giving notice of arbitration. Having done that,
they considered that their position was preserved. In March 1997 their
D position was such that they wished to proceed.
The law relating to commencement of arbitration and its application
It might be thought that to commence an arbitration the party claiming
should give notice to the other requesting arbitration in accordance with
the agreement. Article 21 of the United Nations Commission on
International Trade Law Model Law on International Commercial
b
Arbitration (21 June 1985) ("the UNCITRAL Model Law") takes that
approach:
"Commencement of arbitral proceedings. Unless otherwise agreed by
the parties, the arbitral proceedings in respect of a particular dispute
commence on the date on which a request for that dispute to be
referred to arbitration is received by the respondent."
Vosnoc's letter would meet this requirement. English law may take a
different approach. Whether in practice it does so is the main point which
I have to decide.
English law as to when an arbitration is commenced has based itself
on the relevant provisions of the Limitation Acts 1939 and 1980 and now
of the Arbitration Act 1996. A barring provision which does not arise
Q under statute but is contractual will not be covered by these provisions. It
is established that in those circumstances the statutory provisions should
be applied by analogy: see Nea Agrex S.A. v. Baltic Shipping Co. Ltd.
[1976] Q.B. 933.
The relevant provision here is that in force on 19 September 1995,
namely section 34(3) of the Limitation Act 1980. Its predecessor was
section 27(3) of the Limitation Act 1939, which was the provision in
H question in the Nea Agrex case. It was repealed with effect from
31 January 1997 and replaced by section 14 of the Arbitration Act 1996.
Section 27(3) of the Limitation Act 1939 provided:
"For. the purpose of this Act . . . 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, or, where
the arbitration agreement provides that the reference shall be to a
 The Weekly Law Reports 16 January 1998
106
jSckeQRcyn,0,ld V o s n o c Ltd
- v- Transglobal Projects Ltd. (Q.B.D.) [1998)
person named or designated in the agreement, requiring him or them A
to submit the dispute to the person so named or designated."
Section 34(3) of the Limitation Act 1980 provided:
"For the purposes of this Act and of any other limitation
enactment an arbitration shall be treated as being commenced—
(a) when one party to the arbitration serves on the other . . . a notice
requiring him or them to appoint an arbitrator or to agree to the "
appointment of an arbitrator; or (b) where the arbitration agreement
provides that the reference shall be to a person named or designated
in the agreement, when one party to the arbitration serves on the
other party or parties a notice requiring him or them to submit the
dispute to the person so named or designated."
Section 14 of the Arbitration Act 1996 provides:
"(1) The parties are free to agree when arbitral proceedings are to
be regarded as commenced for the purposes of this Part and for the
purposes of the Limitation Acts. (2) If there is no such agreement the
following provisions apply. (3) Where the arbitrator is named or
designated in the arbitration agreement, arbitral proceedings are
commenced in respect of a matter when one party serves on the other ^)
party or parties notice in writing requiring him or them to submit
that matter to the person so named or designated. (4) Where the
arbitrator or arbitrators are to be appointed by the parties, arbitral
proceedings are commenced in respect of a matter when one party
serves on the other party or parties notice in writing requiring him or
them to appoint an arbitrator or to agree to the appointment of an g
arbitrator in respect of that matter. (5) Where the arbitrator or
arbitrators are to be appointed by a person other than a party to the
proceedings, arbitral proceedings are commenced in respect of a
matter when one party gives notice in writing to that person
requesting him to make the appointment in respect of that matter."

Section 14 is evidently intended to be a complete code covering all F

situations. Unless the meaning of "a person designated" in an agreement
is in some way to be stretched to cover persons to be appointed by a
designated person, section 27(3) of the Act of 1939 and section 34(3) of
the Act of 1980 would not cover those numerous cases where the arbitrator
is to be appointed by, for example, the president of a professional body.
Section 14 of the Act 1996 also avoids the use of "deemed" and "treated
as," which occur in its predecessors.
Although in some circumstances article III, rule 6 might be a
"limitation enactment" for the purpose of section 34(3) of the Act of
1980, that would seem not to be the case where the provision applies by
reason of a contractual incorporation. That was evidently the view of
Hobhouse J. in Petredec Ltd. v. Tokumaru Kaiun Co. Ltd. [1994] 1 Lloyd's
Rep. 162, 164. H
The main authority on section 27(3) of the Act of 1939 and hence on
section 34(3) of the Act of 1980 is the decision of the Court of Appeal in
Nea Agrex S.A. v. Baltic Shipping Co. Ltd. [1976] Q.B. 933. In that case
the words of the notice were, at p. 942: "Please advise your proposals in
order to settle this matter, or name your arbitrators. Expecting your
reply. . . ." Two points were taken: first, that it was in the alternative;
second, that the arbitration agreement provided for arbitration by a single
 The Weekly Law Reports 16 January 1998
107
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) jackQ°c
A arbitrator. As to the requirements of a notice Lord Denning M.R. said, at
pp. 944-945:
"Whilst it is undesirable to introduce too much technicality,
I think it important that there should be clear rules as to when an
arbitration is deemed to have been commenced. There must, of
course, be an arbitration agreement, that is 'a written agreement to
D submit present or future differences to arbitration, whether an
arbitrator is named therein or not': see section 32 of the Arbitration
Act 1950. In this charterparty clause 23 was such an agreement. It is
deemed to include a provision that the reference shall be to a single
arbitrator: see section 6 of the Act of 1950. 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
C 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 arbitration is 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
E 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."
Goff L.J. said, at pp. 949-950:
"[Section 27(3)] is, as the charterers submit, a 'deeming section,' but
the question is whether, as they say, the methods prescribed are
Q 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 implied. However, it
H 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
 The Weekly Law Reports 16 January 1998
108
j£ckeQRcym0lld Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) [1998]
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." (Emphasis added.)
B
Shaw L.J. said, at pp. 953-954:
"I agree. . . . It is to be observed that [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 C
principle is to be 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 ry
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 parties 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 E
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.'"
F
In the Nea Agrex case the notice did call for the appointment of an
arbitrator. So Mr. Southern submitted on behalf of Transglobal the
remarks of Lord Denning M.R. as to a notice of arbitration implying a
request to appoint (with which Goff L.J. agreed) were obiter. I do not
think that they were. They were, it seems to me, the foundation for his
conclusion that the notice in that case was adequate. Goff L.J. agreed
with Lord Denning M.R. but did not think it necessary to decide that G
point. Shaw L.J. did not refer to the implication point. Although his
judgment begins "I agree," in my view that should be taken in the context
of the judgment as reflecting his agreement with the outcome of the
appeal.
After the Nea Agrex case came Surrendra Overseas Ltd. v. Government
of Sri Lanka [1977] 1 W.L.R. 565. There a letter stated, at p. 570: H
"In view of the attitude taken by charterers in their calculation of
laytime, owners will be putting the matter to arbitration. We will be
advising you concerning details of the arbitrator appointed in due
course."
Kerr J. held that the letter did not mark the commencement of anything:
it was all in the future. After citing a passage from the speech of Lord
 The Weekly Law Reports 16 January 1998
109
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) jack™!:
A Maugham L.C. in N.V. "Vulcaan" v. AIS Ludwig Mowinckels Rederi
[1938] 2 All E.R. 152, 157 he said, at p. 571:
"The first part of this statement is not relevant for present
purposes, but it seems to me that the reference to the usual practice
in the second part is relevant to the question whether the letter can
fairly be read as implying a requirement that the proposed respondents
g should appoint an arbitrator. To my mind the only implication of the
letter is that, at any rate for the time being, the owners could sit back
and await developments. It may be that if the charterers had simply
said: 'We hereby require this dispute to be referred to arbitration,'
the position would be different. It might then be said that they had
also impliedly added: 'We therefore require you to appoint your
arbitrator.' I will assume that this would be so, though I do not so
C decide, any more than did the majority of the Court of Appeal in the
Nea Agrex case. But even on this assumption I think that this letter
does not go far enough. It merely referred to an arbitration in the
future and contains no present requirement of any kind. For the
purposes of limitation the commencement of an arbitration must be
clear and unequivocal. This letter is vague and couched in the future
j) tense. I therefore hold that this contention fails."
I do not think that I should deduce from the manner in which Kerr J.
expressed himself any view on the question which he did not decide. But
he certainly regarded it as an open question.
In Petredec Ltd. v. Tokumaru Kaiun Co. Ltd. [1994] 1 Lloyd's Rep. 162
there was a fax stating that the claimants had appointed Mr. Ferryman as
E their arbitrator and calling on the respondents to appoint theirs. The main
issue was whether there was an agreement to arbitrate. Hobhouse J. held
that there was, and that time ceased to run with the receipt of the fax.
In Frota Oceanica Brasiliera S.S. v. Steamship Mutual Underwriting
Association (Bermuda) Ltd. [1995] 2 Lloyd's Rep. 254, 261, Longmore J.
cited with evident approval the passage from Lord Denning M.R.'s
p judgment in the Nea Agrex case [1976] Q.B. 933 to the effect that a
requirement to submit a difference to arbitration carries with it by
implication a request in relation to appointment. He found that the facts
before him were clearer than in the Nea Agrex case because the relevant
letter called for suggestions for suitable names (which in effect calls for an
appointment). The application in the case was for the appointment of an
arbitrator where there had been awe-inspiring delay. It had been submitted
G that in any event the claim was barred because of lack of a sufficient
notice.
Lastly, it is suggested in a footnote in Mustill & Boyd on Commercial
Arbitration, 2nd ed. (1989), p. 199, that the decision in the Nea Agrex case
on the facts "represents the limit of the court's indulgence." The note ends
"Both [the Nea Agrex case [1976] Q.B. 933 and the Surrendra case [1977]
H 1 W.L.R. 565] leave open the question whether T require this dispute to
be referred to arbitration' is sufficient."
The issue I have to decide is whether a notice requiring differences to
be submitted to arbitration in accordance with an agreement satisfies
section 34(3) of the Limitation Act 1980 because it carries with it by
implication a request that the recipient appoint his arbitrator. Is the
judgment of Lord Denning M.R. in the Nea Agrex case to be followed on
the point?
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j"ckQC Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) |1998|
Sections 27(3) of the Act of 1939 and 34(3) of the Act of 1980 spell A
out what is to be done to commence an arbitration and thereby to stop
limitation running in the circumstances which the sections cover. There is,
it seems to me, in this context an important distinction between serving a
notice which expressly requires an act to be done and a notice which
states something from which that act should follow though it is not
referred to. Further, although of course the correct construction of a
statutory provision may be affected by its context, if a statutory provision **
provides for a notice requiring something, it is ordinarily to be expected
that the notice must do so expressly.
There is, I think, a contrast between the UNCITRAL Model Law and
the English statutes, which shows a difference in approach between them.
English law has taken the approach that something more must be done
than to request that the matter be referred to arbitration. A step must be Q
taken towards getting the arbitration under way, a step towards the
appointment of the tribunal. If all that is needed is a notice referring the
matter to arbitration, it makes pointless the spelling out in the statutes
what is to be done in the situations which they cover. I cannot see any
distinction in this respect between the three statutory provisions, and the
position would be the same with the new section 14 of the Arbitration Act
1996. It seems particularly clear that it cannot have been the intention D
that the carefully considered provisions of that section would be met by a
notice simply referring the dispute to arbitration.
I can see factors of policy which point the other way. Thus many
commercial men would think that an arbitration is commenced by giving
notice of arbitration, and that this should be sufficient for the purposes of
the Hague Rules. Many, many arbitrations are held in England involving £
foreign parties. When the possibility of arbitration arises they may or may
not have English solicitors to advise them. They are otherwise unlikely to
be familiar with the provisions of the English law as to limitation. There
is nothing sophisticated about the implication made by Lord
Denning M.R. in the Nea Agrex case [1976] Q.B. 933. Provided the notice
makes plain that the arbitration is to commence at the date of the notice,
it is plain that the respondent is required to do what the arbitration F
agreement provides, namely to appoint his arbitrator. However, these are
reasons for framing the statutory provisions in another way, rather than
for reading them in another way. English law, has it seems to me, taken
the policy decision that, to stop time running, the notice must take a step
further than a requirement to arbitrate.
Having reached that conclusion, should I, as a judge at first instance, Q
none the less apply the law as stated by Lord Denning M.R. in the Nea
Agrex case, leaving it to a higher court to say whether the law as so stated
was right or wrong? It has stood without criticism (so far as I am aware)
for 20 years. On the other hand both in the Surrendra case [1977]
1 W.L.R. 565 and Mustill & Boyd on Commercial Arbitration the point is
noted as undecided. I have hesitated considerably; but I have concluded
that, as the point is an open one, I should apply the law as I find it to be. H
Having reached that decision, I can turn to some subsidiary
submissions. Mr. Picken sought help from the terms of the letter, and, as
I have mentioned, Mr. Southern sought help from the history thereafter.
Mr. Picken submitted that the reference in the letter to clause 17.8
assisted him because it brought in the provisions of the clause as to
arbitrators and their appointment. I do not consider that this can help. It
may make an implication easier: but it cannot meet the requirement of the
 The Weekly Law Reports 16 January 1998
111
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) jk/kQ™
A section as I have held it to be. The terms of the letter including these
references do, however, make it clear that the reference is immediate. The
present case is different to Surrendra in this respect. I have mentioned and
rejected Mr. Southern's submission that the history thereafter shows that
Vosnoc did not intend an immediate reference. But, whatever the events
following may show, the letter has to be construed in accordance with its
terms. It is either a sufficient notice or it is not. What happened after it
" cannot affect that. It appears that what Vosnoc were seeking to do was to
protect their position without having to advance the reference once it was
made. If Transglobal had acted on the letter and appointed an arbitrator
they could, if they chose to, have forced the arbitration ahead unless
Vosnoc had persuaded the arbitrators appointed to stay the proceedings
for a period. The position would have been similar to that where a writ
Q has been served. There is no equivalent in arbitration proceedings to a
protective writ which can "lie in a drawer" without being served. It is
interesting that in the Nea Agrex case [1976] Q.B. 933 the letter giving
notice was dated 31 May 1972, the claimants, the charterers, appointed
their arbitrator on 8 December 1972 and then nothing happened until
November 1973.
Mr. Picken submitted that, if his primary submission relying on Lord
D Denning M.R. in the Nea Agrex case was wrong, the defect in the letter
as a notice to comply with section 34(3) of the Act of 1980 was an
irregularity which did not make the notice ineffective and was capable of
being cured as happened by Richards Butler's letter of 6 March 1997
calling on Transglobal to appoint their arbitrator. He relied on the
judgment of Goff L.J. in the Nea Agrex case. The defect in the Nea Agrex
£ case was that the notice called for the appointment of the respondent's
arbitrators whereas the arbitration agreement provided for arbitration by
a single arbitrator. If the notice was required expressly to call for the
appointment of an arbitrator by Transglobal, I do not think that its
omission to do so was an irregularity. An essential element, the primary
element, would then have been missing.

F The alternative application for an extension of time to commence arbitration

The application for an extension of time is to be considered as of
today and the relevant power is given by section 12 of the Arbitration Act
1996. Section 12(3) provides:
"The court shall make an order only if satisfied—(a) that the
circumstances are such as were outside the reasonable contemplation
G of the parties when they agreed the provision in question, and that it
would be just to extend the time, or (b) that the conduct of one party
makes it unjust to hold the other party to the strict terms of the
provision in question."
The provision in question is article III, rule 6 of the 1922 Hague Rules.
The burden is on Vosnoc to satisfy me of the matters in question.
H Mr. Picken made his application under both (a) and (b).
The Act of 1996 is the consequence of the work of the Departmental
Advisory Committee on Arbitration Law chaired by Lord Saville. The
Committee's Report on the Arbitration Bill gives reasons for the
replacement of section 27 of the Arbitration Act 1950 with its reference to
undue hardship by a different provision. In short it was intended to make
it more difficult to obtain an extension. But the report does not provide
assistance as to the construction of the new provision.
 The Weekly Law Reports 16 January lyys
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v
Jack o c <>snoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) |1998|
Subsection (3) (a) requires the court to be satisfied of two matters, one A
as to the circumstances being outside the reasonable contemplation of the
parties when they agreed the time bar, one that an extension would be
just. Mr. Picken submitted that the circumstances in which the application
would come to be made, namely that Vosnoc had intended to give notice
to commence arbitration and to stop time running, but had failed because
they did not include in their notice a request to Transglobal to appoint an
arbitrator, were circumstances outside the reasonable contemplation of the "
parties in August 1994. Mr. Southern submitted that the only reasonable
contemplation in August 1994 was that, if a party with a claim did not
take the necessary step, then its rights would be lost. He submitted that
the parties are deemed to know the law.
In my view the question is not whether in August 1994 the parties
would reasonably have contemplated that the time bar would apply and Q
rights be lost in the circumstances which may have in fact arisen. For that
is not what the subsection says. And whatever the circumstances, if the
time bar applies, it applies—the parties have no reason to think otherwise.
It is the circumstances before the court which must have been outside the
parties' reasonable contemplation. Are those circumstances limited to the
circumstances in which the claim has arisen? For example, it might come
about that, contrary to what might have been reasonably expected, D
damage did not become apparent until after the time bar had operated.
Or it might be that what had seemed a trivial loss later emerged as
substantial, this not being in the reasonable contemplation of the parties.
There are no such circumstances here.
Or may the circumstances include as well circumstances being those in
which it comes about that an extension is required but which do not relate g
to the claim? Examples might be the failure of communications or the
illness of the person handling the matter for the claimant. Such
circumstances would bring in here the failure of the letter of 19 September
to bring suit for the purpose of article III, rule 6 of the Hague Rules.
The subsection places no limit on "the circumstances." I conclude that
the court should look at the whole of the circumstances in which the
application for an extension arises. The significant aspect of the letter of F
19 September is that contrary to its intention it did not succeed in bringing
suit: it would be what may be called "a near miss." In my view such an
event would not have been in the reasonable contemplation of the parties
in August 1994.
I come then to the second requirement of the paragraph, that it would
be just to extend the time. The main factors are: (a) the extension would ^
be required as a result of the failure of Vosnoc to include in the letter of
19 September an express requirement that Transglobal appoint an
arbitrator. This was a mistake for which the explanation is most likely an
ignorance of the requirement of English law on a point which was not
determined by authority, (b) Vosnoc's intention to give notice of
arbitration and to prevent time running against them was clear from the
two letters of 16 and 19 September 1995. In view of that clear intention H
and the terms of the latter letter it is surprising that Transglobal did not
think that the purpose of the latter was to commence arbitration
proceedings. However, that was apparently their reaction: I refer to the
penultimate sub-paragraph of paragraph 4 of Mr. Panayides's second
affidavit, (c) Transglobal were advised as to the effect of the letter of
19 September 1995 in February 1996. They must have been told that the
intention was to give a notice to prevent time running. They may have
 The Weekly Law Reports 16 January 1998
113
Judg<
1 W.L.R. Vosnoc Ltd. v. Transglobal Projects Ltd. (Q.B.D.) jack ox*
A been advised that its effect was uncertain; they may have been advised on
the basis of Lord Denning M.R. in the Nea Agrex case [1976] Q.B. 933
that it did so; they are, it seems to me, less likely to have been advised
that it definitely failed to do so. (d) Vosnoc's claim is substantial. The loss
of such a claim by reason of a time bar counts more in their favour than
the loss of the time bar may alternatively count for Transglobal: see by
analogy Libra Shipping and Trading Corporation Ltd. v. Northern Sales
B
Ltd. [1981] 1 Lloyd's Rep. 273, 280. (e) Vosnoc did nothing for 18 months
after the letter of 19 September. This delay is not explained. The initial
inaction at least was apparently due to the situation described in their
letter of 16 September asking for a year's extension. The relation to the
Korean proceedings is unexplained, (f) Vosnoc applied to the court as
soon as the point was taken against them, (g) Transglobal assert that they
Q would have been prejudiced by the assumed failure to serve an appropriate
notice. If they have done so, they have themselves to blame at least in
part. I refer to (b) above, and to a lesser extent (c). In paragraph 19 of
his first affidavit Mr. Panayides refers to matters of prejudice. They are as
follows.
(i) Problems in making any recovery from the stevedores after the
passage of so much time. These will be made less by the reports which
D were prepared at the time. The damage is established by them. Any
dispute would seem to be as to how it arose. It seems to me that the
stevedores may well have the greater difficulty in rebutting the suggestion
that it was their conduct. I accept, however, that, although no specific
problems are pointed to, Transglobal may well have suffered some
prejudice through the passage of time.
g (ii) Mr. Russell, the deputy chairman of Transglobal, who was dealing
with the matter in 1994, retired at the end of 1996. It is not suggested that
he cannot help Transglobal. He would seem at a remove from the events
themselves.
Weighing these matters I am satisfied that it would be just in all the
circumstances to grant Vosnoc an extension if one were needed. I find the
combination of (a) (b) and (d) in particular persuasive. I would therefore
F grant Vosnoc an extension of time under section 12(3)(a).
Mr. Picken put his case under section 12 (3) (6) on the basis that the
conduct of Transglobal in keeping silent as to a point on the time bar
makes it unjust to hold Vosnoc to the bar. If Transglobal had not done
so, Vosnoc could have applied for an extension under the section in force
until 31 January 1997, namely section 27 of the Arbitration Act 1950, and
Q would have obtained one under the more generous provisions of the
section. I do not consider that Transglobal have caused any difficulties
which Vosnoc have. Having sent their letter and received no acknowledge-
ment and kept silent, they cannot complain that Transglobal also kept
silent. I would not grant an extension under section 12 (3) (6).
The outcome is that I hold that Vosnoc's letter of 19 September 1995
was not in terms which were appropriate to commence suit for the purpose
H of article III, rule 6 of the Hague Rules, but I hold that there should be
such an extension of time under section 12 (3) (a) of the Arbitration Act
1996 for the commencement of arbitration as is needed.
Order accordingly.
Solicitors: Richards Butler; Clifford Chance.
[Reported by ISOBEL COLLINS, Barrister]