Background
A shipowner obtained an ad hoc arbitral award for demurrage against a trader after carrying goods that the trader had bought and sold. It obtained permission to enforce the award without notice and secured an attachment order over money in one of the trader’s bank accounts.
The trader, which had not participated in the arbitration, applied to set aside the award and the attachment order. It denied entering into the purported charterparty and arbitration agreement. The shipowner relied on a “Clean Recap” naming the trader as head charterer, but the trader’s director said her signature, the company stamp and a handwritten date had been electronically pasted onto that document without authority.
The Court’s Holding
Andre Maniam J set aside the award under Article 34(2)(a)(i) of the UNCITRAL Model Law because there was no valid arbitration agreement between the shipowner and the trader. Section 2A(6) of the International Arbitration Act could not deem an arbitration agreement into existence merely because a non-participating respondent did not deny its existence in the arbitration. A respondent with a jurisdictional objection was entitled not to participate and later challenge the award.
The evidence did not establish that the trader executed or authorised the Clean Recap. Its payment of freight, made after its supplier asked it to do so, did not show that it was the charterer, had ratified the purported execution, or had agreed by conduct to arbitrate. A forged signature is a nullity and cannot be ratified; in any event, the trader lacked knowledge of the purported charterparty when it paid the freight.
Key Takeaways
- A non-participating arbitral respondent may later challenge jurisdiction based on the absence of an arbitration agreement.
- IAA s 2A(6) does not create an arbitration agreement where none otherwise exists.
- Paying freight does not, without more, make a cargo owner a charterer or bind it to an arbitration clause.
Why It Matters
The decision confirms that arbitration consent remains foundational. A claimant cannot establish jurisdiction simply by asserting an arbitration agreement and treating silence by a non-participant as acceptance.
It also illustrates the enforcement consequences of a successful jurisdictional challenge: the court set aside the award, vacated the debt-attachment enforcement order, released the attached debt and released the trader’s security for costs.