Facts
Cleaves negotiated nine time charters on behalf of Nisshin. The charterparties between Nisshin and the charterers provided for commission to Cleaves and contained arbitration clauses. Nisshin disputed the commission, alleging that Cleaves had repudiated its agency relationship. Cleaves referred the disputes to arbitration. The tribunal held that it had jurisdiction, and Nisshin challenged that ruling under section 67 of the Arbitration Act 1996.
Issue
Could Cleaves enforce the commission clauses in its own right under the Contracts (Rights of Third Parties) Act 1999? If so, did it have to use the arbitration clauses in the charterparties?
Decision
The Commercial Court upheld the tribunal’s jurisdiction. The commission clauses conferred a benefit on Cleaves within section 1(1)(b) of the 1999 Act. The charterparties disclosed no intention to exclude direct enforcement under section 1(2). The fact that some commission was shared with another broker did not prevent Cleaves from enforcing its own share.
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The arbitration clauses were wide enough to cover disputes between the owners and charterers about payment of the commission. Under section 8(1), Cleaves was treated as a party to those arbitration agreements for enforcement of the commission clauses. It was entitled and required to arbitrate those claims. The ruling concerned jurisdiction, leaving the merits of the commission dispute to the tribunal.
Reported citations: [2004] 1 Lloyd’s Rep 38, [2004] 1 LLR 38, [2004] 1 All ER (Comm) 481
Source: Full judgment
