The applicant charterers Exfin applied to set aside an arbitration award in favour of the respondent ship-owners, Tolani for some US$130,000. Exfin argued that there was no “dispute” between the parties pursuant to the arbitration clause in the parties’ contract because Exfin had admitted the liability, the amount of the claim and that payment had not been made.
Does failure to make payment admittedly due constitute a “dispute”?
Reference
The Honourable Mr Justice Langley held that Exfin’s refusal to pay the amount due notwithstanding that it was admitted was a “dispute”. Citing the well known case of The Halki [1998] 1 Lloyd’s Rep 465, his Honour said that if one party says you must pay now and the other refuses to do so they are in dispute. As there was no difference between a refusal to admit a claim and a refusal to pay it, a dispute was deemed to have arisen.
*Full case details
Exfin Shipping (India) Ltd Mumbai vs Tolani Shipping Co Ltd Mumbai
High Court of Justice (Queen’s Bench Division), The Honourable Mr Justice Langley [2006] EWHC 1090 (Comm)
Postscript
The question of whether or not parties have a dispute arises commonly in construction contracts, both in the arbitration and adjudication contexts. The general position is that if there is no dispute or difference then the arbitrator or adjudicator has no authority to consider the matter. It is therefore important for a party to establish that they are actually in dispute before referring an issue to arbitration or adjudication. In this case, Mr Justice Langley considered Exfin’s application was “wholly unmeritorious” as Exfin’s refusal to pay Tolani, notwithstanding the fact Exfin did not dispute it owed Tolani the money, meant a dispute had arisen between the parties.
