Emirates Shipping Line DMCES v Gold Star Line Ltd [2023] EWHC 880 (Comm)

The question before the Court in this challenge under S67 of the Arbitration Act 1996 was whether the parties to the proceedings were also parties to a memorandum of understanding governing the operation of a container shipping line containing, inter alia, an LMAA arbitration clause which Emirates Shipping Line DMCEST ("ESL") sought to rely upon.

Various communications were exchanged between the parties in or around October 2019 whereby it was agreed that ESL would phase in a vessel into the liner service in January of the following year and in return, ESL would purchase slots on the vessels presently in the service. The question was therefore whether there was agreement between the parties as to the applicability and binding effect of the memorandum as concerns the slot purchase aspect of the deal.

ESL contended that the slot purchase was governed by the memorandum of understanding whether by virtue of an express or implied agreement to the same effect or as a result of an estoppel by representation or convention. The estoppel that ESL relied upon arose out of an email sent after a dispute arose between the parties whereby Gold Star Line's ("GSL") representatives stated, 'with reference to the MOU dated 24.4.2018 between you, other liner partners and Gold Star Line Ltd, we were the 'vessel operator' and you were the 'slot charterer' for the purpose of the voyage of IAN H'. GSL denied the same and contended that the slot purchase was a separate agreement to the phasing in of the Vessel and that estoppel could not give rise to a cause of action in ESL's favour.

The Judge, having considered the arguments as to the objective meaning of the memorandum and the intention of the parties at the date of the contract, concluded that the slot purchase and phasing in of the vessel were two separate agreements and that therefore the slot purchase was not governed by the 2018 MOU.

Interestingly however, as concerns the estoppel argument, the Judge denied that this was a case where estoppel was relied upon to give rise to a new cause of action. The Judge correctly held that this was a case where estoppel was used not to give rise to a cause of action but to enable a party to succeed in a claim which would otherwise have failed by preventing the other party from relying on a defence. Put differently, it was the effect rather than the substance of the memorandum of understanding that the estoppel submission supported and therefore there was no reason in principle why estoppel could not aide ESL in the circumstances. The Judge also distinguished the judgment in The Eleni P [2014] EWHC 4202 (Comm). However, notwithstanding ESL was not barred from relying on an estoppel, on the facts the judge found that no such estoppel operated for want of reliance on ESL's part.

The outcome of the case as concerns the objective interpretation of the parties' written exchanges and conduct is fact specific although serves as a useful reminder of the need for certainty and clarity in parties' agreements. The judgment on estoppel also provides an interesting analysis of when estoppel may or may not be said to give rise to a cause of action and highlights the continued importance of demonstrating actual reliance on a representation or shared assumption before an estoppel can be made out.

Lydia Myers acted for Emirates Shipping Line DMCEST instructed by Andrew Hughes & Ellie Hall of MFB Solicitors.

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