On 1 March, the Royal Court of Justice of the United Kingdom ruled on an action for annulment by a guarantor, Jiangsu Sharang Group (JSG) against the arbitral award recognising the jurisdiction of the arbitral tribunal to hear the dispute between it and the owner of the guaranteed vessel, Loki Owning Company (the owner) in its commercial shipping lease with Shagang Shipping (the lessee). The amount in dispute is approximately 70 million dollars, including rent delays and damages.
JSG claims that it neither concluded nor authorised the conclusion of the guarantee, whereas the arbitrators considered that there was indeed an authorised guarantee concluded via a maritime courier. As a result, the arbitrators recognized the validity of the arbitration clause, contained in the rental contract, between the owner and the guarantor. The central question was therefore whether the guarantor had transferred the authority to enter into the guarantee on its behalf, expressly or implicitly, to the secured lessee or to a third party.
In the absence of sufficient evidence as to the express attribution of authority, considering that consent cannot be inferred from silence and considering that an implied transfer of authority must necessarily be linked to an usual express power, the Court considered that JSG had not authorised the conclusion of the guarantee and was therefore not bound by it. Therefore, there is no valid arbitration agreement between the parties, which would give the arbitrators substantive jurisdiction over the owners’ claim against JSG.