On 3 November 2004, part of the 25,400 mt of Indian solar salt (cargo) that was shipped on the Duden on a voyage from Kandla Port (India) to Qingdao (China) pursuant to a bill of lading was found to be damaged and/or contaminated during discharging operations at the discharge port of Qingdao, apparently due to rust originating from the Duden’s bulkheads and the bottom of its holds. The Duden was operating under a chain of time charterparties, with the head charterparty dated 20 May 2003 between the appellant and Anchor Navigation Ltd. The cargo owners (the respondents) held the contractual carrier of the cargo (the appellants) responsible for the loss and damage they suffered. The Duden was arrested by the respondents and released upon the appellants' provision of security. The appellants subsequently challenged the second renewal of the writ in rem. The Duden had called into Singapore during the duration of the first renewal of the writ and service of the writ should have been effected at that time. However, the respondents were not made aware of the Duden’s call and failed to effect arrest. Eventually, this challenge was not successful, and the appellants sought to stay court proceedings in favour of London arbitration. The bill of lading, notwithstanding factual uncertainties, was found to incorporate the law and arbitration clause of the charterparty dated 9 September 2004 between Goodearth Maritime Ltd and Grand Loyal Ltd. The stay of proceedings in favour of London arbitration was ordered on two conditions, leading to the present appeal. The first was that the security obtained by the respondents from the arrest of the Duden be retained as security for the arbitration proceedings in London. The second was that the appellants waive the defence of the time bar (art 3.6 of the Hague-Visby Rules provides for a one year time bar for claims against the carrier) in the arbitration proceedings in London, which was considered by the Assistant Registrar to be appropriate and necessary in the circumstances of the case.

Held: Appeal dismissed.

The Court has an unfettered discretion to impose terms and conditions upon a stay of proceedings in favour of arbitration under s 6(2) of the International Arbitration Act (rev ed 2002, Cap 143A), but that discretionary power has to be exercised judiciously. While the Court should generally be slow to interfere in the arbitration process, the Court should not be reluctant to intervene by exercising its statutory power to impose conditions where the justice of the case called for it. It would be wrong for the respondents to be subjected to the defence of the time bar in light of the uncertainty and confusion surrounding the identity of the charterparty referred to in the bill of lading. Therefore, the justice of this case demanded the imposition of the condition that the appellants waived the defence of the time bar in the English arbitration proceedings. While there was room for the respondents to seek an extension of time for the commencement of arbitration via the arbitral process and s 12 of the Arbitration Act 1996 (UK), substantive justice would be ensured with the imposition of this condition.