This case concerned a charterparty dated 12 August 1974, under which Transamerican Ocean Contractors Inc chartered the vessel Ioanna to Transchemical Rotterdam BV to carry di-ammonium phosphate from Taft, Louisiana, USA, to Tanjung Priok, Indonesia. The charterparty was based on the standard Gencon form and included a general average clause (cl 13), which stated that general average was to be settled according to the York-Antwerp Rules 1950. No general arbitration clause was included in the charter; the only reference to arbitration appeared in cl 13 as a typed addition, reading: 'General Average & arbitration to be settled according to York-Antwerp Rules 1950 in London.'

After the Ioanna arrived at her port of discharge, the owners claimed demurrage of approximately USD 340,000 due to delays. The owners applied under s 10 of the Arbitration Act 1950 (UK) for the appointment of a sole arbitrator, as the charterers refused to concur. The application was initially refused by Kerr J on the basis that cl 13 only referred to general average and did not cover demurrage disputes. The appeal focused exclusively on how cl 13 should be construed, whether the addition of '& arbitration' implied a general arbitration clause covering all disputes under the charterparty or was limited solely to general average matters.

Held: The owners' appeal is dismissed.

Stephenson and Browne LJJ:

1. On the true construction of the clause, the addition of the words 'in London' determined where the adjustment as to general average was to take place, and the words 'arbitration' indicated that the parties were agreeing to prefer arbitration to litigation in the Courts of any country for any dispute as to general average which might arise, and that it was English law which was to apply to the settlement of these disputes.
2. The interpretation put upon the clause by the Judge was a possible and a natural interpretation in that it provided for the determination by arbitration of any dispute arising out of a general average adjustment, and that not only was the adjustment to be made in London, but that was also to be the place of arbitration.
3. Since there was no additional clause dealing with arbitration, if the intention of the parties was to provide for a reference of all disputes arising under the charterparty to arbitration in London, the most convenient place, the obvious place, for such a provision would have been an additional typed clause, and the Judge's construction was right.