In Five Oceans Salvage Consultants Ltd v Perla Navigation Ltd (unreported), the applicant applied for the court to appoint an arbitrator pursuant to section 18 Arbitration Act 1996.
The applicant was the contractor under a Lloyd’s standard form of salvage agreement, which incorporated the Lloyds standard salvage and arbitration clauses. The second and third respondents were the buyer and seller of the cargo. The former was an entity owned by the Iranian government.
The salvage and arbitration clauses contemplated the appointment of an arbitrator. Appointment would usually be made by the Council of Lloyd’s, who declined to appoint due to concerns that the cargo (the subject of a sale to an entity owned by the Iranian government) might be subject to current sanctions in respect of the provision of material, logistical and financial support to Iranian entities.
The respondents did not object to the order sought. The issue was whether there was a good arguable case that the salvage agreement, and hence the arbitration agreement, was an agreement with the second or third respondent. The court could only appoint an arbitrator in such circumstances.
The court granted the application.
Neither the second respondent nor the cargo were on the lists of proscribed Iranian entities or goods. Although there was some uncertainty as to who the owner of the cargo was at the time the salvage agreement was entered into, there was a good arguable case in respect of either the second or third respondent being the owner of the cargo. As a result, it was appropriate for the court to appoint an arbitrator.
This case highlights the requirements in respect of evidence and proof where the court is asked to appoint an arbitrator under s.18 Arbitration Act 1996. It is simply necessary to show a good arguable case that the court should make the appointment. This allows for some uncertainty to remain. This is a logical position to take, as such uncertainties may only be resolved in the course of the subsequent arbitration proceedings.