We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
19 December 2017
The English High Court has found that service by email of arbitration proceedings was not valid under Section 76 of the Arbitration Act 1996 on the basis that the correspondence had been directed to the email address of an employee who did not have the authority to accept service. The judge found that in circumstances where service is by way of an individual email address, validity of service depends on the application of agency principles.
Conqueror had chartered a Glencore Grain vessel (AMITY) to carry corn from Ukraine to Egypt. Glencore Grain allegedly caused delays at the load port due to an employee (Mr Oosterman) emailing Conqueror three times (from his Glencore Grain email address with the suffix @glencore.com) instructing AMITY to remain at anchorage until further instructions were relayed. As a consequence, Conqueror brought arbitration proceedings for damages for the time spent at anchorage.
All correspondence relating to the proceedings was sent to Oosterman's business email address, including:
Glencore Grain did not respond or acknowledge any of the correspondence and first became aware of the proceedings when it received a copy of the arbitration award for $43,176.27 plus costs (dated September 26 2016) by post on October 28 2016. Glencore Grain then applied to have the award set aside on the basis that the notice of arbitration had not been validly served in accordance with Section 76 of the Arbitration Act.
The issues examined concerned:
Section 76 of the Arbitration Act
The dispute resolution provisions in the charterparty provided for arbitration in London in accordance with the London Maritime Arbitrators Association Terms 1997 and for the application of English law.
Section 76 of the Arbitration Act provides that parties are free to decide the manner of service of any notice or other document required to be served. If no such agreement is reached, it is further provided that such notice or other document can be served by "any effective means". This is different to service of a claim form under the Rule 6.3 of the Civil Procedure Rules, which is much narrower (providing a finite list of options for valid service) and is not at the discretion of the parties. On the facts, the judge found that email service was capable of being a valid means of service and falls within the "any effective means" category.
Agency and authority
The common law of agency determines who (if anyone) is acting on behalf of a legal person and with what authority. In this scenario, the parties contested whether agency principles applied to the facts and circumstances of the case. The judge found that agency principles applied because the notice of arbitration had been sent to an individual's email address and agency principles govern whether the acts of an employee bind the company. Therefore, validity of service would depend on whether Oosterman had the authority to accept service (see, for example, Hely-Hutchinson v Brayhead Ltd  1 QB 549) and what role he held (or was held out to hold) within the company.
As a result, it was determined that it would not be sufficient for a notice of arbitration to be sent to an individual's email address at a company, whether or not that individual is reasonably believed to be the right person. The definitive factor must be whether the company has given the individual authority so as to ensure commercial certainty. The judge referred to Sino Channel Asia Ltd v Dana Shipping and Trading PTE Singapore ( EWCA Civ 1703) and the comment by the judge in that case that even if an employee has wide general authority to act on behalf of his or her employer, that does not generally include authority to accept service of proceedings.
It was determined that actual authority could be express or implied. Given that there was no evidence that Glencore Grain had specifically authorised Oosterman to accept service, the focus was on the application of the principle of implied authority. The judge found that authority would be implied in circumstances where an individual's activities are incidental to the effective execution of his express authority, as inferred from his conduct and the specific facts and circumstances of the case. In essence, this recognised that a company may not specifically authorise a person to accept service, but if an employee's role encompassed dispute resolution and he or she were sufficiently senior, then such authority could be implied, taking into account that the service of proceedings is an important matter.
Oosterman's role at Glencore Grain was as part of the grain operations team and the judge determined that he was a relatively junior employee. Further, the judge found that Oosterman did not have a dispute handling role within Glencore Grain's business (albeit that his role was in operations and the dispute concerned operations) and, as a result, he did not have the implied authority to deal with any disputes, let alone accept service of proceedings. As regards the application of ostensible authority, it was decided that Glencore Grain did not hold out Oosterman as having authority to deal with legal disputes, nor accept service, given that he merely sent emails regarding operational issues.
Conqueror argued that it had not been able to obtain the email address of Glencore Grain's legal department, as this was not on the website and that the only email address Conqueror had was Oosterman's. The judge noted that the Glencore Group has a website that lists contact details for the group, including a general email address, and that Conqueror should have inquired via this email address. The judge further stated that Conqueror could also have chosen an alternative method of service.
The judge differentiated this case from Bernuth Lines Ltd v High Seas Shipping Ltd (The Eastern Navigator) ( EWHC 3020 (Comm),  1 All ER (Comm) 359), wherein the court found that service via a general company email address (ie, email@example.com) was valid on the basis that the company held this email address out as the company's only email address. The court concluded that sending a document to the general email address was service on Bernuth, as the sender could reasonably expect that the person responsible for reviewing such correspondence was authorised to deal with the correspondence (ie, pass it on to a person within the company that has a dispute resolution role) given that the company promulgated the address on its website.
In circumstances where email is a permissible form of service, parties should take care when adopting this method to ensure that service is valid. As a general rule of thumb a party should consider:
If in doubt, a party should enquire or use another method of service.
For further information on this topic please contact Laura Evans or Jonathan Cary at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.