Great Offshore Ltd vs Iranian Offshore Eng&Constn. Co

2. Brief facts which are relevant to dispose of this arbitration petition are recapitulated below.

3. The charter party agreement in dispute marks the second time the parties have done business with each other. The first time was in 2004. In March of that year, the respondent entered into a contract with the Oil and Natural Gas Corporation Limited ("ONGC") to carry out construction work on ONGC's installations at Bombay High. On 26th October, 2004, the applicant and the respondent entered into a charter party agreement. Under this prior agreement, the respondent hired a vessel combination from the applicant. The respondent required a specialized offshore construction barge known as a "Gal Constructor." It also required an anchor handling tug, named "AHT Malaviya Five." The AHT Malaviya 3 is used in combination with the Gal Constructor. I shall refer to the Gal Constructor and the AHT Malaviya as the "vessel combination."

7. After the parties expressed mutual interest in resuming business for Phase II, the respondent faxed a letter to the 4 applicant. The letter is dated June 20th, 2005. In this letter, the respondent expressed its intention to use the applicant's vessel combination for 170 days pursuant to the same terms as the preceding agreement. A few amendments, however, were to be made to that agreement.

8. The applicant responded vide email the next day and stated that it would like to "come to an agreement." After meeting the respondent on 22nd June, the applicant faxed an offer to the respondent on June 23rd, 2005.

9. In turn, the respondent faxed a letter of intent on June 23rd, 2005. The letter stated that it was "...a firm and unconditional letter of intent (for short LIO) for award of contract for charter hire of your barge Gal Constructor and Malviya 5". Nevertheless, the very same letter contained a contingency clause:

11. On August 4th, 2005, the applicant explained that it no longer wanted the respondent to provide a barge for 45-55 days, as mentioned in the respondent's June 23rd letter of intent. Because the parties could not agree on the rate for this service, the applicant said that it would make alternate arrangements.

12. On August 11th, the respondent sent a letter in regard to modifying the Barge Gal Constructor so that it could function as a riser installation barge. Based on its engineering analysis, it sought to install "...5 davits in the port or STBD side at the barge" as well as a "... working platform as an extension to main deck in the aft quarter over one of the anchor rests".

13. In response to a meeting on August 8th and the above letters, the respondent faxed a letter to the respondent on 6 August 13th, 2005. The letter suggested that additional provisions be incorporated in a new draft of the contract. The respondent requested the right to modify the Gal Constructor, thereby enabling it to perform a riser installation. The respondent further asked the applicant to pay the outstanding amount (USD 188,500) from the preceding contract. In conclusion, the respondent stated that it would be willing to finalize the contract before the 30th of August.

16. The faxed CPA officially entitled the "Charter Party for Offshore Service Vessels Code Name `Supplytime 89'" dated August 22nd, 2005 is reproduced, in relevant part. The "charterer" is the respondent, and the applicant is the "owner":

24. The respondent faxed a letter dated September 23rd, 2005 to the applicant. The letter asks the applicant to issue a cheque for the outstanding amount due from the parties' Phase I work. It further demands that the applicant grant the respondent the sole and absolute right to sublet the vessel to its subcontractor(s) at the agreed charter party rate. It concludes by saying that the respondent "... can not conclude the charter party agreement until the above issue are settled."

33. The letter goes on to state that it would still consider hiring the applicant's vessel combination if it received the right to sublet and also if the crane were made fit for the purpose for which the respondent intended. On 18th October, the respondent sent a letter in which it stated that it would have to look for a vessel from an alternative provider. The respondent said that it would treat the matter with the applicant as "closed." It concluded by asking the applicant to pay the amount due for Phase I. It sent a letter on 20th October reiterating the same.

68. Section 7(4)(b) further requires us to ask whether a record of the agreement is found in the telecommunication, in this case a fax. What could be a better record of the agreement than the signatures of the parties themselves? As noted above, with no evidence to indicate that the respondent's signature 33 was forged, the faxed CPA stands on its own as the record of agreement. Likewise, Section 7(4)(b) stands satisfied.

70. If this Court adds a number of extra requirements such as stamps, seals and originals, we would be enhancing our role, not minimising it. Moreover, the cost of doing business would increase. It takes time to implement such formalities. What is even more worrisome is that the parties' intention to arbitrate would be foiled by formality.

71. Such a stance would run counter to the very idea of arbitration, wherein tribunals all over the world generally bend over backwards to ensure that the parties' intention to arbitrate is upheld. Adding technicalities disturbs the parties' "autonomy of the will" (l' autonomie de la volonti), i.e., their wishes. [For a general discussion on this doctrine see Law and 34 Practice of International Commercial Arbitration, Alan Redfern and Martin Hunter, Street & Maxwell, London, 1986 at pages 4 and 53].

77. Before parting with this arbitration petition, I would like to make it abundantly clear that the learned arbitrator shall not be bound by any observations which have been made in 37 this judgment. The observations have been made only to decide this arbitration petition.

78. The Registry is directed to communicate this order to the learned arbitrator to enable him to enter upon the reference and decide the matter as expeditiously as practicable.

79. Consequently, this arbitration petition is allowed and disposed of. In the peculiar facts and circumstances of this case, I direct the parties to bear their own costs.

.................................J. (Dalveer Bhandari) New Delhi;

August 25, 2008.