Tort claims and contractual exclusions—jurisdiction of arbitral tribunal (MS ‘V1’ and another v SY Co)
Arbitration analysis: The claimant shipowners brought tortious claims in the Chinese courts against the defendant shipbuilders, seeking damages for costs the shipowners had incurred removing asbestos discovered in the fabric of the ships. The claimants had been assigned quality guarantees under the shipbuilding contracts by the original buyer, and the defendant maintained that as a matter of English law (as the governing law of the shipbuilding contracts) liability for the tortious claims was excluded under those quality guarantees. The contracts contained an arbitration clause, and the court agreed that the arbitral tribunal had jurisdiction to determine whether or not the contractual exclusions excluded actions in tort. The decision provides guidance on how English law treats non contractual claims linked to assigned contractual rights, and confirms that tribunals may have jurisdiction to determine the applicability of contractual exclusions even where the substantive tort claims are addressed in court proceedings. This underscores the broad construction given to arbitration clauses, and demonstrates the risk of ‘forum fragmentation’, where different parts of a dispute may be resolved in different fora. Written by Rob Palmer, partner, Sophia Kinally, senior associate, and Hugo Petit, associate, at Hogan Lovells.