It seems harsh to say that the failure to answer an email, because you dismissed it as spam, can lead to defeat in an arbitration case. But it's true

In these days of electronic communication, it is vital to ensure that nothing slips through the net. In the recent case of Bernuth Lines vs High Seas Shipping, a failure to direct emails to the appropriate person left one party on the wrong end of an arbitration award. This case has significant implications for all contracts that provide for arbitration or adjudication.

Solicitors for High Seas emailed Bernuth Lines at the address shown on its website and in the Lloyd's Maritime Directory, setting out details of High Seas' claim. Unfortunately for Bernuth, this address was intended only for cargo bookings and the email was ignored as spam. The same fate befell subsequent emails informing Bernuth of the appointment of the arbitrator and other case communications. The arbitrator's final award was sent by email to the same address. It was also sent by post, coming to the attention of the relevant personnel at Bernuth, but too late.

Bernuth, of course, tried to set the award aside, arguing that as the communications were not properly brought to its attention, service was ineffective. However, the court held that, in the absence of specific agreement, any means of service will suffice "provided that it is a recognised means of communication, and effective to deliver the document to the party to whom it is sent at his address".

So, service by email to clerical personnel was enough. A key factor was that Bernuth gave only one email address on its website and in the directory. Perhaps if there had been email addresses for different divisions, or countries, despatch might not have been effective. High Seas had also obtained confirmation of delivery receipts, to prove that the email arrived. It would have been different if the emails had been rejected by the system.

In the absence of contractual provisions to the contrary, arbitration communications can be sent by email, even if they do not reach the appropriate person. The Arbitration Act provides that unless parties agree on a method of service, documents and notices may be served "by any effective means". The Construction Act also provides for service "by any effective means", so adjudication will be caught.

In the absence of a contrary clause, arbitration communications can be sent by email, even if they do not reach the appropriate person

All parties to written contracts that do not provide specifically for the means of service are potentially at risk. JCT2005 contracts may fall within this. For example, the 2005 With Contractor's Design form, also allows for service by "any effective means". If the contract particulars are amended to include an email address (for instance, in place of the current fax number entry), or if an email address is subsequently agreed, the risk is increased.

So here are some practical steps to take:

  • Parties to international contracts, or those acting in joint ventures, may wish to consider appointing a third party to accept service and provide appropriate contact details in the contract.
  • Where possible, make clear the nature of the communications for which any email address is to be used.
  • General email addresses, often given on websites and on headed notepaper, should be reviewed regularly. Consider whether a particular email address for service should be specified and protocols put in place to ensure that emails are forwarded to the relevant personnel.
  • Anyone absent from the office for a significant period should set an auto-reply message to make this clear.
  • Consider amending contracts to provide specifically for the address and method of service of arbitration and adjudication documents.
  • Review contracts and identify those that would permit service by email.
  • Where contracts already allow for service by email, parties should ensure that addresses are up to date and monitored. Put in place procedures to notify relevant parties where addresses change.
The problems in the Bernuth case could have been avoided either by specific contractual provisions or by ensuring that procedures were in place to direct emails to the appropriate destination. Businesses would be wise to take the opportunity to review their procedures.

Postscript

Helen Garthwaite is a partner in the construction and engineering department of Taylor Wessing. She co-wrote this article with solicitor Tom Wrzesien.