Some Lessons from Pans Odyssey1

Steven Rares2

I. Introduction

1. In the week in which the meeting of two ships, on water, in the middle of the day, caused
a 200,000-strong traffic jam, on land, in the early evening, it is perhaps appropriate that we
should be here to discuss recent changes to maritime law. The aptness stems from the
alarming factual similarities between the two events the brouhaha surrounding the arrival
of the Queen Mary 2 and the QEII, on the one hand, and a series of litigation that has passed
through the Federal and High Courts, and to which I will refer as the Pan litigation, on the
other. Consider the following parallels: Tuesday saw two ships arrive in Sydney Harbour; the
Pan litigation also concerned the fate of two ships, albeit of a slightly less well appointed
nature than the two that passed through the harbour. The arrival of the ships in Sydney on
Tuesday led thousands of people to crowd the harbour foreshore; the Pan litigation led to a
curial traffic jam almost as severe, with multiple proceedings resulting in no less than eight
Federal Court judgments, including three of my own, and two hearings in the High Court.
The purpose of this paper will be to consider the impact the Pan litigation has had on
maritime law.

2. I will deal with four discrete areas in which the Pan litigation has advanced the
development of legal principle: the arrest of ships in Australia under the Admiralty Act 1988
(Cth); election in bringing proceedings for the arrest of ships; the construction and scope of
standard arbitration clauses; and the writing requirement under the International
Arbitration Act 1974 (Cth), the Model Law and Art II r 2 of the New York Convention.
Where appropriate, I will draw comparisons with the approaches adopted in other common
law jurisdictions.

1 A paper presented to the Third Biennial Conference of the New South Wales Branch of the Maritime Law
Association of Australia and New Zealand on 24 February 2007.
2 A judge of the Federal Court of Australia. The author is grateful to his associate, Mr Aaron Timms, for his research
and assistance in the preparation of this paper. Any errors are the authors alone.

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II. Background facts

3. In essence, the Pan litigation concerned the arrest of two ships following a dispute
between two companies over a charter party. The background facts that led to the
proceedings are relatively simple. On 19 April 2006 Comandate Marine time chartered a
ship, Comandate, to Pan, which carried on a coastal liner shipping service from and to
Australian ports. The terms of the time charter included those contained in New York
Produce Exchange Form 1993 Revision, most critically clause 45(b), which stipulated: All
disputes arising out of this contract shall be arbitrated at London. On 22 April 2006 the ship
was delivered to Pan.

4. Disputes arose under the time charter. Pan alleged various breaches of the time charter
and claimed damages in the order of USD 2.5m. Accordingly, Pan commenced in rem
proceedings against Comandate in the Court under the Admiralty Act 1988 (Cth) and
obtained the arrest of Comandate in Fremantle. Security was put up by Comandate Marine
and Comandate was released from arrest soon after.

5. In the meantime, there was much to-ing and fro-ing, a good deal of it poorly punctuated,
between the solicitors for the two parties. Stated briefly, Comandate Marine sought an
undertaking from Pan that it would submit all disputes exclusively to arbitration as provided
under the time charter. Pan refused to accede unequivocally to Comandate Marines
demands.

6. On 20 June 2006, Emmett J, sitting in the Federal Courts admiralty jurisdiction, made ex
parte orders which, amongst other things, restrained Comandate Marine, until further order,
from taking any step in the High Court of Justice in London or in any other court to restrain
the continuation of the proceedings in the Court brought under the Admiralty Act and under
the Trade Practices Act 1974 (Cth). This became known as the anti-anti-suit injunction.

2
 Two days later, after a contested hearing, I continued the anti-anti-suit injunction until further
order.3

7. Around the same time that this was going on (if I were to set the dates out in full, we
would need at least another half a day), Comandate Marine commenced separate in rem
proceedings against Boomerang I, a replacement ship demise chartered by Pan from a
company wholly unrelated to Comandate Marine. As you will come to see, this decision to
commence in rem proceedings nourished, as it were, arguments put on the question of
election in the parallel stay proceedings. Four days after Boomerang I was arrested, the Full
Federal Court, exercising the original jurisdiction, set aside the writ and released the ship. I
will first discuss the basis upon which the Court did so, before turning to the more complex
considerations of election and the writing requirement under the International Arbitration
Act.

8. To return to the facts, Comandate Marine then applied for a stay of the proceedings in the
Federal Court and for an order that Pan arbitrate the issues in the arbitration that Comandate
Marine had unilaterally commenced in London. In the meantime Pan had filed a statement of
claim invoking remedies under the Trade Practices Act 1974 (Cth). When the matter came
before the trial judge myself there were, as I saw it, four principal issues to be
determined:4

1. Had Comandate Marine elected to litigate its claim in the Federal Court and to
abandon the right to insist on arbitration in London?
2. Was there an agreement in writing for the purposes of Article II r 2 of the New
York Convention?
3. Did the arbitration clause give the arbitrators power to determine Pans claims
under the Trade Practices Act 1974 (Cth) should the proceedings in this Court
brought by Pan be stayed and, if so, what conditions should apply?

3 Pan Australia Shipping Pty Ltd v The Ship Comandate [2006] FCA 881.
4 Pan Australia Shipping Pty Ltd v The Ship Comandate (No 2) [2006] FCA 1112 at [28].

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 4. Should the anti-anti-suit injunction (the operation of which I had extended in an
earlier judgment) be continued and, if so, on what terms?

9. I refused Comandate Marines application for a stay on the grounds that it had elected to
litigate, rather than arbitrate, the dispute, and that, following The Kuikiang Career5 in the Full
Court, the Trade Practices claims should not be arbitrated. On appeal, the Full Court
overturned my decision, granting the stay and dissolving the anti-anti-suit injunction.

III. Arrest of vessels

10. Section 18 of the Admiralty Act 1988 (Cth) confers a right to proceed in rem on a demise
charterers liabilities. Section 19 gives a right to proceed in rem against a surrogate ship.
Comandate Marine commenced the action in rem against Boomerang I. The key issue with
respect to the validity of the arrest of Boomerang I was whether Pan constituted the owner
of a surrogate ship for the purposes of s 19(b) of the Admiralty Act. That section provides:

A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem
against some other ship if:
(a) a relevant person in relation to the claim was, when the cause of action arose,
the owner or charterer of, or in possession or control of, the first-mentioned ship; and
(b) that person is, when the proceeding is commenced, the owner of the second-
mentioned ship.

11. Pan was described in the writ as the demise or bareboat charterer of the vessel
Boomerang I. The question was whether the word owner included a demise or bareboat
charterer. In other words, can an action in rem be commenced against a surrogate ship where
the nominated relevant person, ie a person who would be liable on the claim in an action in
personam, has something less than full proprietary rights over the ship?

12. Emmett, Allsop and Siopis JJ in the Full Federal Court upheld Pans original application
for the writ of arrest to be set aside.6 And Gummow, Kirby and Heydon JJ heard, variously,
the summons sought by Comandate Marine to stay the orders of the Full Federal Court

5 Hi-Fert Pty Limited v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1.
6 Comandate Marine Corp v The Ship Boomerang I (2006) 151 FCR 403; [2006] FCAFC 106.

4
 setting the writ aside and the same partys application for special leave to appeal the Full
Courts decision, all declining to interfere with the result in the Full Court of the Federal
Court.7

13. The reasoning of Allsop J, who delivered the leading judgment in the Full Court on this
question, is instructive. His Honour placed particular emphasis on the wording of the
ALRCs 1986 report on civil admiralty jurisdiction,8 which stated at [207]:

By definition a surrogate ship in such cases is a different enterprise from the wrongdoing ship, with a
different owner. It would be too great an extension of the relationship between owner and demise charterer
of ship B to allow arrest of that ship in respect of the demise charterer's liabilities arising with respect to
ship A. In the absence of any other international support for such an extension, Australian legislation should
require that a surrogate ship be owned by the relevant person with respect to the claim.

14. The Admiralty Act was of course drafted in terms suggested by the ALRC in that report.
After considering the authorities, the Full Court came to a construction which reflected the
intention of the ALRC.

15. Allsop J also drew assistance from a number of High Court authorities, most notably
McIlwraith McEachern Ltd v Shell Co of Australia Ltd 9 and Australasian United Steam
Navigation Company Co Ltd v The Shipping Control Board 10, in relation to the character in
which a demise charter confers a species of possession and control akin to, or having some
identity with, the property in a vessel which is possessed and controlled in full. But his
Honour, crucially, held that s 19 of the Admiralty Act recognised the distinction between
ownership and a demise. He said:

All the comments of Latham CJ in McIlwraith and Australasian United were founded upon the notion that,
ultimately, the relationship between the owner and the demise charterer is one based on hire, in which the
total possession and control of the vessel is given to the charterer, as distinct from charters such as time
charters where, strictly speaking and in legal substance, the ship is not hired at all, rather a control of
deployment of the commercial working of the ship is given to the charterer to require the master on behalf

7 Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] HCATrans 353; Comandate Marine Corp v
Pan Australia Shipping Pty Ltd [2006] HCATrans 421.
8 Australian Law Reform Commission, Civil Admiralty Jurisdiction (Report No 33, ALRC, 1986).
9 (1945) 70 CLR 175.
10 (1945) 71 CLR 508.

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 of the owner to take the ship subject to the terms of the charter where the charterer wants it taken: cf ASP
Ship Management Pty Ltd v Bergvall [2006] FCAFC 23 at [103].11

Thus, in the result there was an authoritative construction of the Act on this question arrived
at within six weeks of the arrest.

16. Ownership in s 19, in other words, is a proprietary right, linked to the ultimate rights of
control, dominion and sale of the ship. It is a distinct form of proprietary interest from the
relation of demise charter. As a result, a demise charterer of a surrogate ship cannot be
proceeded against in rem under s 19.

IV. Election in bringing proceedings for the arrest of vessels

17. The question of election leads us into far murkier waters. That said, the issue itself was,
once wrestled into interrogatory form, quite clear: by pursuing the arrest of Boomerang I, did
Comandate Marine make an election not to arbitrate in London? As the High Court set out in
Immer (No 145) Pty Limited v Uniting Church in Australia Property Trust (NSW),12 an
election arises when a party is confronted with and makes a choice between the exercise of
alternative and inconsistent rights. The party is not obliged to elect at once, but when it takes
a step which is consistent only with one of those rights the law attributes to it an election to
abandon the other right.13

18. In holding that Comandate Marine did indeed elect to litigate the dispute, thereby
waiving its right to arbitration, I attached considerable importance to the fact that Comandate
Marine, in the writ in rem it issued against Boomerang I, did not specifically seek relief or
security in respect of the London arbitration proceedings. Indeed, the writ made no mention
at all of the arbitration. Pan entered an unconditional appearance and became a defendant and
at that point, there was only the controversy in the writ. I relied on The Indian Grace14 in
concluding that by commencing and also by proceeding after Pan had entered an

11 151 FCR at 410.

12 (1993) 182 CLR 26.
13 182 CLR at 38-39.
14 Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878.

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 unconditional appearance with only the claims in the writ, Comandate Marine had elected to
litigate, not arbitrate.15 I found that silence on the question of curial assistance for the
arbitration specifically was enough to make Comandate Marines conduct in bringing its
proceedings in rem incompatible with the arbitration agreement. This, in turn, would have the
effect of making the arbitration agreement incapable of being performed or inoperative
for the purposes of s 7(5) of the International Arbitration Act 1974 (Cth).

19. The Full Court overturned this finding on appeal. 16 Allsop J, who delivered the leading
judgment, described the principal difficulty with the approach I took in relation to the two
roads Comandate Marine was faced with the one heading towards arbitration, the other
proceeding exclusively with litigation as inhering in the absence of two mutually
inconsistent rights in the sense that exercise of one presupposes the non-existence of the
other.17 His Honour continued:18

The notion of inconsistent rights was explained by Stephen J in Sargent v ASL Developments Ltd (1974)
131 CLR 634 at 641-2: the rights are inconsistent if neither may be enjoyed without the extinction of the
other. For instance, when a contract is repudiated the innocent party either accepts the repudiation and ends
the contract or chooses not to end the contract. Both cannot be done the contract is either ended or on
foot. A litigant who has bound itself to arbitrate and commences so to do and who files court proceedings
as well may be acting oppressively or abusively and may be in breach of contract, but has not elected
between inconsistent rights. Here, the filing of the writ did not extinguish the rights under the arbitration
agreement; it may or may not have constituted, or formed part of, an inconsistent course of conduct; it may
or may not have amounted to a breach of contract; but it did not cause or presuppose the extinction of the
rights under the arbitration agreement. To express the matter in the terms of Professor Hohfeld used by Mr
Justice Handley in Estoppel by Conduct and Election (Thomson/Sweet and Maxwell 2006) at 230-231:
The elector has a power to change the legal rights and duties of himself and another with a
corresponding liability in that other to submit to the change.

(The Full Court had been supplied with the recently published new text by Handley JA.)

20. In other words, the mere failure of a plaintiff to claim security for an arbitration in a writ
in rem claiming relief in relation to breach of a charterparty (where the originating process of
that action makes no reference to the arbitration, and seeks no security or other curial

15 [2006] FCA 1112 at [30].

16 Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192.
17 FCAFC 192 at [62].
18 FCAFC 192 at [62].

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 assistance in respect of any eventual arbitration proceedings) is not unequivocably
inconsistent with the continued existence of the right and obligation to arbitrate.

21. Allsop J drew attention to some of the injustices that would potentially flow were
judgments resulting from actions in rem and in personam to be assimilated, as the House of
Lords had done in The Indian Grace19. He said:20

If the claimant has to bring the action in rem knowing that this is its one action against the defendant owner,
it may risk disaster in proceeding in rem. If the owner does not appear and if the claimant proceeds against
the ship, it may gain little from the action (even if it has a strong case). Other claimants may come in
mortgagees, lienees, other statutory claimants. None of these, or at least the amount each is owed, would
have been apparent to the claimant before judgment.

22. Following a detailed discussion of the relevant authorities, Allsop J demonstrated why no
finding of election should have been made based on the filing of the writ. He showed that an
action in rem, at least prior to the unconditional appearance of a relevant person, is an action
against the ship itself rather than the owner or demise charterer of the ship. In other words,
the in rem action is not always one in which the owner or demise charterer, as a relevant
person, is a party. His Honour observed: The action in rem is a necessary tool of
international maritime commerce for the recovery of just claims. To treat it as the equivalent
of the in personam claim risks making it a dangerous lottery, thereby diminishing its practical
value.21 What Allsop J concluded on the basis of this principle was that the filing of the writ,
as a pure proposition of logic, could not have been an election as its effect was to commence
legal proceedings not against Pan but against a wholly different entity namely, the ship. In
other words, when the choice is between apples and oranges, there is no meaningful choice to
be had at all. Importantly, his Honour stressed that once a relevant person has made an
unconditional appearance in the action in rem, the action continues as an action in rem and
also as if it were an action in personam against the relevant person who appears.22 In other
words, the action in rem remains an action against the ship exclusively only for as long as
there has been no unconditional appearance of a relevant person. In this part of the judgment,

19 [1998] AC 878.
20 FCAFC 192 at [118].
21 FCAFC 192 at [118].
22 FCAFC 192 at [128].

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 Allsop J (with whom Finkelstein J, but not Finn J, agreed) disagreed with the decision of the
House of Lords in The Indian Grace23 as to the consequence of commencing a proceeding
in rem.

23. This portion of the litigation has not been the subject of any application for special leave
to appeal before the High Court.

V. Construction and scope of arbitration clauses

24. The necessity to examine the scope of the arbitration clause arose out of the fact that Pan
made a number of claims under s 52 of the Trade Practices Act 1974 (Cth). I held that Pans
Trade Practices claims did not arise out of the contract, and that it would therefore not be
appropriate to resolve them by way of arbitration. This, to recap, is because clause 45(b) of
the NYPE time charter provided relevantly for all disputes arising out of this contract to be
arbitrated in London. Everything centred, therefore, on the meaning of the words arising out
of.

25. The ascertainment of the scope of arbitration clauses is a question of contractual

construction.24 As the High Court held in Pacific Carriers Ltd v BNP Paribas,25 the meaning
of a provision of a contract is to be determined by what a reasonable person in the position of
the parties would have understood it to mean, having regard to the text, surrounding
circumstances, purpose and object of the transaction.26

26. The Full Federal Courts decision in The Kiukiang Career Hi-Fert Pty Limited v
Kiukiang Maritime Carriers Inc (No 5)27 proved crucial to the resolution of this portion of the
doctrinal controversy. In that case the relevant clause provided that any dispute arising from
this charter would be settled in a London arbitration. Plainly the form of words was different
in this case, but Emmett J, who delivered the leading judgment in the Kiukiang Career, was
23 [1998] AC 878.
24 FCAFC 192 at [162].
25 (2004) 218 CLR 451.
26 218 CLR at 462 [22].
27 (1998) 90 FCR 1.

9
 careful also to consider cases which involved other forms of wording. Emmett J said that a
claim arising out of a contravention of the Trade Practices Act 1974 (Cth) during the
performance of an agreement could be a claim arising out of the agreement. 28 But, he made
the critical distinction that where there was a dispute in respect of conduct which was
antecedent to the contract, such a dispute could not be said to arise from the contract in
question29 and he observed that it did not arise out of the charterparty.30

27. At first instance I applied this reasoning to arrive at the conclusion that the Trade
Practices claims, relating as they did to representations which were made before the contract
was made, did not arise out of the contract and could not, therefore, be brought within the
ambit of the arbitration clause.

28. The Full Court overturned this finding on appeal on the basis that the decision in the
Kuikiang Career was distinguishable on the facts. For a start, the Full Court reasoned, that
decision did not concern the words arising out of, which was the form of words used in this
arbitration clause. Also, and more importantly, the meaning of the clause in question was
affected by particular textual and contextual aspects of the surrounding documentation.

29. In support of the proposition that the phrase arising out of can in fact include a claim
based on pre-contractual representations, Allsop J drew on a long line of authority, chief of
which were the English cases of Ethiopian Oilseeds and Pulses Export Corporation v Rio del
Mar Foods Inc31 and Samick Lines Co Ltd v Owners of the Antonis P Lemos.32 In the latter,
Lord Brandon of Oakbrook (with whom Lord Scarman, Lord Diplock, Lord Roskill and Lord
Templeman agreed) said the following:33

With regard to the first point, I would readily accept that in certain contexts the expression arising out of
may, on the ordinary and natural meaning of the words used, be the equivalent of the expression arising
under, and not that of the wider expression connected with. In my view, however, the expression

28 90 FCR at 21G.
29 90 FCR at 22A-B.
30 90 FCR at 22B-C.
31 [1990] 1 Lloyds Rep 86.
32 [1985] AC 711.
33 [1985] AC at 727.

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 arising out of is, on the ordinary and natural meaning of the words used, capable, in other contexts, of
being the equivalent of the wider expression connected with. Whether the expression arising out of has
the narrower or the wider meaning in any particular case must depend on the context in which it is used.

30. In Ethiopian Oilseeds,34 Hirst J held a similarly expansive view of the words arising out
of. He said: I find it very difficult to make any distinction between the words arising out
of and arising in connection with, the two phrases appearing to me to be virtually
synonymous.35

31. This line of authority was referred to, with approval, as reflecting the current state of the
law in New South Wales in Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd
(1996)36. At 165, Gleeson CJ said:

When the parties to a commercial contract agree, at the time of making the contract, and before any
disputes have arisen, to refer to arbitration any dispute or difference arising out of the agreement, their
agreement should not be construed narrowly. They are unlikely to have intended that different disputes
should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine
shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing
points of argument.

In Ethiopian Oilseeds, Hirst J held that a claim for rectification of a contract gave rise to a dispute arising
out of the relevant agreement.

That decision, and the reasoning underlying it, reflects the current state of the law in New South Wales.

32. The effect of the Full Courts acceptance of these authorities is to make claims relating to
pre-contractual representations and conduct arbitrable for the purposes of clauses such as
NYPEs clause 45(b).

VI. Writing requirement under the International Arbitration Act 1974 (Cth)

33. Finally, we come to another important issue which emerged from this cluster of decisions
whether there was an agreement in writing between the parties on the question of
arbitration for the purposes of the International Arbitration Act. Consideration of this
question was necessary in this case in light of the fragmentary manner in which the time

34 [1990] 1 Lloyds Rep 86.

35 1 Lloyds Rep at 97.
36 39 NSWLR 160.

11
charter had been negotiated between the parties. There was no single document setting out
each partys rights and liabilities at the time the contract was made; instead, the contractual
negotiations were conducted in a piecemeal fashion, and the contractual terms were
contained in a number of different documents and media.

34. As many of you will already be aware, s 7(2) of the International Arbitration Act
provides for a mandatory stay of legal proceedings where there is an arbitration clause
applicable to the resolution of a dispute, providing that certain relatively uncontroversial
threshold conditions set out in s 7(2) are met. The phrase arbitration agreement is defined
in s 3(1) of the Act as follows: arbitration agreement means an agreement in writing of the
kind referred to in sub-article 1 of Article II of the Convention.

35. The Convention there mentioned is, of course, the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards. Article II of the Convention
stipulates:

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake
to submit to arbitration all or any differences which have arisen on which may arise between them in
respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable
of settlement by arbitration.

2. The term agreement in writing shall include an arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this article, shall, at the request of one of the
parties, refer the parties to arbitration, unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.

36. Early in their negotiations the parties both agreed that if a charterparty for Comandate
were later made it would contain clause 45(b) of the NYPE form providing for London
arbitration. If nothing else, the dispute highlights the continued folly of local commercial
parties in agreeing to arbitration in London or New York and then, after the arbitration clause
becomes engaged, commencing litigation locally to seek to avail themselves of a domestic
dispute resolution mechanism. Equally proficient arbitration services are now available in
Australia. As Allsop J recognised in the F. S. Dethridge Memorial Address he delivered last

12
 year, commercial arbitration generally is taking strong root in Australia. ACICA and the
Chartered Institute are both active. There are some maritime arbitrations in Australia, but not
in large numbers.37 With time, and attention by Australian parties to choosing a local seat for
the arbitration in international contracts with arbitration clauses, those numbers may increase.

37. The email and telex exchanges for the next two weeks of negotiations dealt with other
matters. The owners, however, insisted that a bank guarantee had to be provided by Pan
before the ship would be delivered. Just before delivery a recap telex and email were sent by
the owners broker to Pans broker which included a number of terms and confirmed the
fixture subject to the owners receiving the bank guarantee. The guarantee was delivered soon
after and the vessel was then delivered.

38. There was at that time no one document containing all the terms which had been agreed,
but there was no question that cl 45(b) was part of the charterparty. The question was whether
there was an agreement in writing within the meaning of the International Arbitration Act.

39. I found that there was no agreement in writing for the purposes of satisfying s 7 of the
International Arbitration Act because the charterparty was formed by tacit acceptance
rather than by the exchange of a relevant document. This, in my opinion, did not satisfy the
writing requirement.

40. The Full Court held:

That assent and the conclusion that such a clause or an agreement is contained in such exchanged
documents, is not denied by the fact that in the substantive agreement the parties agreed that their binding
contractual relations (including in the arbitration clause) would not arise unless and until one party
performed an act such as provide a bank guarantee in a particular form.38

41. The crux of the Full Courts reasoning lay in the belief (set out in Allsop Js reasons) that:

37 The Hon. Justice James Allsop, International commercial law, maritime law and dispute resolution: the place of
Australia, New Zealand and the Asia Pacific region in the coming years, F.S. Dethridge Memorial Address,
Maritime Law Association of Australia and New Zealand, 28-29 September 2006.
38 FCAFC 192 at [155].

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 The requirement that the arbitral clause in a contract or an arbitration agreement be contained in an
exchange of letters or telegrams is not a requirement that the contract be formed by the act of signing or the
exchange of letters or telegrams. The clause in a contract or the arbitration agreement can be contained in
an exchange of letters and telegrams even if the act of formation was some conduct.39

42. Referring to van den Berg, AJ in The New York Arbitration Convention of 1958,40 Allsop
J continued:

Where there is clear mutual documentary exchange as to the terms of, and assent to, the arbitration
agreement the purpose of Article II is fulfilled. If the agreement so reached is conditional, in the sense of
being operative only upon an event occurring, the arbitration agreement can, nevertheless, be said to be
contained in the exchange of relevant documents.41

43. On the Full Courts understanding, this approach further harmonises with the inclusive
definition of Art II sub-art 2 applied in Canada. As the Manitoba Court of Appeal said in
Proctor v Schellenberg42:

What is important is that there be a record to evidence the agreement of the parties to resolve the
dispute by an arbitral process. This flexibility is important in this day and age of changing
methods of communication. In my view, communication by facsimile falls within the definition.
This is in keeping with a functional and pragmatic interpretation of the definition to serve the
Legislatures intent to give effect to arbitral awards granted in other jurisdictions in this era of
interjurisdictional and global business.43

The Full Court also said, obiter, that Art 8 of the Model Law in Schedule 2 of the
International Arbitration Act would lead to the same result.

44. More recently, Kiefel J has applied the Full Courts approach in APC Logistics Pty Ltd v
CJ Nutracon Pty Ltd.44 Her Honour observed: [I]n some cases the exchange of
correspondence may be relied upon both for the conclusion of a binding agreement having
been reached by the parties and their overt acceptance of that conclusion.45

39 FCAFC 192 at [150].

40 (Kluwer, 1981).
41 FCAFC 192 at [152].
42 [2003] 2 WWR 621.
43 2 WWR at 628 [18].
44 [2007] FCA 136.
45 [2007] FCA 136 at [5].

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 45. The Pan litigation has brought a new light to the writing requirement under the
International Arbitration Act.

VII. Severability

46. The Full Court held that the arbitration clause was severable. This meant that it could be
used as the mechanism to resolve the dispute involving the pre-contractual claims of
misleading and deceptive conduct under the Trade Practices Act even though, if they were
proved, the charterparty, and hence cl 45(b), may be set aside. Allsop J said:46

But the doctrine of separability is not so much a fiction as an approach by the law to accommodating
commercial practicality and commonsense to the operation of legal rules. Commercial law and honest,
practical common sense should never be far apart. The approach to construing and dealing with
commercial contracts in this way, subject always of course to the particular contract at hand, is not to
introduce a fiction, but to apply a legal rule or perspective borne of precedent and common sense better to
facilitate the intentions (express and inferred) of the commercial parties involved: see also Mahoney JA in
Ferris v Plaister at 496-97.

VIII. Conclusion

47. The tunes Pan played with Comandates Greek owners in this litigation have yielded
interesting developments in Australian maritime jurisprudence. The issues were both topical
and interesting. Because special leave to appeal is not being sought by Pan, the final world
may not yet have been said on a number of these issues.

46 FCAFC 192 at [228].

15