The Importance of Serving your Notice on the right person
Jeremy Glover, Partner, Fenwick Elliott
The case of Glencore Agriculture BV (formerly Glencore Grain BV) v Conqueror Holdings Ltd1 provides a helpful illustration of the importance of reviewing the Notice requirements of the Contract strictly. Quite often, Notices (with a capital “N”) must be served on individuals who are different from the people who deal with projects on a daily basis and at addresses different from the site office.
Here, Glencore brought proceedings to set aside a final arbitration award of a sole arbitrator in the sum of just over US$40k. Glencore had not taken any part in the arbitration and was unaware of the proceedings until it received the award by post on 28 October 2016. The notice of arbitration and other documents had been sent to the email address of an employee of Glencore called Florian Oosterman, who had left Glencore’s employment in September 2016. The Commercial Court had to consider whether or not the notice of arbitration and notice of the appointment of the sole arbitrator had been served effectively.
Mr Oosterman had been the initial point of contact during a dispute in relation to delays at a loading port. Once the dispute became more formal, communications passed through the broking channel, although the judgment notes that those communications did not reveal the identity of the person or persons at Glencore who were giving instructions to the brokers. However, presumably because of Mr Oosterman’s initial involvement, Conqueror sent to him, by email, correspondence including, in September 2015, a letter identifying the sum Conqueror said was due and inviting Glencore to agree to the appointment of a sole arbitrator. There was no reply and Conqueror continued to send email updates on the progress of the case, to the same personal email address. There was again no response to any of the letters and other communications sent to the email address. The arbitration continued and the arbitrator gave his final award.
Glencore said that Mr Oosterman was a junior back office employee who was not authorised to accept service of any legal document. Glencore further confirmed that Mr Oosterman had not passed on any of the letters sent by Conqueror or indeed the arbitrator to Glencore’s legal department. Conqueror said that they had served the notice of arbitration properly, as Mr Oosterman was the individual who had dealt with the issues which had given rise to the dispute.
Which address to use?
Mr Justice Popplewell said that there was a distinction to be drawn between sending an email to an email address which is the personal business address of an individual, and to one which is generic. Where a generic email address is used, for example email@example.com, the sender will probably not know the identity of the person who will open and read the email. However, if that generic address is, for example, on a company’s website, then the sender can reasonably expect the person who opens the email to be authorised internally to deal with its contents. The generic email address is therefore similar to post that is often simply sent to a company address. The company can be expected to ensure that the letter or email is opened by someone with internal responsibility for putting it in the hands of whoever needs to deal with it on behalf of the company.
In the case of Bernuth Lines v High Seas Shipping2 arbitration proceedings had been served at an email address which appeared in the Lloyd’s Maritime Directory and on the company’s website. The email was received, but then ignored by the clerical staff. The Judge held that the service was valid and the failings of the internal administration were the responsibility of the company concerned.
However, where an individual email address is used, the sender will reasonably expect the email to be opened and read by the named individual, and if he or she fails to do so, that risk falls on the company. The question here was whether an email sent to a personal business email address was good service. The answer would be the same as if the document had been physically handed to that person. Therefore the answer would depend upon the particular role which the named individual played or was held out as playing within the organisation. Service on Mr Oosterman at Glencore could only be effective if he was the company’s agent with authority to accept service. The Judge said that:
"Whether it constitutes good service if directed to an individual's email address must depend upon the particular role which the named individual plays or is held out as playing within the organisation".
Here, there was no basis for finding that Mr Oosterman was expressly authorised to accept the service of arbitral proceedings and all the available evidence suggested the opposite. Further, there was nothing to suggest he had any implied authority. At most, Mr Oosterman was a representative of the operational department who had sent operational communications in relation to the performance of the charter party and the events giving rise to the dispute. That was not sufficient to give rise to the inference that he was cloaked with authority to assume the serious and distinct responsibility for accepting the service of a legal process. It could not therefore be said that he thereby impliedly had authority to handle any legal dispute arising out of the voyage, still less to accept the service of a legal or arbitral process and deal with it.
This meant that service was not valid. One issue not apparently addressed by the case was why Mr Oosterman had not passed on the legal documents. The case therefore highlights a number of important issues when it comes to company processes and procedures. Most companies should and do have in place procedures which would require any individual to pass any legal documents on to the legal department or officer as a matter of course.
Care must also be taken to ensure that proper procedures are in place to monitor fax machines and computers, and also to make sure that you use the correct fax number or email address. In Lehman Brothers International (Europe) (In Administration) v Exxonmobil Financial Services BV3 the wrong fax number was used. Mr Justice Blair held that where a party has made every effort to serve a Notice by the method specified, but cannot, a different method may be used. The decision here might have been influenced by the fact that the wrong fax number was used and this was not picked up at the time - the point only being taken in pleadings some six years after the event.
Whilst the Glencore case was about the formal service of an arbitration notice, and of course special rules are often in place for the service of court documents, it is important that all parties are aware of the correct address to which project communications should be sent. Care must be taken to ensure that those to whom communications are sent actually work at the place that needs to receive them. For example there is little point in giving a formal registered office address if that registered office is not used on a regular basis, as this may mean that Notices and the like are not dealt with within either the contractually required or a reasonable time.
With this in mind, it is worth noting the new Notice requirements to be found in sub-clause 1.3 of the second edition of the FIDIC form. Notices must be:
- in writing;
- a paper-original signed or an electronic original “generated from any of the systems of electronic transmission stated in the Contract Data” sent from the “electronic address uniquely assigned to each of such authorised representatives”. In other words, an email must be from a personal address set out in the Contract Data;
- identified as a Notice; and
- sent to the address for the recipient’s communications as stated in the Contract Data.
So whilst the facts of this case are very unusual, it provides a useful reminder to check carefully the address and means you are using to serve Notices of any kind, perhaps especially when they are being sent by email.