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Emails that initiated legal proceedings were ignored as spam by a shipping firm. It was a costly oversight: the firm lost the case without taking part and an English judge has rejected a late challenge, ruling that service by email is just as valid as post or fax.

The significance of the case, decided 21st December, is limited: this was a maritime arbitration, not an English court action. That would be subject to different rules, rules that generally do not permit the service of writs by email.

The case only came before the High Court when Bernuth Lines Ltd sought to challenge the validity of the arbitration ruling against it. The High Court ruled that, in an arbitration, effective service did not depend on the email address to which service was made being one that the serving party had been notified of as an address to be used in the context of the dispute.

The dispute arose after Bernuth chartered a cargo ship to High Seas Shipping Ltd for a voyage from Miami to Nicaragua. The draught of the chartered ship – i.e. the depth of its keel below the surface – was found to be over the limit for one of the shallower ports on the voyage; so the captain felt compelled to unload the cargo onto another ship. A dispute ensued over payment of compensation.

High Seas’ lawyers emailed Bernuth, offering to settle the dispute for $34,100. If no settlement was reached, arbitration proceedings would commence, said the email. The email sought Bernuth’s agreement to the appointment of an arbitrator.

However the email address used by the lawyers – info@bernuth.com – had not been detailed on any prior communication between the parties, although it was listed on the firm’s website and in the Lloyds Maritime Directory.

Bernuth did not respond to the email – or to any of the others that followed during the arbitration proceedings – despite High Seas’ lawyers logging delivery receipts for all of the messages.

Finally, on 29th July 2005, the arbitrator issued his final award in favour of High Seas.

This time the arbitrator sent notice of the award by email and by post. He was contacted shortly afterwards by Bernuth’s lawyers who expressed surprise at the award.

It transpired that the info@bernuth.com address was used for Bernuth's cargo bookings. The emails about the dispute would have been ignored as probably being unsolicited email, argued Bernuth's lawyers. They wrote to High Seas' lawyers: "Our client is perplexed that the other channel of communication established through your client’s Miami lawyers appears to have been bypassed.”

Bernuth asked the High Court to invalidate the award on the basis that the legal action had not been properly brought to the firm’s attention and that there had “been a serious irregularity affecting the proceedings which has caused or will cause them substantial injustice.”

The Arbitration Act of 1996 allows awards to be challenged on such a basis.

The ruling

According to Mr Justice Christopher Clarke, the case hinged on whether the arbitration had been properly commenced or not.

Under the Arbitration Act this depends on notice in writing being given, requiring the defendant to appoint or to agree to the appointment of an arbitrator. Such a request had been expressed in the first email to Bernuth, but questions remained over whether the notice had also been properly served.

According to the Act, “A notice or other document may be served by any effective means.”

In the opinion of the Judge, this provision has been made “purposely wide”. He explained:

“It contemplates that any means of service will suffice provided that it is a recognised means of communication effective to deliver the document to the party to whom it is sent at his address for the purpose of that means of communication (e.g. post, fax or email). There is no reason why, in this context, delivery of a document by email – a method habitually used by businessmen, lawyers and civil servants – should be regarded as essentially different from communication by post, fax or telex.”

According to Justice Clarke, service emails must be sent to the email address of the intended recipient and, where several email addresses are shown, it must be sent to the correct one. In this case, said the Judge, the email address had been held out as Bernuth’s only address and emails sent to that address had been logged as delivered.

“The position is, to my mind, no different to the receipt at a company’s office of a letter or telex which, for whatever reason, someone at the company decides to discard," added Justice Clarke. "In both cases service has effectively been made, and the document received will, in the first instance, be dealt with by a clerical officer."

The fact that the emails did not reach the relevant members of staff was an “internal failing” but did not affect the validity of service.

Comment

John MacKenzie, a partner at Pinsent Masons, the law firm behind OUT-LAW.COM, said: "When email first emerged there were concerns about whether it was 'writing' at all. This case demonstrates the almost uniform acceptance of email as a form of communication."

He said it also shows that if you have an email address, the inbox needs to be carefully checked. This includes generic addresses such as 'admin@' and 'info@', as in this case.

"Not all court documents can be served by email due to specific court rules, but there can be other important notices that may be missed if the inbox is not checked," added MacKenzie.

Scottish court actions cannot be served by email. In England, email service is possible but only when there is written consent to this from the other party in advance, according to the Civil Procedure Rules. Accordingly, if a British business receives a court action "out of the blue" by email, it could generally argue that service has not been affected.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

The ruling

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