Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2003] EWHC 2602 is an English contract law

English contract law

English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...

 case concerning the Contracts (Rights of Third Parties) Act 1999

Contracts (Rights of Third Parties) Act 1999

The Contracts Act 1999 was an Act of the Parliament of the United Kingdom that significantly reformed the common law Doctrine of Privity and "thereby [removed] one of the most universally disliked and criticised blots on the legal landscape"...

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Facts

Cleaves & Co Ltd were chartering brokers. They negotiated charterparties (Lat. charta partita) for Nisshin, the shipowners. In each charterparty Nisshin agreed with the charterers of ships that they pay Cleaves & Co Ltd commission. However it did not expressly say that Cleaves & Co had a right to enforce the commission payments. There were arbitration clauses in each, so parties agreed to refer all disputes to arbitration. Could Cleaves & Co Ltd claim the commissions must be paid by Nisshin?

Judgment

Colman J held Cleaves had a third party right to enforce Nisshin’s promise to pay the commission and it was entitled and bound to enforce it by arbitration.
s 1(2) puts the onus on the party wanting to avoid the third party benefit. Unless they rebut, s 1(1)(b) applies. The existence of an alternative cause of action (trust of promise) did not exclude the Act. Section 1(1)(b) is disapplied if on proper construction it appears parties did not intend any third party enforcement.