- Arbitration – Arbitrator – Jurisdiction – Inordinate and inexcusable delay in prosecution of claim – Whether jurisdiction in arbitrator to dismiss claim for want of prosecution – Whether jurisdiction in court to restrain claimant from proceeding in arbitration – Parties’ obligation to prevent inordinate delay – Duty to apply to arbitrator
- Injunction – Jurisdiction to grant – Arbitration proceedings – Inordinate and inexcusable delay in prosecution of claim – Whether claimant under duty not to so delay – Court’s jurisdiction to restrain party continuing with arbitration for repudiatory breach of arbitration agreement
[1981] A.C. 909 Page 910
Held, allowing the appeal, that the High Court had no inherent jurisdiction to supervise the conduct of arbitrators analogous to its power to control inferior tribunals, and its power to grant injunctions arose from the existence of a right to be enforced or protected, so that when there was a repudiatory breach of an arbitration agreement the innocent party, having elected to treat the contract as at an end, could obtain an injunction to restrain the party in default from proceeding with the arbitration; but (Lord Fraser of Tullybelton and Lord Scarman dissenting), since the parties were equally under an obligation to keep the procedure moving, both were under an obligation to apply to the arbitrator to prevent inordinate delay and, since the plaintiffs had made no such application, they were not entitled to rely on the defendants’ breach as giving them the right to treat the agreement as at an end (post, pp. 978E-H, 979D-F, 980G – 981B, 982C-E, 986B-D, 987G – 988A, A-B, 992F-G, 993B-C, H, 997B-C, F-G, G – 998A, 999F-H).
The following cases are referred to in their Lordships’ opinions in the House of Lords:
Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 Q.B. 229; [1968] 2 W.L.R. 366; [1968] 1 All E.R. 543, C.A.
Beddow v. Beddow (1878) 9 Ch.D. 89.
Birkett v. James [1978] A.C. 297; [1977] 3 W.L.R. 38; [1977] 2 All E.R. 801, C.A. and H.L.(E.).
Congimex S.A.R.L. v. Continental Grain Export Corporation [1979] 2 Lloyd’s Rep. 346, Donaldson J. and C.A.
Crawford v. A. E. A. Prowting Ltd. [1973] Q.B. 1; [1972] 2 W.L.R. 749; [1972] 1 All E.R. 1199.
Czarnikow v. Roth, Schmidt and Co. [1922] 2 K.B. 478, C.A.
Glasgow and South-Western Railway Co. v. Boyd & Forrest, 1918 S.C. (H.L.) 14, H.L.(Sc.).
Heyman v. Darwins Ltd. [1942] A.C. 356; [1942] 1 All E.R. 337, H.L.(E.).
Japan Line Ltd. v. Aggeliki Charis Compania Maritima S.A. (The Angelic Grace) [1980] 1 Lloyd’s Rep. 288, Parker J. and C.A.
Kent v. Elstob (1802) 3 East. 18.
Kitts v. Moore [1895] 1 Q.B. 253, C.A.
Malmesbury Railway Co. v. Budd (1876) 2 Ch.D. 113.
Moorcock, The (1889) 14 P.D. 64, C.A.
North London Railway Co. v. Great Northern Railway Co. (1883) 11 Q.B.D. 30, C.A.
Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827; [1980] 2 W.L.R. 283; [1980] 1 All E.R. 556, H.L.(E.).
Pickering v. Cape Town Railway Co. (1865) L.R. 1 Eq. 84; (1869) L.R. 7 Eq. 224.
Reg. v. National Joint Council for the Craft of Dental Technicians (Disputes Committee), Ex parte Neate [1953] 1 Q.B. 704; [1953] 2 W.L.R. 342; [1953] 1 All E.R. 327, D.C.
Rex v. Northumberland and Compensation Appeal Tribunal, Ex parte Shaw [1952] 1 K.B. 338; [1952] 1 All E.R. 122, C.A.
Scott v. Avery (1856) 5 H.L.Cas. 811, H.L.(E.).
[1981] A.C. 909 Page 911
Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.).
Unione Stearinerie Lanza and Wiener, In re [1917] 2 K.B. 558. D.C.
The following additional cases were cited in argument in tile House Lords:
Andre et Compagnie S.A. v. Marine Transocean Ltd. (The Splendid Sun) [1981] 3 W.L.R. 43, C.A.
Ben & Co. Ltd. v. Pakistan Edible Oils Corporation Ltd., The Times, July 13, 1978, C.A.
Bloemen (F. J.) Pty. Ltd. v. City of Gold Coast Council [1973] A.C. 115; [1972] 3 W.L.R. 43; [1972] 3 All E.R. 357, P.C.
Bremer Oeltransport G.m.b.H. v. Drewry [1933] 1 K.B. 753, C.A.
Chandris v. Isbrandtsen-Moller Co. Inc. [1951] 1 K.B. 240; [1950] 1 All E.R. 768.
Crighton and Law Car and General Insurance Corporation Ltd., In re [1910] 2 K.B. 738, D.C.
Exormisis Shipping S.A. v. Oonsoo [1975] 1 Lloyd’s Rep. 432.
Gulf Shipping Lines Ltd. v. Jadranska (unreported), [1981] 1 Lloyd’s Rep. 31.
Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26, [1962] 2 W.L.R. 474; [1962] 1 All E.R. 474, C.A.
Jamshed Khodaram Irani v. Burjorji Dhunjibhai (1915) 32 T.L.R. 156, P.C.
Lep Air Services Ltd. v. Rolloswin Investments Ltd. [1973] A.C. 331: [1972] 2 W.L.R. 1175; [1972] 2 All E.R. 393, H.L.(E.).
Liverpool City Council v. Irwin [1977] A.C. 239; [1976] 2 W.L.R. 562: [1976] 2 All E.R. 39, H.L.(E.).
London and Blackwall Railway Co. v. Cross (1886) 31 Ch.D. 354, C.A.
Mareva Compania Naviera S.A. v. International Bulkcarriers S.A. [1975] 2 Lloyd’s Rep. 509, C.A.
Miliangos v. George Frank (Textiles) Ltd. [1976] A.C. 443; [1975] 3 W.L.R. 758; [1975] 3 All E.R. 801, H.L.(E.).
Mylne v. Dickinson (1815) Coop.G. 195.
Powell v. Main Colliery Co. Ltd. [1900] A.C. 366, H.L.(E.).
Rasu Maritima S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Government of the Republic of Indonesia intervening) (Pertamina) [1978] Q.B. 644; [1977] 3 W.L.R. 518; [1977] 3 All E.R. 324, C.A.
Rickards (Charles) Ltd. v. Oppenhaim [1950] 1 K.B. 616; [1950] 1 All E.R. 420, C.A.
Shell U.K. Ltd. v. Lostock Garage Ltd. [1976] 1 W.L.R. 1187; [1977] 1 All E.R. 481, C.A.
Star International Hong Kong (U.K.) Ltd. v. Bergbau-Handel G.m.b.H. [1966] 2 Lloyd’s Rep. 16.
Stickney v. Keeble [1915] A.C. 386, H.L.(E.).
Succula Ltd. v. Harland and Wolff Ltd. [1980] 2 Lloyd’s Rep. 381.
Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401; [1957] 2 W.L.R. 713; [1957] 2 All E.R. 70.
The following cases are referred to in the judgment of Donaldson J.:
Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 Q.B. 229; [1968] 2 W.L.R. 366; [1968] 1 All E.R. 543, C.A.
[1981] A.C. 909 Page 912
Beddow v. Beddow (1878) 9 Ch.D. 89.
Ben & Co. Ltd. v. Pakistan Edible Oils Corporation Ltd., The Times, July 13, 1978, C.A.
Birkett v. James [1978] A.C. 297; [1977] 3 W.L.R. 38; [1977] 2 All E.R. 801, C.A. and H.L.(E.).
Chandris v. Isbrandtsen-Moller Co. Inc. [1951] 1 K.B. 240; [1950] 1 All E.R. 768.
Compagnie Francaise de Télévision v. Thorn Consumer Electronics Ltd. [1978] R.P.C. 735, C.A.
County & District Properties Ltd. v. Lyell, July 12, 1977; Court of Appeal (Civil Division) Transcript No. 314 of 1977, C.A.
Crawford v. A. E. A. Prowting Ltd. [1973] Q.B. 1; [1972] 2 W.L.R. 749; [1972] 1 All E.R. 1199.
Den of Airlie S.S. Co. Ltd. v. Mitsui & Co. Ltd. (1912) 17 Com.Cas. 116, C.A.
Exormisis Shipping S.A. v. Oonsoo [1975] 1 Lloyd’s Rep. 432; [1975] 2 Lloyd’s Rep. 402.
Gouriet v. Union of Post Office Workers [1978] A.C. 435; [1977] 3 W.L.R. 300; [1977] 3 All E.R. 70, H.L.(E.).
Government of Gibraltar v. Kenney [1956] 2 Q.B. 410; [1956] 3 W.L.R. 466; [1956] 3 All E.R. 22.
Kitts v. Moore [1895] 1 Q.B. 253, C.A.
London and Blackwall Railway Co. v. Cross (1886) 31 Ch.D. 354, C.A.
Malmesbury Railway Co. v. Budd (1876) 2 Ch.D. 113.
Miliangos v. George Frank (Textiles) Ltd. [1975] Q.B. 487; [1975] 2 W.L.R. 555; [1975] 1 All E.R. 1076, C.A.; [1976] A.C. 443; [1975] 3 W.L.R. 758; [1975] 3 All E.R. 801, H.L.(E.).
Montgomery v. Montgomery [1965] P. 46; [1964] 2 W.L.R. 1036; [1964] 2 All E.R. 22.
North London Railway Co. v. Great Northern Railway Co. (1883) 11 Q.B.D. 30, C.A.
President of India v. John Shaw & Sons (Salford) Ltd., The Times, October 28, 1977, C.A.
Rasu Maritima S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Government of the Republic of Indonesia intervening) (Pertamina) [1978] Q.B. 644; [1977] 3 W.L.R. 518; [1977] 3 All E.R. 324, C.A.
Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.).
Sociedade Portuguesa de Navios Tanques Limitada v. Hvalfangerselskapet Polaris A/S [1952] 1 Lloyd’s Rep. 407, C.A.
The following additional cases were cited in argument before Donaldson J.:
Biss v. Lambeth, Southwark and Lewisham Area Health Authority (Teaching) [1978] 1 W.L.R. 382; [1978] 2 All E.R. 125, C.A.
Mehta v. Adams, May 26, 1978; Court of Appeal (Civil Division) Transcript No. 348 of 1978, C.A.
Sayers v. Collyer (1884) 28 Ch.D. 103, C.A.
Thorne v. British Broadcasting Corporation [1967] 1 W.L.R. 1104; [1967] 2 All E.R. 1225, C.A.
[1981] A.C. 909 Page 913
The following cases are referred to in the judgments in the Court of Appeal:
Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 Q.B. 229; [1968] 2 W.L.R. 366; [1968] 1 All E.R. 543, C.A.
Andre et Compagnie S.A. v. Marine Transocean Ltd. (The Splendid Sun) [1980] 1 Lloyd’s Rep. 333.
Associated Bulk Carriers Ltd. v. Koch Shipping Inc. [1978] 1 Lloyd’s Rep. 24, C.A.
Beddow v. Beddow (1878) 9 Ch.D. 89.
Birkett v. James [1978] A.C. 297; [1977] 3 W.L.R. 38; [1977] 2 All E.R. 801, H.L.(E.).
Bristol Corporation v. John Aird & Co. [1913] A.C. 241, H.L.(E.).
Chandris v. Isbrandtsen-Moller Co. Inc. [1951] 1 K.B. 240; [1950] 1 All E.R. 768.
County & District Properties Ltd. v. Lyell (unreported), July 12, 1977; Court of Appeal (Civil Division) Transcript No. 314 of 1977, C.A.
Crawford v. A. E. A. Prowting Ltd. [1973] Q.B. 1; [1972] 2 W.L.R. 749; [1972] 1 All E.R. 1199.
Crighton and Law Car and General Insurance Corporation Ltd., In re [1910] 2 K.B. 738, D.C.
Dalmia Dairy Industries Ltd. v. National Bank of Pakistan [1978] 2 Lloyd’s Rep. 223, Kerr J. and C.A.
Danforth Travel Centre Ltd. v. British Overseas Airways Corporation (1972) 29 D.L.R. (3d) 141.
Den of Airlie S.S. Co. Ltd. v. Mitsui & Co. Ltd. (1912) 17 Com.Cas. 116, C.A.
Frota Nacional de Petroleirus v. Skibsaktieselskabet Thorsholm [1957] 1 Lloyd’s Rep. 1, C.A.
Heyman v. Darwins Ltd. [1942] A.C. 356; [1942] 1 All E.R. 337, H.L.(E.).
Jackson v. Barry Railway Co. [1893] 1 Ch. 238, C.A.
Japan Line Ltd. v. Aggeliki Charis Compania Maritima S.A. (The Angelic Grace) [1980] 1 Lloyd’s Rep. 288, Parker J. and C.A.
Kitts v. Moore [1895] 1 Q.B. 253, C.A.
Lister v. Romford Ice and Cold Storage Co. Ltd. [1957] A.C. 555; [1957] 2 W.L.R. 158; [1957] 1 All E.R. 125, H.L.(E.).
Liverpool City Council v. Irwin [1976] Q.B. 319; [1975] 3 W.L.R. 663; [1975] 3 All E.R. 658, C.A.; [1977] A.C. 239; [1976] 2 W.L.R. 562; [1976] 2 All E.R. 39, H.L.(E.).
Maunsell v. Midland Great Western (Ireland) Railway Co. (1863) 1 H. & M. 130.
Murrayfield Real Estate Co. Ltd. v. C. Bryant & Son Ltd. (unreported), July 20, 1978; Court of Appeal (Civil Division) Transcript No. 473 of 1978, C.A.
North London Railway Co. v. Great Northern Railway Co. (1883) 11 Q.B.D. 30, C.A.
Pickering v. Cape Town Railway Co. (1865) L.R. 1 Eq. 84.
Shell U.K. Ltd. v. Lostock Garage Ltd. [1976] 1 W.L.R. 1187; [1977] 1 All E.R. 481, C.A.
Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.).
Smith & Service and Nelson & Sons, In re (1890) 25 Q.B.D. 545, C.A.
Sneddon v. Kyle (1902) 2 S.R.(N.S.W.)Eq. 112.
[1981] A.C. 909 Page 914
Unione Stearinerie Lanza and Wiener, In re [1917] 2 K.B. 558, D.C.
Unitramp v. Garnac Grain Co. Inc. [1979] 1 Lloyd’s Rep. 212, C.A.
Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401; [1957] 2 W.L.R. 713; [1957] 2 All E.R. 70.
Whitworth Street Estates (Manchester) Ltd. v. James Miller Partners Ltd. [1970] A.C. 583; [1970] 2 W.L.R. 728; [1970] 1 All E.R. 796, H.L.(E.)
Wilson, Sons & Co. v. Conde d’Eu Railway Co. (1887) 51 J.P. 230, D.C.
The following additional cases were cited in argument in the Court ot Appeal in Gregg v. Raytheon Ltd.:
Carron Iron Co. v. Maclaren (1855) 5 H.L.Cas. 416, H.L.(E.).
Connolly Bros. Ltd., In re [1911] 1 Ch. 731, C.A.
Curtis v. Potts (1814) 3 M. & S. 145.
Doleman & Sons v. Ossett Corporation [1912] 3 K.B. 257, C.A.
Exormisis Shipping S.A. v. Oonsoo [1975] 1 Lloyd’s Rep. 432.
Farrar v. Cooper (1890) 44 Ch.D. 323.
Gibraltar (Government of) v. Kenney [1956] 2 Q.B. 410; [1956] 3 W.L.R 466; [1956] 3 All E.R. 22.
Giddings v. Giddings (1847) 10 Beav. 29.
Hodgkinson v. Fernie (1857) 3 C.B.N.S. 189.
London and Blackwall Railway Co. v. Cross (1886) 31 Ch.D. 354, C.A.
London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd. [1958] 1 W.L.R. 271; [1958] 1 All E.R. 494.
Malmesbury Railway Co. v. Budd (1876) 2 Ch.D. 113.
Mylne v. Dickinson (1815) Coop.G. 195.
Myron, The [1970] 1 Q.B. 527; [1969] 3 W.L.R. 292; [1969] 2 All E.R. 1263.
Reg. v. Leyland Justices, Ex parte Hawthorn [1979] Q.B. 283; [1979] 2 W.L.R. 28; [1979] 1 All E.R. 209, D.C.
Reg. v. National Joint Council for the Craft of Dental Technicians (Disputes Committee), Ex parte Neate [1953] 1 Q.B. 704; [1953] 2 W.L.R. 342; [1953] 1 All E.R. 327, D.C.
Rex v. Wandsworth Justices, Ex parte Read [1942] 1 K.B. 281; [1942] 1 All E.R. 56, D.C.
Wood v. Leake (1806) 12 Ves.Jun. 412.
The following additional cases were cited in argument in the Court of Appeal in Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation:
Giddings v. Giddings (1847) 10 Beav. 29.
Gouriet v. Union of Post Office Workers [1978] A.C. 435, [1977] 3 W.L.R. 300; [1977] 3 All E.R. 70, H.L.(E.).
Halfdan Grieg & Co. A/S v. Sterling Coal & Navigation Corporation [1973] Q.B. 843; [1973] 2 W.L.R. 904; [1973] 2 All E.R. 1073, C.A.
Rasu Maritima S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Government of the Republic of Indonesia intervening) (Pertamina) [1978] Q.B. 644; [1977] 3 W.L.R. 518; [1977] 3 All E.R. 324. C.A.
Actions
[1981] A.C. 909 Page 915
Kenneth Rokison Q.C. and David Grace for the plaintiffs in the first action.
[1981] A.C. 909 Page 916
- 1. The power to dismiss for want of prosecution should be exercised only where the court is satisfied either that:
- A. the default has been intentional and contumelious, e.g., disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court;
- OR B. (i) there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (ii) such delay (a) either will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action, (b) or is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.
- 2. Only in exceptional cases should an action be dismissed before the relevant limitation period has expired, at least if it is likely that the plaintiff will issue a new writ.
- 3. As Parliament has conferred a legal right on plaintiffs to institute proceedings at any time within the relevant limitation period, the action of a plaintiff in delaying for almost all or any part of that period cannot be relied upon as constituting inordinate or inexcusable delay. Nor, without more, can the defendant rely upon this delay as having caused him prejudice or as giving rise to a risk that there can be no fair trial. But such delay is far from being irrelevant. It will have an important bearing on the degree of expedition which is required of the plaintiff once the proceedings have been instituted, although again he will be entitled to the benefit of the time table provided by the Rules of the Supreme Court. Delay in the course of the proceedings which would have been acceptable if they had been begun promptly, may become inordinate and inexcusable if it occurs after a late start. Similarly, whilst the defendant must show prejudice flowing from delay in the course of the proceedings, the degree of prejudice created by any given period of delay may be greatly heightened if proceedings were not begun promptly. Contrary to legend, it was not the last straw which broke
[1981] A.C. 909 Page 917
- the camel’s back. It was the addition of that straw. The defendant must show that straws of the appropriate kinds were heaped upon his back during the course of the proceedings, but the court must have regard to the load which he was already carrying when the proceedings began.
- 4. Prejudice to the defendant can take many forms. Lapse of time may affect the ability of the defendant to marshal the evidence which would have been available to him at an earlier time. Thus witnesses may die, become untraceable or their recollections may dim. Again they may retire or leave the defendant’s employment, depriving them of the personal interest which they might otherwise have had in the proceedings and tending to reduce the enthusiasm with which they search their recollections. But prejudice is not limited to matters of recollection and evidence. The very fact of having a large unquantified claim hanging over the head of the defendant for a long period may itself be highly prejudicial.
- 5. The defendant will lose his right to have the action dismissed if he induces in the plaintiff a reasonable belief that, notwithstanding the delay, he is willing for the action to proceed and, in consequence, the plaintiff does work or incurs expense in the further prosecution of the action. But the right may be revived by further delay. As Diplock L.J. said in Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 Q.B. 229, 260, in such circumstances the defendant cannot obtain dismissal of the action “unless the plaintiff has thereafter been guilty of further unreasonable delay.” Salmon L.J. in the same case at p. 272 said that the defendant “will be precluded from relying on the previous delay by itself as a ground for dismissing the action.” This has led to an interesting discussion in the present case on whether, following acquiescence in the plaintiff’s delay, the defendant can rely upon that delay for any purpose. The extreme view is that he cannot. He must show inordinate and inexcusable delay following the acquiescence and must further show prejudice following from that delay. I do not think that this is right.
- Much will turn upon the nature of the acquiescence. For example, if the defendant by words or conduct leads the plaintiff to believe that he is content that matters shall drift on unless and until he indicates that he wishes the dispute to be brought to trial, the plaintiff will be entitled to take his time. It will not then be open to the defendant to complain of subsequent delay until he has given notice to the plaintiff that time is of the essence and thereafter further delay has occurred. But a more usual situation is one in which the defendant shows that he is prepared to overlook previous inordinate and inexcusable delay and any prejudice caused thereby, if the plaintiff will now bring the matter to trial with expedition. If the plaintiff still drags his feet, it may be said that the condition upon which the acquiescence is based has not been fulfilled and that the defendant is entitled to rely upon all delay and prejudice, whether occurring before or after the acquiescence. An alternative view is that in such circumstances the defendant must show some delay and prejudice following the aquiescence, but that the extent of delay and prejudice which will give rise to a fresh right to have the
[1981] A.C. 909 Page 918
- action dismissed will be influenced greatly by events prior to the acquiescence.
- I doubt whether it is possible to lay down any rule of general application. Acquiescence in delay is not a permanent bar to a subsequent successful application for an order dismissing the action for failure to prosecute it. Each case will have to be considered in the light of its own particular facts, the court asking itself the question: “Bearing in mind the conduct of the defendant, is it just and equitable in all the circumstances that the plaintiff shall be denied a trial of his action on its merits?”
- 6. Mere inactivity upon the part of a defendant is not to be construed as acquiescence in delay by the plaintiff. “… sleeping dogs, in the form of sleeping plaintiffs, need not be aroused by defendants from their slumbers;”: see per Roskill L.J. in Compagnie Francaise de Télévision v. Thorn Consumer Electronics Ltd. [1978] R.P.C. 735, 739. The reasons underlying this attitude by the courts were discussed by Diplock L.J. in Allen v. Sir Alfred McAlpine and Sons Ltd. [1968] 2 Q.B. 229, 257- 258. His conclusion was that it was inherent in an adversary system of litigation, which relied exclusively upon the parties to an action to take whatever procedural steps appeared to them to be expedient to advance their own case, that a defendant could, with propriety, refrain from spurring the plaintiff to proceed to trial and then, if the facts otherwise justified such a course, apply to have the action struck out for want of prosecution.
“… that in an arbitration, as in proceedings in court, and apart from any express obligation being put upon him, there is a duty upon the claimant to the exclusion of the respondent to promote the progress of the arbitration and correspondingly it is assumed, as the basis of Mr. Scott’s argument, that the respondent to the arbitration can sit by and do nothing, letting the sleeping claimant dog lie until he
[1981] A.C. 909 Page 919
is ready to wake him up with his application to dismiss for want of prosecution.”
“… there is a fundamental difference between the nature of the duties upon the parties in relation to interlocutory progress in an action on the one hand and in an arbitration on the other.”
“… nevertheless it is for both parties, having agreed that the arbitrator shall resolve their differences, to obtain from the arbitrator such interlocutory directions as are appropriate to enable the matter to be prepared for trial.”
[1981] A.C. 909 Page 920
“… the power of an arbitrator to award interest was derived from the submission to him, which impliedly gave him power to decide ‘all matters in difference’ according to the existing law of contract, exercising every right and discretionary remedy given to a court of law;…”
“For myself, I cannot see why any distinction should be drawn between the duty of an arbitrator to give effect to such statutes as the Statute of Limitations and his jurisdiction to give effect in his
[1981] A.C. 909 Page 921
discretion to the award of interest. After all, an award of interest is only a part of the damages recoverable, and, to adapt the words of Lord Salvesen in the Ramkissendass case [1929] W.N. 27 which were approved by Lord Maugham, they would read as follows: ‘Although the Law Reform (Miscellaneous Provisions) Act 1934 does not in terms apply to arbitrations, I think that in mercantile references of the kind in question it is an implied term of the contract that the arbitrator must decide the dispute according to the existing law of contract, and that every right and discretionary remedy given to a court of law can be exercised by him.’ To that there are, of course, certain well-known exceptions, such as the right to grant an injunction, which stand on a different footing; one of the reasons why an arbitrator cannot give an injunction is, of course. that he has no power to enforce it; but such an objection does not apply to the award of interest.”
[1981] A.C. 909 Page 922
“… unlimited power to grant an injunction in any case where it would be right or just to do so: and what is right or just must be decided, not by the caprice of the judge, but according to sufficient legal reasons or on settled legal principles.”
[1981] A.C. 909 Page 923
“The case does not decide that in no case is it right to restrain persons from proceeding to arbitration; there are cases in which it is quite right to do so. One of such cases came before Vice-Chancellor Wood, Maunsell v. Midland Great Western (Ireland) Railway Co., 1 H. & M. 130. It was an action by a shareholder on behalf of himself and the other shareholders in the company, against the company and its directors and another company, to restrain them from proceeding to arbitration under an agreement in respect of breaches of clauses which were ultra vires. That case, and cases of that kind, are wholly unaffected by the decision to which I am alluding. The case must not be supposed to go this length, that there is no authority whatever in the Court of Chancery to restrain proceedings before an arbitrator, but I think it goes this length, that in all cases under the Lands Clauses Act the practice is that the question of right or no right to compensation is to be tried by an action on the award, and not by an action for an injunction in the earlier stage of the proceedings. One can easily see that there are conveniences on the one side and on the other, but in my opinion the balance of convenience is in favour of declining to interfere by injunction.”
“… the High Court has no jurisdiction to issue an injunction to
[1981] A.C. 909 Page 924
restrain a party from proceeding with an arbitration in a matter beyond the agreement to refer, although such arbitration proceeding may be futile and vexatious.”
[1981] A.C. 909 Page 925
The shipbuilding dispute
[1981] A.C. 909 Page 926
[1981] A.C. 909 Page 927
[1981] A.C. 909 Page 928
Destruction of documents
Witnesses
Nature of the defence
The share deal dispute
[1981] A.C. 909 Page 929
“In the event that any dispute or controversy shall arise between the parties hereto, the same shall be resolved by arbitration in Geneva Switzerland, under the rules then prevailing of the International Chamber of Commerce. The laws of England and the laws of the State of Delaware shall be deemed equally applicable to this agreement and in the event of conflict between the two bodies of law the arbitrator shall be free to apply whichever of said laws will in his opinion most equitably secure the results contemplated herein. The decision of the arbitrator(s) shall be final and binding upon both parties and judgment thereon may be entered in any court of competent jurisdiction.”
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Solicitors: Norton Rose, Botterell & Roche; Richards, Butler & Co.; Herbert Smith & Co.; Leslie Wainstead.
Mark Saville Q.C., V. V. Veeder and Brian McClure for Raytheon Ltd.
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The powers of an arbitrator
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“A favourite ploy by those who seek delay is to ignore the timetable fixed by the arbitrator or to fail to comply with directions for the delivery of a defence or for discovery. Parties to an action in the Commercial Court who adopted similar tactics would receive short shrift, since the court would strike out the claim or counterclaim or debar the defendant from defending.”
[1981] A.C. 909 Page 938
The powers of the court
“The High Court shall have, for the purpose of and in relation to a reference, the same power of making orders in respect of – (a) security for costs; (b) discovery of documents… as it has for the purpose of and in relation to an action or matter in the High Court…”
The inherent jurisdiction of the court
[1981] A.C. 909 Page 939
“If… the court should be of opinion that they have debarred themselves from exercising those rights” – to take arbitration proceedings – “by the course of conduct which they have adopted, there arises an equity, which prevents them from prosecuting proceedings, however they might otherwise be entitled to do so…”
“Parties, however, sometimes conduct themselves in such a manner as to induce the Court of Chancery to restrain them from proceeding in a reference.”
“The court has jurisdiction to interfere in arbitration proceedings on equitable grounds where the parties have by their conduct excluded themselves from the benefit of their contract to arbitrate.”
Frustrating delay
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International Chamber of Commerce
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“In any circumstances not specifically provided for above, the Court of Arbitration and the arbitrator shall act on the basis of these rules and make their best efforts for the award to be enforceable at law.”
Conclusion
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“A favourite ploy by those who seek delay is to ignore the time table fixed by the arbitrator or to fail to comply with directions for the delivery of a defence or for discovery. Parties to an action in the Commercial Court who adopted similar tactics would receive short shrift, since the Court would strike out the claim or counterclaim or debar the defendant from defending. In cases which fall within section 12 (6) of the 1950 Act, it is possible for parties to obtain an order from the High Court and for that court to apply sanctions in the event of default. However this is not widely known, does not cover all forms of foot-dragging and involves at least two attendances on the High Court – first to obtain an order and further attendances to invoke sanctions. What is required is a power for the High Court to apply sanctions for disobedience of orders made by the arbitrator. This too is a suitable subject for the attention of an Arbitration Rules Committee.”
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“I do not think that Scrutton J. meant by those words to imply that an arbitrator under a submission by agreement was in the same position as and had all the powers of a judge. I think he meant that he had power to ascertain the facts, and, under clause (f), power to order points of claim to be delivered, and, that that being so, he must have the power also, sitting as the person to decide the questions, to allow an amendment. I do not think he meant anything more than that.”
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“In the event that any dispute or controversy shall arise between the parties hereto, the same shall be resolved by arbitration in Geneva, Switzerland, under the rules then prevailing of the International Chamber of Commerce. The laws of England and the laws of the State of Delaware shall be deemed equally applicable to this agreement and in the event of conflict between the two bodies of law the arbitrator shall be free to apply whichever of the said laws will in his opinion most equitably secure the results contemplated herein. The decision of the arbitrator(s) shall be final and binding upon both parties and judgment thereon may be entered in any court of competent jurisdiction.”
[1981] A.C. 909 Page 950
“Before completing the award, the arbitrator shall submit the same to the Court of Arbitration. The court may lay down modifications as to its form and, if need be, draw the arbitrator’s attention even to points connected with the merits of the case, but with due regard to the arbitrator’s liberty of decision. No award shall under any circumstances be issued until approved as to its form by the Court of Arbitration.”
“In any circumstances not specifically provided for above, the Court of Arbitration and the arbitrator shall act on the basis of these rules and make their best efforts for the award to be enforceable at law.”
“If the claimant was merely stalling for time, no extension would be granted; and the claimant would be warned by the I.C.C. Secretariat or the arbitrators on behalf of the Court of Arbitration that unless he remedied his dilatory conduct within a specified time the Court of Arbitration would treat his request for arbitration as withdrawn, settle the fees of the arbitrators and reimburse the deposit paid by the respondents.”
“The first of the ‘anti-frustrating’ measures provided by the rules are those which enable the preliminaries to the proceedings to go
[1981] A.C. 909 Page 951
ahead, once certain time limits have been reached. The second is that provided in article 13 where a party fails to cooperate in the definition of the precise limits of the dispute, and of the points on which the arbitrators are to rule. This, obviously, does not mean that there is any default procedure, since no party can ever be deprived of its rights to defend its interest.”
- (1) There is no power in an arbitrator to dismiss an arbitration for want of prosecution. In this I respectfully disagree with Donaldson J. and agree with Bridge J., though for reasons which I fear differ from his.
- (2) Mr. Saville’s submissions regarding the possible distinction between “institutional” and other arbitrations and especially his submission on the I.C.C. rules regarding an application to the Court of Arbitration fail.
- (3) It must follow that unless the court can interfere by injunction, as the judge has held, an aggrieved respondent in an arbitration is without remedy save himself to press the proceedings forward, which as a defendant in an action he would be under no obligation to do and which in an arbitration might well not be in his interest.
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“Parties, however, sometimes conduct themselves in such a manner as to induce the Court of Chancery to restrain them from proceeding in a reference.”
“The court has jurisdiction to interfere in arbitration proceedings on equitable grounds where the parties have by their conduct excluded themselves from the benefit of their contract to arbitrate.”
“We have nothing in this court in the nature of a writ of prohibition authorising the court to proceed against an arbitrator, and the only jurisdiction that exists to stop the proceedings before arbitration is founded upon the conduct of the parties. If, for example, defendants are seeking to enforce certain rights which they conceive they are entitled to exercise under a deed for submission to a reference, and the court should be of opinion that they have debarred themselves from exercising those rights by the course of conduct which they have adopted, there arises an equity, which prevents them from prosecuting proceedings, however they might otherwise be entitled to do so under the particular jurisdiction which is beyond the control of this court.”
[1981] A.C. 909 Page 958
“The Vice-Chancellor might have come to a correct conclusion as to the parties having by their conduct excluded themselves from the benefit of their contract to arbitrate, but his Lordship could not see his way to that conclusion until the cause was heard.”
“… it appears to me that the only limit to my power of granting an injunction is whether I can properly do so. For that is what it amounts to. In my opinion, having regard to these two Acts of Parliament, I have unlimited power to grant an injunction in any case where it would be right or just to do so: and what is right or just must be decided, not by the caprice of the judge, but according to sufficient legal reasons or on settled legal principles.”
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Solicitors: Lovell, White & King (instructed only on the appeal); Herbert Smith & Co.
Richards, Butler & Co.; Norton Rose, Botterell & Roche.
Anthony Evans Q.C. and P. G. Caldin for the appellants. The broad issue is whether a claim for damages arising under a shipbuilding contract, referred to arbitration in 1971, should now be effectively dismissed, not on the merits, but because of delay by the claimants (the present appellants) in delivering their points of claim. During the period between 1972 and 1976 there came to light further defects in the ships constructed under the contract and there was express agreement that they should be included in the arbitration. During that time the respondents never applied to the arbitrator for directions as to the conduct of the arbitration or for his finding whether there had been adverse or prejudicial delay. The House of Lords is concerned with issues of fact and law. The question also arises whether the arbitrator can dismiss a claim on the ground of delay without regard to the merits.
- (2) Does the court have the same power in relation to arbitrations as it would in the case of High Court actions? The court itself cannot make an award.
- (3) Should an injunction be ordered on the ground that the agreement to arbitrate was wrongfully repudiated by the claimant and the repudiation was accepted by the other party thus excusing him from performance of the contract of arbitration? In relation to this issue the respondents rely on breach of an implied term of the contract. There cannot be a repudiation without a breach. There cannot be a breach without a term to be broken. The respondents say that the suggested implied term is a necessary legal incident of every contract of arbitration. If so, the implied term has not been noticed for 300 years. It would be a startling development of the law producing a most unjust result.
- (4) In any event, would an injustice be produced in the present case? See Crawford v. A. E. A. Prowting Ltd. [1973] Q.B. 1.
- (5) Has an arbitrator a like power to that of a High Court judge? On this issue the Court of Appeal was in favour of the appellants. The respondents suggest that the power to dismiss is inherent in the arbitrator’s power to determine the matter, but they are seeking to have the claim dismissed, not on the merits, but as a punishment for delay.
- (6) Further factual issues arise in relation to the suggested breach of an implied term. If there was an implied term was there a breach of it?
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- (2) There is a mutual obligation to take steps to bring the matter to a conclusion, i.e. an award. It is the implied term expressed by Donaldson J. below, ante, p. 924H.
- (3) There is an equitable obligation to take such a step. Where notice must be given to make time of the essence there is a duty to apply to the arbitrator. If ultimately what is sought is the equitable relief of an injunction one must look at the overall position including the attitude of the respondent who may refrain from waking a sleeping dog in case it bites him severely.
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“… in one sense he is the antithesis of a court. A person goes to arbitration because he does not want to go to the court. Therefore
he sets up his own private judge to decide the case, but the arbitrator is not deciding it as a judge, he is deciding it as an arbitrator, and procedural rights and all matters relating to procedure are to be found in the Arbitration Act 1950.” (Now the Arbitration Acts 1950 and 1979).
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“parties to the reference, and all persons claiming through them respectively, shall, subject to any legal objection. submit to be
examined by the arbitrator or umpire, on oath or affirmation, in relation to the matters in dispute, and shall, subject as aforesaid, produce before the arbitrator or umpire all documents within their possession or power respectively which may be required or called for, and do all other things which during the proceedings on the reference the arbitrator or umpire may require.”
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“In Beddow v. Beddow [Jessel M.R.] granted an injunction to restrain an arbitrator from going on, and he uses there this language: ‘In my opinion, having regard to those two Acts of Parliament, I have unlimited power to grant an injunction in any case where it would be right or just to do so; and what is right or just must be decided, not by the caprice of the judge, but according to sufficient legal reasons or on settled legal principles.’ He means that if there is either a legal or an equitable right which is being interfered with, or which the court is called upon to protect, and the circumstances do not render it inconvenient or unadvisable to interfere, but render it convenient and advisable to interfere, the court may protect that right by giving the remedy which previously would not have been given, namely, an injunction, and in that case what he did was to interfere where an arbitrator was acting corruptly in the exercise of his jurisdiction under the reference.”
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“the High Court has no power to grant an interlocutory injunction except in protection or assertion of some legal or equitable right which it has jurisdiction to enforce by final judgment.”
[1981] A.C. 909 Page 993
“We have nothing in this court in the nature of a writ of prohibition authorising the court to proceed against an arbitrator, and the only jurisdiction that exists to stop the proceedings before arbitration is founded upon the conduct of the parties.”
“It would be revolutionary if this court were to grant an application for these writs [certiorari and prohibition] to issue to a private arbitrator. These writs issue from a superior court to an inferior court. These gentlemen are not entrusted by law with any functions at all. They have simply been given certain rights by the parties to the indenture. The proper course to take would be to move for an injunction.”
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“the High Court has no power to grant an interlocutory injunction except in protection or assertion of some legal or equitable right which it has jurisdiction to enforce by final judgment.”
[1981] A.C. 909 Page 996
“The arbitration proceedings in fact began in January 1972, over five years after the last vessel was delivered. Points of claim were served in April 1976, over 9 years after that delivery. These proceedings, which were begun a year later in April 1977 have only been heard in March 1979, over 12 years from the delivery of the last vessel and nearly 15 years from the time when the contract was concluded. Clearly some explanation is called for, not only from the parties, but also from the court.”
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Solicitors: Richards, Butler & Co.; Norton Rose Botterell & Roche.