[Inherent Jurisdiction of the Court] Bremer Vuklan Schiffbau und Maschinenfabrik v South India Shipping Corp

  • 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
The plaintiffs were respondents to an arbitration commenced by the defendants, in which they claimed to have been seriously prejudiced by the inordinate and inexcusable delay of the defendants in prosecuting the arbitration. The plaintiffs issued a writ seeking injunctions restraining the defendants from continuing with the arbitration and a declaration that the arbitrator had power to strike out the defendants’ claims for want of prosecution. The judge found that delay in prosecuting the arbitrations by the defendants was such that had their claim been the subject matter of litigation the court would have dismissed them for want of prosecution, and he granted the injunction sought on the ground that such conduct constituted a repudiatory breach of the agreement to submit the dispute to arbitration. The judge further held that, unless the parties to an arbitration agreed to curtail the arbitrator’s jurisdiction, an arbitrator had the same power as the court to dismiss a claim for want of prosecution.

The Court of Appeal, dismissing the defendants’ appeal, held that the claimants in an arbitration were under a duty not to delay the presentation of their claim so as to frustrate the purpose of the arbitration, that the plaintiffs were entitled to treat the defendants’ conduct as a repudiation of the arbitration agreement and, as they had elected to rescind it, the court should grant the injunction.

On appeal: –

[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).

Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 Q.B. 229, C.A. explained.

Decision of the Court of Appeal (post, p. 933E-F); [1980] 2 W.L.R. 905; [1980] 1 All E.R. 420 reversed.

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 TribunalEx 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

By a writ dated April 25, 1977, the plaintiffs in the first action, Bremer Vulkan Schiffbau und Maschinenfabrik (a body corporate), sought an

[1981] A.C. 909 Page 915

injunction restraining the defendants, South India Shipping Corporation Ltd., by themselves or their agents from proceeding with, pursuing or taking any further step in a reference to arbitration, wherein the defendants were claimants and the plaintiffs were respondents, commenced pursuant to an arbitration clause in a contract between the parties dated August 6, 1964. Alternatively, they sought a declaration that the arbitrator had power to make and issue a final award in the reference dismissing the claim on the grounds only that the defendants had failed to prosecute their claims in the reference with diligence and had been guilty of gross and inexcusable delay causing serious prejudice to the plaintiffs and/or that the dispute could not fairly be tried at the likely time of hearing.

In the second action, by a writ dated December 1, 1978, the plaintiffs, Newton Gregg, Lucile Gregg and Malcolm Kelly, sought an injunction against the continuance of an arbitration commenced by the defendants, Raytheon Ltd., against the plaintiffs and which concerned disputes arising out of a contract between the plaintiffs and the defendants dated June 2, 1970, by reason of the defendants’ inordinate and inexcusable delay in prosecuting the arbitration, and for a declaration that the arbitrators in the arbitration had power to strike out the defendants’ claim therein for want of prosecution.

The facts are stated in the judgment.



Kenneth Rokison Q.C. and David Grace for the plaintiffs in the first action.

Solicitors: Norton Rose, Botterell & Roche; Richards, Butler & Co.; Herbert Smith & Co.; Leslie Wainstead.

[Reported by MRS. CLARE BARSBY, Barrister-at-Law]

The defendants appealed to the Court of Appeal.

The second appeal was heard first.

Mark Saville Q.C., V. V. Veeder and Brian McClure for Raytheon Ltd.

ROSKILL L.J. These two appeals from decisions of Donaldson J. dated April 10, 1979, raise, as the judge said at the outset of his judgment,

[1981] A.C. 909 Page 942

ante, p. 915E-F, questions of great importance relating to the conduct of arbitrations in this country and especially in relation to the conduct of those arbitrations to which section 5 of the Arbitration Act 1979 will not apply. Before us the appeal in Gregg v. Raytheon Ltd. was argued before the appeal in Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd., though before the judge the cases were apparently heard in the reverse order. I shall call the first appeal “the Raytheon appeal” and the second “the Bremer appeal.” In each action the judge has held that the appellants, who were the defendants in the two actions and the respective claimants in the two arbitrations had been guilty of inordinate and inexcusable delay which had caused such prejudice to the plaintiffs in each of the two actions, who were the respective respondents in the two arbitrations and of course in these appeals, that had the appellants commenced these proceedings in the High Court by way of action instead of by arbitration in accordance with the arbitration clauses in the respective agreements under which the disputes concerned arose, such proceedings would have been dismissed by the High Court for want of prosecution in accordance with the principles laid down in Birkett v. James [1978] A.C. 297 and Allen v. Sir Alfred McAlpine & Sons Ltd[1968] 2 Q.B. 229. The judge summarised those principles in six succinct paragraphs, ante, pp. 916 – 918. Subject to what I say in the next sentences on the question of acquiescence – see paragraph 5 of the judge’s summary – I accept as correct and gratefully adopt the judge’s summary without repetition. Mr. Butler argued that acquiescence was an absolute bar and that once there was acquiescence in delay, the existence of that delay ceased to be relevant. Only further delay is relevant. Since I take the view, as did the judge, that there was no acquiescence in the Bremer case, this point does not arise for decision. But, as at present advised, I think Mr. Butler’s argument is inconsistent with what Salmon L.J. said in Allen v. Sir Alfred McAlpine & Sons Ltd[1968] 2 Q.B. 229, 232.

The question for decision before him was, and in this court is, whether those principles have any application to the conduct of arbitrations in this country. Until the present cases no court has held that they have. But the judge has held, first, that an arbitrator (I include an umpire in that word) has power to dismiss for want of prosecution and to make an award to that effect: ante, p. 921D-F. He has further held, at pp. 482-483, that in such a case the courts have power to intervene and prevent a dilatory claimant in an arbitration from further proceeding with his claim by granting an injunction restraining him from so doing. The judge based this conclusion upon the view that unjustified delay by a claimant struck at the root of an agreement to arbitrate which a respondent might treat as repudiatory conduct and accept as such, thus bringing to an end the agreement to arbitrate, and enabling him to obtain an injunction and also, where appropriate, damages, e.g. for wasted expenditure.

The judge’s first conclusion that an arbitrator had power to dismiss for want of prosecution was contrary to an earlier decision of Bridge J. in Crawford v. A. E. A. Prowting Ltd[1973] Q.B. 1, where he held that

[1981] A.C. 909 Page 943

there was no such jurisdiction vested in an arbitrator. The argument that the court had power in effect to achieve the same result by an injunction was not and indeed could not have been advanced in that case since the matter came before Bridge J. by way of case stated by an arbitrator who had been invited to dismiss the claimant’s claim in that arbitration for want of prosecution.

Before us Mr. Saville, for the appellants in the Raytheon appeal, argued as almost his last submission that the judge had reached the wrong conclusion upon the facts of that case. Mr. Butler, for the appellants in the Bremer appeal, devoted virtually the whole of his argument to a like submission and was content for the rest to adopt (with one exception) Mr. Saville’s submissions on the other issues so far as relevant to the Bremer appeal. In neither appeal did this court find it necessary to call upon counsel for the respondents to support the judge’s conclusions upon the facts of the case for, notwithstanding the arguments of counsel for each of the appellants, I think the judge’s conclusions upon the facts in each case are quite unassailable. For my part, I would in each case have unhesitatingly reached the same conclusion as did Donaldson J. But even if I had felt any doubt as to the correctness of either or both of his conclusions, which I do not, I would not have been willing to interfere with his exercise of his discretion on a matter of this kind, assuming, of course, he was right in applying to arbitrations the same principle as is now clearly established to apply to actions in the High Court.

It follows that for the first time this court is asked to decide, first, whether arbitrators have power to dismiss for want of prosecution in such circumstances and make an award to that effect, and, secondly, whether or not they have such power, whether the court has power to interfere in such circumstances by injunction. It is convenient to mention at this juncture that since the instant decisions, Lloyd J. in The Splendid Sun [1980] 1 Lloyd’s Rep. 333, granted an injunction restraining claimants in an arbitration from proceeding with their claim. The question whether arbitrators had power to strike out did not arise for decision. The delays in that case were even worse than in the instant cases since the arbitration in question had been begun in 1969 and no steps had been taken thereafter for over eight years. Lloyd J. stated that, as is the fact, until the instant cases no court had granted an injunction such as Donaldson J. granted.

But following Donaldson J.’s decisions Lloyd J. granted such an injunction, resting his decision upon the submission that the delay in question was such as would frustrate the agreement to arbitrate, a submission apparently not advanced before or considered by Donaldson J. As will later emerge, I think Lloyd J. was right to rest his decision upon this foundation rather than upon that enunciated on this branch of the case by Donaldson J. if, which still remains to be considered, the court has any power to interfere by injunction in the circumstances under consideration.

It should be mentioned that neither Mr. Waller nor Mr. Rokison, for the respective respondents, who as the plaintiffs obtained injunctions from

[1981] A.C. 909 Page 944

Donaldson J., found it easy to support that part of the judge’s judgment which held that arbitrators had power to dismiss for want of prosecution and to make an award to that effect. Mr. Waller dealt with this question only towards the end of many submissions, while Mr. Rokison, whose help we had invited in order to make sure that no point favourable to the judge’s view had inadvertently been overlooked, recognised his difficulty in supporting this part of the judgment.

It is strange that if arbitrators have this power it has never been invoked, at any rate in such a way as to obtain a decision of the court upon its existence. The inadequacy of the powers of arbitrators to deal with delays – often deliberate delays – has long been a matter of complaint. Many of the proposals of the powerful committee over which MacKinnon J. presided in 1927 were directed towards strengthening the Arbitration Act 1889 so as to avoid delays which by 1927 were already notorious. Those of the proposals which were ultimately adopted found their place upon the statute book in the Arbitration Act 1934. As recently as 1978 the Commercial Court Committee, over which Donaldson J. himself presided, in a Report on Arbitration (1978) (Cmnd. 7284) bewailed the constant delay and discussed the “favourite ploy” by those seeking delay. Paragraph 57, which bears the rubric “Sanctions in case of delay or failure to comply with the arbitrator’s directions” merits quotation in full:

“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.”

That report was in part responsible for the passing of the Arbitration Act 1979, including section 5. But in neither the report of MacKinnon J.’s committee nor in this report of the Commercial Court Committee does one find any hint or suggestion that arbitrators have so readily to hand this lethal weapon which the judge in his judicial capacity has held to exist.

On the other hand, it must be said that before Allen v. Sir Alfred McAlpine & Sons Ltd[1968] 2 Q.B. 229 and the other related cases it had not readily occurred to practitioners that this weapon of striking out was available to dispose of personal injury and other actions of seemingly indefinite duration, and perhaps it is not surprising that the possibility of

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using this weapon had not occurred to those engaged in arbitrations rather than litigation. Nonetheless complaints of delays in arbitration have been of as long – or longer – standing as complaints of the law’s delays, and it has at long last in 1979 been thought necessary to deal with this problem by legislation.

In my view, it is necessary to consider the correctness of the judge’s view both as a matter of history and of principle. Until well into the last century the courts looked askance at arbitrations. The procedure was suspect as tending to oust the jurisdiction of the courts, and indeed one finds traces of this attitude in decided cases well into this century notwithstanding the passing, first, of the Common Law Procedure Act 1854 and, secondly, of the Arbitration Act 1889.

As Lord Moulton pointed out in Bristol Corporation v. John Aird & Co[1913] A.C. 241, 256, it was not until the Common Law Procedure Act 1854 that Parliament gave to the courts the limited power of stay which section 11 of that statute accorded in cases where the parties had agreed that existing or future differences should be referred to arbitration provided, of course, the other conditions in that section were also satisfied. Until then if one of the parties to a submission refused to proceed to arbitration the other was left to a useless remedy in an action for damages: see also in this connection the judgment of this court in In re Smith & Service and Nelson & Sons(1890) 25 Q.B.D. 545, where it was held that the only remedy for unilateral revocation of a submission to arbitration before section 1 of the Arbitration Act 1889 was enacted lay in an action for damages for breach of contract. But the Act of 1854 is singularly silent as to the powers as distinct from the duties of arbitrators – for example, section 15 provided that an arbitrator should, save in circumstances for which the section made provision, make his award within three months of his appointment. Those and other sections of the Act of 1854 dealing with arbitrations were repealed by Schedule 2 to the Arbitration Act 1889. That statute in section 4 re-enacted in a somewhat different form section 11 of the Act of 1854. By section 2 of and Schedule 1 to the Act of 1889 nine provisions respectively lettered a to i were ordered to be implied into submissions to arbitration unless the parties had otherwise provided. The former section 15 found new and extended life in paragraphs c, d and e of that schedule, provisions which were castigated by the MacKinnon Committee as of no practical value: see paragraph 5 of that report. It is to be observed that paragraph f created an implied obligation on parties to give evidence and also discovery, but notwithstanding that provision no sanctions were provided for any failure so to do. Curiously enough, Schedule 1 contained no express power to order pleadings or indeed to allow amendments to pleadings, nor was any power given to arbitrators to order a claimant to give security for costs in cases where in an action a court would order such security to be given.

It is difficult to think that if between 1889 and 1934, when some of the recommendations of the MacKinnon Committee took effect in the Arbitration Act 1934, anyone had been bold enough to assert that an arbitrator had power to dismiss an arbitration for want of prosecution and to make an award to that effect without more ado, such a submission

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would have been favourably received in any court of law. That that is so is supported, I think, by two decisions in this period, especially the second, to neither of which was the judge referred when this matter was before him. In In re Crighton and Law Car and General Insurance Corporation Ltd[1910] 2 K.B. 738 a Divisional Court which included Scrutton J. held that an arbitrator had both inherent power and also power under paragraph f of Schedule 1 to the Act of 1889 to order pleadings and to allow or to refuse amendments to them. No doubt it was this decision which made it unnecessary for the MacKinnon Committee to recommend that this apparent gap in Schedule 1 be filled by legislation. More important, in In re Unione Stearinerie Lanza and Weiner [1917] 2 K.B. 558, the Divisional Court held that an arbitrator had no power to order security for costs. That court declined to extend Scrutton J.’s reasoning in In re Crighton[1910] 2 K.B. 738 to the length necessary to enable security for costs to be ordered by an arbitrator. Viscount Reading C.J. said, at p. 561:

“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.”

This decision led to the recommendation of the MacKinnon Committee that the court, not be it noted arbitrators, should be given power, inter alia, to order security for costs, a provision subsequently enacted in the Act of 1934 and now finding its place in section 12 (6) (a) of the Arbitration Act 1950.

It was faintly suggested that we should overrule the Unione case [1917] 2 K.B. 558. It would be completely wrong for us to do so even if I had any doubts (which I have not) as to its correctness. When a decision has been accepted for over 60 years and its consequences remedied by statute, though not so as to give arbitrators power to order security for costs, it would indeed be strange for the Court of Appeal to hold at this late stage that this latter power had always existed.

I cannot but think that, if the judge had been referred to this decision and in particular to the passage I have just quoted from the judgment of Viscount Reading C.J., he would not have reached the conclusion that he did, namely that parties by their agreement to arbitrate impliedly clothed the arbitration tribunal with jurisdiction to give effect to their rights and remedies to the same extent and in the same manner as a court, subject only to certain well recognised exceptions: see ante, p. 921E-F

The judge relied on the decision of this court in Chandris v. Isbrandtsen-Moller Co. Inc[1951] 1 K.B. 240 as supporting his view. With great respect, I do not think that that decision goes so far as the judge thought. An arbitrator may award interest on damages in a proper case for the

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reasons given by this court in the Chandris case. But that is not to say, as the judge sought to say, that an arbitrator has in all the circumstances all the powers of the court, subject only to the exceptions which he mentioned. I venture to think that the members of this court who decided the Chandris case would have been surprised to learn that they had impliedly held that an arbitrator had power to dismiss for want of prosecution and had also impliedly reversed the decision in the Unione case [1917] 2 K.B. 558.

So far I have dealt with the question only by considering the history of the relationship between the courts and arbitrators and what I conceive to be the principle which has to be applied in these cases. But we were referred to an ill-reported case: Wilson, Sons & Co. v. Conde d’Eu Railway Co. (1887) 51 J.P. 230. That was a decision of the Divisional Court (Day and Wills JJ.) in which it appears to have been held that an arbitrator, seemingly vested with all the powers of a nisi prius judge, nonetheless had no power to strike out the claims that were before him, but that he must adjudicate upon them: see the brief report of the successful argument of the then Attorney-General and also of the judgment of the court. That decision was before the Act of 1889, but for what it is worth supports the conclusion at which I have independently arrived.

One reason which Bridge J. gave in the Crawford case [1973] Q.B. 1 for holding that there was no power in an arbitrator to dismiss for want of prosecution was what he suggested was the different position of a respondent in an arbitration from that of a defendant in an action. He described the position of a defendant in an action as “relatively privileged,” because such a defendant could sit back, do nothing and then apply to dismiss the action against him for want of prosecution. In the case of an arbitration the judge thought there was an obligation on both parties to enable the matter to be prepared for trial: see Donaldson J. ante, pp. 918 – 920 disagreed with this view, suggesting that save in what he called “look sniff” arbitrations, arbitrations and actions were indistinguishable in principle in their adversarial characteristics.

Mr. Saville submitted that on this issue Donaldson J. was wrong and Bridge J. was right and that arbitrations were inquisitorial rather than adversarial in their character. He relied upon what he claimed to be the duty of an arbitrator to make his award promptly and referred to the penalties for which provision is made in section 13 of the Arbitration Act 1950 for the removal of an arbitrator from office and deprivation of remuneration. I think, with respect, this submission is without foundation. The section is dealing with an arbitrator who will not go forward when everyone wishes him to do so. But an arbitrator who insisted on proceeding against the wishes of the parties and attempted to make an award when they were not ready to proceed might at least in some cases find himself accused of misconduct.

With great respect to any view of Bridge J., I find it difficult to distinguish between litigation and arbitrations on the grounds which he suggested. Both, to my mind, are essentially adversarial. Even in a case where each party has appointed an arbitrator and the arbitrators meet and agree upon their award before appointing an umpire I think the

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proceedings can properly be characterised as adversarial. If the commercial judge tries an action in the Commercial Court, it is by concession an adversarial process. If he is invited and agrees to hear precisely the same dispute as an arbitrator or umpire under section 4 of the Administration of Justice Act 1970, I find it difficult to see how or why the whole character and quality of the proceedings suddenly changes. Indeed an arbitrator or umpire, who in the absence of express agreement that he should do so, attempting to conduct an arbitration along inquisitorial lines might expose himself to criticism and possible removal.

On this point, therefore, I respectfully prefer the reasoning of Donaldson J. to that of Bridge J. I take the view that almost all arbitration proceedings and certainly the instant arbitration proceedings are essentially adversarial in their character. As will appear later in this judgment, I do not think that a respondent in an arbitration is in an in any way different position from a defendant in an action. Neither is under any obligation to stir his adversary into action. The dictum which Donaldson J. quoted, at p. 476, about sleeping dogs seems to me to apply equally to sleeping claimants in an arbitration as to sleeping plaintiffs in an action.

If Donaldson J.’s view that arbitrators do, with certain exceptions, possess all the powers of a court, were right, one wonders why the express powers listed in section 12 (6) of the Act of 1950 were necessary, since an arbitrator would already have possessed the greater number of these powers pursuant to some inherent powers vested in him.

In support of the Raytheon appeal Mr. Saville advanced two further arguments, neither of which, he frankly admitted, had been advanced by counsel appearing for the claimants in that case before the judge.

The first was that even if the criticism of the first part of the judge’s judgment were well-founded, his conclusion could be supported on the ground that the position was different in the case of what Mr. Saville called an “institutional” arbitration, by which phrase I understood him to mean an arbitration conducted in accordance with the rules of and under the supervision of some organisation of arbitration such as, in the Raytheon appeal, the International Chamber of Commerce (“I.C.C.”), or perhaps the Institute of Arbitrators in this country. The second was that even if the three arbitrators appointed by the parties under the I.C.C. rules had no jurisdiction to dismiss for want of prosecution, nonetheless under those rules the respondents’ remedy was to apply to the I.C.C. Court of Arbitration, a body for which their rules make provision, for an appropriate order which Mr. Saville claimed that court could make under the rules. He relied in this connection on an affidavit by Dr. Eisemann, a former Secretary-General of the Court of Arbitration of the I.C.C. To this affidavit the respondents replied with an affidavit from Dr. Mann, whose experience in the field of international arbitration requires no endorsement from this court. We admitted these affidavits notwithstanding formal objection from Mr. Waller.

The arbitration clause in the contract concerned in the Raytheon appeal, which was dated June 2, 1970, is found in clause 11 of that contract and reads:

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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.”

Thus the originally intended place of arbitration was Geneva. But this was later changed to London by agreement between the parties and with the consent of the I.C.C. It was argued that this change cannot have been intended to import into the agreement to arbitrate all the striking out procedure applicable to English High Court actions. Since I take the view that by English law an arbitrator has no such power, the interesting discussion we had on the extent of the applicability of the lex fori to arbitrations which is elaborated in Dr. Mann’s affidavit and also in an article he wrote “Lex Facit Arbitrum” in a presentation book of essays, Liber Amicorum, requires no further consideration.

But I find it difficult to accept Mr. Saville’s suggested distinction between institutional and non-institutional arbitration, for which he claimed some support in a textbook entitled Handbook of Institutional Arbitration in International Trade (1977). No doubt institutions concerned with furthering arbitration as a means of disposal of disputes seek emancipation from control of the courts of the countries where such arbitrations take place, perhaps in the belief that such freedom facilitates expedition of decision. Dr. Mann’s affidavit shows the limited success of such attempts and this court recently had to consider similar problems in relation to I.C.C. arbitrations in Dalmia Dairy Industries Ltd. v. National Bank of Pakistan [1978] 2 Lloyd’s Rep. 223, to which frequent reference was made during the arguments. For my part, I am unable to accept that there can be any logical distinction between arbitrations of one kind and the other according to whether some label such as “institutional” can be attached. In each case the relevant question is – on what terms and conditions have the parties agreed to go to arbitration? That question must be answered without regard to any attachment of suggested labels.

Ultimately Mr. Saville did not argue that the three named arbitrators had power to dismiss for want of prosecution. But he contended that the respondents had pursued the wrong remedy and that to achieve their objective they should have applied not to the arbitrators nor to the courts of this country, but to the I.C.C. Court of Arbitration. To some extent this submission overlaps with the question whether or not the court has power to grant and, if it has power, should grant an injunction, for clearly if an alternative remedy existed an English court would be less willing to grant a discretionary remedy such as an injunction.

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I therefore turn to the I.C.C. rules. We are concerned with the 1955 edition, which were those in force at the date of the relevant contract. I think it is clear that for the purpose of the present proceedings we must interpret those rules in accordance with English principles of construction. There is no evidence that the law of Delaware is any different from our own. Section B (1) of those rules deals with the Court of Arbitration and arbitrators and articles 6 and 7 set out the method of appointment of and the functions of the Court of Arbitration. Article 13 gives further powers to the Court of Arbitration. Article 26 reads:

“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.”

Article 31, much relied upon by Mr. Saville, reads:

“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.”

In addition I should refer to articles 1, 2, 3 and 4 of the statutes of the Court of Arbitration.

In paragraph 40 of his affidavit Dr. Eisemann claims that I.C.C. arbitrations are more expeditious than others. I do not stop to consider whether this assertion would be universally accepted. Paragraph 37 of his affidavit states:

“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.”

It is true that Dr. Mann does not contradict this statement. Accepting therefore for present purposes that this is what does or may happen in practice, but construing the rules as a matter of English law, I feel bound to say that I see nothing in those rules which justifies such a course of action as a matter of contract. I derive some comfort for this conclusion from an article in the Handbook of Institutional Arbitration in International Trade, to which I have already referred. In a passage dealing with I.C.C. arbitration under the most recent rules (we were told that article 13 of the most recent rules is virtually identical with article 19 of the rules with which we are concerned), the writer says, at p. 24:

“The first of the ‘anti-frustrating’ measures provided by the rules are those which enable the preliminaries to the proceedings to go

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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.”

This passage hardly supports Mr. Saville’s submissions or suggests that Dr. Eisemann’s paragraph 37 is justified by the rules, whatever may happen in practice. Moreover, to my mind paragraph 37 suggests something more akin to action of an administrative nature than to action with any contractual force or effect behind it. I am of the clear view, therefore, that the respondents could not have found any satisfactory remedy by application to the Court of Arbitration.

Thus far I have reached these conclusions:

  1.  (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.
  1.  (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.
  1.  (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.
Underlying the view of the judge that the court had power to interfere by injunction was the undoubted fact that the relationship between the parties to an arbitration agreement was a contractual one. An agreement to arbitrate might, like any other contract, be broken or become incapable of performance. If the particular breach in question took the form of repudiatory conduct, then there was no difference in principle between conduct evincing an intention not to perform an agreement to arbitrate and such conduct evincing an intention not to perform any other type of contract. Such conduct could be accepted by the innocent party as a repudiation and a claim to rescind would follow coupled with a claim for damages and an injunction where either or both of these were the appropriate remedies. Such an injunction could then be granted in support of the innocent party’s contractual right to cancel.

The judge further took the view that terms could be implied into an agreement to arbitrate as into any other contract. In addition to the implication, which I have for the reasons already given felt unable to accept, that parties to an arbitration impliedly clothe the arbitrators with jurisdiction to give effect to their rights and remedies to the same extent and in the same manner as a court (ante, p. 921), the judge also held, at p. 924, that it was “implicit” in – by which he meant an implied term of – an agreement to arbitrate that each party would use his reasonable endeavours to bring the matter to a speedy conclusion. In the light of the judge’s findings of fact, he held that the claimants in each case had

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been guilty of repudiatory conduct by failing to proceed with reasonable despatch, repudiatory conduct which each of the respondents was entitled to accept as bringing the agreement to arbitrate to an end.

Mr. Saville was quick to attack the implied term theory both in principle and in its application to the facts of these cases. In principle, he said, there was no need to imply any such term as being both reasonable and necessary in order to make the agreement to arbitrate work. The Arbitration Act 1950, like its predecessors, in the absence of any contrary agreement, imported by statute certain implied terms into a submission to arbitration, for example, section 12 (1). There was, therefore, no need in order to make the agreement to arbitrate work to imply any other terms and no justification for so doing. Moreover, whereas in the Raytheon appeal the complaint was of delay in giving discovery, the respondents had ready to hand a statutory remedy by application to the High Court under section 12 (6) (b), a submission much relied upon by Mr. Saville in his argument on the facts that the respondents were responsible for much, if not all, of the delay by failing to pursue their statutory rights under that paragraph, as indeed they had indicated in correspondence at one time that they intended to do.

Mr. Saville also contended that the judge’s implied term imposed an equal obligation on both parties to proceed with due diligence. Whatever might be said against the claimants in this connection, the respondents had equally done nothing and therefore were equally in breach of their obligation vis-à-vis the claimants, as the claimants were to the respondents, if the judge’s implied term were correctly imported into the agreement to arbitrate. Mr. Saville further argued that if a respondent in an arbitration did nothing it was for the arbitration tribunal itself to get the arbitration moving and that if a respondent did nothing to galvanise that tribunal into action, the respondent was without more ado acquiescing in the delay.

Mr. Butler, however, did not adopt this part of Mr. Saville’s argument, contenting himself with the submission that there was no duty on either party or on the arbitration tribunal to move an arbitration forward. In addition Mr. Saville argued that the respondents’ submission and the judge’s view that an agreement to arbitrate could be repudiated for breach of the implied term which the judge held to exist involved that the innocent party was purporting to revoke his submission to arbitration which, Mr. Saville argued, he was not entitled to do without the leave of the court in view of the provisions of section I of the Arbitration Act 1950. This further argument had not been advanced before the judge and we therefore do not know whether, had he thought this submission well founded, he would have granted the necessary leave under that section. Both respondents before us sought and obtained leave to amend their writs to seek such leave if it should prove necessary. For my part, in the light of the judge’s reasoning I feel little doubt that he would, if he had thought it necessary so to do, have granted leave to revoke.

The submission that a term such as that which the judge held must be implied into this agreement to arbitrate was in the court below based

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upon what in lawyers’ shorthand is known as the “Moorcock principles.” Those principles were recently restated by the majority of this court in Liverpool City Council v. Irwin [1976] Q.B. 319, in terms later unanimously approved by the House of Lords [1977] A.C. 239. Mr. Saville devoted the greater part of his attack upon the implication made by the judge to showing that it was neither reasonable nor necessary to imply such a term so as to make this agreement to arbitrate work. This is, however, not the only basis upon which a court will imply a term into a contract. As their Lordships held in Liverpool City Council v. Irwin, there are certain classes of contract to which a court will, in the absence of agreement to the contrary, attach an implied term as a matter of law. Thus in that case their Lordships held that the particular implied term there in question attached to the contract concerned, which was a contract for the letting of a flat, as a legal incident of that contract: see per Lord Wilberforce at pp. 254-255 and per Lord Edmund-Davies at pp. 266-267. There are plenty of other examples of the operation of this principle in the law of contract. For example, sections 13 and 14 of the Sale of Goods Act 1893, and section 39 of the Marine Insurance Act 1906 attach certain implied conditions to contracts of the particular class with which those two statutes are respectively concerned, and each of those statutory provisions merely reproduces the relevant antecedent common law.

Sale of goods law, landlord and tenant law and marine insurance law are all part of our general law of contract. To each as to other types of contract the law will or may attach certain particular implied terms as legal incidents of the relevant contract. I see no reason in principle why contracts to refer disputes to arbitration should not also be treated as part of our general law of contract, be governed by the same legal principles and have attached to them where appropriate one or more implied terms as incidents of those particular contracts, those implied terms if necessary being in addition to those other implied terms for which the relevant legislation makes statutory provision.

Mr. Saville’s attack upon the implication into the agreement to arbitrate which the judge held to be correct has, to my mind, considerable force. Mr. Waller found difficulty in supporting the judge’s implied term. Adroitly he rested this part of his submission on a different basis. Founding himself on the decision in Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401, he argued that following the reasoning of the House of Lords in Liverpool City Council v. Irwin [1977] A.C. 239there attached to this agreement to arbitrate and to other similar agreements as a legal incident of such agreements a duty not to be guilty of such delay as would frustrate the whole purpose of the arbitration in question. In the Citati case the delay which was ultimately held to be frustrating delay of a repudiatory character was the charterer’s failure to load the ship within such time as did not wholly destroy the commercial purpose of the adventure so that the shipowner thereupon became entitled to throw up the charterparty by reason of the charterer’s repudiatory conduct.

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By parity of reasoning Mr. Waller argued that a claimant in an arbitration who, like a plaintiff in an action, has the conduct of the case and who is guilty of prejudicial delay of such a kind as would in an action lead to that action being struck out by the court was equally guilty of frustrating delay of a repudiatory character, thus enabling the innocent party, the respondents in the Raytheonappeal, to rescind the agreement to arbitrate.

This is indeed a formidable submission. As I have already said, agreements to arbitrate are but part of the general law of contract. The Citati doctrine [1975] 2 Q.B. 401 is of general application. It is not limited to contracts of particular types. This court recently applied that same principle in Unitramp v. Garnac Grain Co. Inc. [1979] 1 Lloyd’s Rep. 212, a decision against which I understand their Lordships’ House has recently refused leave to appeal.

Mr. Saville sought to meet this argument by submitting that the Arbitration Act 1950 was a complete code and that, therefore, there was no justification for attaching by implication to any agreement to arbitrate any further legal obligations beyond those for which the statute provided, such an agreement to arbitrate was not inefficacious or futile without making the implication, especially as the aggrieved party could always invoke his statutory remedies and in particular in the Raytheon appeal a remedy under section 12 (6) from the court.

The short answer to this submission seems to me to lie in the fact that it presupposes, contrary to my view, that a respondent in an arbitration is under some obligation to galvanise a dilatory claimant into action, e.g. by an appropriate application to the High Court under section 12 (6) of the Act of 1950. In my view, for the reasons already given, a respondent is under no such obligation. He can sit back and wait. If this conclusion be right, I see little or no difficulty in attaching to an agreement to arbitrate as a legal incident of such a contract an implied obligation in point of law upon the claimant who, like a plaintiff in the action, has the conduct of the case not to be guilty of such dilatory conduct in the prosecution of his claim as will defeat the whole purpose of the agreement to arbitrate by making a fair hearing before the arbitration tribunal impossible because of the lapse of time involved. This is merely another way of saying that a claimant must in such circumstances not be guilty of frustrating delay of a repudiatory character and it is difficult to think of a better example of frustrating delay of a repudiatory character than delay of such kind as would in an action cause the High Court to strike out the action in its entirety for want of prosecution.

Thus far I accept the judge’s view that a term can properly be implied into the agreement to arbitrate which reflects what I regard as the obligation of a claimant not to delay the prosecution of his claim. But I venture to think that the correct basis for implying such a term is that which I have just stated rather than that which the judge adopted and that the correct implication is also that just stated rather than that suggested by the judge.

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In this connection it should be mentioned, as Mr. Rokison told us, that the suggestion of implying a term originally emanated from the judge during the hearing of the Bremer action and not from counsel arguing that case. Mr. Rokison frankly admitted to us that he displayed little enthusiasm for the suggestion when the judge first made it and that the judge thereupon appeared to drop the suggestion – we have been shown the relevant extract from the transcript which contains the interchange between the judge and Mr. Rokison on this topic. But during the subsequent hearing of the Raytheon case, the judge seemingly revived the idea and ultimately it has formed the basis of this part of his judgment.

Mr. Saville also argued that before the innocent party can treat delay of a repudiatory character as giving him the right to rescind the contract, he must give the guilty party notice making time of the essence. No doubt in certain classes of contract, for example where an innocent party has allowed a guilty party to think that a specific obligation as to timeous performance will not be insisted upon, such a notice making time of the essence would be required and a failure to comply with that notice established before rescission could successfully be sought for non-compliance. But, in my judgment, the present is not such a case. The whole basis of the reasoning in the Citati case [1957] 2 Q.B 401 is inconsistent with this submission. The guilty party remains under a continuing obligation to prosecute his claim and there will come a time, not always very easy to determine in point of fact, when the innocent party can say to the guilty party “enough and no more” and rescind without giving the guilty party any further locus penitentiae. In my view, therefore, this further submission fails.

As to the submission on section I of the Arbitration Act 1950, the short answer is that the rescission with which we are concerned is of the agreement to arbitrate, and not of the appointment of the arbitrators. It is, however, clear that logically the latter appointments must disappear as an inevitable consequence of the rescission of the agreement to arbitrate. Section 1 is only concerned with revocation of the appointment of an arbitrator and not with an agreement to arbitrate. I do not think the dictum of Denning L.J. in Frota Nacional de Petroleiros v. Skibsaktieselskapet Thorsholm [1957] 1 Lloyd’s Rep. 1, 5 is any authority for the contrary view. That was a case where the arbitration in question was continuing. There was no suggestion in that case of a repudiation of the agreement to arbitrate. But, even if I be wrong in the views I have just expressed and leave is required under section 1, I would unhesitatingly give such leave, as I feel reasonably certain that the judge would have done had this issue been raised before him. Finally, on this branch of the case, Mr. Saville argued that there was no clear acceptance of the repudiation by the respondents for he contended that the writ treated the arbitrators as still having power to strike out and that therefore the declaration sought in the writ affirmed the agreement to arbitrate. I do not think this submission is sound – at best it is certainly highly technical. The writ claims an injunction on the footing that the agreement to arbitrate was not subsisting. The claim for a declaration was really no

[1981] A.C. 909 Page 956

more than a claim for an alternative remedy, namely, striking out by the arbitrators consequently upon the rescission of the agreement to arbitrate.

I now turn to the question whether the court has power to grant an injunction restraining the claimants from proceeding with the arbitrations. I approach this question on the basis that the respondents have established a right to rescind owing to frustrating delay which the respondents have exercised. Mr. Saville argued that before section 5 of the Arbitration Act 1979 was enacted the court had no such power.

It is true that such a power, if it exists, has never, at least in recent times, been exercised to restrain the prosecution of an arbitration in support of a claim that the arbitration agreement has been rescinded by repudiatory conduct of one of the parties to that agreement. But if Mr. Saville’s main submission be right and I am right in disagreeing with the judge’s views that the arbitration tribunal itself has no power to strike out, it follows that there is no power anywhere to prevent a dilatory claimant guilty of frustrating delay from ultimately proceeding with his claim notwithstanding the impossibility of the issues between him and the respondent being fairly tried. This of course gives the claimant a grossly unfair advantage.

Mr. Saville argued that the cases where injunctions had been granted in connection with the prosecution of arbitrations fell into two classes, first, misconduct of the arbitrators and, secondly, where there was a dispute whether a particular party was or was not a party to the agreement to arbitrate. He claimed that the respondents by their submissions were trying to add a third class to these two.

In support of the first part of his suggested dichotomy he relied on a recent unreported decision of this court – Japan Line Ltd. v. Aggeliki Charis Compania Maritima S.A. (The Angelic Grace) [1980] 1 Lloyd’s Rep. 288, 292 where it was stated by Lord Denning M.R. that the High Court had jurisdiction to supervise the conduct of arbitrators in order to make sure that they were not guilty of “real misconduct.” In support of the second part of Mr. Saville’s suggested dichotomy he relied upon the decision in Kitts v. Moore [1895] 1 Q.B. 253, where this court granted an injunction to a plaintiff who sought to impeach an alleged agreement to arbitrate by alleging that he was not bound by it: see per Lindley L.J. at pp. 259-260 and per A. L. Smith L.J. at p. 262.

In the present case it was urged there was no “impeaching” of the agreement to arbitrate since it was admitted that initially each of the respondents had been bound by it. There was no suggestion that either agreement to arbitrate was void or voidable on the ground of fraud or mistake. Mr. Saville relied upon Den of Airlie S.S. Co. Ltd. v. Mitsui & Co. Ltd. (1912) 17 Com.Cas. 116 as illustrating a case where a court would not grant an injunction to restrain a defendant from proceeding with an arbitration, saying that there was in such a case no initial impeaching of the agreement to arbitrate.

In answer to these submissions Mr. Waller demonstrated, as he submitted, the development of the relevant equitable jurisdiction before the passing of the Judicature Act 1873 by taking us through many 19th

[1981] A.C. 909 Page 957

century authorities, not all of which were referred to before the judge. I do not propose to examine all these cases, in some of which injunctions were granted and in others injunctions were refused. I think references to three of the cases only will suffice. First and foremost is Pickering v. Cape Town Railway Co., L.R. 1 Eq. 84, a decision of Page Wood V.-C. later varied by Lord Cranworth L.C. The Pickering case has had a curious history and we are indebted to Mr. Waller and his junior for having traced its history . It was treated in the 7th ed. of Russell on Arbitration as authority for the proposition, at p. 204, that:

“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 passage and the relevant reference to the Pickering case was however later dropped in subsequent editions of Russell and the case is not mentioned in the current or indeed any recent edition of that work. It is, however, cited in Halsbury’s Laws of England, 4th ed., vol. 24 (1979), para. 1038, as authority for the proposition:

“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.”

In Pickering’s case, L.R. 1 Eq. 84 there was a contract between the plaintiff and the defendants for the building of a railway in the former Cape Colony. That contract contained an arbitration clause and a certain Mr. Hawkshaw was appointed what was called “standing referee.” Disputes arose and the defendants then resorted to the Supreme Court of the Cape Colony to eject the plaintiff from the site. Later the defendants sought to insist upon their right to go to arbitration in respect of matters arising from the plaintiff’s ejection from the site. The plaintiff sought and obtained from Page Wood V.-C. an injunction restraining the arbitrator from proceeding to make an award. Page Wood V.-C. stated the position thus, at pp. 87-88:

“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.”

Lord Cranworth L.C. subsequently discharged this injunction: L.R. 1 Eq. 89. As I read the very brief report of his judgment, he discharged the injunction because it had, in his opinion, been premature to grant it

[1981] A.C. 909 Page 958

before the relevant facts had been fully ascertained. It is important to note that Lord Cranworth L.C. is reported as having said, at pp. 89-90:

“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.”

I do not read this passage as disagreeing with Page Wood V.-C.’s statement of basic principle upon which the Court of Chancery would proceed in granting relief to a plaintiff seeking to restrain a defendant from proceeding with an arbitration under an arbitration clause.

Mr. Saville strongly argued that the Pickering case was no authority for the proposition that the court could or would interfere with an arbitration because owing to delay a fair trial was no longer possible: Pickering was, he said, a case where the agreement to arbitrate had been impeached. He reinforced this submission that Pickering was no authority for the wider proposition by urging that nothing could be more unfair than an arbitrator whose award could be shown to have proceeded on a wrong view either of the facts or the law or both. Yet there was ample authority in such cases that the court would not interfere. If, therefore, before 1979 the case did not come within section 12 (6) of the Act of 1950, no one had power to interfere.

I shall return to this submission later, but it will be convenient next to consider the two other principal cases. In Beddow v. Beddow, 9 Ch.D. 89 Sir George Jessel M.R. enjoined an arbitrator from acting because of his own unfitness. That case on its facts, of course, falls comfortably within Mr. Saville’s first category. But Sir George Jessel M.R. said, at p. 93:

“… 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.”

In the third and last of these cases, North London Railway Co. v. Great Northern Railway Co., 11 Q.B.D. 30, this court refused to grant an injunction where the plaintiff asserted that the arbitrator had no jurisdiction to hear the dispute. The court, after considering the judgment of Sir George Jessel M.R. in Beddow v. Beddow, 9 Ch.D. 89, held that it had no jurisdiction to grant the injunction sought because if there were no jurisdiction in the arbitrator to hear and determine the arbitration there would be no legal injury and no legal right in the plaintiff which he was entitled to protect by injunction: see per Brett L.J. pp. 35 and 36 and Cotton L.J. at pp. 40 and 41. Cotton L.J. pointed out that Beddow v. Beddow proceeded upon the basis that the plaintiff had a legal and equitable right to protect by injunction.

[1981] A.C. 909 Page 959

At the present day the problem to which the North London Railway case, 11 Q.B.D. 30 gave rise could and no doubt would be swiftly solved by an action for a declaration that the arbitrator had no jurisdiction. The North London Railway case clearly troubled the judge: see [1979] 3 W.L.R. 471, 480. I do not think the North London Railway case decides more than, as is indeed clear law, the court will not grant an injunction save in support of some legal or equitable right: see the recent restatement of this principle by Lord Diplock in Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A[1979] A.C. 210, 256. Lord Diplock in that passage appears to treat this as the ratio decidendi of the North London Railway case. Curiously enough it does not seem to have been argued in that case that the plaintiffs had a legal or equitable right to be protected by injunction against wasted costs in an arbitration in which such costs would be irrecoverable if the arbitrator had no power to determine the dispute. He would indeed be a brave lawyer who, where a problem of this kind arises, advises his clients that they can safely stay away from such an arbitration and risk the arbitrator deciding the issue of jurisdiction against them merely in order to save costs which might prove to he irrecoverable.

There is always a tendency where courts, whether of equity or common law, possess some power whether equitable, at common law or by statute and over a long period of time can be shown to have exercised or refused to exercise that power in widely differing cases to seek to group those cases and to categorise them and then, having drawn up those categories, to limit the exercise of those powers to such cases and to contend that there is no wider power which may be exercised in other cases which do not fall within those categories. With respect, I think this is the basic fallacy which underlies Mr. Saville’s suggested dichotomy. No doubt many of the cases I have referred to and others to which we were referred in argument and which were also referred to by Donaldson J. in his judgment, can be grouped or categorised as Mr. Saville suggests. But to accept that grouping or categorisation is not to say that every future case must fall within such a group or category before such an injunction can be granted. Equity has never proceeded along tramlines. In the instant case, as already stated, the respondents have, in my view, a legal right to rescind the arbitration agreement. They also have a right, whether it be called an equitable right does not matter, to a fair hearing before the arbitration tribunal. The claimants’ conduct has led to their having acquired this legal right to rescind. Their right to a fair hearing cannot now be fulfilled because of the claimants’ conduct.

Why then, when there is no other remedy available, should the court not interfere and protect both those rights by injunction? Without an injunction the claimants can go on with the hearing which ex hypothesi cannot be fair to the respondents.

I think, therefore, the judge was entirely right to grant the injunctions in both these cases. It would, in my judgment, be a lamentable gap in our jurisprudence were claimants in arbitration to be preferred to plaintiffs in litigation, as would be the case if the judge were wrong in

[1981] A.C. 909 Page 960

that they can drag out arbitrations indefinitely, being arbitrations to which the Act of 1979 does not apply, without any penalty being imposed upon them.

That leaves the question of damages. This only arises in the Raytheon appeal. The respondents claim as damages their wasted expenditure and the judge ordered the quantum of such damage to be assessed by a taxing master. Mr. Saville argued that the respondents were not entitled to damages unless they could show that they would have, or at least had stood a good chance of winning the arbitration. I do not think this submission is well founded. Some cases, for example, an action for negligence against solicitors, may require proof of the prospects of success as an essential prerequisite of a successful claim for damages for what would have been gained in the action which the solicitors have negligently failed to bring is the measure of the plaintiff’s loss in his action for negligence. But the question in the Raytheon appeal is: what loss or damage flows naturally and directly from the claimants’ repudiatory conduct? My answer is that the damage which flows naturally and directly from their breach is the wasted expenditure which has been incurred by the respondents to no useful purpose because of the determination of the arbitration by rescission of the agreement to arbitrate and by the injunction. In reaching this conclusion I have not lost sight of the dictum of Lord Macmillan in Heyman v. Darwins Ltd[1942] A.C. 356, 371 that the remedy for breach of an agreement to arbitrate is enforcement and not damages. That statement, however, must be read in its context and not divorced from it. Lord Macmillan was not intending to override the earlier decisions to which I have already referred which emphasise the contractual character of an agreement to arbitrate, a breach of which can in certain circumstances give rise to a claim for damages. In my judgment, therefore, the respondents in the Raytheon appeal are entitled to damages on the basis determined by the judge.

It remains to mention two other matters for the sake of completeness The first is a submission which Mr. Saville sought to raise for the first time in this court. There were, he correctly pointed out, only three respondents in the Raytheon appeal who were the three plaintiffs in the original action. But when one looks at clause 9 of the agreement between the claimants and the respondents one finds that the indemnity upon which the claimants sought to rely in the arbitration was jointly and severally given by four persons, the fourth being a Mr. Teasdale. Mr. Teasdale was not a plaintiff in the proceedings presently before the court and is not a respondent to this appeal. Therefore, argued Mr. Saville, the respondents’ cause of action was incomplete without Mr. Teasdale being joined either as a plaintiff or as a defendant. This became known as the “Teasdale point.” Mr. Teasdale unfortunately is an undischarged bankrupt. Naturally his trustee in bankruptcy is interested as to any terms upon which leave to join Mr. Teasdale might be granted. Since this was a new point taken for the first time in this court, Mr. Saville could only take it with our leave and we were only prepared to grant such leave on terms which Mr. Saville declined to accept. The Teasdale point, therefore, disappears.

[1981] A.C. 909 Page 961

The second matter was raised by Mr. Butler. He sought to introduce for the first time in this court controversial evidence as to German law on the implication of terms into contracts of which German law is the proper law. Since it seemed to us that it would be impossible to resolve this issue even if it be relevant, as to which I express no opinion, without hearing the expert witnesses cross-examined, we declined to allow the matter to be raised for the first time before us. Clearly, if this were intended to be raised as an issue in these proceedings, the matter ought to have been investigated before Donaldson J. so that he might make his findings of fact upon the disputed questions of German law which would be available for us. We, therefore, declined to allow this matter to be raised.

In the result, for the reasons which I have given, I would dismiss both appeals. I would venture to add this. In the addendum to his judgment Lord Denning M.R. has referred to the position of a respondent who was guilty of inordinate and frustrating delay as were the plaintiffs in the present two cases. I prefer to express no view as to the position which might arise in that event which does not now arise for decision and was not presented in argument before us.

CUMMING-BRUCE L.J. I agree that both appeals should be dismissed on the grounds stated by Lord Denning M.R. and Roskill L.J. I take the same view as Roskill L.J. of North London Railway Co. v. Great Northern Railway Co., 11 Q.B.D. 30. The power to intervene by injunction only falls to be exercised in support of a legal or equitable right as stated by Lord Diplock in the Siskina case[1979] A.C. 210, 256, and the respondents in each case have established a legal right to accept the repudiation of the arbitration agreements arising from the repudiatory conduct of the claimants. The decision of Page Wood V.-C. in Pickering v. Cape Town Railway Co., 1 Eq. 84 is correctly stated in Halsbury’s Laws of England 4th ed., vol. 24 (1979), para. 1038 as authority for the proposition quoted in the judgments which have just been delivered. The fact that the courts have not been asked before to intervene by injunction in a case of repudiatory delay is explained by the history of the procedural remedy of striking out an action at law for want of prosecution. A new chapter began with Allen v. Sir Alfred McAlpine & Sons Ltd[1968] 2 Q.B. 229. The principles which were therein explained and applied are as relevant to proceedings taken pursuant to an agreement to arbitrate as to proceedings at law.

Solicitors: Lovell, White & King (instructed only on the appeal); Herbert Smith & Co.

Richards, Butler & Co.; Norton Rose, Botterell & Roche.

C. N.

South India Shipping Corporation Ltd. appealed to the House of Lords.

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.

  1.  (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.
  1.  (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.
  1.  (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.
  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.
  1.  (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?
  1.  (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.
  1.  (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.

“… 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).

“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.”

LORD EDMUND-DAVIES. My Lords, I have had the advantage of reading in draft the seminal speech of my noble and learned friend, Lord Diplock. For the reasons he gives I am for allowing this appeal. I desire to add that I have found it irksome that the appeal has been conducted on the basis that, were we here concerned not with arbitration proceedings but with a civil action, it is beyond doubt that the court would have been justified in dismissing the action on the ground that the plaintiff’s inordinate and inexcusable delay had rendered a fair trial impossible. The nonchalant behaviour of the respondent shipbuilders over the years, despite intimations from the shipowner of fresh complaints (their quiescence obviously deriving from complete reliance on what they regarded as an irrefragable time-bar) creates a substantial doubt in my mind that it would follow as night does the day that an order dismissing the claim for want of prosecution would be the defendants’ for the mere asking. The notion that a defendant may always safely indulge in “letting sleeping dogs lie” is not wholly without its dangers, not the least being that prolonged and complete inactivity may cast doubt upon the acceptability of his assertion of prejudice occasioned by the plaintiff’s delay. But we are enjoined to have no regard to any such considerations in the present case, and, having given expression to my doubts, I have naturally (albeit reluctantly) proceeded on the basis of the prescribed assumption in arriving at my conclusion that the appeal should be allowed.

LORD FRASER OF TULLYBELTON. My Lords, this appeal is concerned with the question whether the court has jurisdiction to restrain a claimant, by injunction, from pursuing a claim in an arbitration after he has been guilty of such inordinate and inexcusable delay that a fair hearing is no longer possible. The facts are summarised by my noble and learned friends, Lord Diplock and Lord Scarman, and I need not repeat them.

In April 1977 the respondents served the writ in the present proceedings alleging that they had been prejudiced by the appellants’ delay in lodging their claim and claiming an injunction restraining the appellants from proceeding with the arbitration, or alternatively, a declaration that the arbitrator had power to make a final award dismissing the claim on the ground that the appellants had been guilty of gross and inexcusable delay causing serious prejudice to the respondents. Donaldson J., in the Commercial Court, concluded, ante, p. 927H, that “the delay in delivering the points of claim was both inordinate and inexcusable and, further, that no significant part of the delay was induced by the conduct of the plaintiffs” (respondents in the appeal.) He went on to find that the plaintiffs had thereby suffered serious prejudice in two ways and he granted the injunction claimed. He also held that an arbitrator had the power referred to in the alternative claim. The Court of Appeal (Lord Denning M.R. and Roskill and Cumming-Bruce L.JJ.), ante, p. 961,

[1981] A.C. 909 Page 989

dismissed an appeal from Donaldson J.’s grant of an injunction but they held that arbitrators did not have the power referred to in the alternative claim. We must, I think, accept the concurring findings of the Commercial Court and the Court of Appeal that the delay was such as to prevent a fair hearing, and that if the claim had been made in an action it would have been dismissed for want of prosecution. That, of course, leaves open the question of whether the court has jurisdiction to grant an injunction, and if so, whether it ought to grant one in the circumstances.

It is convenient to consider first whether an arbitrator himself has power to dismiss a claim for want of prosecution and to make an award to that effect. Before the proceedings in the action now under appeal, that question appears to have been decided in only one reported case – Crawford v. A. E. A. Prowting Ltd. [1973] 1 Q.B. 1, where Bridge J. held that an arbitrator had no power to dismiss on this ground. When the present case was before Donaldson J. he took the opposite view and held that the arbitrator did have such power, but the Court of Appeal held that his view was erroneous. In the Court of Appeal, some reliance was placed on the decision of the Divisional Court in In re Unione Stearinerie Lanza and Wiener [1917] 2 K.B. 558, to the effect that an arbitrator had no power to order security for costs. In that case, which had not been cited to Donaldson J., Lord Reading C.J. said at p. 561 that the provisions of the Arbitration Act 1889 obliging parties to a reference to “do all other things which during the proceedings on the reference the arbitrators or umpire may require” did not invest arbitrators with the powers of a judge, such as power to commit for contempt and to issue a writ of attachment for default in compliance with an order made by him. Roskill L.J. examined the history of arbitrations in England and I gratefully adopt his reasoning and agree with the conclusion of all the members of the Court of Appeal that arbitrators do not have power to dismiss for want of prosecution.

I do not think it can make any difference whether an arbitrator purports to dismiss a claim for want of prosecution in so many words, or leaches the same result indirectly, by making a peremptory order for the plaintiff to lodge his claim by a certain day, and then, if the claimant fails to obey the order, refusing to hear him. There seems to be no authority as to the arbitrator’s power in these circumstances. Subsection (1) of section 12 of the Arbitration Act 1950 imposes an obligation on the parties to a reference to obey the arbitrator’s orders, in terms virtually identical with those of the Act of 1889 mentioned above, but it does not expressly confer any power upon the arbitrator to apply sanctions for disobedience, and, having regard to the decision in Unione Stearinerie, I do not think they can be implied. Moreover subsection (6) of section 12 of the Act of 1950 provides that the High Court shall have power for the purpose of a reference to make orders in respect of inter alia discovery of documents, and it seems to me that notwithstanding the proviso to subsection (6), the reason for conferring the power on the High Court must be that it is not already vested in the arbitrator. An even stronger implication to the same effect emerges from section 5 of the Arbitration Act 1979, although that Act does not apply to the arbitration in the

[1981] A.C. 909 Page 990

present case which began in 1972. I consider therefore than an arbitrator does not have power to refuse to hear a party who has failed to obey a peremptory order for lodging a claim.

In fact no peremptory order was sought or made in this case, and part of the argument for the appellants was that it would have been essential for such an order to have been made by the arbitrator and disobeyed by the claimant, before the claim could be dismissed by the court. If that is right, it would mean that the respondent in an arbitration, who believes that the claimant’s delay had been such as to prevent the possibility of a fair trial, would have to ask the arbitrator to make an order upon the claimant for lodging his claim by a specified date, while hoping that the order would be disobeyed so as to leave the way open for sanctions to be imposed. Why should the respondent be obliged to seek an order for something which would be directly contrary to his interests? It seems unreasonable. The argument in favour of requiring some such procedure depends, as I understand it, upon the view that a reference to arbitration, because it is contractual, differs fundamentally from litigation, particularly in respect that both parties to an arbitration have an obligation to avoid unreasonable delay. The result is said to be that, if the respondent in an arbitration remains inactive while the claimant delays to make his formal claim, he, the respondent, is not entitled to found on the delay as a reason for asking for dismissal of the claim. I recognise that an argument on these lines is acceptable to the majority of my noble and learned friends who heard this appeal, but I regret that I cannot agree with it. The contractual element in an arbitration such as the present, which depends upon an agreement made before any dispute had arisen, consists, in my opinion, of the choice of the tribunal which is to come in place of the court that would otherwise have had jurisdiction, in this case presumably a German court. The choice of an English arbitration as the tribunal would probably imply that the rules of the English Arbitration Act 1950 would apply to the procedure, but in this case the matter is put beyond doubt by a provision to that effect in the arbitration clause. Once the tribunal has been chosen, I agree with Donaldson J. and with Roskill L.J. that proceedings in the arbitration, like those in litigation, are in most cases, and certainly in the present case, adversarial in character. It is therefore for each party to act in what he conceives to be his own interest, subject of course to any agreement on procedure that may have been made between them, and to the relevant statutory provisions including the obligation to obey orders made by the arbitrator. But if no order is made, the respondent in an arbitration, like the defendant in an action, is in my opinion entitled to sit back and await a formal claim. In the words used by Donaldson J. he is entitled to let sleeping dogs lie. If the sleep lasts long enough and he is prejudiced thereby, he may seek a remedy for the delay.

The fact that, but for the arbitration clause, the court which would have had jurisdiction in this case would have been a foreign court, seems to me immaterial. If, by English law, an injunction may be granted by the English court against proceeding with an English arbitration in which there has been inordinate and inexcusable delay in presenting the claim resulting in serious prejudice to the respondent, then it must be for the

[1981] A.C. 909 Page 991

English court to decide in any particular case whether that sort of delay and that result has occurred. In reaching its decision, the court will naturally have regard to its own practice as a guide, when the arbitration is analogous to a litigation, but I agree with my noble and learned friend, Lord Scarman, that the analogy must not be taken too far. The decision will ultimately depend upon whether the party who is not responsible for the delay has suffered, or is likely to suffer, such serious prejudice that a fair trial is not possible. The same principle will apply to all types of arbitration. In the present case both parties were represented in the arbitration proceedings by solicitors and counsel, and both assumed that a formal statement of claim and answers analogous to pleadings in court would be required. The analogy of proceedings in court was therefore appropriate. But in a simple case, which might be dealt with by the arbitrator’s inspecting goods without any formal hearing, the analogy would not be appropriate and a much shorter delay might prevent the possibility of a fair trial (for instance if perishable goods were involved).

If the arbitrator does not have power to dismiss for want of prosecution then, unless the court has power to restrain the arbitration by injunction, there is no means of preventing its proceeding even if the delay has been such as to preclude the possibility of a fair trial. If that were indeed the position I would agree with Roskill L.J. that it would reveal a lamentable gap in English jurisprudence. But I do not think that such a gap exists. It is well established, and is not disputed by the appellants, that the court has jurisdiction to grant injunctions against proceeding with arbitrations in two cases. One is where the arbitrator has been guilty of misconduct, or has become unqualified – see Beddow v. Beddow, 9 Ch.D. 89. The other is where the validity or the application of the contract of arbitration is denied or “impeached” by one party – see Kitts v. Moore[1895] 1 Q.B. 253. The real question is whether these two types of case are unique in being the only types in which an injunction can be pronounced, or, as I think, are examples of the application of a more general principle. The principle which underlay the decision in Beddow was explained in North London Railway Co. v. Great Northern Railway Co., 11 Q.B.D. 30 by Cotton L.J. who said at p. 40:

“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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That shows that Cotton L.J. regarded the injunction granted against an arbitration proceeding in Beddow not as something unique or very special, but as an ordinary exercise of the court’s power and duty to protect legal rights. Cotton L.J. did not define the right which was being interfered with, but he must have had in mind the right to a fair trial, which includes the right to have the reference determined by an impartial arbitrator; or more accurately, the right not to be harassed by an arbitration before a tribunal that was not impartial. I regard the latter formulation of the right as more accurate, and more relevant, because it is only a right so formulated that would be directly protected by an injunction.

In the North London Railway case itself, 11 Q.B.D. 30, an injunction was refused because the Court of Appeal (Brett and Cotton L.JJ.) held that no legal right of the plaintiff would be interfered with if the defendant went on with an arbitration before an arbitrator who had no jurisdiction in the matter, so that any award would be futile. Whether that view of the facts be right or wrong, and I am bound to say that I doubt whether it would be accepted in similar circumstances today, the principle is clear and is still applicable to the power of the court under the Judicature Act 1925. The North London Railway case has been recently referred to with approval in Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A[1979] A.C. 210, 256, by my noble and learned friend, Lord Diplock, who said that

“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.”

I fully accept that principle as applying in the present case and I will return to it.

Before doing so I wish to mention a decision which, if it is good law in England, demonstrates that misconduct and impeachment are not the only grounds for an injunction. It is a decision of this House in Glasgow and South-Western Railway Co. v. Boyd & Forrest, 1918 S.C. (H.L.) 14, where the House upheld the grant of an interdict against proceeding with an arbitration on matters which, as they held, were res judicata. The appeal came from Scotland, and there was no argument on the question of jurisdiction to grant an interdict, but it seems unlikely that the English Law Lords who were present, Lord Finlay L.C., Lord Parmoor and Lord Atkinson, would not have raised a question if they had entertained a ny doubt about the jurisdiction of the English court in similar circumstances. I think therefore that the case may be regarded as giving some support to the view that the English courts have jurisdiction to grant injunctions to protect the right of a party not to be harassed by an arbitration that would in the end be futile. Before parting with the case I observe that the House discriminated between those issues which were res judicata and those which were not; interdict was pronounced only in respect of the former. That would dispose of the suggestion made in argument before us that an injunction must relate to the whole reference.

It follows that the decision in the instant appeal depends upon whether, if the arbitration were now allowed to proceed, it would infringe a legal or equitable right of the respondents. In my opinion it would. It would

[1981] A.C. 909 Page 993

infringe their right to a fair trial, just as an arbitration before an arbitrator who was not impartial would do; more accurately, it would infringe their right not to be harassed by arbitration proceedings which cannot lead to a fair trial. The source of this right may be contractual, arising from the contract to refer, or it may be imposed by law as a rule of natural justice. The former view was taken by Donaldson J. and it was also, I think, the preferred view of Roskill L.J. But Lord Denning M.R. regarded the right as correlative to a duty which was imposed by law, and not by any application of The Moorcock (1889) 14 P.D. 64 principle of implied terms, and Roskill L.J. thought that there was “also” such a right in addition to the contractual right. Cumming-Bruce L.J. agreed with both Lord Denning M.R. and Roskill L.J. so he cannot have regarded the difference between them as important. For my part, I would rest my opinion in favour of the respondents in this appeal on the principle that they have an equitable right not to be harassed by arbitration proceedings which cannot result in a fair trial. I do not think it is necessary to rely on any implied term in the arbitration contract.

In my opinion the court, in granting an injunction to restrain an arbitrator from proceeding, is not exercising a supervisory jurisdiction of the same sort as it exercises over inferior tribunals by the issue of prerogative writs. The contrast between the prerogative writs and an injunction was referred to in Pickering v. Cape Town Railway Co(1865) L.R. 1 Eq. 84 by Page Wood V.-C. when he said at p. 87:

“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.”

The same contrast was drawn by Lord Goddard C.J. in the course of argument in Reg. v. National Joint Council for the Craft of Dental Technicians (Disputes Committee), Ex parte Neate [1953] 1 Q.B. 704, 706 when he said:

“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.”

My Lords, for these reasons as well as for the reasons explained by my noble and learned friend, Lord Scarman, with which I agree, I would dismiss this appeal.

LORD RUSSELL OF KILLOWEN. My Lords, this appeal has been very fully discussed in the speech of my noble and learned friend, Lord Diplock. I find it convincing, and I also would allow this appeal.

LORD SCARMAN. My Lords, the specific question raised by the appeal is whether the High Court may properly grant an injunction to restrain

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a party from proceeding with an arbitration, notwithstanding that there has been a valid agreement to refer and no misconduct, unfitness, or other disqualification of the arbitrator. The ground upon which the respondents seek relief by injunction is excessive and prejudicial delay in the conduct of the proceedings by the appellants, who are the claimants in the arbitration. The delay, it is said, has denied the respondents their right to a fair arbitration – a right which it is accepted that the law recognises. The trial judge granted the injunction, and the Court of Appeal upheld his decision. The appeal to the House is by leave of the Court of Appeal.

There is no earlier case like this in the books. There are cases, but not many, in which the court has by injunction restrained arbitration proceedings. They were cases in which either the agreement to refer was, or could in the circumstances be treated as, invalid or there was misconduct, unfitness, or incompetence displayed by the arbitrator. The present case falls to be decided under the law as it was before the coming into force of the Arbitration Act 1979: but your Lordships’ decision is not thereby rendered of merely academic interest.

The Act does not, save perhaps incidentally by excluding some rights which previously existed, limit the injunctive power of the High Court, though its provisions, of which section 5 is of particular relevance, are bound to have a marked effect on the exercise of the court’s discretion. For, if an arbitrator has power, or may be given power by the court, to remedy or prevent injustice occurring in the arbitration proceedings, it will be less likely that the grant of an injunction by a court would be a just or convenient course.

There is also a cross-appeal, whereby the respondents seek to restore the ruling of the trial judge, Donaldson J., that an arbitrator has power to dismiss a claim for want of prosecution.

Their basic case, of course, is to resist the appeal, submitting that, whether or not an arbitrator had (under the pre-1979 law) this power, the High Court certainly had power to restrain an arbitration on the ground of excessive and prejudicial delay. It is obvious that, if an arbitrator did have the power to dismiss, the occasions for the exercise of the court’s power to restrain would be few. The respondents, if need be, are, however, prepared to contend that, in the present case where neither party went near the arbitrator after his appointment and where (as they submit) responsibility for delay was upon the claimants, the court may, and should, intervene to restrain the arbitration without prior recourse to the arbitrator, if the delay be excessive and destructive of the possibility of a fair arbitration. It will be convenient, therefore, to consider the powers of an arbitrator in the course of dealing with the appeal.

It will be convenient to consider first the jurisdiction of the High Court to grant an injunction. There is no distinction to be drawn, so far as jurisdiction is concerned, between an interlocutory and a final injunction. A recent re-statement of principle is to be found in the speech of my noble and learned friend, Lord Diplock, in Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A[1979] A.C. 210, 256 where he said that:

[1981] A.C. 909 Page 995

“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.”

This formulation was based on the decision of the Court of Appeal in North London Railway Co. v. Great Northern Railway Co., 11 Q.B.D. 30, which, on this point, is now to be treated as having been approved by the House.

The North London Railway case was one in which an order of the Queen’s Bench granting an injunction to restrain a party from proceeding with an arbitration was discharged by the Court of Appeal. There was a valid arbitration agreement between the parties but the party seeking the injunction contended that the subject matter of the dispute was not within it. If he were right, the continuance of the arbitration would have been futile and vexatious. But the Court of Appeal considered that, as Brett L.J. put it at p. 36, “the fact of the appellants going on with that futile arbitration is no legal injury.”

Like my noble and learned friend, Lord Fraser of Tullybelton, and the Master of the Rolls, I do not believe that the proposition that no legal injury can arise from the futility and vexation of the arbitration process would be accepted to-day and I do not accept it. But the ratio decidendi of the case is certainly accepted law. The case resolved a doubt, which had arisen in the years following the Judicature Act 1873, as to the extent of the power conferred on the High Court by section 25 (8) of that Act, now re-enacted in section 45 of the Judicature Act 1925. In short, the Court of Appeal decided that the section was to be construed as procedural in its purpose and effect. The section does not extend the power of the court to cases where there is no legal or equitable right to be protected. It enables the court, where there is a legal right, to “grant an injunction where it is just or convenient to do so for the purpose of protecting or asserting the legal rights of the parties”: Cotton L.J. at p. 39.

It is necessary, therefore, to discover whether, if the arbitration proceedings in the present case continue, the respondents will suffer a legal injury, and then to determine whether the judge erred in exercising his discretion to grant an injunction protecting them from such injury.

First, the facts. The appellants are shipowners. The respondents are shipbuilders, and in August 1964 agreed to build five bulk carriers for the appellants. The contract was governed by German law but disputes were to be referred to arbitration in London. The contract included a guarantee clause whereby the respondents agreed to rectify defects appearing within 12 months of delivery. The last of the five ships was delivered on December 3, 1966. The last guarantee period, therefore, expired on December 3, 1967.

The appellants claim that very serious defects have appeared in the ships. The claim is resisted on the facts and in law, the principal legal defence being the contention that under German law the claim became time barred six months after the end of the guarantee period, i.e. on May 3, 1967.

I now take up the story in the words of the trial judge (ante, p. 925F-G):

[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.”

After a full investigation of the facts which included the correspondence between the parties’ solicitors he concluded (ante, p. 927G) “that the delay [by the appellants] in delivering the points of claim was both inordinate and inexcusable and, further, that no significant part of the delay was induced by the conduct of the [respondents].” He further found that the delay had caused the respondents serious prejudice in two ways: first, in the loss of witnesses by reason of death, retirement, or having left the respondents’ employment: and secondly, in the effect of the delay upon the ability of the respondents to collect the necessary evidence to ensure that justice is done. The learned judge concluded (ante, p. 928F-G): “I am satisfied that if the proceedings had been pursued by action, I should have dismissed them for want of prosecution.” The Court of Appeal concurred in his findings of fact and also accepted as relevant the analogy of litigation. The analogy is, of course, open to challenge in this House. But I do not think that the findings of fact can properly be challenged. Even if I were disposed to differ, which I am not, I would not disturb them. I accept, therefore, that the appellants have been guilty of delay which has made it impossible for the respondents to collect the evidence necessary to ensure that justice can be done at the hearing of the arbitration. I also accept that the respondents were not guilty of any acts which contributed to the delay: but I treat as open to decision by your Lordships’ House the question whether the respondents could and should, by seeking the directions of the arbitrator, have ended the delay before it became excessive and prejudicial.

The appellants’ case can be summarised in two sentences. No relevant comparison is to be made between litigation and arbitration. And, where parties agree to refer their dispute (or disputes) to arbitration, they mutually bind themselves by contract ta use the arbitration process to prevent the mischief of delay. Clearly the submission assumes the existence of effective powers in the arbitrator to overcome or prevent delay. It also raises a question as to the scope of the principle, which has been slowly gaining strength in English law ever since the enactment of the Common Law Procedure Act 1854 and has been dramatically extended by the Act of 1979, that, where the parties have agreed upon arbitration, they take it with all its faults.

My Lords, I will deal at once with the scope of this principle. Though it has been extended in the modern law, it is not of universal application. It has not yet achieved such supremacy as totally to oust the power of the High Court to remedy or prevent injustice in the arbitration process.

The principle yielded in the past to a measure of judicial control and review of the arbitration process: and this remains true of most arbitrations

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even after the coming into force of the Act of 1979. This power of the court has been exercised in many ways: for example, review of awards (limited, changed, regulated, but not discarded by the new Act), removal of arbitrators where their impartiality, fitness, or competence is impugned, the grant of injunctions to restrain arbitration proceedings where the arbitrator has been shown to be unfit or incompetent. Such landmarks in the law as the Act of 1854, Scott v. Avery (1856) 5 H.L.Cas. 811, Beddow v. Beddow, 9 Ch.D. 89, where an injunction to restrain an arbitration was granted, Czarnikow v. Roth, Schmidt & Co[1922] 2 K.B. 478, and the Act of 1979 itself bear witness to the importance attached in the various branches of our arbitration law to a measure of judicial control and review. Though the jurisdiction of the courts may now be ousted in those international arbitrations where the new Act allows an exclusion agreement, it remains a vital, if no longer universal, principle of the law that the courts will act to prevent injustice arising in arbitration proceedings where it is necessary so to do.

I therefore agree with my noble and learned friend, Lord Fraser of Tullybelton, and with Lord Denning M.R. that the courts retain such a power save where excluded by statute and that parties to arbitration have a right to a fair arbitration. If the right can be protected within the arbitral process, as in most cases under the Act of 1979 it will be, the courts will not intervene; for neither justice nor convenience will require so drastic a step. If the right be excluded by statute, as well it may be under an exclusion agreement rendered lawful by the new Act, there will be no legal right for the court to protect.

What then is the nature of the right? In practice, I do not think it matters whether it be treated as one of natural justice which the courts in the exercise of a supervisory power will enforce, if need be, or as arising from an implied term of the arbitration contract. Whether the agreed process be a “look-sniff” commodity arbitration, or an award upon documents submitted without a hearing, or an award reached after a full-dress hearing with pleadings, discovery, and evidence, the right is fundamental. But since the question has arisen and differing answers have been given, I will state my view. The right does not depend upon contract, and cannot be excluded by contract, save where statute allows its exclusion, as it may be that the Act of 1979 does in certain cases (though I reserve my opinion on the point). The right arises from the judicial element inherent in the arbitration process which is a process for reaching a decision where parties have not themselves resolved their difference. Nevertheless in most cases, and this is such a case, the right is implicit in the contract, and, if infringed, may be enforced as a right given by the contract. And, with respect, I do not see the case of Reg. v. National Joint Council for the Craft of Dental Technicians (Disputes Committee) Ex parte Neate [1953] 1 Q.B. 704 as an authority inconsistent with such a supervisory power. In that case the Divisional Court, though holding that the prerogative writs (or orders) would not go to a private arbitrator, did not rule out the possibility of injunction (see Lord Goddard’s intervention at p. 206). Since, however, I accept the analysis which enabled the judges below to deal with this case as one of

[1981] A.C. 909 Page 998

contractual rights and duties, I say no more as to the general power of the High Court to prevent injustice in this field, save to express agreement with Lord Denning M.R. and my noble and learned friend, Lord Fraser of Tullybelton. The existence of such a power, associated as it is with the requirements of natural justice in any adversarial process, remains, subject to the statutory law regulating arbitrations, a powerful weapon for justice in the armoury of the law, even though the occasions for its use will be few and far between.

I turn now to consider the contractual position. Where parties agree to refer present or future differences to arbitration, they enter into a contract, an implied term of which is that each has a right to a fair arbitration. The implication arises necessarily from the nature and purpose of their agreement, which is to submit their dispute (or disputes) to the arbitrament of an independent and impartial arbitrator of their choice. I do not understand the appellants to challenge the existence of the term. Such a contract is often to be found as an arbitration clause in a commercial, industrial, or other type of contract. Where so found it is, in strict analysis, a separate contract, ancillary to the main contract: see Heyman v. Darwins Ltd[1942] A.C. 356. It follows that obstruction of the right will be a breach of contract and may be a repudiatory breach; and that frustration of the right, i.e. conduct of a party making the fair arbitration of a dispute impossible, will be a repudiatory breach at least of the agreement to refer that dispute to arbitration.

These general propositions were, as I understand their judgments, accepted by the judge and the Court of Appeal, notwithstanding that in the refinement of their reasons by way of response to the detailed arguments addressed to them by counsel they expressed themselves in different ways. After all, they were considering a specific case in which it was alleged that the claimant’s delay had made a fair arbitration impossible. It was natural therefore to formulate the term by reference to delay. But it matters not whether in the context of delay it be formulated as an obligation implicitly accepted by a party, if he finds himself the claimant in the proceedings, to use his best endeavours to move the arbitration along, which was the view of Donaldson J.: or whether it be formulated as a term imposing a duty upon parties not to be guilty of frustrating delay, as Roskill L.J. accepted: or whether there are mutual obligations, as Lord Denning M.R. thought, namely a duty upon the claimant to proceed with reasonable despatch and a duty upon the respondent not to baulk the claimant by devious manoeuvres. Cumming-Bruce L.J. found it possible to agree with the formulations of both Lord Denning M.R. and Roskill L.J. I think he was right to perceive and accept their basic consistency. In a contract of arbitration I accept that there are mutual obligations to be implied into the parties’ agreement not to obstruct or frustrate the purpose of the agreement, i.e. a fair arbitration to be conducted in accordance with the terms of their agreement.

Unless, therefore, the breach is by the terms of the parties’ contract itself to be referred to arbitration, a remedy for its breach may be sought in the courts. In the case of a non-repudiatory breach this will depend upon the true construction of the arbitration clause. But if, as is alleged

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in the present case, the breach consists of a frustrating delay, it discharges the aggrieved party from further performance of his agreement to refer. If he chooses then to sue in the courts, he will be able to show the infringement of a legal right entitling him to damages: and, if he can show that the defendant is persisting in a course of action, i.e. proceeding with the arbitration, which is a continuing infringement of the right, the court may grant him an injunction restraining the claimant from pursuing this course of conduct, if it thinks it just and convenient so to do. The injunction will be issued to avert legal injury and to protect a legal right.

My Lords, I believe these propositions constitute the basis of principle upon which the present case is to be decided. As I understand it, this was the view of the very experienced judges below. And I would add that, on their findings, justice and convenience would appear to require that the respondents, their contractual right having been infringed, be granted the injunction if they are to be protected from the harassment of a vexatious, expensive, time-consuming, and futile arbitration.

But, before reaching a conclusion, the formidable submissions of the appellants have to be considered. The first is that no relevant comparison is to be made between litigation and arbitration. It was argued, and, as I understand it, a majority of your Lordships accept, that the analogy is misleading. Litigation, it is submitted, is a compulsory process available as of right to anyone who issues a writ: it is not to be compared with the process of arbitration, which arises from consent and is conducted according to terms agreed, expressly or impliedly by the parties. Arbitration is, of course, subject to a measure of statutory control: but this control in no way detracts from the essentially contractual nature of arbitration. My Lords, all this is true. But arbitration, while consensual, is also an adversarial process. There is a dispute, the parties having failed to settle their difference by negotiation. Though they choose a tribunal, agree its procedure and agree to accept its award as final, the process is adversarial. Embedded in the adversarial process is a right that each party shall have a fair hearing, that each should have a fair opportunity of presenting and developing his case. In this respect, there is a comparability between litigation and arbitration. In each delay can mean justice denied. And the analogy is not falsified because of the wide variation of types of arbitration. Whether the arbitration be “look-sniff” or a full-scale hearing with counsel and solicitors, the right to a fair arbitration remains. An unfair arbitral process makes no sense either in law or in fact. It is a contradiction which it is inconceivable that the law would tolerate or the parties select.

But the analogy must not be taken too far. It does not follow that, because a court may protect a party from abuse of its own process in a lawsuit, it has the same power in connection with arbitration proceedings. I do not understand the judges below to have fallen into this trap. They used the analogy not to introduce the decision of Allen v. Sir Alfred McAlpine & Sons Ltd[1968] 2 Q.B. 229 into the law of arbitration but as a strong indication that arbitrators or the court (or, as Donaldson J. was disposed to hold, both) have a power to prevent injustice arising from a party’s delays in the proceedings. Though

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arbitration is consensual and litigation compulsory in so far as the respondent (or defendant) is concerned, both are judicial processes of an adversarial character. The analogy, taken thus far, is therefore helpful: and I reject the submission that the judges erred in making use of it for the purpose of showing the need for such a power to reside either in the arbitrator or the court.

I pass now to the most powerful submission made by the appellants – that the respondents should have sought to prevent delay by applying to the arbitrator for directions. The judges below considered very carefully the pre-1979 powers of an arbitrator to deal with delay, and concluded that, though he could exercise influence, he had no sanction other than to make a final award on the merits of the dispute. I respectfully adopt the analysis of the law on this point to be found in the judgment of Roskill L.J. Like him, I attach importance to paragraph 57 of the Report of the Commercial Court Committee on Arbitration (1978) (Cmnd. 7284) as correct description of the mischief which section 5 of the Act of 1979 was enacted to remove. I think, therefore, that the judge and the Court of Appeal were justified in their conclusion that, the arbitrator having in the circumstances no effective power to protect the respondents from the legal injury of an unfair arbitration, the mere fact of his appointment did not exclude the power of the court.

But the point remains that the respondents, pursuant to section 12 (1) of the Arbitration Act 1950, could have applied to the arbitrator for directions, and that an order by him for the delivery of points of claim within a time limit, though backed by no sanction, might have galvanised the appellants into action before their dilatoriness had caused the respondents serious prejudice. This is, I think, the most formidable argument available to the appellants. I reject it because of the adversarial nature of the arbitration process. I accept that parties to an agreement to refer may expressly agree that each, whether he be claimant or respondent, will use his best endeavours, by application to the arbitrator or otherwise, to move the arbitration along. But in the absence of express agreement to do so it can hardly be said that a party who finds himself a respondent in an adversarial process has implicitly agreed to move along the claim being made against him. Certainly a term might well be implied – as suggested by Lord Denning M.R. – that, if a party to the agreement finds himself respondent to a claim, he will not by devious manoeuvres seek to baulk the claim: but no more.

I reject, therefore, the appellants’ submissions. The respondents have been denied by the appellants’s delay be viewed as a denial of natural justice can be done. Whether the denial be viewed as a denial of natural justice or a fundamental breach of contract, it constitutes a legal injury from which the court may grant relief by injunction to restrain the appellants from proceeding with the arbitration. I would, therefore, dismiss the appeal. In doing so, I wish at the same time to express my concurrence with the speech delivered by my noble and learned friend, Lord Fraser of Tullybelton.

As I understand that the majority of your Lordships take a different view, it is incumbent upon me to express an opinion on the respondents’

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cross-appeal. Under the law as it was before the Act of 1979 I can find no justification for the view that an arbitrator had power to dismiss an arbitration for want of prosecution. His power was limited to making an award upon the merits. The nearest he could get to a dismissal on grounds of delay would have been to fix a day for hearing and make an award upon the merits based upon whatever evidential material was then available to him. I agree with Roskill L.J. on this point and do not think it necessary to elaborate further my reasons. I would dismiss the cross-appeal.

Solicitors: Richards, Butler & Co.; Norton Rose Botterell & Roche.

F. C.

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