André et Cie SA v Marine Transocean Ltd (Splendid Sun)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE EVELEIGH,LORD JUSTICE FOX |
| Judgment Date | 08 April 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0408-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 April 1981 |
| Docket Number | 81/0128 |
[1981] EWCA Civ J0408-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE LLOYD)
Royal Courts of Justice.
The Master of the Rolls
(Lord Denning)
Lord Justice Eveleigh and
Lord Justice Fox
81/0128
1978 A. No. 2211
MR. NICHOLAS PHILLIPS, Q.C. and MR. R. AIKENS (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Plaintiffs (Respondents).
MR. M. COLLINS and MR. R. JACOBS (instructed by Messrs. Holman, Fenwick & Willan) appeared on behalf of the Defendants (Appellants).
Everything in this case took place eleven years ago. In February 1969 the M/V "Splendid Sun" was let by her owners on a voyage charter. She was to load a cargo at a safe port on the West Coast of Mexico and carry it to Puerto Cabello in Venezuela, and discharge it at "one/two safe berth Puerto Cabello".
In April 1969 the vessel went to Manzanillo, Mexico. She loaded 10,400 metric tons of maize. A bill of lading was issued, incorporating the terms of the charterparty, including the Centrocon arbitration clause. This provides for arbitration in London by two commercial arbitrators (one arbitrator appointed by each party) with power to appeal to an umpire.
On the 10th May, 1969 the vessel arrived in the roads off Puerto Cabello. On the 31st May, 1969 the receivers of the cargo ordered her to proceed to Berth No. 10 in order to discharge. As she was getting near, she grounded. Her rudder was damaged. Temporary repairs were done there. Permanent repairs were done in Italy. The expense was $221,733.18.
The owners put the blame on the charterers. They wrote a letter on the 7th June, 1969 to the charterers:
"It is obvious, being the demonstration in 're imsa', that the assigned berth was not safe as under the terms of the C/P".
The charterers put the responsibility on the owners. They wrote a letter on the 24th June, 1969 to the owners:
"We hereby repudiate any liability as it was the captain's duty to bring his vessel to the assigned berth, which is customarily used for other vessels of similar size".
Each side appointed nautical surveyors to examine the vessel. Each side appointed an arbitrator. On the 18th September, 1969 the owners appointed Mr. Cedric Barclay. On the 1st October, 1969 the charterers appointed Mr. R.J. Lynn.
Now, this is the amazing thing. Nothing more happened on this dispute for over eight years. The period of limitation of six years came and went. Mr. Lynn died on the 5th February, 1975. No one was appointed in his place. Then out of the blue on the 29th December, 1977 the solicitor for the owners wrote to the charterers a letter received on the 3rd January, 1978:
"'Splendid Sun' C/P 27.9.69—Grounding at Puerto Cabello—
"We act for Marine Transocean Limited in connection with this matter and now enclose Points of Claim on their behalf.
"You will recall that on 1.10.69 you appointed Mr. R.J. Lynn to act as your Arbitrator, and that Mr. Cedric Barclay was appointed on behalf of our clients.
"We have today written to Mr. Barclay requesting him to make the order for directions.
Yours faithfully,
Holman, Fenwick & Willan, Solicitors"
The solicitors enclosed in that letter Points of Claim drafted and signed by counsel. The charterers were aghast at this sudden revival of the claim. Their solicitors made enquiries and went out to Puerto Cabello to see if there was any evidence available to meet the claim. None was available. As a result the judge said: "It is now virtually impossible to prepare a defence to the claim in the arbitration. If the correct test is, as I believe it to be, whether the delay of the owners in pursuing their claim in the arbitration has been such as to frustrate the arbitration agreement, I would unhestitatingly hold that it has".
ABANDONMENT
For myself, I would be prepared to decide this case on the same lines as Pearl Mill Co. v. Ivy Tannery Co. (1919) 1 King's Bench 79. The lapse of time—over eight years—was so long that "the proper inference to be drawn is that each party was justified in assuming that the matter was off altogether". I look at it in this way: It was the owners who were making the claim for damage to the ship. It was their master who was navigating it into the berth. It was for him and the crew to say how she came to be grounded—to give some evidence that the berth was unsafe—and that the grounding was not due to the bad navigation of the master.
As soon as the two arbitrators were appointed in 1969, it was for the owners to take the next step. Either by applying to the arbitrators for directions, or (as they eventually did) omitting that step and delivering points of claim. By failing to take that step, it would look as if they—or their insurers—had little confidence in the claim. They may have suspected it was the master's own fault. Then, after five years, one of the arbitrators, Mr. Lynn, died. Still the owners did nothing. I do not see why the charterers at that stage should have been expected to appoint anyone in Mr. Lynn's place. It was for the owners—if they were pursuing their claim—to serve the charterers with notice to appoint a substitute for Mr. Lynn, see section 7(b) of the Arbitration Act 1950. By doing nothing, the inference was that the owners were not pursuing their claim. So much so that three years later the charterers were justified in assuming that the arbitration was at an end.
THE BREMER VULKAN CASE
The recent ruling of the House of Lords in Bremer Vulkan (1981) 2 Weekly Law Reports 141 has given much anxiety to many. It would appear to put upon each party to an arbitration a duty to get on with the case. If the claimant does nothing, it is the duty of the respondent to apply to the arbitrator. If the respondent does not fulfil that duty, the claimant can delay indefinitely—even for years—and then restore the case for hearing before the arbitrators—and the arbitrators must go on and hear and determine the case. That is the interpretation which we were asked to put upon the words of Lord Diplock. He said:
"The obligation is, in my view, mutual; it obliges each party to co-operate with the other in taking appropriate steps to keep the procedure in the arbitration moving, whether he happens to be the claimant or the respondent in the particular dispute".
And later:
"If what is done voluntarily by way of preparation is done so tardily that it threatens to delay the hearing to a date when there will be a substantial risk that justice cannot be done, it is in my view a necessary implication from their having agreed that the arbitrators should resolve their differences that both parties, respondent as well as claimant, are under a mutual obligation to one another to join in applying to the arbitrators for appropriate directions to put an end to delay".
This mutual obligation comes as something of a surprise to everyone: especially to the denizens of Essex Court and St. Mary Axe. Nothing of the kind was propounded before the judge, nor before us in the Court of Appeal. It appears for the first time in the speech of Lord Diplock in the House of Lords. It is, I suppose, too late for any words of mine to make any difference. It is for us to come to terms with it. It is said to be based on an implication. As such it goes beyond anything that I have hitherto understood. To my way of thinking the implication is neither obvious, nor reasonable, nor necessary. Nor does it accord with reality. If the claimant does not pursue his claim—if he makes no application to the arbitrator—it is said that the respondent is bound himself to do so. Who ever heard of a respondent doing any such thing? Take this very case. It was not the charterers who were claiming any money. It was the owners. If they wanted to pursue their claim, they should have taken steps to put in their points of claim—or to apply for directions. It was not for the charterers to do so. Just as the owners started the arbitration by taking the first step. So they should have continued it by taking the second or succeeding steps as they came around to be done. As we all know, the cases are legion in which arbitrators are appointed and nothing more is heard of the case. Sometimes it is settled. At other times the claimant simply lets it drop: and the respondent does nothing. Does that mean that the claimant can revive it five, eight, fifteen or twenty years later on? I cannot believe that the House of Lords intended any such thing. I think that we must have misunderstood the ruling in some way or other. Take this very case. If there really is a mutual obligation, the charterers, at the end of 1969, ought themselves to have roused the sleeping shipowners or have applied to the arbitrators for directions: and, as they did not do so, they are now in 1981 being faced with an arbitration—when all their evidence is lost. It would be most unjust to put such an obligation on the charterers—which no one had ever thought of before.
Lord Diplock made striking reference to the maxim "Vigilantibus non dormientibus jura subveniunt". The laws help the vigilant, not the sleepers. But that maxim can work both ways. If the shipowners had been vigilant and watchful, the laws ought indeed to help them—as against the sleeping charterers. But these shipowners were not vigilant—they went to sleep themselves. So they should have no claim on the laws to help them. The maxim simply does not apply. Two of their Lordships (Lord Edmund-Davies and Lord Russell) agreed with...
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