Andrea v British Italian Trading Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SELLERS,LORD JUSTICE DIPLOCK,LORD JUSTICE PEARSON |
| Judgment Date | 21 February 1962 |
| Judgment citation (vLex) | [1962] EWCA Civ J0221-2 |
| Date | 21 February 1962 |
| Court | Court of Appeal |
In the Matter of the Arbitration Act 1950
In the Matter of an Arbitration
[1962] EWCA Civ J0221-2
Lord Justice Sellers
Lord Justice Pearson and
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal
(From: Mr Justice McNair - in Chambers)
Mr. H. A. P. Fisher. Q. C. and Mr. Joseph Dean (instructed by Messrs, Linklaters & Paines) appeared on behalf of the Appellants (Applicants, Buyers).
Mr. Michael Kerr, Q. C. and Mr. A. E. Diamond (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Respondents (Respondents, Sellers).
I will ask Lord Justice Diplock to give the first judgment.
This is an appeal from a judgment of Mr. Justice McNair in which he refused to set aside an award made by the Board of Appeal of the Incorporated Oil Seed Association in an arbitration arising out of a contract, in the standard form for that Association, for the sale of 2,300 tons of Gambia ground nuts March/April/May 1961 shipment c. i. f. Genoa or Taranto, one port to be declared at sellers' request but in any case not later than February 1st, 1961.
The contract contains an arbitration clause providing that all disputes from time to time arising out of the contract should be referred to arbitration "according to the Rules appended to this Contract". It is necessary for me to refer to a number of those Rules.
Rule 1 provides: "Any dispute arising out of a contract embodying these rules shall be referred to arbitration in London, each party appointing one arbitrator….and such arbitrators shall have the power if and when they disagree to appoint an umpire….whose decision is to be final". (I have left out some immaterial words in that Rule).
I turn to Rule 4: "All awards by arbitrators or an umpire shall be in writing on an official form issued by the Secretary of the Association…."; and then there is a provision that they can deal with costs.
Rule 5: "In case either party shall be dissatisfied with the award a right of appeal shall lie to the Committee of Appeal of The Incorporated Oil Seed Association provided it be claimed by notice given to the Secretary of the Association not later than 12 o'clock noon on the 28th day after the date of the award…." There follow some more immaterial words.
Rule 6: "The appeal shall be determined by a Board of Appeal consisting of four members of the Committee of Appeal of the Association in accordance with the Regulations of Associationfor the time being of The Incorporated Oil Seed Association, and the Rules of the Executive Committee for the time being in force…."
Rule 7: "The parties to an arbitration or an appeal to the Committee of Appeal shall not be represented or appear by Counsel or Solicitor on the hearing of such arbitration or appeal unless in the sole discretion of the arbitrators, or umpire, as the case may be, or Board of Appeal, the case is of special importance or questions of law are likely to arise upon which the opinion of the High Court of Justice may be required".
Rule 8 (which is an important rule for the purposes of this appeal): "The Board of Appeal shall confirm the Award appealed from unless not less than three of the members of the Board of Appeal decide to vary such Award. The Board of Appeal may award the payment of the costs and expenses of and incidental to the appeal but the appeal fee shall follow the award unless three of the members of the Board of Appeal shall direct otherwise. The Board of Appeal shall have the power to vary an Award (in addition to the power to vary in any other manner) by increasing, if the Board see fit, the liability of the Appellant. The award of the Board of Appeal whether confirming or varying the original award shall be signed by two members of the Board of Appeal and countersigned by the Secretary of the Association and when so signed shall be deemed to be the award of the Board of Appeal and of the Committee of Appeal and shall be final and conclusive in all cases".
It is quite clear from these Rules that where there is an appeal from an award of arbitrators or an umpire to the Board of Appeal, the award of the Board of Appeal supersedes that of the arbitrators or umpire and is the only binding award.
To deal with the nature of the dispute which arises in this case it is necessary for me to recite a few of the facts. The buyers did not declare any port – that is, either Genoa or Taranto – before the 1st February, 1961. On the 22nd February they did declare a port. The sellers claimed to rescind thecontract for breach of condition in not declaring the port before the 1st February of that year. On the 28th February the buyers brought against the sellers a claim at arbitration; and it is perhaps relevant at this stage to read a passage in a letter of the 6th March, 1961, written by the sellers, which sets out - if indeed it is not already clear from my brief recital of the facts - what the dispute of the parties was. That passage reads as follows: "We have already made it quite clear, as per our letter of the 23rd February and telegram of 1st March 1961 what in view of your not having conformed to the condition precedent in the contract requiring declaration of one port of destination in any case not later than the 1st February 1961 we are entitled to consider that the contract is void in so far as any obligation on our part to perform it is concerned".
On the 13th April, 1961, the arbitrators appointed by the respective parties having failed to agree, they appointed as umpire Mr. Bostelmann, and he held a hearing on the 28th April. Shortly after the hearing he consulted his solicitors as to the legal consequences of a breach of the term as to declaring the port, and on the 12th May he received a letter from those solicitors expressing their view on the legal point which he had put them. Within four days thereafter he gave a copy of the letter to the buyers' arbitrator, who made no complaint as to the umpire having consulted solicitors. On the 24th May the umpire issued his award, in the following terms: "I hereby award that buyers have failed to declare the final port of destination by the 1st February, 1961, and therefore the contract is void". He then went on to provide for costs, amounting to £24. 15s. 0d., to be divided, with the exception of one small item, which was to be paid by the buyers.
From that award the buyers, within the time limited by the Rules, gave notice of appeal to the Board of Appeal; and on the 21st August, 1961, there was a hearing by the Board of Appeal, who confirmed the award of the umpire in terms which I shall read. No complaint was made at the hearing before the Board ofAppeal about the letter which had been received by the umpire from his solicitors.
The award of the Board of Appeal is in the following terms. It is headed "Appeal", sets out the names of the buyers and sellers, and reads as follows: "The Board of Appeal elected to hear the Appeal presented by Giacomo Costa fu Andrea against the Award of Mr. M. Bostelmann, Umpire, dated 24th May, 1961, in respect of 2,300 tons Gambia Groundnuts, March and/or April and/or May 1961 shipment sold under a contract dated 7th November 1960 having considered the case do hereby decide that the original Award be confirmed and do further award that the fee of this Appeal amounting to £52. 10. 0. be borne and paid by Buyers".
On the 29th September the buyers issued a notice of motion seeking that the award made between the parties in the above named arbitration by Mr. Bostelmann the Umpire therein dated 24th May 1961 and confirmed by the decision of the Board of Appeal of the Incorporated Oil Seed Association dated 21st August 1961 be set aside and also asked for certain consequential relief. The two grounds which were persisted in in this court (there were other grounds which were dealt with in the court below) were, first, that the umpire, Mr. Bostelmann, had misconducted himself (there being no suggestion that there was any misconduct on the part of the Board of Appeal); and secondly, that there was error of law on the face of the award. The misconduct relied on – which was, of course, of a highly technical character and imputed no moral opprobrium – was that he had consulted solicitors on a point of law which arose in the hearing.
I will deal with the first ground first, namely, the application to set aside the award upon the ground of misconduct, and can deal with it I think shortly. This was made under section 23 of the Arbitration Act, 1950, which is in the following terms. Sub-section 1: "Where an arbitrator or umpire has misconducted himself or the proceedings the High Court may remove him". Sub-section 2: "Where an arbitrator or umpire has misconducted himself or the proceedings the High Court may set theaward aside". This section, in my view, clearly only relates to misconduct by the arbitrator or umpire who has made the award sought to be set aside (sub-section 2) or is conducting the proceedings which will result in a binding award (sub-section 1). In a two-tier arbitration such as this, the umpire is functus officio once he has made his award, and his award ceases to be binding as soon as the Board of Appeal has made its award either confirming it or varying it. It seems to me to be clear that only misconduct by the Board of Appeal would justify the court in acting under section 23 of the Arbitration Act; and no misconduct by the Board of Appeal is alleged.
Mr. Fisher has sought to avoid this consequence by relying on a sentence in the judgment of Lord Justice Jenkins (as he then was) in the case of London Export Corporation v. Jubilee Coffee Roasting Company Limited, reported in 1958 1 Weekly Law Reports, page 661. It is not necessary for me to go into the...
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