Cargill SRL (Milan) v P Kadinopoulos SA
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE,LORD JUSTICE LEGGATT,LORD JUSTICE BALCOMBE |
| Judgment Date | 12 November 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J1112-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 1990 |
| Docket Number | 90/1086 |
[1990] EWCA Civ J1112-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE EVANS)
Royal Courts of Justice.
Lord Justice Nourse
Lord Justice Balcombe
Lord Justice Leggatt
90/1086
MR. BERNARD RIX Q.C. and MR. CHRISTOPHER RUSSELL (instructed by Messrs. Sinclair Roche & Temperley) appeared on behalf of the Appellants.
MR. MARK HAVELOCK-ALLAN (instructed by Messrs. Hill Taylor Dickinson) appeared on behalf of the Respondents.
I will ask Lord Justice Leggatt to deliver the first judgment.
It is to be hoped that users have benefited as much as lawyers from form No. 64 of the Grain and Feed Trade Association (which I shall call "GAFTA") incorporating, as it does, the Arbitration Rules in form No. 125, with which on this occasion the court is immediately concerned.
Before the court is an appeal by Cargill SRL of Milan as buyers from an decision of Mr. Justice Evans dismissing an appeal from the Board of Appeal of GAFTA allowing an appeal by P. Kadinopoulos S.A. as sellers from the decision of a sole arbitrator, Mr. Meadows, who had declined to allow the sellers' claim to proceed in an arbitration before him as sole arbitrator on the ground that it was time barred.
It was as long ago as 28th May 1986 that the sellers sold a cargo of Greek Durum wheat to the buyers FOB one Greek port. The goods were shipped on 4th July 1986. On arrival in Sicily the buyers rejected them on the ground that there were radioactivity levels in the cargo which were unacceptable to the Italian authorities. A week later the defendants declared the sellers in default, and on 29th September 1986 the sellers claimed arbitration and appointed Mr. Meadows as their arbitrator. A few days later it was agreed between the parties that he should act as sole arbitrator.
The sellers should have served documentary evidence and submissions on Mr. Meadows or, alternatively, in accordance with the provisions of the Arbitration Rules, should have served a notice on the buyers renewing their arbitration claim before 29th September 1987 if they were to avoid the claim being deemed to have been withdrawn or abandoned under rule 2.8 of the Arbitration Rules. They omitted to do so, only forwarding their submissions and their documentary evidence to the sole arbitrator in June 1988.
It is convenient at this stage to read the material provisions of the Arbitration Rules, beginning with the provision directly in point. That is rule 2.8, entitled "Lapse of claim". It provides as follows:
"If neither the claimant nor the respondent submits any documentary evidence or submissions to the arbitrator appointed by or for him within the period of one year from the date of the appointment of the first-named arbitrator, then the claim to arbitration shall be deemed to have lapsed on the expiry of the said period of one year unless before that date the claim is renewed by a further claim to arbitration, to be made by either party notifying the other before the expiry date. Any such renewal shall be for a period of one year from the date of the giving of notice of renewal, when it shall lapse again unless renewed in the like manner as the first renewal or unless by then documentary evidence or submissions have been submitted by either the claimant or the respondent.
In the event of failure to renew a claim as provided in this rule, such claim shall be deemed to have been withdrawn and abandoned unless the arbitrator(s) shall in his/their absolute discretion otherwise determine upon such term as he/they may think fit."
It is of course to the last sentence of that provision that this appeal directly relates.
The previous provision is rule 2.7 which says:
"In the event of non-compliance with any of the preceding provisions of this Rule, claims shall be deemed to be waived and absolutely barred, unless the arbitrator(s) shall, in his/their absolute discretion, otherwise determine. If the arbitrator(s) do not exercise their discretion to admit a claim, then the Board of Appeal, on appeal, shall have the power in its absolute discretion, to determine otherwise, but not so as to overrule or set aside any determination already made by the arbitrator(s) to admit a claim."
I refrain from reading the preceding provisions of the rule referred to in rule 2.7, but it is to be noted that the rule itself is entitled "Procedure for claiming arbitration and time limits". When one turns to rule 8, under the heading "Right of appeal", one finds that rule 8.1 provides:
"No appeal shall be allowed on awards for condition where the goods have been sold on terms 'Guaranteed sound on arrival' and/or on 'Rye terms'".
Rule 8.2 reads so far as material:
"If any party, except as provided in Rule 8.1, be dissatisfied with an aribtration award, a right of appeal shall lie to a Board of Appeal provided that the following conditions are complied with…"
and there is no dispute as to compliance with the conditions that are then set out.
Rule 10 is entitled "Appeal procedure", and of immediate importance is rule 10.2 which provides as follows:
"An appeal involves a new hearing at which fresh evidence may be submitted, and the Board of Appeal may confirm, vary, amend or set aside the award of the arbitrator(s). In particular, (but not by way of restriction) the Board of Appeal may:-
(a) Vary an award by increasing or reducing, if the Board shall see fit, the liability of either party.
(b) Correct any errors in the award or otherwise alter or amend it.
(c) Award interest on any sum(s) awarded.
(d) Award the payment of costs and expenses incidental to the hearing of the arbitration and the appeal; such costs and expenses shall normally follow the event."
After the late submission of material to the arbitrator, the buyers took the point that the claim was deemed to have been "withdrawn or abandoned" (in the language of rule 2.8). The sellers asked the arbitrator to exercise his discretion to determine otherwise and allow the claim to proceed.
The matter having been argued before Mr. Meadows, he made an interim award on 13th February 1989 to the effect that the claim was to be deemed to have lapsed. In his interim award he concluded by setting out his findings in paragraph 6, which read as follows:
"6:1 The Rule 2:8 of the Arbitration Rules No. 125 was introduced into the Rules in order to give some certainty to parties against whom arbitration is claimed, but not pursued.
6:2 From the evidence before me there was no continuing dialogue—in fact there was absolute silence from October 1986, until the end of June 1988 when submissions and documents were sent to me with a copy to Respondent Buyers.
6:3 I FIND no compelling reason in this case to interfere with the purpose of the clause by exercising absolute discretion vested in me…"
and then in the published version of the interim award appear the words "the case". He may be supposed to have said "in the case" or something to that effect. At all events, he was saying that he declined to exercise his discretion so as to permit the claim to proceed. He finally said under the heading "Interim award":
"I ACCORDINGLY AWARD that Sellers' claim is deemed to have lapsed, been withdrawn and abandoned as provided for in Rule 2:8 of GAFTA Rules 125.
In the event that an appeal against this Award is not made as provided for in Rule 8 of GAFTA Rules No. 125 this Award shall become final."
And in an addendum to his interim award, under the heading "Award of arbitration", the arbitrator set out "the Fees and Expenses of this Arbitration" which he particularised, and provided that they should be paid by sellers. He added:
"In the event of an Appeal being lodged against this Award, Appeal fee for Members and Non-Members shall be" a sum which he then stipulated.
There was an appeal to the GAFTA Board of Appeal, with which the Board dealt by an appeal award dated 2nd June 1989. At the outset they stated their decision that the interim award be set aside and in substitution thereof they exercised their absolute discretion to allow the arbitration to proceed. In their findings in the concluding paragraph of the appeal award the Board referred to the provisions of rule 8.2 and rule 10.2 of the Arbitration Rules, both of which I have read. They cited the conclusion of the interim award, which I have also read, and then by paragraph 4.4 the Board said:
"Nothing contained in the Arbitration Rules expressly precludes the Board of Appeal from admitting a claim such as this to proceed. The only...
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