Chandler v Goodwin
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Rix,The Master of the Rolls |
| Judgment Date | 16 October 2006 |
| Neutral Citation | [2006] EWCA Civ 1341 |
| Docket Number | Case No: 2005 2841, 2005 2721 and 2005 2844 B6 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 October 2006 |
[2006] EWCA Civ 1341
[2005] EWHC 2238 (Comm)
IN THE SUPREME COURT OF JUDICAT
COURT OF APPEAL (CIVIL DIVISI
ON APPEAL FROM THE HIGH COURT OF JUST
QUEEN'S BENCH DIVISION (Commercial Court)
Hon Mr Justice Morison
Royal Courts of Justice
Strand, London, WC2A 2LL
The Master of The Rolls
Lord Justice Rix and
Lord Justice Longmore
Case No: 2005 2841, 2005 2721 and 2005 2844 B6
Miss GERALDINE ANDREWS QC
(instructed by Zaiwalla & Co) for the Applicant
SIMON CROALL Esq
(instructed by Waterson Hicks) for the Respondent
This application (which was heard at the same time as the AstraZeneca case in which we have just given judgment) is an application for permission to appeal from a decision of Morison J in the Commercial Court in which he held that the shipowners' application to set aside an arbitral award for serious irregularity under section 68 of the Arbitration Act 1996 ("the 1996 Act") was to be dismissed. Having dismissed the application the judge refused permission to appeal. Section 68(4) of the 1996 Act provides:-
"(4) The leave of the court [viz the judge hearing the application in the High Court] is required for any appeal from a decision of the court under this section."
The question that arises is whether, in the light of that statutory provision, this court has jurisdiction to entertain an application for permission to appeal from the substantive decision of the judge to the effect that there was no serious irregularity on which the shipowners could rely.
The serious irregularity alleged was that the award was infected by the apparent bias of the umpire or third arbitrator (who had been appointed by the other two arbitrators) , Mr Duncan Matthews QC. The apparent bias was said to arise because on a previous occasion, Mr Matthews in his capacity as leading counsel had been instructed by a shipowner in another (earlier) matter ("the B case") who alleged that the opposite party was or might be concealing relevant documents. The terms of the charter were in dispute; a Mr Moustakas was the shipbroker and there was an application for disclosure of the broker's file pursuant to section 43 of the 1996 Act. Mr Matthews was not counsel in the case but was instructed on that application and, in due course, a consent order was made for production of the file to the arbitration tribunal on certain terms. As far as Mr Matthews was aware he had had no contact with Mr Moustakas on that occasion. Mr Moustakas was, however, a witness for the respondent shipowners in the arbitration before Mr Matthews and his co-arbitrators from which the current proceedings arise.
As to that, the position was that on 4th August 2004 the parties were notified of Mr Matthews' appointment as third arbitrator, by which date a 3 day hearing had been fixed for 5th-7th October 2004 in order to hear a number of preliminary issues arising in the charterers' claim against the shipowners. On the morning of the first day of the hearing Mr Moustakas, who was due to give evidence on that day, inquired who the third arbitrator was and on being told that it was Mr Matthews, suggested to Mr Zaiwalla, of the shipowners' solicitors, that an objection should be made because Mr Matthews had what Mr Moustakas said were "close connections" with the charterers' solicitors (Messrs Waterson Hicks) . Mr Moustakas later told Mr Zaiwalla's assistant that Mr Matthews had been instructed for shipowners by Waterson Hicks in the B case and that, in that case, serious allegations of a personal nature had been made against Mr Moustakas. (It later transpired that, after the section 43 application to the court, there was indeed a complaint that the consent order had not been complied with but by that time counsel previously involved had resumed the conduct of the case and Mr Matthews had no further involvement.)
Be that as it may, there was no opportunity for Mr Moustakas to give and for Mr Zaiwalla to receive full instructions about the concerns of Mr Moustakas before he began to give his evidence. Mr Zaiwalla considered the position at the end of the day but could not talk to Mr Moustakas since he was giving evidence. Mr Moustakas completed his evidence the following day and towards the end of his evidence made a reference "to another case to do with the production of a file". It was this reference together with a fax of 6th October from Mr Zaiwalla that brought the earlier B case to Mr Matthews' mind and, having reflected overnight, Mr Matthews read out a statement about the extent to which he had been involved in the B case. He concluded by saying that it would be wrong in principle for him to recuse himself. That led to a definite instruction by the shipowners to Mr Zaiwalla that an objection be made to Mr Matthews' continuing to sit as arbitrator. Nevertheless the arbitration proceeded, shipowners' leading counsel saying that his clients reserved their position on their stated objection to Mr Matthews continuing to sit.
In their opening skeleton in the arbitration, charterers heavily criticised the shipowners' disclosure. They were the same sort of points as had been made by Waterson Hicks (the same solicitors) in the B case in respect of different owners. The judge held that Mr Moustakas had a genuine feeling that Mr Matthews would or might have detected a pattern of misbehaviour in relation to disclosure even though in the B case Mr Moustakas had been the broker while in the current case he was in the shipowners' camp. The judge concluded:-
"The nature of the allegation; the pattern of them; the involvement of the same solicitors; [Mr Matthews'] involvement in the disclosure process a short time before sitting as arbitrator in judgment on the alleged dishonest party persuades me, for the reasons I have given, that [Mr Matthews] should have recused himself after objection was taken."
The judge went on to hold, however, that after Mr Matthews declined to recuse himself, shipowners' counsel should have indicated that that was not acceptable and that an application would be made to have him removed under section 24 of the 1996 Act but that the hearing could be concluded without prejudice to the shipowners' rights. After the conclusion of the hearing, that application should have been made. Instead there was merely a continuing objection in correspondence and the shipowners in due course took up the award. He said:-
"Owners were faced with a straight choice: come to the courts and complain and seek his removal as a decision-maker or let the matter drop. They could not get themselves into a position whereby if the award was in their favour they would drop their objection but make it in the event that the award went against them. A 'head we win and tails you lose' position is not permissible in...
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