Etri Fans Ltd v N.M.B. (U.K.) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WOOLF,LORD JUSTICE FOX |
| Judgment Date | 19 March 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J0319-3 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 87/0259 |
| Date | 19 March 1987 |
[1987] EWCA Civ J0319-3
Lord Justice Fox
Lord Justice Woolf
87/0259
CH. 1984 E. No. 5535
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(THE VICE-CHANCELLOR) (SIR NICOLAS BROWNE-WILKINSON)
Royal Courts of Justice,
MR STEWART BOYD, Q.C. and MR G. SHIPLEY (instructed by Messrs. Payne Hicks Beach) appeared on behalf of the Appellants.
MR DAVID DONALDS ON, Q.C.., and MR D. KITCHIN (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Respondents.
This is an appeal by two Japanese companies, Minebea Company Limited ("Minebea"), and Kondo Company Limited ("Kondo"), from a decision of the Vice-Chancellor given on 22nd October 1985, dismissing their applications to be joined as parties to the existing action between Etri Fans Limited ("Etri"), and NMB (UK) Limited, ("NMB"), and for an order that the action be stayed under Section 1 of the Arbitration Act, 1975.
The appeal raises issues as to the interpretation of that section and the approach which the Court should adopt to applications to be joined as a party to the proceedings where the only purpose of the application is to enable an application for a stay to be made.
Etri is a sister-company of a French company, Etri S.A. ("the French company"), and NMB is a subsidiary of the Japanese companies. The French company designs, manufactures and markets a range of axial fans.
Etri brings the action against NMB on the grounds that MB has imported into this country, and offered for sale, fans which infringe the copyright of the French company in the original engineering drawings of axial fans manufactured by the French company. Etri makes its claim as assignee of the copyright of the French company.
The fans which are the subject of the action were manufactured by Kondo in Japan. Kondo had been granted a licence authorising the manufacture of the fans by the French company by an agreement dated 21st May 1969. Kondo also had a licence to sell the fans, but not in the United Kingdom.
The agreement under which the licences were granted has an arbitration clause in the following terms:
"All disputes shall be finally settled by arbitration to take place in accordance with the Rules of the International Chamber of Commerce by an arbitrator appointed in accordance with the said Rules. The said arbitration shall take place in the country of the defending party and any counterclaim shall be dealt with at the same place by the same arbitrator. Arbitration procedure shall be conducted in the English language".
I am by no means satisfied that the matters complained of by Etri involve a dispute which falls within this arbitration clause. However, the Vice-Chancellor dealt with the applications of the Japanese companies on the assumption that the agreement properly interpreted is sufficiently wide to cover the claims made by Etri, and I will adopt the same course. However, even on this basis, I am satisfied that while this case does (as the Vice-Chancellor stated) raise a number of difficulties, the decision of the Vice-Chancellor is correct, and this appeal should be dismissed.
It is accepted that NMB, as opposed to the appellants, could not now succeed on an application for a stay. Having served a defence and having taken other steps in the action, even if the appellants' contentions on the facts and the law are correct, NMB would not be able to bring itself within Section 1 of the Arbitration Act 1975, since an application under that section has to be made "after appearance, and before delivering any pleadings or taking any other steps in the proceedings". Furthermore, if the Court has an inherent jurisdiction to grant a stay which goes beyond the statutory discretion given to the Court by Section 1 of the Arbitration Act 1975 (a matter with which I will deal later) then, having regard to the history of the proceedings, there could be no ground for the Court taking a different view under its inherent jurisdiction from that which it would take under the Act.
If the appellants are to succeed in this appeal, they have to show that the Vice-Chancellor was wrong in not permitting them to be joined as parties to the English proceedings, and that if they had been joined, they would have been entitled to have the proceedings stayed.
While the Court has a residual discretion where the conditions of Section 1 of the Act can be complied with by an applicant not to grant a stay, in the ordinary case, exercising its discretion judicially, the Court has no option but to grant a stay to an applicant who can fulfil the requirements of Section 1. If therefore, but for the fact that they were not parties to the proceedings, the appellants could bring themselves within Section 1, so they would almost inevitably be entitled to a stay, then they would have a powerful argument for saying that they should be allowed to join the proceedings so as to obtain the benefit to which they would then be entitled under Section 1.
I therefore prefer, before dealing with the question of whether the appellants should be joined in the proceedings, to come to a conclusion as to the outcome of the application for a stay on the assumption that the appellants' application to be joined as a party was successful. If, on this assumption, their application for a stay would, as a matter of law, fail, then there would be no purpose in allowing their appeal in respect of their application to be joined as defendants in the proceedings. (Etri only object to the appellants being joined in the action because their sole reason for wishing to be joined is that they believe this will enable them to achieve their object of having the action stayed).
Both Mr Boyd and Mr Donaldson, in their helpful submissions to this Court, identified the same requirements which have to be fulfilled by the appellants before they can take advantage of Section 1 of the 1975 Act, but they differ in the case of each requirement as to whether it was complied with by the appellants. However, it is sufficient for my purpose if I only deal with one of those requirements, namely, the requirement which identifies the party who may apply to the Court to stay the proceedings.
The part of Section 1...
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