European Grain and Shipping Ltd v Johnston
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE OLIVER,LORD JUSTICE KERR |
| Judgment Date | 20 July 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0720-4 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 July 1982 |
| Docket Number | 82/0398 |
[1982] EWCA Civ J0720-4
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 PARKER)
Royal Courts of Justice.
The Master of the Rolls
(Lord Denning)
Lord Justice Oliver
and
Lord Justice Kerr
82/0398
MR. ANTHONY HAVELOCK-ALLAN (instructed by Messrs. Middleton Potts & Co.) appeared on behalf of the Appellants/Sellers.
MR. JEFFREY GRUDER (instructed by Messrs. Greene & Greene of Bury St. Edmunds) appeared on behalf of the Respondent/Buyer.
This case raises some points about the proper conduct of arbitrations. In particular whether the arbitrators must meet together to sign their award: or whether they can each sign it separately. The dispute arose out of the sale of wheat. The sellers were a London firm called European Grain and Shipping Limited of London. The buyers were a Norfolk firm of grain merchants called R. Johnston. In April 1980 there was a contract of sale between them whereby 600 tons of wheat, 5 per cent more or less, were to be delivered to the buyers—200 tons in May 1980, another 200 tons in June 1980, and another 200 tons in July 1980. The price was £98.25 per thousand kilos. It was subject to the arbitration rules of UKASTA (the United Kingdom Agricultural Supply Trade Association).
The first two batches of 200 tons were satisfactorily delivered. But when it came to the 200 tons in July 1980, the first 100 tons were delivered all right. But the second 100 tons were not delivered at all. There was a question about times and notices and so on which I need not go into. The upshot of it was that a dispute arose between the parties as to the last 200 tons. The sellers said that they wanted payment for the 100 tons which had been delivered. The buyers said they had a cross-claim in respect of the other 100 tons which had not been delivered. The price had gone up and they claimed damages for non-delivery accordingly. So there was claim and cross-claim.
When the sellers said that they wanted payment for the first 100 tons, the buyers deducted their cross-claim. It came to £2,775. They said they were deducting that sum from the price of the first 100 tons because of their claim on the second 100 tons. The sellers objected. They said that the buyers ought to pay the whole amount of the first 100 tons and that, if they had a cross-claim, they should go to arbitration on the other 100 tons. That was the dispute between the parties.
I will not go into the details. The UKASTA Arbitration Rules were shown to us. These provided for the arbitrators to proceed on documentary evidence and submissions, unless either party wished otherwise. They also provided for each party to appoint an arbitrator and a third arbitrator appointed by agreement. The sellers appointed a Mr. Defoe as their arbitrator. The buyers appointed a Mr. Lawrence as their arbitrator. Those two arbitrators appointed a third, a Mr. Little, who, in accordance with ordinary practice, would be the chairman.
But then this question arose: The sellers were saying to the arbitrators: "Only deal with our claim on the first 100 tons. Do not deal with the cross-claim at all". That was quite untenable. The dispute was as to both matters—whether payment should be made for the first 100 tons and whether there was a cross-claim on the second. Quite clearly all those matters came within the arbitration. There is no doubt whatever about it. It could not be severed into two separate contracts. It was all one running contract.
The point of interest which has arisen is this: Mr. Defoe was going to Australia before all the submissions were made. He told the other two arbitrators that he was going. Before he left, he signed in blank a form of award: and left the award itself to be filled in by the others. The form was completely blank save for Mr. Defoe's own signature. He then wrote a letter to the chairman stating his own views as to what the award should be: but also realising that there could be alternative views.
The other two arbitrators did not agree with Mr. Defoe's views. They differed from him. They agreed—the two of them—what the award should be. They filled in the blanks with their own views. They then put their own signatures below that of Mr. Defoe. The result was that—after Mr. Defoe had gone to Australia—on the 12th February, 1981 the other two arbitrators filled in the award. They left Mr. Defoe's signature on in ink, and they added their own signatures. I will read the award. It was in two parts:
"We, the undersigned, having been appointed to arbitrate in a dispute that has arisen between European Grain & Shipping Ltd.…and Richard Johnston (Grain Merchants)…in respect to 200 tonnes DNO Wheat delivery July 1980…have considered the case of each of the disputing parties respectively, and DO HEREBY AWARD"
Then this is the first part—
"that buyers shall pay to sellers the sum of £2,775 wrongfully deducted from their invoice No. 04470 due for payment on 29th August 1980 and shall pay interest on that amount at the rate of 16% per annum from 30th August 1980 until the date of this award. Payment to be made within 14 days from date of this award…"
There it is. They decided on the first 100 tons that the buyers wrongfully deducted £2,775. They ought to have paid the full amount: and they should pay interest on the amount outstanding. That is the first part. Then on to the second part:
"…and do further award that sellers are in default on 103.05 tonnes not delivered against contract, settling price on 1st August 1980 to be £126 per tonne and shall pay to buyers the sum of £2859.64 being the difference between buying price of £98.25 per tonne and settling price of £126 per tonne…"
So there it is. On the second part they ordered that the sellers had to pay the difference between the market price and the contract price. Those are the two parts of the award.
The buyers accepted the whole of the award—both parts of it. They paid to the sellers the sum of £2,775 and interest awarded in the first part: and the sellers accepted it. But the sellers took exception to the second part—in which they were held liable. I need not go through all of the technical points which were taken on behalf of the sellers. The judge disposed of them fully and faithfully. There are only two points which I need mention. The first is this: that is the effect of Mr. Defoe signing the award in blank: and then going off to Australia. He left the other two arbitrators to come to a decision, to fill in the blanks, and issue the award.
In Russell on Arbitration at page 247 it is said:
" All must make award together. Where there are two or more arbitrators, all should execute the award at the same time and place. If they do not, the award may be invalidated, but as the objection is one of a formal character, if no other objection is shown, the court may remit the award to the arbitrators for correction".
That statement is amply supported by the old cases which are cited in Russell. In particular by Lord v. Lord (1855) 5 El. & Bl. 404 where each of two arbitrators signed the award but did so at a different time and place. The Court of Queen's Bench upset it. But Mr. Justice Coleridge said (at page 406):
"It is now clearly established that every judicial act, to be done by two or more, must be completed in the presence of all who do it: for those who are to be affected by it have a right to the united judgment of all up to the very last moment".
That principle was accepted as correct by the Court of Common Pleas in Beck v. Jackson (1857) 1 C.B. (N.S.) 695.
Those cases are not binding on this court. I think the time has come when we should lay down a different rule. Business convenience requires it. Nowadays, whenever an agreement or award or any other document is to be done by two or three jointly, the practice is for one or the other to draw up a draft and send it to the other or others for their consideration and comments. One or other may suggest amendments and send it back. So it goes to and fro until the draft is agreed. Once the draft is agreed, all that remains is for it to be copied out in a legible form...
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