Food Corporation of India v Antclizo Shipping Corporation (Antclizo)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Brightman,Lord Ackner,Lord Goff of Chieveley |
| Judgment Date | 05 May 1988 |
| Judgment citation (vLex) | [1988] UKHL J0505-4 |
| Date | 05 May 1988 |
| Court | House of Lords |
[1988] UKHL J0505-4
House of Lords
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Lord Brightman
Lord Ackner
Lord Goff of Chieveley
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Goff of Chieveley. I agree with it and for the reasons he gives I would dismiss the appeal. I wish in particular to express my entire concurrence in the plea he advances, in the concluding paragraph of his speech, for early legislation to correct the manifest defects in the present state of the law relating to the effect of inordinate and inexcusable delay in pursuing claims by way of arbitration.
My Lords,
I have had the advantage of reading in draft the speech prepared by to my noble and learned friend Lord Goff of Chieveley. I agree with it, and for the reasons which he gives I would dismiss this appeal.
I share his concern at the absence of any provision of law which would enable claims in arbitrations to be struck out on the ground of inordinate delay in their prosecution. A simple way of remedying this defect in the law would be an amendment by the legislature of section 12(6) of the Arbitration Act 1950, adding to the powers already conferred by it on the High Court a further power to strike out claims in arbitrations on that ground.
My Lords,
I have had the privilege of reading in draft the speech to be delivered by my noble and learned friend Lord Goff of Chieveley. I agree with it and in particular with his important footnote, that the time is ripe for a short enactment to remedy the shortcomings of the present situation. I also would dismiss this appeal.
My Lords,
I have had the privilege of reading in draft the speech to be delivered by my noble and learned friend Lord Goff of Chieveley. I agree with it and for the reasons he gives would dismiss this appeal.
My Lords,
There is before your Lordships' House an appeal by the Food Corporation of India against a decision by the Court of Appeal, dismissing an appeal by the appellants from a decision of Evans J., in which he dismissed an application by them for a declaration that an arbitration between them and the respondents, Antclizo Shipping Corporation, had been abandoned by mutual consent, and an injunction restraining further proceedings in the arbitration commenced by the respondents, having regard to the long delay which had occurred. The appeal to your Lordships' House is brought by leave of the Court of Appeal.
It at once appears that the present case provides yet another example of those cases in which it has been contended, for one reason or another, that, where an arbitration has been allowed to go to sleep for many years, the parties should be precluded from proceeding further with it. In Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [1981] A.C. 909, your Lordships' House, by a bare majority, rejected an argument that in such circumstances it may be held that the arbitration agreement has been repudiated. Indeed, in delivering the leading speech, Lord Diplock, concluded that a mutual obligation rested upon both parties to co-operate in proceeding with the reference to arbitration; and accordingly that, far from one party being able to treat as a repudiation the other party's failure to proceed with the arbitration after a long delay, he was himself in breach of contract in failing so to proceed. It is not understating the position to record that the effect of this decision, and indeed the reasoning upon which it is based, has provoked serious disquiet among the whole commercial community.
In particular, it has been suggested that the mutual obligation resting upon both parties to proceed with their reference to arbitration, as expressed by Lord Diplock, bears no relation to commercial reality; indeed, it is plain that (if it exists) it is honoured more in the breach than in the observance, because in arbitration, as in litigation, where the claimant does not actively pursue his claim, it is the usual practice of the other party, founded on sheer common sense, to do nothing in the hope that the claim will simply die a natural death. In such a case, to expect the respondent to stir up an apparently moribund claim in arbitration proceedings against him is most unreal: see, in particular, the outspoken criticism of Lord Denning M.R. in Andre et Cie. S.A. v. Marine Transocean Ltd. (The Splendid Sun) [1981] Q.B. 694, at 700-702. As a result, parties and their advisers have attempted to outflank the decision in the Bremer Vulkan case [1981] A.C. 909 by invoking other legal concepts. It was first suggested that, even if the arbitration agreement could not be held to have been repudiated, it might nevertheless be held to have been frustrated: this, which was a principal issue in Paal Wilson & Co. A/S v. Partenreederei Hannah Blumenthal (The Hannah Blumenthal) [1983] I A.C. 854, was rejected by your Lordships' House in that case. Next it was suggested that total inaction in an arbitration might give rise to an inference of a contract whereby the arbitration was mutually abandoned; indeed such a contract was inferred by the Court of Appeal in The Splendid Sun [1981] Q.B. 694, a decision which was approved by some members of your Lordships' House in The Hannah Blumenthal [1983] 1 A.C. 854. But it has since been suggested that such a conclusion may be difficult to reconcile with the ordinary principles underlying the formation of contracts at common law: see Allied Marine Transport Ltd. v. Vale do Rio Doce Navegacao S.A. (The Leonidas D) [1985] 1 W.L.R. 925, and the judgments of Bingham and Nicholls L.JJ. in the present case [1987] 2 Lloyd's Rep. 130, 143, 147; and it has also been pointed out that the line of authority on which the notion of an implied contract of abandonment purports to rest is remarkably slender. As a result, two new suggestions have since been advanced. The first is that, by virtue of an implication in the contract containing the reference to arbitration, a term should be implied to the effect that the right to proceed with an arbitration may lapse after the expiry of a reasonable time during which the arbitration proceedings are not proceeded with; see The Leonidas D at p. 928, and the present case at p. 147, per Nicholls L.J. This suggestion, if correct, would have the advantage that it might be fashioned, on the basis of the concept of reasonableness, to accord with the power of the court to dismiss an action for want of prosecution; certainly the officious bystander could have some very pertinent questions to put to the parties on this topic at the time of the formation of the contract. The second suggestion is that the court might exercise its power, under section 1 of the Arbitration Act 1950, to give leave to revoke the authority of one or more of the arbitrators, coupled if necessary with an order under section 25(2)( b) of the Act that the arbitration agreement shall cease to have effect with regard to the relevant dispute — a suggestion which is said to derive some force from the history of these provisions. Neither of these solutions has, however, hitherto been explored in litigation; and indeed it is not easy to reconcile the former with the mutual obligation to proceed with the arbitration, as expounded by Lord Diplock in the Bremer Vulkan case [1981] A.C. 909, 983.
In the present case, all members of the Court of Appeal expressed their anxiety about the present state of the law on this topic, in terms which have become depressingly familiar. There is little doubt that they gave leave to appeal in the present case, in the hope that your Lordships' House might conduct a full-scale review of the authorities and, in particular, a review of the mutual obligation as expounded by Lord Diplock in the Bremer Vulkan case — and even that, if they thought fit to do so, your Lordships might exercise their power under the Practice Statement (Judicial Precedent) [1966] 1 W.L.R. 1234 to depart from that decision. A similar invitation was extended to your Lordships' House in The Hannah Blumenthal [1983] 1 A.C. 854; but on that occasion the House declined the invitation. In a sense, therefore, your Lordships are being invited to depart from a previous decision not to depart from a previous decision; but I myself do not consider that this is a correct analysis of the situation. This is simply a repeated invitation to depart from the Bremer Vulkan case; and I cannot for myself think that an earlier refusal to respond to the invitation should stand in your Lordships' way if they were now minded to accept it. For my part, I cannot disguise my strong inclination to accept the invitation to review the whole position, if the circumstances were appropriate. Mr. Boyd, for the appellants, expressed his particular anxiety to advance the arguments founded upon an implied term of the arbitration agreement, and under sections 1 and 25 of the Act of 1950. But there must, I consider, in any event, be two prerequisites to such a review. First, your Lordships should not embark upon such a review unless they felt free, if necessary, to depart both from the reasoning and the decision in the Bremer Vulkan case. Secondly, they should not embark upon any such review unless they were satisfied that it would be of relevance to the resolution of the dispute in the instant case. Your Lordships' House has repeatedly stressed that they will not embark upon an inquiry into an issue which is only of academic interest: see, in particular, Sun Life Assurance Co. of Canada v. Jervis [1944] A.C. 111 and Ainsbury v. Millington [1987] 1 W.L.R. 379; a fortiori they should not do so where the...
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