Huyton SA v Jakil SpA

JurisdictionEngland & Wales
JudgeLORD JUSTICE BROOKE,LORD JUSTICE ALDOUS,LORD JUSTICE ROCH
Judgment Date24 March 1998
Judgment citation (vLex)[1998] EWCA Civ J0324-8
Docket NumberNo LTA + A 97/7135 CMS3
CourtCourt of Appeal (Civil Division)
Date24 March 1998

[1998] EWCA Civ J0324-8

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE ORDER OF MR JUSTICE CLARKE (QUEEN'S BENCH DIVISION)

Royal Courts of Justice

Strand

London WC2

Before:

Lord Justice Roch

Lord Justice Aldous

Lord Justice Brooke

No LTA + A 97/7135 CMS3

Huyton S A
and
Jakil S P A

MR N LEGH-JONES QC (Instructed by Richards Butler of London) appeared on behalf of the Applicant

MR S HALES (Instructed by Holman Fenwick & Willan of London) appeared on behalf of the Respondent

1

LORD JUSTICE BROOKE
2

This is an application by the Plaintiffs for leave to appeal from an order of Clarke J made on 16th September 1997 when he struck out for want of prosecution the Defendants' Notice of Motion to the Commercial Court dated 17th October 1996 challenging parts of an Interim Final Award of the Board of Appeal of the Federation of Feed Oil Seeds and Fats Association Ltd (FOSFA) dated 24th September 1996.

3

The parties' dispute arises out of a contract dated 1st June 1993 for the sale by the Plaintiffs to the Defendants of 3,500 tonnes of Chinese cotton seed for shipment between 1st and 15th June 1993 at a price of US$164 per tonne CIFFO Ravenna. The vessel was delayed on the voyage and did not arrive at Ravenna until 13th September 1993. The Defendants did not pay for the documents on the vessel's arrival, and the Plaintiffs declared default. In the arbitration the Plaintiff claimed just over US$464,000, plus expenses, based on the difference between the contract price and the price for which the goods were eventually disposed of in Italy on or about 4th January 1994.

4

Before the first tier arbitrators the Plaintiffs' claim failed. The umpire found that the Defendant was entitled to reject the documents because the bill of lading was ante-dated. The Plaintiffs appealed to the Board of Appeal, and following a two-day hearing in May 1996 the Board published its Interim Final Award on 26th September 1996. The Board held that the Defendants had not proved to the necessary high standard that the bill was ante-dated and it rejected other grounds relied on by the Defendants for rejecting the documents, and also their claim based on misrepresentation. In relation to the other issues canvassed before it, the Board found against the Defendants on what became known as "the quality issue" but for them on what were known as "the market price issue" and "the insurance issue", the latter two findings being fatal to the Plaintiffs' claim.

5

The Plaintiffs by their Notice of Motion sought leave to appeal under the Arbitration Act 1979 against the Board's adverse conclusions on the market price issue and the insurance issue, and by a Respondents' Notice the Defendants sought to uphold the Board's decision, as distinct from its reasoning, on the ground that it ought to have decided the quality issue in the Defendants' favour.

6

The Plaintiffs' motion came before Thomas J on 15th November 1996. He granted the Plaintiffs leave to appeal on the market price issue and the insurance issue, and granted the Defendants leave to appeal, if appeal was required, on the quality issue. However, for reasons he explained in his judgment he acceded to a request by the Plaintiffs for an order remitting to the Appeal Board the paragraphs of the award which dealt with the market price issue and the quality issue, and directed that their appeal should not be set down for hearing until 21 days after publication by the Board of the supplemental award which would arise out of the remission.

7

We have been supplied with a chronology which sets out the events between 15th November 1996 and 1st July 1997 when the Defendants issued a summons in the Commercial Court for an order to strike out the Plaintiffs' motion for want of prosecution. The timetable of events was as follows:

1996

November 15

Judgment of Thomas J

1997

January 31

Defendants' solicitors (HFW) ask Plaintiffs' solicitors (RB) for sealed copy of judge's order

February 24

Office copy of judge's order provided after original went astray. RB wrote to FOSFA and HFW concerning arrangements for the resumed hearing.

February 27

FOSFA asked RB to co-ordinate availability dates, indicating that a hearing in April or May was anticipated.

March 12-24

Correspondence between RB and HFW about length of hearing, dates etc.

April 7

FOSFA request a more definitive reply from RB on the question of dates, stating that its aim was to ensure that appeals proceed with the minimum of unnecessary delay.

RB reply that the case handler was abroad and would deal with the matter on his return.

July 1

Defendant's summons to strike out for want of prosecution issued and served.

8

This summons came before Clarke J on 15th September 1997 and he gave judgment the following day. He applied the test approved in this court in Secretary of State for the Environment v Euston Centre Investments Ltd [1995] Ch 200 when applicants are dilatory in pursuing High Court challenges to the awards of arbitrators and struck out the Plaintiffs' motion for want of prosecution. Although the Plaintiffs originally sought to challenge the basis on which Clarke J exercised his discretion, when he considered the significance of their appeal against the award, they have not pursued this proposed ground of appeal following observations by Hobhouse LJ when he directed that their application for leave to appeal should be heard inter partes, with the appeal to follow if leave is granted. He said that the point seemed to have been overlooked that the Award had been remitted by Thomas J, and that it would therefore seem that there must be a further hearing before the Appeal Board and a further Award: apart from this consideration, he would have been minded to say that Clarke J's discretion must stand. The Plaintiffs then recast their proposed challenge to the judgment of Clarke J along the lines I set out below. We decided, after a brief initial hearing, that the points Mr Legh-Jones QC sought to raise were fit for argument even on an appeal in an Arbitration Act matter, and that since no further delay would be involved in view of the way Hobhouse LJ had framed his direction, we granted leave to appeal and proceeded to hear the appeal.

9

It is convenient to set out a few background matters first. Arbitrators derive their power to strike out proceedings for want of prosecution on Birkett v James lines not from the common law but from Section 13A of the Arbitration Act 1950, which restates the familiar principles in statutory language. If a party to an arbitration seeks to challenge an award in the High Court, Paragraph 7.2 of the Guide to Commercial Court Practice provides that in arbitration matters it is the particular duty of the Court to see that court proceedings are not a cause of delay. In the Euston Centre case this court affirmed, with a slight change of language, the developing practice of commercial court judges to strike out court challenges if they were not being pursued with appropriate dispatch. Steyn LJ made it clear that the court's inherent power to strike out appeals to the High Court from awards of arbitrators was not limited to cases where the delay occasioned by one party was such as to cause serious prejudice to the other: it was exercisable whenever there had been a failure to conduct and prosecute an appeal with all deliberate speed.

10

The power of the High Court to remit matters for the reconsideration of an arbitrator is contained in Section 22 of the Arbitration Act 1950 which provides:

"(1) In all cases of reference to arbitration the High Court or a judge thereof may from time to time remit the matters referred, or any of them, to the reconsideration of the arbitrator or umpire.

(2) Where an award is remitted the arbitrator or umpire shall, unless the order otherwise directs, make his award within three months after the date of the order."

11

Mr Legh-Jones' first complaint is that the judge did not consider whether it was appropriate to strike out the proceedings begun by the Plaintiffs' Notice of Motion when there had been delay not in the appeal proceedings before the court but in an arbitration which had been revived by Thomas J's order. No argument had been addressed to the judge on the significance of the fact that the Respondents were seeking to strike out the remitted arbitration proceedings as well as the appeal proceedings in court. The distinction between the pending arbitration proceedings and the anticipated subsequent appeal proceedings in the Commercial Court had been obscured by treating a failure to prosecute the former as constituting delay in prosecuting the latter. He pointed out, correctly, that neither this court in the Euston Centre case nor Hobhouse J in The Leon [1985] 2 Lloyd's Rep 470 and The Faith [1993] 2 Lloyd's Rep 408 were concerned with a delay on a remission to arbitrators. These were the authorities on which Clarke J had relied in determining the principles relevant to the exercise of his discretion on the summons before him, and Mr Legh-Jones submitted that he was wrong to do so.

12

He accepted that the judge had an inherent jurisdiction to strike out proceedings on an appeal from arbitrators as an abuse of the process of the court, notwithstanding the order for remission, if there had been unacceptable delay, but he argued that since the matter was back before the Appeal Board when the summons to strike out was issued, the judge should have applied the only criteria which are available to arbitrators themselves when deciding to strike out an arbitration for want of prosecution, namely the criteria set out in Section 13A of the 1950 Act.

13

In my...

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