Inco Europe Ltd v First Choice Distribution (A Firm)

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD NICHOLLS OF BIRKENHEAD,LORD JAUNCEY OF TULLICHETTLE,LORD STEYN,LORD CLYDE,LORD MILLETT
Judgment Date09 March 2000
Judgment citation (vLex)[2000] UKHL J0309-2

[2000] UKHL J0309-2

HOUSE OF LORDS

Lord Nicholls of Birkenhead

Lord Jauncey of Tullichettle

Lord Steyn

Lord Clyde

Lord Millett

Inco Europe Ltd.

And Others

(Appellants)
and
First Choice Distribution

(A Firm) and Others

(Respondents)
LORD NICHOLLS OF BIRKENHEAD

My Lords,

1

Section 9 of the Arbitration Act 1996 empowers the court to stay legal proceedings brought against a party to an arbitration agreement in respect of a matter which under the agreement is to be referred to arbitration. The issue on this appeal is whether an appeal lies to the Court of Appeal from a decision of the first instance court made under section 9. Section 9 is silent on the point.

2

The circumstances in which this question has arisen are set out in the judgment of Hobhouse L.J. in the Court of Appeal, reported at [1999] 1 All E.R. 820, 822. Nothing turns on the particular facts, so I can be appropriately economical in my rehearsal of them. On 24 June 1997 the plaintiffs issued a writ in the Manchester District Registry of the High Court claiming damages in respect of the loss of a consignment of nickel cathodes being carried from Rotterdam to Hereford. One of the defendants, Steinweg (Handelsveem B.V.), made an application for an order under section 9 of the Arbitration Act 1996 staying the legal proceedings, on the ground that the proceedings had been brought in respect of a matter the parties had agreed by their contract to refer to arbitration in the Netherlands. His Honour Judge Hegarty Q.C., sitting as a judge of the High Court, dismissed the application. He held that the arbitration agreement was 'null and void, or inoperative'. In order to appeal against this interlocutory order Steinweg needed permission to appeal. Steinweg sought permission from the judge, but this was refused. Steinweg renewed its application to the Court of Appeal. One of the questions the Court of Appeal had to consider was whether it had any jurisdiction to entertain the appeal. The doubt arose from a provision in section 18 of the Supreme Court Act 1981. The material part of section 18(1), as amended by the 1996 Act, reads:

'No appeal shall lie to the Court of Appeal -

(g) except as provided by Part I of the Arbitration Act 1996, from any decision of the High Court under that Part;'

3

Inco's case was an extremely simple one. Judge Hegarty's decision was a decision of the High Court under Part I of the Act of 1996. The saving exception does not apply, because nowhere in section 9, or indeed anywhere else in Part I, is there provision for an appeal from a decision of the court under section 9. Ergo, so the argument runs, the decision sought to be appealed falls four-square within section 18(1)(g): no appeal lies to the Court of Appeal.

4

If section 18(1)(g) as amended by the Act of 1996 is read literally and in isolation from its context, this argument is unanswerable. However, the Court of Appeal, comprising Hobhouse, Thorpe and Mummery L.JJ., rejected the submission. Hobhouse L.J. examined with care the development of the status of arbitration clauses in English law, the genesis of the Act of 1996 and the statutory context of the amendment. The amendment made by the Act of 1996 to section 18(1)(g) of the Act of 1981 was made by section 107 of the Act of 1996. Section 107 was concerned with 'consequential' amendments. The conclusion of Hobhouse L.J., at page 826e, was that a removal of the pre-existing right of appeal (with leave) from a decision whether or not to stay litigation covered by an arbitration clause would not be consequential upon anything contained in the Act of 1996. It would, he said, be a radical and additional provision. He continued:

'In my judgment such a change in the pre-existing law is not achieved by wording such as that used in section 107 of the 1996 Act. In my judgment the effect is that the amendment to section 18(1) of the 1981 Act must be understood as giving effect to the exclusions (and restrictions) on the right of appeal to the Court of Appeal laid down in Part I of the 1996 Act and no more. Thus, as is self-evident from the wording of the amendment, it is necessary to look at the provisions in Part I of the 1996 Act to ascertain to what extent the right of appeal to the Court of Appeal is excluded. If some provision of Part I does not exclude it, the right of appeal remains.'

5

Thorpe and Mummery L.JJ. agreed. The Court of Appeal granted permission to appeal from the decision of Judge Hegarty. Having considered the substantive grounds of appeal, the court then allowed the appeal and stayed further proceedings in the action brought by the plaintiffs against Steinweg.

6

Before this House is an appeal by the plaintiffs on the jurisdictional point. The plaintiffs do not seek to challenge the decision of the Court of Appeal if, contrary to their submissions, the Court of Appeal had jurisdiction to hear the appeal.

7

In my view the decision of the Court of Appeal was correct. Several features make it plain beyond a peradventure that on this occasion Homer, in the person of the draftsman of Schedule 3 to the Act of 1996, nodded. Something went awry in the drafting of paragraph 37(2) of Schedule 3. Paragraph 37(2) is the paragraph which set out the amendment made to section 18(1)(g) of the Act of 1981. Moreover, what paragraph 37(2) was seeking to do, but on a literal reading of the language failed to achieve, is also abundantly plain.

8

The starting point is to consider what was the purpose of section 18(1)(g) of the Act of 1981 as originally enacted. Sections 15 to 18 of the Act of 1981 are the statutory provisions regarding the jurisdiction of the Court of Appeal. Section 16 is the basic source of the Court of Appeal's jurisdiction to hear appeals from decisions of the High Court. Section 16(1) provides that 'subject as otherwise provided by this or any other Act' the Court of Appeal 'shall have jurisdiction to hear and determine appeals from any judgment or order of the High Court'. Section 18 is concerned with restrictions on appeals to the Court of Appeal. As originally enacted, the relevant part of section 18(1)(g) read:

'(1) No appeal shall lie to the Court of Appeal -

(g) except as provided by the Arbitration Act 1979, from any decision of the High Court -

(i) on an appeal under section 1 of that Act on a question of law arising out of an arbitration award; or

(ii) under section 2 of that Act on a question of law arising in the course of a reference;'

9

As paragraph (g) indicates, sections 1 and 2 of the Act of 1979 enabled the High Court to make decisions on questions of law arising out of arbitration awards or in the course of references to arbitration. These two sections contained restrictions on appeals to the Court of Appeal in respect of certain decisions. For instance, section 1(7) excluded an appeal to the Court of Appeal unless the High Court or the Court of Appeal gave leave and the High Court certified that the decision raised a point of law of general public importance. Thus, and this is the first feature to note regarding section 18(1)(g) in its original form, the phrase 'except as provided by the Arbitration Act 1979' did not mean 'except as enabled by the Arbitration Act 1979'. The Arbitration Act 1979 did not contain provisions empowering the Court of Appeal to hear appeals from decisions of the High Court on arbitration matters. As already noted, the source of the statutory power enabling the Court of Appeal to hear such appeals lies elsewhere, in the Act of 1981 itself. Rather, in this context the word 'provided' meant envisaged, or permitted. In more legalistic language, the phrase meant 'except in accordance with the provisions of the Arbitration Act 19797', those provisions being restrictions on appeal.

10

A second feature should also be noted. Section 18(1)(g) did not impose additional restrictions on the right to appeal to the Court of Appeal from decisions of the High Court mentioned in sub-paragraphs (i) and (ii) of section 18(1)(g). Section 18(1)(g) merely brought forward into section 18(1) restrictions on rights of appeal already expressed in the relevant sections of the Act of 1979. Presumably it was thought convenient and desirable that these restrictions,...

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