Kianta Osakeytio v Britain & Overseas Trading Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SOMERVELL,LORD JUSTICE MORRIS,LORD JUSTICE ROMER |
| Judgment Date | 09 April 1954 |
| Judgment citation (vLex) | [1954] EWCA Civ J0409-1 |
| Court | Court of Appeal |
| Date | 09 April 1954 |
[1954] EWCA Civ J0409-1
In the Suprime Court of Judicature,
Court of Appeal.
Lord Justice Somervell,
Lord Justice Morris, and
Lord Justice Romer.
MR DINGLE FOOT and MR T. O. KELLOCK (instructed by Messrs Arthur & Co.) appeared as Counsel on behalf of the Appellants (Plaintiffs).
LORD HAILSHAM, Q.C. and MR J. E. S. FAWCETT (instructed by Messrs W. A. Crump & Son) appeared as Counsel on behalf of the Respondents (Defendants).
This is an appeal from a decision of Mr Justice Devlin. The Plaintiffs are a Finnish Company engaged among other things in the selling of timber. In 1937 an agreement was entered into between the Plaintiffs and the Defendants for the sale by the Plaintiffs and the purchase by the Defendants of 5,000 fathoms of timber. The date ofthe agreement is the 5th August, 1937. The timber was to be ready for delivery at places in a district in Finland not later than September or October, 1938. There was an arbitration clause the material words of which are "In case of any dispute arising out of the interpretation of the fulfilment of this contract, such dispute, unless amicably settled, to be referred to arbitration in Helsingfors". Then it goes on with the details as to the appointment of arbitrators. Under that agreement 500 fathoms were not by the buyers and disputes arose as to that. There was a ten per cent. variation clause and one gathers there was a question as to whether that applied to the whole quantity of 5,000 fathoms. The sellers were clearly maintaining that the buyers ought to have taken this 500 fathoms and, as the price had fallen, if they were right about that they would have been entitled to damages. It is also clear that while, as it were, that dispute was maturing, there was also a desire by the parties to have a further contract with regard to the sale of timber.
On the 10th February, 1939, two agreements were entered into. One is an agreement, like the first, for the sale and purchase of timber, though the quantity is 2,500 fathoms instead of 5,000 fathoms, and the period is not later than 31st August, 1939. That contract contained an arbitration clause, but a different one: "Should any dispute arise out of the interpretation or fulfilment of this contract, such dispute, unless amicably settled, shall be referred to Mr John Worsoe, or any other person nominated by Messrs Churchill & Sim Ltd. for arbitration. The award in such arbitration to be final and binding on both parties". So far as the first agreement was concerned, it was not disputed that it was to be governed by Finnish law. On the 10th February there was that agreement entered into with regard to the further purchase of timber. There was a third agreement which has been referred to by Counsel as the compensation agreement, and that is in these terms: "It is hereby mutually agreed between Messrs KiantaOsakeyhtio of Helsingfors as sellers and Messrs Britain & Overseas Trading Co. Ltd. of London as buyers that (1) The balance of approximately 500 cubic fathoms of pit props remaining unshipped under the contract between these parties dated 5th August, 1937, is hereby cancelled, and that no further goods shall be delivered under the said contract. (2) In consideration of sellers having agreed to the cancellation of this unshipped balance, buyers agree to pay to the sellers in lieu of any other indemnity 11s. 0d. per fathom on every fathom delivered under the contract for about 2,500 cubic fathoms dated 10th February, 1939, in addition to the price payable by the buyers under the terms of this contract". The war intervened and no deliveries were in fact taken under that contract of February 10th, and no sums of 11s. 0d. on fathoms delivered were paid because no fathoms were delivered. After hostilities had ended the matter was taken up by the parties. A claim was made by the Plaintiffs for the sum of £1,375 which was the 11s. 0d. multiplied by 2,500, the number of fathoms; in other words, the sum which would have been paid if 2,500 fathoms had been delivered and the 11s. 0d. paid in respect of each fathom delivered. It was maintained by the sellers that the connecting of the payment with the delivery of the fathoms under the second contract was irrelevant to the Defendants' liability. The Defendants, the buyers, took the view, referring to the words which I have read, that as no fathoms had been delivered they were not under any liability to pay anything, in other words, that the second and third agreements had finally settled the rights, and as no sum was due under that no sum was due at all.
We were referred to the correspondence and also to what is called the Writ and the recitals in the Award. I agree with the learned Judge, who sets out in his Judgment the recital and the material provisions of the Award, that the dispute was it essence a dispute about the true construction of clause 2 of the compensation agreement. The Award was made in favour ofthe Plaintiffs. I should have said that the Defendants at this time took the point which they still take that the arbitration clause was inapplicable and they refused to appoint an arbitrator. I think in one of the letters they said: "If you want to sue you must sue in England". It is unfortunate that this dispute should have become a dispute as to which is the proper jurisdiction to decide whether there is liability or not.
The Plaintiffs, having got an award in their favour, brought an action here and sued on it, and that brings into operation section 37 of the Arbitration Act of 1950, the material parts of which are as follows: "In order that a foreign award may be enforceable under this Part of this Act it must have (a) been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed". Then sub-section 2: "Subject to the provisions of this subsection, a foreign award shall not be enforceable under this Part of this Act if the court dealing with the case is satisfied that (a) the award has been annulled in the country in which it was made; or (b) the party against whom it is sought to enforce the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case, or was under some legal incapacity and was not properly represented; or (c) the award does not deal with all the questions referred or contains decisions on matters beyond the scope of the agreement for arbitration".
It was submitted to the learned Judge on behalf of the Defendants, and it has been submitted to us, that this Award does contain decisions on matters beyond the...
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