National Enterprises Ltd v Racal Communications Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE CAIRNS |
| Judgment Date | 17 October 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J1017-5 |
| Date | 17 October 1974 |
| Court | Court of Appeal (Civil Division) |
[1974] EWCA Civ J1017-5
Lord Justice Russell,
Lord Justice Cairns and
Sir John Pennxcuick
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Orders of Mr Justice
Mr CHRISTOPHER STAUGHTON, Q.C. and Mr RICHARD SCOTT (instructed by Messrs Stephenson, Harwood & Tatham) appeared on behalf of the Appellants, Racal Communications Limited.
Mr R.A. MacCRINDLE, Q.C. and Mr GAVIN LIGHTMAN (instructed by Messrs Pritchard, Englefield & Tobin) appeared on behalf of the Respondents, National Enterprises Limited.
This case is reported below at 1974 2 Weekly Law Reports, page 733- There is substantially only one point for decision in these appeals, whether in the circumstances there is Jurisdiction in the Court, under section 10(a) of the Arbitration Act, 1950, to appoint an arbitrator to determine differences that have arisen between the parties in respect of their contract.
The arbitration clause provided: "In the event of any dispute arising out of or in relation to this agreement, the same shall be decided by arbitration by an arbitrator appointed by the Federation of British Industries and by arbitration in accordance with the Arbitration Act, 1950 …"
Differences having arisen, the Federation of British Industries (in fact the Confederation of British Industries) has declined to appoint an arbitrator. It is not suggested that the reference to arbitration in accordance with the Act is an alternative to appointment by the Federation of British Industries. The arbitration clause is consequently simply a reference to an arbitrator to be appointed by X. Is there jurisdiction in such a case, under section 10(a), to appoint an arbitrator if X declines to act (as here) or is unable for any reason to act?
Section 10(a) confers jurisdiction "where an arbitration agreement provides that the reference shall be to a single arbitrator, and all parties do not, after differences have arisen, concur in the appointment of an arbitrator". Is this such a case?
It is common ground that section 10 is not a section which confers jurisdiction in all cases where the contract envisages the solution of differences by arbitration but themachinery provided does not operate. A simple example of this would be where the agreement provides for two arbitrators plus a third (or umpire) to be appointed by I, and I fails to appoint: no paragraph of section 10 extends to such a case
I consider first the construction of section 10(a) apart from authority, bearing in mind, as I have said, that the legislature has not intended a (so to speak) blanket power in the Court, and also bearing in mind that the section operates, if it does, to deprive a party of his ordinary right of recourse to the Courts: though that latter consideration should not, in my view, weigh too heavily in construing the section.
The appellant contends that the facts fit the language of section 10(a): the agreement provides for reference to a single arbitrator: differences have arisen: the parties have not concurred in the appointment of an arbitrator. The respondent answers that this is too simple an approach to the construction of the language: it roads the paragraph as if it said, after the first comma, simply "and if for any reason an arbitrator is not appointed" - language which would be very simple to select and apt to include the present circumstances: it is, the argument proceeds, reasonable and sensible to attribute significance to the actual words used after that first comma: and unless those words have a significance as pointing to a situation in which the agreement provides expressly or impliedly for the unnamed arbitrator to be appointed by the concurrence of all parties, they can have no significance, because appointment of an arbitrator with concurrence of all parties would displace the possibility of appointment by the Court under section 10(a),though, not of course under -action 10(b) if the circumstances required - for example, if the agreed arbitrator declined to act.
In my judgment, apart from authority, section 10(a) upon its true construction applies to a case in which the" arbitration clause provides for a single arbitrator to be agreed upon by the parties either expressly or impliedly. It does not apply when it is provided that he shall be appointed by X, unless (which is not the case here) there is an express or implied agreement that if X fails to appoint, the arbitrator shall be agreed upon by the parties and they do not agree.
The appellant, however, contends that there is authority binding upon this Court that section 10(a) does confer jurisdiction when the agreement only provides for appointment by X and X fails to appoint. That is the case of Davies Middleton & Davis Ltd. v. Cardiff Corporation (1964 Local Government Reports, page 134) in this Court. In that case the contract incorporated the clauses of a standard form, excluding and amending certain of them. No express mention was made of clause 27 of that form, which provided that any dispute should be referred to the arbitration of (blank) or, in the event of his death or unwillingness or inability to act, of a person to be appointed by X, A footnote to the standard form recommended that if the blank were not filled in, the reference to death etc. of the unnamed person should be deleted lest the reference to arbitration be ineffective. In the event the blank was not supplied: X on advice declined appoint. One party applied to the Court by originating summons for an Order appointing Y as arbitrator: the otherparty opposed upon the ground of lack of jurisdiction, that lack being solely because there was no written agreement to submit to arbitration at all. The Master and the Judge in Chambers ordered the appointment. An appeal to this Court was dismissed. I was a member of this Court on that occasion. My recollection based upon a reading of my notes of the hearing is clear that the only ground of appeal and the only contention in this Court was that clause 27 was not embodied or intended to be embodied in the agreement, or, if it was embodied, it was so uncertain as to be meaningless and ineffective - in short, the one ground of opposition below, that is to say, that there was no arbitration agreement within section 10(a) at all. That this was so appears also from the outset of the judgment of Lord Justice Sellers at page 135 It is true that apparently from my notes I indulged in a momentary speculation whether section 10(a) applied to a case in which the submission was to an arbitrator to be appointed by X but it also appears probable that if I touched upon the point at all during the argument of eminent Counsel for the appellant - as conceivably an alternative point in his favour - it was not accepted as an available point. The Court was unanimous in rejecting the appeal based as it was upon the grounds stated. Lord Justice Sellers and I were of opinion that, in the absence of any name in the blank space, the power in X to appoint was effective, the earlier reference to the death etc. of blank not being a condition precedent to the exercise by X of the power to appoint and should be ignored: therefore, there was an effective arbitration agreement. Lord Justice Pearson preferred the view that there was a condition precedent to the power in X to appoint, but thatthis left a simple power in the parties to appoint by agreement an unnamed arbitrator, which was an effective arbitration agreement. All three members of the Court were therefore against the appellant on the only issued raised in the appeal - whether there was an arbitration agreement at all - and, having decided that issue, the Court was, I consider, obliged to dismiss the appeal.
It was, however, in the present appeal contended that the principles of binding precedent applied, since upon the Tooting of the construction favoured by the majority of the Court in the Davies case there was no jurisdiction in the Master or the Judge to appoint in the circumstances, if the view that I take of section 10(a) is the correct one. Consequently it is...
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