Petraco (Bermuda) Ltd v Petromed International S.A.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PURCHAS,LORD JUSTICE STAUGHTON,SIR ROUALEYN CUMMING-BRUCE |
| Judgment Date | 06 May 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0506-3 |
| Docket Number | 88/0390 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 May 1988 |
[1988] EWCA Civ J0506-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE PHILLIPS)
Royal Courts of Justice.
Lord Justice Purchas
Lord Justice Staughton
and
Sir Roualeyn Cumming-Bruce
88/0390
QBCOMI 1424/87
MR. M. DEAN, Q.C. and MR. J. GAISMAN (instructed by Messrs. William Stockler & Co.) appeared on behalf of the Appellants.
MR. K. ROKISON, Q.C. and MR. D. JOSEPH (instructed by Messrs. Clyde & Co.) appeared on behalf of the Respondents.
I will ask Lord Justice Staughton to deliver the first judgment.
On the 5th November, 1985 the parties to this appeal concluded an agreement for the sale of a quantity of crude oil. It was to be 400,000 barrels of Saharan Blend crude oil sold FOB Arzew or Bejaia with delivery the 14th/16th November, 1985. The contract provided that it should be governed by English law and that any dispute should be referred for determination to the High Court of Justice in England.
All did not go well. The sellers found that they did not have any Saharan Blend crude oil when the time for shipment came. They had another kind of crude oil which was not very different, so it is said, but the buyers did not want that. On the afternoon of the 14th November the sellers proclaimed their inability of supply Saharan Blend crude oil; and the buyers purported to accept that news as a repudiation of the contract. The buyers then sought to claim damages from the sellers. But there was a problem, because it was at the least doubtful whether the buyers would have been able to fulfil their duty to put in a ship to load the crude oil between the 14th and 16th November, if the sellers had had any crude oil to load.
The solicitors to the parties, having discovered the state of delay in the Commercial Court at that time, agreed to vary the contract so that the dispute should be referred to the arbitration of Mr. Bernard Rix, Q.C. That agreement was reached promptly on the 27th May, 1986. For my part I do not doubt that these experienced solicitors had in mind the Arbitration Act 1979, the extent to which that Act afforded a right of appeal from arbitrators, and the guidelines which had been formulated as to when leave to appeal should be granted.
The hearing before Mr. Rix came on very promptly, in October 1986. Unfortunately not quite enough time had been allowed—as does occur occasionally—and it had to be continued in January 1987. Mr. Rix made his award on the 14th July, 1987. He awarded damages in the sum of U.S. $235,108 to the buyers.
A number of points were dealt with in the award, but there is only one which is now really in issue. This was the question who had the burden of proving that the buyers would or would not have been able to provide a ship in time, and with what degree of certainty they had to prove it. There are passages in the award which suggest that the issue as presented to the arbitrator was whether the buyers would have inevitably been unable to provide a ship in time. If that was the case, then there was either no breach by the sellers or, at any rate, no damages. If on the other hand the arbitrator found that it was not inevitable that the buyers would be unable to provide a ship in time, then if was argued that there was a breach and there were damages.
It is, however, suggested before us that the proper test is different. It is not whether the buyers would inevitably have failed to put in a ship on time, but whether they would probably have been unable to do so.
The arbitrator made findings which to some extent covered both those topics. I should explain that the buyers had nominated a ship, the "Thomaas", but had reserved leave to substitute her with another. By the afternoon of the 14th November the "Thomaas" was inevitably doomed not to arrive before the 17th. The arbitrator found that. But it was questionable, in his view, whether the buyers might then still have found a substitute vessel in the Mediterranean which could have arrived on the 14th, 15th or 16th. The conclusion of the arbitrator was that the buyers had not proved that they could probably have secured a timely substitute. On the other hand, he concluded that it was not proved that they would inevitably have failed to do so. The arbitrator found it proved that they had a real chance of making a timely substitution.
The sellers applied to Mr. Justice Phillips in the Commercial Court for leave to appeal from the award. There was argument as to the substantive point, that is to say whether the question was whether the buyers were inevitably doomed to fail to provide a ship, or whether they would probably be unable to provide one. The judge having heard brief submissions on that point, it was then suggested to him on behalf of the buyers that the test of probability, if it was the relevant one, had never been argued by the sellers before the arbitrator. It was suggested to the judge that this in itself was a ground on which he should refuse leave to appeal; or at any rate it was a factor to be taken into account.
The judge refused leave to appeal. If that had been all that he did, it would not have been right for him to give any reasons, because, as was said in The Antaios [1985] A.C. 191, a judge considering an application for leave to appeal under the 1979 Act should not do so. But the judge was then asked, under section 1(6) (a) of the Arbitration Act 1979, for leave to appeal to this court from his own refusal of leave to appeal to the High Court. He granted that leave. In doing so, he was taking an exceptional course, but in my opinion he was quite right to take it. The House of Lords has said that leave to appeal from a refusal of leave to appeal from arbitrators should only be given where some question arises as to the guidelines generally to be followed on the granting of leave to appeal from arbitrators: see the speech of Lord Diplock, again in The Antaios. This case did, in the judge's view, raise a question as to the guidelines, and it has not been suggested that he was wrong in that respect.
Having decided to grant leave to appeal from his own refusal, the judge did have to give reasons, because it has been said that in such a case where the guidelines are in issue reasons should be given: see again the speech of Lord Diplock in The Antaios.
The judge said that he formed the following conclusions:
"(i) The arguments advanced by Mr Dean"—who appeared for the...
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