Tradax Export SA v Volkswagenwerk AG (La Loma)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE SALMON,LORD JUSTICE EDMUND DAVIES |
| Judgment Date | 20 November 1969 |
| Judgment citation (vLex) | [1969] EWCA Civ J1120-1 |
| Date | 20 November 1969 |
| Court | Court of Appeal (Civil Division) |
[1969] EWCA Civ J1120-1
The Master of The Rolls (Lord Denning),
Lord Justice Salmon and
Lord Justice Edmund Davies
In The Supreme Court of Judicature
Court of Appeal
Appeal of plaintiffs from Judgment of Mr. Justice Megaw on 27th January 1969.
Mr. BRIAN DAVENPORT (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Appellant Plaintiffs.
Mr. ANTHONY DIAMOND (instructed by Messrs. Holman Fenwick & Willan) appealed on behalf of the Respondent Defendants.
Tradax deal in corn and grain. In 1963 they chartered a British motor vessel "La Loma" to carry a cargo of grain from Toledo, Ohio, to London or Hull. She was loaded at Toledo, but, owing to the depth of water there, the Easter did not take on the full cargo specified in the charterparty. She was loaded light. When she got to Hull the owners of the vessel, the Volkswagenwerk Company, claimed a lien in respect of dead freight. In order to release the goods, the charterers paid the sum of £1,103. 13s.0d.: but they paid it under protest. They said that the Master ought to have taken the full load. Under the charterparty Tradax had guaranteed 25 feet of fresh water draft available in the approach channels to Toledo. They said it was fulfilled. They claimed back the money they had paid.
The charterparty contained the Centrocon Arbitration Clause, which says that all disputes were to be referred to the arbitration of two arbitrators "carrying on business in London who shall be members of the Baltic and engaged in the shipping and/or grain trades, one to be appointed by each of the parties with power to such arbitrators to appoint an Umpire…………. Any claim must be made in writing and claimant's arbitrator appointed within three months of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred.: The discharge was completed on the 15th December, 1963. The three months would expire on the 15th March, 1964. So the claimants' arbitrator had to be appointed by the 15th March, 1964.
Well within the three months, in a telex of the 27th January, 1964, the charterers, Tradax, said to the owners. "This payment is under reserves and we will get into arbitration to settle this question. Please note that we nominate Mr. J. Chesterman, 3, Lloyds Avenue, London, E.C. Please let us know the name of your arbitrator. We request you to cancel immediately the lien on the cargo." They confirmed it by aletter of the 30th January, saying: "……we have nominated Mr. John Chesterman, 3, Lloyds Avenue, London, E.C.3, who will act as our arbitrator"
Now, here is the point, Tradax did not tell Mr. Chesterman anything about his being nominated. They did not even send him a copy of the letter. They did not tell Mr. Chesterman anything until the 24th July, 1964. They then wrote to him. "A dispute has arisen between the owners of the ss/ La Loma", Messrs. Volkswagenwerk A.G., Wolfsburg, and ourselves as to the payment of the deadfreight. We have taken the liberty of appointing you as our arbitrator; vessel owners have nominated Mr. B.A.S. Clyde to act as their arbitrator'1. The point in the case is, when did Tradax appoint Mr. Chesterman? Was it when they told the owners? or when they told Mr. Chesterman himself? If it was on the 27th January when they told the owners, then the appointment was in time. But, if it was not till the 24th July when they told him, then the appointment was out of time.
Meanwhile the owners appointed Mr. Clyde to be their arbitrator. Mr. Clyde on the 9th March, 1964, wrote to Mr. Chesterman. You are representing the Charterers, Messrs.
Tradax; I the disponent Owners of the ship, Meessrs. Volkswagenwerk. I have got my file, I think it is complete, or nearly complete. Let me know what is the situation at your end." In reply Mr. Chesterman told Mr. Clyde that he had no knowledge of the matter, he could not trace being nominated. So he did nothing. It is a pity that he did not write to Tradax and ask them if he should act. But he did not do so. So the three months expired without Tradax telling Mr. Chesterman about it.
As soon as Mr. Chesterman in July 1964 received notice of his appointment, he took it up with Mr. Clyde. But then the owners said it was too late. The three months had expired. For some two years or more, until 1967, Tradax let the matter sleep. Then they asked the Court to hold that the appointment of Mr. Chesterman was made within the three months.
So we have to decide; what is necessary to constitute the appointment of an arbitrator? I think the answer is this: First, it is necessary to tell the other side. That is plain from ( Tew v. Harris 1847 11 Q.B.7). Second, it is necessary to tell the appointee himself. That is obvious because he often has to start acting at once. Third, it is necessary that he should be willing to act and have intimated his willingness to accept the appointment. In Russell on the Law of arbitration it is said "Acceptance of the office by the arbitrator appears to be necessary to perfect an appointment." There is a passage in ( Ringland v. Lowndes 1863 15 C.B. (N.S.) 173) which gives some support to that statement.
Mr. Devonport by great diligence has discovered the case of Cox v. Johnson in 1914 State Reports of New South Wales when at page 250 it is said. "In my view all that is required by the section" – that is, a similar section - "is nomination by each party to the other of the person whom he has selected to act on his behalf. I think that statement may have been right in relation to the facts and evidence in that case. But I do not think it is of general application. I think in general it is essential that, not only the other side should be told, but also that the arbitrator himself should be told.
Mr. Devonport took a special point. He said that Mr. Chesterman was, so to speak, the standing arbitrator for Tradax. As long ago as 1960 Tradax had decided that, in any case of a charterparty arbitration in which they were involved, Mr. Chesterman would be acting as their arbitrator. They appointed him, not on a permanent retainer, but habitually and regularly as their arbitrator whenever he was free to accept the appointment. In consequence, I think it may fairly be assumed that Mr. Chesterman would have been willing to accept the nomination. But I do not think that is enough. Mr. Chesterman ought to have been told that he was nominated as arbitrator, otherwise his appointment was not complete. I see no difficulty in complying with this rule. Tradax could have told Mr. Chesterman that hewas appointed, at the same time as they told the owners. A telephone call, or letter, a telex message, or anything would do long as be was told. The three months' provision could easily be satisfied.
I am sure that it was an oversight that Mr. Chesterman was not told. So much so that if Tradax – as soon as...
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...by reading into the section the requirement that a party must have notice before time begins to run against him. 6 In Tradax Export S.A. v. Volkswagenwerk A.G., (1970) 1 Q.B. 537, Lord Denning and Lord Justice Salmon both stated that notice was necessary to complete the appointment of an a......
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