Tzortzis v Monark Line A/B
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EDMUND DAVIES,THE MASTER OF THE ROLLS |
| Judgment Date | 24 January 1968 |
| Judgment citation (vLex) | [1968] EWCA Civ J0124-3 |
| Date | 24 January 1968 |
| Court | Court of Appeal (Civil Division) |
[1968] EWCA Civ J0124-3
The Master of The Rolls (Lord Denning)
Lord Justice Salmon and
Lord Justice Edmund Davies
In The Supreme Court of Judicature
Court of Appeal
Civil Division
From Mr Justice Donaldson
MR MICHAEL KERR, Q.C. and MR RICHARD YORKE (instructed by Messrs Hedley Thompson, Edward & Butler) appeared as Counsel for the Appellants.
MR B. ECKERSLEY (instructed by Messrs Sinclair, Roche & Temperley) appeared as Counsel for the Respondents.
On the 7th November, 1963, there was a contract between Swedish sellers (Monark Line A/B of Stockholm) and Greek buyers (Mr Tzortzis and Mr Sykias of Piraeus) whereby the sellers sold the steamship "Montrose" to the buyers at a price of £38,000 in freely transferable pounds sterling. A deposit-was to be made with a Stockholm Bank and the cash amount was to be paid in pounds sterling transferable into Swedish kroner. The vessel was to be delivered and taken over at a Swedish west coast port. The memorandum of agreement was in the standard form in use in Scandinavia which had been approved by the Norwegian Shipowners' Association and adopted by the Baltic and international Maritime Conference. Later on disputes arose which were submitted to arbitration. The question now arises: "What is the proper law of the contract? Is it Swedish law or English law?
If you read the contract apart from the arbitration clause, it is clear that it has its closest and most real connection with Sweden. Sweden was the place of the contract. It was the place where the contract was to be performed both as to payment and as to delivery. But then we come to the arbitration clause which reads:
"If any dispute should arise in connection with the interpretation and fulfilment of this contract, same shall be decided by arbitration in the City of London and shall be referred to a single arbitrator to be appointed by the parties hereto. If the parties cannot agree upon the appointment of the single arbitrator, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the High Court or the corresponding Court at the place where the arbitration is to be held".
When the dispute arose, each side appointed an arbitrator. The third one was appointed by the High Court in England. There is apparently no provision in the Arbitration Act for the Court here appointing such a third arbitrator:but it was done by the High Court by consent. The High Court appointed Mr MacCrindle as tile third arbitrator. Then the question arose as to which was the proper law they were to apply, Was it English law or Swedish law? The arbitrators held that, in view of the arbitration clause, they were to apply English law. It was taken to the Commercial Judge, Mr Justice. Donaldson, who affirmed their decision.
Now the sellers bring the case to this Court. The amount in dispute is comparatively small; but the matter, they say, is of considerable importance. This standard form of agreement is widely used. The sellers contend that, as this contract had its closest and most real connection with Sweden, Swedish law should be applied, even in a London arbitration. They say that there is no difficulty in London in obtaining evidence as to Swedish law, and that London arbitrators have often to apply foreign law. The buyers answer that, by providing for arbitration in London, the parties have impliedly agreed that English law should be applied.
It is clear that, if there is an express clause in a contract providing what the proper law is to be, that is conclusive in the absence of some public policy to the contrary. But where there is no express clause; it is a matter of inference from the circumstances of the case. Now there is no express clause here, out only a clause that arbitration is to be in London. What is the proper inference in such a case?
The cases on this point start, as Mr Kerr reminded us, with Hamlyn & Co. v. Talisker Distillery, 1894 Appeal Cases, p. 202, and Spurrier v. La Cloche, 1902 Appeal Cases, p. 446, Those cases show that where you have the nationals of two countries providing for an arbitration to take place in the country of one of them, that is a very strong indication that the proper law of the contract is the place of the arbitration.
But Mr Kerr suggested that it was different when the place of the arbitration was not the country of one of the twoparties of which they were nationals but another country altogether. There ere, however, cases against him, notably N.V. Kwik Hoo Tone Handel Maatschappij v. James Finlay & Co. Ltd., 1927 Appeal Cases, p. 604, and the Naamloose case, 60 Lloyds Law Reports, p. 217. And I see no reason for any such difference. When Swedish sellers and Greek buyers agree on arbitration in London, it may fairly be presumed that they mean that English law is to be applied. In the Kwik Hoo Tong case, Lord Phillimore said (at p. 609): "The forum provided for the settlement of disputes is English and, therefore, the contract is intended to be governed by English law". And in the Vita Foods case, 1939 Appeal Cases, at p. 290, Lord Wright said: "The provision in a contract (e.g. of sale) for English arbitration imports English law as the law governing the transaction".
If one leaves the cases and turns to the text books, Dicey and Morris in the Eighth Edition, p. 1047, says that "as a rule, the parties, by fixing the place of arbitration, impliedly choose the proper law of their contract in general and that of the arbitration clause in particular". Professor Cheshire in the Seventh Edition at p. 193 says that an arbitration clause "may merely refer possible disputes to the tribunals of the chosen country or may go further and add that the tribunal shall apply the law of its own country". Then he says: "This addition, though convenient as a clear indication of the proper law, is not of vital significance, since for better or for worse English law is...
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