Yamashita-Shinnihon Steamship Company Ltd v L'Office Cherifien des Phosphates and Unitramp SA

JurisdictionEngland & Wales
Judgment Date07 April 1993
Judgment citation (vLex)[1993] EWCA Civ J0407-4
Docket NumberNo. 93/0259/B
CourtCourt of Appeal (Civil Division)
Date07 April 1993

[1993] EWCA Civ J0407-4





(Mr. Justice Saville)

Before: The Master of The Rolls Lord Justice Beldam and Lord Justice Kennedy

No. 93/0259/B

In The Matter Of The Arbitration Acts 19591970 And In The Matter Of An Arbitration BETWEEN: L'office Cherifien Des Phosphates First Plaintiffs Unitramp S.A. Second Plaintiffs and Yamashita-Shinnihon Steamship Co. Ltd. Defendants M/V "BOUCRAA"

MR. A. POPPLEWELL (instructed by Messrs. Herbert Smith, London W1) appeared on behalf of the Respondents (Plaintiffs).

MR. AIKENS Q.C. and MR. F. BROADBENT (instructed by Messrs. Ince & Co, London EC3) appeared on behalf of the Appellants (Defendants)




May an arbitrator exercise the power conferred by section 13A of the Arbitration Act 1950 to dismiss a claim on the ground of the claimant's inordinate and inexcusable delay in pursuing it when the delay occurred before 1st January 1992 (the date on which that section came into force)? That is the question raised by this appeal. It is a question of practical importance to arbitrators, particularly maritime arbitrators, a number of whom are deferring awards to await the outcome of the appeal. In order to help them and the parties to those arbitrations this hearing has been expedited.

The facts:


The claimants in this arbitration (it is unnecessary to distinguish between them) were owners of a cargo vessel named "BOUCRAA". They chartered her to the respondents in the arbitration to carry a bulk cargo from Vancouver to Aqaba. The voyage was completed in November 1984 and gave rise to an immediate complaint of damage by the owners, who in August 1985 referred the dispute to arbitration. Points of claim were served in December 1985, points of defence in February 1986 and points of reply in November 1986. Between January 1986 and November 1988 there was discussion between the parties of security for the claim and costs, but no security was provided. During 1991 the possibility of a preliminary issue to construe a clause of the charterparty was considered, but this proposal was overtaken by the charterers' application to dismiss for want of prosecution.


The sole arbitrator appointed by the parties in this reference was Mr. Michael Baker-Harber. He made a preliminary ruling on 27th February 1992 in which he held that section 13A was retrospective in its effect. On 13th August 1992 he made an interim final award: in this he dismissed the owners' claim in the arbitration, holding that the conditions in section 13A(2) were satisfied and that the power to dismiss should be exercised. Cresswell J gave the owners leave to appeal against the decision and on 2nd February 1993 Saville J allowed their appeal, in effect revoking the dismissal of the owners' claim. He certified under section 1(7) of the Arbitration Act 1979 that the appeal raised a question of law of general public importance and gave the charterers leave to appeal. So the issue comes to this court.


Dismissal for want of prosecution


If a plaintiff in ordinary litigation is guilty of inordinate and inexcusable delay in prosecuting his claim after the issue of proceedings, and the effect of the delay is such as to jeopardise a fair trial of the action or cause at least a risk of serious prejudice to the defendant, the court may (even in the absence of contumacious conduct or breach of a peremptory order) dismiss the plaintiff's action if the relevant limitation period has expired. That, very briefly put, is the upshot of a series of authorities of which Allen v. Sir Alfred McAlpine & Sons Ltd. [1968] 2 QB 229 and Birkett v James [1978] AC 297 are the most prominent.


At the time when those cases were being decided, dilatory conduct by arbitration claimants was every bit as common as that by plaintiffs, but the legal effect of such conduct, the courses open to the respondent and the powers of the arbitrator were the subject of some doubt. That doubt was dispelled by two decisions of the House of Lords, Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd. [1981] AC 909 and Paal Wilson & Co. A/S v. Partenreederei Hannah Blumenthal [1983] 1 AC 854. The effect of those decisions, again very briefly put, was this: arbitration is a consensual procedure; the parties owe each other a contractual duty to co-operate in progressing a reference; the claimant is under a duty to pursue his claim; but the respondent, being under a corresponding duty, cannot complain of a delay in which he has acquiesced; the reference continues until, if ever, a contractual abandonment of the reference can be inferred. Thus in arbitration the position was quite unlike that in litigation: the respondent, unlike the defendant, could not stand idly by, acquiescing in his opponent's delay, until the moment came to strike by launching an application to dismiss. Whereas defendants in litigation could let sleeping dogs lie ( Allen v. McAlpine, above, at pp 258E, 272E) a respondent in arbitration could not ( Bremer Vulkan, above, at p. 988A).


These decisions were almost universally criticised, not on the grounds of defects in their reasoning but because they were felt to be entirely out of touch with the realities of commercial life. In the market and in the courts there was a clamour that the law be changed so that stale arbitration claims could be dismissed in much the same way as stale claims in the courts. Views varied on whether this was a power to be exercised by arbitrators or by the courts themselves. In Hong Kong a power to dismiss was conferred on the court as early as 1982.


In England the plea for reform was eventually heeded. By section 102 of the Courts and Legal Services Act 1990, section 13A was inserted into the Arbitration Act 1950, giving to arbitrators a power similar to that exercised by the courts. Section 13A provides as follows:

"13A.-(1) Unless a contrary intention is expressed in the arbitration agreement, the arbitrator or umpire shall have power to make an award dismissing any claim in a dispute referred to him if it appears to him that the conditions mentioned in subsection (2) are satisfied.

(2) The conditions are -

(a) that there has been inordinate and inexcusable delay on the part of the claimant in pursuing the claim; and

(b) that the delay -

(i) will give rise to a substantial risk that it is not possible to have a fair resolution of the issues in that claim; or

(ii) has caused, or is likely to cause or to have caused, serious prejudice to the respondent.

(3) For the purpose of keeping the provision made by this section and the corresponding provision which applies in relation to proceedings in the High Court in step, the Secretary of State may by order made by statutory instrument amend subsection (2) above.

(4) Before making any such order the Secretary of State shall consult the Lord Chancellor and such other persons as he considers appropriate.

(5) No such order shall be made unless a draft of the order has been laid before, and approved by resolution of, each House of Parliament."


This section did not come into effect on the passing of the 1990 Act. By virtue of section 124(3) and S.I. 2730/1991 the section came into force on 1st January 1992. There can be no doubt at all about this mischief at which this legislative change was directed: it was the powerlessness of arbitrators (and the courts) to dismiss claims without a hearing on the merits where the claimants had been guilty of gross and unjustified delay in pursuing their claims and the effect of such delay was such as to jeopardise the prospects of a fair trial or to cause the other parties at least a real risk of serious prejudice. This situation had come to be seen as a significant blemish on the English arbitration regime, and the amendment was intended to remove it. Power was also taken to keep arbitration procedure in line with court procedure if the Secretary of State thought fit.


By 1st January 1992 the inordinate and inexcusable delay of which the arbitrator in this case has found the owners to be guilty had already occurred. The arbitrator did not convict them of such delay after that date. Thus the question is squarely raised whether section 13A is retrospective in its effect or, more simply, whether the arbitrator was entitled in law to exercise the power conferred by the section in reliance on delay by the owners before the section came into force. The charterers contend that he was so entitled, the owners that he was not.


The arbitrator's ruling


In ruling that he was in law entitled to exercise the power to dismiss on the basis of delay by the owners before 1st January 1992 the arbitrator relied on a number of considerations:

(1) Since section 13A was inserted into the 1950 Act, and was not enacted as a free-standing provision, it was to be assumed that Parliament intended the section to have retrospective effect and the power to be exercisable as if it had always been part of the Act.

(2) Since the amendment was made for the benefit of respondents and was intended to apply where a fair trial of the issues in the arbitration might not be possible, claimants would not be hard done by if the dismissal power were exercised retrospectively.

(3) Since section 13A did not take effect on enactment of the Courts and Legal Services Act 1990, and so gave claimants an opportunity to put their houses in order, it was to be inferred that the power conferred by the section was to be capable of retrospective exercise.

(4) The 1990 Act could have provided, but did not, that it applied...

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