Zambia Steel & Building Supplies Ltd v James Clark and Eaton Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE O'CONNOR,LORD JUSTICE RALPH GIBSON,SIR DENYS BUCKLEY |
| Judgment Date | 16 May 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0516-7 |
| Docket Number | 86/0489 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 May 1986 |
[1986] EWCA Civ J0516-7
Lord Justice O'Connor
Lord Justice Ralph Gibson
and
Sir Denys Buckley
86/0489
No. 202/85
THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(SIR NEIL LAWSON)
Royal Courts of Justice,
MR. S. BURNTON, Q.C. and MR. M. McLAREN (instructed by Messrs. Slaughter & May, EC2) appeared on behalf of the Defendants (Appellants).
MR. M. POTTER, Q.C. and MR. C. GIBSON (instructed by Messrs. Field, Fisher & Martineau, WC1) appeared on behalf of the Plaintiffs (Respondents).
The defendants in this case sold a large quantity of sheet glass to the plaintiffs who are a Zambian company in Zambia. The glass was contracted to be sold C & F Dar-Es-Salaam. It arrived in four shipments during July, August and September 1977, and when the third shipment arrived in August a telex was sent by the plaintiffs complaining that the glass had been damaged in shipment in breach of contract. In due course a writ was issued claiming damages for breach of contract on 26th August 1983. It was not served until August of 1984, and the statement of claim was delivered on 12th October 1984. On 17th October the defendants moved to stay the proceedings on the ground that there was a binding arbitration agreement.
The contract had been arranged, to use a neutral term, between October 1976 and May 1977. The question is whether on the facts established by the documents and the affidavits the defendants have proved a valid arbitration agreement. In this case, it is within the Arbitration Act 1975 because the plaintiff is in Zambia. Section 1(1) of that Act provides, so far as relevant: "If any party to any arbitration agreement to which this section applies…commences any legal proceedings in any court against any other party to the agreement…any party to the proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings; and the court, [unless certain matters apply], shall make an order staying the proceedings."
"Arbitration agreement" is defined in section 7 of the Act. "'Arbitration agreement' means an agreement in writing (including an agreement contained in an exchange of letters or telegrams) to submit to arbitration present or future differences capable of settlement by arbitration."
So it is for the defendants to prove that there was an arbitration agreement in writing. That has to be done when an application for a stay is made, and at that stage the evidence placed before the court will be on affidavit. As is pointed out at page 418 by the authors of Mustill and Boyd, 'Commercial Arbitration', there may be circumstances where at that stage it would be necessary for the court to hear evidence as to whether an arbitration agreement is proved. But that is not the case here.
Before I examine the facts, it is necessary to say something about the evidence which was filed. It consisted of two affidavits sworn by Mr. Byford, who is the Export and Overseas Projects Manager of the defendants and held that position from 1975 onwards. To his affidavits he exhibited all documents in the case save two, and he gave his account of how the contract had been agreed with the plaintiffs. The only evidence filed by the plaintiffs consisted of a single affidavit by their solicitor, and that affidavit is really nothing but an attempt under the guise of an affidavit to argue the plaintiffs' submissions. The whole of it consists of examining Mr. Byford's affidavit and the documents exhibited thereto and seeking to argue that from his affidavit, from the documents exhibited and from the pleadings no binding agreement had been made to arbitrate.
In my judgment, that is quite valueless so far as any evidence in the case is concerned. It is not in dispute. The contract was certainly in part at least oral. It was made by an individual, a Mr. Mwanashiku, acting for the plaintiffs, and no evidence from him is forthcoming, not even in the form, from the solicitor, of "I am informed by Mr. Mwanashiku and believe". All that happened is that the solicitor exhibited two documents, to which I will refer, without in any way verifying any information as to them from her clients. The evidence, therefore, in the case is for practical purposes confined entirely to the evidence filed on behalf of the defendants.
With that introduction, let me take up the factual story. It begins in September 1976 when a Mr. Woolcott, who was a representative of Woodgate Limited, agents for the plaintiffs, made an approach as to whether the defendants could supply a large quantity of glass. We are talking of well over 100, 000 or 150,000 square metres of glass to a value running into a quarter of a million pounds or more. As a result of that inquiry the defendants produced a quotation, and the quotation is of prime importance because in the quotation is found the arbitration clause. It is dated 11th October and the face of it identifies the defendants as James Clark & Eaton Limited with their address, then "Our reference" and there is filled in "BN/399/October/76/VS". "Your reference" is left blank. Date "11th October 1976". Then the print reads: "Please quote our reference on all future communications. Your telephone contact is", and it is filled in "Mrs. J MacKenzie, ext. 16".
Returning to the print: "Dear Sirs, We thank you for your inquiry. We hope that our quotation set out below proves satisfactory and that you will decide to offer us the business. If any further information is required, please let us know. Yours faithfully, James Clark & Eaton Limited."
Thereafter the quotation was set out in different categories of glass which were required totalling £395,496. Payment terms were strictly net to be made by 180 days; draft documents against acceptance. "Terms of an irrevocable letter of credit made in favour of us confirmed by London bankers. These prices are based on the exchange rate of 1.58 to the pound and therefore will be subject to fluctuations. All import dues and/or taxes to be paid by consignee."
Below that in print there appears the following: "Quotations (which do not constitute offers) are made on our terms of business printed overleaf. Orders are only accepted and executed on these terms to the exclusion of all others E and OE." On the back: "Terms of business". There are eight numbered terms dealing with a variety of matters, and the eighth term reads: "Any disputes on the contract to be settled by arbitration in England according to English law and usage as provided by the Arbitration Act 1950 or any statutory modification thereof."
That quotation order was sent. It produced a purchase order. The original of that document, which was in fact a photocopy as sworn to by Mr. Byford, was sent by the plaintiffs to the defendants by their agents, Woodgate. For some reason it is dated 9th October 1976, but the date must be wrong because on its face it refers to the quotation by its correct identifying number, and we know that that was not despatched until 11th October. But nothing turns on that. The document repeats the quotation verbatim, and the document is called a "Purchase order". At the foot of the document there is printed matter: "This order is not valid without all signatures." Immediately above that there is space for authorised signatories, three of them, and they are all completed. "For conditions see attached." There is nothing on the back of the document, and the evidence is that nothing was attached when this document was received by the defendants. That is sworn to by Mr. Byford, and there is no evidence to the contrary.
Negotiations continued both as to quantities and as to price. There was a revised quotation on 25th October on the same form. There was an amendment to the purchase order in November, and matters then went to sleep while the letter of credit was being arranged. The letter of credit was forthcoming in April of 1977, and then in early May, in order to agree final terms it was necessary for Mr. Byford and Mr. Woolcott of Woodgate to go to Zambia, and they did go to Zambia and meet Mr. Mwanashiku. Mr. Byford told us in his affidavit what happened (page 30 of the documents): "I went to Zambia on 6th May 1977 and stayed until 11th May 1977 and there met Mr. Mwanashiku. Prior to my departure I prepared the quotation of 2nd May 1977…which was also on the pro forma contained in [the exhibits] and negotiations with Mr. Mwanashiku in Zambia were conducted around that document."
That document was again on the pro forma, which I have already recited, and it simply contained a variation of quantities and prices, the total on this occasion being £294,505.80. The final entry reads: "This quotation is subject to our final confirmation of your acceptance."
Returning to the affidavit, Mr. Byford says: "It took several days of negotiation in Zambia before agreement was reached, but finally the defendants' revised quotation was accepted by Mr. Mwanashiku and it was on the basis of that quotation (which expressly incorporates the arbitration clause) that the contract was made."
That is the evidence as to the formation of the contract. The statement of claim says in paragraphs 1 and 2: "By a contract concluded partly in writing and partly orally between the plaintiffs and the defendants between in or about October 1976 and in or about November 76 the plaintiffs purchased from the defendants quantities of glass, C &...
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