HC Deb 18 July 1933 vol 280 cc1700-7

(1) Any party to an arbitration may at any step in the arbitration request the arbiter to state a case for the opinion of the court on any question of law relevant to the matters in dispute in the arbitration, and the arbiter may state a case accordingly and shall include in such case a statement of the facts which are admitted, or if evidence has been adduced are in his opinion proved and which are relevant to the question of law included in the case.

(2) In the event of an arbiter refusing to state a case, or refusing to include in the case stated by him any matter which a party considers to be material, a party may petition the court to direct the arbiter to state a case, or to include such matter in the case, and the court may give such directions to the arbiter as may seem to them proper.

(3) The parties to any agreement to refer any question or matter to arbitration may agree that the provisions of this section shall not apply to any arbitration under that agreement.

(4) In this section "arbiter"shall include arbiters and oversmen, and "the court"shall mean either division of the court, and there shall be no appeal to the House of Lords from any decision of the court unless such decision is not unanimous.

(5) This section shall not apply to any statutory arbitration in respect of which there already exists in terms of the statutory provisions applicable thereto a right to obtain a case stated by the arbitrator for the opinion of the court on any question of law.—[Mr. J. Reid.]

Brought up, and read the First time.

4.14 p.m.


I beg to move, "That the Clause be read a Second time."

This Clause is designed to apply to the very numerous class of cases where, particularly in commercial contracts, there is a clause sending a dispute to arbitration, and at the beginning of a contract of that kind it is quite impossible to foresee the nature of the disputes which may arise. In nine cases out of 10 those disputes will be of a technical character suitable for reference to a person acquainted with that kind of business; but in a test case a question of law is apt to crop up, a question never foreseen by the parties, and I venture to think that in many of those cases, speaking from my own experience, if parties had realised from the beginning what the ultimate question for decision was going to be, they would never have made a general reference to a non-legal man for decision.

In England for a generation there has been a provision under which, in the event of a legal question cropping up in a technical arbitration, the opinion of the court can be taken and I have never heard that this has led to any difficulty. On the contrary my impression is that it has been of great public service. In this proposed new Clause I am safeguarding the sanctity of arbitration which, perhaps, has been regarded in Scotland with a rather more favourable eye than in England, because I have included a provision that parties who do not want this form of stated case to the court may contract out of the Clause. The people of whom I am thinking are commercial people who do not foresee at the beginning what the upshot of a contract is going to be. I think it right, in a case of that sort, that the courts should be open for the solution of legal questions which arise un-expectedly.

I realise that there may be one or two objections to a procedure of this kind. It may be said that it would lead to additional expense. I think that the proposal would not lead to any substantial additional expense. The parties would save the expense of arguing a legal question before a non-legal man and an argument of that kind often proceeds at greater length than an argument on the same point in court The expense of going to court would be o negligible because the form of a stated case is a short form and the argument in general would be a short argument. It would go direct to the Inner House—to the Court of Appeal—and there would not be an appeal to the House of Lords except in the event of dissent in the bench which heard the stated case in the first instance. In the present state of business any case going up to the Court of Session could be heard within a very few weeks and, as I say, this procedure would cut out any appeal to the House of Lords except in a difficult case where there was a difference of opinion. As this new Clause gives the parties to arbitration a cheap and satisfactory method of deciding questions of law and does not impose anything on anybody, because it is possible to contract out of it, I ask the Government to allow this type of litigation to be started in the way proposed by the new Clause. This Bill provides for what is, in effect, an arbitration before a judge of the Outer House. It is undoubtedly extending the scope of the arbitration type of procedure and I ask the Lord Advocate whether he will not round off the scheme of the Bill by permitting an arbitration which has been started before an ordinary arbiter to be taken to the court on a question of law.

4.20 p.m.


I beg to second the Motion.

It is obvious that the underlying motive of this Bill is to make more efficient the machinery of justice in Scotland, to make that machinery more ready and more easy to use in doing justice between parties to disputes. It is notorious that in commercial circles disputes arising out of agreements and contracts are very often referred to the arbitration of non-legal men. As a rule no harm is done because no question of law arises, but one has heard of cases in which justice has been denied because a non-legal arbiter has been faced with a question of law which he was not competent to decide. The proposed New Clause aims at removing what is now a defect in one of the common forms by which citizens settle their disputes. It removes that defect by enabling a question of law, if and when it emerges in the course of a commercial or other arbitration, to be taken to the court and decided by a trained lawyer, and thereafter the matter goes back to the arbiter for final decision. The proposal of the New Clause is reasonable. Such a provision has been in operation in England for over 40 years. In the Arbitration Act of 1889 a similar provision to this was passed by the Legislature and it has been made use of in England to the great advantage of the parties concerned. It seems to me that the provision is so reasonable that the Government ought not to insist upon excluding it from a Bill the object of which is to render more efficient the machinery by which disputants in Scotland can settle their disputes.

4.22 p.m.


I think that this proposed New Clause should not be added to the Bill. For more than 200 years in Scotland it has been well-settled law that, when parties refer a dispute to an arbiter, that excludes the jurisdiction of the court. That is sound law and sound sense. Suppose that two parties are in disagreement. The sum in dispute is small and they are reluctant to take their dispute to the court. They foresee the possibility of an endless vista of appeals and a bill of costs mounting up rapidly. The one thing for which they are anxious is a speedy decision with the minimum of expense. Like sensible men they say "let us arbitrate"and they refer their dispute to some person in whose integrity they have confidence. That is the principle of arbitration as we know it in Scotland.

In 1695 an Act was passed called the Act of Regulations providing that no award of an arbiter could be reduced except on the ground of corruption, bribery, or falsehood. That does not mean that an arbiter has carte blanche. Assuredly not. Supposing he were, in his award, to make a pronouncement on a question which had not been submitted to him. Supposing, as we say, he travelled ultra fines compromissi—in that case his award could be reduced. Or, if he were, in the course of the proceedings, to violate what is termed the principle of natural justice, if he were, for example, having heard one of the parties to refuse a hearing to the other, there again he could be interdicted. But the mere fact that an arbiter has made a mistake or is said to be about to commit an error whether on a question of fact or of law, matters not at all. This proposed New Clause would undermine the whole structure of arbitration as we know it in Scotland. What have we here? The side note to the proposed New Clause is: Appeal from arbiters on questions of law. I think I should put it fairly if I put it thus. It means that in future there shall be read into every submission, whether it is there or not, an implied agreement to permit appeals. That, as I say, would undermine the whole structure of arbitration as we understand it. The hon. and learned Member for Stirling and Falkirk (Mr. J. Reid) will say, "But the parties can contract out."No doubt they could insert in their submission a clause prohibiting the right of appeal, but see how it would operate. In Scotland a submission does not require to be embodied in a formal deed. A deed is not necessary. A course of correspondence has been held sufficient to constitute a valid reference. Suppose that two traders in a country town in Scotland have a small dispute. They are not well off and they are anxious to avoid litigation. They do not want to go near the lawyers, so they do as their forefathers did. They submit the question in dispute to a mutual friend—a home-made submission if you will, but good enough. But it will not be good enough if this new Clause is passed. Their home-made submission does not contain a clause expressly excluding the right of appeal. They ought to have gone to a lawyer and the lawyer would have explained how the law has been altered in that respect, and I suppose he would have offered to draft for them an appropriate clause excluding the right of appeal.

Why should the law be altered? The reason given by the hon. and learned Member for Stirling and Falkirk and the hon. and learned Member for Kirkcaldy (Mr. Albert Russell) is that it would bring our law into line with the law of England. I have a great regard for the law and customs of my fellow countrymen south of the Border. I do not want to say anything which would seem in the least disrespectful to a great and friendly nation. I content myself with reading a passage from a judgment of one of the greatest of English judges, Lord Campbell, afterwards Lord High Chancellor, which I think throws some light on the difference between the attitude of the law of England and the attitude of the law of Scotland towards arbitration. Lord Campbell in the case of Scott versus Avery, 1856 (25 L.J. Ex. 308, at 313) said: There was no disguising the fact than as formerly the emoluments of the judges depended mainly or almost entirely upon fees, and as they had no fixed salary there was great competition to get as much as possible of litigation into Westminster Hall and a great scramble in Westminster Hall for the division of the spoil. That was in Westminster Hall. That is the inducement which is offered to us to bring our law into line with the law of England. I am gravely concerned for the integrity of the Scottish law of arbitration. I am even more concerned for the rights of the common people. The lieges in Scotland have two inalienable rights. One is the right to litigate. That is our protection against the aggressor and the wrongdoer. The other is a right which we esteem as highly, the right to arbitrate. That is our protection against the lawyers. I earnestly counsel the House to have nothing to do with the proposed new Clause.

4.29 p.m.

The LORD ADVOCATE (Mr. Craigie Aitchison)

I agree with the hon. Member for West Fife (Mr. Milne) who has expressed the view that if this House were to assent to the proposed Clause the result would be to innovate on our Scottish law of arbitration which is of long standing. The fact that it is 200 years old does not of course mean that you are not to change it, but I would point out to the House what would be the effect of this new Clause. You would be facilitating appeals in arbitration, and if you do that, you run a very great risk of destroying the whole character and value of arbitration. This matter was very carefully considered by the Royal Commission upon whose report the present Bill is based. The Commission unanimously reported against the proposal to apply in Scotland the provisions of the English Arbitration Act of 1889, and what I think will carry very great weight with Scottish Members of this House is that in that inquiry Lord Dunedin gave evidence and spoke against this proposal with a, wealth of experience in these matters to which no hon. Member can lay claim. He was clear that it would be a mistake to attempt to graft on to the Scottish system of arbitration any system of appeals derived from the system prevailing in England. Therefore, I regret that the Government cannot see their way to accept the proposed Clause.

4.31 p.m.


I regret that the right hon. and learned Gentleman does not see his way to accept this Clause. The hon. Member for West Fife (Mr. Milne) said that for 200 years the law of Scotland had not made a provision of this sort, but if you went back over 200 years, you would not find that there was a single commercial arbitration in Scotland. It is to meet a much felt want that my colleagues and I have put this Clause on the Paper. We have to-day in Scotland many commercial arbitrations. Many business men prefer, when there is a dispute, that the matter should be decided by a man in business rather than by a court. Frequently these arbitrations, when they are entered into, appear to he disputes on questions of fact, but in the course of the arbitration serious and difficult questions of law arise. In England in such cases there is a right to the parties to the arbitration to have the question of law settled by the courts, and it seems to me that that is an admirable procedure and one which would tend to do justice in Scotland. The point that in every little arbitration resort would be had to the courts is fully met by the provision in the Clause that the parties may contract out of the provision, and I feel that this Clause would add very beneficially to the present law of Scotland.

4.33 p.m.


As one who listened to very nearly the whole of these discussions in Committee upstairs, perhaps I may be allowed to say that I strongly appreciate the fact that three hon. Members opposite who have supported the Clause imagine that, by blindly copying everything English, they will get something good. That is a kind of inferiority complex which I do not like to see spreading to the great nation North of the Tweed, and although nine times out of 10 they would be right, this is one of the occasions when, if I may say so as a layman who has tried to understand the question—and we had a very good explanation of the matter upstairs from the Solicitor-General for Scotland—it would be a directly retrogressive step to go back on the principle of arbitration. Arbitration is being established more and more in every walk of life, and to try to make loopholes for people, when once they have agreed to accept arbitration, is not a helpful policy.

I think the hon. Members opposite who represent the legal profession in Scotland should have some tender mercies for their Scottish fellow citizens who are not lawyers, because, after all, the legal profession has a very good opening in these days, and in the case of many of the great businesses of this country, and more particularly of the small businesses, it saves enormous expense if they can arbitrate. I feel that these points ought to be made. There has been no official opposition to this Bill on any occasion, because there is no Socialist Scottish Member apparently who understands these Scottish affairs, and therefore I am glad to point out what seems to an outsider the common sense point of view, and that is the point of view of the Government. I hope the Scottish Law Officers of the Crown will pass a hint to the English Law Officers to try to get the blemish withdrawn from the English method rather than add the blemish to the Scottish method.

Question, "That the Clause be read a Second time,"put, and negatived.