HL Deb 13 March 1934 vol 91 cc97-109

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Askwith.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF ONSLOW in the Chair.]

Clauses 1 to 4 agreed to.

Clause 5:

Provisions relating to umpires.

5.—(1) The following paragraph shall be substituted for paragraph (b) of the First Schedule to the principal Act (which sets out certain provisions which are to be implied in an arbitration agreement unless the contrary intention is expressed therein):—

"(b) if the reference is to two arbitrators, the two arbitrators shall appoint an umpire immediately after they are themselves appointed," and in paragraph (c) of Section five of the principal Act after the word "arbitrator" there shall be inserted the words "or where two arbitrators are required to appoint an umpire."

(2) At any time after the appointment of an umpire, however appointed, the Court may, on the application of any party to the reference and notwithstanding anything to the contrary in the arbitration agreement, order that the umpire shall enter on the reference in lieu of the arbitrators and as if he were a sole arbitrator.

(3) At any time after an umpire has entered on a reference in lieu of the arbitrators, whether under the provisions of this section or otherwise, any of the arbitrators may give evidence or act as an advocate on behalf of any party to the reference.

LORD ASKWITH

moved, in subsection (3), after "arbitrators," to insert "and as a sole arbitrator." The noble Lord said: I am moving that certain words be inserted to show that the arbitrators must have shed their power of arbitration before they can appear either to give evidence or as advocates, if they do both or either, before the umpire. It is an endeavour to meet the point which was raised by my noble friend Lord Ponsonby on the Second Reading, when he was doubtful owing to the strength of the wording. It is clear, I think, from the law, which was decided some time ago, that an arbitrator under those conditions actually leaves his power of arbitration, except, possibly, in the circumstances that the umpire might die and the arbitrators might be called upon to appoint a new umpire. The reason was given in a case before the Court of Appeal. The present noble and learned Viscount on the Woolsack, then sitting as Lord Justice Sankey, pointed out that in certain cases the arbitrator, or the man who had been appointed an arbitrator, was the only person who really could, as an expert, say anything about the goods. In the event of the goods being perishable goods they might have to be destroyed at once. The case in question, I think, was one where a ship had been detained in the Goodwins and was carrying meat from the Argentine to London. The meat got old and mouldy and bad and the question was whether it was due to the detention or whether it was due to the bad packing. The Court decided in that case that evidence could be given by the arbitrator after he had shed his power of arbitration and when the umpire had the sole decision. These words make it clear that the umpire has the sole decision. I beg to move.

Amendment moved— Page 3 line 39, after ("arbitrators") insert ("and as a sole arbitrator").—(Lord Askwith.)

On Question, Amendment agreed to.

LORD ATKIN

Before Clause 5 is put, I should like to point out that in subsection (3) there is a provision that after an umpire has entered on a reference in lieu of the arbitrators, any of the arbitrators may give evidence or act as an advocate on behalf of any party to the reference. The position of an advocate is one that is quite inconsistent with that of an arbitrator, whether an umpire is acting in lieu of him or not, and it appears to me to be a very dangerous practice to give statutory validity to the conception that anybody, once he has been appointed as an arbitrator, can in an arbitration act as an advocate. There are certain classes of cases, commercial arbitrations, where it has been quite usual for this practice to be adopted and I do not think it should be brought to an end. But that depends entirely upon the consent of the parties by reason of their having entered into an arbitration of a kind in which it is usual for them first to give evidence and then to act as arbitrator. In this case, however, the arbitrator would have power to act as advocate against the will of the other side, which, it appears to me, would constitute a very grave difficulty and would be objectionable in principle. I do not know whether the noble Lord would be willing to consider the possibilities of omitting those words, because if he did it would leave the right to act by consent quite untouched.

LORD ASKWITH

]: I have had a conversation with my noble and learned friend. As he seems to object to the words "or act as an advocate" I am prepared to agree to those words being omitted. I will do that on Report.

LORD ATKIN

That will be quite satisfactory.

Clause 5, as amended, agreed to.

Clauses 6 to 9 agreed to.

LORD RHAYADER

moved to insert the following new clause after Clause 9:

Enforcing award.

". On any final award (not being an award in the form of a special case) for a liquidated sum, the party in whose favour the award is made shall be at liberty to serve on the other party or parties a copy of the award, and on filing at the Court an affidavit of service and copy of the award judgment shall be entered in the terms of the award."

The noble Lord said: I have put down this Amendment at the request of the Chamber of Shipping. They quite recognise that the Bill goes a long way in the right direction, but they feel that it ought to go a little further in their direction. At present there is a great deal of delay as well as unnecessary expense in enforcing awards. You have to go to Court and it is very easy to set up fictitious counter-claims which cause delay. I am told that that practice is not infrequent. Section 12 of the principal Act provides that the award may, by leave of the Court or a Judge, be enforced in the same manner as a judgment, and Clause 10 of this Bill carries that out to some extent in cases where leave is given by the Court. But it is very frequently desirable to go further than that. In cases where a straight award is made for a liquidated sum—that is to say, an award for a specified sum at a specified rate—the successful party might be put in a position to enforce the award without delay in exactly the same way as a successful litigant can enforce a judgment of the Court.

I quite see that there may be difficulty in applying such a rule to an award in the form of a special case which necessitates a decision of the Courts, but I can see no good reason why simple awards for liquidated sums to one or other of the parties should not be treated in the same way as la judgment. In the case of a judgment specifying that a certain sum is due to one of the parties it is filed at the Court and execution can immediately be issued if the amount is not paid. In the case of a simple award the party in whose favour the award is made should be at liberty, on serving a copy of the award on the other party, to file at the Court an affidavit of service of the final award and thereupon judgment should be entered without any application to the Court for the amount specified by the award to be payable. That is why I put this proposed new clause on the Paper. I beg to move.

Amendment moved— After Clause 9, insert the said new clause.—(Lord Rhayader.)

LORD ASKWITH

I hope my noble friend will not press this Amendment. It introduces ground for controversy which would make things very difficult. He goes much further than either the MacKinnon Report or the Reports of other Committees which have dealt with this particular question. The Amendment would give the go-by to Section 12 of the original Arbitration Act, 1689, which says that an award or submission may, by leave of the Court or Judge, be enforced in the same manner as a judgment or order of the Court, and it gives the go-by to Clause 10 of this Bill. I might point out that the MacKinnon Committee did not go so far as to say that an award of this kind should necessarily be filed as a judgment of the Court. They gave certain ways in which delays might be mitigated. One is by an amendment of Order 64, Rule 14, as to the time within which questions may come before the Court or when an award might become, through the Court, a judgment. That time should not be so long as to prevent a judgment being obtained earlier. They also mention something which is secured by the Schedule to this Bill; that is, that security of costs should be obtainable.

A final judgment in the terms of the award can be given under Clause 10 of this Bill, where leave is given, as under Section 12 of the principal Act. That makes it a judgment of the High Court and the MacKinnon Committee gave a strong hint as to the value of a judgment compared with an award in foreign countries. Foreign countries pay much more attention to a judgment of the High Court in England than to the decision of an arbitrator of whose appointment they know nothing, of whom they have not heard, who may be simply an arbitrator ad hoc and who has really no locus standi in the eyes of the public though he may have as between parties. I therefore suggest that this proposed new clause goes too far and that it would be much safer to leave the matter as it is at present with the additions that have been put into the Bill. Further, supposing an award could be made a judgment in this manner, it creates difficulty in cases where an application ought to be made to the Courts for setting aside judgment on the various grounds that might be alleged, because it has already become a judgment from the fact of the award being given, and a most serious position and grave injustice might result in such a case. Therefore I am afraid I cannot accept the Amendment.

THE MARQUESS OF READING

I hope my noble friend will not persist in this Amendment. Apart altogether from the observations which have been addressed to us by the noble Lord opposite, in answer to this Amendment, I think there is very grave objection to the proposed new clause as it stands. All that has to be done is to serve a copy of the award and then, on filing at the Court an affidavit of service and copy of the award, judgment shall be entered. Judgment is to be entered without the other party having an opportunity of stating grounds why judgment should not be entered. There may be various objections to the award, and I think from every point of view this clause is objectionable. It does what would never be allowed in any court of law—namely, an ex parte application to be made resulting in judgment.

THE LORD CHANCELLOR (VISCOUNT SANKEY)

I would like to join in the appeal to the noble Lord to withdraw this Amendment. It would result in judgment being given without the other party having an opportunity of asking for a stay, pending proceedings to set aside the award. I am all in favour of speeding up the Arbitration Law and the ordinary law, but really this Amendment gives no time to other parties, but enables an award to be turned into a judgment without the party against whom it is made having an opportunity of raising any objection to it.

LORD RHAYADER

This Amendment appears to have brought up against me a number of legal authorities, and, although I feel that we ought to find some better way of dealing with the matter than we have at present, possibly my Amendment goes too far, and I must leave it at that. I recognise so fully the authority of my noble friend Lord Askwith on this question, that I shall bow to his judgment rather than follow my own, and beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clauses 10 to 15 agreed to.

Clause 16:

Limitation of time for commencing arbitration, proceedings.

16.—(1) The statutes of limitation shall apply to arbitrations as they apply to proceedings in the Court.

(4) For the purpose of the statutes of limitation as applying to arbitrations and of the said Section four hundred and ninety-six of the Merchant Shipping Act, 1894, as amended by this section, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other party or parties a notice requiring him or them to appoint an arbitrator, or, where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring him or them to submit the dispute to the person so named or designated.

(5) Any such notice as is mentioned in subsection (4) of this section may be served either:—

  1. (a) by delivering it to the person on whom it is to be served; or
  2. (b) by leaving it at the usual or last known place of abode in England of that person; or
  3. (c) by sending it by post in a registered letter addressed to that person at his usual or last known place of abode in England;
and where a notice is sent by post in manner prescribed by paragraph (c) service thereof shall, unless the contrary is proved, be deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of post.

(7) For the purposes of this section the expression "the statutes of limitation" includes any enactment limiting the time within which any particular proceeding may be commenced.

LORD RHAYADER

moved to leave out subsection (5). The noble Lord said: This Amendment raises a question of considerable controversy. At the same time it does try to deal with a very real grievance in regard to shipping matters—a grievance which is very constantly occurring, and that is with regard to the form of serving notices where the other party is a foreigner. I remember a case given to me where there was a Norwegian shipowner whose ship had been chartered to a San Francisco charterer, who sublet the ship to an Australian charterer. There was an arbitration clause in the agreement made. The San Francisco charterer did not fulfil the terms of the charter, the ship was late, and heavy loss resulted to the Australian charterer. The Australian charterer wishes to enforce the arbitration clause, which runs as follows: That any dispute arising under this charter shall be referred to arbitration in London (or another port if arranged) one arbitrator to be nominated by the owners and another by the charterers, and in case such arbitrators shall not agree then to the decision of an umpire, who shall be appointed by the said arbitrators, and the award of the said arbitrators or umpire shall be final and binding upon both parties hereto. The arbitrators, including the umpire, shall be commercial men. That is the clause, but how is this unhappy man in Australia to enforce the clause against the man in San Francisco?

He can bring an action in the Courts, but that is a very long and expensive process, and what is wanted, it seems to me, is the carrying out of the arbitration clause. That would be done if he could serve his notice, and to some extent Clause 16 of the Bill deals with this service of notice, but deals entirely with the service of notice in this country, and there can be no possibility in this particular case of serving notice outside this country. Again I would say to Lord Askwith that some way ought to be found of dealing with these cases, and in this particular instance I have the support of the MacKinnon Committee, which in paragraph 6 (h) of its Report, says this: for substituted service of notices required by the Act; this should include a provision for the service upon an agent in this country of a party resident abroad—a thing not included in the ordinary machinery of the Courts under the name of "substituted service." Any such order should specify the time within which such a notice shall be complied with, having regard to the course of post, to the residence of the foreigner concerned, etc. Subsection (5) of Clause 16 does nothing in such a case, and I have therefore moved to leave out subsection (5) in order to substitute for it the new clause on the Paper.

That clause says: . Any notice under the Arbitration Acts, 1899 to 1934, may be served either—

  1. (a) by delivering it to the person on whom it is to be served, or to an agent in England who signed the reference to arbitration on behalf of a party or parties abroad; or
  2. (b) by leaving it at the usual or last known place of abode in England or abroad of that person, or of an agent as aforesaid; or
  3. (c) by sending it by post in a registered letter addressed to that person at his usual or last known place of abode in England or abroad, or to an agent as aforesaid."
It seems to me a reasonable and possible procedure. These shipping men, practically all of them, have agents in London, and if the clause which I have suggested were accepted the difficulty of my Australian friend would not arise. I am afraid that a great many questions of legal jurisdiction, and of the power of pleading in foreign Courts and tinder foreign law, and so forth, may arise, but I hope that those difficulties may be disposed of. I beg to move.

Amendment moved— Page 8, line 14, leave out subsection (5).— (Lord Rhayader.)

LORD ASKWITH

I understand from the method in which the Amendment is put down that if subsection (5) remained the proposed new clause after Clause 16 would not come in. If, on the other hand, subsection (5) were omitted from the Bill, then the noble Lord's proposed Lew clause after Clause 16 would come in. I am sorry that I cannot see my way to accept this Amendment, because I know that the noble Lord is anxious to improve arbitration and to assist in any way he can. But I must point out to him that there are two kinds of service in the Courts. There is the ordinary service, which would apply to arbitration as well, where a person can easily be found, where his address is known, and where an agent is appointed who is prepared to act upon his behalf. Those would be ninety or more cases out of 100. But in the other cases where a man wishes to get away, or where for one reason or another there is evasion, you have to have substituted service.

Now substituted service is not a very easy thing for which to lay down rules. An attempt, I have been told, was made in 1928 by a very strong Committee, and they came to the conclusion, after discussing it at great length, that it could not be introduced into arbitration; that arbitration should not be hampered by a large number of rules, as in a substituted service. If substituted service, particularly to deal with cases abroad, did come into use now, it would be much more suitably introduced in some amendment of the Arbitration Act of 1930, which deals with foreign awards—an Act which I have not attempted to interfere with, and which raises a most difficult and controversial subject. If it is in the Court, the position is rather different. You have there a solicitor, who is an officer of the Court, has got a place of abode in London, and is known. He is acting as the agent of this person. If the case is in the High Court there is a writ, and there is an entry required. Those identify the people, and they identify the place of service, and the person can be got at. But with an arbitrator, until an arbitrator is appointed he cannot enter upon his reference. He cannot get hold of the people, and there is no one upon whom he can serve the thing or with whom he can deal. He is obliged to act upon his own, and he has none of the powers of the Court of getting at the person, or of finding out whether the substituted service has really arrived or not.

The way out is really for these great associations, like the Shipping Association that my noble friend talked about, to follow the example of other associations. There is the Incorporated Oil Seed Association and the London Corn Trade Association—both very important associations indeed—and they do not attempt to go as far as my noble friend proposes. The first of these associations says that the service of proceedings upon a person, where substituted service is required, by leaving the same at the office of the London Corn Trade Association together with the posting of copies of such proceedings to his Address abroad, or in Scotland or Northern Ireland, is to be deemed good service, any rule of law to the contrary notwithstanding. The man must be a member of the London Corn Trade Association, and he must agree in his contract that a letter sent to him at the London Corn Trade Association is good service upon him. Further than that, subsection (5) is limited in its construction; but by this new clause the Court, once the judgment had been entered, would be unable to do anything more. It would introduce a more serious change than anything I had contemplated by this Bill, and I think it would not apply to arbitration in general and, except in a very few cases, would not be required at all.

THE LORD CHANCELLOR

I should like to make a similar appeal to my noble friend. I am not without sympathy with him, but the object of this Bill is to keep the law of arbitration as simple as possible, and we do not want, if we can avoid it, to have any complicated procedure, which has unfortunately not only delayed, but rendered legal matters so very much more expensive. One of the most complicated matters in legal procedure is this question of substituted service. We have had a great number of decided cases upon it. There is always great difficulty with regard to it, both with regard to the agent upon whom the service is to be made, and the place at which the service is to be made. Fortunately this Bill, as drafted, avoids all these complicated questions. And may I point out to the noble Lord that if parties to an arbitration really do desire to provide for service on agents, the remedy is in their own hands, and they can set up the necessary machinery in their own arbitration clause? I think this has been done in many arbitration clauses, which have been referred to by the noble Lord, Lord Askwith, particularly in the corn trade clause, which provided for service on brokers. There seems to be no reason why this should not be done in other cases. At any rate, to apply this generally would complicate the simple arbitration proceedings to a most unpleasant degree.

LORD RHAYADER

I shall certainly not press this. At the same time there is a real grievance, which ought to be dealt with somehow, and the main object of the Arbitration Act is, I understand, to get rid of the Courts. I beg leave to withdraw.

Amendment, by leave, withdrawn.

LORD RHAYADER

moved to leave out subsection (7). The noble Lord said: The MacKinnon Report raises this point in paragraph 44, which says: There are certain statutes which refer to the bringing of a suit, or taking legal proceedings, or the like, as affecting rights and liabilities. Instances are as follows:—

  1. (a) Section 496 of the Merchant Shipping Act, 1891, which deals with deposits of freight with a wharfinger, provides in subsection (3) that at the expiration of thirty days 'unless legal proceedings have in the meantime been instituted by the shipowner,' etc.
  2. (b) Carriage of Goods by Sea Act, 1924, Schedule, Article III, Rule 6, provides that all liabilities shall cease 'unless suit is brought within one year,' etc.
  3. (c) Section 3 of the Limitations Act, 1623, speaks of 'actions of debt…being commenced and sued,' etc."
Subsection (7) says that for the purpose of this section—that is Clause 16 of the Bill— the expression 'the statutes of limitation' includes any enactment limiting the time within which any particular proceeding may be commenced. Subsection (4) refers to Section 496 of the Merchant Shipping Act, 1894, but not to these other Acts, so that apparently the beginning of proceedings is only effective under subsection (7) in so far as it refers to the Merchant Shipping Act, 1894, Section 490. I am not quite sure whether it is intended to apply to the other Acts or not, or whether an Amendment can be put down to make it apply to those Acts if it does not so apply at present. I beg to move.

Amendment moved— Page 9, line 1, leave out subsection (7).—(Lord Rhayader.)

LORD ASKWITH

The reason for this subsection is that the technical words "the statutes of limitation" might be taken only in their narrow sense, and so it is intended in using the phrase in this Bill to include in it "the time within which any particular proceeding may be commenced"—that is, not only under the Merchant Shipping Act, but under all Acts where arbitration is required. I do not think it is advisable to name any particular Acts. The subsection is really necessary to prevent a wrong construction being placed upon the words "statutes of limitation."

LORD RHAYADER

Still I am not quite clear. I meant to read further words in the MacKinnon Report. This is what is said: To start arbitration proceedings is certainly within the spirit, but not the letter of this sort of provision. It might be well to provide in the suggested new Act (a) that when a party to a submission gives written notice claiming arbitration to the other party he shall be deemed to institute arbitration proceedings, and (b) that the institution of arbitration proceedings shall be deemed to be the institution of proceedings within Section 496 of the Merchant Shipping Act, 1894, or the bringing of suit within the rule of the Act of 1924, or the commencement of an action within the Act of 1623. There may perhaps be similar provision in other Acts of which we are not at present aware. Do I understand that it is only to the Merchant Shipping Act, 1894, that this clause at present relates?

LORD ASKWITH

I think this would be a definition applying to all the Acts. The Committee at the end of their Report stated that: There may perhaps be similar provisions in other Acts of which we are not at present aware. That brings in all the Acts.

LORD RHAYADER

I beg leave to withdraw the Amendment. I think I have been rather unfortunate.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clauses 17 and 18 agreed to.

Clause 19 [Saving for pending arbitrations]:

LORD ASKWITH

On this clause I should mention that Lord Amulree called attention to the Industrial Acts. I have looked at those Acts. The ones in question would be the Conciliation Act, 1896, and the Industrial Courts Act, 1919. The introduction of this measure does not affect them at all, The argument would have to be that the main Act of 1889 does not apply, and that the Arbitration Acts, 1889–1934, supersedes the conditions laid down in these Industrial Acts, which it does not do.

Clause 19 agreed to.

Remaining clause agreed to.

Schedules agreed to.