HL Deb 18 January 1979 vol 397 cc1180-7

4.3 p.m.

House again in Committee on Amendment No. 1.


I should like to express my gratitude to the noble and learned Lord the Lord Chancellor for his concise and short reply. But he fully realises that since the Second Reading a number of representations have been made to him by commercial interests and arbitrators' associations. I have in my hand copies of correspondence and statements from the London Maritime Arbitrators' Association and the Institute of Arbitrators, who believe that there are serious difficulties in regard to the procedures adopted under this Bill for this kind of appeal. I fully realise the problems which the noble and learned Lord has and that, so far as he is concerned, there is a considerable matter of public policy that arbitrators should not be judges in their own cause. However, he realises that there are hundreds of arbitrations where the reference to the court is usually introduced to delay matters. Therefore, I wonder whether the noble and learned Lord would reconsider this Amendment and allow it to be dealt with again at a later stage.


Perhaps I might intervene very shortly becausefconditional upon notification by the party to the onclusion as he reached in his original reply. I do not think that this Amendment is acceptable. I simply want to give two or three general reasons why I think that is so. It is very important that law reform should be fully ventilated through the professional organisations and through proper inquiry before we introduce it hurriedly into Parliament. This is not because Parliament does not have an absolute right to interfere with and amend the reports of committees, but because sometimes hasty changes lead to unforeseen results. This is a proposal which would absolutely revolutionise the whole practice and law of arbitration in this country.

It is basic to the law of arbitration in this country that we should not be able to exclude the jurisdiction of the courts. Once we put into effect that the only appeal from an arbitrator is by leave of the arbitrator, we completely revolutionise the fundamental principle on which arbitration law is based. We really cannot use this Bill as a vehicle for that. I venture to say that with some emphasis because the first book I ever wrote was not about politics but about the law of arbitration. I think that I have studied the subject fairly continuously ever since. When we come to discuss whether the clause should stand part of the Bill, I want to refer to my noble and learned friend Lord Diplock because I have a little bone to pick with him.

On the other hand, it is important to remember that the very reason that arbitration in this country has been so popular in the commercial world internationally is that we have developed a code of arbitration practice under the general supervision of the courts which has proved acceptable in the international world. To introduce into our domestic law—because that would be the effect of the Amendment of the noble Lord, Lord Lloyd of Kilgerran—something as revolutionary as this would be a mistake. I am sure that in this matter the judgement of the noble and learned Lord the Lord Chancellor is correct.

However, I should like to add a few more words because I shall be expanding on this aspect a little later. I think that there has been a genuine misunderstanding in the commercial world, which we must put right during this Committee stage, as to the purpose and effect of the Bill. We have always received the various documents to which the noble Lord, Lord Lloyd of Kilgerran, has referred. From having read them, it is fairly apparent to me that they have misunderstood what is being done. They believe that what is being given is a freer access to the courts than we previously had. That is not the effect of the Bill; it is to substitute Clause 1 for the previous special case procedure under Section 21 of the Arbitration Act. So far from making an appeal easier, if anything, it makes it a little more difficult. Once that is generally understood, I believe that much of the dismay which has been expressed in the professional Press and even through the Institute—in which, again, I must disclose a moderate interest because I am a Fellow of it—would be dispelled. Therefore, I would respectfully suggest to the Committee that in this matter the noble and learned Lord is right.


There is also a layman's reason why the noble and learned Lord the Lord Chancellor should be supported. I believe that there is a real risk that if this Amendment were accepted, it would interfere with the objectivity of the arbitrator. Like anyone else—like a judge—the arbitrator is human, and the knowledge that he could be appealed against on a point of law is very salutary in ensuring that on the evidence submitted to him he is as objective and impartial in his decisions as he possibly can be. Indeed we are very proud of our judges. But I venture to suggest that there are many occasions when the risk of a judge's decision being appealed against, with the effect it would have on his reputation as a judge, is a very salutary bounty in getting the best out of the judge, or the arbitrator. Purely from the layman's point of view, I would suggest that we must not interfere with the objectivity, which I believe is strengthened by the knowledge that, on a point of law at any rate, a decision could be appealed against.


In the hopes of mollifying my noble and learned friend Lord Hailsham before he picks a bone with me, may I say that I entirely agree with what he has said about this Amendment, which goes to the root principle of the Bill. May I simply add that this section applies to every arbitration in this country except those which are excluded. International arbitrations are outside it. It applies to the consumer arbitrations; it applies to the tourist industry arbitrations; it applies to the National Council of Housebuilders' arbitrations; it applies to thousands of arbitrations.

I am perfectly well aware that there are many experienced arbitrators, particularly in the commercial arbitrations, who would be perfectly capable of deciding whether this particular case is an appropriate one for a reference to the courts. But without that experience—and most of the arbitrations we are talking of are done by people without that experience—what you have done is to leave it to the whim of the arbitrator to decide whether or not the court can look at his award to see whether he has made a mistake of law. If in perfect innocence he has made a glaring and obvious mistake of law, you can do nothing about it under this Amendment, unless he says, "I am willing that you should go to the court".


I am gratified by the notable support my opposition to the Amendment has received from the noble and learned Lord, Lord Hailsham, who is a great authority in this field, as of course he is in so many other fields. I hope that although this was the first book he wrote it may not be the last. I am reinforced also by the layman's valuable contribution, and that of the noble and learned Lord, Lord Diplock. I hope, in the face of this weighty opposition, the noble Lord, Lord Lloyd of Kilgerran, who is always so reasonable in these matters, will think it appropriate to withdraw the Amendment.


I express my gratitude to the noble and learned Lord, Lord Hailsham, for having disclosed, as a member of the Institute of Arbitrators, the concern that has been shown by that institute about the appeal procedure under this Bill. Of course the noble and learned Lord, Lord Diplock, is the president of that institute. However, I have in my hand a letter from the director and secretary-general of that institute saying that the appeal procedure under this Bill is a deterrent to many people coming to London in order to have their matters arbitrated. In the face of this overwhelming opposition from so many noble and learned Lords, I beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

4.13 p.m.

Lord LLOYD of KILGERRAN moved Amendment No. 2: Page 2, line 5, at end insert ("but on condition that the arbitrator or umpire shall be notified prior to the close of the hearing that his award is likely to be the subject of an appeal and that this notification shall form part of his award.").

The noble Lord said: This Amendment is directed to a procedural matter; that is, that an umpire or arbitrator should be told whether or not it is intended that the award is likely to be subject to an appeal. The matter arises in this way. The arbitrator goes ahead with his arbitration. Then, at the end, one party wants to appeal and they go to the court. They ask leave of the court. The court then has powers to ask the arbitrator to amplify his award and his decision, and long delays ensue at that stage. This Amendment says that there should be a leave to appeal to the court, … but on condition that the arbitrator or umpire shall be notified prior to the close of the hearing that his award is likely to be the subject of an appeal and that this notification shall form part of his award".

This Amendment again has strong support from professional arbitrators and from commerce. It is intended to avoid further delays that may arise now, and frequently arise, in the course of the conduct of arbitration proceedings. All that this Amendment requires is that at some time during the course of the arbitration the arbitrator should be notified that a party is likely to lodge an appeal. It becomes clear in the course of an arbitration whether you are going to lose, or what will happen. It often happens in this way. If you notify the arbitrator that you are likely to appeal, he can then amend his award, and write his award in such a way to take care of that point. I beg to move.


This Amendment would, in effect, make an appeal under Clause 1(2) conditional upon notification by the party to the arbitration before the hearing of the arbitration closed that an appeal was being contemplated. It would require the notification to form part of the award. In many cases, however, it would not be until the award was made that the question of an appeal would arise, or the grounds of appeal would become apparent. In the result, if this Amendment was accepted either party with good grounds of appeal might be barred from appealing by the failure to give preliminary notice, or alternatively all parties would issue a notification as a protective measure, and that, I think, would be a most unfortunate development in the arbitration proceedings.


Before the noble and learned Lord sits down, may I ask whether he has overlooked the word, "likely"? You do not have to decide in the course of the hearing that you are going to appeal, but you should give an indication to the arbitrator that there is a likelihood of an appeal. It is not a definite decision in the course of the case that you are going to. It means that if the arbitrator feels that there is a likelihood of an appeal, and this is a circumstance that arises quite reasonably in the course of an arbitration, then he knows what is going to happen and will modify the award accordingly.


I should like again to express my concurrence with the noble and learned Lord the Lord Chancellor in this matter. I do not think that he has overlooked the word, "likely". Often you cannot possibly tell when you are dealing with a judge, an arbitrator, a magistrate, or whatever, whether he is likely to make a mistake. On the contrary, until you hear his judgment you sometimes are lulled into a false sense of security. I think that the noble and learned Lord the Lord Chancellor is right.


I have often been in the position to find in the course of a case before the High Court that I am likely to lose, and I am sure that many parties before an arbitrator can tell whether they are likely to lose. Again this is a matter which is of great concern to professional arbitrators and to commercial interests, but has aroused no sympathy with the Lord Chancellor. In those circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendments Nos. 3 to 8 not moved.

Lord HACKING moved Amendment No. 9: Page 2, line 19, after ("set out") insert ("the facts as found by the arbitrator or umpire together with").

The noble Lord said: This is a simple Amendment which I hope will have the acceptance of the Committee. This Amendment concerns the order that the court can give on appeal, and on an appeal the court may be provided with both the facts and the reasons. If there is power to order the reasons, in my submission there also ought to be power to order the facts. It can be argued that it is not necessary to add (his Amendment to the Bill, not necessary to include these words, and that it is universal practice to provide both facts and reasons. But we are considering a new appeal procedure from arbitrations to courts of law. What about the shorthand notes? Will there be shorthand notes? Will there be arbitrator's notes available, and so forth? Secondly, there could be occasions when only further facts are needed. What order is to be mode then? An order for more reasons?

As it affects international agreements—and I refer to the admiralty, commodity and insurance agreements, which are excluded from the exclusion clause of the Bill, and to parties to international agreements who choose, in any event, not to contract out under the new exclusion agreement—it is enormously helpful for overseas lawyers to see the chapter and verse rather than have to delve into English procedural law. As for all other arbitrations, why have a grey area when the law could so easily be remedied?

To make a nice small point, the Committee will have seen that I use the phraseology "facts as found" rather than the usual "findings of fact". I chose those words purposely because in the Commercial Court Committee's Report a great deal of emphasis was laid on the need for arbitrators to feel free to use ordinary language when presenting both the facts and the reasons for their awards, and the report said: He would have had some reasons for making the award and all that he would need to do would be to summarise them in ordinary language. Nothing formal would be required". I think I am right in saying that; Sir John Donaldson, Senior Judge in the Commercial Court, subsequently spoke to the Institute of Arbitrators and again emphasised that feature as a part of the relationship he would like between an arbitration and a court of law. I beg to move


I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.