MARCHANT HEYWORTH & SWIFT , LTD , Appellant, and A. E. M. USOOF, Respondent

054-NLR-NLR-V-57-MARCHANT-HEYWORTH-SWIFT-LTD-Appellant-and-A.-E.-M.-USOOF-Respondent.pdf

1955Present :Basnayake, A.C.J., and Pulle, J.MARCH ANT HEVH'OfiTH & SWIFT, LTD., Appellant, and A. E. M.
USOOF, Respondent
S. C. 167—D. C. (Inly.) Colombo, 28,778
Contract—-Sale■ of goods—Arbitration clause—Arbitration on reference by one parly
alone—Validity of award—Reciprocal Enforcement of Judgments Ordinance,
r. .J.,-
In a written contract entered into between n buyer in England and a sellerin Ceylon for the sale of 50 tons of rubber, tlio seller failed to perform his partof the contract-. Thereupon the buyer referred the matter to- the RubberTrado Association of I.ondon for arbitration in terms of the contract whichprovided that it was governed by the Rules, Regulations and Bye-laws of theRubber Trade Association of I.ondon. The arbitrators awarded that theseller should pay to the buyer a stun of £15,000. As tho seller failed to satisfythe award, the buyer obtained an originating summons from the High Courtof Justice under section 26 of tho Arbitration Act of 1950 and duly served iton the seller in Ce-lon.
The seller, having objected to the arbitration, took no part in the arbitrationproceedings and did not appoar in the High Court of Justice in England.
When the buyer applied under section 3 of tho Reciprocal Enforcement ofJudgments Ordinance to have tho judgment of the English Court registeredin the District Court of Colombo, tho District Judge refused tho application onthe basis of the objection taken by tho seller that tho High Court in Englandhad no jurisdiction over the seller as the seller had not submitted himself toits jurisdiction.
Held, that, under a marginal clause in the contract, disputes between thoparties were to be settled by arbitration. According to the law of Englandwhich regulated tho transaction in question there was nothing whichrequired that tho reference to arbitration should bo a'formal document signedby both parties. In the circumstances tho judgment of tho English Court wasregistrablo in the District Court of Colombo under section 3 of the ReciprocalEnforcement of Judgments Ordinance.
,/^lPPEAL from an order of the District Court, Colombo.
TV, Jayewardene, Q.Cr? with E. R. 3. R. Coomardsioamyl for’’.thoPe t i t ioner-Appella n t.
R.M. Marlthani, for the Respondent-Respondent.
July 19, 1955. Bassayake, A.C.J.—
– . The appellant, Merchant Heyworth & Swift, Limited, a limited liabilitycompany incorporated in the United Kingdom (hereinafter referred to
101,vi i
2J. N. B 52922-1,590 (2/50)
as the appellant), applied under section 3 of the Reciprocal Enforcementof Judgments Ordinance to have a judgment given in its favour by theQueen’s Bench Division of the High Court of Justice in England registeredin the District Court of Colombo.
The material portion of that judgment reads—
“ PURSUANT to the Arbitrators’ Award herein dated the 26thday of October 1950 WHEREBY IT WAS AWARDED that Sellershave defaulted and shall pay to the Buyers the sum of Fifteen ThousandPounds (£15,000/-) and Association FeeTen Shillings (10/-) and Arbitra-tion Fee Three Guineas (£3—3—Ocf) to be paid bj' Sellers. And thesaid Applicants Marchant Heyworth & Swift Limited having by theOlder of Master Diamond dated the 3rd day of October 1952 obtainedleave.to enforce the said Award in the same manner as a Judgment. or Order to the same effect.
“ IT IS THEREFORE ADJUDGED that the Applicants MarchantHeyworth & Swift Limited recover against the Respondents, CeylonTrading Corporation, £15,003—13—0<2.”
The appellant’s application was opposed by the respondent AhamedEbrahim Mohamed Usoof, the judgment debtor (hereinafter referredto as the respondent), the sole proprietor of the Ceylon Trading Corpora-tion, on the ground that—
for) he did not submit to the jurisdiction of the High Court of Justieein England ;
the High Court of Justice in England acted without jurisdiction ;
he was not duly served with the process of the original Court
and
the judgment was not registrable under section 3 (2) of the Ordi-
nance.
The learned District Judge after trial held that the respondent hadbeen duly served with the process of the High Court of Justice in Englandbut that that Court had no jurisdiction over the respondent as he .hadnot submitted himself to its jurisdiction, and refused the appellant’sapplication to have the Judgment in its favour registered.
Dissatisfied with that decision, the appellant has appealed to thisCourt. It will be convenient to refer shortly to the material facts. Theyare as follows :—
: Bv a contract dated 22nd June, 1950, the appellant contracted tobuy from the respondent a consignment of 50 tons of rubber.' Theinstrument of contract was in the following form
CONTRACT.
Mgl'lMARCHANT, HEYWORTH & SWIFT,
= :s » 2 ■*“limited
s s ^ ^ o
| 2 1 I !Ref. No. 664.
TOC o "1-5" h z
“zr.^.H
O ft_-*;
** -22-gc3^3
g ”5Sg;gLondon House,
•§. >>o^®3,New London
3 •* S «gStreet,
p g *H _ aLONDON, 22nd June, 1050.
H Sg?=®
S ^S=2°
^^ i-l -=-
.22 'a a 6 "*3Messrs. Ceylon Trading Corporation, 360j Union
■g ^ o-o ;=Place, Colombo.
N =g IS .§ ^We have this day Bought from you the following
o * i Sgoods.
o-43 oq -g
| ,|| | I1 j About 50 (fifty) tons FAIR AVERAGE QUALITY^ I £M S-RIBBED SMOKED SHEETS RUBBER, R. M. A.
^g> xg3, packed in cases and/or bales and/or bareback
S ^33-gbales, fit for export, at Is fid. (one shilling and
g g -gg~ «*ninepence) per lb., nett. c. i.f. Liverpool :
j3 ** t!pf ^%For shipment from the East during June and/or
| I O 3 ^ | Jubh 1050.
P ^ JTERMS : Payment by Sight Draft on presenta-
^MJ§.g}' 'gt-ion in LondonwithShippingDoeu-
ojo^ments attached.
c3 O -g*-* O
-3«gpoJConfirmed Credittobeopened
jl^^^13gimmediately.
» ■ .- o S °
O ^ .3 >-> r§
** P0 ■g. ^ g 3Yours respectfully,
tC 12 "g ^ ^ <oFor and on behalf of
> 3 <r =* *S ■£MARCHANT, HEYWORTH & SWIFT,
S | S .I | ^LIMITED.
•o -§ 3 -g SJ 3,2 g,o2
(2 I ,§ 4 8DIRECTOR.
Please Sign and Return the Receipt attachedHereunder.
Below the words “ Please Sign and Return the Receipt attachedHereunder ’’ was a detachable receipt which the respondent duly per-fected and sent to the'appellant.– That receipt and the letter which' 'accompanied it are set out below :
To : MARCHANT, HEYWORTH & SWIFT, LIGHTED
– — – 'Ref. No. G64.
London House, 3, New London Street, London, E. G. 3.
We hereby confirm having sold to you about 50 (fifty) tons FAIRAVERAGE QUALITY RIBBED SMOKED SHEETS RUBBER
R.M. A. 3, packed in cases and/or bales and/or bareback bales, fitfor export, at IsJQd. (one shilling and ninepencc) per lb., nett, c.i.f.Liverpool :
Delivery. For shipment from the East- during June and/orJidy, 1950.
Terms.As’per your Contract Ref. No. 6(54 dated 22nd June, 1050Date
CEYLON TRADING CORPORATION.Sgd.
Manager.
CEYLON TRADING CORPORATION
"COLOMBO, 2Sth June, 1950.
Dear Sirs,
We thank you for your letter of the 22nd instant enclosing yourcontract No. 064 covering your purchase of the 50 Tons RSS3.
We confirm cables mutually exchanged as per copy attached andin confirmation of our cable we now have pleasure in enclosing ourformal contract No. 00S/50 in respect of 50 Tons RMA 3—RSS rubbersold to your goodselves at Is. 9J. per lb. CIF Liverpool shipmentJune/July.
Now we have received your Letter of Credit, we shall make arrange-ments to have this rubber shipped as early as possible.
We thank you for your valued order and co-operation and assureyou of our best and careful attention.
.'Yours faithfully,
CEYLON TRADING CORPORATION
Sgd..
Manager.
.The respondent failed to perform his part of the contract. His excusewas that the export duty on rubber had been increased by the CeylonGovernment by 2J ponco. Over this failure the parties exchanged a
series of communications both by post and telegraph. The respondentat first asked for time to perform his contract till the end- of Augustand also for an increase in the credit value. Then ho asked for timotill the end of September and finally till tho loth of December, 1050,and even. suggested 31st March, 1951. The appellant was willing togive the respondent time till oven I5t-h December, 1950, but asked himto give proof of his bona jides by shipping at least part of tho amountcontracted for and specifying tho name and date of sailing of the steamer.Tho respondent failed to give such proof but kept on asking for timeand repeating his difficulties and claiming that his default was causedby force majeure.
After giving repeated extensions and finding that the respondentwas not going to honour his obligations, on 10th October, 1950, theappellant cabled—
“ FESTAL WARNING INTEND REQUESTING RUBBER TRADEASSOCIATION LONDON NOON TOMORROW TO APPOINTARBITRATORS DEAL WITH YOUR DEFAULT
As this cable evoked no response the appellant proceeded with thoreference to arbitration, and on I9th October, 1950, cabled—
“ARBITRATION RE DEFAULT MONDAY NEXT THREEP. M. TELEGRAPH WHETHER YOU WILL BE REPRESENTEDAND IF SO BY ’WHOM
The respondent objected to the arbitration by the following cable—
“YOUR l&TH CANNOT AGREE ARBITRATION DELAYDUE FORCE MAJEURE
On 23rd October, 1950, the appellant cabled—
“UNLESS WE HEAR BY "WEDNESDAY NOON THAT YOUWILL BE REPRESENTED AT THE POSTPONED ARBITRATIONAT THREE P. M. THAT DAY ARBITRATORS WILL PROCEEDWITH THE CASE
This cable was followed by another dated 26th October, 1950 :
“ARBITRATORS AWARDED US FIFTEEN THOUSANDPOUNDS STERLING DAMAGES FOR DEFAULT IF YOU WISHAPPEAL YOU MUST DO SO WITHIN FIVE DAYS AND REMITFIFTEEN GUINEAS FEES
The respondent cabled back on 27th Oetobor, 1950—
.“ YOUR 2GTH CANNOT ACCEPT ANY AWARDS WILL SHIP
GOODS IF SUFFICIENT TIME GIVEN DELAY DUE FORCEMAJEURE”.
The appellant roplied..
“YOUR CABLE 27TH ARE POSTING ALL DOCUMENTSRELATIVE TO CLAIM TO OUR LAWYERS IN COLOMBO ONTHURSDAY EVENING NEXT WITH INSTRUCTIONS TAKEAPPROPRIATE LEGAL ACTION
On 9th November, 1950, the appellant’s lawyers in Ceylon sent to therespondent a copy of the arbitrator’s award together with the followingletter :
9th November, 50,EL/PRS/NG.
Messrs. Ceylon Trading Corporation,
360, Union Place,
Colombo.
Dear Sirs,
Claim of Mar eluant, Heyworth cfc Swift, Lid.
Oirr clients Marcliant Heyworth & Swift-, Ltd., London, have sentus the correspondence and documents in respect of the 50 tons FairAverage Quality Ribbed Smoked Sheets Rubber R. M. A. 3, whichyou had contracted to supply them by shipment during June/July1950, together with the award of the Rubber Trade Association ofLondon, and wo are instructed to demand payment from you andin default of payment to take legal proceedings against you to enforcerecovery of £15,003—13—0d. representing the amount due to ourclients.-
You have failed to fulfil your part of the contract with our clientsalthough at your request and for the purpose of assisting you ourclients amended the relative credit without prejudice to their rightsunder the contract to permit shipment to be effected by the end ofSeptember last. You have sought to give the impression to ourclients that the delay in shipment of the rubber was due to theuncertainty caused by the increase in the Export Duty on rubber andto “ force majeurc ”. But the reasons given by you for your failureto ship have no substance and cannot be entertained. You are awarethat the Government of Ceylon has taken steps to assist shippers ofrubber by reimbursing their losses consequent on the increase of theExport Duty.’
It is clear that your failure to ship the rubber even at the end of^September cannot bo excused by the increase in Export Daty on rubberand the rise in tho price of rubber and our clients consider that youwere hoping for a fall in price to fulfil your contract with financialadvantage to 3'ou.,
In the circumstances our clients were obliged to refer the matterto the Rubber Trade Association of London for Arbitration in termsof tho contract entered into with you which provided that it wasgoverned by the Rules, Regulations and Bye-Laws of the Rubber
Trad© Association, of London which fact wa3 acknowledged by youin signing the contract receipt. You were given ample notioe of thereference to Arbitration and ample opportunity was given to you tobo represented at the Arbitration proceedings but you failed to makeany response. The Arbitrators have awarded that you defaultedand that you as sellers should pay to our clients tho buyers the sumof £15,000 and costs. IVe ^enclose the original Arbitration AwardNo. 56S9 * of the Rubber Trade Association of London together withour cLents’ account showing a sum of £15,003—13—0d. due to them andwe havo to request you to make immediate payment of Rs. 200,645*70representing the approximate equivalent in Ceylon currency of£15,003—13—Od-in default of payment forthwith we shall take appropriate legalproceedings against you to enforce recovery ”.
Yours faithfully,
Sgd. F. J. & G. de Saram.
* “ We the undersigned having been appointed by the committeeto settle a dispute arising out of a contract dated '22nd June 1950made between Messrs. Marchant Heyworth & Swift Ltd. and theCeylon Trading Corporation, Colombo, for Fair Average Quality
R.S. S. R. M. A. 3, C. I. F. Liverpool, have carefully considered thesame and award as follows, viz. about 50 tons Fair Average QualityRibbed Smoked Sheets Rubber R. M. A. 3.
That sellers have defaulted and shall pay to the buyers the sum ofFifteen Thousand Pounds (£15,000) ”.
As the respondent failed to satisfy the award, the appellant obtainedan originating summons from the High Court of Justice under section 26of the Arbitration Act of 1950. The originating summons was servedon the respondent by Mr. V. Murugesu, Proctor, of Messrs. F. J. & G. deSaram and an affidavit to that effect was filed in the High Court. Therespondent did not appear in the High Court and took no part in theproceedings.
Learned Counsel for the respondent contended that, a party to acontract is not bound to submit to arbitration any dispute thereunderunless he has formally agreed to be so bound. He invited our attentionto the case of Caerleon Tinplate Co. Ltd. v. Hughes and anotherx, andto the case of T. IF. Thomas Co. Ltd. v. Portsea Steamship Co. Ltd. 2.Neither of these cases has any application to the case under consideration.
The quostion in the former case was, whether or not there had beena submission to arbitration within the.meaning of the Arbitration Act,1S89 (52 & 53 Viet. C. 49) section 27 of which provided that “ in thisAct, unless the contrary intention appears, ‘ submission ’ means a writtenagreement to submit present or future differences to arbitration, whetheran arbitrator is named therein or not ”
The action was for the price of goods sold, and it appeared that thedefendants sent a bought-note, duly signed by them, to the plaintiffs’agents, containing the following provision :
"Any dispute arising on this contract to be settled by arbitrationin Liverpool
On the same day the plaintiffs’ agents signed a sold-note which con tamedno provision for arbitration whatever. It was held that section 27required an agreement signed by both parties and that as there was nosuch agreement there was no valid reference to arbitration.
In the latter case, it was held that an arbitration clause found in thecharter party was not applicable to the contract evidenced by the Billof Lading, and to disputes arising between the shipowners and the holdersof the Bill of Lading under that document the Bill of Lading being theprimary document to bo considered in that ease.
It was sought to bring into the Bill of Lading the arbitration clausein the charter party by virtue of the following words in the Bill ofLading :
“ William Malcolm Mackay or to his assigns, he or they payingfreight for the said goods, with other conditions as per charter partywith average accustomed ” and “ Deck load at sliippers’ risk, and allother terms and conditions and exceptions of charter to be. as percharter party, including negligence clause ”..
The House of Lords refused to permit such a construction of the Billof Lading. The speech of Lord Atkinson at page 6 states the principleof construction thus—
“ I think it would be a sound rule of construction to adopt thatwhen it is sought to introduce into a document like a Bill of Lading—a negotiable instrument—a clause such as this arbitration clause,not germane to the receipt, carriage or delivery of the cargo or thepayment of freight,—the proper subject-matters with which theBill of Lading is conversant,—this should be done by distinct andspecific words, and not by such general -words as those written in themargin of the Bill of Lading in this ease ”.
Counsel for the respondent argued that the words “ terms as per yourcontract Ref. No. 664 dated 22nd June 1950 ” in the respondent’s cablodid not includo the arbitration clause and referred only to what wasstated in the appellant’s letter in regard to the Terms of Payment. Weare unable to uphold his contention. This is not the respondent’s firstbusiness transaction with the appellant. The respondent’s, ploa thatthe arbitration clause was unknown to him cannot be accepted in viewof the appellant’s letter dated 4th April, 1949. It reads :
** Wo duly received your of the 19th March enclosing Contracts001/49 and 002/49, and would like to point out to you that thesepurchases from you have already been covered by our Contracts which
are made under tho Rules of the Terms and conditions of tho RubberTrade Association of London. Wo naturally assume that those termsand conditions are well known to you and hope that you aro agreeableto them. As you know they fully protect you in every respect
Even in tho letter by which the instant contract was concluded pointedattention is drawn to the fact that disputes arising on the contract areto bo settled by arbitration. The fact that that clause is printed in themargin of the document is no justification for treating it as if it did notexist.'
. According to the law of England which regulates tho transactionin tho instant case there is nothing which requires that tho agreementto refer a dispute to arbitration should be a formal document signed byboth parties. The requirements of that law are that there must bean agreement in the sense that the parties must be ad idem and that thoagreement must be in writing. Tho view we have taken finds supportin the case of Frank Fehr <0 Co. v. Kassan Jivraj <0 Co. Ltd.1 which isquoted at p.2o of the 15th Edition of Russell on Arbitration. Such anagreement may even be extractod from the correspondence betweenthe parties. It may even be incorporated by reference as in tho appel-lant’s letter of 4th April, 1949. In the instant case the respondent isnot freo to plead ignorance of tho provision to refer disputes to arbitrationas it is not only stated expressly in the formal letter of April, 1949,explaining the terms of business but it is also included in the letter bywhich the contract was concluded. The contention that there has beenno valid agreement to refer is not entitled to succeed.
Evon applying the test of our Law the respondent will not be heardto say in the instant case that there was no submission to arbitration.The only requirement of a voluntary submission is that the parties shouldconsent to it either expressly or tacitly by conduct or action.
Once it is held that there was an agreement to refer all disputes toarbitration the only question that remains to be decided is whetherthe arbitration was properly held in England as provided in that clause.We think tho arbitration was properly held in England, and that thepetitioners correctly made an application to enforce it in the Queen’sBench Division of the High Court of England.
In our opinion tho learned District Judge should not have set asidethe order that the Judgment should be registered under section 3 of the.Reciprocal Enforcement of Judgments Ordinance. We accordinglyset aside the order of the learned District Judge and allow tho appealwith, costs in both Courts.
JPerxr:, J.—I agree.Appeal alloived.
(,1949) 82 LI. L. Rep. 673. .