Supreme Court
Action No. 10 of 1972
22nd February, 1982
Moe, CJ.

Mr. M. Young, for the Plaintiff/Applicant
Mr. D. Courtenay S. C., for the Defendant/Respondent

Contract - Breach of Contract - Agreement to submit to Arbitration in the event of disputes - Specially indorsed Writ issued by Plaintiff - Proceedings in respect of Writ stayed on application to court by the Defendant to enable the Parties to submit to Arbitration - Application by Plaintiff to vacate Stay Order - Application refused on ground that the parties should not be released from their obligations to proceed to Arbitration.

J U D G M E N T

The Plaintiff in this Action herein on the 10th January, 1972 issued a Writ against the Defendant, whereon was indorsed a claim for an amount due for services rendered and work done by the Plaintiff pursuant to an agreement between the Defendant and himself. An appearance was entered on behalf of the Defendant, but no Defence was delivered and on the 23rd February, 1972, the Defendant applied for a stay of proceedings on the ground that there was an agreement between the Plaintiff and the Defendant to refer to arbitration, the matters in respect of which the Action herein is brought. On the 25th November, 1980 the Court ordered that the Action be stayed pending submission of the dispute to arbitration with liberty to apply.

The Plaintiff now applies for an order that the order made on the 23rd November, 1980 be vacated and that the Action herein be revived and proceed to trial. The ground of the application as stated in an affidavit filed in support of the application is that the Defendant has taken no steps requisite or pursuant to the arbitration and in particular has not given any notice of demand for arbitration as provided by the agreement between the parties. It was contended (i) that the proceedings herein were stayed at the instance of the Defendant; (ii) that it was then incumbent on the Defendant to proceed to arbitration with all due despatch; (iii) that the agreement between the parties required a demand for arbitration to be made within a reasonable time (after a dispute has arisen). But the Defendant has done nothing to have the matter dealt with by arbitration because the Defendant is not in truth willing to go to arbitration.

At the hearing of the application, it was also urged on behalf of the Plaintiff that the Action herein ought to be revived and continued in Court on the grounds: - (a) that the dispute is connected with Belize; (b) that there are difficulties likely to be caused by the matter proceeding to arbitration, and (c) if the matter is to be determined at all, it should proceed to a Court hearing.

The Defendant's contention is that the onus lies on the Plaintiff to prosecute the claim to arbitration. That by the terms of the agreement it was the party having a claim to give notice of the demand for arbitration. The Defendant further contends that while the Court may consider any changes in circumstances since the date of the order staying the proceedings, nothing new has been put to justify the Court taking a position different from that taken on the date of the order.

I look first at the agreement. The agreement entered into by the parties contains the following provision (hereinafter referred to as the Arbitration Clause): - Article 15 "All claims or disputes arising out of this contract or the breach thereof shall be decided by arbitration. Notice of the demand for arbitration shall be filed in writing with the other party to the contract and with the American Arbitration Association and shall be made within a reasonable time after the dispute has arisen".

Now in this matter the Plaintiff claims (or there is a dispute) that he is owed a certain sum by the Defendant for work done under the contract between them. There is no contention that by virtue of the agreement made between them, they have obligated themselves to have that claim or dispute decided by arbitration. Doleman & Sons v Ossett Corp. [1912] 3 K.B. 257. Nor is it being disputed that the Plaintiff, although so obligated had a perfect right to bring an Action in respect of his claim or the dispute. The Plaintiff took the steps necessary to bring the claim or dispute before the Court. The Defendant then as he also had a perfect right to do (see section 5, CAP 13) applied for a stay of the proceedings and the Court ordered as set out above.

In Doleman & Sons v Ossett Corporation [1912] 3 K.B. 257 Fletcher Moulton L.J. had this to say about agreements to refer to arbitration: "The law will not enforce the specific performance of such agreements but if duly appealed to, it has the power in its discretion to refuse to a party the alternative of having the dispute settled by a court of law and thus to leave him in the position of having no other remedy than to proceed to Arbitration." When, therefore, the Court made its order on the 25th November, 1980 the Plaintiff was left to have recourse to arbitration as his means of obtaining redress. The arbitration clause sets out what steps are to be taken to bring a claim or dispute to arbitration.

What then are the obligations under that clause? The recent ruling of the House of Lords in Bemer Vulkan v South India Shipping Corp. Ltd. [1981] A.C. 909 provides some guidance. In the words of Lord Diplock at pg. 982, the arbitration clause is "an agreement between the parties as to what each of them will do if and whenever there occurs an event of a particular kind. The event is one that either party can initiate by asserting against the other a claim under or concerning the main agreement which they have not been able to settle by agreement. In that event, each is obliged to join with the other in referring the claim to arbitration and to abide by the arbitrator's award. The arbitration clause itself creates no obligation upon either party to do or refrain from doing anything unless and until the event occurs and even then the mutual obligations that arise are in relation to the particular claim which constitutes the event.

The primary obligations of both parties that arise then are contractual, whether express, or implied by statute or included by necessary implication in the arbitration clause. "The decision appears to put upon each party to an arbitration agreement a duty to get on with the case". As Lord Diplock said further ibid pg. 983, " the obligation is mutual, it obliges each party to cooperate with the other in taking appropriate steps to keep the procedure in arbitration moving, whether he happens to be claimant or the respondent in a particular dispute". The view of the minority was as expressed by Lord Scarman at page 998, "Where parties agree to refer present or future differences to arbitration, they enter into a contract, an implied term of which is that each has a right to a fair arbitration ----there are mutual obligations to be implied into the parties agreement not to obstruct or frustrate the purpose of the agreement i.e. a fair arbitration to be conducted in accordance with the terms of their agreement."

The position, therefore, is when there is a claim or a dispute the obligations which arise are mutual there is clearly an onus on the claimant to pursue his claim and there is also an onus on the Respondent to play his part. What I have before me is that neither party has taken any steps towards fulfillment of that party's obligation. The Plaintiff who is in default cannot put the blame on the Defendant. Consequently, I cannot find in this case that the failure of the Defendant to take any step to bring the matter to arbitration is sufficient ground for vacating the order that the proceedings be stayed pending submission to arbitration.

I turn now to the other submissions. The questions whether the dispute is connected with Belize and whether difficulties will be faced in proceeding to arbitration are matters which I take the Court to have considered in making its order on the 11th November, 1980. If it did not, I take the view that on taking into account those matters the Court would have been correct in exercising its discretion to stay these proceedings. Further, I do not consider that those questions present any new circumstances which justify removing the existing order.

Whether the claim or dispute is unlikely to be dealt with at arbitration, to my mind, depends on the matter of fulfillment or non-fulfillment of the mutual obligations of the parties as adumbrated above. The following extract from the judgment of Lord Denning M. R. in Andre & Cic v Marine Transocean Ltd. [1981] 3 W.L.R. 43 at pg. 49 shows the way. "Seeing that arbitration is consensual ---. Each is to do his part as it comes round to him to do it. Neither party will do anything that he ought not to do - or omit to do anything that he ought to do - in order to ensure a fair trial. The Claimant will put in his points of claim as it comes round for him to do it; the Respondent will put in his answer when it comes to his turn. A failure on either side entitles the other to such redress as the justice of the case requires. The manner and scope of the redress depends on the circumstances." It has not been shown in this application that the mutual obligations of the parties cannot be met.

In the result I do not find anything placed before me as a sufficient ground for releasing the parties from their obligations to proceed to arbitration. The application is accordingly refused.

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