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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Sumukan Ltd v The Commonwealth Secretariat  EWCA Civ 243 (21 March 2007)
Cite as:  EWCA Civ 243,  Bus LR 1075,  2 All ER (Comm) 23,  3 All ER 342,  2 Lloyd's Rep 87,  BusLR 1075,  ArbLR 56,  1 CLC 282
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Queen's Bench Division, Commercial Court
Mr Justice Colman
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE WALLER
Vice-President of the Court of Appeal, Civil Division
LORD JUSTICE SEDLEY
| Sumukan Ltd
|- and -
|The Commonwealth Secretariat
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Colin Nicholls QC and Tom Poole (instructed by Speechly Bircham LLP, Solicitors) for the Respondent
Hearing dates : 29th - 31st January 2007
Crown Copyright ©
Lord Justice Waller :
This is the judgment of the court.
Does the Court of Appeal have jurisdiction to consider the appeal from Colman J as to the existence of an exclusion agreement?
Mr Speaight's submissions
"Arbitration Act, 1991, ss 45(1) and 49
45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,
(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and
(b) determination of the question of law at issue will significantly affect the rights of the parties.
49. An appeal from the court's decision in an appeal of an award, an application to set aside an award or an application for a declaration of invalidity may be made to the Court of Appeal, with leave of that court."
"8. As I have said, the non-appealability of orders refusing leave is the general rule. As Hillmond sets forth on pp 624-25 O.R., the courts have engrafted onto this general rule an exception which is applicable where the judge mistakenly declines jurisdiction. Hillmond referred to and quoted the following passage from the reasons of Cartwright J for the Supreme Court of Canada in Canadian Utilities Ltd v Deputy Minister of National Revenue, supra, at p 63 SCR:
"It appears to me to have been consistently held in our courts and in the courts of England that where a statute grants a right of appeal conditionally upon leave to appeal being granted by a specified tribunal there is no appeal from the decision of that tribunal to refuse leave, provided that the tribunal has not mistakenly declined jurisdiction but has reached a decision on the merits of the application. (Emphasis added)
9. Denison relies upon this exception in the present case. It submits that Macdonald J erred in concluding that the arbitration agreement dealt with the appeals on questions of law (s.45(1) of the Arbitration Act 1991), that is, that the parties had "contracted out" of a right of appeal and, accordingly, erred in declining jurisdiction.
10. I appreciate that in many cases the meaning of "jurisdiction" can be fraught with difficulty. In the present case, however, I think that the principle stated by Cartwright J can be applied with some degree of confidence. He distinguished between declining jurisdiction and reaching a decision on the merits of the application. In the present case, the parties did not argue the merits of the application before Macdonald J. By agreement they argued whether or not Macdonald J had jurisdiction to grant leave to appeal. If she had decided that she had jurisdiction, they would have continued the hearing of the application on the merits. I think that the exception applies."
Mr Nicholls QC's submissions
"9. That case is very different from the present case. Here there is no doubt that Morison J had jurisdiction either to accede to the application or to refuse it. Whichever way the decision went, it was still a decision under section 68 of the Act and a refusal of permission to appeal was likewise a decision under the section. It cannot, therefore be challenged by way of appeal even if the decision is wrong or, even, obviously wrong. The fact that waiver (or indeed estoppel) can be said to operate as a defence to a prima facie entitlement is, in our view, nothing to the point. A decision to refuse relief (for whatever reason) is still a decision under section 68 just as much as a decision to grant relief would have been, if the decision had gone the other way."
Conclusion on jurisdiction of the Court of Appeal
Incorporation as a matter of English domestic law
"The Secretariat and the consultant shall endeavour to settle by negotiation and agreement any dispute which arises in connection with this contract. Failing such agreement the dispute shall be referred to the Commonwealth Secretariat Arbitral Tribunal for settlement by arbitration in accordance with its statute which forms part of this contract and is available on request."
"The judgment of the Tribunal shall be final and binding on the parties and shall not be subject to appeal. This provision shall constitute an "exclusion agreement" within the meaning of the laws of any country requiring arbitration or as those provisions may be amended or replaced."
"Section 3(1) of the 1979 Act does not require the overt demonstration of an intention to exclude the right of appeal. True it is, that formerly the Court was careful to maintain its supervisory jurisdiction over arbitrators and their awards. But that aspect of public policy has now given way to the need for finality. In this respect the striving for legal accuracy may be said to have been overtaken by commercial expediency. Since public policy has now changed its stance, I see no reason to continue to adopt an approach to the construction of exclusion agreements which might well have been appropriate before it had done so. In my judgment, the phrase "an agreement in writing . . . which excludes the right of appeal" is apt to apply to an exclusion agreement incorporated by reference. I reach this conclusion unpersuaded to the contrary by the decisions of the European Court which I consider might be misleading in this essentially domestic context. Whatever considerations of good sense may support those decisions and however much one, might be impressed by them if approaching the matter a priori, the pursuit of homogeneity should not deter me from the broader approach hitherto adopted by the common law. It is more important that commercial men should know that the English Courts are consistent than that the Courts should turn towards Luxembourg when Parliament has not directed them to do so."
"Between March and August 1983 the plaintiffs delivered to the defendants at least 11, perhaps 13 or 14, invoices. These related to business done between the parties pursuant to oral contracts. There was no other contract document between these parties other than the invoice. Each invoice bore the legend –
All business is transacted by the company under the current trading conditions of the Institute of Freight Forwarders, a copy of which is available on request.
That lettering was clear and legible. It was placed immediately below the price payable on the invoice where the eye would naturally light on it. Mr Zacaria personally looked at the invoices as they arrived. He did not see the reference to the IFF conditions before the loss, but he knew that freight forwarders normally deal on standard terms and he must have seen some writing on the invoice. The defendants' own invoices bore a somewhat similar – although in their case meaningless – legend in a somewhat similar position.
Applying to this case the question posed by Lord Justice Ackner (as he then was) in Keeton Sons Ltd v Carl Prior Ltd Mar 13 1985 (unreported), "Has reasonable notice of the terms been given?", the only possible answer in my judgment is that it has. The Judge decided otherwise on the ground that terms should have been recited in extensor and not simply incorporated by reference, but, whatever the rule in other jurisdictions, the clear rule of English law is that clear words of reference suffice to incorporate the terms referred to: see, for example, Smith v South Wales Switchgear Co Ltd  1 WLR 165. I therefore conclude that the IFF standard trading conditions were effectively incorporated into the contract, and I would accordingly allow the appeal on this first issue"
"Condition 2 of the plaintiffs' conditions is in my judgment a very onerous clause. The defendants could not conceivably have known, if their attention was not drawn to the clause, that the plaintiffs were proposing to charge a "holding fee" for the retention of the transparencies at such a very high and exorbitant rate.
At the time of the ticket cases in the last century it was notorious that people hardly ever troubled to read printed conditions on a ticket or delivery note or similar document. That remains the case now. In the intervening years the printed conditions have tended to become more and more complicated and more and more one-sided in favour of the party who is imposing them, but the other parties, if they notice that there are printed conditions at all, generally still tend to assume that such conditions are only concerned with ancillary matters of form and are not of importance. In the ticket cases the courts held that the common law required that reasonable steps be taken to draw the other parties' attention to the printed conditions or they would not be part of the contract. It is, in my judgment, a logical development of the common law into modern conditions that it should be held, as it was in Thornton v Shoe Lane Parking Ltd  2 QB 163, that, if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.
In the present case, nothing whatever was done by the plaintiffs to draw the defendants' attention particularly to condition 2; it was merely one of four columns' width of conditions printed across the foot of the delivery note. Consequently condition 2 never, in my judgment, became part of the contract between the parties."
"The tendency of the English authorities has, I think, been to look at the nature of the transaction in question and the character of the parties to it; to consider what notice the party alleged to be bound was given of the particular condition said to bind him and to resolve whether in all the circumstances it is fair to hold him bound by the condition in question. This may yield a result not very different from the civil law principle of good faith, at any rate so far as the formation of the contract is concerned.
. . . .
To the extent that the conditions so displayed were common form or usual terms regularly encountered in this business, I do not think the defendants could successfully contend that they were not incorporated into the contract.
The crucial question in the case is whether the plaintiffs can be said fairly and reasonably to have brought condition 2 to the notice of the defendants. The judge made no finding on the point, but I think that it is open to this court to draw an inference from the primary findings which he did make. In my opinion the plaintiffs did not do so. They delivered 47 transparencies, which was a number the defendants had not specifically asked for. Condition 2 contained a daily rate per transparency after the initial period of 14 days many times greater than was usual or (so far as the evidence shows) heard of. For these 47 transparencies there was to be a charge of each day of delay of £235 plus value added tax. The result would be that a venial period of delay, as here, would lead to an inordinate liability. The defendants are not to be relieved of that liability because they did not read the condition, although doubtless they did not; but in my judgment they are to be relieved because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention. I would accordingly allow the defendants' appeal and substitute for the judge's award the sum which he assessed upon the alternative basis of quantum meruit."
Does Article 6 of the ECHR and section 3 of the Human Rights Act 1998 affect the above conclusion?
"In the determination of his civil rights and obligations …. Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…"