Withdrawal – NYPE form – “any breach” – confined to repudiatory breach or breach of a condition – in any event, option to withdraw not exercised timeously.
This House of Lords speech given by Lord Diplock has become famous for the following statement:
“If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense”.
The purpose of Lord Diplock’s speech was to discourage the granting of leave to appeal against arbitral awards.
For this reason he deliberately refrained from setting out the facts upon which his, now seminal, conclusion was based.
He confined himself setting out the arbitrator’s conclusion contained in an award of 78 pages in the following short summary:
(1) ” any other breach of this charter party” in the withdrawal clause means a repudiatory breach – that is to say: a fundamental breach of an innominate term or breach of a term expressly stated to be a condition, such as would entitle the shipowners to elect to treat the contract as wrongfully repudiated by the charterers, a category into which in the arbitrators’ opinion the breaches complained of did not fall, and (2) that even if that were wrong, the word “on” immediately preceding “any other breach” meant “within a reasonable time of” their first knowledge of the breach; and the shipowners, in the arbitrators’ opinion, had not given notice of withdrawal until after such reasonable time had expired.
Staughton J refused leave to appeal to the High Court against the arbitrators’ award but, imprudently, according to Lord Diplock, gave reasons for doing so.
Because of the importance of the procedural issue involved, Staughton J gave leave to the Court of Appeal to appeal against his refusal of leave. The Court of Appeal (Sir John Donaldson MR and Fox LJ, Ackner LJ dissenting) upheld Staughton J’s refusal of leave.
The real issue decided by Lord Diplock in this matter was the correct basis on which to grant leave – a difference of opinion amongst commercial judges (dicta as opposed to rationes) was not sufficient ground to grant leave to appeal.
Given, as it was, without the discipline of having to apply the law to the facts, Lord Diplock’s passing remark hardly bears the weight now placed on it.
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