Arbitration – long delay by claimant in prosecuting claim – application by defendant for injunction refused
In August 1964, Bremer Vulkan agreed to build 5 bulk carriers for South India Shipping.
The contract was governed by German law and contained a London arbitration clause.
There was a 12 month guarantee.
The last of the vessels was delivered in December 1966 and the guarantee expired in January 1967.
During the guarantee period and thereafter, there were intermittent exchanges in which South India complained of defects.
By German law claims became time-barred 6 months after the end of the guarantee period ie in May 1967.
Arbitration was initiated by the appointment of an arbitrator in January 1972 and points of claim delivered in April 1976, 9 years after delivery.
A year later, Bremer Vulkan applied for an injunction.
After a full interrogation of the facts, Donaldson J found that blame for the delay lay with South India and that the delay was prejudicial to Bremer Vulkan. Accordingly, he granted the injunction.
Lord Denning MR and Roskill LJ sitting with Cumming-Bruce LJ agreed.
A divided House of Lords upheld an appeal by South India on the basis that both parties in an arbitration have the duty to move the proceedings to finality: Lords Diplock and Edmund-Davies with Lord Russell, Lords Scarman and Fraser dissenting.
By a head count those in favour of the injunction outnumbered those who did not 6:3 and the result is probably wrong: why should a defendant advance a claim against himself?
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