The Chief Justice. — In this case the dispute arises under a contract, as to whether the vendors had broken the contract, by failing to deliver at the proper time, and whether the purchasers were entitled to sue in respect of the alleged breach, and, if so, whether they are entitled to any and what damages.
From the correspondence, it would appear that there might be a counter-claim also on the ground that the vendors allege that the purchasers failed to take and pay for the goods as they were bound to do under the contract. The contract contains an arbitration clause Art. 12 in the following terms:
“Should any dispute arise as to the interpretation of this contract, or any matter in connection therewith, or with the carrying out thereof, the same shall be submitted to arbitration,”
and it gives the merchants an option as to the form of arbitration. An application was made to stay the suit pending reference to arbitration, under Art. 12 of the contract. The learned Judge stayed the action and this is an appeal from that order.
It is argued before us that the learned Judge had no power to stay the action, because the claim made, as appears from the plaint, was for damages for breach of the contract; and it was argued that, under such an arbitration clause, claims for damages for breach of the contract are excluded. I asked in the course of the argument, if such claims were excluded, what claims would be included, and I received no answer. Authority for the proposition there is none. Reference to arbitration under similar clauses in respect of breaches of contract is of daily occurrence in England and, as far as my experience goes, no one ever ventured to suggest to the Court there that there was no power to refer in matters of breach of contract, the real reason being that it is only in respect of breaches of contract that references arise. There may be questions of interpretation of contract not involving a breach, which would also be covered, but these must be very rare. The ordinary scope of such a clause is that the ordinary commercial disputes, which almost always involve an alleged breach on one side or the other should be referred to a tribunal chosen by the parties, namely, arbitration instead of going to Court. The learned Judge puts the test in this way:
“The test is whether the claim is made in respect of a contract, which parties declare binding on them, or in respect of a matter arising dehors the contract in a cause of action based on its invalidity”.
I do not know where those words come from, but I think they are quoted from some leading authority and at any rate, in my judgment, correctly state the position in law. If the case is on a matter arising out of the contract, the most usual instance of that being a case of breach of contract like the present, there is no doubt whatever that there is power in the Court to refer to arbitration. It is true that in certain cases the Court will not exercise that power. Those are cases where, either by reason of the fact that there are charges of fraud, or by reason of the Court coming to the conclusion that in arbitration complete justice cannot be obtained between the parties, or for some other proper cause that the matter should be kept in Court rather than be referred to arbitration, the Court can decline to stay the action. There is nothing of that sort in this case, and in my judgment, the learned Judge was perfectly correct in staying this action.
The appeal must be dismissed with costs.
Ramesam, J.—I agree. Wallis v. Hirsch(1), is a case in which a question of fraud was raised and the learned Judges refused to exercise their discretion in referring the case to arbitration and staying all proceedings. Nobel Brothers Petroleum Production Company v. P. Stewart & Company(2), does not help the appellant as the facts are rather peculiar. But apart from this, the case seems to be one of doubtful authority and very near the line. The decision in Piercy v. Young(3), states the principle correctly and it is clear that the appellant has no case.
K.V.SAppeal dismissed.