34 All England Law Reports [1983] 1 AIER Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal The Hannah Blumenthal HOUSE OF LORDS LORD DIPLOCK, LORD KEITH OF KINKEL, LORD ROSKILL, LORD BRANDON OF OAKBROOK AND LORD BRIGHTMAN 27, 28 OCTOBER, 2 DECEMBER 1982 Arbitration — Practice - Want of prosecution ~ Inordinate and inexcusable delay — Delay making satisfactory arbitration impossible — Rescission ~ Frustration — Repudiation - Whether implied agreement to abandon arbitration agreement ~ Whether mutual delay can constitute repudiation by one party of arbitration agreement ~ Whether agreement frustrated because delay making satisfactory arbitration impossible - Whether one party can rely on frustration when there is mutual deiay. In 1969 the sellers agreed to sell a vessel to the buyers under a contract which provided that any dispute arising out of the sale was to be settled by arbitration in London by a single arbitrator or, if the parties could not agree on a single arbitrator, by three arbitrators, one appointed by each party and one appointed by an outside body. In 1972 the buyers informed the sellers that they had a number of complaints about the vessel and some months later commenced arbitration proceedings by appointing an arbitrator. The sellers also appointed an arbitrator, but a third arbitrator was never appointed. In 1974 the buyers delivered their points of claim alleging that the sellers had made a false representation or warranty prior to the execution of the contract regarding the vessel's speed and engine performance. Four months later the sellers delivered their defence in which they denied the claim. In the period from the delivery of the defence in 1974 until July 1980 when the buyers proposed that a date of hearing be fixed there was a lengthy delay in the process of discovery and in the progress of the arbitration generally. However, throughout that period there was an intermittent exchange of letters between the two sides in which each side pressed the other for production of the relevant log books. Nevertheless by July 1980, some 11 years after the sale, there had occurred over 7 years’ delay in the arbitration. When the buyers proposed, in July 1980, that a date of hearing be fixed for the arbitration, the sellers issued a writ secking, inter alia, a declaration that the arbitration agreement had been discharged by the buyers’ repudiation of it or by frustration or by mutual rescission arising out of an agreement by the parties to abandon the agreement. The judge held (i) that on the evidence there was no agreement to abandon the agreement and (ji) that he was bound by House of Lords authority to hold that because both parties were under a mutual obligation to prevent delay and to keep the arbitration moving it was not open to the sellers to do nothing themselves and then rely on the buyers’ delay as being a repudiation of the arbitration. agreement. The judge went on, however, to hold that the length of delay was such that the arbitration agreement had been frustrated because a fair trial of the issues was no longer possible, and he granted a declaration to that effect. The buyers appealed to the Court of Appeal. which held (i) tha che judge had been right to hold that there had been no abandonment of the arbitration agreement, (ii) that since the buyers had never taken any initiative to bring the delay to an end so as to bring any duty of mutual co-operation into play the sellers were entitled to rely on the buyers’ delay as amounting to repudiation, and (iii) that since the delay was such as to make a fair trial impossible and the sellers had not been responsible for the delay the agreement to arbitrate had been frustrated. The Court of Appeal accordingly dismissed the buyers’ appeal. The buyers appealed to theHL Paal Wilson & Co v Blumenthal 35 House of Lords on the repudiation and frustration issues and the sellers cross-appealed on the abandonment issue. Held - The appeal would be allowed and the cross-appeal dismissed for the following reasons— (1) Where delay in proceeding with an arbitration was caused by breaches by both claimant and respondent of the mutual obligations to one another to avoid delay, it was not open to either party to rely on the other's conduct as amounting to repudiation. Furthermore, the fact that the parties were under a mutual obligation to keep the arbitration moving meant that neither party could claim that delay by the other party had frustrated the agreement to arbitrate (see p 43 j, p 44.b c, p 48.4 toc, p 50 be, p 52d e, ps4 fj and p55 ¢, post); Bremer Vulkan Schiffbau Und Maschinenfabrik v South India Shipping Corp [1981] 1 All ER 289 explained. (2) Inany event, the two essential prerequisites for a contract to be held to be frustrated were (a) that there was some outside event or extraneous change of situation which was not foreseen or provided for by the parties at the time of making the contract and which either made it impossible for the contract to be performed at all or rendered its performance radically different from that which the parties contemplated when entering, into the contract and (b) that the outside event or extraneous change of situation and the consequences thereof occurred without the fault or default of either party. On the facts, there had been no outside event or external change of situation affecting the performance of the agreement to refer disputes to arbitration, and, since both parties were under a mutual obligation to keep the arbitration moving and both were in breach of that obligation, the delay could not be said to have arisen without the fault or default of either party. Accordingly, the mutual obligation on both parties to apply to the arbitrators for directions to put an end to any delay effectively prevented the sellers from relying on the buyers’ delay to assert that the arbitration agreement was either repudiated or frustrated, even though a satisfactory trial of the issues was no longer possible (see p 44 € f, p 45.4 to d, p47 bc, p 48.a toc, p 51 de and j to p 52 e and p 54 fj, post); Bremer Vulkan Schiffoau Und Maschinenfabrik v South India Shipping Corp [1981] 1 All ER 289 applied. (3) Since the doctrine of abandonment depended on the formation of a contract of abandonment (to which the normal rules of contract applied, including the necessity for consensus ad idem between the parties), the sellers had to show either (a) that an implied agreement to abandon the contract to arbitrate was to be inferred from the parties’ conduct or (b) that the buyers’ conduct as envinced to the sellers was such as to lead the sellers reasonably to believe that the buyers had abandoned the contract to arbitrate (even though that may not have been the buyers’ actual intention) and that the sellers had significantly altered their position in reliance on that belief. Furthermore (per Lord Brightman), in the latter case the sellers were required to produce evidence not only of what the buyers did or omitted to do, to the knowledge of the sellers, which entitled the sellers to assume that the contract was agreed to be abandoned, but also of what the sellers themselves did or omitted to do, whether or not to the knowledge of the buyers, which showed that the sellers had assumed that the contract was agreed to be abandoned. Since there had been intermittent exchanges between the parties during the period of delay from 1974 onwards the sellers were unable to show that the buyers’ conduct was such as to induce in the minds of the sellers a reasonable belief that the buyers had abandoned the arbitration agreement or that the sellers had acted on any such belief (see p 47 de and gto p 48c and fto p 49 cand g to p 50 a, p 52 de, p 54 fj and p55 g to p 56 b, post); André & Cie SA v Marine Transocean Ltd, The Splendid Sun [1981] 2 All ER 993 considered. Per curiam. The mutual obligation on both parties to an arbitration to keep the arbitration moving is not merely a matter of each party co-operating with any initiative taken by the other but a positive obligation imposed on each party to take the initiative himself, with or without the co-operation of the other party (see p 45 gh, p 48 a to, p 52 deand p 54 fj, post). Decision of the Court of Appeal [1982] 3 All ER 394 reversed.36 All England Law Reports [1983] 1 AIER Notes For termination of an arbitration agreement, see 2 Halsbury's Laws (4th edn) paras 547— 554, and for cases on the subject, see 3 Digest (Reissue) 104-118, 545-646. For the doctrine of frustration, see 9 Halsbury’s Laws (4th edn) paras 450-453, and for cases on the subject, see 12 Digest (Reissue) 482-511, 3426-3535. For repudiation of contract, see 9 Halsbury's Laws (4th edn) paras 546-549, and for cases on the subject, see 12. Digest (Reissue) 41 1-416, 3032-3049. Cases referred to in opinions Allen v Sir Alfred McAlpine & Sons Ltd, Bostic v Bermondsey and Southwark Group Hospital ‘Management Committee, Sternberg v Hammond [1968] 1 All ER 543, [1968] 2 QB 229, [1968] 2 WLR 336, CA, Digest (Cont Vol C) 1091, 2262b. André & Cie SA v Marine Transocean Ltd, The Splendid Sun [1981] 2. All ER 993, [1981] QB 694, [1981] 3 WLR 43, CA. Bell v Lever Bros Ltd [1932] AC 161, [1931] AI ER Rep 1, HL, 35 Digest (Repl) 23, 140. Birkett v James [1977] 2 All ER 801, [1978] AC 297, [1977] 3 WLR 38, HL, Digest (Cont Vol E) 666, 2698b. Bremer Vulkan Schiffbau Und Maschinenfabrik v South India Shipping Corp [1981] 1 All ER 289, [1981] AC 909, [1981] 2 WLR 14, HL; rvsg [1980] 1 All ER 420, [1981] AC 909, [1980] 2 WLR 905, CA; on appeal from [1979] 3 All ER 194, [1981] AC 909, [1979] 3 WLR 471. Central London Property Trust Lid v High Trees House Ltd (1946) [1956] 1 All ER 256, [1947] KB 130, 21 Digest (Reissue) 9, 53. Chancery Lane Safe Deposit and Offices Co Ltd v IRC [1966] 1 All ER 1, [1966] AC 5, [1966] 2 WER 251, HL, 28(1) Digest (Reissue) 278, 924. Constantine (Joseph) Steamship Line Ltd v Imperial Smelting Corp Ltd, The Kingswood [1941] 2 AILER 165, [1942] AC 154, HL, 12 Digest (Reissue) 482, 3428. Crawford v A E A Prowting Ltd [1972] 1 All ER 1199, [1973] 1 QB 1, [1972] 2 WLR 749, 3 Digest (Reissue) 116, 637. Davis Contractors Ltd v Fareham UDC [1956] 2 All ER 145, [1956] AC 696, [1956] 3 WLR 37, HL, 12 Digest (Reissue) 507, 3518. Donoghue (or M’Alister) v Stevenson [1932] AC 562, [1932] AI ER Rep 1, HL, 36(1) Digest (Reissue) 144, 562. Fitzleet Estates Ltd v Cherry (Inspector of Taxes) [1977] 3 All ER 996, [1977] 1 WLR 1345, HL, Digest (Cont Vol E) 291, 9234. Heyman v Darwins Ltd [1942] 1 All ER 337, [1942] AC 356, HL, 3 Digest (Reissue) 88, 453. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 1 AI ER 474, (1962) 2 QB 26, [1962] 2 WLR 474, CA, 41 Digest (Repl) 363, 1553. Johanna Oldendorff, The, E L Oldendorff & Co GbmH v Tradax Export SA [1973] 3 All ER 148, [1974] AC 479, [1973] 3 WLR 382, HL, Digest (Cont Vol D) 828, 25 43a. Jones v Secretary of State for Social Services, Hudson v Secretary of State for Social Services [1972] 1 AILER 145, [1972] AC 944, [1972] 2 WLR 210, HL, Digest (Cont Vol D) 683, 4585. Knuller (Publishing, Printing and Promotions) Ltd v DPP 1972] 2 All ER 898, [1973] AC 435, [1972] 3 WLR 143, HL, 14(1) Digest (Reissue) 140, 966. ‘Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524, [1935] All ER Rep 86, 12 Digest (Reissue) 428, 3 100. Pearl Mill Co v Ivy Tannery Co[1919] 1 KB 78, [1918-19] All ER Rep 702, DC, 12 Digest (Reissue) 435, 3132. Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556, [1980] AC 827, [1980] 2 WLR 283, HL. R v Cunningham [1981] 2 All ER 863, [1982] AC 566, [1981] 3 WLR 223, HL. Shaw v DPP [1961] 2 All ER 446, [1962] AC 220, [1961] 2 WLR 897, HL, 14(1) Digest (Reissue) 139, 965.HL Paal Wilson & Co v Blumenthal (Lord Diplock) 37 Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Co for Agricultural Products, The Aello [1960] 2. All ER 578, [1961] AC 135, [1960] 3 WLR 145, HL, 41 Digest (Repl) 333, 1304. Appeal The defendants, Partenreederei Hannah Blumenthal (the buyers), appealed by leave of the Court of Appeal against the decision of the Court of Appeal (Lord Denning MR and Kerr LJ, Griffiths LJ dissenting) [1982] 3 All ER 394, [1982] 3 WLR 49) on 26 March 1982 dismissing their appeal against the decision of Staughton J ([1982] 1 All ER 197, [1981] 3 WLR 823) on 7 July 1981 granting the plaintiffs, Paal Wilson & Co A/S (the sellers), a declaration that an arbitration agreement contained in a contract dated 23 September 1969 between the buyers and the sellers for sale of the vessel Pinto (later renamed the Hannah Blumenthal) was discharged by frustration. The sellers, by their cross-appeal sought to uphold the decision of the Court of Appeal on the alternative ground that the contract had been abandoned by mutual consent. The facts are set out in the opinion of Lord Brandon. ‘Mark Saville QC and Timothy Wormington for the buyers. David Johnson QC and Jonathan Sumption for the sellers. Their Lordships took time for consideration. 2 December. The following opinions were delivered. LORD DIPLOCK. My Lords, since the speech to be delivered by my noble and learned friend Lord Brandon will be the principal speech in this appeal, I have asked him, with the agreement of all your Lordships, that it should be delivered first. Such observations as I shall myself be making are intended to be supplementary to and in amplification of some parts of it; and I understand that those to be made by miy noble and learned friends Lord Roskill and Lord Brightman are intended by them to be regarded in the same light. LORD BRANDON OF OAKBROOK. My Lords, your Lordships have before you an appeal from a judgment of the Court of Appeal (Lord Denning MR and Kerr LJ, Griffiths L} dissenting) ((1982] 3 All ER 394, [1982] 3 WLR 49) affirming a judgment of Staughton J in an action in the Commercial Court ((1982] 1 All ER 197, [1981] 3 WLR 823). The question raised by the appeal is of a general character and of great importance to arbitrators and commercial practitioners. It can be formulated in this way. Suppose that two parties toa contract have agreed to refer a dispute arising out of it to arbitration, and subsequently there is such prolonged delay by either or both parties in preparing for the arbitration and bringing it to a hearing that it becomes no longer possible for the arbitrator or arbitrators concerned to decide the case satisfactorily. In those circumstances, is the result in law that the agreement to refer is frustrated, so that neither party has either the duty or the right to proceed further with the reference, and that, if either should wish to do so, he should be restrained by injunction from so acting? Both Staughton J at first instance and the Court of Appeal by a majority on appeal from him have given an affirmative answer to that question, have held that the agreement to refer which is the subject matter of the present action has been frustrated by the delay of one or both the parties and have granted an injunction against the claimants restraining them from proceeding further with the reference. The original appellants, with the leave of the Court of Appeal, now appeal to your Lordships’ House against that decision. Your Lordships also have before you a cross-appeal by the original respondents. That cross-appeal raises a further question, which is not of a general character but which depends on the particular facts of the present case. The further question is this: on the assumption that the decision of the courts below on the first question referred to above was wrong, so that, on a true view of the law, the agreement to refer in the present case was not frustrated, was the conduct of the parties nevertheless of such a character as to38 All England Law Reports [1983] 1 AIIER lead to the inference that they impliedly consented with each other to abandon that agreement? It was held by Staughton J, and unanimously by the Court of Appeal, thar ‘no such mutual consent to abandon the agreement to refer could properly be inferred from the conduct of the parties. The original respondents cross-appeal against that further decision. The original appellants and cross-respondents are Partenreederei Hannah Blumenthal, a West German concern, whom I shall call ‘the buyers’. The original respondents and cross-appellants are Paal Wilson & Co AJS, a Norwegian company, whom I shall call ‘the sellers’. The matter arises out of a written contract, entitled ‘Memorandum of Agreement’ and dated 23 September 1969, for the sale of a ship by the sellers to the buyers. The ship's name before the sale was Pinto; she was renamed after the sale Hannah Blumenthal. The contract of sale of the ship contained the following, among other, provisions: ‘Section 4. The Sellers shall provide for inspection of the Vessel . .. about 27th September 1969 and the Buyers shall undertake the inspection without undue delay tothe Vessel... Section 8 ... The Sellers shall, at the time of delivery, hand to the Buyers all classification certificates .. . as well as all plans which may be in Sellers’ possession. The same applies to log books, unless otherwise agreed. Section 11. .. the Vessel with everything belonging to her shall be delivered and taken over as she is at the time of delivery, after which the Sellers shall have no responsibility for possible faults or deficiencies of any description ... Section 15. If any dispute should arise in connection with the interpretation and fulfilment of this contract, same shall be decided by arbitration in the city of LonDoN and shall be referred to a single Arbitrator to be appointed by the parties hereto. If the parties cannot agree upon the appointment of the single Arbitrator, the dispute shall be settled by three Arbitrators, each party appointing one Arbitrator, the third being appointed by The Balticand International Maritime Conference in Copenhagen The contract of sale contained no provision of any kind relating to the rpm or speed of the ship in service. It was duly carried out and the property in the ship was transferred from the sellers to the buyers, who proceeded to operate her with the new name referred toabove. On 28 January 1972 Messrs Holman Fenwick & Willan (Holmans), London solicitors acting for the buyers, wrote to the sellers asking them for delivery of the ship's deck and engine log books in accordance with section 8 of the contract of sale. By letter dated 15 March 1972 the sellers informed Holmans that the log books were with their Protection and Indemnity Associations, the London Steam-Ship Owners’ Mutual Insurance Association Ltd and Assuranceforeningen Skuld. On 5 April 1972 A Bilbrough & Co Ltd (Bilbroughs), the managers of the former association, wrote to the West of England Ship ‘Owners Mutual Insurance Association (London) Ltd, in their capacity as insurers of the buyers, saying that Skuld had sent such log books of the ship as they had in their possession to Bilbroughs. In the following months the buyers notified the sellers, either directly or through agents, that they had a claim against them in respect of the speed of the ship, and the sellers, again directly or through agents, rejected such claim, with the result that a dispute between the parties in connection with the contract of sale had come into being. During the course of August 1972, after the parties had been unable to agree on a single arbitrator for the settlement of the dispute, the buyers appointed Mr Ralph Kingsley as their arbitrator, and notice of such appointment was given to Bilbroughs as agents for the sellers. At the same time Bilbroughs were asked to give inspection of the ship's predelivery log books. On 1 September 1972 Bilbroughs wrote refusing to comply with this request on the ground that the buyers were not entitled to such inspection until discovery in the arbitration. Between December 1972 and February 1973 Messrs Sinclair Roche & Temperley (Sinclairs). London solicitors acting for the sellers, appointed Mr Cedric Barclay as theHL Paal Wilson & Co v Blumenthal (Lord Brandon) 39 sellers’ arbitrator, and gave notice of such appointment to Holmans. No steps, however, were taken by either party separately, or both parties together, then or at any later time, to effect the appointment of a third arbitrator by the Baltic and International Maritime Conference in Copenhagen, as provided for in section 15 of the contract of sale. Between February 1973 and February 1974 Holmans and Sinclairs exchanged a considerable number of letters relating to the nature of the buyers’ claim and the production for inspection of the ship's predelivery log books. This correspondence proved inconclusive and on 22 February 1974 Holmans served on Sinclairs the buyers’ points of claim in the arbitration. These made it clear that the buyers founded their case on alleged representations, both oral and written, made by the buyers or their agents before the conclusion of the written contract of sale, and not on any express or implied terms of that contract. On 26 June 1974 Sinclairs served on Holmans the sellers’ points of defence in the arbitration, which consisted substantially of a denial of all the relevant averments in the buyers’ points of claim. In September 1974 Sinclairs sought and obtained from Holmans consent to amendment of the points of defence. By November 1974 the pleadings in the arbitration could reasonably be regarded as closed, A suggestion had earlier been made by Holmans that it might be necessary for the buyers to serve points of reply, but no such further pleadings had by then been served, The stage was accordingly set for discovery of documents by both parties. In fact, however, there was a lengthy delay in the process of discovery, so much so that it was not until 15 September 1977 that Holmans served on Sinclairs the buyers’ list of documents. Subsequently there was a further prolonged exchange of letters between the solicitors on either side, in the course of which Holmans pressed Sinclairs to serve the sellers’ list of documents, and to agree a timetable for the further conduct of the arbitration, There was much delay on the sellers’ side during this period, and it was not until 12 May 1978 that Sinclairs ultimately served on Holmans the sellers’ list of documents, subject to a reservation about other documents not so far translated into English. The documents set out in the sellers’ list did not, extraordinary as it may seem having regard to the nature of the buyers’ claim and the history of the matter, include any of the ship's predelivery log books, and not surprisingly Holmans immediately wrote to Sinclairs complaining of this vital omission. Between 17 May 1978 and 15 November 1978 a further exchange of letters took place between Holmans and Sinclairs in the course of which Holmans were pressing their request for discovery of the ship's predelivery log books and of other documents which Sinclairs had informed them should be added to the sellers’ list, and Sinclairs, in addition to stalling on those requests, themselves pressed Holmans for discovery of the ship’s post-delivery log books. On 14 September 1978 Holmans supplied to Sinclairs copies of translations of the ship’s post- delivery log books, and repeated once again their request for production of the ship's predelivery log books. On 16 November 1978 Holmans at long last received these log books from Sinclairs, Between December 1978 and February 1979 Holmans were in correspondence with a marine expert with a view to his examining and reporting on the ship's log books in relation to the buyers’ claim for mispresentation by the sellers of the ship's service speed. In February 1980 Holmans received their expert's first report and in June 1980 his second report, On 30 July 1980 Holmans sent to Sinclairs the two reports prepared by their expert, saying that they strongly supported the buyers’ case and invited them to agree a date for the hearing of the arbitration. ‘On 5 August 1980 Sinclairs, galvanised into action no doubt by the receipt of the expert's reports, and Holmans' assertion that they strongly supported the buyers’ case, wrote to Holmans saying that they were going to apply to the court for an order that the buyers’ claim should be struck out for want of prosecution, On 14 August 1980 Sinclairs wrote a further letter to Holmans in which they purported to accept the buyers’ conduct in connection with the arbitration as amounting to a repudiation by the buyers of the agreement to refer the dispute between the parties to arbitration, and claimed that that agreement had thereby been discharged. ‘On 19 August 1980 Sinclairs issued a writ on behalf of the sellers against the buyers in the Commercial Court. The writ was indorsed on the reverse with points of claim, by40 All England Law Reports [1983] 1 AIL ER which the sellers claimed against the buyers the following items of relief: (1) a declaration. that the arbitration agreement in the contract of sale had been discharged by reason of repudiation of it by the buyers acceptedaas such by the sellers; (2) an injunction restraining the buyers from taking any further action in pursuance of that agreement; (3) an order dismissing the buyers’ claim for want of prosecution; (4) damages limited to the sellers’ costs in the reference; alternatively (5) a declaration that, if the arbitration agreement was still subsisting, the arbitrators had power to strike out the buyers’ claims for want of prosecution. So far as those points of claim are concerned, | think it right to make two observations in passing. First, even on the most favourable view of the sellers’ case, it could not be contended that the whole of the arbitration agreement contained in s 15 of the contract. of sale had been discharged; at best, from the sellers’ point of view, it could only be contended that the agreement to refer the particular dispute between the parties which had arisen had been discharged in the manner alleged. Second, since no third arbitrator had been appointed as required by s 15, itis difficult to see how the court could possibly have made the alternative declaration asked for in (5) above. Following the service of the writ various interlocutory applications were made by both parties. The buyers applied twice to have the sellers’ claims struck out as disclosing no cause of action. The sellers also applied twice to amend their points of claim. Directions were given for trial of the action on affidavit evidence alone, any further pleadings and discovery of documents to be dispensed with. It was further decided that the various interlocutory applications referred to above should be dealt with immediately before the trial of the action, the date for which was then or later fixed as 6 June 1981. In the result, before the trial, which occupied both 6 and 7 July 1981, was begun, the buyers’ applications to have the sellers’ claims struck out were dismissed, and the sellers were given leave to amend item (1) of their claim by adding to the existing contention that the arbitration agreement had been discharged by the sellers’ acceptance of the buyers’ repudiation of it the further contentions that it had in the alternative been discharged either by frustration or by an agreement between the parties to abandon it. My Lords, Staughton J at first instance and all three members of the Court of Appeal on appeal from him were of the opinion that there had been such inordinate delay by the buyers and the sellers in their preparation for the arbitration and the bringing of it to a hearing that a fair trial of the dispute between the parties was no longer possible. There was, in my view, ample material on which the two courts below could properly reach this conclusion, and it would, | apprehend, only be in very rare cases that your Lordships’ House would see fit to disturb a concurrent conclusion of that kind. Even if that consideration were to be disregarded, however, I think it right to say, after a careful examination of the extensive delays which admittedly occurred in this case, that I should have no hesitation in reaching the same conclusion on the matter concerned as was reached in the two courts below. 1 would only say that I should prefer to substitute, for the concept that a fair trial would be impossible, the similar, but as it seems to me more accurate, concept that a satisfactory trial would be impossible, and I approach the primary question raised by the original appeal on that basis. My Lords, it is not possible to explain and understand the manner in which the present case was dealt with in the two courts below without first referring in some detail to the history and outcome of an earlier case in which attempts were made by respondents in an arbitration to bring the reference of a dispute to a summary end on the ground of. inordinate and inexcusable delay by the claimants in prosecuting their claim. That earlier case is Bremer Vulkan Schifbau Und Maschinenfabrik v South India Shipping Corp (1981) 1 All ER 289, [1981] AC 909, and the present case is in a number of senses a sequel to it. Bremer Vulkan was tried at first instance by Donaldson J (see [1979] 3 All ER 194, [1981] AC 909). He found that the claimants in an arbitration between the parties (the defendants in the action) had been guilty of inordinate and inexcusable delay in prosecuting their claim to the serious detriment of the respondents (the plaintiffs in the action), and that, if the claim had been brought in an action instead of an arbitration andHL Paal Wilson & Co v Blumenthal (Lord Brandon) 41 the same delays had occurred, the court would have exercised its undoubted jurisdiction to dismiss the action for want of prosecution in accordance with the principles laid down in Allen v Sir Alfred McAlpine é Sons Ltd [1968] 1 All ER 543,[1968] 2 QB 229. The judge further held that, in these circumstances, it was open to the plaintiffs to bring the reference to arbitration concerned to a summary end in one or other of two different ways. First, the plaintiffs could apply to the arbitrator himself to dismiss the claim for want of prosecution, and the arbitrator would then have the same power as the court to do so. Second, there was to be implied in the agreement to refer a term that each party would use his best endeavours to bring the matter to a speedy conclusion; the inordinate and inexcusable delay of the defendants in prosecuting their claim was so serious a breach of that implied term as to amount to a repudiation of the agreement to refer; and the plaintiffs, by accepting that repudiation as such, were entitled to treat that agreement as, discharged by breach. The court could then protect the plaintiffs’ position by granting an injunction against the defendants restraining them from taking any further step in the arbitration. It is to be observed that, in so far as Donaldson J held that an arbitrator himself has the power to dismiss a claim for want of prosecution, he was disagreeing with and declining to follow an earlier decision to the contrary effect of Bridge J, in Crawford v A E A Prowting Ltd [1972] 1 All ER 1199, [1973] QB 1. The judgment of Donaldson J in Bremer Vulkan was substantially upheld by the Court of Appeal (Lord Denning MR, Roskill and Cumming-Bruce LJ}) (see [1980] 1 All ER 420, [1981] AC 909), although with some variations in the precise grounds of decision. Lord Denning MR held, contrary to the view of Donaldson J, and in accordance with the earlier decision of Bridge J referred to above, that an arbitrator himself had no power to dismiss a claim for want of prosecution. He took the view, however, that the court, in the exercise of its jurisdiction to supervise arbitrations, did have such power. He also supported the view of Donaldson J that a claimant in an arbitration was under an implied obligation to use reasonable dispatch, that if a claimant failed to comply with that obligation to such an extent as to make a fair hearing of the dispute impossible, and thereby to frustrate the whole purpose of the arbitration, the respondent was entitled to accept such conduct asa repudiation of the agreement to refer and to treat such agreement asat an end, and, further, that the court could protect a claimant's position in such a case by the grant of an injunction. Roskill L] also held that an arbitrator himself has no power to strike out a claim for want of prosecution. As regards the issue of accepted repudiation, he did not agree with the view of Donaldson J about the term to be implied in an agreement to refer. He agreed that some term was to be implied, but formulated it as an obligation on a claimant not to be guilty of such delay as would frustrate the whole purpose of the arbitration. He found that the claimant in that case had been guilty of such delay, so that the respondent was entitled to treat the agreement to refer as discharged by breach and have the protection of an injunction from the court. Cumming-Bruce L] agreed with both Lord Denning MR and Roskill L] that the appeal should be dismissed on the grounds given by them. He went on to state in express terms his view that the principles laid down in Allen v Sir Alfred McAlpine & Sons Ltd were as relevant to arbitrations as to actions. The defendants brought a further appeal from the judgment of the Court of Appeal to your Lordships’ House, which by a majority allowed the appeal. The reasoning on which the majority founded their decision was fully expounded in the speech of Lord Diplock. He laid much stress on the contractual nature of an agreement to refer a dispute to arbitration and disagreed strongly with the view much relied on by the two courts below that, because actions and arbitrations were alike adversarial in character, the same principles which applied to the summary dismissal of an action on the ground of inordinate and inexcusable delay in its prosecution by the plaintiff applied equally to the summary dismissal of a claim in an arbitration on the ground of similar delay in its prosecution by a claimant. It is not possible, in a short compass, to summarise the whole effect of the speech of42 All England Law Reports [1983] 1 AIER Lord Diplock in Bremer Vulkan. Nor do I think it is necessary for me to do so, for it seems to me that it is sufficient to quote two important passages from it, which afford powerful guidance in the decision of the present appeal. In the first passage Lord Diplock said ({1981] 1 All ER 289 at 301, [1981] AC 909 at 985-986): ‘Lturn then to consider what the mutual obligations of the parties are in a private arbitration. By appointing a sole arbitrator pursuant to a private arbitration agreement which does not specify expressly or by referenceany particular procedural rules, the parties make the arbitrator the master of the procedure to be followed in the arbitration. Apart from a few statutory requirements under the Arbitration Act 1950, which are not relevant to the instant case, he has a complete discretion to determine how the arbitration is to be conducted from the time of his appointment to the time of his award, so long as the procedure he adopts does not offend the rules of natural justice. The contractual obligation which the parties assume to one another in relation to the procedure to be followed in the arbitration unless a contrary intention is expressed in the arbitration agreement is that which is stated in s 12(1) of the Act, viz: “... parties to the reference, and all persons claiming through them respectively, shall, subject to any legal objection, submit to be examined by the arbitrator or umpire, on oath or affirmation, in relation to the matters in dispute, and shall, subject as aforesaid, produce before the arbitrator or umpire all documents within their possession or power respectively which may be required or called for, and do all other things which during the proceedings on the reference the arbitrator or umpire may require.” No doubt in some arbitrations of a kind with which those who act on behalf of the parties in the conduct of the arbitration are familiar both claimant and respondent may carry out voluntarily some of all of the preliminary steps needed to prepare the matter for the hearing by the arbitrator, and do so without seeking and obtaining any prior direction from him; but, if what is done voluntarily by way of preparation is done so tardily that it threatens to delay the hearing to a date when there will be a substantial risk that justice cannot be done, it is in my view a necessary implication from their having agreed that the arbitrator shall resolve their dispute that both parties, respondent as well as claimant, are under a mutual obligation to one another to join in applying to the arbitrator for appropriate directions to put an end to the delay. Even if an application to the arbitrator for directions in such circumstances were a matter of right only and not, as I think it is, a mutual obligation, it provides a remedy to the party which thinks that the proceedings are not progressing fast enough voluntarily, which renders unnecessary the implication in the arbitration agreement of any such term as was suggested by Donaldson J or Roskill LJ.’ (Lord Diplock’s emphasis.) In the second passage Lord Diplock said ([1981] 1 All ER 289 at 302, [1981] AC 909 at 987-988): ‘In the instant case, however, as in Crawford v A E A Prowting Ltd(1972] 1 AI ER 1199, [1973] QB 1, the respondents, Bremer Vulkan, were content to allow the claimants, South India, to carry out voluntarily the preparation of detailed points of claim. They never made an application for directions to the arbitrator and none were made by him. For failure to apply for such directions before so much time had elapsed that there was a risk that a fair trial of the dispute would not be possible, both claimant and respondent were in my view in breach of their contractual obligations to one another; and neither can rely on the other's breach as giving him a right to treat the primary obligations of each to continue with the reference as brought toan end. Respondents in private arbitrations are not entitled to let sleeping dogs lie and then complain that they did not bark.’ I have described the history and outcome of Bremer Vulkan in some detail for this reason. The members of both the courts below made no secret of the fact that they regretted the decision of your Lordships’ House in that case, Being of that mind the trialHL Paal Wilson & Co v Blumenthal (Lord Brandon) 43 judge and the majority in the Court of Appeal were at pains to reach a conclusion on the present case which their deeply held convictions led them to believe that both justice and good sense demanded, despite the obstacles which they recognised at first sight that the Bremer Vulkan decision put in their way. The conclusion which they reached was, as | indicated earlier, that, because there had been such inordinate delay by one or both of the parties to the arbitration in preparing for it and bringing it to a hearing that a fair trial of the issues raised in it was no longer possible, the agreement of the parties to refer the dispute which has arisen between them toarbitration had been frustrated, and that the claimants should accordingly be restrained by injunction from proceeding with it further. Griffiths LJ on the other hand, in his dissenting judgment, while making it abundantly clear that his distaste for the decision of your Lordships’ House in Bremer Vulkan was no less than that of the other judges concerned, reached what was for him the unhappy conclusion that to hold that the ¢ agreement to refer had been frustrated for the reasons given by the majority could not be reconciled with the reasoning on which that decision was founded. The reasoning of Lord Denning MR can be summarised as follows. First, he held that the views expressed by Lord Diplock in Bremer Vulkan, that the parties to an agreement to refer a dispute between them to arbitration owed to one another a mutual obligation toapply to the arbitrator for directions to prevent inordinate delay (the mutual obligation concept), did not form part of the ratio decidendi in that case, and were wrong. Second, that, since this was so, the Bremer Vulkan case did not form an obstacle to holding that an agreement to refer a dispute to arbitration could be repudiated by inordinate and inexcusable delay by the claimant. Third, and alternatively, inordinate delay by a claimant could frustrate, and in the present case in fact had frustrated, the agreement to refer. The reasoning of Kerr LJ went like this. First, he accepted, unlike Lord Denning MR, that Lord Diplock’s mutual obligation concept did form part of the ratio decidendi in Bremer Vulkan, Second, he recognised that, since that was so, inordinate and inexcusable delay by a claimant could not, without some additional factor or factors, amount £0 a repudiation by such claimant of an agreement to refer. But, third, he said that there was nothing in the decision of your Lordships’ House in Bremer Vulkan to prevent the court from treating delay, of such a length as to make the fair trial of an arbitration no longer possible, as causing frustration of an agreement to refer, and that, on the facts of the present case, such frustration had occurred, Griffiths LJ, in his dissenting judgment, expressed views which accorded substantially with the first two steps in the reasoning of Kerr LJ set out above. He went on, however, to express his further view that it was not open to the Court of Appeal, in the light of your Lordships’ decision in Bremer Vulkan, to hold that an agreement to refer a dispute to arbitration could be frustrated by delay alone, and in particular by delay which was caused, not by an external event or circumstances outside the control of the parties, but solely by their own conduct of the reference. In the light of this necessarily compressed analysis of the reasoning of the three members of the Court of Appeal, two issues emerge for your Lordships’ decision in relation to the first and general question raised by this appeal. The first issue is whether Lord Diplock’s mutual obligation concept in Bremer Vulkan formed part of the ratio decidendi of that case. The second issue is whether, if it did, it was open to the majority of the Court of Appeal to hold that, on the facts of the present case, the agreement to refer the dispute between the parties to arbitration had been discharged by frustration, so as to entitle the sellers to an injunction restraining the buyers from taking any further step in that reference. So far as the first question is concerned, I entertain no doubt whatever that Lord Diplock’s mutual obligation concept formed an essential part of the ratio decidendi of Bremer Vulkan in your Lordship’s House. That this is so is, in my opinion, made crystal clear by the words used by him in the second of the two passages from his speech which I quoted earlier, and which I shall now, in order to make good my opinion, venture to quote once again.44 All England Law Reports [1983] 1 AIlER ‘For failure to apply for such directions before so much time had elapsed that there was a risk that a fair trial of the dispute would not be possible, both claimant and respondent were in my view in breach of their contractual obligations to one another; and neither can rely on the other's breach as giving him a right to treat the primary obligation of each to continue with the reference as brought to an end.” The Court of Appeal in Bremer Vulkan had held that the claimant had been guilty of such inordinate and inexcusable delay in proceeding with the reference there concerned as to amount to a repudiation of the agreement to refer, that the respondents were entitled to accept, and had accepted, that repudiation as such, and that the agreement to refer had accordingly been discharged by breach. What Lord Diplock was saying was that, since the delay concerned was the consequence of breaches on the part of both the claimant and the respondent of their mutual obligation owed to one another, neither could rely on the other's conduct as amounting to repudiation. It necessarily follows that Lord Diplock’s mutual obligation concept was an essential part of the ratio decidendi of the Bremer Vulkan case in your Lordships’ House. So far as the second issue is concerned there can be no doubt that an agreement to refer a dispute to arbitration can in theory, like any other contract, be discharged by frustration. Lord Diplock expressly recognised this in his speech in Bremer Vulkan [1981] 1 All ER 289 at 297, [1981] AC 909 at 980. Before this can happen, however, the usual requirements necessary to give rise to frustration of a contract must be present. What those requirements are appears clearly from the various pronouncements of high authority on the doctrine of frustration of contract conveniently gathered together by Griffiths L] in his dissenting judgment in this case (see [1982] 3 All ER 394 at 406-407, [1982]3 WLR 4g at 64-65). Those pronouncements, which I do not consider that it is necessary for me to quote again myself, show that there are two essential factors which must be present in order to frustrate a contract. The first essential factor is that there must be some outside event or extraneous change of situation, not foreseen or provided for by the parties at the time of contracting, which either makes it impossible for the contract to be performed at all, or at least renders its performance something radically different from what the parties contemplated when they entered into it. The second essential factor is that the outside event of extraneous change of situation concerned, and the consequences of either in relation to the performance of the contract, must have occurred without either the fault or the default of either party to the contract. It was contended for the sellers that the courts have never defined with precision the meaning of the expression ‘default’ in this context. In this connection reliance was placed on the observations of Viscount Simon LC in Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd, The Kingswood [1941] 2 All ER 165 at 173, [1942] AC 154 at 166, where he said: ‘... do not think that the ambit of “default” as an element disabling the plea of frustration to prevail has as yet been precisely and finally determined. “Self-induced” frustration, as illustrated by the two decided cases already quoted, involves deliberate choice, and those cases amount to saying that a man cannot ask to be excused by reason of frustration if he has purposely so acted as to bring it about. “Default” is a much wider term, and in many commercial cases dealing with frustration is treated as equivalent to negligence. Yet in cases of frustration of another class, arising, in connection with a contract for personal performance, it has not, | think, been laid down that, if the personal incapacity is due to want of care, the plea fails. Some day it may have to be finally determined whether a prima donna is excused by complete loss of voice from an executory contract to sing if it is proved that her condition was caused by her carelessness in not changing her wet clothes after being out in the rain, The implied term in such a case may turn out to be that the fact of supervening physical incapacity dissolves the contract without inquiring further into its cause, provided, of course, that it has not been deliberately induced in order to get out of the engagement.’