[1982] [HOUSE OF LoRDs] PIONEER SHIPPING LTD. anp OTHERS . . . RESPONDENTS B.T.P. TIOXIDELTD.. . = + + » . APPELLANTS 1981 June 15, 16, 17, 18; Lord Diplock, Lord Fraser of Tullybelton, July 16 Lord Russell of Killowen, Lord Keith of Kinkel and Lord Roskill Arbitration—Award—A ppeal—Effect of strike on charterparty— Arbitrator’s decision on frustration — Finding that charter- party divisible into separate seasons — Whether court to entertain appeal against award—Arbitration Act 1979 (c. 42), s. 1 (1) (2) @) (4) (7) Contract—Frustration—Charterparty—Effect of strike—Whether delay sufficient to constitute frustration—Whether fact or law Ships’ Names—Nema On November 2, 1978, owners chartered the Nema to charterers for seven consecutive voyages to Sorel in Canada, there to load titanium slag and carry the cargo back to Europe. For three or four of the winter months Sorel was only open for ice-reinforced vessels and the Nema was not ice-reinforced. Her voyages were to start in April and end in December 1979. By clause 5 of the charterparty time lost in, inter alia, strikes ‘was not to be computed in the loading or discharging time. The Centrocon arbitration clause providing for “final arbitra- ment” in London was incorporated in the charter. After one round voyage the Nema arrived back at Sorel on June 20, 1979. She gave notice of readiness but was unable to load_owing to a strike which had started there on June 6. On June 28, 1979, the parties, in consideration of the strike situation, agreed an addendum no. 2 to the charterparty by which, inter alia, the owners were permitted to take the Nema for one intermediate transatlantic voyage thereafter returning to load her next cargo at Sorel, the charterparty was extended for a further seven cargoes to be lifted between April and December 1980 and, if the strike continued after the end of the intermediate voyage, the situation was to be “dis- cussed without obligation.” The strike at Sorel continued and by an addendum no. 3 of July 11, 1979, the charterers agreed to pay the owners compensation at the rate of $2,000 a day until the strike ended or the Nema got an intermediate voyage. On July 20 the Nema was released to the owners and sailed on an intermediate voyage from which she finished discharging her cargo at Glasgow on August 10, 1979. The charterers then wanted the Nema to return to Sorel in case the strike ended but the owners fixed her for a further intermediate voyage. In mid-August 1979 the parties agreed to early arbitration before a single arbitrator. After an all day arbitration hear- ing on September 26, 1979, the arbitrator, who did not know when the strike would end, gave his decision on September 28, 1979, that ‘the whole of the charterparty contract of November 2, 1978, is now frustrated.” On October 3 he gave his reasoned award and stated that in arriving at his con- clusions he had disregarded addenda nos, 2 and 3 and that his decision only adverted to the “seven consecutive voyages for725 AG Pioneer Shipping v. B.T.P. Tioxide (H.L.E.) ) 1979,” no consideration having been given “to the seven voyages contemplated for the 1980 season.” On October 5, the strike ended. On November 2, 1979, Robert Goff J. gave leave to appeal under section 1 of the Arbitration Act 1979 * and on appeal by the owners the Court of Appeal held that it had jurisdiction to entertain the appeal and declined to interfere with the judge’s grant of leave. ‘On the hearing of the appeal, Robert Goff J. held that “the charterparty and addenda’ comprised one indivisible contract” which was not frustrated and ordered that the award be varied pursuant to section 1 (2) (a) of the Act of 1979 by substituting a declaration that the charterparty had not been frustrated and/or that the Nema was and had at all material times since August 10, 1979, been obliged to return to Sorel. On appeal by the owners the Court of Appeal allowed the appeal. ‘On appeal by the charterers: — Held, dismissing the appeal, (1) that under the charter- party of November 2, 1978, and addendum no. 2 the contem- plated voyages for the 1979 and 1980 seasons were distinct, separate and independent adventures and the arbitrator had rightly considered whether or not the charterparty for the 1979 season had been frustrated (post, pp. 734z-F, 744u—745B, 75\n-8).. Larrinaga and Co. Ltd. v. Société Franco-Américaine des Phosphates de Medulla, Paris (1923) 29 Com.Cas. 1, H.L.(E.) considered. (2) That, since the arbitrator had properly directed himself that, because of the strike, performance of the charterparty for 1979 must be radically different from what had been under- taken under the contract and his finding was reasonable, his conclusion that on September 26, 1979, the charterparty was frustrated in respect of the 1979 season should not have been interfered with and should be restored (post, pp. 734:-F, 744u—745p, 753-2, 7548-2). Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696, H.L.(E.) applied. Trade and Transport Inc. v. lino Kaiun Kaisha Ltd. (The Angelia) [1973] 1 W.L.R. 210 doubted. (3) That in the circumstances leave to appeal to the High Court from the arbitrator's award ought not to have been granted by the judge nor from his decision to the Court of ‘Appeal (post, pp. 7358-F, 740z-F, 744H—745p, 746a-2). 1 Arbitration Act 1979, s. 1: ‘*(1) In the Arbitration Act 1950. . . section 21 (statement of case . . .) shall cease to have effect and, without prejudice to the right of appeal conferred by subsection (2) below, the High Court shall not have jurisdiction to set aside or remit an award on an arbitration agreement on the ‘ground of errors of fact or law on the face of the award. (2) Subject to subsection G) below, an appeal shall lie to the High Court on any question of law arising out ‘of an award on an arbitration agreement; and on the determination of such an appeal the High Court may . . . (a) confirm, vary or set aside the award... (3) ‘An appeal under this section may be brought by any of the parties to the reference —(a) with the consent of all the other parties to the reference; or (6). . . with the leave of the court. (4) The High Court shall not grant leave under subsection (3) (6) above unless it considers that, having rcgard to all the circumstances, the determina- tion of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement . . (7) No appeal shall lie to the Court of Appeal from_a decision of the High Court on an appeal under this section unless—(a) the High Court or the Court of Appeal gives leave; and (6) it is certified by the High Court that the question of law to which its decision relates either is one of general, public importance or ig one which for some other special reason should be considered by the Court of Appeal... .”726 Pioneer Shipping v. B.T.P. Tioxide (H.L.(E.) ) [1982] Schiffahrisagentur Hamburg Middle East Line G.m.b.H. Hamburg v. Virtue Shipping Corporation Monrovia (The Oinoussian Virtue) [1981] 1 Lloyd’s Rep. 533 disapproved. Observations on the granting of leave to appeal under section 1 of the Arbitration Act 1979 (post, pp. 740n-E, 7422— 743A, C-F, 744B-G, H—745n, D—746A). Decision of the Court of Appeal [1980] Q.B. 547; [1980] 3 W.L.R. 326; [1980] 3 All E.R. 117 affirmed. The following cases are referred to in their Lordships’ opinions: Czarnikow v. Roth, Schmidt & Co. [1922] 2 K.B. 478, C.A. Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696; [1956] 3 W.L.R. 37; [1956] 2 All E.R. 145, H.L(E,). Edwards v. Bairstow [1956] A.C. 14; [1955] 3 W.L-R. 410; [1955] 3 All E.R. 48, H.L(E.). Halfdan Grieg & Co. A/S v. Sterling Coal & Navigation Corporation (The Lysland) [1973] Q.B. 843; [1973] 2 W.L.R. 904; [1973] 2 All ER. 1073, C.A. International Sea Tankers Inc. of Liberia v. Hemisphere Shipping Co. Ltd. of Hong Kong (The Wenjaing) [1981] 2 Lloyd’s Rep. 308. Larrinaga and Co. Ltd. v. Société Franco-Americaine des Phosphates de Medulla, Paris (1922) 27 Com.Cas. 160; 28 Com.Cas. 1, C.A.; (1923) 29 Com.Cas. 1, H.L(E.). National Carriers Ltd. v. Panalpina (Northern) Ltd. [1981] 2 W.L.R. 45; [1981] 1 All ER. 161, HL). Penelope, The [1928] P. 180. Schiffahrtsagentur Hamburg Middle East Line G.m.b.H. Hamburg v. Virtue Shipping Corporation Monrovia (The Oinoussian Virtue) [1981] 1 Lloyd’s Rep. 533. Trade and Transport Inc. v. lino Kaiun Kaisha Ltd. (The Angelia) [1973] 1 W.L.R. 210; [1973] 2 All ER. 144, Tsakiroglou & Co. Ltd. v. Noblee Thorl G.m.b.H. [1962] A.C. 93; [1961] 2 W.LR. 633; [1961] 2 All ER. 179, HL(B). The following additional cases were cited in argument: Bank Line Ltd. v. Arthur Capel & Co. [1919] A.C. 435, H.L.(B.). British Launderers’ Research Association v. Borough of Hendon Rating Authority [1949] 1 K.B. 434; [1949] 1 All ER. 21, C.A. Comptoir Commercial Anversois and Power, Sons & Co., In re An Arbitration between [1920] 1 K.B, 868, C.A. Denny, Mott & Dickson Ltd. v. James B. Fraser & Co. Ltd. [1944] A.C. 265; [1944] 1 All E.R. 678, H.L.(Sc.). Dominion Coal Co. Ltd. v. Roberts (1920) 4 L1.L.Rep. 434. Esmail v. J. Rosenthal & Sons Ltd. [1965] 2 Lloyd’s Rep. 171, H.L.(E.). Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB. 26; [1962] 2 W.L.R. 474; [1962] 1 All E.R. 474, C.A. Intertradex S.A. v. Lesieur-Tourteaux S,A.R.L. [1978] 2 Lloyd’s Rep. 509, C.A. Ismail v. Polish Ocean Lines (The Ciechocinet) [1976] Q.B. 893; [1976] 2 W.L.R. 477; [1976] 1 All E.R. 902, C.A. Jackson v. Rotax Motor and Cycle Co. [1910] 2 K.B. 937, C.A. Jackson v. Union Marine Insurance Co. Ltd. (1874) L.R. 10 C.P. 125. Mondial Trading Co. G.m.b.H. v. Gill & Duffus Zuckerhandelsgesell- schaft m.b.H. [1980] 2 Lloyd’s Rep. 376.R27 AC Pioneer Shipping v. B.T-P. Tioxide (H.L.(E.) ) Ocean Tramp Tankers Corporation v. V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226; [1964] 2 W.L.R. 114, [1964] 1 All E.R. 161, CA. Tersons Ltd. v. Stevenage Development Corporation [1965] 1 Q.B. 37; [1964] 2 W.L.R. 225; [1963] 3 All E.R. 863, C.A. Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401; [1957] 2 W.L.R. 713; [1957] 2 All E.R. 70. APPEAL from the Court of Appeal. This was an appeal by leave of the House of Lords by the appellants, B.T.P. Tioxide Ltd., from an order dated May 22, 1980, of the Court of Appeal (Lord Denning M.R., Templeman and Watkins L.JJ.) allow- ing an appeal from an order dated December 21, 1979, of Robert Goff J., thereby restoring the decision of the sole arbitrator, Donald Ashford Davies Esq. given in an award dated October 3, 1979, whereby he determined a dispute which had arisen between the appellants and the respondents, Pioneer Shipping Ltd. and Armada Marine S.A., under a charterparty dated November 2, 1978. The facts are set out in the opinion of Lord Roskill. Anthony Hallgarten Q.C. and Bernard Rix Q.C. for the appellants, the charterers. In determining whether frustration had occurred, the arbitrator took as his yardstick the general principle relating to frustration set out in Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696 which he summarised as “. . . the change of obligation theory; performance because of the supervening events must be something radically different from that which was undertaken under the contract; “it was not this that I promised to do.’” Purporting to apply this test, the arbitrator reached the conclusion that the whole of the charter was frustrated. As to obligation, he considered that it was “for seven voyages” during the 1979 season with a last loading to take place in December 1979. As to performance, both in terms of the number of contractual voyages actually or prospectively performed and in terms of the impact of delay upon the owners, the arbitrator concluded that per- formance was now radically different from that undertaken, and that the interruption was sufficiently long to destroy the identity of the service to be performed by the owners. Indeed, it was his view that such would be the case even if the strike had ended on September 27; at most performance would be four out of seven contractual voyages, something “ radically different from that originally contemplated.” In reaching these conclusions, the arbitrator stated that his decision adverted only to the seven voyages for 1979. He made it clear that, as to obligation, he had disregarded addenda nos. 2 and 3, and that as to performance, he had disregarded the movements and employment of the vessel since her presentation for the second voyage. The arbitrator used the wrong test in determining whether frustration had occurred. Reliance is placed on the first world war requisition cases in support of this submission. Frustration operates automatically inde- pendently of the will and intention of the parties: Bank Line Ltd. v. Arthur Capel & Co, [1919] A.C. 435, 451, per Lord Sumner. Non728 Pioneer Shipping v. B.T.P. Tioxide (H.L.(E.) ) [1982] constat that the tribunal should ignore the attitude of the parties in the circumstances that they found themselves in. The Bank Line Ltd. case is the converse of the present. The arbitrator’s finding that the contract was frustrated even if the strike had ended on September 27 is an extreme view. But the fact that there could still be further substantial performance is a vital factor in determining whether a contract has been frustrated: see Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB. 26, 72, 73. Putting it in another way: is there still consideration moving from both parties under the original bargain and can it be said that it would not be a travesty of that bargain if it was performed in the new circumstances? The question whether performance under the new circumstances was performance under the original bargain or under some different bargain was correctly dealt with by Robert Goff J. [1980] 2 Lloyd’s Rep, 83, 93. Up to September 26, it may have been a hard bargain, but it remained the same bargain. The Court of Appeal should not have reversed the judge on this point. For the relevant factors to be taken into account in considering this issue see Chitty on Contracts, 24th ed. (1977), vol. I, paras 1403, 1406. The strike in the present case was within the commercial risk undertaken by these owners. It is necessary to ascertain whether there was a real chance of further performance. Most attempts to invoke strikes as a cause of frustration have failed. The Penelope [1928] P. 180, where such an attempt was successful, is distinguishable. Robert Goff J.’s assessment of the award was correct, the charter was not dissolved on September 26 and if it had continued it would have been the same bargain. The House is entitled to adopt the approach of Lord Reid in Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696, 721, that the court should take from the arbitrator's award all facts which throw light on the nature of the contract, or which can properly be held to be extrinsic evidence relevant to assist in its con- struction and then, as a matter of law, to construe the contract and to determine whether the ultimate situation, as disclosed by the award, is or is not within the scope of the contract so construed. The position of an arbitrator is analogous to that of an official referee or county court judge. The arbitrator, having established the facts, the points of law are subject to review. The question is: was the basis of the contract seven voyages? This is a pure question of construction. In the appellants’ submission, it was a contract of up to seven voyages. The probable maximum was five voyages. This contract was, of course, affected by the strike but the com- posite agreement contemplated further performance of the contract after the strike. It is only if, as Lord Denning M.R. states, the court adopts a more liberal approach that the doctrine of frustration could apply. No one has ever contraverted the observation of Viscount Simonds in Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696 that the doctrine should be kept within very narrow limits. It should not be compartmental- ised. The question of delay is merely one of a number of factors which have to be taken into account in considering whether a contract has been frustrated. Bank Line Ltd. v. Arthur Capel & Co. [1919] A.C. 435 was a very different case from the present. Because frustration has such draconian consequences for the parties, the729 AC. Pioneer Shipping v. B.T-P. Tioxide (H.L(E.) ) question whether there has been frustration should be one that the court cherishes for itself. It is a question of Jaw for the court paying due defer- ence to the findings of the arbitrator: see Davis Contractors Ltd. v. Fareham Urban District Council [1956] A.C. 696, 719, 720, 721, 730, and Tsakiroglou & Co. Ltd. v. Noblee Thorl G.m.b.H. [1962] A.C. 93, 116, 119, 123, 124, 129-130, 134. This approach was adopted by Lord Denning MR. in Ocean Tramp Tankers Corporation vy. V/O Sovfracht (The Eugenia) [1964] 2 Q.B, 226, 239, 240, and is now considered to be accepted Jaw: see [1980] 1 Lloyd’s Rep. 519, 520, 521. It was the approach adopted by Kerr J. in Trade and Transport Inc. v. lino Kaiun Kaisha Ltd. (The Angelia) [1973] 1 W.L.R. 210, which is strongly relied on. It is said by the respondents that the findings of an arbitrator are akin to those of a jury and that, therefore, they should not be disturbed and reliance is placed on Jackson v. Union Marine Insurance Co. Ltd. (1874) LR. 10 CP. 125, The appellants would support Jackson for what it decided but would not support the manner in which it was decided. For the ambit of that decision: see the judgment of McCardie J. in Larrinaga & Co, Ltd. v. Société Franco-Américaine des Phosphates de Medulla, Paris (1922) 27 Com.Cas. 160, 176. See also In re an Arbitration between Comp- toir Commercial Anversois and Power, Sons & Co. [1920] 1 K.B. 868, 890, per Bankes L.J. Jackson v. Union Marine Insurance Co. Ltd., L.R. 10 C.P. 125 and Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401 are both simple cases of the postponement of a single voyage charter. The present case is the converse of those cases. Delay was the: overriding factor in the Jackson case. In the present case, it is only one of many factors. The respondents are seeking to raise a new compartmentalisation of the law in relation to frustration. The difficulties in the respondents’ approach are highlighted on an analysis of the judgment of Templeman L.J. below. This is a most difficult area of the law of contract: see British Launderers’ Research Association v. Borough of Hendon Rating Authority [1949] 1 K.B. 434, 471, per Denning LJ. As to whether the Arbitration Act 1979 requires a new approach to be adopted to arbitration awards, this is an issue of the greatest importance. There are no grounds for thinking that the statements of Lord Denning MR. and other members of the Court of Appeal in the present case were welcomed by the maritime community or came other than as a surprise. If the appellants be correct so far, it would be surprising if the new Act shut the appellants out from appealing to the court. It is difficult to think of a case more fitting for judicial review than the present. Very few com- mercial cases are concerned with pure questions of law. If Lord Denning M.R.’s view be right, then the new Act has greatly curtailed judicial review of arbitration awards. As to whether leave ought ever to have been given to appeal to the High Court in this case, in view of the circumstances that the parties sought a quick decision, there are cases where legal rights and wrongs are of secondary importance and where finality is of prime importance. In other cases, a decision is required promptly, whether right or wrong, because of the circumstances that commercial certainty is the paramount consideration. It is open to the parties to enter into an exclusion agreement under section 3 of the Act of 1979. This was not done in the present case. The award730 Pioneer Shipping v. B.T.P. Tioxide (H.L.E.) ) [1982) has to be approached on its merits or lack of them. Robert Goff J. had the award before him and was fully aware of the ambiguities in it. The judge dealt with the case in a way that cannot be faulted. The Arbitration Act 1979 has not brought about any substantial shift in the method of judicial review from that to be found in earlier legislation as suggested by the respondents. What was wrong with the old case stated procedure under section 21 of the Arbitration Act 1950 was the opportunity to indulge in delaying tactics that it gave to undeserving parties. The Arbitration Act 1979 made substantial and very beneficial changes in procedure but once the matter—an award—was before the court, there is nothing in the Act to suggest that there is to be a different approach to the judicial review of awards. The question posed by section 1 (2) is: is there a question of law arising out of an award? The question then it a matter that the court will entertain? If the parties consent, then section 1 (2) operates. If one of the parties does not agree, then under section 1 (4), the court considers if there is a question of law which substantially affects the rights of one or more of the parties. As a matter of language, there is nothing to suggest the shift in approach to entertaining appeals as is sug- gested by the respondents. Section 1 (5) assists the appellants’ argument. The court may look at all relevant material to reach its own conclusion on the point of law. On the language of the Act, the considered judgment of Robert Goff J. in giving leave to appeal was absolutely right. For the established approach of the law on the question of statutory construction, see Halsbury’s Laws of England, 3rd ed. vol. 36 (1961), para. 621. The purpose of the Act of 1979 was to do away with technicalities—to have a reasoned award couched in everyday language. There is nothing in the Act of 1979 which suggests that Parliament had in mind any change of approach or indeed that it considered the traditional approach as representing a mischief which it was desirable to combat. On the contrary, Parliament intended to leave the old approach undisturbed. The traditional special case procedure had given rise to certain problems, In particular, it was unsatisfactory because arbitrators and the courts had to consider whether or not a case was to be stated, on hypothetical facts before issue of the award itself, an award which might show that the ques- tion of law was now peripheral or indeed academic: see The Ciechocinek [1976] I Lloyd’s Rep. 489, 497. This and the matter of delayed enforce- ability stated above gave undeserving parties opportunities for delay. [Counsel sought to refer to the Report on Arbitration by the Commer- cial Court Committee (1978) (Cmnd. 7284), which led to the Arbitration Act, 1979, but the House indicated that it was not prepared to hear sub- missions in respect of the Report.) As to how section 21 of the Act of 1950 was understood at the time when the Act of 1979 was passed, see Halfdan Grieg & Co. A/S v. Sterling Coal and Navigation Corporation (The Lysland) [1973] Q.B. 843, 862a. The shift of emphasis between section 21 of the Act of 1950 and section 1 (4) of the Act of 1979 is that it is now left to the discretion of the judge whether or not to grant leave. What the new Act does not do is to lay down a rigorous test as to what constitutes a point of law. The new conditions, the three tests, to which Lord Denning M.R. addresses himself731 AG Pioncer Shipping v. B.T-P. Tioxide (H.L.E.) ) for granting leave to appeal [1980] Q.B. 547, 564, are unwarranted by the language of the Act. They should not be followed because: (i) an applica- tion for leave would turn into a mini trial; (ji) the manifest wrongness test would be inimical to the proper relationship between the courts and the commercial community; (iii) to graft onto a perfectly straightforward arbitration law administrative law conditions will lead to infinitely greater technicalities than those swept away by the Act of 1979; and (iv) the misdirection test has no part in the arbitration procedure. Lord Denning M.R.’s observation that the arbitrator is likely to be as right as a judge on the question of frustration flies in the face of the general development of the law on frustration over the last 50 years. In Schiffahrtsagentur Hamburg Middle East Line G.m.b.H. Hamburg v. Virtue Shipping Corporation Monrovia (The Oinoussian Virtue) [1981] 1 Lloyd’s Rep. 533, Robert Goff J. refused to follow the judgment of Lord Denning MLR. in the present case. That refusal should carry great weight coming from the commercial judge who has the task of carrying out the day to day administration of the Commercial Court. The decision illus- trates admirably the way the procedure under the Act of 1979 operates. See also: International Sea Tankers Inc. of Liberia v. Hemisphere Shipping Co, Ltd. of Hong Kong (The Wenjaing) [1981] 2 Lloyd’s Rep. 308. If Robert Goff J.’s approach be rejected, then the test should be whether the applicant for leave can show a good arguable case. That test does not introduce technical hurdles. There is no evidence that the test adopted by Robert Goff J. has led to any abuse of the appeal procedure. As to awards which involve a legal assessment to be drawn from certain essential facts, for example, awards concerning frustration, Lord Denning MLR. cites in support of his argument for a new approach under the Act of 1979, decisions from other fields in which a system of judicial review had developed. In particular, reference was made to Edwards v. Bairstow [1956] A.C. 14 which related to a jurisdiction whereby the determination of tax commissioners could only be upset if it were “ erro- neous in point of law.” In reversing the commissioners’ decision, the House set out certain tests whereby even pure findings of fact might be capable of review. Thus, when an inference is to be treated as an inference of fact, nevertheless, the court can intervene with that conclusion if it was a conclusion that could not reasonably be reached. There is nothing in that case which bears upon a frustration situation: see Intertradex S.A. Vv. Lesieur-Tourteaux S.A.R.L. [1978] 2 Lloyd’s Rep. 509, 515, and Tersons Ltd. v. Stevenage Development Corporation [1965] 1 Q.B. 37. The correct application of Edwards v. Bairstow [1956] A.C, 14 is set out in Halsbury's Laws of England, 4th ed. vol. 1 (1973), para. 63. If the above tests be wrong and Lord Denning MLR. is correct, neverthe- less, the appellants are entitled to succeed: see de Smith's Judicial Review of Administrative Action, 4th ed. (1980), pp. 135-136. Rix Q.C., followed on the issue of divisibility, the respondents seek to say that this contract can be divided into two parts and that both parts are capable of being frustrated. On the facts here, there has been total frustration of part of the contract or it may be said partial frustration of a single divisible contract. There are four submissions: (i) the award itself provides no basis for the conclusion that the charterparty was partially732 Pioneer Shipping v. B.T.P. Tioxide (H.L.(E.) ) 11982] frustrated. (ii) Lord Atkinson’s dictum in the Larrinaga case (1923) 29 Com.Cas. 1, 14, was not put forward as a test of severability. (iii) Even accepting the soundness of the doctrine of partial frustration of a single con- tract and applying Lord Atkinson’s dictum to the facts here it does not have the effect for which the respondents contend. (iv) The appellants do not accept the theoretical basis of the respondents’ argument. This question, Partial frustration of a single contract, is an heretical conception. It is not supported by any direct authority. @) The award itself affords no basis for the conclusion that the charter- party was partially frustrated. (ii) Lord Atkinson’s language on frustration is not put forward in the Larrinaga case as authority for the severability of contracts. The only question which arose on frustration in that case was whether the whole contract had been frustrated. There was an alterna- tive argument, one of construction, that the contract was indivisible—a contract for six shipments—and that as three shipments had been waived, the owner could not be compelled to perform the other three: see the argument set out by Scrutton LJ. in the Court of Appeal (1922) 28 Com.Cas 1, 6. This second argument related only to construction. Lord Atkinson’s language, therefore, is an unsound basis for the proposition that there can be partial frustration of a single contract in view of the fact that in its context it related to the question of construction. (Reference was made to Chitty on Contracts, 24th ed., vol. I, paras. 1278, 1285; Benjamin's Sale of Goods, 2nd ed. (1981), paras. 644-648.) There is an important distinction between a contract which is divisible, although on its face it constitutes one contract, from an agreement which, on its true construction, is really more than one contract: see Benjamin's Sale of Goods, 2nd ed., paras. 644-647, which shows a threefold division of contracts albeit it is there stated in the context of sale of goods. (iii) This argument proceeds on the assumption that there can be partial frustration of a single contract. It also assumes that Lord Atkinson’s language in the Larrinaga case, 29 Com.Cas. 1, 14 is applicable. This is a question of construction. Reliance is placed on clauses 2, 5 and 8 of addendum No. 2 to the charterparty. It is difficult to consider a charter- Party “to be extended ” if it has been frustrated. The present case is much more akin to Dominion Coal Co. Ltd. v. Roberts (1920) LLL.Rep. 434 than it is to the Larrinaga case, 29 Com.Cas. 1. The argument raised by the respondents in the present case was raised in the Dominion Coal case and was rejected by Rowlatt J. The Dominion Coal case is not inconsistent with the Larrinaga case since (i) the Larrinaga case raised a different issue and (ii) Rowlatt J. had very much in mind the point raised by the respond- ents in the present case on the language of Lord Atkinson in the Larrinaga case. On this issue, the judgment of Robert Goff J. [1980] 2 Lloyd’s Rep. 83, 90, et seq. is to be preferred to the judgment of the Court of Appeal. (iv) The doctrine of partial frustration is wrong in principle. Whether there can be partial frustration of a contract depends on the conduct of the parties. It does not exist as a matter of principle: see Lord Sumner in the Larrinaga case, 29 Com.Cas. 1, 18, 19. If it is axiomatic that frustration only applies to a contract and not a part of a contract, then it is not helpful to ask: is there more than one adventure, unless that question means: is there more than one contract? The authorities establish that for frustra-733 AC. Pioneer Shipping v. B.T-P. Tioxide (H.L.(E.) ) tion to take place, there must be a fundamental or basic change in the circumstances in which the contract is to be performed. That language is important if there is to be only excision of part of a contract, It would be like the excision made by the surgeon’s knife. It would lead to anoma- lies. The Law Reform (Frustrated Contracts) Act 1943 was drafted on the basis that it applied to a contract and not to part of a contract: see the preamble to section 2 (4) of that Act. There is no case which decides that part of a contract as distinct from a separate contract can be frustrated. Denny, Mott and Dickson Ltd. v. James B. Fraser & Co, Ltd. [1944] A.C. 265, 270, 272, 279 and Dominion Coal Co. Ltd. v. Roberts, 4 L1.L.Rep. 434 decide to the contrary. [Reference was also made to Jackson v. Rotax Motor and Cycle Co. [1910] 2 K.B. 937 and Esmail v. J. Rosenthal & Sons Ltd. [1965] 2 Lioyd’s Rep. 171.) [Their Lordships conferred. Lord Diplock said that their Lordships only wished to hear the respondents on the Arbitration Act 1979.] Anthony Diamond Q.C. and Bernard Eder for the respondents, the owners. The issue of giving leave to appeal under section 1 (3) of the Arbitration Act 1979 is one of great importance in the field of commercial and other arbitrations. The court is given a general discretion in section 1 (3) (6). Section 1 (4) does not provide guidelines but sets a gateway through which the applicant has to pass. If he does, then the court has a general discretion to grant leave. The court looks at the arbitrator's reasons and nothing more. This was what was done under the old pro- cedure. Donaldson L.J.’s observations on the Act of 1979 are adopted in their entirety. If an applicant gets through section 1 (4), then the judge must exercise his discretion under section 1 (3). Under this subsection, he must balance finality against the question whether there should be further consideration by the court. Section 1 (5) enables the court to ask for further reasons at any stage—either at the hearing of the application for leave or during the actual hearing if leave has been granted. If it be held that the sole or principal criterion for the giving of leave is that there should be a question of Jaw arising out of the award and “ the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement” (section 1 (4)), then as parties will tend to ask for reasons, there will be greater use (and greater attendant abuse) of the concept of judicial review under the new procedure than ever existed under the old special case pro- cedure. More awards than ever before will come before the courts. Further, by a side wind, the Act of 1979 will at one and the same time have abolished and re-introduced the concept of error of law on the face of the award, If the sole or principal criterion for the giving of leave is as described above, the pendulum will have swung decisively against finality and in favour of legality with the added disadvantage that where there is no point “of general public importance” (section 1 (7)), the tribunal of the parties’ choice may be reversed by the Commercial Court without there being an opportunity for the matter to be tested further. It is in this con- text that Lord Denning M.R. suggested a more restricted approach to the giving of leave. Hallgarten Q.C. in reply on the Arbitration Act 1979. There should734 Pioneer Shipping v. B.T.P. Tioxide (HLL(E.) ) [1982] be no yardstick. Alternatively, what an applicant has to show in order for leave to be given is that he has a good arguable case. In order for leave to be given, the court has to see whether there is a question of Jaw and fact arising out of the award. Section 1 (5) is not confined to cases where the arbitrator’s award was unreasonable. As to section 1 (7), it ought to be interpreted liberally. There is not the slightest evidence that the commercial community would welcome a restrictive approach to leave to appeal. Their Lordships took time for consideration. July 16. Lorp Dirtock. My Lords, this is the first case to come before this House under the new procedure for judicial review of arbitrator’s awards that was instituted by the Arbitration Act 1979. Leave to appeal was given by an Appeal Committee of the House itself. This was not because of any intrinsic general importance of the points of law involved in the arbitrator’s award. If ever there were a case which under the new procedure ought never have been allowed to get any further than the arbitrator’s award, this was one. The reason why leave was given to bring the matter before this House was because the proceedings in the instant case and in cases that have come before the Commercial Court since the judgment of the Court of Appeal [1980] Q.B. 547 was given, show that there exist significant differences of opinion between the individual judges themselves who sit in the Commercial Court, and between one of them at least and the guidelines laid down in the instant case, by Lord Denning M.R. (with whom Watkins L.J. agreed) as to the considerations which should influence the judge in deciding how to exercise his discretion under section 1 of the Arbitration Act 1979 to grant or to refuse leave to appeal to the High Court on a question of law arising out of an arbitrator’s award. The dispute submitted to the arbitration of a London maritime arbi- trator of great experience arose between charterers and owners under a consecutive voyage charterparty. The relevant terms of the charterparty, the dispute between the parties to it and the circumstances in which that dispute was submitted to arbitration will be dealt with in the speech of my noble and learned friend Lord Roskill with whose reasons for dis- missing the appeal and upholding the award of the arbitrator I find myself in such unqualified agreement that I am able to confine my own speech to the question of the discretion to grant leave to appeal under section 1 of the new Act which has given rise to divergences of opinion between those judges called upon to exercise it. These, if permitted to continue, may well endanger the maintenance of the reputation of London arbitration as a forum for the resolution of commercial disputes. It is sufficient for my purpose to mention that the reason why the parties submitted the dispute to speedy arbitration was that they wanted to know, not later than the end of September 1979, how they then stood as respects the employment of the chartered vessel, the Nema, during the remainder of the 1979 Saint Lawrence River open water season at the loading port under the charter, Sorel, in the Province of Quebec.735 AG Pioneer Shipping v. B.T.P. Tioxide (H.L.(E.) ) Lord Diplock Was she, as the charterers claimed, bound to proceed forthwith from Spain, where she then lay, to Sorel and wait there at the owners’ expense until either the strike at Sorel ended and she could be loaded or the end of the open water season had made loading impossible, whichever should first occur? Or, as the owners claimed, had their contractual obligation to perform any further voyages in the 1979 open water season been dissolved by frustration? My Lords, as mentioned by my noble and learned friend, there had been three contested interlocutory applications in this matter before the application for leave to appeal from the arbitrator’s award was made. At the first two, before Mars-Jones J. and Donaldson J., undertakings were given by the owners not to fix the Nema for any further voyage otherwise than in accordance with the charterparty, pending arbitration. The third interlocutory application came before Mocatta J. after the arbitrator had telexed to the parties that his award was in favour of the owners, but before he had had time to set out in writing the reasons for his decision. Mocatta J. discharged the owners unconditionally from their undertaking; but, what for my purposes is significant in the reasons that he gave for doing so (of which a note was taken), was the expression of his opinion that in the circumstances in which the arbitration had arisen the way in which any judge would exercise his discretion would be to refuse leave to appeal from the arbitrator’s award when his reasons had been given, even though the judge might have doubts as to the correctness of the arbitrator’s reasons for his conclusions on any question of law involved. According to Mocatta J. a similar view that the arbi- tration award would be treated by the court as final and not one in which leave to appeal to the court would be granted under section 1 of the Act had also been expressed by Mars-Jones J. and Donaldson J. on the two earlier interlocutory applications. ‘My Lords, the particular circumstance in which the parties wanted a quick decision as to where they stood as respects the future employment of the Nema are, no doubt, exceptional. In my view, they are in them- selves sufficient to make a grant of leave to appeal from the arbitrator’s award under section 1 of the Arbitration Act 1979 an unjudicial exercise of the discretion conferred upon the judge by that section. Such was the view of those who were then the two most senior judges of the Commercial Court and such (on second thoughts) was the view of Lord Denning M.R.; but the dispute had other characteristics that are likely to recur in other cases and have caused those divergences of views as to the weight that should be given to them in deciding how to exercise that discretion. As will appear from Lord Roskill’s speech, the terms of the charter- party and its addenda that are relevant to the disputed issue of frustration are unique; it is almost inconceivable that they will be found again in any other charter. The same may be said of the events that preceded and led up to the dispute between the parties. If one were seeking to exemplify what is meant by the convenient neologism “a one-off case” it would be hard to find a better exemplar than the case that is now before your Lordships.