Heyman v Darwins Limited: HL 1942

An arbitration clause will survive a repudiatory breach: ‘I agree with the Lord Chancellor in thinking that the true ground of the decision in Jureidini v National British and Irish Millers Insurance Co Ltd was the narrowness of the field of submission and the fact that no dispute had arisen on the only point submitted to arbitration.’
If one party to a contract repudiates it and that repudiation is accepted, then ‘By that acceptance he is discharged from further performance and may bring an action for damages, but the contract itself is not rescinded.’ The primary obligations under the contract may come to an end, but secondary obligations then arise, among them being the obligation to compensate the innocent party. The original rights may not then be enforced. But a consequential right arises in the innocent party to obtain a remedy from the party who repudiated the contract for his failure in performance.
Lord Porter said that in differentiating between disputes ‘arising under’ and ‘arising out of’ the agreement, the former should be given a narrower meaning.
As to the right to rescind, he said: ‘The three sets of circumstances giving rise to a discharge of contract are tabulated by Anson as: (1) renunciation by a party of his liabilities under it; (2) impossibility created by his own act; and (3) total or partial failure of performance. In the case of the first two, the renunciation may occur or impossibility be created either before or at the time for performance. In the case of the third, it can occur only at the time or during the course of performance.’
References: [1942] AC 356, [1942] 1 All ER 337
Judges: Viscount Simon LC, Lord Wright, Lord Macmillan, Lord Russell of Killowen, Lord Porter
Jurisdiction: England and Wales
This case cites:

  • Explained – Jureidini v National British and Irish Millers Insurance Company Limited HL 1915
    An insurance company disputed liability of a claim arising out of a fire, alleging fraud and arson. These allegations were not sustained. The insurer then sought to resist liability on the basis that, by litigating, the insured was in breach of an . .
    ([1915] AC 499)

This case is cited by:

  • Cited – Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd; The New York Star PC 1980
    A question arose, in the context of dispute between a consignee of goods and stevedores, whether the latter could rely on a time bar. It was argued that because of the fundamental nature of the breach, the stevedore had deprived itself of the . .
    ([1981] 1 WLR 138, [1980] 3 All ER 257)
  • Cited – Super Chem Products Limited v American Life and General Insurance Company Limited and Others PC 12-Jan-2004
    PC (Trinidad and Tobago) A fire occurred at premises in which the stock was insured under two policies. Both insurers denied the claims alleging arson, and that it was out of time. The claimant said that the . .
    (, [2004] UKPC 2, Times 28-Jan-04, , , , [2004] 2 All ER 358)
  • Cited – Alfred Mcalpine Construction Limited v Panatown Limited HL 17-Feb-2000
    A main contractor who was building not on his own land, would only be free to claim damages from a sub-contractor for defects in the building where the actual owner of the land would not also have had a remedy. Here, the land owner was able to sue . .
    (Times 15-Aug-00, , Gazette 05-Oct-00, , [2000] UKHL 43, [2000] 4 All ER 97, [2000] 3 WLR 946, [2001] 1 AC 518)
  • Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
    The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
    (, , [2003] UKHL 6, [2003] 1 All ER Comm 349, [2003] 2 Lloyd’s Law Reports 61, [2004] ICR 1708, [2003] Lloyds Rep IR 230, [2003] 1 CLC 358)
  • Cited – Fiona Trust and Holding Corporation and others v Privalov and others CA 24-Jan-2007
    The court was asked whether when contracts have been induced by bribery and have been rescinded on discovery of the bribery, that constitutes a dispute which can be determined by arbitration in the context of a common form of arbitration clause.
    (, [2007] EWCA Civ 20, Times 29-Jan-07, [2007] Bus LR 686, [2007] 1 CLC 144, [2007] 2 Lloyd’s Rep 267, [2007] ArbLR 22, [2007] 1 All ER (Comm) 891)
  • Cited – Harbour Assurance Co (Uk) Ltd v Kansa General International Insurance Co Ltd 1993
    The Court said that older (pre Heyman v Darwins Ltd) authorities about the width of arbitration clauses had to be approached with some care and that the words ‘arising from the contract’ have almost invariably been treated as ‘words of very wide . .
    ([1993] 1 Lloyds Rep 81)
  • Cited – Premium Nafta Products Ltd (20th Defendant) and others v Fili Shipping Company Ltd and others; Fiona Trust and Holding Corporation v Privalov HL 17-Oct-2007
    The owners of a ship sought to rescind charters saying that they had been procured by bribery.
    Held: A claim to rescind a contract by reason of bribery fell within the scope of an arbitration clause under which the parties had agreed to refer . .
    ([2007] ArbLR 24, , [2007] UKHL 40, [2008] 1 Lloyd’s Rep 254, [2007] 4 All ER 951, [2007] Bus LR 1719, [2007] 114 Con LR 69, [2007] 2 CLC 553, [2007] 2 All ER (Comm) 1053, [2007] CILL 2528)
  • Cited – SK Shipping (S) Pte Ltd v Petroexport Ltd ComC 24-Nov-2009
    The parties disputed the termination of a charterparty for anticipatory repudiatory breach.
    Held: To the extent that the dispute relied on disputes of fact, the court preferred the evidence of the claimant. The defendant had displayed an . .
    (, [2009] EWHC 2974 (Comm))

These lists may be incomplete.
Last Update: 27 November 2020; Ref: scu.193384