A firm of contractors undertook a contract to construct a sewer for the Corporation of Glasgow at certain scheduled rates. During the progress of the work it was found impossible owing to the nature of the soil to drive a tunnel by the ordinary method. The contractors were then instructed to continue the work by means of the air pressure system, which was more costly, and the Corporation agreed to refer the question of the amount to be paid to them ‘in respect of the extra cost incurred by the necessary adoption of the said system of air-pressure’ to a certain arbiter who was a civil engineer in Glasgow. No formal submission was entered into. The parties subsequently agreed to submit to the arbiter certain items of the contractors’ account, other than those relating to the use of air-pressure, which they were unable to adjust. After hearing parties and examining the accounts and making certain measurements, the arbiter issued a note of proposed findings at which he had arrived without hearing evidence, but intimated that, although he did not consider it essential he was prepared to hear proof if desired. Thereafter he made an order for proof, and in a note appended thereto he added-‘Both parties having distinctly agreed that they were not to be represented by law-agents, the arbiter cannot now see his way to allow this arrangement to be broken unless mutually agreed upon.’ In the proceedings up to this time the parties had not been represented by law-agents. The contractors refused to accept a proof upon these conditions, and denied that they had entered into such an arrangement. The arbiter thereupon cancelled the order for proof, and issued a note of proposed findings, in which he awarded a gross sum ‘as the total amount due in respect of the work done by the claimants in connection with this contract.’ After allowing time for representations the arbiter issued a formal decree-arbitral. The findings and the decree-arbitral did not show what sums were respectively awarded in respect of the use of air-pressure and in respect of the disputed items of the account.
In an action by the contractors for reduction of the decree-arbitral upon the ground (1) that the arbiter had refused to hear evidence as to the actual cost of using air-pressure; (2) that he had proceeded ultra fines compromises by finding what was a reasonable sum to be allowed for the use of air-pressure instead of determining the actual extra cost of using it; (3) that the decree-arbitral did not distinguish between the amount allowed for the use of air-pressure and for the other disputed items; and (4) that he had acted illegally in refusing to hear proof except on condition that parties should not be represented by law-agents- held ( rev. judgment of the Second Division, and restoring judgment of the Lord Ordinary, Kyllachy) that the defenders were entitled to absolvitor, in. respect that this was an informal arbitration in which the matter in dispute was referred to the personal skill and local knowledge of the arbiter, and in which proof was not essential; that in the circumstances the arbiter was entitled to refuse to allow parties to be represented by law-agents-the understanding between parties acted on up to that time being that law-agents were not to be employed, and the question of whether law-agents should be allowed in an arbitration being one of procedure for the consideration of the arbiter; and that although he gave an opportunity of making representations against his proposed findings, no request was made to him by the contractors to divide the amount of the award into separate items.
Judges:
Lord Chancellor (Halsbury), Lord Macnaghten, Lord James of Hereford, Lord Brampton, Lord Robertson, and Lord Lindley
Citations:
[1901] UKHL 855, 38 SLR 855
Links:
Jurisdiction:
Scotland
Arbitration, Contract
Updated: 11 October 2022; Ref: scu.630992
