DE GRAFT-JOHNSON AND ANOTHER v.

GHANA COMMERCIAL
BANK AND ANOTHER
[1973] 2 GLR 100

Division: HIGH COURT, ACCRA

Date: 29 MAY 1973
Before: ABOAGYE J.

Practice and procedure—Stay of proceedings—Arbitration clause—Dispute between insured and insurers

to be submitted to arbitration under terms of insurance policy—Application by insurers to have
proceedings stayed and dispute referred to arbitration—Matter to be referred to arbitration purely a
question of construction of insurance policy—Whether proper to refer dispute to arbitration—Arbitration
Act, 1961 (Act 38), s. 8.

HEADNOTES
The defendants, Ghana Commercial Bank, were sued for damages for the death of one of their employees,
Mr. Eyeson, who was killed in an accident whilst being driven to his station in one of the defendants’
vehicles. The defendants in turn claimed indemnity from the third party who were their insurers. A
dispute arose between them as to whether the deceased employee was, at the time of the accident, in the
course of his employment. After third party directions had been given, the third party brought this
application under section 8 of the Arbitration Act, 1961 (Act 38), and Order 72, r. 1 of the Supreme
[High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), for a stay of the third party proceedings and for
reference of the dispute between them and the defendants to arbitration in terms of condition (8) of the
insurance policy which required that all differences arising out of the policy be referred to arbitration and
that an award on such arbitration should be a condition precedent to any right of action against the third
party.
Held: the courts would not grant a stay of proceedings if the matter in dispute between the parties
involved difficult questions of law or if the matter was more convenient and suitable for determination by
the court rather than an arbitrator who might have to state a case for the decision of the court. The matter
in difference in this suit was purely one of construction of section 11 (1) (a) of the insurance policy. It
involved the application of law to agreed facts and the court was in a better position than an arbitrator to
resolve the difference since an arbitrator faced with the problem was likely to refer it to the court for
determination. Dicta of Lord Hanworth M.R. in Metropolitan Tunnel and Public Works Ltd. v. London
Electric Rail. Co., Ltd. [1926] Ch. 371, at p. 385, C.A. and of Warrington J. in Printing Machinery Co.,
Ltd. v. Linotype and Machinery Ltd. [1912] 1 Ch. 566 at p. 573 applied.

CASES REFERRED TO
(1) Metropolitan Tunnel and Public Works Ltd. v. London Electric Rail Co., Ltd. [1926] Ch. 371; 95
L.J.Ch. 246; 135 L.T. 35, C.A.
(2) Clough v. County Livestock Insurance Association, Ltd. (1916) 85 L.J.K.B. 1185; 32 T.L.R. 526;
60 S.J. 642.
[p.101] of [1973] 2 GLR 100

(3) Barnes v. Youngs [1898] 1 Ch. 414; 67 L.J. Ch. 263; 46 W.R. 332; 42 S.J. 269.
(4) Printing, Machinery Co., Ltd. v. Linotype and Machinery Ltd. [1912] 1 Ch. 566; 81 L.J.Ch. 422;
106 L.T. 743; 28 T.L.R. 224; 56 S.J. 271.

NATURE OF PROCEEDINGS
APPLICATION for a stay of proceedings in accordance with an arbitration clause. The facts are fully set
out in the ruling.

COUNSEL
Akyea-Djamson for the third party.
E. D. Kom for the defendants.

JUDGMENT OF ABOAGYE J.
The plaintiffs herein have sued the defendants for damages for the death of one Mr. K.M. Eyeson,
resulting from the alleged negligence on the part of the driver of the defendants land rover No. GL 9331.
The defendants’ said vehicle had been insured with the third-party under insurance policy No. 1498/CH at
the time of the accident and the defendants have claimed indemnity against the third-party in the event of
the plaintiffs’ action succeeding against them. After third party directions have been given, the third party
has brought this application under section 8 of the Arbitration Act (Act 38), and Order 72, r. 1 of the
Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), for a stay of the third-party
proceedings and for reference of the difference between them and the defendants to arbitration in terms of
condition (8) of the insurance policy which requires that all differences arising out of the policy shall be
referred to an arbitration and that an award by such arbitration shall be a condition precedent to any right
of action against the third-party.
The late K. M. Eyeson was, until his death, a branch manager of the defendant bank and he died when he
was being driven back to his station in one of the defendants’ vehicles. Although no statement of defence
has been filed by, or on behalf of, the third-party, from paragraphs (8) and (9) of their affidavit in support
of their application they deny any liability to the defendants on the ground that the deceased died in the
course of his employment and by section 11 of the policy liability is excluded in such cases. Section 11
(a) quoted in the supporting affidavit reads:
“1. (a) Subject to the limits of liability the company will indemnify the insured in the event of
accident caused by or arising out of the use of the motor car against all sums including
claimant’s costs and expenses which the insured shall become legally liable to pay in respect
of:
(a) death or bodily injury to any person except where such death or injury arises out of and
in the course of the employment of such person by the insured and

[p.102] of [1973] 2 GLR 100

excluding liability to any person being a member of the insured’s household who is a
passenger in the motor car unless such person is being carried by reason of or in
pursuance of a contract of employment.”

A dispute as to whether or not the late K. M. Eyeson was, at the time of the accident, on the defendants’
vehicle in the course of his employment has arisen between the defendants and the third-party and either
of them is entitled to apply for a stay of the proceedings between them and for reference of the dispute to
arbitration under section 8 of the Arbitration Act, 1961 (Act 38). Section 8 of the Act provides:
“If any party to an arbitration agreement, or any person claiming through him, commences any legal
proceedings in any court against any other party to the agreement, or any person claiming through him, in
respect of any matter agreed to be referred, any party to those legal proceedings may apply to that court to
stay the proceedings, and that court, if satisfied that there is no sufficient reason why the matter should not be
referred in accordance with the agreement, and that the applicant was, at the time when the proceedings were
commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the
arbitration, may make an order staying the proceedings.”

The general principle which guides a judge in deciding whether to grant or refuse a stay of proceedings is
whether the party opposing the application for the stay has shown any reason why the matter should not
be referred to an arbitration: see Metropolitan Tunnel and Public Works Ltd. v. London Electric Rail. Co.,
Ltd. [1926] Ch. 371 at p. 385, C.A. per Lord Hanworth M.R. The courts will not grant a stay of the
proceedings if the matter in dispute between the parties involves difficult questions of law or if the matter
is more convenient and suitable for determination by the court rather than an arbitrator who may have to
state a case for the decision of the court: see (i) Clough v. County Livestock Insurance Association, Ltd.
(1916) 85 L.J.K.B. 1185 at p. 1186 per Avory J., (ii) Barnes v. Youngs [1898] 1 Ch. 414 and (iii) Printing
Machinery Co., Ltd. v. Linotype and Machinery Ltd. [1912] 1 Ch. 566. In the last case Warrington J.
stated at p. 573:
“It seems to me that it would be absurd to give an arbitrator the duty of determining a question of
construction, and then, supposing the arbitrator determined that question against the plaintiff company, to let
the matter come back to the Court to determine whether the agreement should be rectified or not.”

The matter in difference between the defendants and the third-party in this suit is purely one of
construction of section 11 (1) (a) of the insurance policy. It involves the application of law to agreed facts
and in my opinion the court is in a better position than an arbitrator to

[p.103] of [1973] 2 GLR 100

resolve the difference since an arbitrator faced with the problem is likely to refer it to the court for
determination. The application for stay of proceedings is therefore dismissed.

DECISION
Application dismissed.
S.O.