Page 1

Pioneer Shipping Ltd v BTP Tioxide Ltd

sub nom BTP Tioxide Ltd v Pioneer Shipping Ltd and Armada Marine SA, The Nema
[1982] AC 724, [1981] 2 All ER 1030, [1981] 3 WLR 292, [1980-84] LRC (Comm) 391, [1981] 2 Lloyd's
Rep 239, [1981] Com LR 197, 125 Sol Jo 542

Court: HL

Judgment Date: 16/07/1981

Catchwords & Digest

ARBITRATION - THE AWARD, REMISSION, APPEALS AND ENFORCEMENT - APPEALS - GRANT OF

LEAVE TO APPEAL — EXERCISE OF DISCRETION — GUIDELINES
In November 1978 a vessel was chartered for seven consecutive voyages in 1979. After one voyage
the vessel was unable to load the cargo due to a strike. The parties agreed to an addendum no 2 to the
charterparty by which the owners were permitted to take the vessel for one intermediate voyage, the
charterparty was extended for a further seven voyages in 1980 and if the strike continued the situation was
then to be discussed without obligation. The strike continued and by addendum no 3 the charterers agreed to
pay the owners compensation. An intermediate voyage took place and the charterers sought the return of the
vessel in case the strike ended, but the owners fixed her for a further intermediate voyage. Arbitration took
place on 26 September 1979 and the arbitrator held that the whole of the charterparty contract of November
1978 was frustrated, disregarding the addenda and considering only the seven voyages for 1979 and not
those contemplated for 1980. The strike ended on 5 October. Leave to appeal was given and the appeal was
allowed on the grounds that the charterparty and the addenda comprised one indivisible contract extending
over two seasons and the delay did not amount to frustration of that contract. On appeal, the Court of Appeal
restored the arbitrator's award. Lord Denning MR further held that the judge had been wrong to grant leave
to appeal because the arbitrator was just as likely as the judge to be right when interpreting a one-off
contract or clause and it was contrary to the purpose of the Arbitration Act 1979 to give leave unless the
arbitrator was clearly wrong on a question of law. On appeal by the charterers: Held (i) s 1(3) of the 1979 Act
conferred a judicial discretion to refuse leave to appeal from an award in the face of an objection by any of
the parties to the reference. The discretion was unfettered but had to be exercised judicially. The Act
indicated that parliamentary intention was in favour of finality in arbitral award where that did not involve
exposing arbitrators to a temptation to depart from settled principles of law. Except when all the parties to the
reference consented, s 1(4) placed an absolute bar on the grant of leave to appeal unless the determination
of the disputed point of law would affect the rights of any of the parties to the reference. It could not be
inferred from the inclusion in s 1(4) of a power to impose conditions on the grant of leave to appeal a
parliamentary intention that whenever the absolute bar did not operate leave to appeal should be granted,
albeit subject to conditions. The right of appeal given by s 1(2) was expressly confined to appeals on
questions of law. If a decision on construction in particular circumstances would add to the clarity and
certainty of English commercial law, it would be proper to give leave, but leave should not be given even in
such a case unless the judge considered a strong primâ facie case had been made out that the arbitrator had
been wrong in his construction. The question that the judge should ask himself in exercising his discretion
was ‘did it appear on perusal of the award either that the arbitrator misdirected himself in law or that his
decision was such no reasonable arbitrator could reach?’ Where events took place of a general character
affecting similar transactions between many other persons engaged in the same kind of commercial activity it
might be a proper exercise of the discretion to give leave to appeal in order to express a conclusion that
would afford guidance binding on arbitrators in other arbitrations arising out of the same event. In this case,
the charterparty was a one-off contract peculiar to the circumstances and since the arbitrator's award was not
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obviously wrong, the judge had been wrong to grant leave to appeal. (ii) On the true construction of the
charterparty as varied by the addenda, the voyages for the 1979 and 1980 seasons were separate and
distinct adventures, since the performance of the one was not dependent on the performance of the other.
Treating the voyages for the 1979 season as a separate adventure, the arbitrator was justified on the facts
and correct in law in holding that the 1979 adventure was frustrated. The appeal would be dismissed.

Case History
Annotations Case Name Citations Court Date
[1982] AC 724, [1981]
2 All ER 1030, [1981] 3
WLR 292, [1980-84]
Pioneer Shipping Ltd CaseSearch
— LRC (Comm) 391, HL 16/07/1981
v BTP Tioxide Ltd Entry
[1981] 2 Lloyd's Rep
239, [1981] Com LR
197, 125 Sol Jo 542
[1980] QB 547, [1980]
3 All ER 117, [1980] 3
Pioneer Shipping Ltd CaseSearch
Affirming WLR 326, [1980] 2 CACivD 22/05/1980
v BTP Tioxide Ltd Entry
Lloyd's Rep 339, 124
Sol Jo 428
BTP Tioxide Ltd v
Pioneer Shipping Ltd CaseSearch
Reversing [1980] 2 Lloyd's Rep 83 QBD circa 1980
and Armada Marine Entry
SA, The Nema

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 Page 3

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 Page 4

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Sort by: Judgment Date (Latest First)
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Schiffahrtsagentur
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 Page 5

Lloyd's Rep 296, 117

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TLR 797

Document information

Court
House of Lords
Judgment date
16/07/1981