058-NLR-NLR-V-16-SOYSA-v.-RANASINGHE.pdf
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Present: Lascelles C. J. and Wood Renton J.
SOYSA RANASINGHE.
34—D. 0. Kandy, 21,514.
Arbitration—Agreement to refer matters in dispute to arbitration—-Action
by one party for loss.
Under section 8 of Ordinance No. 15 of 1866 the Court has adiscretion with regard to compelling the parties to an agreementto resort to arbitration, and the Court is not obliged to take thisstep if it is satisfied that there is sufficient reason why such matterscannot be referred to arbitration under the agreement.
Where fraud is charged, the Court will in general refuse to sene}the dispute to Arbitration, if the party charged with fraud desiresa public inquiry in regard to the allegations made against him.
Lasoexjuss C.J.—It may be that, in respect of the charges offraud brought by the plaintiff himself, he had no right to object tothese being referred to the arbitrators, inasmuch as he himself hadmade them. But with regard to the charges against the plaintiff,it is well settled that he is entitled to claim the benefit of a publicinquiry according to law.
Wood Renton J.—The claims in the respondent’s plaint for theappointment of a receiver and for the grant of an injunction dealwith matters beyond the competence of arbitrators, and can onlybe satisfactorily disposed of by the ordinary tribunals.
rjlHE facts appear from the judgment.
Barfholomeusz, for the defendant, appellant.—Where fraud ischarged, the Court will in general refuse to send the matter indispute to arbitration, if the party charged, with the fraud desires apublic inquiry- But when the objection to arbitration is by the
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party charging the fraud, the Court will not necessarily accede to it,and will never do so unless a primd facie case of fraud is proved.Plaintiff, who himself alleges fraud, cannot object to the reference {to arbitration in terms of the clause of the agreement.
The Courts will be inclined to refer the matters in dispute toarbitration in terms of the agreement, and unless the plaintiff .showsvery clear reasons for not doing so. It is not enough to say thatfraud is alleged unless a primd facie case is made out.
In Russell v. Russell 1 there were distinct charges of fraud.sup-ported by affidavit. The Court held that.no primd facie case of fraudwas proved.
Counsel cited Biefield v. Brown,2 Walmsly, v. White,8 Russell onArbitration 49 and 50.
De Sampayo, K.C., for plaintiff, respondent.—The defendanthimself charges the plaintiff with fraud in his answer. Theplaintiff wants those charges to be inquired into in open Court.Russell v. Russell1 is therefore a decision in plaintiff's favour.The arbitrator would not be in a position to grant the relief soughtfor; he cannot appoint a receiver or issue an injunction.
March 13, 1913. Lascelles C.J.-~
This is an appeal from an order of the District Judge on anapplication under section 8 of Ordinance No. 15 of 1866 to stay theproceedings under the action, and to compel a reference to arbitra-tion clause in the partnership agreement. Under the section inquestion the Court has a discretion with regard to compelling theparties to resort to arbitration, and the Court is not obliged to takethin step if it is satisfied that there is sufficient reason why suchmatters cannot be referred to arbitration under the agreement. Onreading the plaint and the affidavits, it is clear that there are severalreasons why the matter should not be referred to arbitration. Themost important objection is to be found in the charges and counter-chargesof fraud made by the two parties. Not only has the plaintiffbrought serious charges of fraud against the defendant, but thedefendant himself in his answer has charged the plaintiff with havingsubmitted fictitious and false accounts. The plaintiff in his affidavithas claimed the right of having a public inquiry into these charges.It may be that,- in respect of the charges of fraud brought by theplaintiff himself, he had no right to object to these being referred tothe arbitrators, inasmuch as he himself had made them. But withregard to the charges against the plaintiff, it is well settled that be isentitled to claim the benefit of a public inquiry- according to law.This, I think, is in itself a sufficient reason to support the order ofthe learned District Judge. But there are several other matters
1 (1880) 14 Ch. D. 471.* (1894) 1 Ch. D. 52L
9 L. T. ff. 87 (N. 8.) 48$.
1W8.
8oy$a v.Ranasinghe
1943.
XiAfiOHLLB8
C.J.
Soysa v.Banatinghe
( 224 )
alleged in the plaint with regard to which it seems to me at leastdoubtful whether they come within the purview of the arbitrationclause. 1 think that the order made by the District Judge it soundm law, and I also think that it is the best that can be made .in the interests of the parties. For I do not believe that theserious charges and counter-charges which had been made in theseproceedings could be satisfactorily. and finally determined byarbitration. I think the appeal should be dismissed with costs.
Wood Beaton J.—
I am of the same opinion. The appellant’s counter-charges offraud against the respondent at once exclude the latter part of therule affirmed by Sir George Jessel in the case of Russell v. Russell,xthat, where the objection to arbitration is by a party charging thefraud, the Court will not necessarily accede to it, and bring the casewithin the former branch of that rule, viz,, that, where fraud ischarged, the Court will in general refuse to send the dispute toarbitration, if the party charged with fraud desires—as therespondent Here does desire—a public inquiry in regard to the alle-gations made against him. It inay'be that the arbitration clause'with which we have to deal is wide enough to cover a possibledissolution of the partnership. But the claim, in the respondent'splaint for the appointment of a receiver and for the grant of aninjunction, deal with matters beyond the competence of arbitrators,and can only be satisfactorily disposed of by the ordinary tribunals.
Affirmed.
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* (1880)11 Ch.D. 471.