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CHAPTER X.

ARBITRATION.

PRIVATE FIRMS AND COMMON LAW COMPANIES.

observations.

THOUGH individual partners have no implied powers to refer General to arbitration matters in which their companies are concerned; and though it is even doubtful whether such a power may on mere implication be competently exercised by majorities so as to bind dissenting members, it is not unusual to confer it by the instrument of formation on majorities, officials, or managing partners. When this has been done, the powers so conferred will bind the company, provided they are exercised by the persons and in accordance with the provisions stipulated; nor is it probable that the courts will in a question with third parties permit the company to take advantage of informalities, to escape from obligations so created. It would be jus tertii for a third party to found on such informalities.

submission in

contract of

copartnery.

It is also a common practice to introduce into the articles of Clauses of association or deed of copartnery, clauses whereby disputes arising inter socios or between the company and its members or their representatives are required to be referred to the arbitration of certain specified persons. Such stipulations, when properly expressed, are binding, and will exclude to a great extent the jurisdiction of the ordinary tribunals (a). To be effectual, however, they must be conceived in very explicit terms; and they must contain a specific reference to persons named. Thus a clause in a contract of copartnery, referring all future disputes to the chairman, etc., of the Glasgow Chamber of Commerce for the time, was held to be

(a) Cooper v. Bertram, Shotts Friendly Society, 1825, 3 S. 454; Manson v. Doull, 1840, 2 D. 1015.

Rules as to arbitration.

ineffectual,—the reference not being to an individual, and the reference as well as the point to be decided being indefinite at the date of the contract (a). In like manner, an obligation to refer to two neutral persons was held to be insufficient to bar action (b).

Arbitration between companies and the public, or their own partners, are in general regulated by the same rules as apply in cases of ordinary submissions, and will be found in any work on arbitration (c). There are, however, some peculiarities to which we shall briefly advert. An arbiter is in general disqualified by being a partner (d). It is no objection, however, to an arbiter, that as partner of a company he is creditor to a small extent of an insolvent party, in whose favour decree is pronounced (e). It was found to be no objection to a decree-arbitral against a company, that it was pronounced after the sequestration and death of the sole partner, notice having been given to the trustee and representatives, who declined to appear (ƒ). It does not seem ever to have been judicially settled, but there can be no doubt that a submission may be prorogated by the acts of one active and known partner, such power plainly falling within the implied agency. In a judicial reference of an action against a partner for payment of two calls of stock, it was held that as the referee had decerned for payment of both calls at one time, whereas, by the statute constituting the company, an interval of one month should elapse, the decree was invalid, except as to the first call, and was in other respects conditional and inconclusive (g). It was held that a submission in a contract of copartnery, of any difference which shall arise between the partners themselves, did not apply to an action by one partner against the other for illegal, fraudulent, and malicious violations of the con

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tract, such as attempting to destroy the partnership by creating a fictitious bankruptcy (a). The clerk to a submission between two partners raised an action against both for his account, and arrested the funds of one of them. A new submission was entered into between the clerk and that partner, and the amount claimed was consigned in the hands of the referees. They having differed in opinion, and declined to act, a multiplepoinding raised by the clerk in their name for disposal of the consigned fund was held competent, though the other partner had not been made a party (b).

STATUTORY ARBITRATION.

enactments.

We have already seen that it is a matter of considerable doubt, Legislative whether at common law, and unless specially provided in their instruments of formation, associations for the purposes of gain, whether corporate or unincorporate, have the power of referring disputed questions to arbitration, so as to bind dissenting members. However this may be, the Legislature has by divers acts conferred powers to this effect upon companies incorporated or formed under certain general enactments, and has laid down certain rules by which such statutory arbitrations are to be regulated. It will be necessary to devote some space to the examination of these provisions.

The Lands Clauses Consolidation Acts, and the Railway Clauses Consolidation Acts, provide that, in certain circumstances, the value of lands taken under the powers of a company's special act, and the loss or damage consequent on the company's operations, shall be assessed by arbitration; and the mode in which such arbitrations are to be conducted is specially laid down and regulated. These provisions are declared applicable to railways formed under the Railway Construction Facilities Act, 1864 (sec. 51 of 27 and 28 that Act). It is unnecessary to notice these provisions in this place, as they have been already fully examined and explained.

Vict. c. 121.

c. 17.

By the Companies Clauses Consolidation (Scotland) Act, 1845, 8 and 9 Viet. it is provided that where any dispute directed by that or the special act, or any act incorporated therewith, to be settled by arbitration, shall have arisen, then, unless both parties concur in the appoint(b) M'Farlane v. Black, 1842, 4 D. 1459.

(a) Lauder v. Wingate, 1852, 14 D. 633, and 24 Jur. 321.

22 and 23 Vict. c. 59.

ment of a single arbitrator, each party shall, on the written request of the other, nominate an arbitrator by writing under his hand. The appointments so made cannot be revoked except of consent, nor does death operate as a revocation. If for fourteen days after the dispute has arisen, and after the request to name an arbitrator has been made by one party or the other, this last party fails to do so, the party making the request may appoint the person whom he has named to act on behalf of both, and his award is final (sec. 131). If, before the matters referred have been determined, an arbitrator die, become incapable, or refuse or neglect for seven days to act, the party appointing him may nominate another to supply his place; and if for seven days after written notice to make a new appointment, he fail to do so, the other arbitrator may proceed er parte. Substituted arbitrators have the same powers as those in whose place they came (sec. 132). The two arbitrators must, before proceeding to act, appoint an umpire (oversman) by writing under their hands to decide where they differ. If the umpire die, refuse, or for seven days neglect to act, the arbitrators must immediately nominate another. The decision of the umpire is final (sec. 133). On failure of the arbitrators to appoint an umpire, the Lord Ordinary is empowered to do so on the application of either party (sec. 134). The arbitrators or umpire may examine the parties or their witnesses on oath, and may order production of documents, or grant diligence for this purpose, or for citing witnesses. Letters in supplement, etc., are issued by the Lord Ordinary where necessary (sec. 135). Unless otherwise provided, the costs of the arbitration are in the discretion of the arbitrators or umpire, as the case may be (sec. 136).

By the Railway Companies Arbitration Act, 1859, and which extends over the United Kingdom, certain important provisions are made for the settlement of matters in which railway companies are mutually concerned. It provides as follows:-Any two or more such 'companies,' under which are included the owners or lessees of a line of railway worked by steam power, and all contractors working such lines, may from time to time, by writings under their common seals, refer to arbitration any existing or future differences, and all matters in which they are mutually interested, and which they might lawfully dispose of by

agreement between themselves, and may delegate to the referees such powers to determine the terms of any contract made between the companies as their directors might delegate to committees of their own number (sec. 2). The reference may from time to time be added to, altered, or revoked, by a joint writing under seal (sec. 3); but subject to such alteration or revocation, its terms are binding, and must be carried into effect (sec. 4). Where the companies agree, the reference may be made to a single arbitrator; but in default of such agreement, there must be as many arbiters as there are companies (secs. 5, 6). Where there are more arbitrators than one, each company appoints an arbitrator by writing under its common seal, and must give notice to the other companies (sec. 7). If, after such notice, any company fail for fourteen days to appoint an arbiter, the Board of Trade may do so on the application of any of the other companies (sec. 8). If, before final award, any of the arbitrators die, become incapable or unfit, or for seven consecutive days fails to act, the company that appointed him must appoint another; and on their failure to do so, the Board of Trade will as before make the appointment (secs. 9, 10). Arbitrators appointed by the Board of Trade are deemed to have been appointed by the companies who failed to do so (secs. 8, 10). Appointments of arbitrators once made cannot be revoked, except on the written consent of the other companies (sec. 11). The arbitrators, before entering on the business of the reference, must appoint a duly qualified umpire; and on their failure to do so for seven days, the Board of Trade, on application, will make the appointment (secs. 12, 13). On the death, supervening incapacity, or failure for seven days of the umpire to act, another must be named by the arbitrators; and if they fail to do so for seven days, it will be done by the Board of Trade (secs. 14, 15). Substituted arbitrators and umpires have the same power as their predecessors (sec. 16). If within the agreed upon time, or otherwise if within thirty days, the arbitrators do not agree on their award, the reference devolves on the umpire (sec. 17). The arbitrators or umpire, as the case may be, are empowered to call for documents and to examine witnesses on oath; and to grant diligence for the recovery of documents or evidence, and for citing of witnesses. If required, the Lord Ordinary will issue letters in supplement or other writs in support of the diligence (sec.

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