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Lee v. Page, 30 L. J., Ch. 857), for such a covenant is an agreement to oust the jurisdiction of the courts, and it is established that, on grounds of public policy, any court. agreement to oust the jurisdiction of the courts is void. (See Ripley v. Great Northern Rail. Co., 31 L. T. 869, per Jessel, M.R.)


Though an agreement not to sue on a contract is void, Award the same result is attainable by the parties agreeing that precedent to the award of an arbitrator shall be a condition precedent right to sue. to the right to sue. This may be done by a stipulation that no right of action shall arise until matters in dispute have been referred to and ascertained by arbitration (Scott v. Avery, 5 H. L. Ca. 812; 25 L. J., Ex. 308; Caledonian Insurance Co. v. Gilmour [1893] A. C. 85; Brown v. Overbury, 11 Ex. 715; Tredwen v. Holman, 31 L. J., Ex. 398; 1 H. & C. 72; Elliott v. Royal Exchange Assurance Co., L. R., 2 Ex. 237; 36 L. J., Ex. 129; Alexander v. Mendl, 22 L. T., N. S. 609; Edwards v. Aberayron, &c. Insurance Co., 44 L. J., Q. B. 67; 1 Q. B. D. 563; Sharpe v. San Paulo Rail. Co., L. R., 8 Ch. 597; Trainor v. Phoenix Fire Assurance Co., 65 L. T. 825; Scott v. Mercantile, &c. Insurance Co., 66 L. T. 811; Viney v. Bignold, 20 Q. B. D. 172; 57 L. J., Q. B. 82; Spurrier v. La Cloche [1902] A. C. 446), or by a contract to pay such a sum only as shall, in case of difference, be ascertained by an arbitrator. (Braunstein v. Accidental Death Insurance Co., 31 L. J., Q. B. 17; 1 B. & S. 782.)

clause in


Under the ordinary condition in an insurance policy Arbitration that no action shall be maintainable until the amount of loss has been ascertained by arbitration, the stipulation has been uniformly held to be a condition precedent in the English Courts whether the dispute was as to liability or amount. (Trainor v. Phonix Fire Assurance Co., supra.) But in a case in Ireland, where a policy was subject to a condition that if any difference should


Architect's certificate condition to payment.

Defence under

condition precedent.

Reference not a condition

arise in the adjustment of a loss, the amount to be paid should be submitted to arbitration, and that the insured should not be entitled to maintain an action on the policy until the amount of the loss should have been referred, and then only for the amount so determined, and the insured, without going to arbitration, commenced his action, the Court, on the ground that the amount of loss was admittedly in excess of the amount of the policy, and that the only matter in dispute was whether the plaintiff by storing petroleum on the premises had violated another condition, held that no difference had arisen in the adjustment of the loss, and refused a motion to stay the proceedings. (O'Connor v. Norwich Insurance Co. [1894] 2 I. R. 723.)

The principle of these cases is applicable to what are often spoke of as, but are not in fact, arbitration clauses, viz., stipulations in building contracts and the like, by which the contractor's right to payment is made conditional upon the contractor obtaining the certificate of the employer's architect or engineer. (Scott v. Corporation of Liverpool, 28 L. J., Ch. 230; 3 De G. & J. 334; Westwood v. Secretary of State for India, 11 W. R. 261; Richards v. May, 10 Q. B. D. 400; 52 L. J., Q. B. 272; London Tramways Co. v. Bailey, 37 L. T. 499.)

Where the contract makes the reference to arbitration a condition precedent, the defendant may either apply to stay the proceedings, or plead the clause as a defence to the action. The former is the course usually adopted. It is necessary to distinguish between cases where the precedent, but stipulation for a reference is a condition precedent and where it is only a collateral agreement. (Viney v. Bignold, 20 Q. B. D. 172.) Thus, where there are two independent covenants, one to do a certain thing and if it is not done to pay damages, and the other, that if the parties cannot agree upon the amount of the damages, it shall be ascertained by arbitration, the latter stipulation is no bar to

collateral stipulation.

an action on the former. (Elliott v. Royal Exchange Assurance Co., 36 L. J., Ex. 129; L. R., 2 Ex. 237, per Bramwell, B.) It is often difficult to determine when there are two independent covenants. Thus, a covenant that in case of damage to crops by hares, "the defendant would pay a fair and reasonable compensation for the same, the amount of such compensation in case of difference to be referred to arbitration," was held to be in reality two independent covenants, and the arbitration was not a condition precedent to a right to sue (Dawson v. Fitzgerald, 45 L. J., Ex. 893; 1 Ex. D. 257; and see Collins v. Locke, 48 L. J., P. C. 68; 4 App. Cas. 674); while an agreement to deliver up a furnished house and effects in good order, "and in the event of any loss, damage, or breakage to make good or pay for the same; the amount of such payment, if in dispute, to be referred," was held to make the reference a condition precedent. (Babbage v. Coulbourn, 9 Q. B. D. 235; 52 L. J., Q. B. 50.)




express terms of contract.

A stipulation making the award or certificate of a Award only third person a condition precedent to the right to sue precedent will not be held to extend to subject-matters not clearly as to matters contemplated by the parties. (Roberts v. Bury Commissioners, 39 L. J., C. P. 129; L. R., 5 C. P. 310; Collins v. Locke, 41 L. T. 292; Lawson v. Wallasey Local Board, 48 L. T. 507; Alexander v. Campbell, 41 L. J., Ch. 478.) Where a building contract contained a clause that, in case of difference between the contractor and his employer, the award in writing of the architect, in all matters connected with the works or their execution, or the value of extra work, or reductions, or the meaning of the plans or specifications, should be a condition precedent to any proceeding whatever at law or in equity in respect of any matter or thing which could or might be the subject of such award; it was held that the architect's award was not a condition precedent to an


Proceedings contrary to an agreement to refer stayed.

action by the employer against the contractor for not completing the buildings and for leaving them unfinished. (Mansfield v. Doolin (1868), Ir. R., 4 C. L. 17; Lamprell v. Billericay Union, 3 Ex. 283; 18 L. J., Ex. 282.)

A contract for the sale of goods contained a stipulation for a fair allowance for inferior quality, the amount to be ascertained by reference, but no claim to be entertained unless the reference was demanded within fourteen days of the landing of the goods. The fact that the reference was not so demanded was held a good defence to an action claiming in respect of inferior quality. (Pompe v. Fuchs, 34 L. T. 800.)

Even where an agreement to refer contains no provision against the accrual of a right to sue until arbitration has been resorted to, legal proceedings will seldom be permitted to be carried on now in respect of matters within the scope of such an agreement, for upon proceedings being commenced by the one party the other may apply to the court for a stay of proceedings under 52 & 53 Vict. section 4 of the Arbitration Act, 1889, which provides as follows:-"If any party to a submission, or any person

c. 49, s. 4.

17 & 18 Vict. c. 125, s. 11.


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The corresponding provision in the C. L. P. Act, 1854, was section 11, which enacted as follows:- Whenever the parties to deed or instrument in writing to be hereafter made or executed, or any of them, shall agree that any then existing or future differences between them or any of them shall be referred to arbitration, and any one or more of the parties so agreeing, or any person or persons claiming through or under him or them, shall nevertheless commence any action at law or suit in equity against the other party or parties, or any of them, or against any person or persons claiming through or under him or them in respect of the matters so agreed to be referred, or any of them, it shall be lawful for the court in which action or suit is brought, or a judge thereof, on application by the defendant or defendants, or any of them, after appearance and before plea or answer, upon being satisfied that no sufficient reason exists why such matters cannot be or ought not to be referred to arbitration according to such agreement as aforesaid, and that the defendant was at the time of the bringing of such action or suit, and still is, ready and willing to join and concur in

claiming through or under him, commences any legal proceedings in any court against any other party to the submission, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings, and that court or a judge thereof, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission, 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."

"Submission" within this section includes every case in which the parties have constituted a tribunal for themselves, although it may be a foreign court instead of an individual. (Austrian Lloyd Steamship Co. v. Gresham Life Assurance Co. [1903] 1 K. B. 249; Law v. Garrett, 8 Ch. D. 26.)


Section applies to to refer to foreign tribunal;


and to a reference to


The section also enables the court to stay an action in a case in which the agreement is to refer to three arbitrators, one to be appointed by each of the parties, and arbitrators. the third by the two so chosen (Manchester Ship Canal Co. v. Pearson [1900] 2 Q. B. 606), although the court has no power in such a case to appoint or compel a party to appoint an arbitrator. (Re Smith and Nelson, 25

Q. B. D. 545.)

For the purposes of this section, a counterclaim has Counterclaim

all acts necessary and proper for causing such matters so to be decided by arbitration, to make a rule or order staying all proceedings in such action or suit, on such terms as to costs and otherwise as to such court or judge may seem fit: provided always, that any such rule or order may at any time afterwards be discharged or varied as justice may require."

a commence

ment of legal proceedings.

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