Heyman v Darwins Ltd
An arbitration clause survives the repudiation and termination of the main contract, so a dispute about whether the contract had been repudiated fell within the clause.
Facts
Heyman was appointed as the selling agent of a steel manufacturer, Darwins, under an agreement which contained a broad arbitration clause covering any dispute in respect of the agreement. Heyman claimed that Darwins had repudiated the agreement, and that he had accepted the repudiation, and he sued for damages in court. Darwins applied for a stay of the proceedings in favour of arbitration. Heyman argued that, because the contract had been brought to an end, the arbitration clause had ended with it.
Legal principle
The House of Lords held that the arbitration clause survived, and that the dispute fell within it. Lord Macmillan said that an arbitration clause is quite distinct from the other clauses in the contract, because the other clauses set out the obligations which the parties undertake towards each other, whereas the arbitration clause embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. Repudiation, even if accepted, did not abrogate the contract, so the arbitration clause continued to apply. The case laid the foundation of the doctrine of separability.
Related cases on the arbitration agreement: validity, scope and governing law
- Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334
- Enka Insaat ve Sanayi AS v OOO Insurance Co Chubb [2020] UKSC 38, [2020] 1 WLR 4117
- Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, [2007] Bus LR 1719
- Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002
- Jivraj v Hashwani [2011] UKSC 40, [2011] 1 WLR 1872
- Kabab-Ji SAL v Kout Food Group [2021] UKSC 48
- Scott v Avery (1856) 5 HL Cas 811
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