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Showing contexts for: void contract arbitration in Chandanmull Jhaleria And Ors. vs Clive Mills Co. Ltd. And Ors. on 2 December, 1947Matching Fragments
Ordinarily speaking, there seems no reason at all why a widely drawn arbitration clause should not embrace a dispute whether a party is discharged from future performance by frustration, whether the time for performance has already arrived or not.
My Lords, it is of much practical importance that the law should be quite plain as to the scope of an arbitration clause in a contract where the clause is framed in wide and general terms such as this, and I trust that the decision of the House in this appeal may be useful for this purpose and will remove any misunderstanding which may have grown up out of certain phrases in some of the previous decisions to which I have referred...If the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is void. But, in a situation where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect of,' or 'with regard to,' or 'under' the contract, and an arbitration clause which uses these, or similar, expressions should be construed accordingly....
20. In the second place, it was argued by Mr. Chatterjee that the plaintiffs had pleaded that these contracts were void ab initio by reason of mistake. Viscount Simon, L.C. in that portion of his judgment, which I have already cited, concedes that if the contract was void ab initio the arbitration clause would also be void and of no effect. Mr. Chatterjee has contended that the pleading in this case is a pleading of mutual mistake rendering the contract void ab initio together with the arbitration clause contained in it.
23. Mr. Chatterjee had attempted to argue that what was pleaded was that there had been a decision by Government to extend this order and that in spite of the decision the order was not extended. It is not pleaded that there was a decision and if it had, then no question of mistake could arise because both parties assumed a decision and there was one. What is pleaded, however, is that upon assurances of Government both parties assumed that an event would occur, namely, the extension of this order at a future date. The order was not extended and the mistake was a mistake as to a fact to occur in the future. That being so, the contracts were binding between the parties until October 1, when this order was not extended. These cases, therefore, are not cases of contracts void ab initio including the arbitration clauses contained in them. The contracts were binding and were avoided, if at all, later. It is clear from the judgment of Lord Atkin to which I have already made reference and the decision in Heyman v. Darwins Ltd. (1942) 1942 A.C. 356 already referred to, that arbitration clauses can be framed wide enough to cover the questions of avoidance of contracts at a later date. It seems to me clear that the question whether the failure of Government to extend the Jute Control Order from 30 9-1946, avoided these contracts or not is a, question relating to the contract; and that being so the arbitration clauses are framed wide enough to cover such disputes. It follows, there fore, that there is nothing in the pleadings of these suits which would make the arbitration clauses inapplicable to this allegation of mistake, In my judgment Das J., was right in holding that this was no ground for refusing a stay.