## Facts

- Shipowners chartered the vessel *Nema* to charterers under a consecutive voyage charter for seven voyages from Sorel, Canada, to European ports to carry titanium slag during the April–December 1979 season.
- Sorel was seasonally accessible to non–ice-reinforced vessels; winter conditions restricted access.
- The charter contained a clause excluding strike-related time loss from laytime calculations and incorporated a London arbitration clause providing for final arbitration.
- A strike at Sorel began before the *Nema* returned to load for the next voyage; on arrival and tender of readiness, loading was impossible due to the strike.
- The parties executed addenda allowing an intermediate voyage, extending performance to a further season, providing daily compensation during the strike, and stating that if the strike continued after the intermediate voyage the situation would be “discussed without obligation.”
- After discharge of the intermediate voyage cargo, the charterers wanted the vessel positioned to return to Sorel if the strike ended; the owners instead fixed another intermediate voyage.
- The parties agreed to early London arbitration before a single experienced maritime arbitrator; when the hearing occurred, the strike was ongoing and its end date was unknown.
- The arbitrator concluded the charterparty had been frustrated by the strike and treated the contract as effectively divisible by seasonal performance conditions.

## Issues

1. Whether the strike-related delay frustrated the charterparty (in whole or by reference to a seasonal segment), discharging further performance obligations.
2. Under the Arbitration Act 1979, § 1, when should a court grant leave to appeal on a question of law arising out of an arbitral award, and what level of restraint is required in reviewing commercial arbitration awards.

## Decision

- The House of Lords dismissed the charterers’ appeal and upheld the award as restored by the Court of Appeal.
- The House held that leave to appeal under Arbitration Act 1979, § 1, should be granted only exceptionally; routine commercial disputes should ordinarily end with the arbitrator’s decision.
- The House accepted that the lower court’s intervention was unwarranted in a fact-intensive shipping dispute decided by an experienced arbitrator.
- Without re-trying the merits, the House declined to interfere with the arbitral conclusion that the charterparty had been frustrated on the facts and contractual structure as amended.

## Legal Principles

- Appeals on questions of law from arbitral awards under Arbitration Act 1979, § 1, are exceptional and should not function as a broad merits review.
- Leave to appeal is generally appropriate only where: (1) the legal question is of general public importance, (2) the tribunal’s decision is open to serious doubt, and (3) it is just and proper for the court to decide the point.
- Courts should give substantial weight to the finality of commercial arbitration and the parties’ choice of an expert tribunal, particularly where the alleged legal error is bound up with factual and commercial evaluation.
- Frustration in voyage charter contexts is commonly a mixed question of law and fact; where performance depends on a limited season and port accessibility, an unforeseen and prolonged strike may, on appropriate facts, radically alter the contract’s commercial purpose.

## Conclusion

The House of Lords reinforced a restrictive approach to judicial review of arbitral awards under the Arbitration Act 1979 by limiting leave to appeal to rare cases meeting strict criteria, and it left undisturbed an experienced arbitrator’s fact-sensitive finding that a prolonged strike had frustrated a season-dependent voyage charterparty.


Pioneer Shipping Ltd. v. B.T.P. Tioxide Ltd. (The Nema), [1982] A.C. 724 (H.L. 1981)