There is consensus. Commodity arbitration needs the trade + lawyers as arbitrators. But what happens if there is ambiguity on the facts and commercial good sense comes up against legal definition?
Brian Perrott of HFW addressed this issue at the 4 May 2021 Zoom Meeting of the Commodity Arbitration Club. When it comes to understanding words used in a contract should arbitrators rely on dictionaries or commercial good sense? (Any errors in what follows are mine, not Brian’s)
Lord Diplock indicated in the Antaios  AC 1919 that words cannot “flout business common sense”. 1-0. Lord Hoffman, in Charter Reinsurance Co Ltd v Fagan  AC 313, added doubts to reliance on words in a contract “because the meaning of words is so sensitive to syntax + context”. 2-0. Hoffman went further in Investors Compensation Scheme v West Bromwich Building Society  1 WLR 896 suggesting that the “old intellectual baggage of interpretation” should be thrown away in favour of an emphasis on the surrounding circumstances.” 3-0. Lord Clark took heart from Hoffman + said, in Rainy Sky  UKSC 50, that where words are ambiguous preference should be given to construction associated with common sense. 4-0.
The fightback started with Lord Neuberger in Arnold v Britton  UKSC 36 “a court should be very slow to reject the natural meaning of a provision…because it appears to be a very imprudent term for one of the parties to have agreed”. 4-1. Lord Sumption writing in A Question of Taste supported Neuberger, criticised Hoffman, + urged instead the acceptance of “language properly used [which] should speak for itself and it usually does.” 4-2
Still only Half-Time. More to come in Episode 4 on 15 June – Lord Hamblen in the Supreme Court on 15 January 2021.