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    Wahl V Donaldson

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    happymabee
    The case involved a dispute over a contract between Wahl and Donaldson for the lease of a ship. The contract contained a clause requiring that any disputes be submitted to arbitration in Hong Kong. Wahl sued Donaldson in court for unpaid balances. Donaldson failed to respond and a default judgment was issued against it. Donaldson later applied to set aside the default judgment and compel arbitration per the contract clause. The Court of First Instance set aside the default judgment and upheld the arbitration clause. However, the Supreme Court reversed, finding that clauses preventing any right of action in court are against public policy.

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    Wahl V Donaldson

    Uploaded by

    happymabee
    394 views2 pages
    The case involved a dispute over a contract between Wahl and Donaldson for the lease of a ship. The contract contained a clause requiring that any disputes be submitted to arbitration in Hong Kong. Wahl sued Donaldson in court for unpaid balances. Donaldson failed to respond and a default judgment was issued against it. Donaldson later applied to set aside the default judgment and compel arbitration per the contract clause. The Court of First Instance set aside the default judgment and upheld the arbitration clause. However, the Supreme Court reversed, finding that clauses preventing any right of action in court are against public policy.

    Original Description:

    Digest Conflicts of Law

    Original Title

    Wahl v Donaldson

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    The case involved a dispute over a contract between Wahl and Donaldson for the lease of a ship. The contract contained a clause requiring that any disputes be submitted to arbitration in Hong Kong. Wahl sued Donaldson in court for unpaid balances. Donaldson failed to respond and a default judgment was issued against it. Donaldson later applied to set aside the default judgment and compel arbitration per the contract clause. The Court of First Instance set aside the default judgment and upheld the arbitration clause. However, the Supreme Court reversed, finding that clauses preventing any right of action in court are against public policy.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    394 views2 pages

    Wahl V Donaldson

    Uploaded by

    happymabee
    The case involved a dispute over a contract between Wahl and Donaldson for the lease of a ship. The contract contained a clause requiring that any disputes be submitted to arbitration in Hong Kong. Wahl sued Donaldson in court for unpaid balances. Donaldson failed to respond and a default judgment was issued against it. Donaldson later applied to set aside the default judgment and compel arbitration per the contract clause. The Court of First Instance set aside the default judgment and upheld the arbitration clause. However, the Supreme Court reversed, finding that clauses preventing any right of action in court are against public policy.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Wahl v Donaldson (1903) Cooper, J.

    Plaintiff: Rudolph Wahl, Jr., Dr. Kurt Wahl


    Defendant: Donaldson, Sims, & Co.
    Concept: Arbitration clause
    Brief facts: A contract was entered into between Wahl and Donaldson
    for the purpose of lease of a ship and a stipulation in said contract
    provides that conflicts shall be submitted before arbitrators in HK. A
    complaint for sum of money was filed before the CFI. CFI first decided
    in favor of Wahl, but upon application, the judgment by default was
    set aside. The CFI in granting such motion to set aside judgment,
    upheld the validity of the arbitration clause. The SC however reversed
    the CFI and declared the clause contrary to public policy.
    Doctrine: A condition in a contract that disputes arising out of it shall
    be referred to arbitration is good where the amount of damages
    sustained by a breach of the contract is to be ascertained by specified
    arbitration before any right of action arises, but that it is illegal where
    all the matters in dispute of whatever sort may be referred to
    arbitrators and to them alone. In the first case a condition precedent to
    the accrual of a right of action is imposed, while in the second it is
    attempted to prevent any right of action accruing at all, and this can
    not be permitted.
    Facts:
    Wahl and Donaldson entered into a contract by which Wahl
    leased to the defendants a certain ship called Ptrarch for the
    term of 6 months
    Wahl then claimed that Donaldosn is still indebted to them
    (Wahl) a balance of $ 25, 484.38 with interest. Wahl then
    insituted a suit.
    Donaldson failed to answer the complaint. Consequently, a
    judgment by default was rendered in favor of Wahl wherein
    Donaldson was asked to pay Wahl the sum of $17, 892.81
    After almost 2 months, Donaldson made an application to the CFI
    for a new trial which was granted and eventually set aside the
    judgment by default.
    After the grant of motion for new trial, a demurrer was made by
    Donaldson to the complaint which presented the question of the
    competency of the CFI to try the case basing this argument on a
    provision in the subject contract
    o Contract provides that in case of conflict, the difference
    shall be referred for arbitration to 2 competent persons in
    HK
    Issue: WON the provision is invalid as being against public policy (Yes)

    Ratio:
    A condition in a contract that disputes arising out of it shall be
    referred to arbitration is
    o Valid where the amount of damages sustained by a
    breach of the contract is to be ascertained by specified
    arbitration before any right of action arises
    Ratio for validity it is a condition precedent to the
    accrual of a right of action
    o Illegal where all the matters in dispute of whatever sort
    may be referred to arbitratiors and to them alone
    Ratio for invalidity it is attempted to prvent any
    right of action accruing at all, and this cannot be
    permitted
    Rule proviided above is the rule in the US which shall also be
    applicable in our jurisdiction because our Code of Civil Procedure,
    which is the law applicable in the case at bar, is copied from the
    Civil Code of Procedure of California
    Moreover, the CFI erred in granting the motion for new
    trial.
    o The general rule for grant of the said motion is that the
    application should show merits, and that this should be
    done with some degree of certainty and not left to surmise.
    o In the case at bar, the affidavit submitted by Donaldson
    merely states that they have a counterclaim against Wahl
    based upon the failure on the part of the plaintiffs (Wahl) to
    perform the contract with regard to the Petrarch. The SC
    finds such statement too vague and uncertain to show
    merits in the defense.
    o Also, after the application to set aside the judgment had
    been granted, a demurrer was submitted based upon a
    purely technical ground that under the contract the parties
    had agreed to settle the matters in dispute by arbitration
    at HK. Such is not meritorious.
    Disposition: CFI decision set aside. Order for new trial issued.

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