This case concerned a claim by the West of England Shipowners Mutual Insurance Association (Luxembourg) against Cristal Ltd, the administrator of an international oil pollution compensation fund. The dispute arose following an oil spill from the tanker Glacier Bay in Alaska in July 1987. The shipowners' club compensated affected third parties and sought reimbursement from Cristal under the CRISTAL contract. Cristal rejected the claim, asserting it was out of time under cl VIII and that, under cl IX, it was the 'sole judge' of the validity of all claims. The central issue before the English Court of Appeal was whether Cristal's determination under the 'sole judge' clause was binding and excluded the jurisdiction of English courts to review factual or legal questions.

Held: The appeal by Cristal Ltd is allowed.

The Court held that under the CRISTAL contract, Cristal Ltd is the 'sole judge' of questions of fact concerning claims for compensation from the fund, and its determinations on such matters are final and binding. However, the Court retains the right to review questions of law and intervene in cases of unfairness, bad faith, or perverse decisions.

The Court emphasised that this arrangement was consistent with the international and administrative nature of the CRISTAL scheme, designed to streamline claims on the fund. Consequently, the preliminary issues were answered to confirm Cristal Ltd's authority over factual determinations, while preserving the Court's supervisory role over legal questions.

Neil LJ: It is important to emphasise the fact that this is an international agreement to which oil companies throughout the world are parties. At the same time, it is necessary to note that by cl XI the CRISTAL contract is to be construed and is to take effect in accordance with the laws of England, and the English Courts are given exclusive jurisdiction over any matter arising from the contract. In the light of cl XI and of the concessions made by Cristal Ltd, it does not seem to me that any question arises as to the ouster of the jurisdiction of the Court. The Court clearly has a role to play. The problem is to define the extent of that role.

It is unusual for one party to a contract to be constituted the sole arbiter of the validity of any claim made against it. There is therefore attraction in the argument that the determination under cl IX is merely, as counsel for the Club would put it, a first stage determination, and that the words 'sole judge' were inserted to make it clear that Cristal Ltd rather than the members of the company or some other person should make the first stage determination.

This argument must be rejected. This is an unusual agreement. One of the functions of Cristal Ltd is to administer the fund. In most, perhaps nearly all, cases the claimant will be a member of Cristal Ltd. Cristal Ltd. and the board of directors are there to hold a balance between the members. In the context of this agreement it seems to me to be clear that the words 'sole judge' in cl IX are sufficient to show that the determination made by Cristal Ltd is to be final and binding for all purposes on matters of fact, subject of course to any question of unfairness, bad faith or perversity. This conclusion accords with the nature of the scheme and takes account of the importance of having the simplest possible machinery to adjudicate about claims made on the fund. The exclusion of disputes about compensation from the arbitration provisions in r 9.2(b) does not mean that such disputes are to go at once to the Courts but rather that the question of compensation is to be decided by Cristal Ltd as 'sole judge'.