JUDGMENT-1:
BINGHAM L.J: The question in this appeal is whether the English court
is bound or entitled to decline jurisdiction in this action against the third
and fourth defendants. That depends on the construction and application
of the Brussels Convention on Jurisdiction and the Enforcement of
Judgments in Civil and Commercial Matters, enacted into English law by
the Civil Jurisdiction and Judgments Act 1982.
The action arises from the loss at sea of a valuable consignment of
electronic goods. The goods were carried on the deck of the vessel D. of
Y., on a voyage from Scheveningen to Great Yarmouth and were swept
overboard in the great gales of October 1987. The goods were owned by
the first or second plaintiffs. They are the only effective plaintiffs and it
is unnecessary to distinguish between them. I shall refer to them as "the
plaintiffs."
The third defendants, N. Line Ltd., are an English company having their
head office at Great Yarmouth. They were bareboat charterers of the
vessel: as such they were the employers of its crew and bailees of its
cargo. The fourth defendants, N. Line B.V., are a Dutch company having
an office in Scheveningen. They appear to have acted as agents for the
third defendants. It is these defendants who seek to stay this action
against them so that the plaintiffs' claim against them may be determined
by the court in Rotterdam.
The sea voyage from Scheveningen to Great Yarmouth during which the
goods were lost was one leg of a longer journey which began at Bremen
and would but for the loss have ended with delivery of the goods to the
plaintiffs at Montrose. The first defendants in the action, F. F. Management
Ltd. ("F."), contracted as principals with the plaintiffs to perform the whole
of the carriage from West Germany to Scotland and sub-contracted the
sea leg of the carriage to the third defendants. F. have been sued here
and have not in any way challenged the jurisdiction of the court.
Before Hobhouse J. the plaintiffs sought to establish that the court was
bound to accept jurisdiction to adjudicate upon their claim against the
third defendants by virtue of the Convention on the Contract for the
International Carriage of Goods by Road ("the C.M.R. Convention").
The judge rejected that contention and there is no challenge by the
plaintiffs to that decision. The judge, however, accepted the plaintiffs'
alternative argument that under the Brussels Convention the court was
bound to accept jurisdiction and had no discretion to decline jurisdiction
in favour of the court in Rotterdam. But he held that if (contrary to his
view) the court did have a discretion he would exercise it so as to stay
these proceedings against the third and fourth defendants. On appeal
these defendants argue that the judge should have held himself bound to
decline jurisdiction in favour of the Rotterdam court. If that is wrong, they
argue that he may (depending on more precise elucidation of the facts)
have had a discretion to decline jurisdiction.
Article 2 of the Brussels Convention provides:
"Subject to the provisions of this Convention, persons domiciled in a
contracting state shall, whatever their nationality, be sued in the courts of
that state."
Article 6 of the Convention provides:
"A person domiciled in a contracting state may also be sued: (1) where he
is one of a number of defendants, in the courts for the place where any
one of them is domiciled;..."
It is thus clear, as the judge held, that England is prima facie the proper
jurisdiction in which the plaintiffs should sue the third defendants and
a proper jurisdiction in which to sue the fourth defendants. But that is
subject to the other provisions of the Convention. There are two other
material provisions, articles 17 and 22, which give rise to separate
arguments on this appeal.
I. Article 17
Article 17 of the Convention is, so far as material, in these terms:
"If the parties, one or more of whom is domiciled in a contracting state,
have agreed that a court or the courts of a contracting state are to
have jurisdiction to settle any disputes which have arisen or which
may arise in connection with a particular legal relationship, that court
or those courts shall have exclusive jurisdiction. Such an agreement
conferring jurisdiction shall be either in writing or evidenced in writing or,
in international trade or commerce, in a form which accords with practices
in that trade or commerce of which the parties are or ought to have been
aware."
The third and fourth defendants invoke this article in reliance on a bill of
lading issued (probably by the fourth defendants on behalf of the third)
at Scheveningen on shipment of the goods on 15 October 1987. The
named consignees were F. and the document appears, as the judge held,
to evidence a contract of carriage between these defendants and F.. This
document contained a number of printed clauses on its reverse. Among
these was clause 12:
"Jurisdiction. This document shall be governed by Dutch law and all
actions under this document shall be brought before the court at
Rotterdam and no other court shall have jurisdiction with regard to any
such action unless the carrier appeals to another jurisdiction or voluntarily
submits himself thereto."
The carrier (whether the third or fourth defendants) has not appealed or
submitted himself to any jurisdiction other than the court at Rotterdam.
But it is common ground that this exclusive jurisdiction clause did not
form part of any contract between the plaintiffs and the third or fourth
defendants because there was no such contract. These defendants (whom
I shall hereafter call "the defendants," without distinguishing between
them) accordingly argued (1) that they held the goods as bailees on
terms of the bill of lading, including the jurisdiction clause; and (2) that
that clause applied to any claim by the plaintiffs in tort against them.
The judge was sceptical as to (1) but rejected the argument at (2). The
correctness of his decision is the first issue in this appeal.
Before this court Mr. Hamblen for the defendants advanced a clear and
well constructed argument which proceeded by these steps. (1) The
plaintiffs bailed their goods to F.. (2) F. sub-bailed the goods to the
defendants on terms set out in the bill of lading. (3) On the facts, the
plaintiffs must be taken to have consented expressly or impliedly to F.
making a sub-bailment of the goods on those terms. (4) The plaintiffs
accordingly became bound by those terms vis-...-vis the defendants as
sub-bailees despite the absence of a contract between them: Midland
Silicones Ltd. v. Scruttons Ltd. [1962] A.C. 446, 489-491, per Lord
Denning; Morris v. C. W. Martin & Sons Ltd. [1966] 1 Q.B. 716, 729-730,
per Lord Denning M.R.; Johnson Matthey & Co. Ltd. v. Constantine
Terminals Ltd. [1976] 2 Lloyd's Rep. 215; Singer Co. (U.K.) Ltd. v. Tees
and Hartlepool Port Authority [1988] 2 Lloyd's.
Rep. 164. (5) Being bound by the terms of the sub-bailment the plaintiffs
cannot circumvent those terms by suing in tort or otherwise than in
bailment. (6) The terms by which the plaintiffs are bound include the
jurisdiction clause quoted above. (7) On a proper construction the
jurisdiction clause applies to any claim made by the plaintiffs against the
defendants in respect of this carriage. (8) The jurisdiction clause satisfies
the requirements of article 17 of the Convention and the English court
must accordingly decline jurisdiction in favour of the court at Rotterdam.
In his able argument for the plaintiffs Mr. Leggatt accepted the first two
of these steps, and did not (I think) challenge the third. He did, however,
argue, in reliance on the judgment of Donaldson J. in Johnson Matthey
Co. Ltd. v. Constantine Terminals Ltd. [1976] 2 Lloyd's Rep. 215, that the
question whether or not a bailor was bound by the terms of his bailee's
sub-bailment depended not on the consent of the bailor to the sub-
bailment but on whether the bailor could advance a claim in tort against
the sub-bailee (for example in negligence or trespass or conversion)
without having to plead or rely on the bailment. Here, Mr. Leggatt argued,
the plaintiffs could do so: they had pleaded a claim in negligence which
did not depend on establishing a bailment. The plaintiffs could accordingly
advance that claim, unrestricted by the terms of the sub-bailment. If,
contrary to this argument, any of the sub-bailment terms bound the
plaintiffs, the jurisdiction clause did not. In any event, the jurisdiction
clause did not cover a claim by the plaintiffs and did not satisfy article 17
of the Convention.
These competing submissions involved an interesting discussion of the
doctrine of bailment on terms and of possible differences between the
basis of the doctrine as explained by Lord Denning M.R. in Morris v. C. W.
Martin & Sons Ltd. [1966] 1 Q.B. 716 and by Donaldson J. in the Johnson
Mattheycase [1976] 2 Lloyd's Rep. 215. I do not, however, think that it is
necessary for us to rule on this question, important though it is, in order
to decide this appeal. I am prepared to assume (but without deciding)
that Mr. Hamblen is able to establish the correctness of the first six steps
of his argument. He cannot in my judgment make good the steps which
I have numbered (7) and (8), and failure to make good either of those
steps is fatal to his prospects of success on this part of the appeal.
With reference to what I have called step (7), Hobhouse J. said in his
judgment:
"the jurisdiction clause is not sufficiently widely expressed to enable [the
defendants] to prevent the plaintiffs suing in the English courts in the
present action. For the clause to apply the action has to be 'under this
document.' The plaintiffs are not parties to any bill of lading contract.
They are not asserting any rights under the bill of lading; they are not
contractually bound to sue under the bill of lading. They are in the
relevant respect suing in tort. If the defendants had wished to stipulate
that any claim in respect of the loss of or damage to the goods, no matter
by whom that claim was brought and whether or not that person was
or was not a party to the bill of lading or asserting any right under the
bill of lading, could not be litigated elsewhere than in the Dutch courts,
the clause could have said so. But it did not. The clause uses a more
restricted phraseology that no doubt suffices where the parties to the
litigation are parties to the contract evidenced by the bill of lading. But
the plaintiffs are not such parties and therefore this clause does not
suffice for the defendant's purposes before me."
Mr. Hamblen criticised the judge's reasoning. If the language of the
bill would no doubt suffice to bar an action in tort elsewhere than in
Rotterdam by a party to the contract, why would the language not suffice
to bar such an action by a party who although not a party to the contract
was bound by its terms? Mr. Hamblen pointed out that in the definition
clause of the bill "merchant" is defined to mean and include the shipper,
the consignee, the holder of the document, the receiver and the owner of
the goods, language wide enough to embrace a non-contracting party.
There is considerable force in the question posed above, and if I were
satisfied that a proper construction of the jurisdiction clause bound a
contracting party suing in tort to sue in Rotterdam and nowhere else I
would hold that a non-contracting party bound by the terms of the clause
would be similarly bound. But the expanded definition of "merchant" gives
the defendants little or no assistance since there is no reference to the
"merchant" in the jurisdiction clause. While the clause may have been
intended to achieve the object for which the defendants contend, I share
the judge's view that this intention is not clearly to be derived from the
language used. I do not think either of the two references to "document"
in the clause can be read quite literally, since a document cannot strictly
be governed by a law and an action cannot strictly be brought under a
document. If "document" is to be understood as meaning "contract," it
would greatly strengthen the plaintiffs' argument. If it is to be understood
as meaning "carriage" or "transaction," it would greatly strengthen the
defendants'. Either of these meanings is in my view possible, but I find
no clear pointer to the preferred meaning and feel bound to uphold the
narrower and not the more extensive meaning. This was the defendants'
bill. If they had wished to provide that the Rotterdam court should be the
exclusive forum for prosecution of claims against them whether by parties
or non-parties to the contract and whether in contract, tort or otherwise,
they could have done so. In my view they have not, and we have received
no evidence to show that in Dutch law this clause as it stands would be
construed as the defendants contend. I accordingly agree with the judge's
conclusion.
Before us (more fully, I think, than before the judge) Mr. Leggatt deployed
an additional argument based on the language of article 17. The first
sentence of the article, he argued, required that the parties shall have
"agreed" to give exclusive jurisdiction to a court or courts in a contracting
state. The second sentence prescribes the formal requirements which
must be satisfied if an agreement is to be treated as effective under the
article. Thus the parties' agreement must be either (i) in writing, or (ii)
evidenced in writing, or (iii) in international trade or commerce, in a form
which accords with practices in that trade or commerce of which the
parties are or ought to have been aware. Alternative (iii) was added by
amendment to accommodate the United Kingdom and Ireland on their
accession to the Convention. Its purpose is obvious. The incorporation
of contract terms by reference, commercial custom or trade practice
is a phenomenon very much more familiar in the common law than
in the civil law world. It was desirable, if not necessary, to recognise
this divergent practice on the accession of two common law countries
(in which expression I do not include Scotland). But alternative (iii)
only relaxes the formerly strict requirements as to the form which an
agreement, to be effective, must take. It does not, as I read the article,
dispense with the need for agreement between the parties said to be
bound by an exclusive jurisdiction clause.
Here is the defendants' difficulty. Had the question arisen between F.
and the defendants, there would be no doubt that the clause had been
agreed between them. Had F. contracted as agents of the plaintiffs, the
answer would have been the same. So it would if the plaintiffs sued as
holders of the bill of lading to whom all F.'s rights and obligations under
the contract of carriage had been transferred: Partenreederei ms. Tilly
Russ v. Haven & Vervoebedrijf Nova N.V. [1985] Q.B. 931. But none of
these situations existed here. So the question which has to be asked is
whether the plaintiffs agreed with the defendants that the Rotterdam
court should have exclusive jurisdiction to entertain disputes between
them. Even accepting the defendants' explanation of the doctrine of
bailment on terms as depending on the bailor's express or implied consent
to the bailee's sub-bailment of goods on certain terms, the resulting
relationship between the bailor and sub-bailee cannot in my view be aptly
described as depending on agreement. The doctrine has evolved because
the bailor cannot sue the sub-bailee in contract; but a contract is what, as
I think, the first sentence of article 17 demands.
After what I take to have been briefer argument, the judge formed the
same view. He said:
"The plaintiffs have not agreed... to submit the claim that they are
making in this action to the courts of the Netherlands. Article 17 of the
Brussels Convention accordingly does not apply."
Although with some reluctance, because the doctrine of bailment on terms
is a pragmatic legal recognition of commercial reality, I feel bound to hold
that, even where it applies, it cannot satisfy the requirements of article
17.
I accordingly dismiss this limb of the defendants' appeal.
II. Article 22
Although it is only article 22 which is directly in issue in this appeal it is
helpful to set out the text of articles 21 to 23 of the Convention.
"Article 21
"When proceedings involving the same cause of action and between the
same parties are brought in the courts of different contracting states,
any court other than the court first seised shall of its own motion decline
jurisdiction in favour of that court.
"A court which would be required to decline jurisdiction may stay its
proceedings if the jurisdiction of the other court is contested.
"Article 22
"Where related actions are brought in the courts of different contracting
states, any court other than the court first seised may, while the actions
are pending at first instance, stay its proceedings.
"A court other than the court first seised may also, on the application of
one of the parties, decline jurisdiction if the law of that court permits the
consolidation of related actions and the court first seised has jurisdiction
over both actions.
"For the purposes of this article, actions are deemed to be related where
they are so closely connected that it is expedient to hear and determine
them together to avoid the risk of irreconcilable judgments resulting from
separate proceedings.
"Article 23
"Where actions come within the exclusive jurisdiction of several courts,
any court other than the court first seised shall decline jurisdiction in
favour of that court."
The scheme of the Convention is thus to require the second court to
decline jurisdiction in the situations covered by articles 21 (paragraph
1) and 23 and to grant the second court a discretionary power to stay
its proceedings where related actions are brought in two relevant
jurisdictions as provided by article 22. On the facts here it is only article
22 which is in issue, and the question is whether (as the plaintiffs contend
and the judge held) the English court was the court first seised or whether
(as the defendants argue) the Dutch court was first seised, so that the
judge did (contrary to his view) have a discretion to stay proceedings
before him.
The writ which initiated these proceedings was issued out of the Central
Office of the High Court on 15 July 1988. It followed the standard form
for a cargo damage claim under the C.M.R. Convention. It was amended
without leave under R.S.C., Ord. 20, r. 1 on 27 October 1988 and again
with leave pursuant to an order made on 10 July 1989. It was served
on the defendants on 13 July 1989 when its period of validity was on
the point of expiring. A statement of claim was served on 20 November
1989, claiming against the defendants as successive C.M.R. carriers. The
statement of claim was amended in May 1990 to add claims in tort and
bailment.
By this time proceedings were on foot in the Netherlands and the judge
has given a very helpful summary of events. These were limitation
proceedings initiated by the defendants, who on 21 February 1989 made
a request for limitation to the District Court of Rotterdam. The request
related to the events of 16 October 1987 and to the loss of a number
of trailers overboard including that which carried the plaintiffs' goods.
The request disclosed claims by a number of interested parties totalling
D.Fl. 3 3m. It was based on a right granted by the Dutch Procedural and
Commercial Code to limit liability to a number of gold francs calculated by
reference to the tonnage of the vessel. The defendants offered security
for the amount of the limitation fund but did not admit liability. The
request to the court was that it should establish the limit of liability of the
defendants and provide for distribution of the limitation fund with certain
consequential relief.
On 27 February 1989 the District Court of Rotterdam determined the limit
of liability of the defendants. On 31 March 1989 the defendants, who
had lodged a guarantee in the relevant amount, requested the District
Court to appoint a judge-commissioner to determine the division of the
limitation fund. On 17 April 1989 an appointment was made by the court
and on 20 April a date was set by which claims had to be lodged and any
challenge made to the request for limitation of liability. A date was fixed,
24 August 1989, for the meeting of creditors. Article 320 of the Dutch
Procedural Code entitles a debtor who has complied with the order to
constitute a limitation fund to request that his liability to pay damages
to the persons vis- -vis whom he is entitled to limit his liability should be
suspended and that any legal proceedings which are pending in respect of
such claims should likewise be suspended. The debtor must obtain such a
suspension of other proceedings if the claims in those other proceedings
are to be subject to the limitation.
The orders of the Rotterdam District Court so far referred to had been
made ex parte and without publicity. But on 19 May 1989 the orders were
published. At that stage all persons affected were deemed to be notified
of the proceedings and became obliged to lodge their claims with the
court and, if they wished, notify their opposition to a limitation decree.
On 13 June 1989 the plaintiffs lodged a written defence in the limitation
proceedings. This document referred to the fact that the plaintiffs had
lodged their claim "by way of an English writ of summons dated 15 July
1988." The plaintiffs disputed the defendants' right to limit and asked
the court, among other things, "to declare itself incompetent to hear the
claim... or at least to stay its judgment on this claim." Thus the plaintiffs
challenged the competence of the Rotterdam court and relied on the
existence of proceedings before the English court relating to the same
claim.
The meeting of creditors duly took place on 24 August 1989 before the
judge-commissioner. If he cannot effect an agreement between the
parties, the judge-commissioner is required by article 320(p) of the Dutch
Procedural Code to refer the matter for hearing before the District Court
and no further summons is required to initiate such proceedings. This is
what happened. On 15 November 1989 the plaintiffs put in a statement
before the District Court challenging the jurisdiction of that court and
in the alternative making a claim in the proceedings. They relied on the
pending English action to show that the Dutch court was incompetent to
decide the plaintiffs' claim. When this matter came before the judge, the
defendants had not responded in the Dutch proceedings to the plaintiffs'
objections and claim but had sought successive adjournments.
On these facts, three questions have to be answered. (1) Are the English
and the Dutch proceedings "related" within the meaning of article 22?
(2) When did the High Court become seised of the English proceedings?
(3) When did the Rotterdam District Court become seised of the Dutch
proceedings?
It is unnecessary to linger on the first of these questions, since it is
common ground that the English and the Dutch proceedings are related
within the meaning of article 22. It is indeed plain that very similar
questions as to the defendants' care and competence in stowing and
securing the plaintiffs' cargo would arise in both actions if both were
to proceed, so that there would be considerable overlap and a risk
of irreconcilable judgments. The plaintiffs accept this and have not
challenged the judge's ruling that he would exercise his discretion to stay
these proceedings if (contrary to his conclusion) he had any discretion to
exercise.
The second question raises large, novel and important issues.
Articles 21 to 23 provide a code for resolving contests of jurisdiction
between the courts of different contracting states where both the courts
or all the courts involved are prima facie bound or entitled to accept
or exercise jurisdiction under the Convention. Some tie-break rule was
necessary, and that adopted by the Convention was a simple test of
chronological priority. Priority was given to "the court first seised" (in
French, "le tribunal premier saisi").
Authoritative guidance on the meaning of this expression was given by
the European Court of Justice in Zelger v. Salinitri (Case 129/83) [1984]
E.C.R. 2397, 2408, where it was held that the court first seised
"is the one before which the requirements for proceedings to become
definitively pending are first fulfilled, such requirements to be determined
in accordance with the national law of each of the courts concerned."
In the course of its judgment the court pointed out that the rules of
procedure of the various contracting states are not identical as regards
determining the dates at which courts are seised. Having considered the
procedural rules of France, Italy, Luxemburg, the Netherlands, Belgium
and Germany, the court accepted that a common concept of lis pendens
could not be arrived at by a rapprochement of the various relevant
national provisions. The court declined to impose on contracting states
a uniform procedural rule which was not to be found in the Convention.
Instead, it defined "first seised" and wisely left it to national courts to
apply that definition to their own procedure.
Until the United Kingdom acceded to the Brussels Convention in 1987,
no English court had ever had to consider when it was "first seised" of
proceedings nor when proceedings were "definitively pending" before
it. These are not terms of art, nor terms with any established meaning,
in English law. But articles 21 to 23 of the Convention are now part of
English law and section 3(1) of the Civil Jurisdiction and Judgments Act
1982 requires us to apply the Convention in accordance with principles
laid down by the European Court of Justice. We must therefore decide
when, under English law, the requirements for the present proceedings
to become definitively pending were first fulfilled. Since this question
never arose, and never could have arisen, before 1987 one could not
expect earlier authority to yield a simple, ready-made answer. We must
be wary of adopting and applying any rule developed for a different
purpose in different circumstances. In determining the effect of national
law for purposes of the Convention we must, I think, have regard to the
international purpose which the Convention was made to achieve.
Before this case the present question had been before an English court
on one occasion only: Kloeckner & Co. A.G. v. Gatoil Overseas Inc.[1990]
1 Lloyd's Rep. 177, a decision of Hirst J. handed down on 31 July 1989.
The contest in that case was between English and German jurisdiction and
arose under article 21, but the point was the same. The judge held, at p.
204:
"that the critical moment when an action has been brought in this
country, and therefore becomes pending, is the moment of the issue of
the writ. The court at that juncture becomes in my judgment definitively
seised, as is demonstrated by the large number of orders which the court
can then make, showing, as Mr. Johnson put it, that from that moment it
becomes master of the proceedings."
The judge based himself on authority which showed that an action was
pending once it was brought and brought once the writ was issued. The
judge also based himself on highly persuasive opinions expressed by a
number of commentators including in particular the editors of Dicey &
Morris, Conflict of Laws, 11th ed. (1987), p. 399 and Cheshire and North's
Private International Law, 11th ed. (1987), p. 324. He also relied on
the report of Professor Schlosser (Official Journal 1979 No. C59), which
the court is entitled under section 3(3) of the Act of 1982 to consider in
ascertaining the meaning or effect of any provision of the Convention
and to which the court is to give such weight as is appropriate in the
circumstances. Professor Schlosser in his report gave his understanding of
the English procedure, at p. 71, 125:
"The fact that the moment at which proceedings become pending is
determined differently in the United Kingdom and Ireland from the way
it is determined on the Continent is due to peculiarities of procedural
law in those states. In the original member states of the Community a
claim becomes pending when the document instituting the proceedings
is served. Filing with the court is sometimes sufficient. In the United
Kingdom, except Scotland, and in Ireland, proceedings become pending
as soon as the originating document has been issued. In Scotland,
however, proceedings become pending only when service of the summons
has been effected on the defendant. The moment at which proceedings
become pending under the national procedural law concerned is the
deciding factor for the application of article 21 of the 1968 Convention."
In the present proceedings the plaintiffs naturally relied very strongly on
this decision of Hirst J. The judge also agreed with it. He said:
"In my judgment the decision of Hirst J. in Kloeckner & Co. A.G. v.
Gatoil Overseas Inc. was clearly correct. Where the relevant English
proceedings are proceedings in personam and the subject matter of the
proceedings and the relevant defendants both fall within the permitted
jurisdiction of the relevant English court under the Brussels Convention,
the proceedings are pending from the moment that the writ is issued.
Under English procedural law that is the time at which the proceedings
become definitively pending or have been definitively brought. The court
is seised of the action. The characteristics of the action are defined both
as to the parties to the action, the subject matter and the claims in the
action, and the time at which and court in which it has been brought. The
definition is complete. It is of course always possible, and this feature
is common to all jurisdictions, to amend proceedings after they have
been first commenced; thus parties can be added or deleted and causes
of action or counterclaims can be added or stuck out. The fact that a
relevant party or cause of action has only been added to an action at
some later date may mean that in respect of that party or that cause of
action the court has only become seised of the action for the purposes of
articles 21 to 23 at the later date. No such problem arises here.
"Similarly, by sealing the writ and authorising its service on the relevant
defendant, the court has accepted the invocation of its jurisdiction over
the defendant. As recognised by Hirst J. [1990] 1 Lloyd's Rep. 204,
where a plaintiff needs leave under R.S.C., Ord. 11, r. 1 before the
writ may be issued for service on a defendant out of the jurisdiction,
different considerations may arise similar to those which arise in respect
of Admiralty proceedings in rem: see The Nord Sea [1989] 1 Lloyd's Rep.
388. The present case does not raise any such complication and I need
say no more about it.
"The argument of the defendants before me also needs to be tested by
reference to the significance of service under English procedural law.
It is true that a plaintiff who has issued a writ may always choose to
do nothing about it and let it expire without having been served. Under
those circumstances the writ ceases to be valid for the purpose of service.
However, where the writ is served before it has expired, the plaintiff
may still discontinue the proceedings and, indeed, at almost any stage
a plaintiff can allow the proceedings to lapse although the procedural
consequences will be different the later the stage of the proceedings at
which he does this. The mere fact of service does not alter the ability to
discontinue the proceedings.
"Further even before service a defendant has the right to waive the
requirement for service and acknowledge service 'gratis' under Ord. 10,
r. 5. Alternatively he can exercise his right under Ord. 12, r. 8A to serve
a notice on the plaintiff requiring him, within a specified period, either to
serve the writ or discontinue the action. Thus, under the procedural laws
of this country, a defendant has rights in respect of the proceedings even
though the writ has not been served. The primary effect of service is to
start the clock running against the defendant for him to take the next step
in the action and in default of that step being taken the plaintiff has the
right to proceed by default. Such a situation is repeated at later stages of
an action where time limits apply and default can occur.
"Further as soon as the writ has been issued or the plaintiff has given
an undertaking to issue a writ the plaintiff can apply ex parte for orders
against the defendant. Most commonly these are injunctions, including
Mareva injunctions. The defendants in argument before me submitted
that even after such an injunction has been granted there still was no
action pending before an English court until the writ has been served upon
the relevant defendant. But the court has assumed jurisdiction and has
made orders. It has made orders in an action that is defined and has been
commenced. The argument that under those circumstances no action is
pending before the English courts cannot be accepted.
"In English procedural law, subject to irrelevant exceptions, proceedings
are pending once the legal process has been issued by the court. The
date of service is not significant; service is simply one of a number of
procedural steps that are taken in a pending action. If a different moment
in time than the issue of the process by the court was to be taken as
the moment when the court was first seised of the relevant action, that
time would probably have to be the time at which the defendants either
submitted to the jurisdiction or the court rejected a challenge to its
jurisdiction and ruled, inter partes, that it has jurisdiction. That moment
would be later in the proceedings than has been contended for in any
reported argument and, quite apart from raising practical difficulties, is
clearly inconsistent with the approach of the European court in Zelger v.
Salnitri (Case 129/83) [1984] E.C.R. 2397.
"I will not refer further to the various ways in which the defendants
developed their argument before me on this point. They were similar to
those arguments recited in the judgment of Hirst J. They fail to recognise
the authority of the Zelger case and I respectfully concur in their rejection
by Hirst J.
"It follows that the defendants' reliance on article 22 cannot be supported.
The English courts are the courts first seised. It follows that under the
Convention the courts of The Netherlands should defer to the jurisdiction
of the English courts in relation to the claim which is the subject matter of
the present proceedings."
An action in England is commenced, whether in the High Court or the
county court, by and upon the issue of proceedings. Time then ceases
to run against a plaintiff. It has been acknowledged that ideally the
institution of proceedings should be a step which would at once come
to the knowledge of the defendant, a desideratum which the issue
of proceedings does not meet, but considerations of simplicity and
certainty have been thought to favour retention of the old rule despite this
drawback: see, for example, the Law Reform Committee's 21st Report
on Limitation of Actions 1977 (Cmnd. 6923), paras. 2.72-2.83. A recent
proposal to alter the rule for limitation purposes in the Courts and Legal
Services Bill may well have been made and withdrawn for similar reasons.
The rule that an action is commenced by issuing
proceedings, and that such issue provides the terminus ad quem for
limitation purposes, is clearly relevant to fulfilment of the condition that
proceedings should become definitively pending, but I do not think it
concludes the question whether in English procedural law that condition is
fulfilled or not. A more detailed inquiry into the nature and effect of issue
is in my view called for.
Both in the High Court and the county court issue involves the
presentation to the appropriate court office of a document (a writ or a
summons) which, on the proper fee being tendered, receives the official
court seal recording the date of issue. In the High Court, with which most
Convention cases are likely to be concerned, a writ is ordinarily issued out
of the Central Office, the Admiralty and Commercial Registry, Chancery
chambers or a District Registry: R.S.C., Ord. 6, r. 7(2). It is issued upon
sealing by an officer of the court out of which it is issued: rule 7(3). A
number is then assigned to the action which is entered up in the Cause
Book (see Ord. 1, r. 4(1)) and the copy writ may then be searched for,
inspected and copied: Ord. 63, r. 4(1)(a). Save where the leave of the
court is required, which it is not in a case covered by the Convention
(Ord. 11, r. 1(2)), the issue of a writ cannot be refused and it is not a
judicial act but the act of a party: Clarke v. Bradlaugh (1881) 8 Q.B.D.
63. There is no involvement of the court save through the medium of an
administrative officer.
No statute or rule of court obliges a plaintiff who has issued a writ to
serve it on or bring it to the notice of the defendant. The period of initial
validity of a writ is now much reduced by amendment of R.S.C., Ord. 6,
r. 1, but a plaintiff may quite properly wait until the end of the period
before he serves the writ or allow the period to elapse without serving it.
Formerly a defendant who had not been served had no right to require
service, even if he knew of the issue, but a 1987 amendment of the rules
has altered that position. Ord. 12, r. 8A now provides:
"(1)Any person named as a defendant in a writ which has not been served
on him may serve on the plaintiff a notice requiring him within a specified
period not less than 14 days after service of the notice either to serve
the writ on the defendant or to discontinue the action as against him.
(2) Where the plaintiff fails to comply with a notice under paragraph
(1) within the time specified the court may, on the application of the
defendant by summons, order the action to be dismissed or make such
other order as it thinks fit."
A plaintiff who has issued but not served a writ may formally discontinue
the action with leave (Ord. 21, r. 3): in practice, applications to
discontinue before service are only made where a claim has been satisfied
before issue and the issuer wishes to recover the fee paid on issue,
which he is now unlikely to do. Ordinarily, a plaintiff who does not wish to
pursue an action in which he has issued but not served a writ simply fails
to serve it.
It is service of proceedings, not issue, which ordinarily activates the
litigious process and imposes procedural obligations on the parties. Thus
the defendant must acknowledge service within the time limited by Ord.
12, r. 5. Only if he fails to do so and to give notice of intention to defend
may judgment in default be obtained under Order 13. Only if he does so
may the plaintiff seek summary judgment under Order 14. The plaintiff's
obligation to serve a statement of claim arises on or after service: Ord.
18, r. 1. Only a defendant who has acknowledged service and given notice
of intention to defend is obliged to serve a defence: Ord. 18, r. 2. The
procedure under Order 86 is different, but summary judgment cannot
be given without notice to the defendant: Ord. 86, rr. 1(2), 2(3). Until a
defendant has been served, a plaintiff cannot apply for an order that he
make an interim payment: Ord. 29, r. 10(1).
It would of course be wrong to suggest that the court has no jurisdiction
to make orders against a person until he has been served. Mareva
injunctions, Anton Piller orders and other injunctive orders may be and
very regularly are granted and made before service. But they may also
be granted and made before issue, a practice authorised by the rules in
cases of urgency on terms providing for the issue of proceedings (Ord.
29, rr. 1(3)), and this practice also is very regularly followed. Where a
defendant has not acknowledged service, his right to apply for various
orders of this kind is restricted: Ord. 29, rr. 2(6), 3(5), 4(2).
In In re Evans [1893] 1 Ch. 252, 264 Lindley L.J. considered that a
defendant had become a party on service. This is certainly the law in
respect of additional defendants (Ord. 15, r. 8(4); Ketteman v. Hansel
Properties Ltd. [1987] A.C. 189) and third parties (Ord. 16, r. 1(3)). In
the analogous field of arbitration, where service out of a court office is
for obvious reasons inappropriate, the arbitration is treated as being
commenced on notice: Limitation Act 1980, section 34(3).
In Kloeckner & Co. A.G. v. Gatoil Overseas Inc. [1990] 1 Lloyd's Rep. 177,
201, Hirst J. cited Stroud's Judicial Dictionary, 5th ed. (1986), for the
proposition that a legal proceeding is "pending" as soon as commenced
and until concluded, i.e. so long as the court having original cognisance of
it can make an order on the matters in issue, or to be dealt with, therein.
This proposition was based on old Star Chamber authorities, but is said to
have been applied in New Zealand and Canada. It does not seem to me
very satisfactory if treated as applying to issue alone. While, as already
noted, the court's powers to make orders is greater after issue than
before, the court does not lack power to make orders even before issue
and if it does so the terms imposed will in practice relate not only to issue
but to service also.
Even if an action is pending on issue of proceedings, it is necessary to
consider if it is "definitively" pending. The European Court did not in my
opinion use this adverb, defined by the Oxford English Dictionaryto mean
"so as to decide or settle the matter; decisively, conclusively, finally,
definitely" by way of mere rhetoric. The Commission submitted to the
court in Zelger v. Salnitri (Case 129/83) [1984] E.C.R. 2397, 2403-2404:
"Since the bringing of an action often extends over a certain period
of time (the lodging of the document initiating the proceedings at the
registry of the court and the subsequent service thereof on the defendant)
the question also arises whether article 21 of the Convention refers to
the definitive institution of proceedings or to some earlier stage, for
example the time when the document is lodged with the court.... It would
seem to be justified to displace jurisdiction which exists by virtue of
the provisions of the Convention only if proceedings have already been
instituted before the court of another contracting state and have resulted
in that court's being seised thereof definitively. As long as that court
is not seised definitively it is not clear whether those proceedings will
actually take their course. Thus, for example in German procedural law
an application may simply be withdrawn before service on the defendant
without that amounting to a formal discontinuance of the proceedings.
Furthermore, it must not be forgotten that the defendant does not, as
a general rule, have any knowledge of the fact that proceedings have
been instituted against him before the document initiating them is served
upon him and that in those circumstances he cannot yet raise the plea of
lis alibi pendens. For that reason the moment at which the proceedings
are definitively instituted must be retained as the deciding factor for the
purposes of article 21 of the Convention."
It seems likely to me that the court had these submissions in mind when
it formulated its judgment as it did. In using the term "definitively" the
court may also have intended to reflect this part of the opinion of Mr.
Advocate General Mancini, at p. 2415:
"It seems to me that to establish a link between a lis pendens and
a procedural step preceding service of the document initiating the
proceedings runs the risk of undermining the possibilities of defence
open to the defendant from two points of view. In the first place, because
he is unaware that proceedings have been initiated against him before
another court, he cannot raise the plea of lis alibi pendens in time and
therefore take prompt action to ensure that the case is heard by the
court first seised; secondly, because the rights of the defence would
also be undermined because the mere lodging by the plaintiff of the
document initiating the proceedings would prevent the defendant, even
before that document had been served on him, from taking proceedings
before another court which also had jurisdiction. Thus, article 21 only
permits solutions which do not cause a lis pendens to arise before
service. Obviously, that does not prevent the moment at which a lis
pendens arises from being shifted to a later stage (such as, at the time of
registration on the roll: article 29 of the Belgian Civil Code)."
Given the novelty of this problem, pre-1987 authority is unlikely to be
of very much help. But there are indications that in some situations
an action has been treated as pending only upon service. In Ray v.
Sherwood(1836) 1 Curt. 173 both Dr. Lushington, at p. 183, and Sir
Herbert Jenner, at p. 221, relying on civil law authorities, treated a lis as
pending when the citation was served. In The Helenslea (1881) 7 P.D. 57,
60, Sir Robert Phillimore, also perhaps influenced by civil law principles,
observed:
"Two suits can only I think be consolidated after each of them has become
a lis pendens; and it is clear that a suit in personam does not become a lis
pendens until after service of the writ of summons."
In In re Foseco International Ltd.'s Patent [1976] 2 F.S.R. 244 Whitford
J. had to resolve an issue under section 33(1) of the Patents Act 1949.
That section enabled a person who had not opposed the grant of a patent
to apply to the comptroller within a limited period for its revocation, but
there was a proviso:
"that when an action for infringement, or proceedings for the revocation,
of a patent are pending in any court, an application to the comptroller
under this section shall not be made except with the leave of the court."
Infringement proceedings were issued on the same day that application
for revocation was made to the comptroller. The question was whether the
revocation application was barred without leave because the infringement
proceedings had become pending at the time of issue. The patentees'
argument was not very meritorious, because they had acquiesced in the
revocation proceedings. Whitford J. held that it was also wrong in law. He
said, at pp. 250-251:
"the question remains as to whether or not, on the mere issue of a writ,
the proceeding shall be held to be a proceeding pending. Upon the issue
of the writ, there is no need for the plaintiffs to do anything further. They
can put it in their pocket and walk around with it for such period as it may
remain an effective instrument. They may in due course secure some
renewal of their interest under a writ originally issued but not served
within the period prescribed by the rules, and so it may lie in their pockets
unknown for a considerable period of time. Once the writ is served, of
course, they are in this position that they must either proceed with the
action or discontinue their proceedings or face the possibility that they will
be forced to face an application to have their proceeding dismissed by the
party against whom they are bringing the proceeding.
"It seems to me to be quite plain that the provision in section 33 in
designed to secure this: that there shall not be running in the court
and in the office proceedings relating to the validity of one and the
same patent, without the leave of the court. Although it is attractive to
argue, as counsel for the patentees did, that once the proceeding has
been commenced (as it necessarily has by the issue of the writ) it must
thereafter be held to be a pending proceeding for the purposes of this
particular provision, it does not seem to me that it would be sensible so to
hold. If one were, in fact, so to hold, curious consequences might result. A
writ could be issued and held in the issuer's pocket for months, or indeed
years, without anybody knowing about it; and, at any moment – upon
an application to amend, for example under section 29 [of the Patents
Act 1949] – the applicant might be faced with this position: that it will
be said a proceeding is pending merely because a writ has been issued,
even though it may be that the person issuing the writ never even had
any intention to serve it.
"I do not think, for the purposes of the subsection in question, that it
would be sensible to consider proceedings as pending until the writ has
been served – until that step has been taken – which at least is going
to ensure that there is a dispute before the court to which there are two
parties who are both on notice as to the existence of the dispute. If that
be right, then of course the answer is that the belated opposition was
undoubtedly started before the writ was served, and therefore it can
stand."
We were referred, lastly, to a decision of Sheen J. under the Convention
in an action in rem: The Nord Sea [1989] 1 Lloyd's Rep. 388. In his
judgment in that case the judge recognised, at p. 390: "powerful support
for the view that in England the court is seized of jurisdiction in an
action in personam from the moment when a writ is issued." But he
distinguished an action in rem and held, at p. 391:
"It seems to me that the court cannot be seised of an action in rem until
the plaintiff has not only made up his mind as to which ship he will arrest,
but also has either served the writ upon the ship or arrested the ship."
He repeated, at p. 392: "In my judgment, the court is seised of an action
in rem from the moment, whichever is the earlier, of service of the writ
or of arrest of the ship." Most of the judge's reasoning related to the
features peculiar to an action in rem, but in the result he regarded service
as the moment of seisin unless there had already been an actual exercise
of jurisdiction.
Although (as recognised in Zelger v. Salnitri [1984] E.C.R. 2397) practice
on the Continent of Europe varies from country to country, Mr. Leggatt
accepted that courts in those countries would not ordinarily regard
themselves as seised of proceedings until (at earliest) the proceedings
had been actually served on and thus brought to the attention of the
defendant. But he pointed out that service and notice were not in all
cases coincident. Thus under Dutch procedure, for example, a defendant
resident abroad is treated as served when a copy of the proceedings
is served on the officier van justitie for the issuing court, and French
procedure provides in similar circumstances that service is complete when
the huissier delivers the proceedings to the minist re public. While grateful
to be told of these departures from the ordinary rule, it does not affect
my conclusion. We are concerned to analyse and apply English procedure,
and we will review that of other countries only when an issue under the
Convention falls to be decided. We must then accept their interpretation
of their procedural law. It may, however, be that in other countries as
well as this procedural rules will call for reconsideration in the light of the
Convention.
Mr. Leggatt urged that it would be contrary to the ratio of the
Zelgerdecision to force English procedure into a straitjacket of European
design. I agree. But procedural idiosyncrasy is not (like national costume
or regional cuisine) to be nurtured for its own sake and in answering the
question before us we must have regard to the realities of litigation in this
country and the purpose of the Convention, not to tradition, nomenclature
or rules developed for other purposes. Despite the length of my approach
to it the question is, at root, quite a short one.
With genuine respect to the contrary opinions of Hirst J. and Hobhouse
J., it is in my judgment artificial, far-fetched and wrong to hold that the
English court is seised of proceedings, or that proceedings are decisively,
conclusively, finally or definitively pending before it, upon mere issue of
proceedings, when at that stage (1) the court's involvement has been
confined to a ministerial act by a relatively junior administrative officer;
(2) the plaintiff has an unfettered choice whether to pursue the action and
serve the proceedings or not, being in breach of no rule or obligation if
he chooses to let the writ expire unserved; (3) the plaintiff's claim may
be framed in terms of the utmost generality; (4) the defendant is usually
unaware of the issue of proceedings and, if unaware, is unable to call on
the plaintiff to serve the writ or discontinue the action and unable to rely
on the commencement of the action as a lis alibi pendens if proceedings
are begun elsewhere; (5) the defendant is not obliged to respond to the
plaintiff's claim in any way, and not entitled to do so save by calling on
the plaintiff to serve or discontinue; (6) the court cannot exercise any
powers which, on appropriate facts, it could not have exercised before
issue; (7) the defendant has not become subject to the jurisdiction of the
court.
It would be wrong, at this early stage in the life of the Convention (in
so far as it affects the United Kingdom), to attempt to formulate any
rule which will govern all problems which may arise in the future. I
am, however, satisfied that the English court became seised of these
proceedings, which first became definitively pending before it, when
the defendants were served on 13 July 1989. The plaintiffs and the
defendants then became bound by the Rules of Court to perform
the obligations laid on them respectively or suffer the prescribed
consequences of default. The defendants became subject to the court's
jurisdiction unless they successfully challenged or resisted it which they
were required to do then or not at all. In the ordinary, straightforward
case service of proceedings will be the time when the English court
becomes seised. I would, however, stress the qualification, because
that is not an invariable rule. The most obvious exception is where an
actual exercise of jurisdiction (as by the granting of a Marevainjunction
or the making of an Anton Piller order or the arrest of a vessel) precedes
service: plainly the court is seised of proceedings when it makes an
interlocutory order of that kind. Further exceptions and qualifications
may well arise in practice, but they do not fall for consideration in this
case. I would accordingly answer this important second question in the
defendants' favour.
The expert evidence of Dutch procedural law did not enable the judge
to determine when, as a matter of Dutch law applied to the facts here,
the Rotterdam court became seised of the limitation proceedings (if it
ever did). This did not matter. Since the judge held that the English court
became seised on issue, and since at that time no proceedings of any kind
were on foot in Rotterdam, it naturally followed that the English court was
first seised and that the judge had no discretion to exercise under article
22. The judge did not therefore have to give a precise answer to the third
question posed above.
The differing answer I have given to the second question, however,
makes necessary a precise answer to the third question, without which
it cannot be decided which was the court first seised and whether the
judge had a discretion or not. It is agreed between the parties that the
material before the court does not enable us, any more than the judge, to
resolve that third question and that, if the defendants' argument on the
second question succeeds (as it has), the case must be remitted to the
Commercial Court for resolution of that issue.
I would accordingly allow the defendants' appeal on this second ground
under article 22, and order that the case be remitted to the Commercial
Court for decision of the question whether the Rotterdam District Court
was seised of related proceedings before these English proceedings were
served on the defendants. If Hobhouse J. were available to decide this
remaining question, it would doubtless save the time and expense which
would be involved in any other judge familiarising himself with the case.
JUDGMENTBY-2: RALPH GIBSON L.J
JUDGMENT-2:
RALPH GIBSON L.J: I agree that, on the first ground, the appeal should
be dismissed for the reasons given by Bingham L.J. I share his reluctance
at being driven to that conclusion, and would express my own regret on
the ground that the doctrine of bailment on terms is, as Bingham L.J. has
explained, a pragmatic legal recognition of commercial reality but, on the
terms of article 17, that is not sufficient.
As to the second ground, based on article 22 of the Convention, I
recognise that the question is one on which English lawyers will differ but
I have no doubt that, for the reasons given by Bingham L.J. this appeal
should be allowed.
Hobhouse J. held that the argument of the defendants failed to recognise
"the authority of the Zelger case." I do not think that is right. It seems
to me, with respect, that the error in the approach of Hobhouse J. and of
Hirst J. in Kloeckner & Co. A.G. v. Gatoil Overseas Inc. [1990] 1 Lloyd's
Rep. 177, is the assumption that there was residing in English procedural
law, before the enactment of the Convention as part of our law, any
rule or principle which demonstrates that, upon the issue of a writ, the
proceedings which are thereby commenced are "definitively pending" or
have been "definitively brought" within the meaning of those phrases as
applied by the European Court of Justice to the construction of article 22
of the Convention. The procedural law of this country had no occasion
to address that question until the Convention was enacted by the Act of
1982. Professor Schlosser was accurate in reporting that in this country
proceedings become pending as soon as the originating document has
been issued but that statement was accurate only in some contexts, as for
the purposes of limitation of action, and not in all, as reference to In re
Foseco International Ltd.'s Patent [1976] 2 F.S.R. 244 demonstrates. The
European Court of Justice held in Zelger v. Salnitri [1984] E.C.R. 2397
that the court first seised, for the purposes of article 22, is:
"the one before which the requirements for the proceedings to become
definitively pending are first fulfilled, such requirements to be determined
in accordance with the national law of each of the courts concerned."
That decision acknowledges that this court has both the right and
the obligation to decide that question having regard to the proper
construction of the Convention in the light of its purposes in accordance
with the proper understanding of our own procedural law. In the ordinary
case, at the stage where there is no more than the issue of the writ, by
the administrative act of a court official at the instance of the plaintiff,
without any judicial consideration of the case, I agree that proceedings
in this country cannot be regarded as "definitively pending" for the
purposes of article 22. In such a case, and in the absence of any other
proceedings before service which may be held to cause the proceedings
to be definitively pending, I would hold that the proceedings become
definitively pending for the purposes of article 22 upon service of the writ
for the reasons given by Bingham L.J.
I therefore agree that the appeal should be allowed and an order made as
proposed by Bingham L.J.
JUDGMENTBY-3: SIR STEPHEN BROWN P
JUDGMENT-3:
SIR STEPHEN BROWN P: I have had the advantage of reading the
judgment of Bingham L.J. in draft and I agree that the first limb of the
defendants' appeal should be dismissed for the reasons which he gives.
I further agree that the proceedings in this country cannot be regarded
as being "definitively pending" for the purposes of article 22 of the
Convention until service of the writ. I therefore agree that the appeal
should be allowed on the second ground.
I further agree that the case should be remitted to the Commercial Court
for further consideration as proposed by Bingham L.J.
DISPOSITION:
Appeal allowed with costs.
Leave to appeal refused.
Case remitted to Commercial Court for consideration of Dutch law.