CLARKE J: There are a number of applications before the Court. The
principal questions raised for determination are these:
1. What is the true construction of cl 25 of a contract between the
plaintiffs, U Ltd and B SA on the towcon form?
2. If B is in breach of contract in commencing or continuing its proceeding
against Uin South Africa, should this Court grant an injunction restraining
it from continuing them?
Background
The litigation between U and B arises out of the loss of B barge BOS 400
on June 26, 1994 when she stranded in South African waters after the
towline by which she had been attached to the tug Tigr parted. B is a
company domiciled in France. The second defendants ("the insurers")
were the insurers of the barge and are also domiciled in France. U is a
Bermudan company managed from the Netherlands. By two consecutive
supplytime charter-parties dated Feb 15, 1993 and Feb 8, 1994 U time
chartered the tug from a former Azerbaijan government body, namely C.
Department.
There is some doubt as to who were the owners of the tug at the time
of the casualty. In English proceedings commenced by B it has named
four different candidates as the first to fourth defendants, including
the Republic of Azerbaijan As I understand it B intend to claim against
whichever entity or entities either owned the tugs or employed the master
and crew. For present purposes it is for the most part convenient to
describe those defendants as C.
Any claim by the insurers derives from that of B. It is not suggested that
any distinction should be drawn between them for the purposes of the
determination of any of the issues on these applications. I shall therefore
make no further reference to the position of the insurers.
The tug was hired by B from U under a contract which was made in
Paris on May 26, 1994. It was on towcon terms. It is common ground
that the BIMCO towcon form is an internationally recognized contract
used worldwide by professional tug and offshore organizations. Part II
of towcon contains a number of standard terms including cl 18, which
regulates the liabilities of the tug-owner on the one hand and the hirer
on the other, cl 19, which is a Himalaya clause and cl 25, which is a
jurisdiction clause to which I shall return.
The barge left the Congo under tow by the tug on June 5, 1994. She
grounded on June 26 after the towline had parted. On June 30 B issued a
writ in rem in the Supreme Court of South Africa against the tug claiming
damages in the sum of French Fr 450,000,000. On July 25 the Supreme
Court made an attachment order ad fundandam jurisdictionem or ad
confirmaridam jurisdictionem in in personam proceedings brought by
B against "the owner of the m/t TIGR" and U. The order directed the
attachment of the tug as security for the claim against the tug-owner
and the attachment of the bunkers on board the tug as security for the
claim against U. The order was an attachment order nisi. B subsequently
withdrew its action in rem.
U and C asserted from the outset that the proceedings in South Africa had
been commenced in breach of cl 25, of towcon. C said that it could rely
upon the clause by reason of the terms of cl 19. However no application
to stay or set aside the proceedings was made by either C or U at that
time, although as I understand it such an application could have been
made. Instead U sought to set aside the attachment order on the ground
that it was not the owner of the bunkers so that there was no relevant
property which could be attached by B in support of its claim. On Dec 13,
1994 Mr Justice Farlam rejected U's submissions as to ownership (see
post p 153) and on Aug 18, 1995 U’s appeal to the Supreme Court was
dismissed.
In the meantime U gave a notice of intention to defend without prejudice
to jurisdiction on Mar 9, 1995. On May 22 C served a defence in South
Africa and on the same day it served a special plea in which it asked
the Court to decline jurisdiction on the ground that it was entitled to the
benefit of the English exclusive jurisdiction clause in cl 25 of the towcon
between B and U.
On May 25 B issued a writ indorsed with a statement of claim in England
in action 1995 Fo 907 against the four C entities and U. The only reason
that B did so was to avoid C or U being able to argue that its claim was
barred and its rights extinguished under cl 24 of towcon if the South
African Court should decline jurisdiction. I accept the evidence that B
had at all times wanted to proceed in South Africa. On June 22 U issued
the writ in this action claiming inter alia an injunction restraining B from
continuing with its proceedings against U in South Africa. On Aug 22,
which was just after its appeal on jurisdiction in South Africa had been
dismissed, U issued these applications. On Aug 23 leave was granted for
service of the writ in action 1995 Fo 907 upon U out of the jurisdiction. On
Sept 11 it was served on M who had received authority from U to accept
service. On Sept 21 Mr Justice Longmore granted leave to serve the writ
out of the jurisdiction on the C parties. At some later stage service of the
writ was acknowledged by solicitors for all the C parties other than the
Republic of Azerbaijan.
In the meantime on Sept 12 B issued a writ in an Admiralty action in
personam in South Africa against T Ltd trading as P, which is a South
African company which acts as the port authority in Cape Town. The writ
alleges negligence on the part of P. On Sept 13 B issued a summons
under RSC, 14A in this action seeking a determination by this Court of the
true construction of cl 25 of towcon on the facts of this case. On Oct 11
B served a reply to C's defence in South Africa. On Oct 18 Mr Hebden's
first affidavit was served on behalf of U in these applications. On Oct 27
U gave notice of application for a stay in South Africa. On Nov 20 and 22
respectively the first affidavits of Mr Crignton and Mr Dyason were served
on behalf of B in these applications.
On Nov 28 U served a defence and counterclaim in action 1995 Fo
907. On Nov 29 B served detailed particulars of its claim against P. On
Dec 4 the Supreme Court in South Africa ordered the sale of the tug,
presumably including the bunkers, although so far as I am aware the
tug has not yet in fact been sold. Also on Dec 4 the second affidavit
of Mr Dyason was served in this action. On Dec 5 U issued a writ in
a limitation action, action 1995 Fo 2415, in which (without admitting
liability) it claimed to be entitled to limit its liability under English law.
As I understand it that limit is £ 573,717.58. It has also constituted a
limitation fund in England. On Dec 11 B served a reply and defence to
counterclaim in this action.
These applications were due to come before the Court on Dec 18. In the
event however they did not, through no fault of either of the parties. On
Jan 5, 1996 Mr Hebden's second affidavit was served. At that time it was
thought that these applications would be likely to be heard at the end of
February. On Jan 12 B obtained a hearing date for U's application for a
stay in South Africa, namely Feb 6. They did so without the consent of
tisol. On Jan 22 U obtained a date for the hearing of these applications.
They did so without the consent of B.
On Jan 25 P obtained an attachment order nisi in South Africa in respect
of the tug and her bunkers in order, as Mr Dyason puts it in his third
affidavit sworn on the same day, to confirm the Court's jurisdiction in
respect of P's claim for contribution against C and U respectively if it
should be held liable to B. On Jan 26 (which was last Friday) B applied
for an adjournment on various grounds, including that it would or might
not be able to adduce further evidence from Mr Dyason in reply to Mr
Hebden's affidavit, that it would be preferable to await the outcome of
the stay application in South Africa on Feb 6 and that U had (as it were)
jumped the gun in obtaining a hearing date in England.
I reached the conclusion that it would be more sensible for these
applications to be heard as scheduled on Jan 29, which was of course
Monday of this week. I did so because it seemed to me that it was
appropriate for this Court to take the responsibility of construing cl
25 of towcon, which is expressly governed by English law. Although it
was suggested to me that in reaching a conclusion upon the correct
application of the clause to the facts of this case it would be necessary
to investigate the true nature of the proceedings in South Africa, it did
not seem to me that that was so. If I had thought that it was necessary I
might have reached a different conclusion. As it has turned out, it has not
proved necessary to do so. Further it seemed to me that it was likely that
it would be possible for Mr Dyason to respond to Mr Hebden's evidence
and so it has proved. Although I indicated on Friday that I would give B
an opportunity to adduce further evidence later this week if necessary, it
has not sought to do so. Finally I reached the conclusion that both parties
were responsible for a certain amount of manoeuvring for position and
that since the Court was able to proceed on Monday it was sensible to do
so. In reaching that conclusion I did not intend (and do not now intend)
any disrespect to the Supreme Court in South Africa, which is held in the
highest regard in this Court.
Clause 25 of towcon
Clause 25 provides as follows:
Law and Jurisdiction.
This Agreement shall be construed in accordance with and governed
by English law. Any dispute or difference which may arise out of or
in connection with this Agreement or the services to be performed
hereunder shall be referred to the High Court of Justice in London.
No suit shall be brought in any other state or jurisdiction except that
either party shall have the option to bring proceedings in rem to obtain
conservative seizure or other similar remedy against any vessel or
property owned by the other party in any state or jurisdiction where such
vessel or property may be found.
It is common ground that all the claims made by B against U are claims
which fall within the classes of dispute or difference referred to in the
second sentence of the first paragraph of the clause. It follows that the
parties have agreed that those claims "shall be referred to the High Court
of Justice in London". However it is submitted by Mr Gault on behalf of B
that the first paragraph of the clause must be construed in the light of and
subject to the second paragraph and that B was entitled to commence
and is entitled to continue its proceedings in South Africa.
It was at one time suggested on behalf of U that the commencement of
the proceedings in South Africa which led to the order of Mr Justice Scott
on July 25, 1994 attaching the bunkers ad fundandam vel confirmandam
jurisdictionem was a breach of cl 25. That was in part at least upon the
ground that the purpose of such proceedings, which cannot be brought
if the defendant submits to the jurisdiction, is to found jurisdiction. That
suggestion is contained in Mr Hebden's second affidavit and is based upon
the opinion of two South African lawyers. In his fourth affidavit Mr Dyason
says that in his opinion that view is wrong, or at least too restrictive,
because the purpose of such proceedings is twofold, namely both to found
jurisdiction and to obtain security.
For the purposes of this application I shall assume that Mr Dyason's
opinion is correct. Although there appears to me to be much to be said
for that opinion, it is not necessary or desirable for me to express a
concluded view upon it. In any event I do not understand Mr Glennie
now to submit that the mere commencement of those proceedings was a
breach of cl 25, unless perhaps there is now no method of discontinuing
those proceedings while retaining the security.
It is common ground that, like any clause in a contract, this clause must
be construed in its context, which means that it must be construed in
the context of the contract as a whole set in its factual matrix or against
its surrounding circumstances. Those include the fact already mentioned
that the towcon is a contract drafted or approved by BIMCO which is in
worldwide use by many of those engaged in international towage. Thus it
is likely that neither the parties nor the events will have any connection
with England. In this case the towage was from the Congo to South
Africa. Mr Glennie submits that when construed in their context both the
wording and the purpose of the clause lead to the conclusion that it was
agreed that any relevant dispute on the merits must be referred to the
High Court in England, that no suit to determine the merits was to be
brought elsewhere but that either party could bring a suit elsewhere in
order to obtain security for its claim on the merits in England.
He submits that the distinction between the jurisdiction of a Court on the
merits and the jurisdiction of a Court for the provision of security I is well
recognized. In that regard he has drawn my attention to Petromin SA v
Secnav Marine Ltd, [1995] 1 Lloyd's Rep 603 per Mr Justice Colman at
p 613, where the Judge relied upon a passage from the judgment of Mr
Justice Brandon in The Rena K, [1978] 1 Lloyd's Rep 545 at p 559; [1979]
1 QB 377 at p 404, where he said:
The choice of forum for the determination of the merits of a dispute is one
thing. The right to security in respect of maritime claims is another. This
distinction has been recognised and given effect to by the way in which
the Court has exercised its discretion in foreign jurisdiction clauses and
vexation cases.
I accept Mr Gault's submission that neither Mr Justice Brandon nor Mr
Justice Colman was considering the true construction of a clause in a
contract like the towcon, but in my judgment they were both recognizing
the distinction which Mr Glennie seeks to make.
I accept Mr Glennie's construction of the clause. It seems to me to be
clear from the words used in the second paragraph that the only suits
permitted by the clause otherwise than in England are those to obtain
security. Thus proceedings in rem are permitted "to obtain conservative
seizure". As I see it, that means that they are permitted for the purpose
of "saisie conservatoire" or "conservative seizure" but not otherwise. The
expression "or other similar remedy", when construed in its context, must
mean "or other remedy similar to conservative seizure". Thus proceedings
are permissible in any jurisdiction for the purpose of obtaining security
for a claim but not otherwise. What are not permitted are proceedings on
the merits because they "shall be referred to the High Court of Justice in
London". That construction of the clause makes perfect sense. It makes
the same distinction as is drawn in the two cases referred to above and,
more importantly it gives meaning to the expression --
... any dispute or difference... shall be referred to the High Court of
Justice in London...
in the first paragraph of the clause.
So far, for example, as I see it, if the provisions of the first paragraph
of the clause provided for the dispute to be referred to the Courts of,
say, South Africa and a party arrested a ship in an action in rem in
England, that would he permissible and would not be a breach of the
clause provided that that party did not thereafter seek to have its claim
determined on the merits in England. In my judgment that would be so
even though in order to arrest the ship it is necessary to assert a claim
on the merits within the Admiralty jurisdiction of the Court. It is now
common for vessels to be arrested and for the security so obtained to be
used for the purposes of, say, the enforcement of an arbitration award.
In the instant case, B has proceeded in South Africa and has obtained
security for its claim against U by obtaining an order for attachment of
the bunkers on the tug. On the assumption that Mr Dyason's evidence is
correct, one of the purposes of those proceedings was to obtain security
for its claim. That being so, it follows in my judgment that neither the
mere commencement of the proceedings nor the obtaining of the order
of attachment was a breach of the clause. However, the continuing of
the action in order to obtain a determination of B' claim against U on its
merits is or would be a breach of cl 25 because it is or would be a breach
of the agreement that --
... any dispute or difference... shall be referred to the High Court of
Justice in London.
Mr Gault submits that that construction is wrong. As I understand it
he submits that where a party brings proceedings for the purposes of
obtaining security which also involve a potential determination of the
claim on the merits he is not in breach of contract, either in commencing
the proceedings or in continuing with them to judgment on the merits.
He submits that the right to arrest a ship is an ancient and (as he puts
it) often very necessary right and that that right carries with it a right
to pursue the claim to a judgment enforceable against the ship. He says
that that is the position in England, subject only to the power of the
Court to stay the action in favour of arbitration or the Courts of another
State. He submits that there is nothing in the clause which deprives a
party of the right both to bring and continue such an action unless and
until it is ordered to be stayed. On the contrary he submits that the
second paragraph permits the bringing of such a suit and that there is
nothing in the clause which makes the continuation of a suit which is
validly "brought" within the meaning of the clause impermissible. He
thus submits that on the facts of this case, when B "brought" the suit
by commencing the attachment proceedings, it was permitted to do so
by the clause and there is nothing in the clause which prohibits it from
continuing with the suit to judgment on the merits.
In my judgment, while that argument has a logical attraction, it gives
too narrow a meaning to the word "brought". Moreover it offends what to
my mind is the central purpose of the clause, namely the agreement that
disputes must be determined on their merits in the chosen jurisdiction
but that it is permissible to take proceedings for security elsewhere.
It is also inconsistent with the word "shall" in the first paragraph. The
only proceedings which are permissible elsewhere are those brought
for the purpose of obtaining security. The word "brought" should not be
construed as meaning merely "commenced" but as including commenced
and continued.
It is suggested that there may be a practical difficulty in such a
construction. In my judgment there is no such difficulty. As the two cases
referred to above show, it is commonplace for security to be obtained in
one jurisdiction in order to meet a judgment in another. That is the whole
purpose of many a "saisie conservatoire". I do not understand it to be
suggested on the facts here that there is no mechanism in South Africa
whereby the security which B has obtained by attaching the bunkers
there cannot be available to meet a judgment obtained in England as the
agreed jurisdiction, subject no doubt to any claims which others might
have over the bunkers. However, if there were no such mechanism, the
correct conclusion might be that the commencement of the proceedings
was a breach of the clause. In this connection I note in passing that
there is a procedure in South Africa (spoken of by Mr Hebden and not
I think gainsaid by Mr Dyason) whereby a plaintiff can obtain security
for proceedings in other jurisdictions. In any event, as appears below,
it appears to me that where, as here, a party to towcon has obtained
security, it is appropriate to grant any injunction only on terms that the
security will be available in the chosen forum. I would so hold even if the
security was obtained in breach of contract.
On the evidence before the Court I hold that commencement of the
attachment proceedings was not a breach of the towcon contract, but
that the continuation of the proceedings in order to obtain a judgment
in South Africa on the merits is or would be a breach of B' promise to
refer all its claims in these actions to the exclusive jurisdiction of the High
Court. I so determine under RSC, 14A. It was as I understood it agreed
between the parties that that question should be determined under RSC,
O 14A.
Injunction
The next question is whether the Court should grant an injunction
restraining B from continuing with its proceedings against U in South
Africa. In this connection, as I understand it, U is willing to agree that
the bunkers (or presumably their proceeds of sale) will be available for
the enforcement of any judgment of this Court to the same extent as in
South Africa. It is in my judgment important that the precise terms of
that agreement, which should I think be in the form of an undertaking to
the Court, should be clearly formulated.
Mr Glennie submits that the Court has no discretion whether or not to
grant an injunction by reason of art 17 of the Brussels Conventions (as
defined in s 1 of the Civil Jurisdiction and Judgments Act, 1982), which
have the force of law in the United Kingdom by reason of s 2 of that Act.
Alternatively he submits that an injunction should be granted because
there is no or no sufficient reason for not holding B to its bargain. I shall
consider those submissions in turn.
No discretion?
Article 17 provides, so far as material, as follows:
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 --...
Where such an agreement is concluded by parties, none of whom is
domiciled in a Contracting State, the courts of other Contracting States
shall have no jurisdiction over their disputes unless the court or courts
chosen have declined jurisdiction...
It is common ground that the contract in this case, including s 25,
satisfies the formal requirements of art 17. Mr Glennie submits that
the effect of the article is to exclude the jurisdiction of the Courts of
all States other than the agreed State. He submits that that is so both
under Community law and under English law by reason of s 2 of the
1982 Act. Mr Gault submits that the Convention is not concerned with
the jurisdiction of Courts of States which are not Contracting States
and that there is nothing in art 17 of the Convention which leads to the
conclusion that as a matter of English law the Courts of South Africa have
no jurisdiction on the facts of this case. He further submits that the Court
retains a discretion because it always has a discretion whether to grant
equitable relief.
I accept both Mr Gault's submissions. In my judgment art 17 was not
intended to exclude the jurisdiction of the Courts of non-Contracting
States in any circumstances. So for example, where two parties to a
contract both domiciled in a Contracting State agree that the Courts of
say England and New York are each to have non-exclusive jurisdiction, art
17 does not exclude the jurisdiction of the Courts of New York. The effect
of the article is simply to exclude the jurisdictions of other Contracting
States. Thus where in the first paragraph it says that --
... that court or those courts shall have exclusive jurisdiction...
it means exclusive jurisdiction as between the Courts in Contracting
States. That view is I think consistent with the decision and reasoning
both of the Court of Appeal in In re Harrods (Buenos Aires) Ltd, [1992]
Ch 72 and of Mr Justice Hoffmann in Kurz v Stella Musical GmbH, [1992]
Ch 196. It is also consistent with the views expressed by Professor Peter
Schlosser in pars 174, 176 and 177 of his report, to which the Court is
entitled to have regard by reason of s 3(3) of the 1982 Act.
Equally in my judgment the article does not exclude the jurisdiction of the
Courts of a non-Contracting State even where one of the parties proceeds
in the Courts of such a State in breach of an exclusive jurisdiction
agreement providing for the exclusive jurisdiction of the Courts of a
Contracting State. Whether such a party should be permitted to do so is
left to the application of the principles ordinarily applied by the relevant
Court, which in this case are the principles of the common law. That is
because the Convention is not concerned at all with the jurisdiction of the
Courts of non-Contracting States. In an article in (1990) 106 LQR 535 Mr
Lawrence Collins said this (at p 539):
But the states which were parties to the Convention had no interest
in requiring a contracting state to exercise a jurisdiction where the
competing jurisdiction was in a non-contracting state. The contracting
states were setting up an intra-Convention mandatory system of
jurisdiction. They were not regulating relations with non-contracting
states.
That passage was expressly approved by Lord Justice Bingham in In re
Harrods (Buenos Aires) Ltd at p 103. I would only add this. It seems to
me that if the draftsman of the Convention had intended to exclude the
jurisdiction of the Courts of non-Contracting States in any circumstances,
he would have done so expressly, especially in circumstances, for
example, where parties domiciled in a Contracting State had agreed
to submit their disputes to such Courts as well as to the Courts of a
Contracting State.
I recognize that that view is not universally shared, as is pointed out in
Dicey & Morris on The Conflict of Laws, 12th ed, vol 1 at p 402; and see
Cheshire and North, Private International Law, 12th ed at pp 333-334. I
understand that in In re Harrods (Buenos Aires) Ltd the House of Lords
referred to the European Court the question (inter alia) whether it is
inconsistent with the 1968 Convention for a Court in a Contracting State
to exercise a discretionary power to decline to hear proceedings brought
against a person domiciled in that State if the jurisdiction of no other
Contracting State is involved. The case was however withdrawn because it
was settled. Notwithstanding those doubts my conclusion is that there is
nothing in art 17 of the Convention to deprive the South African Courts of
jurisdiction in this case as a matter of English, or indeed Community, law.
I do not think the fact that art 17 extends to a case like this, where
only one of the parties is domiciled in a Contracting State, affects the
above conclusion because the purpose of the article is as I see it simply
to exclude the jurisdiction of the Courts of the other Contracting States
where parties (whether domiciled in a Contracting State or not) have
agreed to the exclusive or non-exclusive jurisdiction of the Courts of a
Contracting State: see Kurz per Mr Justice Hoffmann at p 203.
It follows from the above that in my judgment there is nothing in art 17
or the Convention as a whole to exclude the Court's discretion whether
to grant an injunction in circumstances such as these. However, even
if, contrary to my view, the Supreme Court of South Africa has no
jurisdiction to entertain B' claims as a matter of English law, this Court
nevertheless retains a discretion whether or not to grant an injunction.
Injunctive relief is a form of equitable relief and as such is discretionary.
There is nothing in the 1982 Act to lead to the conclusion that the position
is any different even in the case where a party is proceeding in a State
which has no jurisdiction under the Convention. Mr Gault draws attention
to the fact that s 49 of the 1982 Act expressly saves the Court's power
to stay, strike out or dismiss any proceedings on the ground of forum
non conveniens or otherwise, where to do so is not inconsistent with
the Convention, but that it does not save the Court's power to grant an
injunction. He submits with force that that is because there is nothing
in the Convention which would otherwise require the Court to grant an
injunction.
Further, even in a case where the relevant Court had no jurisdiction, there
might be other reasons personal to the plaintiff, such as delay, which
might lead to the conclusion that an injunction should not be granted.
Moreover in Continental Bank NA v Aeakos Compania Naviera SA, [1994]
1 Lloyd's Rep 505; [1994] 1 WLR 588, where the Court of Appeal held
that the Greek Court had no jurisdiction by reason of art 17, even if it
was the Court first seised within the meaning of art 21, it then considered
whether to exercise its discretion whether or not to grant an injunction
to restrain the prosecution of proceedings in Greece. It is true that the
point does not seem to have been argued, but there is no suggestion in
the judgment of the Court, which was delivered by Lord Justice Steyn that
the fact that the Greek Court had no jurisdiction meant that the Court was
bound to grant the injunction. At the conclusion of a passage headed "The
exercise of discretion under English law" Lord Justice Steyn said (at pp
512 and 598, where it is correctly reported):
Given the total absence of special countervailing factors, this is the
paradigm case for the grant of an injunction restraining a party from
acting in breach of an exclusive jurisdiction agreement.
In these circumstances I hold that on any view the Court retains a
discretion whether or not to grant an injunction restraining B from
continuing its action on the merits in South Africa.
How should the discretion be exercised?
The relevant principles have recently been restated in the Continental
Bank case and in The Angelic Grace, [1995] 1 Lloyd's Rep 87. In those
cases the Court of Appeal said in effect that in cases in which to pursue
proceedings elsewhere would be a breach of an agreement to refer a
dispute to the exclusive jurisdiction of the English Court, the Court should
not be reluctant to grant an injunction on the ground that to do so would
or might be thought to be an indirect interference with the exercise of
the jurisdiction of the Courts of another State. In The Angelic Grace Lord
Justice Leggatt cited with approval and followed the principles set out by
Lord Justice Steyn in the following passage from the earlier case (which
includes the sentence which I have already quoted):
In our view the decisive matter is that the bank applied for the
injunction to restrain the defendants' clear breach of contract. In the
circumstances, a claim for damages for breach of contract would be a
relatively ineffective remedy. An injunction is the only effective remedy
for the defendants' breach of contract. If the injunction is set aside
the defendants will persist in their breach of contract, and the bank's
legal rights as enshrined in the jurisdiction agreements will prove to be
valueless. Given the total absence of special countervailing factors this is
the paradigm case for the grant of an injunction restraining a party from
acting in breach of an exclusive jurisdiction agreement. In our judgment
the continuance of the Greek proceedings amounts to vexatious and
oppressive conduct on the part of the defendants.
Lord Justice Millett agreed with Lord Justice Leggatt. He said this (at p
96):
In my judgment, the time has come to lay aside the ritual incantation
that this is a jurisdiction which should only be exercised sparingly and
with great caution. There have been many statements of great authority
warning of the danger of giving an appearance of undue interference with
the proceedings of a foreign Court. Such sensitivity to the feelings of a
foreign Court has much to commend it where the injunction is sought
on the ground of forum non conveniens or on the general ground that
the foreign proceedings are vexatious or oppressive but where no breach
of contract is involved. In the former case, great care may be needed
to avoid casting doubt on the fairness or adequacy of the procedures of
the foreign Court. In the latter case, the question whether proceedings
are vexatious or oppressive is primarily a matter for the Court before
which they are pending. But in my judgment there is no good reason for
diffidence in granting an injunction to restrain foreign proceedings on the
clear and simple ground that the defendant has promised not to bring
them.
Lord Justice Neill agreed with both Lords Justices Leggatt and Millett and
expressly endorsed the views of Lord Justice Millett which I have quoted.
If follows from the above that the Court should not be reluctant to grant
an injunction on the ground that to do so might be thought to be an
interference with the exercise of a jurisdiction by a Court of competent
jurisdiction elsewhere. It would not be such an interference but merely
the enforcement of a contractual promise. If the situation were reversed
the English Court would not regard a similar injunction granted by
another Court as an unwarranted interference with its process. In these
circumstances I accept the submission that the Court should not be
reluctant to grant an injunction on the ground that an application for a
stay is pending in South Africa.
It does not however follow that an injunction should be granted. Lord
Justice Millett concluded as follows:
The jurisdiction is, of course, discretionary and is not to be exercised as
a matter of course, but good reason needs to be shown why it should not
be exercised in any given case.
The test of good reason is in essence the same test as that applied
where a stay of English proceedings is sought on the grounds of a foreign
exclusive jurisdiction clause: see eg The El Amria, [1981] 2 Lloyd's Rep
119 and The Nile Rhapsody, [1994] 1 Lloyd's Rep 383 and The Pioneer
Container, [1994] 1 Lloyd's Rep 593; [1994] 3 WLR 1. I recently tried to
apply those principles in Standard Chartered Bank v Pakistan National
Shipping Corporation, [1995] 2 Lloyd's Rep 365. I note in passing that
these principles appear to be the same as or very similar to those applied
in South Africa: mv Achilleus v Thai Insurance Co Ltd, [1992] 1 SA 324.
The question is whether there is good reason or, as Lord Justice Brandon
put it in The El Amria at p 123, strong cause why B should not be held
to its agreement to refer these claims to this Court. It is I think apparent
from the second passage from the judgment of Lord Justice Millett
quoted above that it is for the party in breach of the contract to persuade
the Court that there is a good reason or strong cause not to grant the
injunction. Lord Justice Brandon summarized the type of factors which
are or may be relevant on the facts of a particular case in The El Amria
at pp 123-124 and 128. However he emphasized that the Court should
take into account all the circumstances of the case. The various aspects of
the case may be shortly considered under a number of heads as follows.
I take them in a somewhat different order from Lord Justice Brandon
because of the particular circumstances here. In considering them I
assume throughout that B genuinely desires trial in South Africa and that,
subject to the limitation of liability point discussed below, it is not (as Lord
Justice Brandon put it) only seeking procedural advantage.
Parties
The parties to the contract are French and Bermudan managed from
Holland. The tug-owner is from Azerbaijan Portnet is South African, which
is a factor, but not by itself a powerful factor, in favour of South Africa.
Relative stages of proceedings in England and South Africa
While I accept the submission that the question of jurisdiction could have
been raised in South Africa earlier, I do not think that this is a factor
of much significance in favour of South Africa. It seems to me that this
action could now proceed equally well on the merits in either England or
South Africa.
Other proceedings
Mr Gault submits that if the injunction is granted there will be a
multiplicity of proceedings, whereas if it is refused there will not.
He submits that the authorities show that the risk of multiplicity of
proceedings is an important factor in favour of refusing a stay or (as here)
an injunction. He refers inter alia to The El Amria per Lord Justice Brandon
at p 128 and to the cases there cited. He also refers to the Standard
Chartered Bank case at pp 373 and 377, where I referred to The Abidin
Daver, [1984] 1 Lloyd's Rep 339 at p 344; [1984] AC 398, at pp 411-412
per Lord Diplock. In The El Amria Lord Justice Brandon went so far as to
describe the risk of separate issues being decided differently in England
and Egypt as "a potential disaster". I accept Mr Gault's submission
that the risk of multiplicity of proceedings and any consequent risk of
inconsistent decisions on the same facts is a potentially important factor,
although each case must depend on its own facts. I observe for example
that in The El Amria Lord Justice Brandon drew attention (at p 128) to
the fact that it was the defendants who had in effect blamed the Mersey
Docks and Harbour Board, whereas in the instant case B chose to sue
both Caspian and U from the outset and has subsequently sued P.
However that may be, the risk of multiplicity of proceedings on the facts
here in my judgment affords B its strongest ground for saying that there
is a good reason why it should not be held to its contract. It is necessary
to consider both C and P. B says that it will continue to proceed against
C in South Africa in any event, whatever the outcome of this application.
Mr Glennie submits that there is no reason for it to do so and that the
sensible course would be for B to proceed against C here. He further
submits that in any event it could do so if it wished and that it should not
be permitted to rely upon proceedings which it has chosen to maintain in
South Africa when it could perfectly well proceed against both U and C in
the agreed jurisdiction.
There is in my judgment considerable force in that submission. B could if
it wished proceed against both U and C here. It may have to if C succeeds
in persuading the English or South African Court that it is entitled to rely
upon cl 25 of towcon. It seems likely to me that if an injunction is granted
and B proceeds against U in England, C will make a similar application
either here or in South Africa. Although there is no direct evidence on
the point, it seems not unlikely that C is awaiting the outcome of this
application. It has always said that it wishes to rely upon cl 25. Without
in any way seeking to prejudge any such application by C, it seems to
me at present that if B proceeds against U in England, C will have strong
grounds for seeking an order either here or in South Africa that B should
proceed against it here too, whether or not its argument that it can rely
upon cl 25 succeeds.
That is because B has correctly recognized from the outset that its claims
against U and C raise very similar issues, especially if C is entitled to rely
upon the terms of towcon. Clause 18.2(b) provides inter alia as follows:
18. Liabilities
... 2. (b) the following shall be for the sole account of the Hirer without
any recourse to the Tugowner, his servants or agents, whether or not the
same is due to breach of contract, negligence or any other fault on the
part of the Tugowner, his servants or agents:
(i) loss or damage of whatsoever nature, howsoever caused to or
sustained by the tow...
B seeks to avoid the possible effect of that clause by alleging that
it entered into the contract in reliance upon various fraudulent
representations made by C and U as to the capabilities of the tug. In
particular it is alleged that fraudulent misrepresentations were made as
to the bollard pull, horsepower and turbocharger of the tug. It is said that
the contract was rescinded by B, as it was entitled to do. B thus claim for
damages in tort, although it advances an alternative claim for damages
for breach of particular terms in the contract. The allegations against C
and U are intimately connected and should be tried in the same forum.
There are also allegations of negligence in the precincts of the port to
which I shall return below in the context of the claim against P.
So far as the claims against U and C are concerned I see no reason why
they should not be pursued in England, given that B agreed to make
any claim against U on the merits in England. I say nothing as to what
the position might be in the absence of such an agreement. Indeed Mr
Glennie was not seeking an injunction if it was held that there was no
breach of the exclusive jurisdiction clause. In my judgment it is not just
that B should be able to say that it should not be held to its bargain
because it has a claim against the owners of the tug which it contracted
with U to hire in circumstances where it could if it wished proceed against
both tug-owner and time charterer in the agreed jurisdiction.
I turn therefore to the position of P. As stated above B has claimed
against P in South Africa and P has claimed contribution against U and C
and has obtained an attachment order nisi against tug and bunkers. It
makes various allegations of negligence against it with regard inter alia to
the entry of the tug and tow into the port and their safety while they were
there. As indicated above, B also makes allegations against U and C with
regard to the negligence of their servants or agents within the precincts
of the port. There is an undoubted overlap between these allegations and
it would be desirable (to put it no higher) that the allegations against
P should be tried at the same time and by the same tribunal as the
allegations relating to the same period against U and C.
There is a debate between the South African lawyers on the affidavits as
to whether the actions against P on the one hand and against U and C
on the other are likely to be consolidated. If the actions were proceeding
here I have no doubt that they would either be consolidated or an order
would be made directing that issues which overlapped should be tried at
the same time. Although I cannot of course say, it seems likely to me that
much the same would happen in South Africa. In these circumstances
Mr Gault submits that an injunction should be refused and all the claims
allowed to proceed in South Africa.
There is undoubted force in that point. However Mr Glennie submits that
it is not at all clear that the claims against P will proceed in South Africa.
Alternatively he submits that there is no reason why B should not seek
leave both to add Pas a defendant in the action here and to serve it out
of the jurisdiction as a necessary and proper party. I see no reason why
it should not do so if the action proceeds here against both U and C, as it
will if B complies with its contractual obligations under cl 25.
The question would then arise whether P would seek to set aside such
service on the ground that the forum conveniens for a claim against
it is South Africa. There would plainly be strong arguments in favour
of such a course, viewed solely from P's perspective. Curiously at that
stage, if an injunction is granted now, the question would be whether
such an application should be granted even though it would have the
effect of creating more than one set of proceedings. Mr Gault submits
that it is likely that Pt would make such an application if it were joined
here because it is a South African company and all the allegations against
it relate to events in South Africa. He submits that I should not permit
such a situation to arise in the future by refusing an injunction now. Mr
Glennie submits on the other hand that there is no evidence what P might
do in such a case and that I should not speculate. He also submits that
the claim against P is something of a make-weight having only been
commenced in September, 1995 shortly after this application was made.
It is the position of the claim against P which gives me the greatest cause
for concern because I do not accept the submission that the claim against
it is a makeweight. What may be called the P factor is certainly one
important consideration which weighs in the scales against the grant of an
injunction.
There is perhaps a countervailing factor, namely that U has commenced
limitation proceedings in England which B has not yet sought to stay.
Mr Glennie submits that those proceedings will continue in any event so
that there will be proceedings in England whether or not an injunction is
granted. However, I have doubts whether that is really so because, for the
reasons explained below, if all the actions on the merits proceed in South
Africa a limitation decree obtained in England may well be of no value
to U. I do not therefore regard this as a significant factor against South
Africa.
Law
It is common ground that the issues between B and U are to be
determined under English law. It appears to me that the natural forum
for the determination of such issues as arise is this Court, although I
recognize that the Supreme Court in South Africa regularly applies English
law and moreover that it does so after argument. There would be no
question of English lawyers giving evidence in South Africa, as Mr Justice
Farlam made clear. Nevertheless it is clear that both parties have English
lawyers who have been and will be assisting them with regard to the
relevant principles of English law whether any trial on the merits takes
place in England or South Africa. In all the circumstances it seems more
sensible for questions of English law to be determined here. It is with
regard to the misrepresentation aspects of the case that questions of law
are most likely to arise, although questions of South African law may arise
in the claim against P.
Evidence and witnesses
Mr Gault submits that there is a significant amount of evidence in South
Africa. There is undoubtedly a good deal of evidence there, since that is
where P is based, there are a number of allegations relating to events
within the precincts of the port and the casualty occurred there. On
the other hand the allegations of misrepresentation are not concerned
with South Africa, save with regard to damage to the turbocharger
of the tug and the actual bollard pull of the tug. Evidence relating to
the misrepresentations is to be found in Europe, as are many of the
experts for the parties. Thus I do not think that the whereabouts of the
evidence and the witnesses is a factor of any real weight in favour of the
submission that there is good reason or strong cause why B should not
be held to its contract. The same is I think true of the relative costs of
proceedings in London and Cape Town.
Limitation of liability
Mr Glennie submits that a strong reason for granting an injunction is
that if the merits are determined in South Africa there is a serious risk
that a different and less favourable regime of limitation of liability will be
applicable. He submits that in South Africa there is a serious risk that the
South African Court will apply the regime which is in force in South Africa,
namely that laid down by the Convention relating to the Limitation of the
Liability of Owners of Seagoing Ships, 1957 ("the 1957 Convention"),
whereas in England the Court will apply the provisions of the International
Convention of Limitation on Liability for Maritime Claims, 1976 ("the 1976
Convention"). The essential difference between the two regimes is this.
Under the 1957 Convention the limit of U's liability would be about £
80,000 (on the facts of this case) but only if it proves that the casualty
occurred without its actual fault or privity. Under the 1976 Convention,
if it can bring the case within art 2 of the Convention, the limit of U's
liability is £ 573,717.58 unless B proves that its loss resulted from U's
personal act or omission, committed with the intent to cause such loss or
recklessly and with knowledge that such loss would probably result. Thus,
although the limit is higher under the 1976 Convention it is very difficult
if not impossible to break the limit, whereas under the 1957 Convention
there are many examples of the limit having been broken because of the
difficulty of proving absence of actual fault and privity.
In South Africa B argues that the 1957 Convention applies and denies that
U can prove absence of actual fault or privity. It thus hopes to defeat U's
claim to limit its liability. U argues that the 1957 regime does not apply.
I cannot resolve that issue on this application. However, if the Supreme
Court were to take the same view as that which I formed in Caltex
Singapore Ltd v BP Shipping Ltd (The British Skill), [1996] 1 Lloyd's
Rep 286, it would apply South African law. There is in my judgment at
least a real possibility that it would do so. The same is true in the case
of Caspian. In England, if that decision is correct, the Court will apply
the 1976 Convention. There is however an issue between the parties as
to whether the case falls within art 2(1)(a). The question is whether the
claim is in respect of loss of or damage to property "occurring on board
or in direct connection with the operation of the ship". Again, I cannot
resolve that issue now, but in my judgment it is at least arguable (to put
it no higher) that it is.
Mr Gault submits that it is by no means clear that it will in the end be
to U's advantage to have the question whether it can limit its liability
governed by the 1976 Convention. I accept that that is so, but in my
judgment U's right to seek to limit its liability in accordance with the law
of the chosen forum and thus under the 1976 Convention is a potentially
very valuable right. That is because of the much greater risk that it will
be unable to limit its liability at all in South Africa, in which case it will
be exposed to a very large claim. I accept Mr Glennie's submission that
this is a right of which U should not lightly be deprived. It is true that U
has commenced limitation proceedings here, but if the claims proceed in
South Africa, it seems likely to me that there will be serious difficulties in
relying upon any limitation decree obtained here. If the Court in South
Africa applies the 1957 Convention to the facts of this case, it may well
not recognize a decree based upon the terms of the 1976 Convention.
In all the circumstances this seems to me to be a powerful factor in favour
of requiring U to be I sued here. That is I think so, even if there is a
risk of U facing contribution proceedings by P in South Africa, since they
depend upon P being liable to B. Moreover P is not a party to the contract
containing the exclusive jurisdiction clause whereas B is.
Conclusion
The ultimate decision in a case like this is always a matter of balance.
As stated above, it is the position of the claim against P, and indeed of
its contribution proceedings against U and C, which affords the strongest
reason for refusing to grant an injunction. However on balance I have
reached the conclusion that (at least on the present evidence) the P
factor, either alone or in conjunction with such of the other considerations
as point in that direction, is not sufficient to lead to the conclusion
that B should not be held to its contract. In the light of the contract,
it would not be just to require U to face a claim by B other than in the
agreed jurisdiction, where its right to limit will be governed by the 1976
Convention. If the action proceeds in England I would expect B to take the
sensible step of proceeding against the tug-owner in the same jurisdiction
at the same time. If it chooses not to do so, that is a matter for it and
provides no reason for allowing it to break its contract with U. If it also
seeks to join P, which it could do if it wished to avoid different sets of
proceedings, it is not at present shown what P would do or indeed what
would happen if leave to serve P out of the jurisdiction were granted
and P sought to set aside that leave. That situation would have to be
faced if it arose. On the evidence at present before the Court B has not
in my judgment discharged the burden which is upon it of showing good
reason or strong cause why it should not refer its claim to this Court, as it
contracted to do.
It follows that an injunction in appropriate terms will be granted provided
that U gives a satisfactory undertaking with regard to the availability
of the security which B has obtained by attaching the bunkers in South
Africa.