JUDGMENT
Lord Justice HOBHOUSE:
This is a further case in the series following on from the decision of the
Court of Appeal in The Deichland, [1989] 2 Lloyd's Rep. 113; [1990] 1
Q.B. 361. In that case the Court of Appeal held, reversing the Admiralty
Judge Mr. Justice Sheen ([1988] 2 Lloyd's Rep. 454) that an Admiralty
action in rem was, without more, capable of infringing art. 2 of the
Convention on Jurisdiction and the Enforcement of Judgments in Civil
and Commercial Matters, Brussels, 1968, (the "Judgments Convention")
but indicated that where a vessel has been arrested in accordance with
the International Convention Relating to the Arrest of Seagoing Ships,
Brussels, 1952, (the "Arrest Convention") the Admiralty Court would have
jurisdiction by virtue of art. 57 of the Judgments Convention. The United
Kingdom is a contracting party under both Conventions. Mr. Parsons, who
appeared for the appellants before us, has submitted that we should not,
in the present case, follow the dicta in The Deichland; Mr. Hirst, Q.C. who
appeared for the respondents on this appeal accepts that this Court is
bound by The Deichland but reserved the right, should the need arise, to
contend elsewhere that it was wrongly decided.
In December, 1990 A. H, flying the German flag, called at the port
of Swansea, South Wales, to load a cargo of steel coils pursuant to a
voyage charter-party dated Dec. 17, 1990 between British Steel Plc.
and brokers acting as agents for the owners of the vessel. The vessel
has, at all material times, been owned by a German domiciled company,
Partenreederei A. H, and was demise chartered to S. Shipping Co. Ltd.
(incorporated in Antigua and Barbuda) which also has German domicile.
The voyage charter-party was expressly governed by English law and
contained a London arbitration clause but this fact is not material to the
present case. At Swansea, 56 cold-reduced coils of steel were loaded
by British Steel on the vessel for carriage to Barcelona in Spain. The
master signed three bills of lading dated Dec. 21. These were on the
"Congenbill" form and were subject to the Hague-Visby Rules. They
named British Steel as the shippers and B. De M. of Barcelona ("BDM")
as the consignees and acknowledged shipment of the cargo on board
the vessel in apparent good order and condition. It appears that it was
raining in Swansea around the time that the cargo was loaded. The coils
got wet and were damaged. Cargo interests say that this happened
during the process of loading and stowing the cargo and is therefore
the responsibility of the ship; ship interests say that it happened before
loading and was not the fault of the ship or their servants or agents. At
Barcelona the coils out-turned damaged.
Cargo underwriters therefore caused a claim to be made in respect of the
damage and the German P. & I. Club with which the vessel was (and is)
entered disputed liability. Correspondence between the respective insurers
failed to resolve the dispute on liability and disclosed a further dispute as
to the forum which should decide the primary dispute.
It is against this background that on Sept. 19, 1991 Messrs. Richards
Butler of …, London E.C.3, as the solicitors for "The Owners and Demise
Charterers of the A. H" entered a caveat against the arrest of A. H. This
was done under R.S.C., O. 75, r. 6 which provides that:
(1)...a person who desires to prevent the arrest of any property must
file in the registry a praecipe in Form No. 5 in Appendix B, signed by him
or his solicitor, undertaking – (a) to acknowledge issue or service (as
may be appropriate) of the writ in any action that may be begun against
the property described in the praecipe, and (b) within three days after
receiving notice that such an action has been begun, to give bail in the
action in the sum not exceeding an amount specified in the praecipe or to
pay the amounts so specified into court; and on the filing of the praecipe
a caveat against the issue of the warrant to arrest the property described
in the praecipe shall be entered in the caveat book.
The praecipe lodged by Richards Butler read:
We, Partenreederei A. H, the Owners of the ship A. H and S. Shipping
Co Ltd, her demise charterers, both of …, 2361 Wittenborn, Germany,
request a caveat against the arrest of the ship A. H and hereby undertake
to acknowledge issue or service of the writ in any action that may be
begun in the High Court of Justice against the said A. H and, within three
days after receiving notice that such an action has been begun, to give
bail in the action in the sum not exceeding £90,000 or to pay that sum
into Court.
We consent that the Writ of Summons and any other document in this
action may be left for us at Richards Butler …, London.
The praecipe departed from the prescribed form in that it purported to
relate to proceedings between -
Cargo lately laden on this ship A. H and the Owners and Demise
Charterers of the ship A. H...
naming them respectively as the plaintiffs and the defendants, whereas
it should simply have described the property to which the caveat was to
relate. The rule does not restrict the persons who may enter a caveat
against arrest.
A caveat against arrest does not prevent the issue of a warrant to arrest
the property (O. 75, r. 6(2)); but where any property in respect of which
there is a caveat against arrest is nevertheless arrested, the caveator may
apply to the Court for an order that the warrant of arrest be discharged
and that the relevant party pay damages in respect of any loss suffered
by the caveator as a result of the arrest. (O. 75, r. 7) Such an order will
be made by the Court unless the party procuring the arrest satisfies the
Court that it had a good and sufficient reason for arresting the vessel or
other property.
Nothing turns in the present case upon the amount of the bail which the
caveators undertook to provide. It is accepted that, whilst falling far short
of the value of A. H, it was a sufficient sum to cover the cargo damage
claim in respect of the steel coils.
The lodging of the caveat against arrest was not the only step which the
shipowners and demise charterers took in September 1991. At about
the same time they took steps in Germany to initiate proceedings before
the German Courts against British Steel and BDM claiming declarations
of non-liability against them. What was the basis of that invocation of
jurisdiction against those parties before the German Courts and how it
is consistent with the provisions of the Judgment Convention has not
been made clear. The German proceedings were originally relied upon as
a ground for the British Court to decline jurisdiction or, at least, to stay
the English proceedings. That ground has now been abandoned since it
has been established that the German Court did not become seised of the
relevant matter until after the Admiralty Court had become seised.
On Oct. 3, 1991, British Steel and BDM issued a writ in rem in the
Admiralty Court against the ship or vessel A. H. The endorsement was in
the usual terms and claimed damages for breach of contract and/or duty
and/or negligence in and about the loading, handling, custody, care and
discharge of the relevant cargo on the relevant voyage. The identity of the
plaintiffs is disclosed by the inclusion of their addresses in their writ. The
writ is addressed to -
...the defendants and other persons interested in the ship or vessel A. H
registered in the port of Hamburg, Germany.
It continues:
This writ of summons has been issued by the plaintiffs against the
property described above in respect of the claim set out on the back.
The defendants are given as "the owners and/or demise charterers of the
ship A. H". Save for including a reference to the "demise charterers" as
well as to the "owners" of the ship, this writ followed the standard form.
The vessel was just about to visit British waters. The plaintiffs took steps
to procure the arrest of the vessel and to serve the writ upon her. On
applying for a warrant of arrest the plaintiffs discovered the existence
of the caveat against arrest. They nevertheless proceeded with the
arrest. The vessel was arrested on Nov. 11 and, on the instructions of
the plaintiffs, released from arrest about one hour later. On the same day
the plaintiffs' solicitors, pursuant to the undertaking given in the caveat,
delivered a sealed copy of the writ to Richards Butler by way of service on
the vessel and through them called upon the caveators to acknowledge
service and give bail in the action.
On Nov. 15 a bail bond was executed. It was headed with the title of the
Admiralty action and followed the prescribed form under R.S.C., O. 75, r.
16. It recited:
Whereas this Admiralty action in rem against the above mentioned
property is pending in the High Court of Justice and the parties to the said
action are the above mentioned plaintiffs and defendants...
It then gave the name and addresses of the insurers of the ship interests,
i.e. the German P. & I. Club in Hamburg and the Steamship Mutual in
Bermuda and continued by stating that they (that is to say the insurers)
submitted themselves to the jurisdiction of the Admiralty Court and
consented that -
...if they, the above-mentioned defendants, do not pay what may be
adjudged against them in this action with costs or do not pay any sum
due to be paid by them in consequence of any admission of liability
therein or under any agreement by which this action is settled before
judgment and which is filed in the said Court, execution may issue against
us.
for the amount unpaid up to the sum of £90,000.
On Nov. 15, pursuant to O. 75, r. 16, Richards Butler as solicitors for the
owners and demise charterers of the vessel gave notice to the plaintiffs'
solicitors that bail had been given by the insurers on behalf of the owners
and demise charterers of the vessel. It is to be noted that this was not
done under protest and that the bail was given in respect of any judgment
which might be given against the shipowners and demise charterers,
not against the ship. On Nov. 22, 1991 Richards Butler on behalf of "the
Owners and Demise Charterers of the ship A. H" (whom I will now refer to
collectively as the shipowners) acknowledged service of the writ in rem.
Thereafter there were further discussions between the parties'
representatives to see whether their differences could be resolved. In
November, 1992, when it was clear that they could not, the plaintiffs
served points of claim and on Nov. 19, 1992 Dres. Dabelstein & Passehl,
the solicitors now acting for the shipowners, served a notice of motion
asking:
1. That the service of the writ herein be set aside and/or that all further
proceedings herein be stayed;
2. That pursuant to Order 12 rule 8 the Court decline and/or declare
that it has no jurisdiction on the said defendants in respect of the
subject matter of the claim in the action herein on the basis of the Civil
Jurisdiction and Judgments Act 1982.
Two grounds were relied on. The first was that the shipowners and the
demise charterers were domiciled in the Federal Republic of Germany
and the claim did not fall within any of the exceptions contained in the
Schedule to the 1982 Act. The second ground was the now abandoned
allegation that the German Court was the Court first seised of the relevant
matter and a reliance upon art. 21 of the Judgments Convention.
The primary argument of the shipowners was that the plaintiffs had
no right to arrest the vessel under the Arrest Convention; secondarily
they argued that even if there was jurisdiction to arrest the vessel, the
Admiralty Court had no jurisdiction to determine the case upon its merits.
The plaintiffs, beside contesting the shipowners' arguments, submitted
that the shipowners had by the praecipe agreed to the jurisdiction of the
Admiralty Court for the purposes of art. 17 of the Judgments Convention
or had, by their appearance and by putting up bail, submitted to the
jurisdiction of the Admiralty Court for the purposes of art. 18. Belatedly
the plaintiffs also argued that they were in any event entitled to rely upon
one of the exceptions in art. 5 of the Judgments Convention.
There was no dispute that the plaintiffs' claim in the action came within
the jurisdiction of the Admiralty Court as defined in s. 20 of the Supreme
Court Act 1981:
The Admiralty jurisdiction of the High Court shall be...jurisdiction to hear
and determine...any claim for loss of or damage to goods carried in a
ship...
It also was not in dispute that the claim arose in connection with A. H and
that the person who would be liable on the claim in an action in personam
was, at the time the cause of action arose and at the time of the action
in rem was brought, the owner or charterer by demise of A. H and that,
under s. 21(4):
...an action in rem may (whether or not the claim gives rise to a maritime
lien on that ship) be brought in the High Court against that ship...
It similarly was not in dispute that the claim was a maritime claim
which gave a right to arrest the vessel for the purposes of the Arrest
Convention.
The motion came on before the Admiralty Judge, Mr. Justice Clarke. He
dismissed the motion. He held against the shipowners on the Arrest
Convention points. On the submission arguments, he followed The
Prinsengracht, [1993] 1 Lloyd's Rep. 41, holding against the shipowners
on the effect of the provision of the bail. He adjourned the point on art.
5 of the Judgments Convention for further argument on proper notice
should the need arise.
The shipowners have appealed to this Court with the leave of Mr. Justice
Clarke.
The Arrest Convention
This Convention was agreed to by the Contracting States, which included
the United Kingdom and the Federal Republic of Germany, with a view
to determining by agreement certain uniform rules of law relating to the
arrest of seagoing ships. Article 2 provides that:
...a ship flying the flag of one of the Contracting States may be arrested
in the jurisdiction of any of the Contracting States in respect of any
maritime claim, but in respect of no other claim.
"Maritime Claim" is defined in art. 1 and the requisite relationship
between the claim and the ship to be arrested is set out in art. 3. These
provisions are given effect to in ss. 20 and 21 of the 1981 Act. The scope
of the Convention is defined by the definition of the word "arrest" in art.
1(2):
"Arrest" means the detention of a ship by judicial process to secure a
maritime claim, but does not include the seizure of a ship in execution or
satisfaction of a judgment.
This is the provision upon which the shipowners rely for their primary
argument. They submit that the arrest of A. H in this action at the
instance of the plaintiffs was not "to secure" any claim; they did not need
to arrest her to obtain security; they arrested her to found jurisdiction.
Article 4 makes it clear that the arrest may only take place under the
authority of the Court or other judicial authority in the country of arrest.
Article 5 provides for the release of arrested vessels on provision of bail.
Articles 5 and 6 provide that all questions relating to the arrest are to be
decided in accordance with the law of the arresting country.
The jurisdiction of the arresting Court after the arrest is governed by art.
7:
(1) The Courts of the country in which the arrest was made shall have
jurisdiction to determine the case upon its merits if the domestic law
of the country in which the arrest is made gives jurisdiction to such
Courts, or in any of the following cases namely: (a) if the claimant has his
habitual residence or principal place of business in the country in which
the arrest was made; (b) if the claim arose in the country in which the
arrest was made;... (2) If the Court within whose jurisdiction the ship
was arrested has no jurisdiction to decide upon the merits, the bail or
other security given in accordance with Article 5 to procure the release
of the ship shall specifically provide that it is given as security for the
satisfaction of any judgment which may eventually be pronounced by a
Court having jurisdiction so to decide...
The shipowners' secondary argument is that, after the United Kingdom
became a party to the Judgments Convention and the passing of the
1982 Act, the "domestic law" of this country no longer gives jurisdiction
to the Admiralty Court to determine the case on its merits where the
party contesting liability is domiciled in another state also a party to the
Judgments Convention. They accepted that this argument only assisted
them in relation to BDM as British Steel would in any event come within
sub-par. (1)(a). The plaintiffs had an alternative argument (also accepted
by Mr. Justice Clarke) that BDM's claim came within sub-par. (1)(b). The
shipowners' submission was that the case fell to be dealt with under art.
7(2) and s. 26(1) of the 1982 Act.
The Judgments Convention
The primary purpose of this Convention is to give effect to art. 220 of the
Treaty of Rome and to secure the simplification of formalities governing
the reciprocal recognition and enforcement of judgments within the
European Communities. To this end it was necessary to provide a scheme
for determining which Courts were to have jurisdiction over what matters
and to avoid conflicting decisions of the Courts of different countries. The
scope and basic principle of the Convention are laid down in arts. 1 to 3,
in each case with exceptions which are not material for present purposes.
1. This Convention shall apply in civil and commercial matters whatever
the nature of the court or tribunal...
2. 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...
3. Persons domiciled in a Contracting State may be sued in the courts of
another Contracting State only by virtue of the rules set out in sections 2
to 6 of this Title...
Article 3 goes on to declare inapplicable certain provisions of national law
which would conflict with this principle. In relation to the United Kingdom
the provisions are:
The rules which enable jurisdiction to be founded on:
(a) The document instituting the proceedings having been served on the
defendant during his temporary presence in the United Kingdom; or
(b) the presence within the United Kingdom of property belonging to the
defendant; or
(c) the seizure by the plaintiff of property situated in the United Kingdom.
On these provisions it is clear that the Admiralty Court would have no
jurisdiction to entertain a suit against the shipowners and the presence
of their ship within the United Kingdom, or its seizure, would not give the
Admiralty Court jurisdiction to entertain such a suit.
However art. 2 is "subject to the provisions of this Convention ". Article 57
of the Convention (as added to by the Accession Conventions of 1978 and
1989) provides:
(1) This Convention shall not affect any conventions to which the
Contracting States are or will be parties and which, in relation to
particular matters, govern jurisdiction or the recognition or enforcement
of judgments.
(2) With a view to its uniform interpretation, paragraph 1 shall be applied
in the following manner – (a) This Convention shall not prevent a court
of a Contracting State which is a party to a convention on a particular
matter from assuming jurisdiction in accordance with that convention,
even where the defendant is domiciled in a Contracting State which is not
a party to that convention...
The Arrest Convention is a Convention referred to in art. 57.
The relationship of the Arrest and Judgments Conventions
The shipowners submitted that the Judgments Convention should be
construed as giving effect to an over-riding policy and that the Arrest
Convention should now be read as being subject to and qualified by
that policy. Mr. Parsons cited to us judgments which emphasized the
uniformity intended to be achieved by the Judgments Convention and
Community law in general, including Estasis Salotti v. RUWA, [1976]
E.C.R. 1851, Kalfelis v. Bankhaus Schroeder Munchmeyer Hengst & Co.,
[1988] E.C.R. 5565, Reichert v. Dresdner, [1990] E.C.R. 27, Dresser U.K.
Ltd. v. Falcongate Freight Management Ltd., [1991] 2 Lloyd's Rep. 557;
[1992] 1 Q.B. 502, and Mund & Fester v. Hatrex, (E.C.J.), C-398/92.
The underlying policy of Community legislation and of the Judgments
Convention is not in doubt but the relevant question is what is the
correct understanding of art. 57 and the relationship of the Judgments
Convention and the Arrest Convention.
In this task regard must be had to the travaux preparatoires (s. 3 of the
1982 Act). In his commentary on art. 57 of the Judgments Convention in
1968, Mr. Jennard said (OJ C59/59-60: emphasis supplied):
The Member States of the Community, or some of them, are already
parties to numerous international agreements which, in relation to
particular matters, govern jurisdiction or the recognition or enforcement
of judgments. Those agreements include...[the Arrest Convention].
The approach adopted by the Committee means that agreements relating
to particular matters prevail over the Convention. It follows that, where
those agreements lay down rules of direct or exclusive jurisdiction, the
court of the State of origin will have to apply those rules to the exclusion
of any others; where they contain provisions concerning the conditions
governing the recognition and enforcement of judgments given in matters
to which the agreements apply, only those conditions need be satisfied,
so that the enforcement procedure set up by the EEC Convention will not
apply to those judgments.
The Committee adopted this approach in view of the fact that the Member
States of the Community, when they entered into these agreements,
had for the most part contracted obligations towards non-Member States
which should not be modified without the consent of those States.
Moreover, the following points must be borne in mind:
1. The rules of jurisdiction laid down in these agreements have been
dictated by particular considerations relating to the matters of which
they treat, e.g. the flag or port of registration of a vessel in the maritime
conventions: the criterion of domicile is not often used to establish
jurisdiction in such agreements....
In 1978 at the time of the accession of Great Britain, Professor Schlosser
commented specifically upon the treatment of the Admiralty jurisdiction of
Courts in the United Kingdom. He said (OJ C59/108):
The scope of the international competence of the courts, as it has been
developed in the United Kingdom, has become of worldwide significance
for admiralty jurisdiction....It would have been inappropriate to limit
the exercise of admiralty jurisdiction to the basis of jurisdiction included
in the 1968 Convention in its original form. If a ship is arrested in a
State because of an internationally recognized maritime claim, it would
be unreasonable to expect the creditor to seek a decision on his claim
before the courts of the shipowner's domicile....Parallel negotiations
on Article 57 of the 1968 Convention did, however, lead to a generally
acceptable interpretation which will enable States party to a convention
on maritime law to assume jurisdiction on any particular matter dealt with
in that convention, even in respect of persons domiciled in a Community
State which is not a party to that Convention (see paragraph 236 et
seq.). Furthermore, all delegations are in support of a Joint Declaration
urging the Community States to accede to the most important of all
the conventions on maritime law, namely the Brussels Convention of 10
May 1952 (see paragraph 238). The Working Party confident that this
Joint Declaration will be adopted and implemented, finally dropped its
plans for a section dealing with admiralty jurisdiction. This would also
avoid interfering with the general principles of the 1968 Convention
and maintain a clear dividing line between its scope and that of other
conventions.
Reverting to this topic later in his commentary, Professor Schlosser said
(OJ C59/140: emphasis supplied):
The solution arrived at is based on the following principles. The 1968
Convention contains the rules generally applicable in all Member States;
provisions in special conventions are special rules which every State may
make prevail over the 1968 Convention by becoming a party to such a
convention...
The most important consequence of this is that provisions on jurisdiction
contained in special conventions are to be regarded as if they were
provisions of the 1968 Convention itself, even if only one Member State is
a Contracting Party to such a special convention...
The relationship between the two Conventions was discussed in The
Nordglimt, [1987] 2 Lloyd's Rep. 470; [1988] Q.B. 183 and The Po,
[1991] 2 Lloyd's Rep. 206. (Nothing turns upon any difference between
what was said in those cases.) The two Conventions are to be read
together. Their relationship is of the special to the general. Where special
provision is made in the special Convention, it shall govern; where
no special provision is made, the general provisions of the Judgments
Convention apply. Accordingly, within its scope, the Arrest Convention
governs the jurisdiction of the Admiralty Court and prevails over the
provisions of the Judgments Convention. There is no reason to impose
any implicit restriction on the effect of art. 57 or the continuing efficacy of
the Arrest Convention. The argument of the shipowners is contrary both
to the literal effect of the language of art. 57, especially what is said in
par. (2), and to the travaux preparatoires. There is no reason to detect
any hostility to the in rem jurisdiction of the Admiralty Court or intent that
it should be abrogated. Further, it is clear that the intention is that the
jurisdiction available under the Arrest Convention should be preserved
and that it should continue to apply even though the owner of the ship
may be domiciled in another member State.
Following the accession of the United Kingdom to the Judgments
Convention, no amendment was made to the statutory provisions defining
the in rem jurisdiction of the Admiralty Court. The effect of art. 57 was
reinforced by s. 9(1) of the 1982 Act:
The provisions of Title VII of the 1968 Convention (relationship between
that convention and other conventions to which Contracting States are or
may become parties) shall have effect in relation to – (a) any statutory
provision, whenever passed or made, implementing any such other
convention in the United Kingdom; and (b) any rule of law so far as it has
the effect of so implementing any such other convention, as they have
effect in relation to that other convention itself.
The purpose of this provision is to ensure that the relevant statutory
provisions and other rules of English law shall be treated as if they are
parts of the Convention which they have the effect of implementing and
nothing shall turn upon the fact that in English law Conventions are not
self-executing. Again there is in no basis for inferring any intention to
narrow the extent of the jurisdiction in rem of the Admiralty Court.
The only amendment made by the 1982 Act in relation to the powers of
the Admiralty Court was the introduction, in s. 26, of a power to direct
that an arrested ship or her bail be held as security for claims being
prosecuted before arbitrators or Courts other than the Admiralty Court
either in the United Kingdom or overseas. As was illustrated by The
Nordglimt, this power is required if the Court is to give effect to art. 22 of
the Judgments Convention. A similar situation can arise under the 1958
New York Convention on the Recognition and Enforcement of Arbitral
Awards.
The relationship between the Admiralty jurisdictions in rem and in
personam
The jurisdiction under the Arrest Convention which is preserved by
art. 57 of the Judgments Convention is to be contrasted with the
jurisdiction which is expressly excluded by that part of art. 3 of the
Judgments Convention specifically applicable to the United Kingdom. No
jurisdiction in personam can be founded upon service on a person within
the jurisdiction or the presence within the United Kingdom of property
belonging to the person sued in personam or the seizure of his property.
It is out of this contrast that a problem for English procedural law has
arisen. The Admiralty Court has jurisdictions both in personam and in
rem. The jurisdiction referred to in the Arrest Convention can only be
exercised in rem; it does not confer any jurisdiction in personam. The
jurisdiction in personam is indisputably governed by the Judgments
Convention. English procedural law recognizes many differences between
the two types of proceedings, one of which is the availability of service of
process out of the jurisdiction in in personam proceedings, whereas in in
rem proceedings the Court has no jurisdiction unless and until the vessel
is served or arrested within the territorial jurisdiction of the Admiralty
Court (e.g. see The Freccia del Nord, [1989] 1 Lloyd's Rep. 388). The
judgment in an action in rem is solely a judgment given against the
res (or the bail that has been substituted for it). As pointed out in The
Nordglimt, (at p. 482, col. 1; p. 200):
...It is determinative and conclusive against all the world in respect of
the rights in the res but does not create any rights that are enforceable
in personam. An action in rem may be defended by any one who has
a legitimate interest in resisting the plaintiff's claim on the res. Such a
person may be the owner of the res but equally it may be someone who
has a different interest in the res which does not amount to ownership, or
again it may be simply someone who also has a claim in rem against the
res and is competing with the plaintiff for a right to the security of a res
of an inadequate value to satisfy all the claims that are being made upon
it. It will also be appreciated from what I have said and from a general
understanding of the law of maritime liens that the owner or the other
person defending the action may be under no personal liability to the
plaintiff.
The right being enforced in an action in rem is a right against the res. It
may be a proprietary right; it may be a maritime lien to the existence
of which the current ownership of the res is wholly irrelevant; or it may
be an analogous "statutory" lien where the ownership of the vessel at
the time of the issue of the writ (though not at the time of her arrest)
is relevant. (The Monica S, [1967] 2 Lloyd's Rep. 113.) It is easily
comprehensible why Professor Schlosser appreciated that an action in
rem raised different considerations from those covered by s. 1 of the
Judgments Convention.
The problem for the application of the Judgments Convention arises from
the historic rule of English procedural law that, if a party who is liable in
personam enters an appearance in an action in rem, he is liable to have
judgment given against him in personam. Thus, the result of such an
appearance will be that, although the action proceeds as an action in rem
and may give rise to a judgment in rem against the res (The Nordglimt;
The Maciej Rataj, [1992] 2 Lloyd's Rep. 552), the person who has entered
an appearance is liable to have judgment given against him in the full
amount of the claim notwithstanding the fact that the res may be of a
lesser value.
After conflicting earlier decisions, this rule of English procedural law
was only finally settled by Mr. Justice Jeune in 1892 in The Dictator,
[1892] P. 304 and subsequently by the Court of Appeal in The Gemma,
[1899] P. 285. The origins of this rule derive from a medieval doctrine
that jurisdiction could be founded and an appearance before the Court
compelled by the arrest of the defendant himself or the seizure of his
property. This procedure had become obsolete by the end of the 18th
Century (see The Beldis, (1935) 53 Ll.L. Rep. 255 at p. 274; [1936] P. 51
at p. 85 per Lord Justice Scott) but it nevertheless provided the historical
basis for the law as declared in The Dictator. In that case Mr. Justice
Jeune, in discussing the various decisions of Dr. Lushington, commented
(at p. 319):
I cannot help thinking that the fallacy lies in considering that to enforce a
judgment beyond the value of the res, against owners who have appeared
and against whom a personal liability, enforceable by Admiralty process,
exists, is the grafting of one form of action on to another. The change, if it
be a change, in the action is effected at an earlier stage, namely when the
defendant by appearing personally introduces his personal liability.
On the following page (p. 320) he said:
It may well be that, if the owners do not appear, the action only enforces
the lien on the res, but that, when they do, the action in rem not only
determines the amount of the liability, and in default of payment enforces
it upon the res, but is also a means of enforcing against the appearing
owners, if they could have been made personally liable in the Admiralty
Court, the complete claim of the plaintiff so far as the owners are liable
to meet it...If the owners appear to contest or reduce their liability, they
should be placed in the same position as if they had been brought before
the Court by a personal notice.
He is thus identifying a special rule of Admiralty procedure which makes
such a person, by virtue of his appearance, liable in personam as if a writ
in personam had been issued against him and served upon him within the
jurisdiction notwithstanding that the original action did not make any in
personam claim against him. This fiction creates a notional situation which
is directly in conflict with art. 3 of the Judgments Convention.
This problem can arise in any defended action in rem, including the
present action, whether or not the res has been arrested. It can be seen
that since it is not the action in rem but the rule in The Dictator which is
contrary to the Judgments Convention, it should be the special rule which
has been implicitly qualified by the 1982 Act. The Arrest Convention gives
the Admiralty Court the jurisdiction to arrest the ship and give judgment
against the ship. It does not give the Court jurisdiction to give a judgment
in personam against the owner of the ship. The problem is independent of
the Arrest Convention.
The Deichland
The Deichland [1989] 2 Lloyd's Rep. 113; [1990] 1 Q.B. 361 concerned
an Admiralty action in rem where the plaintiffs did not arrest the vessel.
Steel coils had been carried on the defendant vessel from Glasgow to
La Spezia. The vessel was registered in Panama but managed in the
Federal Republic of Germany by a firm, Deich, to whom the vessel had
been demise chartered. It was a cargo damage action and had a curious
procedural history. The writ was served upon the vessel at Erith in Kent.
The plaintiffs did not arrest the vessel nor did they obtain any agreement
as to jurisdiction. By then the demise charter had come to an end and
the vessel had been renamed and sold to new owners. The P. & I. Club
with which the vessel had been entered put up security in consideration
of the plaintiffs refraining from arresting the vessel. Some seven months
later the former demise charterers issued a notice of motion asking that
the writ be set aside and seeking a declaration that the Court had no
jurisdiction over them in respect of the subject matter of the claim. (My
emphasis.) The ground upon which this application was made was that
it was contrary to the Judgments Convention that the action should be
allowed to proceed, the former demise charterers being domiciled in
Germany. Since the former demise charterers were no longer interested
in the vessel, this intervention on their part in the action was gratuitous.
They no doubt did so in order to protect the P. & I. Club and the obligation
to indemnify the new owners of the vessel. Mr. Justice Sheen ([1988] 2
Lloyd's Rep. 454) dismissed the application on the ground that the action
was still solely an action in rem and -
...the demise charterers [sic] must decide whether they will submit to the
jurisdiction of this court or allow the action in rem to proceed by default.
Both the notice of motion and this quotation from Mr. Justice Sheen raised
the potential for making the distinction to which I have referred in the
preceding section of this judgment.
The Court of Appeal allowed the former demise charterers' appeal.
Initially, Counsel for the plaintiffs did not argue that an Admiralty action in
rem fell outside the scope of art. 2 of the Judgments Convention but later
advanced that argument. However the motion was dealt with on the basis
that the former demise charterers were in the position of people who
were being sued as defendants in this country and the presence of whose
property in this country was being used as a means to compel them to
submit to the jurisdiction of the English Court.
The Court of Appeal held that art. 2 of the Judgments Convention applied
to an Admiralty action in rem even while it remained solely in rem. At p.
119, col. 1; p. 374 Lord Justice Neill said:
It is true that in the present case the vessel is no longer chartered to
Deich and that the jurisdiction to entertain the action in rem is based
upon the provisions of s. 21 of the Act of 1981. But looking at the reality
of the matter it is Deich who is interested in contesting liability and
against whom the plaintiffs would wish to proceed in personam if an
appearance is entered....It is impossible to conclude that on the proper
construction of art. 2 and 3 of the [Judgments] Convention, Deich is
not being "sued" in these proceedings even though at this stage the
proceedings are only in rem. Deich is liable to be adversely affected by
the result of the proceedings and wishes to contest the merits of the
plaintiffs' claim.
The other members of the Court of Appeal reached similar conclusions,
emphasizing that under English procedural law the entry of an appearance
to an action in rem amounted to a submission to the jurisdiction in
personam so as to give rise to a liability in personam.
The plaintiffs advanced an alternative argument based upon the Arrest
Convention. That argument failed because they had never arrested the
vessel. The Court of Appeal were all of the view that it would have been
different if the vessel had been arrested because the plaintiffs could then
have relied upon the Arrest Convention and art. 57 of the Judgments
Convention. The matter was succinctly put by Lord Justice Stuart-Smith at
p. 126, col. 2; p. 385:
The practical consequences of allowing this appeal do not seem to me to
be as far reaching as Mr. Aikens [for the plaintiffs] suggested. If a plaintiff
for some reason is determined to litigate in the English Admiralty Court he
can easily secure this; either he arrests the ship, or he secures express
agreement by the defendant owner or demise charterer to submit to the
jurisdiction of the English court to avoid arrest, no doubt at the same time
obtaining security. In the present case the plaintiffs did neither of these
things.
Before us the plaintiffs rely upon the affirmation by the Court of Appeal
in The Deichland (admittedly obiter) of the entitlement of a plaintiff to
invoke the Arrest Convention notwithstanding that the person liable
in personam may be domiciled in a country which is a party to the
Judgments Convention. The shipowners argued before us that the arrest
of the vessel did not in the present case come within the provisions of the
Arrest Convention and therefore no distinction is to be drawn between the
present case and the actual decision in The Deichland.
The arrest
The argument of the shipowners is that the arrest of A. H was not "to
secure" any claim. They argue that unless it can be shown that the arrest
was necessary in order to obtain security, the arrest did not come within
the definition in art. 1 of the Arrest Convention. The Judge was right to
reject their argument.
The criterion relates to the character of the legal process pursuant to
which the vessel has been detained. In English law, the arrest of a ship
or other maritime property in an Admiralty action in rem involves the
detention of the ship by the Admiralty Marshal subject to the directions
of the Admiralty Court in judicial proceedings to secure a maritime claim.
The definition is concerned with the character of the legal process, not
with the motivation of the party that initiates the process. It is therefore
beside the point that the plaintiffs in the present action may have been
primarily motivated by a need to satisfy the requirements of founding an
action in rem within the jurisdiction of the Admiralty Court. Likewise it is
irrelevant that they shortly afterwards chose to release the vessel.
The argument of the shipowners was that even if the Admiralty Court
had jurisdiction to arrest the vessel under arts. 1 and 2 of the Arrests
Convention, the Court had no merits jurisdiction under art. 7. They
argued that the Arrests Convention should now be construed narrowly
so as to impinge as little as possible upon the Judgments Convention.
They further argued that the reference to "domestic law" in art. 7 of the
Arrests Convention should now be read so as to refer to the Judgments
Convention since the Judgments Convention has been incorporated into
English law by the 1982 Act.
The first of these submissions is inconsistent with a correct understanding
of the effect of art. 57 and the relationship between the two Conventions.
The Arrest Convention, in the words of Mr. Jennard and Professor
Schlosser, "prevails over" the Judgments Convention. The Arrest
Convention qualifies and must be read as part of the Judgments
Convention. Any supposed difference of policy must be resolved in favour
of the Arrest Convention.
The other submission of the shipowners postulated that the 1982 Act
had changed the "domestic" law of England regarding the jurisdiction
of the Admiralty Court to decide the merits of a maritime claim once
jurisdiction had been properly founded by an arrest. The general rule of
English procedural law is that there is no distinction between jurisdiction
over the defendant and/or subject-matter of an action and jurisdiction to
determine the merits. Exceptions have been created as, for example, by
the Arbitration Act 1975 which enacts the New York Convention.
Prior to the 1982 Act the jurisdiction of the Admiralty Court in rem was a
jurisdiction to determine the merits of the claim. (The Cap Bon, [1967]
1 Lloyd's Rep. 543.) It was not part of English law that an arrest could
be made to provide security for proceedings before another Court or
tribunal. Section 26 of the 1982 Act now enables the Admiralty Court
to retain the security of the res or the bail for the purpose of arbitration
proceedings or other proceedings in a United Kingdom or overseas
Court. This has the consequence that if, for example, art. 22 of the
Judgments Convention is relevant, the merits of the dispute relevant
to the claim made in the Admiralty action in rem may be determined
in related proceedings elsewhere. (The Nordglimt) The 1982 Act has
therefore raised the potential for the Admiralty Court to uphold the
jurisdiction to arrest the vessel and to decline to determine the merits of
the claim.
However it does not follow from this that the previous law has been
changed and that the Admiralty Court does not have the jurisdiction,
if it decides to exercise it, to determine the merits of the claim. The
shipowners are not able to point to any statutory provision which has
altered the law in this way. The tenor of the relationship of the two
Conventions is, as previously explained, against the implication of any
such statutory intent. Further, s. 9 of the 1982 Act expressly provides
that Title 7 of the Judgments Convention, that is to say, the part of the
Judgments Convention which includes art. 57, shall have effect in relation
to the statute law and other rules of law of this country giving effect to
other Conventions as it has in relation to the Judgments Convention. This
is a clear statutory provision that the full Admiralty jurisdiction in rem of
the English Courts is to continue. Article 57(2) expressly negatives the
inference that the jurisdiction is to be excluded because "the defendant is
domiciled in another Contracting State".
It follows that the shipowners are unable to make good their argument
that the Admiralty jurisdiction in cases of arrest has been altered or that
the jurisdiction to entertain the claim and rule upon its merits has been
taken away. The arguments of the shipowners in support of their motion
fail and the Judge was right to dismiss the motion.
Submission to the jurisdiction
It follows that in my judgment the questions raised by the alternative
way in which the plaintiffs put their case do not require decision. It is
not necessary for them to rely upon any submission by the shipowners
to the jurisdiction of the Court. That question will probably only arise for
decision in a case where a caveat against arrest has been entered and
the plaintiffs in the action have not arrested the vessel, as, for example,
where the plaintiffs have not waited for the vessel to come into British
waters so that it can be arrested and have chosen to rely instead upon
the undertakings given in the praecipe. The effect of those undertakings
is to dispense with the requirement for service of the writ on the ship or
that the ship be arrested before bail can be called for. The likelihood that
any shipowner will trouble to enter a caveat against arrest save when he
knows that his vessel is about to enter the jurisdiction of the Admiralty
Court is remote.
It is also unlikely that any case will arise which makes it necessary to
determine this point since, under the procedural law of this country,
an acknowledgement of service does not without more preclude a
subsequent challenge to the jurisdiction of the Court. Since the time at
which the challenge has to be made is postponed until after the service
of a statement of claim and the fact that, following an unsuccessful
challenge, a fresh acknowledgement is necessary (O. 12, r. 8), there
are problems about treating a mere acknowledgement of service, or
an undertaking to acknowledge issue or service, as being a waiver of
the right to challenge the jurisdiction of the Court. Similarly, since it is
accepted that it is possible to put up bail conditionally reserving the right
to challenge the jurisdiction of the Court (The City of Mecca (1879) 5
P.D. 28), there are problems about treating the provision of bail, without
more, as precluding the shipowner from thereafter exercising his right to
challenge the jurisdiction of the Court.
That some rights of challenge must subsist is self-evident. The claim in
the writ may be one which upon examination does not fall within the
Admiralty jurisdiction of the Court under the 1981 Act. The entry of a
caveat against arrest cannot preclude the caveator from raising that
objection. These matters are best considered and decided in a case which
necessitates their decision.
In the present case the shipowners have not taken any point based upon
an argument that they are exposed to the risk of a judgment in personam
greater than the amount of the bail. When that point arises for decision it
will have to be considered having regard to the matters to which I have
drawn attention earlier in this judgment.
The shipowners' appeal should be dismissed.
Lord Justice HOFFMANN:
Until 1982 an English Court assumed jurisdiction, whether in personam or
in rem, on the ground that the person or thing against which the action
was brought had been duly served with the writ or other originating
process. The plaintiff was entitled as of right to effect service upon
a person or thing within the jurisdiction, no matter how transient its
presence. Service out of the jurisdiction was confined to actions in
personam and permissible only with the leave of the Court given in
accordance with R.S.C., O. 11. But in either case, service was the basis of
jurisdiction.
In relation to persons domiciled in member States of the European Union,
this basic principle of jurisdiction was radically altered by the enactment
of the Brussels Convention as part of the Civil Jurisdiction and Judgments
Act 1982. Article 3 stated the new principle:
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 3 specifically declared that as against persons domiciled in a
Contracting State, the United Kingdom rules which enabled jurisdiction
to be founded on service of process during a temporary stay or the
presence or seizure of property within the United Kingdom were not to be
applicable.
The general principle was however "subject to the provisions of the
Convention" and the Convention contained a number of exceptions. Article
57 contains a class of such exceptions:
This Convention shall not affect any conventions to which the Contracting
States are or will be parties and which, in relation to particular matters,
govern jurisdiction or the recognition or enforcement of judgments.
One of these special conventions was the International Convention
Relating to the Arrest of Seagoing Ships, signed at Brussels on May 10,
1952. To avoid confusion with the principal Brussels Convention "on
jurisdiction and the enforcement of judgments in civil and commercial
matters", I shall call it the Arrest Convention. The United Kingdom and
two other members of the European Union had been parties. The primary
purpose of the Arrest Convention was to agree on the circumstances in
which a ship flying the flag of one Contracting State could be arrested
in the jurisdiction of another Contracting State. In summary, it was
agreed that the right of arrest should exist only in respect of maritime
claims (contrary to the previous law in certain Continental countries) but
should extend to sister ships (contrary to the previous law in the United
Kingdom). But art. 7 also dealt with the jurisdiction of the country of
arrest to determine the merits of the claim. The reason for this article was
that some countries, notably France, declined to assume jurisdiction solely
on the ground that the ship had been arrested within their territory. In
the United Kingdom, on the other hand, service on the ship to establish
jurisdiction was a precondition of a valid arrest. Article 7 therefore
provided that:
(1) The Courts of the country in which the arrest was made shall have
jurisdiction to determine the case upon its merits if the domestic law
of the country in which the arrest was made gives jurisdiction to such
Courts, or in any of the following cases, namely...
There followed a list of cases, including where the claimant habitually
resided in the country of arrest or the claim arose there.
So art. 57 and the Arrest Convention preserve the jurisdiction of England
as "the country in which the arrest was made" when, among other
cases, it has jurisdiction under its domestic law. The difficulty about this
exception, as the cargo-owners discovered in The Deichland, [1989] 2
Lloyd's Rep. 113; [1990] 1 Q.B. 361, is that in order for England to be the
country in which the arrest was made, there must have been an arrest.
But in English domestic law, as we have seen, jurisdiction depends not
upon arrest but upon service. It was therefore common practice for the
owners or P. & I. Club to obviate the need for arrest by giving security
for the claim and undertaking to accept service. The Deichland decided
that the plaintiff could not bring himself within art. 57 and the Arrest
Convention unless there had actually been an arrest. Lord Justice Stuart-
Smith offered cargo-owners some practical advice. If they wanted to
establish jurisdiction, they should either arrest the ship or insist upon
an undertaking to give security and not merely to accept service but to
submit to the jurisdiction in terms which complied with arts. 17 or 18 of
the Brussels Convention.
In this case the cargo-owners followed that advice. Their claim arose from
a shipment of steel coils on the A. H in December, 1990. On Sept. 17,
1991 their solicitors gave notice of the claim to the solicitors representing
the owners' P. & I. Club and invited them to give security and submit to
the jurisdiction of the English Court. The owners offered security for the
judgment of "a competent court" but refused to submit to the English
jurisdiction. Instead they tried to navigate between the Scylla of arrest
and the Charybdis of submission by resorting to the antique ceremony of
entering a caveat against arrest under R.S.C., O. 75, r. 6. For this purpose
they issued a praecipe containing an undertaking on behalf of the owners
to acknowledge issue or service of the writ and to give bail. The caveat
was duly entered on Sept. 19, 1991.
On Nov. 7, 1991 the plaintiffs' solicitor learned that the vessel was due
to arrive at Garston. As he had been given no undertaking to submit
to the jurisdiction, he decided to arrest the ship. He then discovered
the caveat. But a caveat does not prevent an arrest: see R.S.C., O.
75, r. 6(2). It merely lays the ground for a summary application under
r. 7 for discharge of the warrant and payment of compensation if the
plaintiff cannot show a "good and sufficient reason" for the arrest. So
the plaintiffs' solicitor had the ship arrested anyway. Then, presumably
satisfied with the undertaking in the praecipe to give bail, he released it
after an hour without obtaining further security. The owners duly gave bail
and acknowledged service. They then issued a summons under R.S.C.,
O. 12, r. 8 to set aside service of the writ on the ground that the owners
were domiciled in Germany and therefore, under art. 2 of the Convention,
could be sued only there.
The plaintiffs rely upon art. 57 and the Arrest Convention. They say that,
having learned the lesson of The Deichland, they arrested the ship and so
brought themselves within art. 7 of the Arrest Convention. The defendants
counter by unveiling the purpose of their strategy in entering a caveat.
They say that while what happened at Garston may have been a perfectly
good arrest under English law, it was not an arrest within the meaning of
the Arrest Convention. That says that "arrest" means:
...the detention of a ship by judicial process to secure a maritime claim,
but does not include the seizure of a ship in execution of or satisfaction of
a judgment.
Mr. Parsons, in his admirable argument for the owners, says that the
vessel could not have been detained "to secure" a maritime claim.
Security had already been provided by the undertaking in the praecipe,
to say nothing of the earlier offer by letter. The fact that security was not
the purpose of the arrest is shown by the fact that it was released almost
at once without any more having been provided. The real purpose was to
found jurisdiction. But this is not what the Arrest Convention means by an
arrest.
It was not disputed that, first, the ground upon which the warrant was
issued was that the plaintiff had brought an action in rem asserting
a maritime claim and secondly, that when arrested, the ship became
security for that claim. The security may have been superabundant, as
security sometimes is, but was security nonetheless. So the question
reduces itself to this: does the Convention require only that the legal
consequence of judicial detention of the ship should be that it becomes
security for a maritime claim or does it require that the plaintiff's
commercial motive must be to obtain security?
I think that the first meaning is correct. I do not accept that under the
Arrest Convention this country undertook an obligation in international
law to ensure that a plaintiff who arrested a ship did not have sufficient
other security. Article 5 says that the Court -
...shall permit the release of the ship upon sufficient bail or other security
being furnished...
but says nothing about refraining from arrest because security has been
provided in advance. Article 6 leaves to national law the question of
the remedies (if any) for wrongful arrest and the rules of procedure for
arrest. The purpose of the Convention was to harmonize the laws of the
Contracting States as to the kinds of claims which could form the basis
for an arrest and the words "to secure a maritime claim" are part of the
scheme to prevent the use of arrest for securing other kinds of claim.
Mr. Parsons submits that the policy of art. 2 of the Brussels Convention
is so strong that any exception must be narrowly construed. But the
following passage from Professor Schlosser's Report on the Convention
as amended at the time of the U.K.'s accession suggests an intention to
recognize the Admiralty jurisdiction as a fairly broad exception:
The exercise of jurisdiction in maritime matters has traditionally played a
far greater role in the United Kingdom than in the Continental States of
the Community. The scope of the international competence of the courts,
as it has been developed in the United Kingdom, has become of world-
wide significance for admiralty jurisdiction. This factor is reflected not
least in the Brussels Conventions of 1952 and 1957...It would have been
inappropriate to limit the exercise of admiralty jurisdiction to the basis of
jurisdiction included in the 1968 Convention in its original form. If a ship
is arrested in a State because of an internationally recognised maritime
lien, it would be unreasonable to expect the creditor to seek a decision on
his claim before the court of the shipowner's domicile.
Professor Schlosser also suggests that in applying art. 57 -
...provisions on jurisdiction contained in special conventions are to be
regarded as if they were provisions of the 1968 Convention itself.
In other words, one should readart. 7 of the Arrest Convention into
the Brussels Convention and then try to make coherent sense of the
composite document. I therefore ask: would it be more consistent with
the rest of the Brussels Convention to interpret "to secure a maritime
lien" as meaning that obtaining security should have been the commercial
purpose of the arrest? In my view, there is nothing in the rest of the
Convention to suggest that the justification for an exception to art. 2 is
that the plaintiff has obtained security for his claim. On the contrary, art.
3 makes it clear that ordinarily the attachment of property as security
is not to be a sufficient basis for jurisdiction. Article 24 confers a special
jurisdiction to attach property by way of provisional measures without
disturbing the principle that jurisdiction to decide the merits of the dispute
is governed by art. 2. It is not therefore the obtaining the security which
makes the Admiralty jurisdictional exceptional. The identifying features
are that the property attached is a ship and that the claim is a maritime
claim. In my judgment therefore the Judge was right to hold that the ship
had been arrested within the meaning of the Arrest Convention and that
the Court had the jurisdiction conferred by art. 7.
The next question is whether, as art. 7(1) requires, the Court had
jurisdiction under its "domestic law". At first the answer might seem
obvious, because s. 20(1)(a) and (2)(g) of the Supreme Court Act, 1981
plainly confer jurisdiction. But Mr. Parsons says that art. 2 of the Brussels
Convention is also part of domestic law. It has been incorporated into an
Act of Parliament and therefore restricts the jurisdiction conferred by the
Supreme Court Act, 1981.
In my judgment, "domestic law" in the Arrest Convention, whether
read alone or as part of the Brussels Convention, is being contrasted
with treaty law, i.e. the rules embodied in international conventions.
For this purpose, the Brussels Convention counts as treaty law and
not as domestic law. It has been given statutory force in this country
because by our law, treaties are not self-executing. But this is not the
law of all member States. In my view, "domestic law" in the Convention
cannot have been intended to have different meanings in member States
according to whether or not their constitutions require that a treaty shall
be enacted by the legislature.
For these reasons I think that the Judge was right to dismiss the
summons. He also considered a number of alternative bases for
jurisdiction on which I find it unnecessary to express an opinion. I would
dismiss the appeal.
Lord Justice GLIDEWELL:
For the reasons set out in the judgments of my Lords, I agree that this
appeal should be dismissed.
[Order: appeal dismissed with costs both here and below to be taxed and
paid immediately; leave to appeal to the House of Lords refused.]