BARR J: THE FACTS
The plaintiff is a company incorporated in Nicosia, Cyprus. It is the owner
of the T, a cargo vessel. The defendant is a company registered in Ireland
having its registered office at (…). It is conceded by the defendant that
its central management and control is in Graz, Austria. The company is
registered in Dublin solely for Austrian tax purposes and it has no real
connection with Ireland.
The plaintiff commenced proceedings against the defendant in this Court
by plenary summons dated 9 February 1994. Relief was sought under
a number of headings. However, in the statement of claim the plaintiff
seeks only a declaration that it is entitled to a lien over the defendant's
cargo on board the T. by reason of the breach by a Belgian company
called L. with whom the plaintiff concluded a charterparty in respect of
the ship. The plaintiff also seeks an order pursuant to Order 50 Rule 3 of
the Rules of the Superior Courts for sale of the cargo which is presently
on board the vessel in Antwerp and has brought a motion in that regard
dated 18 March, 1994. A conditional appearance has been entered to the
plenary summons on behalf of the defendant contesting the jurisdiction
of this Court to entertain the plaintiff's claims against the defendant.
By notice of motion dated 17 May, 1994 the defendant seeks an order
staying the proceedings pursuant to the provisions of Article 22 of the
Convention on Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters (including the Protocol annexed to that Convention)
signed at Brussels on 27 September, 1968 ("the Brussels Convention")
which has force of law in the State on foot of the Jurisdiction of Courts
and Enforcement of Judgments (European Communities) Act 1988,
Section 3 ("the 1988 Act"). In the alternative, an order is sought declining
jurisdiction under the provision of Article 22 of the Brussels Convention.
In the further alternative the defendant seeks an order staying the
proceedings pursuant to the inherent jurisdiction of this Court.
The plaintiff, as owner of the ship, entered into a charterparty with L.
dated 8 July 1993 under which it chartered the ship to L in respect of
59,000 metric tonnes of steel to be loaded in the Baltic Range for delivery
to a port in the Far East. The defendant concluded a subcharterparty
with L. on 3 September 1993 for 34,000 metric tonnes of wire rods to be
loaded at St Petersburg, Russia for delivery to Hochimin City, Vietnam.
The subcharterparty refers to L. as "the disponent owners" for the original
owners, ie, the plaintiff. It is alleged by the defendant that apart from
the foregoing reference in the subcharterparty to "the disponent owners"
of the ship, the defendant was unaware of any involvement on the part
of the plaintiff until it received a fax from the latter following a dispute
which had arisen between the defendant and L. by reason of the failure
of the latter to arrange for the ship to leave the port of Antwerp and sail
to Hochimin City. It is further contended on behalf of the defendant that
it was not until it received the affidavit of Mr V. grounding the plaintiff's
application for sale of the defendant's cargo that it became aware of the
terms of the charterparty between the plaintiff and L..
It is not in dispute that the defendant's cargo was loaded on the ship at
St Petersburg, Russia in September/October, 1993. In all 32,000 metric
tonnes of wire rods were loaded. The shipper of the wire rods was a
Russian company called R. of Moscow. There is controversy between
the parties regarding the condition of the defendant's cargo and as
to bills of lading relating to it. The essence of the controversy is that
the master of the ship had issued three bills of lading in relation to
the defendant's cargo which were claused because it was alleged that
part of the cargo was damaged. Subsequently, these were replaced
by clean bills on foot of instruction given by a Finnish company who
were L's agents. The ship then proceeded to Antwerp for loading of
further cargo. During the voyage she required salvage services in Belgian
territorial waters. The salvors arrested the ship as security for their
salvage claim against the plaintiff. This matter was resolved and the ship
was released from arrest. However, L failed to provide additional cargo
and the plaintiff refused to permit the ship to leave Antwerp and sail to
Hochimin City for delivery of the defendant's cargo. It appears that the
plaintiff is making a claim under the charterparty against L for freight
and demurrage and I understand that that claim has been referred to
arbitration. The defendant has paid all freight charges for the carriage
of its cargo to Vietnam, ie, approximately US$1.4 million dollars. The
plaintiff concedes that the defendant is not indebted to it in respect of
freight or otherwise. The defendant, having unsuccessfully called upon
L to proceed with the voyage to Vietnam, there were communications
between the legal advisers of the plaintiff and the defendant but the
impasse was unresolved. The next step was proceedings commenced
by the defendant in the Antwerp Court of First Instance against the
plaintiff for the arrest of the ship consequent upon its refusal to permit
her to leave the port of Antwerp and proceed to Hochimin City with the
defendant's cargo. An order was made by the Court on 21 January, 1994
directing the arrest of the ship as security for the defendant's claim for
damages against the plaintiff. The vessel was duly arrested and the
amount of security required to be furnished by the plaintiff to secure her
release was fixed at approximately US$7.5 million. Further proceedings
have been brought by the defendant which commenced on 20 May, 1994
in the Antwerp Commercial Court pursuant to the arrest of the ship. An
introductory hearing was held by that Court on 7 June, 1994. The plaintiff
has brought two applications in those proceedings for the lifting of the
arrest of the ship. Two judgments were delivered on 14 July, 1994 by
the Antwerp Court which refused to release the ship from arrest. No
application has been brought by the plaintiff to stay the consequential
proceedings brought by the defendant in the Antwerp Commercial Court.
In the defendant's motion presently before the Court it seeks the relief to
which I have already referred.
THE LAW
There are two fundamental questions regarding the defendant's
application to stay the proceedings in this Court:
1. Which Court was first seized of the dispute between the parties within
the meaning of Article 22 of the Brussels Convention? Was it the Antwerp
Court of First Instance before which proceedings were brought by the
defendant against the plaintiff for the arrest of the ship in January, 1994;
or was it this Court before which the plaintiff's action commenced on 9
February, 1994?
2. Having regard to all relevant circumstances, should this Court exercise
its inherent jurisdiction and decline to entertain proceedings initiated by
the plaintiff on the ground that the Antwerp Court is the most convenient
venue for all concerned and it is desirable to avoid the possibility of
conflicting decisions.
As to the first question; Article 22 of the Brussels Convention provides
that:-
"Where related actions are brought in the courts of different contracting
States any court other than the court first seized may, while the actions
are pending at first instance, stay its proceedings . . ."
The first court application in point of time was that of the defendant in
proceedings brought by it against the plaintiff in the Antwerp Court of
First Instance in which an order for the arrest of the ship was made on
21 January, 1994. That application was based upon alleged breach of
contract by the plaintiff in failing to authorise the ship to proceed from
Antwerp to Vietnam with the defendant's cargo. It was submitted that
consequential substantive proceedings were commenced in the Antwerp
Court on 20 May, 1994 and an introductory hearing has been held in
that regard. No application has been brought by the plaintiff to stay the
Belgian proceedings, but two unsuccessful applications have been made
to lift the arrest of the ship to which I have already referred.
Article 57 of the Brussels Convention provides that:-
[it] "shall not affect any Convention to which the contracting States are
or will be parties and which, in relation to particular matters, governs
jurisdiction or the recognition or enforcement of judgments".
In accordance with the provisions of Article 7(1)(c) of the International
Convention Relating to the Arrest of Seagoing Ships, signed at Brussels
on 10 May, 1952 ("the Arrest Convention") to which Belgium is a party,
the Belgian courts have jurisdiction to determine the merits of the dispute
between the parties. It is submitted that having regard to the provisions
of Article 57 of the Brussels Convention, the Arrest Convention (insofar
as it governs jurisdiction) prevails over the Brussels Convention and the
effect of the combined provisions of both Conventions is that the Belgian
courts have jurisdiction to determine the merits of the dispute between
the plaintiff and the defendant in these proceedings. This point has not
been challenged by the plaintiff and appears to be well founded.
It was further argued on behalf of the defendant that there will be a
substantial overlap between the proceedings taken before the Antwerp
Court and the proceedings in this Court. The Belgian proceedings concern
the breach by the plaintiff of its obligation under the contract of carriage
evidenced by the bills of lading. It is submitted that it will be necessary,
therefore, for the Court to construe the terms and conditions of the
bills of lading. In the Irish proceedings it is necessary for the plaintiff
to establish that the terms and conditions of the charterparty between
the plaintiff and L are incorporated into the contractual relationship
between the plaintiff and the defendant by means of the terms in
the bills of lading providing for incorporation of the charterparty and
those which provide that in the event of any inconsistency the terms
of the charterparty will prevail over the terms of the bills of lading. The
defendant submits, therefore, that the plaintiff will have to establish in the
Irish proceedings that on a proper construction of the bills of lading it is
the main charterparty rather than the subcharterparty that is incorporated
by the terms in the bills since the subcharterparty merely confers a lien
in respect of freight and does not confer any right of sale in respect of
the cargo. The right of sale is conferred by the charterparty which, if not
incorporated by the bills of lading, will be of no avail to the plaintiff in
seeking the relief sought against the defendant.
It was further submitted that, having regard to the importance of the
terms of the bills of lading in both actions, there is a significant overlap
between the proceedings in the respective courts and, therefore, there
is a possibility that there may be irreconcilable judgments if the actions
proceed in both jurisdictions. It was urged on behalf of the defendant
that paragraph 3 of Article 22 of the Brussels Convention emphasises that
the objective of the article is to avoid the risk of irreconcilable judgments
resulting from several proceedings.
Article 27 of the Brussels Convention provides that a judgment given in
one contracting State shall not be recognised in another contracting State
if (inter alia) the judgment is "irreconcilable with a judgment given in
a dispute between the same parties in the State in which recognition is
sought". The defendant submits that Article 27 affords a further argument
to support its contention that the Irish proceedings should be stayed on
the basis that the risk of irreconcilable judgments emerging from the Irish
and Belgium courts may lead to the latter ultimately refusing to recognise
a judgment delivered by this Court in these proceedings.
It is not in controversy that the plaintiff could have sought the relief which
it is now seeking in this Court by way of a counterclaim in the Antwerp
proceedings and it was pointed out that the plaintiff has not offered any
explanation for not having done so. Furthermore, it would have been open
to the plaintiff to issue proceedings against L in the Belgian courts since it
is a company registered in Belgium. There seems to be no doubt that the
plaintiff's real dispute is not with the defendant but rather with L against
whom it has taken arbitration proceedings. It was further submitted on
behalf of the defendant that under English law where a vessel is arrested
in English territorial waters, the effect of the arrest would be that the
Courts of England would be seized of the substantive proceedings in the
context of Article 22 of the Brussels Convention. Counsel referred to the
following authorities in support of that submission:- Freccia Del Nord,
[1989] 1 Lloyd's Rep 388; the Deichland, [1990] 1 QB 361 ; the Hanna H
[1994] 1 Lloyd's Rep 287. It was submitted that these authorities would
find favour in this Court in similar circumstances. It was urged that by
analogy the Court also should hold that the proceedings in Belgium stem
from the order directing the arrest of the ship in January, 1994 and that
the Antwerp court is that first seized of the matter within the meaning of
Article 22.
In additional to arguments advanced that this Court should in exercise
of its inherent jurisdiction stay the Irish proceedings, the following
submissions were made that Ireland is not the appropriate forum to
determine the dispute between the parties:-
1. The proceedings taken by the plaintiff have no connection with Ireland
with the exception that the defendant is a company registered in Ireland
for Austrian tax reasons.
2. Ultimately, since the current application being made by the plaintiff is
for an interlocutory order for sale, a plenary hearing on oral evidence will
be required in Ireland dealing with the substance of the dispute between
the plaintiff and the defendant, notwithstanding the fact that there is
no connection between the parties and Ireland and that none of the
witnesses required by either party are resident in Ireland and this will
cause substantial inconvenience to both sides.
3. The order sought by the plaintiff in its interlocutory application is an
order for the sale of the defendant's cargo on board the ship in Antwerp.
Any order for sale made by the Irish court on the plaintiff's application
would require to be recognised and enforced in Belgium. It was contended
that the plaintiff may well have considerable difficulties in obtaining
recognition and enforcement of any such order having regard to the
existence of proceedings between the parties in Antwerp.
4. Were the Irish court to order the sale of the defendant's cargo, it would
be unable to supervise or monitor the sale. Furthermore, if the cargo is
sold the proceeds of sale in normal course should be remitted to Ireland
to be under the supervision of the Irish court. It was submitted that this
process is unwieldy and unnecessary having regard to the fact that the
plaintiff could have sought the same order for sale in Antwerp rather than
in Ireland.
5. Even if the cargo is sold it is difficult to see how the plaintiff would
be entitled to the proceeds of sale of the defendant's cargo where the
defendant has not been in default in any way in paying freight or any
other sums due to the plaintiff. It has no direct contractual relationship
with the defendant other than through the bills of lading since the
defendant is not a party to the charterparty between the plaintiff and
L which confers the lien and right of sale upon the plaintiff. It is to
be noted that no such right of sale is conferred upon any party in the
subcharterparty to which the defendant is a subscriber. It was submitted
on behalf of the defendant that it has a full defence on the merits in that
no sum is due or owing by it to either the plaintiff or L regarding freight or
in any other respect.
6. The courts in Antwerp have already conducted a number of hearings
on the matters in issue between the parties concerning the arrest of
the vessel, the substantive proceedings taken by the defendant against
the plaintiff for breach of its obligations under the bills of lading and the
applications by the plaintiff to have the arrest of the vessel lifted.
It was urged that in the light of the foregoing the courts of Antwerp are
the appropriate courts to hear and determine the matters in dispute
between the plaintiff and the defendant, having regard both to the
provisions of Article 22 of the Brussels Convention and to the other
principles to which the court is entitled to have regard pursuant to its
inherent jurisdiction.
The plaintiff's response to the defendant's case is that the proceedings
brought by the defendant against it in January, 1994 before the Antwerp
Court of First Instance did not constitute substantive proceedings,
but related only to an application for the arrest of the vessel and was
not concerned with the merits of the dispute between the parties. It
was submitted that under Belgian law, it is necessary to bring further
substantive proceedings in that regard in the Belgian courts and that the
judge hearing the arrest application has no authority to rule upon the
merits of the case at that time. An affidavit sworn by Mr Wim Fransen,
a Belgian advocate, was relied upon in support of that contention. It
contains the following averments at paragraphs 5 and 6:-
"5. The jurisdiction of the Arrest Judge in the Antwerp Court should be
explained. The Arrest Judge has only jurisdiction in relation to arrest
and attachment measures. Under Article 1489 of the Belgian Procedure
Code the Arrest Judge is not allowed to give a decision regarding the
substance of the case. [Article 1489 and a translation thereof into English
are exhibited].
6. Proceedings brought before the Arrest Judge are not substantive
proceedings under Belgian law. In order that the merits of the dispute
between the plaintiff and the defendant be decided upon it would
be necessary for the defendant to bring substantive proceedings in
the Belgian courts. I note that at paragraph 8 of her affidavit Ms D
admits that what she termed 'consequential proceedings' have not yet
been brought in the Antwerp Court on the merits of dispute between
the parties. I must point out that such substantive proceedings have
meanwhile been started by the defendant and G before the Antwerp
Commercial Court. The Writ of Summons was notified to M Limited on
the 20 May, 1994 and the introductory hearing was held on the 7 June,
1994. At this hearing this case was adjourned Sine Die to allow parties to
prepare their written submissions . . ."
A translation into English of Article 1489 of the Belgian Procedure Code is
as follows:-
"1489: Only the Arrest Judge has jurisdiction to judge disputes regarding
the conformity to the rules of the proceedings of arrest.
The decision of the Arrest Judge does not prejudice the case itself."
This article does not appear to have the restrictive meaning ascribed
to it by the deponent. An affidavit in reply to Mr Fransen was sworn by
Mr Andre Kegels, also an advocate practising in Belgium, in which he
deposed, inter alia, at paragraph 4 as follows:-
"4. I say and believe that, as stated by Ms D at paragraph 6 of her
affidavit, the vessel was arrested in Antwerp by the defendant by reason
of the failure by the [plaintiff] to perform its obligations to carry the
defendant's cargo to Hochimin City on foot of the bills of lading issued in
respect of the said cargo."
Article 22 of the Brussels Convention when read as a whole makes clear
that its primary purpose is to lay down provisions which are designed
to avoid the risk of irreconcilable decisions which may arise of related
actions between the same parties are litigated in two or more contracting
States. The effect of the article is to give precedence to proceedings in
the court which is first seized of the matter. Courts of other contracting
States where related actions are brought may stay their proceeding, or in
certain circumstances may decline jurisdiction. There is nothing in Article
22 or elsewhere in the Brussels Convention about what Mr Fransen calls
"substantive proceedings".
Although I have been furnished with little information as to the function
of the "Arrest Judge" in Belgian maritime law, it appears that there is a
substantial degree of similarity between the functions of the Arrest Judge
in Belgium and the Admiralty Judge in this jurisdiction when dealing with
an application for the arrest of a vessel. In Irish law application for an
arrest warrant is commonly the first step taken by a plaintiff in Admiralty
proceedings against the owner of a ship and it is made ex parte. It is not
an application which is independent and complete in itself. It is a step
taken by the plaintiff to provide for security in respect of his claim against
the shipowner. It is incumbent on a plaintiff who applies for a warrant
directing the arrest of a ship, to furnish this Court by affidavit with details
of his claim against the shipowner and other information as specified
in Order 64 Rule 6(a) of the Rules of the Superior Courts, including an
averment that the applicant's claim has not been satisfied. The claim is
not investigated by the Court at that stage. It can make no order on the
merits of the claim on an arrest application as the defendant is not before
the Court.
It will be appreciated, therefore, that an application to this Court for
the arrest of a vessel is not a self-contained application which stands in
isolation, but is a step in larger proceedings concerning the plaintiff's
claim against the shipowner. As in Belgian law under Article 1489 supra,
the issuing of an arrest warrant does not establish any wrongdoing or
breach of contract on the part of the shipowner and does not in any way
prejudice the owner's defence to the plaintiff's claim or any counterclaim
he may wish to bring in the plaintiff's action.
Stress is laid by Mr Fransen that the Arrest Judge in Belgian law has
no authority to deal with the plaintiff's substantive claim against the
shipowner. He does not elaborate on this proposition in any way and
it may well be that the Arrest Judge is in broadly the same position as
this Court in dealing with an ex-parte application for an arrest warrant.
I note that the original application to the Arrest Judge also appears to
have been made ex parte. Nothing which has been deposed to by Mr
Fransen establishes that the application made on behalf of the defendant
in January, 1994 to the Antwerp Court of First Instance for an arrest order
relating to the ship ought not to be regarded as a step in the defendant's
proceedings against the plaintiff in that jurisdiction. For the foregoing
reasons I am satisfied that the Court first seized of the issues between
the parties was the Antwerp Court of First Instance and not this Court.
Furthermore, I am satisfied that the arguments advanced on behalf of the
defendant on this issue are well-founded. Finally, I have no hesitation in
coming to the conclusion that for the reasons advanced on behalf of the
defendant to which I have referred earlier in this judgment, it is proper
for this Court to exercise its discretion under Article 22 of the Brussels
Convention and stay its proceedings.
In the light of the foregoing, it is unnecessary to consider the alternative
argument based upon the inherent jurisdiction of the Court to stay its
proceedings or decline jurisdiction, other than to comment that, whatever
the powers of the Court may be, it has no authority to disregard the
terms of Article 22 which is binding upon it pursuant to Section 3 of the
1988 Act. In short, if the Court were to hold that it was first seized of the
dispute between the parties under Article 22, then it could not abdicate its
responsibility by declining jurisdiction or staying its proceedings.