CRESSWELL J: This application raises what, according to the research
of Counsel, are novel points and problems as to jurisdiction in relation
to international banking arrangements, in this case a loan agreement
and associated security documents. For this reason this judgment will
he treated as having been given in open Court. The particular problem
raised by this case is as follows: how is the risk of conflicting judgments
to be avoided where (a) an agreement conferring jurisdiction (here on
the English Courts) was concluded for the benefit of only one of the
parties (here the bank); and (b) that party retains the right to bring
proceedings in any other Court which has jurisdiction by virtue of the
Brussels Convention; and that party commences proceedings both in the
Commercial Court (see (a) above) and in the Courts of Greece (see (b)
above)?
By a summons dated Jan 31, 1997 the plaintiff bank seeks an order that
the defendants be restrained from commencing proceedings against the
plaintiff in the Courts of Greece in connection with or arising from the loan
agreement made between the parties on May 7, 1996; alternatively, if
such proceedings have already been commenced, that the defendants be
restrained from taking any further steps in these proceedings.
The order sought by the plaintiff bank has been refined in the course of
the hearing and, as a result, the bank now seeks an order in the following
form:
Until after final judgment in this action or further order the defendants
must not: (a) contend in the courts of Greece or elsewhere that any
judgment or order in these proceedings is otherwise than conclusive
and binding upon the defendants; (b) take any further steps in the
proceedings begun by writ dated 14th February 1997 in the multi-
membered first instance Court of Piraeus; and (c) take any steps to
prosecute any proceedings against the plaintiff pursuant to Article 933 of
the Greek Civil Procedure Code.
The affidavit evidence
There is extensive affidavit evidence before the Court as follows: on
behalf of the plaintiff bank the first affidavit and third affidavit of Mr
Stephen Drury; the first affidavit of Mr Jeremy Watson; the first affidavit
of Mr John Hadjis; and the second affidavit of Mr Christopher Swart; on
behalf of the defendants, the first affidavit of Mr Steven Lowe; the second
and third affidavits of Mr Fergus Broderick.
Background
The plaintiff bank's principal place of business is in Lausanne, Switzerland.
On Jan 4, 1996 the bank was granted authorization to have a
representative office in Greece.
The defendants are four single purpose companies registered in Liberia,
each owning one of the mortgaged vessels referred to below.
On May 7, 1996 the plaintiff bank, as lender, entered into a loan
agreement with the defendants as borrowers to provide a loan facility
of US$19.8 m for the refinancing of four ships, J., P., Ar. and Ar., owned
respectively by the first, second, third and fourth defendants. As security
for their obligations under the loan each of the defendants executed a
first preferred Liberian mortgage over the vessel owned by them. All four
mortgages were in identical form.
Clause 2.1 of the loan agreement provided:
The Borrowers jointly and severally represent and warrant that...
2.1.9 the choice of English law to govern this Agreement and the other
Security Documents and the submission by the Borrowers to the non-
exclusive jurisdiction of the English courts are valid and binding, and none
of the Borrowers is entitled to claim any immunity in relation to itself or
its assets under any law or in any jurisdiction in connection with any legal
proceedings, set-off or counterclaim relating to this Agreement or the
other Security Documents or in connection with the enforcement of any
judgment or order arising from such proceedings.
Clause 23 of the loan agreement provided:
23. APPLICABLE LAW AND JURISDICTION
23.1 This Agreement shall be governed by and construed in accordance
with English law.
23.2 Each Borrower irrevocably agrees for the exclusive benefit of the
Lender that the English courts shall have jurisdiction in relation to any
dispute and any suit, action or proceeding (... "Proceedings") which may
arise out of or in connection with this Agreement and/or any of the other
Security Documents, and for such purposes irrevocably submits to the
jurisdiction of such courts.
23.3 [provisions as to service].
23.4 Nothing in this Clause 23 shall affect the right of the Lender to serve
process in any manner permitted by law or limit the right of the Lender
to take Proceedings against the Borrowers (or any of them) in any other
court of competent jurisdiction, nor shall the taking of Proceedings in one
or more jurisdictions preclude the taking of Proceedings by the Lender in
any other jurisdiction, whether concurrently or not.
23.5 Each Borrower irrevocably waives any objection which it may now
or hereafter have on the grounds of inconvenient forum or otherwise
to Proceedings being brought in any such court as is referred to in this
Clause 23, and further irrevocably agrees that a judgment or order in any
Proceedings brought in the English courts shall be conclusive and binding
upon the Borrowers and may be enforced without review in the courts of
any other jurisdiction.
23.6 Each Borrower consents generally in respect of any Proceedings
arising out of or in connection with this Agreement and/or any of the
other Security Documents to the giving of any relief or the issue of any
process in connection with such Proceedings, including, without limitation,
the making, enforcement or execution against any property or assets
whatsoever of any order or judgment which may be made or given in
such Proceedings.
The plaintiff bank contends that the loan became repayable by virtue of
the occurrence of certain events which are alleged to constitute events
of default under cl 15.1 of the loan agreement (see pars 8 to 10 of the
points of claim and the heading "Events of default" in Mr Drury's first
affidavit).
The allegations of default under the loan agreement (as set out in ML
Drury's first affidavit) are denied by the defendants.
On Dec 23, 1996 the plaintiff bank demanded repayment under the loan
agreement.
On Jan 2, 1997 the writ was issued in the Commercial Court by the bank
against all four defendants seeking the following relief:
(1) Under paras 10 and 11 US$18,030,103 (principal and interest).
(2) Under para 12 US$108,707 and US$107,329 (paid by the plaintiff on
behalf of the defendants).
(3) A declaration that by reason of the foregoing, under clauses 16.1 and
16.2 of the loan agreement, the plaintiff is entitled to be indemnified in
respect of continuing and future costs and expenses which it incurs in the
enforcement or preservation of its security.
(4) A declaration that by reason of the foregoing the first preferred
Liberian mortgages in respect of the four vessels listed in para 6 are valid
and enforceable in accordance with their terms...
On Jan 3 the writ was served on the defendant companies in London
under the service provisions contained in cl 23.3 of the loan agreement.
On Jan 20 the plaintiff bank issued an art 905 petition before the one
member first instance Court of Piraeus requesting a declaration that:
... there be declared enforceable in Greece the unilateral deed for
concession of mortgage dated May 7th 1996 by which the opponent
granted to us as mortgagee a first preferred mortgage up to the amount
of US$19.8 million plus interest and expenses over the Liberian flagged
cargo vessel JESSICA owned by the opponent...
On or after Jan 27 the plaintiff's art 905 proceedings were served on the
first defendants in Greece.
On Jan 29 the defendants' solicitors wrote to the plaintiff's solicitors
stating, inter alia:
We understand that your client has itself issued proceedings in Greece
on 20th January which were served today for hearing in Greece in three
days' time. Are you suggesting that our client should not be allowed to
defend those proceedings?
On Jan 30 the plaintiff's solicitors wrote to the defendants' solicitors:
... You will be aware from the terms of the exclusive jurisdiction clauses
that they are expressed to be for the benefit of our client as lender,
rather than your client as borrower. The "proceedings" in Greece on
20th January you referred to are, as you know, simply steps taken by
our client to enforce their mortgage. These are in no way comparable
with the substantive proceedings which your client has threatened to
commence before the multi-membered first instance Court of Piraeus in
contravention of the clear terms of the security documentation...
On Jan 31 the summons now before the Court was issued seeking
injunctive relief and on the same day the plaintiff issued an O 14
summons for:
Final judgment in this action against the defendants for the amounts and
declarations claimed in the points of claim with interest, if any, and costs.
On Feb 7 the plaintiff's summons for injunctive relief came before Mr
Justice Thomas, who gave directions for the exchange of evidence.
On Feb 10 the first defendants served their pleading in the one member
first instance Court in opposition to the application contained in the
plaintiff's petition to that Court of Jan 20.
On Feb 11 the single member first instance Court of Piraeus directed that
written submissions should be filed by Feb 14.
On Feb 14 a further pleading was filed by the first defendants in the
multi-membered first instance Court of Piraeus.
Thus there are the following sets of proceedings:
(1) this action, commenced by writ issued on Jan 2, 1997, with service
the following day;
(2)(a) the plaintiff's application under art 905 of the Greek Civil Procedure
Code in the Piraeus single member first instance Court for an order
declaring the Liberian mortgage over Jessica enforceable in Greece. This
petition was issued on Jan 20, 1997 and served on or after Jan 27;
(b) the first defendants, the owners of Jessica, have lodged a defence to
the 905 petition;
(3) the first defendants commenced proceedings against the plaintiff in
the multi-membered first instance Court of Piraeus on Feb 14, 1997.
In addition, according to a note provided by the plaintiff in the course
of the hearing Jessica is subject to arrests in Piraeus by six creditors
in respect of the following claims: 5.5 m drachmas (claim in respect of
paints); 18 m drachmas (claim in respect of air tickets); 12,000 drachmas
(claim in respect of lubricants); 4 m drachmas (repairers' fees); 5 m
drachmas (claim in respect of supplies); 300 m drachmas plus US$6.5 m
(claim in respect of various alleged contracts for purchase of shares in the
Ka. group and for purchase of various Ka. properties).
According to the defendants there are at least two petitions pending by
third-party creditors in Greece.
The plaintiff's submissions
Mr Layton, QC on behalf of the plaintiff bank submitted as follows:
As to the jurisdiction clause this case is virtually indistinguishable from
the decision of the Court of Appeal in Continental Bank NA v Aeakos
Compania Naviera SA, [1994] 1 Lloyd's Rep 505; [1994] 1 WLR 588
(Aeakos). The relevant clause is also similar to that in Ocarina Marine
Ltd v Marcard Stein & Co, [1994] 2 Lloyd's Rep 524. By bringing disputes
before the Greek Courts which arise out of or in connection with the loan
agreement and/or the mortgages, the defendants are in breach of cl 23.2.
This depends on the clause being an exclusive jurisdiction clause, at least
as far as proceedings brought by the defendants are concerned.
The plaintiff bank advanced four arguments.
First argument: on its true construction, the clause is plainly intended to
prorogate the jurisdiction of the English Courts (a) exclusively in respect
of proceedings brought by the defendants or any of them against the
plaintiff; but (b) non-exclusively in respect of proceedings brought by the
plaintiff against the defendants or any of them.
Second argument: the fact that the clause does not describe the
jurisdiction conferred as "exclusive" is not material (see Aeakos at p 509,
cols 1 and 2; pp 593H-594A).
In case the plaintiff's first and second arguments on construction are not
sufficient or are not right the plaintiff reserved the following additional
arguments:
Third argument: in the absence of unusual or particular circumstances
which indicate otherwise, where there is an agreement to submit disputes
to the jurisdiction of a particular country, the parties are to be taken to
have intended that country to have exclusive jurisdiction (see Aeakos at p
509, col 1; p 594B-D).
Fourth argument: if cl 23.2 is not an exclusive jurisdiction clause in
respect of the defendants' proceedings it should nevertheless be treated
as such by reason of art 17 of the Brussels Convention (see Kurz v Stella
Musical Veranstaltungs GmbH, [1992] Ch 196 at p 203D-H; see also IP
Metal Ltd v Ruote OZ SpA, [1993] 2 Lloyd's Rep 60 at p 67).
As to arts 21 and 22 of the Brussels Convention in the present case,
unlike Aeakos, the English proceedings were commenced first. Accordingly
there is no conflict between the provisions of art 17 (giving effect to
the jurisdiction clause) and those of art 21. The issues in the Greek
proceedings and in the English proceedings are substantially the same.
In this action the plaintiff seeks to recover sums due under the loan
agreement. In the Greek action the defendants seek to escape liability
under the same agreement. In particular both actions depend, or depend
largely, on whether the validity of the loan agreement can be impugned in
the light of the Greek regulatory provisions.
The Greek proceedings and English proceedings are "related" actions
within the meaning of art 22. There is plainly a risk of irreconcilable
judgments resulting from separate proceedings in England and Greece.
The plaintiff, having been the first party to seise a Court of the disputes
between the parties, is entitled to the benefit of art 21 and/or art 22.
The evidence is that it will not be able to obtain the immediate benefit of
those articles in the Greek Courts, because the jurisdiction of the Greek
Courts cannot be disputed without also submitting a defence on the
substance, which would be a time consuming and costly exercise.
As to exercise of discretion this is an appropriate case in which to grant an
anti-suit injunction. Such injunctions may be granted where, as here, the
defendant breaks, or threatens to break, the plaintiff's contractual right to
have disputes submitted to the English Courts (see Sohio Supply Co Ltd
vGatoil (USA) Inc, [1989] 1 Lloyd's Rep 588 at p 592). This is particularly
the case where, as here, damages would not he an adequate remedy and
there are countervailing factors, (see Aeakos at p 512, col 1; p 598E-G).
The defendants' submission
Mr Dunning on behalf of the defendants submitted as follows:
It is the defendant's case that the proceedings which they have
commenced against the plaintiff in Greece are essentially defensive to
proceedings previously commenced in Greece by the plaintiff against the
first defendants and they should not be stopped from continuing such
proceedings.
The defendants assert that they do not intend to commence any other
proceedings in Greece.
There is no exclusive jurisdiction for the following reasons: there is no
express promise by the defendants not to bring any claim against the
bank (including any cross-claim or set-off) save in the English Courts.
Further, there is no implied promise to this effect.
Clauses 2.1.9, 23.2 and 23.3 of the loan agreement contain a submission
by the defendants to the "non-exclusive" jurisdiction of the English
Courts. They do not contain any agreement that the English Courts shall
have exclusive jurisdiction.
The Aeakos decision is distinguishable because, as far as can be discerned
from the report, there was no equivalent in that case to cl 2.1.9 in
the present case. Article 17 does not have the effect of converting
a non-exclusive clause into an exclusive one so as to give rise to a
right to restrain foreign proceedings (see Cheshire & North on Private
International Law, 12th ed, p 317).
In any event, the present case gives rise to a question not considered by
the Court of Appeal, namely:
What if the lender/beneficiary of the promise not to sue elsewhere,
himself commences proceedings elsewhere against one or more of the
promisors?
If there is an implied promise it must, as a matter of common sense and
business efficacy, be subject to a qualification that the promisors are
entitled in the widest sense to defend themselves against proceedings in
a particular jurisdiction commenced by the promisee under cl 23.4 (even
if, as here, such defence may require the commencement of separate
proceedings and the involvement of other connected parties).
Accordingly, as the commencement of proceedings by the defendants in
Greece is not a breach of contract, the plaintiff does not have a cause of
action on the basis of which to obtain the injunction sought.
As to discretion, even if the plaintiff does have a cause of action an
injunction should not be granted (see Dicey & Morris, The Conflict of
Laws, 12th ed, pp 408-411, The Lisboa, [1980] 2 Lloyd's Rep 546
at p 551, Lord Brandon in South Carolina Insurance Co v Assurantie
Maatschappij "De Zeven Provincien" NV, [1986] 2 Lloyd's Rep 317 at p
324, cols 1 and 2; [1987] 1 AC 24 at pp 39H-40E). The Court retains a
discretion even in an art 17 case (see Mr Justice Clarke in Ultisol Transport
Contractors Ltd v Bouygues Offshore SA, [1996] 2 Lloyd's Rep 140 at p
147).
This application should be considered on the basis of the American
Cyanamid principles (American Cyanamid Co v Ethicon Ltd, (see [1975]
AC 396)) (see Mr Justice Hoffmann (as he then was) in Apple Corporation
Ltd v Apple Computer Inc and Others, [1992] RPC 70).
In the present case the Court ought to he particularly reluctant to
interfere with the process of the Greek Court because:
(1) It is the plaintiff not the defendants who first commenced proceedings
within the jurisdiction of the Greek Courts.
(2) In such proceedings the plaintiff is asserting rights over a valuable
asset which the defendants maintain the plaintiff is not entitled to do, on
bases which all the defendants dispute.
(3) It would be contrary to fundamental principles of justice and fairness
for the defendants to be restrained by injunction from defending
themselves against such claim in every way which is lawfully open to
them in the Greek Courts.
(4) In the present case it would be a particular interference with the
Greek Courts for them to be fettered in any way in considering whether
or not the loan contracts were invalidated because they were made in
Greece in contravention of Greek public law, viz Greek banking law and
regulations.
(5) There is no indication that the Greek Courts would decline jurisdiction
and the Greek Courts have not been asked to do so by the plaintiff
(compare Philip Alexander Securities & Futures Ltd v Bamberger and
Others, [1996] CLC 1,757 at p 1,789, per Lord Justice Leggatt).
The present course of action is the only method by which the defendants
can raise at this stage all the defences open to them. Articles 21 and 22
do not assist the plaintiff. As a matter of discretion the application should
he dismissed.
I record my gratitude to Counsel and to their instructing solicitors for the
assistance that I have received in relation to this application.
Article 17 of the Brussels Convention
Article 17 provides:
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 -- (a) in writing or evidenced in writing, or (b)
in a form which accords with practices which the parties have established
between themselves, or (c) in international trade or commerce, in a form
which accords with a usage of which the parties are or ought to have
been aware and which, in such trade or commerce is widely known to,
and regularly observed by, parties to contracts of the type involved in the
particular trade or commerce concerned.
... If an agreement conferring jurisdiction was concluded for the benefit
of only one of the parties, that party shall retain the right to bring
proceedings in any other court which has jurisdiction by virtue of this
Convention...
In Anterist v Credit Lyonnais, [1986] ECR 1951, the European Court
held that that part of art 17 which commences "If any agreement
conferring jurisdiction..." applies only where it is clear from the terms of
the jurisdiction clause that there was a common intention to confer an
advantage on one of the parties only. Clauses which expressly state the
name of the party for whose benefit they were agreed and those which,
while specifying the Courts in which either party might sue the other, give
one of them a wider choice of Courts must be regarded as clauses which
were agreed for the exclusive benefit of one of the parties.
Articles 21 and 22 of the Brussels Convention
Article 21 provides:
Where proceedings involving the same cause of action and between the
same parties are brought in the courts of different Contracting States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established. Where the jurisdiction of the court first seised is established,
any court other than the court first seised shall decline jurisdiction in
favour of that court.
Article 22 provides:
Where related actions are brought in the courts of different Contracting
States, any court other than the court first seised may, while the actions
are pending at first instance, stay its proceedings. A court other than
the court first seised may also, on the application of one of the parties,
decline jurisdiction if the law of that court permits the consolidation
of related actions and the court first seised has jurisdiction over both
actions. For the purposes of this Article, actions are deemed to be related
where they are so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings.
In Gubisch v Palumbo, [1987] ECR 4861 it was held that the concept of
the "same cause of action" had to he given an independent Convention
interpretation and did not depend on the procedural law of the Courts
concerned. In that case a German seller sued an Italian buyer in the
German Court for the price. The Italian buyer subsequently sued the
German seller in the Italian Court for a declaration that he was not liable
on the contract, or for its rescission. The expression "the same cause of
action" is a translation of what appears in the French version as "le meme
objet et la meme cause", and the European Court held that where the
same parties were suing each other in two legal proceedings in different
Contracting States which were based on the same contractual relationship
the "same cause of action" was involved, and it was not necessary for the
two claims to be identical for them to involve the same subject matter.
At p 4875 the European Court said:
It must he observed first of all that according to its wording Article 21
applies where two actions are between the same parties and involve the
same cause of action and the same subject matter; it does not lay down
any further conditions. Even though the German version of Article 21
does not expressly distinguish between the terms "subject-matter" and
"cause of action", it must be construed in the same manner as the other
language versions, all of which make that distinction.
In the procedural situation which has given rise to the question submitted
for a preliminary ruling the same parties are engaged in two legal
proceedings in different Contracting States which are based on the same
"cause of action", that is to say the same contractual relationship. The
problem which arises, therefore, is whether those two actions have the
same "subject-matter" when the first seeks to enforce the contract and
the second seeks its rescission or discharge.
In particular, in a case such as this, involving the international sale of
tangible moveable property, it is apparent that the action to enforce
the contract is aimed at giving effect to it, and that the action for its
rescission or discharge is aimed precisely at depriving it of any effect.
The question whether the contract is binding therefore lies at the heart
of the two actions. If it is the action for rescission or discharge of the
contract that is brought subsequently, it may even be regarded as simply
a defence against the first action, brought in the form of independent
proceedings in another Contracting State.
In those procedural circumstances it must he held that the two actions
have the same subject matter, for that concept cannot be restricted so as
to mean two claims which are entirely identical.
If, in circumstances such as those of this case, the questions at issue
concerning a single international sales contract were not decided solely
by the court before which the action to enforce the contract is pending
and which was seised first, there would he a danger for the party seeking
enforcement that under Article 27(3) a judgment given in his favour
might not be recognized, even though any defence put forward by the
defendant alleging that the contract was not binding had been not been
accepted. There can be no doubt that a judgment given in a Contracting
State requiring performance of the contract would not be recognized in
the State in which recognition was sought if a court in that State had
given a judgment rescinding or discharging the contract. Such a result,
restricting the effects of each judgment to the territory of the State
concerned, would run counter to the objectives of the Convention, which
is intended to strengthen legal protection throughout the territory of
the Community and to facilitate recognition in each Contracting State of
judgments given in any other Contracting State.
In The Tatry (sub nom The Maciej Rataj), [1995] 1 Lloyd's Rep 302;
[1994] ECR 1-5439 the European Court held that because the terms
"same cause of action" and "between the same parties" have an
independent meaning (see Palumbo, sup) they must be interpreted
independently of the specific features of the law in force in each
Contracting State. The distinction between an action in personam and an
action in rem is not material for the interpretation of art 21.
The European Court further held in The Tatry that the concept of "related
actions" for the purpose of art 22 had to be given an autonomous
interpretation. That interpretation must be broad and cover all cases
where there was a risk of conflicting decisions, even if the judgments
could be separately enforced and their legal consequences were not
mutually exclusive. The objective of the last sentence in art 22 was to
improve co-ordination of the exercise of judicial functions within the
Community and to avoid conflicting and contradictory decisions, even
where the separate enforcement of each of them was not precluded.
At p 307, col 1; p 5473 the European Court said:
The Court stressed in (Palumbo) that art 21, together with art 22 on
related actions, is contained in Section 8 of Title II of the Convention, a
section intended, in the interests of the proper administration of justice
within the Community, to prevent parallel proceedings before the Courts
of different Contracting States and to avoid conflicts between decisions
which might result therefrom. Those rules are therefore to preclude, in
so far as is possible and from the outset, the possibility of a situation
such as that referred to in art 27(3), that is to say the non-recognition
of a judgment on account of its irreconcilability with a judgment given in
a dispute between the same parties in the State in which recognition is
sought.
As to art 21, the Court said at p 308; p 1-5475:
It should be noted at the outset that the English version of art 21 does
not expressly distinguish the concepts of "object" and "cause" of action.
That language version must however be construed in the same manner
as the majority of the other language versions in which that distinction is
made (see the judgment of Gubisch vPalumbo).
For the purposes of art 21 of the Convention, the "cause of action"
comprises the facts and the rule of law relied on as the basis of the
action.
Consequently, an action for a declaration of non-liability, such as that
brought in the main proceedings in this case by the shipowners, and
another action, such as that brought subsequently by the cargo-owners
on the basis of shipping contracts which are separate but in identical
terms, concerning the same cargo transported in bulk and damaged in the
same circumstances, have the same cause of action.
The "object of the action" for the purposes of art 21 means the end the
action has in view...
In those circumstances... an action seeking to have the defendant held
liable for causing loss and ordered to pay damages has the same cause
of action and the same object as earlier proceedings brought by that
defendant seeking a declaration that he is not liable for that loss...
In art 21 of the Convention, the terms "same cause of action" and
"between the same parties" have an independent meaning (see Palumbo).
They must therefore be interpreted independently of the specific features
of the law in force in each Contracting State. It follows that the distinction
drawn by the law of a Contracting State between an action in personam
and an action in rem is not material for the interpretation of art 2l.
... a subsequent action does not cease to have the same cause of action
and the same object and to be between the same parties as a previous
action where the latter, brought by the owner of a ship before a court of
a Contracting State, is an action in personam for a declaration that that
owner is not liable for alleged damage to cargo transported by his ship,
whereas the subsequent action has been brought by the owner of the
cargo before a court of another Contracting State by way of an action in
rem concerning an arrested ship, and has subsequently continued both in
rem and in personam, or solely in personam, according to the distinctions
drawn by the national law of that other Contracting State.
As to art 22 the Court said at p 309; 1-5478:
The purpose of that provision is to avoid the risk of conflicting judgments
and thus to facilitate the proper administration of justice in the
Community... Furthermore, since the expression "related actions" does
not have the same meaning in all the Member States, the third paragraph
of art 22 sets out the elements of a definition. It follows that the
concept of related actions there defined must be given an independent
interpretation.
In order to achieve proper administration of justice, that interpretation
must he broad and cover all cases where there is a risk of conflicting
decisions, even if the judgments can be separately enforced and their
legal consequences are not mutually exclusive.
... on a proper construction of art 22 of the Convention, it is sufficient,
in order to establish the necessary relationship between, on the one
hand, an action brought in a Contracting State by one group of cargo
owners against a shipowner seeking damages for harm caused to part of
the cargo carried in bulk under separate identical contracts, and, on the
other, an action in damages brought in another Contracting State against
the same shipowner by the owners of another part of the cargo shipped
under the same conditions and under contracts which are separate from
but identical to those between the first group and the shipowner, that
separate trial and judgment would involve the risk of conflicting decisions,
without necessarily involving the risk of giving rise to mutually exclusive
legal consequences.
In Aeakos sup the loan agreement provided, inter alia:
21.01 This agreement shall be governed by and construed in accordance
with English law.
21.02 Each of the borrowers... hereby irrevocably submits to the
jurisdiction of the English courts and hereby irrevocably nominates... to
receive service of proceedings in such courts on its behalf but the bank
reserves the right to proceed under this agreement in the courts of any
other country claiming or having jurisdiction in respect thereof.
At p 509; p 593 Lord Justice Steyn (as he then was) said:
Does cl 21.02 contain an exclusive jurisdiction clause?
Clause 21.02 does not expressly make clear that the jurisdiction
agreement is an exclusive one. Dicey & Morris, The Conflict of Laws,
12th ed (1993) vol 1, p 422, submits that the question is simply whether
on its true construction the clause obliges the parties to resort to the
relevant jurisdiction, irrespective of whether the word "exclusive" is
used. In Sohio Supply Co Ltd v Gatoil (USA) Inc..., the Court of Appeal
approved this submission as contained in Dicey & Morris, 11th ed. In our
judgment it would be a surrender to formalism to require a jurisdiction
clause to provide in express terms that the chosen court is to be the
exclusive forum. We have already explained why we interpret cl 21.02
in a transitive sense as involving an agreement by the defendants to
submit disputes in connection with the loan facility to the jurisdiction
of the English courts. That does not necessarily mean that cl 21.02 is
an exclusive jurisdiction agreement... cl 21.02 (the only jurisdiction
agreement that we are asked to consider) does not contain a submission
to English jurisdiction simpliciter. We regard the concluding words as
significant:
... but the bank reserves the right to proceed under this agreement in the
courts of any country claiming or having jurisdiction in respect thereof.
The juxtaposition of a submission by the defendants to the jurisdiction of
the English courts and the option reserved in favour of the bank to sue
elsewhere brings into play the expressio unius exclusio alterius canon of
construction. It suggests that a similar option in favour of the defendants
was deliberately omitted. In our judgment the language of cl 21.02
evinces a clear intention that the defendants, but not the bank, would
be obliged to submit disputes in connection with the loan facility to the
English Courts.
In Ocarina sup each loan agreement provided for English law and
jurisdiction, the latter in the following terms:
25. Jurisdiction
(A) The Borrower hereby irrevocably agrees for the benefit of the Bank
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes which may arise
out of or in connection with Agreement and for such purposes irrevocably
submits to the jurisdiction of such courts...
(D) The submission to the jurisdiction of the Court referred to in Sub-
Clause (A) shall not (and shall not he construed so as to) limit the right
of the Bank to take proceedings against the Borrower in any other court
of competent jurisdiction nor shall the taking of proceedings in any one
or more jurisdiction preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
See further The Angelic Grace, [1995] 1 Lloyd's Rep 87, Court of Appeal.
In Sarrio SA v Kuwait Investment Authority, [1997] 1 Lloyd's Rep 113 the
Court of Appeal considered arts 21 and 22 in the context of the Grupo
Torras litigation. I refer in particular to the analysis of arts 21 and 22 in
the judgment of Lord Justice Evans.
Injunctions to restrain proceedings in a foreign Court
Dicey & Morris, The Conflict of Law, 12th ed at 408 states:
Injunctions:
English courts have long exercised the jurisdiction to restrain a party from
instituting or prosecuting proceedings in a foreign court...
The underlying principle is that the jurisdiction is exercised "where it is
appropriate to avoid injustice" or, as it was once put, where the foreign
proceedings are "contrary to equity and good conscience". Although it is
possible to identify certain categories of cases in which the jurisdiction
has been exercised "the width and flexibility of equity are not to be
undermined by categorisation". Thus the English court may restrain
proceedings brought abroad in breach of a contract not to sue, or in
breach of a contract to be bound by the result of English proceedings,
or to sue only in England. The court will also restrain proceedings which
interfere with "the due process of the court". Thus the court will enjoin
proceedings taken abroad to recover foreign assets, whereby the party
taking them will obtain an unfair advantage over other claimants in an
English administration, or bankruptcy or winding up.
In South Carolina Insurance Co sup at p 324, col 2; p 40, Lord Brandon,
in formulating certain basic principles governing the grant of injunctions
by the High Court said:
... The third basic principle is that, among the forms of injunction which
the High Court has power to grant, is an injunction granted to one party
to an action to restrain the other party to it from beginning, or if he
has begun from continuing, proceedings against the former in a foreign
court. Such jurisdiction is, however, to be exercised with caution because
it involves indirect interference with the process of the foreign court
concerned.
In Apple Corporation Ltd v Apple Computer Inc and Others sup the Court
was concerned with an application for an interlocutory injunction to
restrain Computer until trial from pursuing its opposition or cancellation
proceedings in the various countries in which these had been commenced
or applying to cancel or oppose any other of Apple's trademarks in respect
of Apple goods and services. Mr Justice Hoffmann held that, subject to the
need for caution in granting injunctions to restrain foreign proceedings,
the American Cyanamid principles applied to that case.
(See further Ultisol Transport sup).
In Philip Alexander Securities & Futures Ltd Bamberger and Others,
[1996] CLC 1,757 at 1,789, Lord Justice Leggatt said:
The practice of the courts in England to grant injunctions to restrain a
defendant from prosecuting proceedings in another country may require
reconsideration in the light of the facts of this case. The conventional view
is that such an injunction only operates in personal with the consequence
that the English courts do not and never have regarded themselves as
interfering with the exercise by the foreign court of its jurisdiction. In
cases where the defendant lives or has assets of substance in England
that view may have some reality for there is reason to think that the
injunction may be enforced so as to prevent proceedings taken in breach
of it from reaching the foreign court. But in cases in which the defendant
does not live in England and does not have assets here the injunction
is unlikely to be enforceable except by the foreign court recognising
and giving effect to the injunction or, where it refuses to do so, by this
court refusing to recognise the order of the foreign court made without
such recognition. In the present case the German courts regarded the
injunctions as an infringement of their sovereignty and refused to permit
them to be served in Germany. In addition they proceeded to give
judgments on the merits. It was for that reason that the amici curiae were
appointed in this case. In practice that point has not been developed in
these proceedings. But in future cases it may assume greater importance.
In cases concerning the European Union what would best meet the
predicament is a directive defining the extent of the recognition which the
orders of the courts of each member state are entitled to receive from the
court of other member states.
The present case -- conclusions
1. It is common ground that the loan agreement is governed by English
law (see cl 23.1).
2. Clause 23.2 contemplates the submission of disputes in connection with
the loan agreement and/ or any of the other security documents to the
English Courts. The language of cl 23.2 evinces a clear intention that the
defendants but not the bank would be obliged to submit such disputes to
the English Courts (see Aeakos sup, pp 508-509; pp 592-593.
3. The defendants by cl 23.5 agreed:
... that a judgment or order in any proceedings brought in the English
courts shall he conclusive and binding upon the borrowers and may be
enforced without review in the courts of any other jurisdiction.
Thus the parties provided for "one-stop" adjudication in the case of any
judgment or order resulting from any proceedings brought in the English
Courts. The plaintiff bank intends to pursue these proceedings in the
Commercial Court.
4. Article 17 of the Brussels Convention applies to cl 23. The jurisdiction
agreement in cl 23 prorogates -- ie confers -- jurisdiction on the English
Courts. The plaintiff bank retains the right to bring proceedings in any
other Court of competent jurisdiction (see cl 23.4).
5. For the purposes of arts 21 and 22 the English Court was the Court first
seised.
6. There is in my view a distinction between applications to the Courts
of a Contracting State (in this case Greece) pursuant to cl 23.4 for
provisional/protective measures pending the determination of any dispute
between the parties in the English Courts and proceedings in other
jurisdictions (here Greece) with a view to enforcing a bank's security
documents. As to provisional including protective measures see art 24 of
the Brussels Convention, which provides:
Application may he made to the courts of a Contracting State for such
provisional, including protective, measures as may be available under the
law of that State, even if, under this Convention, the courts of another
Contracting State have jurisdiction as to the substance of the matter.
It is quite plain that the plaintiff bank needed to take at least some
provisional/protective measures in Greece so as to protect its security and
retain priority. The bank says there are six arrests of Jessica affected by
six other creditors, that the market value of Jessica is falling and that port
and other charges are mounting. The defendants say there are petitions
by two other creditors.
The expert evidence as to Greek law and procedure does not address
the question whether the plaintiff bank has taken steps beyond those
necessary to protect its security and retain priority. If the proceedings
commenced by the plaintiff bank in Greece go beyond provisional/
protective measures and represent enforcement proceedings it is
understandable that the first defendants should argue that they should
be permitted to defend such proceedings in Greece, particularly if (as
they contend) such proceedings involve, for example, a consideration of
whether there has been an event of default under the loan agreement.
There are complex disputes between the parties as to Greek law and
procedure. The plaintiff bank says that the procedural steps taken by
the first defendants go beyond defending the art 905 proceedings. The
defendants say that the procedural steps taken by the first defendants in
Greece represent the necessary steps to defend the art 905 proceedings.
It is not easy to determine from the extensive conflicting affidavit
evidence as to Greek law and procedure which side is correct as to these
issues. It would he far easier, if necessary, to determine the answers to
these issues at trial, with the assistance of independent expert evidence
as to Greek law and procedure.
It is to be noted that the proceedings before the multi-member first
instance Court of Piraeus (proceedings which the bank is particularly keen
to restrain) are not due to be heard until, at the earliest, Sept 30, 1997.
7. I apply the principles set out above as to the Brussels Convention and
injunctions to restrain proceedings in a foreign Court. I have regard to the
need to avoid the risk of conflicting judgments and thus to facilitate the
proper administration of justice in the Community.
8. In all the circumstances and in the exercise of my discretion I consider
that it is appropriate to make the following orders and grant the following
I relief:
(1) I will give directions for the speedy trial of the proceedings in this
Court and I expect the parties to co-operate to this end. The trial will be
fixed to start on Apr 8, 1997, estimate four days. The plaintiff bank has
very sensibly indicated that it will not press its application for summary
judgment in the light of the Court's indication that an expedited trial is
likely to be the most effective way forward.
(2) I grant the plaintiff an interlocutory injunction to reflect the terms of cl
23.5 as follows:
Until after final judgment in this action or further order the defendants
must not contend in the courts of Greece or elsewhere that any judgment
or order in these (Commercial Court) proceedings is otherwise than
conclusive and binding upon the defendants.
I record that the defendants have not opposed an injunction in this form
which reflects their plain obligation in cl 23.5 of the loan agreement.
(3) The plaintiff's claims for more extensive injunctive relief will, if
necessary, be considered at trial. In the meantime, I consider that the
plaintiff bank is adequately protected, particularly as the proceedings
before the multi-member first instance Court of Piraeus are not due to be
heard until Sept 30, 1997. Long before that date all disputes between the
parties arising out of or in connection with the loan agreement and the
security documents will have been decided by the Commercial Court and
the defendants will be bound by cl 23.5 in respect of such determination.
(4) I make it plain that the above orders and directions are intended to
avoid the risk of conflicting judgments. All disputes which arise out of or
in connection with the loan agreement and the security documents will
be determined in the Commercial Court. Pending final judgment in the
Commercial Court the defendants will be held to their agreement that any
judgment or order in the English Courts will be conclusive and binding
upon the borrowers.
(5) I direct that an expedited transcript be obtained of this judgment
and that a copy of the judgment as approved be made available as
appropriate to the single member first instance Court and multi-member
first instance Court of Piraeus.
DISPOSITION:
Judgment accordingly