NEILL L.J.
This is an appeal by De. Navigation S.A. ("De.") from an order of Sheen J.
dated 19 July 1988 whereby he dismissed its motion brought pursuant to
R.S.C., Ord. 12, r. 8(1) and (3)(a) to contest the jurisdiction of the High
Court. Certain consequential relief was also sought.
De. contended that the action should have been brought in the Federal
Republic of Germany where, it was alleged, it was domiciled. Reliance was
placed on the Civil Jurisdiction and Judgments Act 1982 and in particular
on article 2 of the 1968 Convention on Jurisdiction andthe Enforcement of
Judgments in Civil and Commercial Matters, which is set out in Schedule 1
to the Act of 1982.
The writ in the action was issued from the Admiralty Registry of the
High Court on 30 January 1987. The action was described in the writ
as an "Admiralty action in rem against the ship D.." The plaintiffs were
named as "the owners of cargo lately laden on board the ship D. ." The
defendants were named as "the owners and/or demise charterers of the
ship D.." In 1986 and at the date of the issue of the writ De. was the
demise charterer of the ship, which has now been renamed B..
It is clear that the writ followed the form prescribed in R.S.C., Ord. 75, r.
3(1) and in Form No. 1 in Appendix B to the Rules. The claim was stated
to be
"for damages for breach of contract and/or duty in and about the loading,
handling, custody, care and discharge of the plaintiffs' cargo and the
carriage thereof on board the defendants' ship D. in the year 1986."
It is common ground that unless De. can invoke the provisions of the Act
of 1982 and the 1968 Convention the High Court has jurisdiction to try
this action in rem. The Admiralty jurisdiction of the High Court is set out
in section 20 of the Supreme Court Act 1981. By section 20(1)(a) and (2)
(g) and (h) this jurisdiction includes jurisdiction to hear and determine
"any claim for loss of or damage to goods carried in a ship" and "any
claim arising out of any agreement relating to the carriage of goods in a
ship or to the use or hire of a ship."
The mode of exercise of the Admiralty jurisdiction is prescribed in section
21of the Act of 1981. Section 21(4) provides:
"In the case of any such claim as is mentioned in section 20(2)(e) to (r),
where - (a) the claim arises in connection with a ship; and (b) the person
who would be liable on the claim in an action in personam ('the relevant
person') was, when the cause of action arose, the owner or charterer of,
or in possession or in control of, the ship, 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 - (i) that ship, if at the time when the action
is brought the relevant person is either the beneficial owner of that ship
as respects all the shares in it or the charterer of it under a charter by
demise; or (ii) any other ship of which, at the time when the action is
brought, the relevant person is the beneficial owner as respects all the
shares in it."
The facts giving rise to this action can be stated quite shortly.
In January 1986 a cargo of steel coils was loaded on the vessel for
carriage from Glasgow to La Spezia in Italy. At that time the disponent
owner of the vessel was De. who was the demise charterer for a period
of two years (30 days less charterers' option) under a bare boat charter
dated 6 May 1985. The plaintiffs contend that when the steel coils were
delivered at La Spezia on or about 1 February 1986 they were found to be
wet-stained and rusted. In the action the plaintiffs are seeking to recover
damages in respect of the loss which they allege they have suffered.
The writ in rem was issued on 30 January 1987. On 23 November 1987
a trainee legal executive in the employment of the plaintiffs' solicitors
served the writ upon the vessel at E. D. Wharf at Erith in Kent by affixing
the original writ on the window near the ship's bridge for a short time and
then, upon removing the original writ, leaving the sealed service copy in
its place, accompanied by an appropriate form of acknowledgement of
service.
By that date, however, the demise charter of the ship had ended, the
ownership of the ship had changed and the ship had been renamed.
When the writ in rem was served on the ship the ship was not arrested.
On 27 November 1987, however, De.'s P. & I. club in Hamburg sent the
plaintiffs a letter in the following terms:
"In consideration of your refraining from arresting the M.v. B. ex D.
or any other vessel in the same ownership, associated ownership or
management for the purpose of founding jurisdiction and/or obtaining
security in any part of the world in respect of the above mentioned claim
against De. Navigation S.A., bareboat charterers of the above named ship
at the material time concerning damage to cargo, we the undersigned P.
& I. club, hereby guarantee to pay to your solicitors on your behalf such
sums as may be adjudged or found due to you by any competent court or
tribunal or as may be agreed between the parties in respect of the said
claim provided always that our liability hereunder shall not exceed the
sum of £54,000 plus interest and costs, providing always in the event
that the shipowners can establish before the competent court their right
to limit their liability pursuant to any applicable convention or legislation,
such lesser sum as may represent the vessel's limit of liability."
On 27 June 1988 De. issued its notice of motion seeking, inter alia, a
declaration that the court had no jurisdiction over the defendants in
respect of the subject matter of the claim.
The motion was heard by Sheen J. on 30 June and 1 July 1988. He gave
judgment on 19 July 1988 dismissing the motion with costs but gave
leave to appeal to this court. The decision is now reported: [1988] 2
Lloyd's Rep. 454.
Before the judge De. contended, as it has contended in this court, that
it is domiciled in Germany and therefore the matter should be tried in
Germany in accordance with article 2 of the 1968 Convention. The judge
rejected this contention on the basis that the 1968 Convention did not
apply to an Admiralty action in rem while it remained solely in rem. He
said, at p. 458:
"This action is an action in rem and remains solely in rem until the demise
charterers submit to the jurisdiction of this court. Insofar as they wish on
this motion to contest the jurisdiction of the court they can only contest
the jurisdiction in rem. On this motion they have not sought to do so. The
ground of the application is 'the defendants are domiciled in the Federal
Republic of Germany.' But while the action is solely in rem there are no
'defendants,' despite the wording of the writ. The demise charterers must
decide whether they will submit to the jurisdiction of this court or allow
the action in rem to proceed by default."
The issues on the appeal
The issues which fall to be decided on this appeal can be stated as
follows; (1) whether the 1968 Convention has any application at all to
an Admiralty action in rem while it remains solely in rem; (2) if the 1968
Convention applies to the action, whether, for the purposes of article 2
of the 1968 Convention, De. is domiciled in Germany (as it contends) or
in Panama (as the plaintiffs contend); (3) if the 1968 Convention applies
to the action and De. is domiciled in Germany for the purposes of article
2, whether nevertheless the High Court has jurisdiction by reason of the
combined effect of article 57 of the 1968 Convention, section 9 of the Act
of 1982 and the provisions of the 1952 International Convention for the
Unification of Certain Rules relating to the Arrest of Seagoing Ships ("the
1952 Convention").
I propose to deal first with issue (1) which is the only aspect of the
matter on which the judge expressed a conclusion in his judgment. At the
beginning of his submissions in this court counsel for the plaintiffs did not
seek to support the judge's reasons for his decision, but later he changed
his position and contended strongly that the judge was right. I make no
criticism whatever of this change in stance. Clearly the point merits the
most careful consideration. The case for De. on this issue is based on
article 2 of the 1968 Convention which, so far as is material, is in the
following terms: "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."De. claims to be domiciled in the Federal
Republic of Germany and contends that it should therefore be sued in
Germany. The plaintiffs argue on the other hand that, while the action
remains solely an action in rem, De. is not a defendant and that therefore
article 2 has no application. Accordingly the plaintiffs seek to support
the decision of the judge. The plaintiffs' case is based on the proposition
that an action in rem is an action against the ship itself and that the
owners or charterers, as the case may be, of the ship only incur some
personal liability if they enter an appearance. In that event the action
will proceed both as an action in rem and as an action in personam:
see The August 8 [1983] 2 A.C. 450. Unless and until an appearance
is entered, however, the claim is against the res alone and De. is not a
defendant in a relevant sense although so described in the writ. This is
an important submission because, if it is right, it means that De. is faced
with the choice of either allowing the action to proceed undefended or of
submitting to the jurisdiction by entering an appearance.
The origin and development of Admiralty actions in rem have been
considered in numerous cases since the jurisdiction of the High Court of
Admiralty was extended by the Admiralty Court Act 1840. It is sufficient
to mention The Dictator [1892] P. 304; Reg. v. City of London Court Judge
[1892] 1 Q.B. 273; The Zeta [1893] A.C. 468; The Beldis [1936] P. 51;
The Monica S [1968] P. 741 and The Banco [1971] P. 137.
It seems clear from these and other authorities that the Admiralty action
in rem had its origin in the form of process whereby the property of a
defendant was arrested as a means of compelling his appearance and
bail or of providing a fund for securing compliance with the judgment.
Once the defendant had appeared in the action it could then proceed in
personam. In due course the action in rem was developed whereby the
Admiralty Court was entitled to enforce its judgments against the arrested
property to the extent of the claim and the claim was enforceable even if
the property had passed into the hands of an innocent purchaser.
In the present case, however, we are concerned with the statutory
jurisdiction of the court and with statutory rights of action in rem. Thus
although the High Court of Admiralty had jurisdiction over contracts
of affreightment before 1650 (see Scrutton on Charterparties, 15th
ed. (1948), p. 478) it seems clear that this jurisdiction passed to the
common law courts during the next two centuries. The Admiralty Court
Act 1861extended the statutory jurisdiction given to the High Court of
Admiralty by the Admiralty Court Act 1840 and included a provision
relating to contractual claims in respect of damage to imported cargo:
see section 6. By section 35 of the Act of 1861 it was provided that the
jurisdiction conferred by the Act might be exercised either by proceedings
in rem or by proceedings in personam.
A wider statutory jurisdiction over contracts of affreightment was
introduced by the Administration of Justice Act 1920. As, however, section
5 of the Act of 1920 was soon repealed and replaced by very similar
provisions in the Supreme Court of Judicature (Consolidation) Act 1925
it is sufficient to refer to the relevant sections in the Act of 1925. Section
22(1) provided:
"The High Court shall, in relation to admiralty matters, have the following
jurisdiction . . . that is to say - (a) Jurisdiction to hear and determine any
of the following questions or claims: . . . (xii) Any claim - (1) arising out
of an agreement relating to the use or hire of a ship; or (2) relating to
the carriage of goods in a ship; or (3) in tort in respect of goods carried
in a ship; unless it is shown to the court that at the time of the institution
of the proceedings any owner or part owner of the ship was domiciled in
England: . . ."
By section 33(2) it was provided that the jurisdiction might be exercised
either in proceedings in rem or in proceedings in personam.
I come next to Part I of the Administration of Justice Act 1956. Section 1
of the Act of 1956 replaced section 22 of the Act of 1925 and re-defined
the Admiralty jurisdiction of the High Court in the light of the 1952
Convention. The wording of section 1(1)(g) and section 1(1)(h) differed
from that of the corresponding provisions in section 22(1) of the Act of
1925 and section 5(1) of the Act of 1920, but, as the wording in these
paragraphs is the same as that in section 20(2)(g) and section 20(2)(h)
of the Act of 1981 (see ante, p. 367D-E), I do not need to set them out. I
do propose, however, to set out the relevant provisions of section 3(4)of
the Act of 1956 even though they are substantially reproduced in section
21(4) of the Supreme Court Act 1981. Section 3(4) provided:
"In the case of any such claim as is mentioned in paragraphs (d) to
(r) of subsection (1) of section one of this Act, being a claim arising in
connection with a ship, where the person who would be liable on the claim
in an action in personam was, when the cause of action arose, the owner
or charterer of, or in possession or in control of, the ship, the Admiralty
jurisdiction of the High Court . . . may (whether the claim gives rise to a
maritime lien on the ship or not) be invoked by an action in rem against
- (a) that ship, if at the time when the action is brought it is beneficially
owned as respects all the shares therein by that person; or (b) any other
ship which, at the time when the action is brought, is beneficially owned
as aforesaid."
…In some Continental countries, however, the power of arrest could be
exercised in respect of any claim whether maritime or non-maritime and
against any ship in the same ownership.
The 1952 Convention reached a solution which restricted the power of
arrest to "maritime claims" as defined in the Convention. In substance the
Convention adopted the approach of English law.
I come finally to the Act of 1982 and to the relevant provisions of the
1968 Convention.
It is provided by section 2(1) of the Act of 1982 that the 1968
Convention, the 1971 Protocol and the Accession Convention(whereby the
United Kingdom acceded to the 1968 Convention and the 1971 Protocol)
"shall have the force of law in the United Kingdom, and judicial notice
shall be taken of them."
Section 3contains provisions relating to the interpretation of the
Conventions and is in these terms:
"(1) Any question as to the meaning or effect of any provision of the
Conventions shall, if not referred to the European Court in accordance
with the 1971 Protocol, be determined in accordance with the principles
laid down by and any relevant decision of the European Court. (2) Judicial
notice shall be taken of any decision of, or expression of opinion by,
the European Court on any such question. (3) Without prejudice to the
generality of subsection (1), the following reports (which are reproduced
in the Official Journal of the Communities), namely - (a) The report by
Mr. P. Jenard on the 1968 Convention and the 1971 Protocol; and (b) the
report by Professor Peter Schlosser on the Accession Convention, may
be considered in ascertaining the meaning or effect of any provision of
the Conventions and shall be given such weight as is appropriate in the
circumstances."…
Title I of the Convention defined its scope. Article 1 provided that the
Convention should "apply in civil and commercial matters whatever the
nature of the court or tribunal." Title II was concerned with jurisdiction.
Section 1 of this Title contained general provisions and provided in article
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. Persons who are not nationals of the state in which they
are domiciled shall be governed by the rules of jurisdiction applicable to
nationals of that state."
Article 3 provided:
"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."
This article in addition set out a number of provisions under which the
individual contracting states (including the three countries including the
United Kingdom which acceded later) claimed jurisdiction over persons
domiciled abroad, which were expressly stated not to be applicable as
against persons domiciled in a contracting state.
Section 2 of Title II contained provisions conferring a special jurisdiction
in a number of specific cases. It is only necessary to refer to part of article
5 in section 2. Nor is it necessary to refer to any of the rules set out in
sections 3 to 6 of Title II.
The following provision in article 5 is, however, of importance:
"A person domiciled in a contracting state may, in another contracting
state, be sued: . . . (7) as regards a dispute concerning the payment of
remuneration claimed in respect of the salvage of a cargo or freight, in
the court under the authority of which the cargo or freight in question:
(a) has been arrested to secure such payment, or (b) could have been
so arrested, but bail or other security has been given; provided that
this provision shall apply only if it is claimed that the defendant has an
interest in the cargo or freight or had such an interest at the time of
salvage."
Finally I should refer to part of article 57 in Title VII of the 1968
Convention. This article provided:
"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. . . ."
It is clear therefore that the 1968 Convention does not affect any
jurisdiction given to the High Court under the 1952 Convention. I shall
return to examine this point further in relation to the third issue.
The question for determination at this stage is whether, assuming for the
moment that De. is domiciled in the Federal Republic of Germany, it is
being "sued" in the High Court in England in the present proceedings, that
is, while the action remains an action solely in rem.
I have come to the conclusion that the right approach when one is
considering the effect of an international convention is to take account of
the purpose or purposes of the convention. Plainly the 1968 Convention
was intended, inter alia, to regulate the circumstances in which a person
domiciled in one contracting state might be brought before the courts of
another contracting state "in civil and commercial matters."
Accordingly it seems to me that all forms of proceedings in civil and
commercial matters were intended to be covered except in so far as
some special provisions such as article 57 might otherwise prescribe.
Furthermore it seems to me that paragraph (7) in article 5, which confers
a special jurisdiction in the case of claims for remuneration in respect of
the salvage of cargo or freight, contemplates that this special jurisdiction
may be exercised by proceedings either in rem or in personam.
It is true that in the present case the vessel is no longer chartered to
De. and that the jurisdiction to entertain the action in rem is based
on the provisions of section 21 of the Act of 1981. But looking at the
reality of the matter it is De. who is interested in contesting liability
and against whom the plaintiffs would wish to proceed in personam if
an appearance is entered. The position might have been different if the
parties to the 1968 Convention and to the Accession Convention had had
no knowledge of the Admiralty jurisdiction of the High Court, but it is
quite clear from paragraphs 121 and 122 of Professor Schlosser's report
on the Accession Convention (Official Journal 1979 No. C. 59, p. 71) that
detailed consideration was given to the exercise of jurisdiction in maritime
matters by the courts of the United Kingdom.
In these circumstances I find it impossible to conclude that on the proper
construction of articles 2 and 3 of the 1968 Convention De. is not being
"sued" in these proceedings even though at this stage the proceedings
are solely in rem. De. is liable to be adversely affected by the result of the
proceedings and wishes to contest the merits of the plaintiffs' claim. By
English law an Admiralty action in rem has special characteristics though,
as has been seen, these characteristics were modified by the Act of 1956
in line with the 1952 Convention. I do not consider, however, that the
rules relating to such actions and governing the rights of a plaintiff to levy
execution can affect the substance of the matter when the court is faced
with an international Convention designed to regulate the international
jurisdiction of national courts.
I would decide the first issue in favour of De..
Issue 2
It is argued on behalf of the plaintiffs that even if article 2 can apply to an
action in rem while it remains solely in rem De. is unable to rely on this
article because it is domiciled in the Republic of Panama.
Article 53 of the 1968 Convention provides:
"For the purposes of this Convention, the seat of a company or other legal
person or association of natural or legal persons shall be treated as its
domicile. However, in order to determine that seat, the court shall apply
its rules of private international law."
It is therefore necessary to turn to the relevant provisions of the Act of
1982.
Section 42 is concerned with the domicile and seat of a corporation or
association. Section 42, so far as is material, provides:
"(1) For the purposes of this Act the seat of a corporation or association
(as determined by this section) shall be treated as its domicile. (2) The
following provisions of this section determine where a corporation or
association has its seat - (a) For the purposes of article 53 (which for
the purposes of the 1968 Convention equates the domicile of such a
body with its seat); . . . (3) A corporation or association has its seat in
the United Kingdom if and only if - (a) it was incorporated or formed
under the law of a part of the United Kingdom and has its registered
office or some other official address in the United Kingdom; or (b) its
central management and control is exercised in the United Kingdom . . .
(6) Subject to subsection (7), a corporation or association has its seat
in a state other than the United Kingdom if and only if - (a) it was
incorporated or formed under the law of that state and has its registered
office or some other official address there; or (b) its central management
and control is exercised in that state. (7) A corporation or association
shall not be regarded as having its seat in a contracting state other than
the United Kingdom if it is shown that the courts of that state would not
regard it as having its seat there."
The relevant facts are not in dispute. De. was incorporated in the Republic
of Panama. The central management and control of De., however, are
exercised in the Federal Republic of Germany. It is also common ground
that the Federal Republic of Germany would regard De. as having its seat
there….. It seems to me to be quite clear from section 42(3) and section
42(6) that for the purposes of the Act of 1982 a corporation may satisfy
the statutory test in relation to more than one state. Indeed section 42(3)
plainly covers the case of a corporation which has been incorporated
abroad but where the central management and control of the corporation
is exercised in the United Kingdom. For the purpose of article 53 such a
corporation has its seat in the United Kingdom and can therefore be sued
there. Furthermore, as was pointed out in argument, articles 21 and 22
of the 1968 Convention are designed to deal with cases where related
actions are brought in the courts of different contracting states.
I am satisfied that for the purpose of article 2 De. is domiciled in the
Federal Republic of Germany (and would be so regarded by the courts of
that state) because the seat of the company is in Germany by virtue of
the alternative test prescribed in section 42(6)(b) of the Act of 1982.
Issue 3
The plaintiffs further argue that even if a German court would otherwise
have jurisdiction by reason of the provisions of Title II of the 1968
Convention the High Court in England can exercise jurisdiction by virtue of
article 57 of the 1968 Convention when read in conjunction with article 7
of the 1952 Convention and section 9 of the Act of 1982. Article 57 of the
1968 Convention is in these terms:
"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. . . ."
(Article 25(2) of the Accession Convention provides:
"With a view to its uniform interpretation, paragraph 1 of Article 57
shall be applied in the following manner: (a) The 1968 Convention as
amended 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 another contracting state which is not a party to that convention. The
court shall, in any event, apply article 20 of the 1968 Convention as
amended.")
It is therefore necessary to turn to article 7 of the 1952 Convention to
determine whether or not the High Court has jurisdiction by reason of the
provisions of that article.
At the same time it is necessary to take account of the provisions of
section 9 of the Act of 1982. This section, so far as is material, provides:
"(1) 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."
I come next to article 7 of the 1952 Convention.
Article 7 of the 1952 Convention, so far as is material, provides:
"1. The courts of the country in which the arrest was made shall have
jurisdiction to determine the case upon its merits . . ." - a number of
conditions are then set out - "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; and the court or other appropriate
judicial authority of the country in which the arrest is made shall fix the
time within which the claimant shall bring an action before a court having
such jurisdiction."
Our attention was drawn to other articles in the 1952 Convention which
referred in terms to security being given to prevent or avoid an arrest.
In this context we were referred to (a) article 3.3, which provides:
"A ship shall not be arrested, nor shall bail or other security be given
more than once in any one of more of the jurisdictions of any of the
contracting states in respect of the same maritime claim by the same
claimant; and, if a ship has been arrested in any one of such jurisdictions,
or bail or other security has been given in such jurisdiction either to
release the ship or to avoid a threatened arrest, any subsequent arrest of
the ship or of any ship in the same ownership by the same claimant for
the same maritime claim shall be set aside . . ."
(b) article 6 which provides:
"All questions whether in any case the claimant is liable in damages for
the arrest of a ship or for the costs of the bail or other security furnished
to release or prevent the arrest of a ship, shall be determined by the
law of the contracting state in whose jurisdiction the arrest was made or
applied for."
In addition emphasis was placed on the common practice whereby ships
are not actually arrested but some security or undertaking is furnished to
prevent an arrest.
I see the force of the argument that in the light of the Act of 1956 the
jurisdiction given by article 7 of the 1952 Convention should not be
confined to cases where an arrest has actually been effected. I have come
to the conclusion, however, that the argument must be rejected for the
following reasons.
(1) …One must be very careful therefore before accepting an argument
that the word "arrest" in article 7 is capable of including a process which
falls short of an actual arrest.
(2) The word "arrest" is defined in article 1.2 as meaning 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."
(3) In articles 3 and 6 respectively reference is made to "bail or other
security" given or furnished "to avoid a threatened arrest" or to "prevent
the arrest." There are no comparable words in article 7.
(4) Professor Schlosser in paragraphs 122 and 123 of his Report on the
Accession Convention commented on the wording of article 5(7) of the
1968 Convention relating to jurisdiction in connection with the arrest of
salvaged cargo or freight. He explained that article 5(7)(b) introduced an
extension of jurisdiction not expressly modelled on the 1952 Convention.
He added, at paragraph 123:
"After salvage operations - whether involving a ship, cargo or freight -
arrest is sometimes ordered, but not actually carried into effect, because
bail or other security has been provided. This must be sufficient to confer
jurisdiction on the arresting court to decide also on the substance of the
matter."
It seems to me that this comment or explanation is at least consistent
with the view that article 7 did not confer jurisdiction where bail or other
security was given to avoid arrest.
(5) It is common ground that if it were not for the 1968 Convention
the High Court would have jurisdiction to try this action and that this
jurisdiction is derived from section 20 and section 21 of the Act of
1981 (formerly section 1 and section 3 of the Act of 1956). In my view,
however, as the jurisdiction given by article 7 of the 1952 Convention
is governed by the word "arrest " it is not permissible for the purpose
of applying section 9 of the Act of 1982 to treat any part of the High
Court's jurisdiction other than the "arrest " jurisdiction as being based on
a statutory provision implementing the 1952 Convention.
I would therefore decide this issue also in favour of De.. Accordingly I
would allow the appeal. It will be necessary to hear further argument on
the form of order which should now be made.
STUART-SMITH L.J.
Two questions arise for determination in this appeal:
(1) For the purpose of the Civil Jurisdiction and Judgments Act 1982 and
…the 1968 Convention where is the appellant corporation, De. Navigation
S.A. ("De. ") domiciled? (2) If De. is domiciled in the Federal Republic of
Germany, one of the contracting states under the 1968 Convention, is the
general requirement that De. must be sued in the courts of that state,
as provided by article 2 of the 1968 Convention, affected by the fact that
the plaintiffs have brought their claim by an action in rem in the English
Admiralty Court?
I turn to consider the first question. The 1968 Convention has the force of
law in the United Kingdom: section 2(1) of the Act of 1982. Article 53 of
the 1968 Convention provides:
"For the purposes of this Convention, the seat of a company . . . shall
be treated as its domicile. However, in order to determine that seat, the
court shall apply its rules of private international law."
In English law those rules are to be found in section 42 of the Act of 1982.
[His Lordship set out subsection (6) and continued:] It is common ground
that (a) De. was incorporated in Panama and has its registered office
or some other official address there; (b) the central management and
control of De. is exercised in the Federal Republic of Germany and (c) the
courts of the Federal Republic of Germany would regard De. as having its
seat there. …
Since section 42 is concerned with jurisdiction and not the applicable
or proper law to be applied, there seems to me no fundamental
objection if two contracting states have jurisdiction. Indeed this is clearly
contemplated by the provisions of articles 5 to 15 (which deal with special
jurisdiction, jurisdiction in matters relating to insurance and consumer
contracts) and articles 21 and 22 (which deal with proceedings involving
the same cause of action and related actions brought in the courts of
different contracting states).
De.'s construction is supported by the opinion of Professor Schlosser,
whose report on the Accession Convention may be considered in
ascertaining the meaning or effect of any provision of the Convention:
see section 3(3)(b) of the Act of 1982 and paragraph 162 of Professor
Schlosser's report. It also has the support of the editor of Dicey & Morris,
The Conflict of Laws, 11th ed. (1987), vol. 1, p. 285, and illustrations at
p. 287. Moreover this construction seems to me to be consistent with the
policy of the 1968 Convention that defendants should be sued where they
are domiciled, if that is in one of the contracting states. It also makes
practical sense that a corporation can be sued where, to use Mr. Priday's
phrase, "it puts up its brass plate or has its nerve centre." Accordingly I
would hold that De. is domiciled in the Federal Republic of Germany.
I turn then to the second question. The central principle of the 1968
Convention is that in matters to which the Convention applies, defendants
are to be sued in the courts of the state in which they are domiciled.
Article 1 provides that the Convention shall apply in civil and commercial
matters whatever the nature of the court of tribunal. There are then
enumerated certain exceptions which do not apply. In my view the
present claim falls within article 1. I must set out article 2, which
provides:
"Subject to the provisions of this Convention, persons domiciled in a
contracting state shall, whatever their nationality, be sued in the courts of
that state."
The remainder of article 2 is not material. Article 3 provides:
"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. In particular the following provisions shall not be
applicable as against them: . . . - in the United Kingdom: . . . (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."
It seems to me to be plain that, if an Admiralty action in rem is within
article 2 at all, and the plaintiffs argue that it is not, it is caught by the
words in (b) and (c) of article 3 relating to the United Kingdom. None of
the exceptions in sections 2 to 6 are relevant to the present claim. I have
already briefly mentioned articles 5 to 15 which constitute sections 2 to 4.
Section 5, article 16, confers exclusive jurisdiction regardless of domicile
in certain matters, for example immovable property. Section 6, articles
17 and 18, is concerned with prorogation of jurisdiction where there is
agreement between the parties that the courts of a contracting state are
to have jurisdiction.
There is however a further exception to be found in article 57 of the 1968
Convention. This provides:
"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 . . ."
It is common ground that the International Convention for the Unification
of Certain Rules relating to the Arrest of Seagoing Ships signed at
Brussels on 10 May 1952, is one such Convention. Both the United
Kingdom and the Federal Republic of Germany are parties to that
Convention. Article 7 provides:
"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 . . ."
"Arrest" is defined in article 1.2 as
"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."
"Maritime claim" is defined in article 1.1 as
"a claim arising out of one or more of the following: . . . (e) agreement
relating to the carriage of goods in any ship whether by charterparty or
otherwise; (f) loss of or damage to goods including baggage carried in
any ship; . . ."
The present action is a maritime claim. Mr. Priday accepts, as he is bound
to do, that if the D. had been arrested, the English Admiralty Court would
have merits jurisdiction. But she was not arrested. and he submits that
on the plain wording of the article, it cannot be extended to a case where
the ship might have been arrested, but is not. I do not understand Mr.
Aikens to dispute this. In my judgment Mr. Priday is right. There are a
number of points, in addition to the plain words of the article which show
that this is so. Article 3.3 of the 1952 Convention draws a distinction
between "arrest . . . or bail or other security . . . given . . . either to
release the ship or to avoid a threatened arrest" (My emphasis). The
1968 Convention makes the same distinction: see article 5(7) and the
comments of Professor Schlosser at paragraph 123 and article 36 of
the Accessions Convention . Furthermore it is clear from the travaux
préparatoires that the question was raised whether the jurisdiction should
be extended to cases where security was given to avoid arrest, and it was
rejected. If need be, though in this case I consider there is no need since
the meaning is plain, resort can be had to this discussion: see per Lord
Wilberforce in Gatoil International Inc. v. Arkwright-Boston Manufacturers
Mutual Insurance Co. [1985] A.C. 255, 264E. …
I pause only to say that it is common ground that an action in personam
would now undoubtedly be subject to the provisions of the 1968
Convention and triable only in the German courts.
"(4) In the case of any such claim as is mentioned in section 20(2)(e)
to (r) where - (a) the claim arises in connection with a ship; and (b) the
person who would be liable on the claim in an action in personam ('the
relevant person') was, when the cause of action arose, the owner or
charterer of, or in possession or in control of the ship, 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 - (i) that ship . . ."
The present claim falls within section 20(2)(g) being a claim for loss
of or damage to goods carried in a ship. Fundamental to Mr. Aikens's
argument on this point is section 9(1) of the Act of 1982. This provides:
"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."
I do not find this the easiest section to construe. No doubt the need
for this section arises, at any rate so far as the 1952 Convention is
concerned, because the Convention was not adopted as such as the law
of this country, for example by incorporating the Convention in a Schedule
to the Act, as was done with the 1968 Convention and the Act of 1982,
but by implementing it in the Supreme Court Acts of 1956 and 1981 …
it seems to me plain from the wording of section 9 that the statutory
provisions are only to be given effect so far as they implement the 1952
Convention and not otherwise, no other convention being relevant for
this purpose. Thirdly it is accepted that much of the jurisdiction given by
section 21 of the Act of 1981 is affected by the 1968 Convention, e.g.,
Admiralty actions in personam and actions in rem in relation to aircraft:
section 21(1) and (3). Why, it may be asked, should not an action in
rem relating to a ship be similarly affected save to the extent that it is
preserved by the 1968 or 1952 Conventions? I conclude therefore that
jurisdiction is not afforded to the English court by article 57 of the 1968
Convention or by section 9(1) of the Act of 1982, except in the case of an
arrest.
…There is clear authority that an action in rem, being an action against
the ship, is not against the owners and is different in kind from an action
in personam against the owners. Fletcher Moulton L.J. in The Burns
[1907] P. 137, 149-150, said:
"I am, therefore, of opinion that …the action in rem is an action against
the ship itself. It is an action in which the owners may take part, if
they think proper, in defence of their property, but whether or not they
will do so is a matter for them to decide, and if they do not decide to
make themselves parties to the suit in order to defend their property,
no personal liability can be established against them in that action. It
is perfectly true that the action indirectly affects them. So it would if it
were an action against a person whom they had indemnified. . . . The
only possible support, in my opinion, for the proposition put forward by
counsel for the appellants is to be found in the language of the writ itself
by which the action in rem is now commenced; but I am of opinion that
this ought not to weigh with us. If the old form of warrant is looked at
by which the arrest of a ship used to be made, the language in no way
supports the contention of the appellants. On the contrary, it is evident
from the language of that warrant that the process was regarded then
as being directed against the ship itself. That old form was abandoned,
and a new form of writ was employed, by direction of those who were
responsible for drawing up the forms under the Judicature Act. I think it
was in 1883 that the rule was passed which directed the present form of
writ to be issued in Admiralty actions in rem. The direction itself shows
that, whether the language was felicitous for the purpose or not, the writ
was intended to apply to the old-established Admiralty action in rem, and
was not intended to have the effect of creating a new type of action or
altering the nature of the action; and when we turn to the form which
was at the same time prescribed for the writ of possession in an Admiralty
action in rem, where there had been a default of appearance, we find that
the language is quite suitable, and shows that the proceeding is against
the ship itself."
This passage was followed by Hobhouse J. in The Nordglimt [1988] Q.B.
183, 200.
However once the shipowner acknowledges service, the action becomes
an action in personam. There are conflicting dicta as to whether or not it
also continues as an action in rem. Mr. Priday has pointed out that in the
cases where it has been said that the action continues both in personam
and in rem are cases where the res was still under the control of the
court, because it was under arrest, as in The August 8 [1983] 2 A.C. 450,
see per Lord Brandon of Oakbrook, at p. 456 and where he cited a dictum
from the judgment of A.L. Smith L.J. in The Gemma [1899] P. 285. In
that case it was said that an action in rem became an action in personam
upon appearance by the defendant; but in fact bail had been put up by
the defendant and was in court.
This view was clearly expressed by Sheen J. in The Linda [1988] 1 Lloyd's
Rep. 175, 179:
"I have already said that this action was commenced as an action in rem
against Linda, but is now an action in personam and no longer in rem.
In case it is thought that there is any conflict between this judgment
and that of Hobhouse J. in The Nordglimt [1987] 2 Lloyd's Rep. 470 , let
me emphasize the point that an action in rem retains the characteristics
of such an action only so long as it remains an action against a ship
or against the proceeds of sale of the ship. In The Nordglimt, the ship
remained under arrest. The action accordingly remained in rem. But
there are many occasions on which (a) solicitors offer to give contractual
security and undertake to accept service of a writ or to acknowledge
service of it in order to avoid the threatened arrest of a ship, or (b) a
ship under arrest is released because security to the satisfaction of the
plaintiffs has been given. In such circumstances the action proceeds as an
action in personam regardless of the form of the writ.
…There is a clear distinction between submitting to the merits jurisdiction
of the court and submitting to its jurisdiction solely for the purpose of
the court deciding its jurisdiction: see Williams and Glyn's Bank v. Astro
Dinamico Compania Naviera S.A. [1984] 1 W.L.R. 438, 443 per Lord
Fraser of Tullybelton, applied by Sheen J. in The Sydney Express [1988]
2 Lloyd's Rep. 257. It seems to me inherent in the reasoning in both The
Linda and The Sydney Express that notwithstanding that the action is
begun as an action in rem a defendant can contest the court's jurisdiction
on Convention grounds and is not to be taken to have submitted to the
merits jurisdiction of the English court, and he is not obliged so to submit
or see the action against the ship go by default.
In my judgment the Act of 1982 and the 1968 Convention provide
a comprehensive code. If a defendant is domiciled in a contracting
state he must be sued in that state unless the case falls within the
exceptions contained in sections 2 to 6 of the 1968 Convention or under
the provisions of article 57, which for the purpose of this case means the
1952 Arrest Convention. Articles 1, 2, 3 and 57 are clearly intended as it
seems to me to apply to actions in rem.
The practical consequences of allowing this appeal do not seem to me to
be as far reaching as Mr. Aikens 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.
I would allow the appeal.
SIR DENYS BUCKLEY.
Article 2 of the Brussels Convention on Jurisdiction and the Enforcement
of Judgments signed on 27 September 1968 provides that, subject to its
other provisions, persons domiciled in a contracting state shall be sued
in the courts of that state. It is not suggested that any other provision
of that Convention (apart may be from article 57) excludes the present
case from that general requirement. The United Kingdom and the Federal
Republic of Germany are both contracting states. Consequently (subject
may be to article 57), if for the purposes of the 1968 Convention the
appellant demise charterers of the ship D. are to be regarded as domiciled
in the Federal Republic of Germany they can in accordance with article 2
be sued only in the Federal Republic of Germany by any party bound by
that article.
Section 2 of the Civil Jurisdiction and Judgments Act 1982gives the 1968
Convention the force of law in the United Kingdom. The Convention is
consequently binding on the respondents. Accordingly, if De. is to be
regarded as domiciled in the Federal Republic of Germany, this appeal
should succeed if it can accurately be said to be "sued" in this action
notwithstanding that the action is in form exclusively an action in rem
against the ship.
Article 57 of the 1968 Convention provides that that Convention shall
not affect any Conventions to which contracting states are parties and
which govern jurisdiction or the recognition or enforcement of judgments.
When the United Kingdom acceded to the 1968 Convention it was, and
it still is, a party to what has been referred to as the Arrest Convention
entered into in Brussels on 10 May 1952. That Convention regulates the
arrest of ships in the jurisdictions of contracting states and the furnishing
of bail and other forms of security in respect of certain maritime claims
including any claim arising out of loss or damage to goods carried in any
ship. Article 7 thereof provides that courts of the country in which a ship
is arrested shall have jurisdiction to determine the case on its merits.
It seems to me, however, that nothing in that Convention can have any
application to the present case because the D. has not been arrested.
Consequently, in my judgment article 57 of the 1968 Convention does not
affect the present case.
So we are, I think, left with two questions: (1) whether De. is "domiciled
" within the meaning of that term in the 1968 Convention in the Federal
Republic of Germany; and (2) whether the instant action is one in which
De. is "sued" within the meaning of article 2 of that Convention as that
article is given effect in English law by the Act of 1982.
1. Domicile
…Article 53 of the 1968 Convention provides that, in order to determine
where that seat is situated, "the court shall apply its rules of private
international law." Section 42(3), (4) and (5) of the Act of 1982 defines,
or describes a company which for the purposes of that Act, and so of
article 53, has its seat in the United Kingdom. It cannot be suggested that
De. is such a company. Section 42(6) provides:
"Subject to subsection (7), a corporation . . . has its seat in a state other
than the United Kingdom if and only if (a) it was incorporated . . . under
the law of that state and has its registered office or some other official
address there; or (b) its central management and control is exercised in
that state."
It is common ground that De. was incorporated in the Republic of Panama
(which is not a contracting state) and has its registered office there, but
that its central management and control have always been conducted
from Hamburg in the Federal Republic of Germany (which is a contracting
state). Section 42(7) of the Act of 1982 provides:
"A corporation . . . shall not be regarded as having its seat in a
contracting state other than the United Kingdom if it is shown that the
courts of that state would not regard it as having its seat there."
The evidence establishes that the courts of the Federal Republic of
Germany would regard De. as having a seat in the Federal Republic of
Germany. It is noteworthy that section 42(7) refers exclusively to a
Contracting State and does not extend to any other state. I find this
entirely understandable, bearing in mind that the purpose of the 1968
Convention is to regulate the mutual rights and obligations of contracting
states bound by that Convention and does not affect any other state.
Accordingly on the question of domicile I reach the conclusion that on the
true interpretation of both the 1968 Convention and the Act of 1982 De. is
for the relevant purposes "domiciled" in the Federal Republic of Germany.
2. Article 2 of the 1968 Convention
The judge, who is very experienced in this part of our law, held, rightly
in my view, that De. by entering an appearance to the writ under
protest contesting the jurisdiction of the court had not submitted to the
jurisdiction. There can be no doubt that, apart from the effect of the
1968 Convention and of the Act of 1982, this action being one relating to
damage to goods carried in the D., and the ship being within the territorial
limits of the Admiralty jurisdiction of the High Court when the writ was
served, the action was one in respect of which the court could exercise
that jurisdiction. The question is whether the combined effects of that
Convention and that Act was not to limit and exclude that jurisdiction
from the commencement of the Act in respect of claims against parties
domiciled in other contracting states.
I do not doubt that the court's Admiralty jurisdiction in an action in rem
against a ship is invoked, if not when the writ is issued, at latest as soon
as it is served upon the ship. It does not follow that it has been rightly
invoked. I see no reason why it should not be as permissible for a party
who, if he were to enter an unconditional appearance to a writ in rem,
would become liable in personam to the claim on which the writ is based
to enter a conditional appearance contesting the jurisdiction of the court
as it is for a defendant in any action in personam. In the present case
De. contends that the jurisdiction of the court was not properly invoked
because it is a company domiciled in another contracting state and so is
within article 2 of the 1968 Convention.
The judge disposed of this point very tersely in his judgment, at p. 458:
"The ground of the application is 'the defendants are domiciled in the
Federal Republic of Germany.' But while the action is solely in rem there
are no 'defendants,' despite the wording of the writ."
There can be no doubt that in referring in their notice of motion of 27
June 1988 to the "defendants" De. was referring to itself, the demise
charterer of the ship. The substance of the application is that by reason
of the 1968 Convention and the Act of 1982 it was impermissible to bring
the action elsewhere than in the Federal Republic of Germany.
So, in my view, the next question for consideration is whether De. has
a sufficient locus standi in relation to the ship and in relation to the
plaintiffs' claim which is the substratum of the action to permit De. to
make that application.
What article 2 of the 1968 Convention says is that persons domiciled in
another contracting state shall be sued in the courts of that state, which
imports, in my opinion, that they shall not be sued elsewhere. Can De.
accurately be said to be "sued" in the instant action? It is true that in an
action in the High Court which is exclusively in rem against a ship, the
plaintiff cannot recover any relief against the party who could be made
liable on the same ground of complaint in an action in personam unless
that party elects to enter an appearance to the writ in rem. If he does
enter such an appearance unconditionally he becomes liable in that action
as though it had been commenced in personam. This is a peculiarity of
our rules of procedure and practice. The underlying complaint, however,
is the same whether the action be framed in personam or in rem. To
use an English term, the cause of action - that is to say those essential
facts all of which the plaintiff must establish, if disputed, to support his
right to the judgment of the court (Read v. Brown (1888) 22 Q.B.D. 128,
131, per Lord Esher M.R.) - must be the same. The issue of a writ in rem
makes available to the claimant, that is to say the plaintiff, different and
more limited remedies in some respects from those which would become
available to him in an action in personam founded on the same complaint,
but the object of each type of action is to recover, or to obtain security for,
compensation for one and the same complaint: see also Letang v. Cooper
[1965] 1 Q.B. 232, per Diplock L.J., at pp. 242 et seq. Moreover any relief
obtained by a plaintiff in an action in rem only will be just as truly at the
expense of the party against whom the underlying complaint is made as
relief against that party in an action in personam would be. In reality,
distinguished from formal aspects, the instant action is, in my judgment,
as much a suit against De. as would be an action in personam against
it founded on the same complaint. It is, I suggest, for this underlying
reason that, if the owner or charterer of a ship against which an action in
rem is brought enters an appearance to the writ, the action thenceforward
and without being reconstituted or amended proceeds as though it were
an action in personam against that owner or charterer and had been so ab
initio.
Reference to the statement of claim in this action makes very clear that
the basis of the action against the D. consists of alleged breaches of
covenant and/or duty on the part of De. and other alleged defaults on its
part. The cause of action alleged is precisely that which would be alleged
in an action in personam against De. in respect of the same ground of
complaint.
The 1968 Convention is a document binding on all contracting states and
its language should consequently, in my judgment, not be construed by
reference to domestic considerations of English law. The United Kingdom
was not a contracting state when the Convention first became operative.
Consequently I think that the word "sued" in article 2 of the Convention
should be liberally interpreted in a sense consistent with the policy of
the Convention and the intention of the original contracting states.
The mere act of giving the Convention the force of law in the United
Kingdom cannot, in my opinion, alter the intent and effect of article 2 so
ascertained.
The function of the Act of 1982 is to implement the 1968 Convention
in the United Kingdom, that is, to give it the force of law in the United
Kingdom. So this appeal, in my judgment, depends primarily not upon the
Act of 1982 or English law but upon the true interpretation of the 1968
Convention and in particular of article 2 of it.
In these circumstances and for these reasons I would hold that in this
action the plaintiffs are seeking to "sue" De., and are "suing" De., within
the meaning and intent of article 2 of the 1968 Convention and so of the
Act of 1982. The contrary conclusion reached by the judge and supported
in this court by the plaintiffs seems to me to conflict with the policy of the
Convention, which I take to be that (save where otherwise provided in the
Convention) disputes of a litigious character between parties domiciled in
different contracting states shall be resolved in the courts of the state in
which that party is domiciled against whom a complaint is made.
I have now had an opportunity of reading the judgments of both Neill and
Stuart-Smith L.JJ., with both of which I agree. They have both entered
into matters discussed in the course of the argument in greater detail
than I have felt it necessary to do, but I do not think I need cover any of
that ground again in this judgment.
In these circumstances and for these reasons I would allow this appeal.