CLARKE J: On June 26, 1996 the plaintiffs arrested the ship V. in this
action in Liverpool. The defendants subsequently issued an amended
notice of motion seeking an order discharging the security provided to
procure her release. The amended notice of motion sets out a number of
grounds upon which the defendants rely. In a judgment given on Aug 1,
1996 I dismissed the application in so far as it was based upon grounds
(1) and (2) (see [1997] 2 Lloyd's Rep 465). The defendants now rely
upon grounds (3) and (5) both of which rely upon the fact that an arrest
of the vessel in Holland at the instance of the plaintiffs was set aside by
order of the Dutch Court after a hearing on the merits.
As I indicated in my earlier judgment, the plaintiffs claim damages for
breach of a charter-party dated Mar 6, 1996 under which they chartered
the vessel from B. Inc for a voyage from Rotterdam to Korea laden with
30,000 tonnes of steel scrap, 5 per cent more or less in owners' option.
For the purposes of this application I shall call P. AG either "the plaintiffs"
or "P." whereas I shall call the applicants "the owners" in order to avoid
any argument as to who the defendants are which might arise out of the
alleged transfer of ownership discussed in my earlier judgment. Any such
argument is not directly material to the application on the grounds which I
am considering at present.
On pp 466 to 467 of my earlier judgment I set out both the basic issues
between the parties on the merits and the principal events leading up to
the issue of the notice of motion. I shall return to the facts below, but the
present application for the release of the security is based wholly upon
the decision and order of the Court in Holland to release the vessel from
arrest. Mr Howard advances three separate bases for the application. He
relies upon art 3(3) of the 1952 Arrest Convention, upon an alleged duty
of the Court to recognize the judgment or order of the Court in Holland
under art 26 of the Convention on Jurisdiction and the Enforcement
of Judgments in Civil and Commercial Matters, 1968 as amended (the
"Brussels Convention") and upon the position at common law. I shall
consider these grounds in turn.
(1) Article 3(3)
Article 3(3) provides as follows:
A ship shall not be arrested, nor shall bail or other security be given more
than once in any one or 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, and the ship released by the Court or
other appropriate judicial authority of that State, unless the claimant can
satisfy the Court or other appropriate judicial authority that the bail or
other security had been finally released before the subsequent arrest or
that there is other good cause for maintaining that arrest.
Mr Howard relies upon art 3(3) as representing English law in two ways.
The first is that he submits that s 21(8) of the Supreme Court Act, 1981
should be construed so as to give effect to art 3(3). The second is that
he submits that art 3(3) has become part of English law by reason of
art 57 of the Brussels Convention, which has the force of law in England
by reason of s 2 of the Civil Jurisdiction and Judgments Act, 1982. In
that context he relies upon the reasoning of Mr Justice Hobhouse in The
Nordglimt, [1987] 2 Lloyd's Rep 470 at pp 477-482; [1988] 1 QB 183
at pp 193-200. Just such an argument based upon s 21(8) of the 1981
Act was rejected by Mr Justice Colman in The Kommunar, on May 22,
1996 (see [1997] 1 Lloyd's Rep 8). In that case Mr Justice Colman held
that s 21(8) applies only to proceedings in rem or to a prior arrest in
this country and not elsewhere. I agree with both his decision and his
reasoning. As to Mr Howard's second point, I shall assume for present
purposes that art 3(3) is part of English law, although I note in passing
that in The Po, [1991] 2 Lloyd's Rep 206 Lord Justice Lloyd expressed
some doubt as to the correctness of the reasoning of Mr Justice Hobhouse
in The Nordglimt on this point.
Mr Matthews submits that on its true construction art 3(3) applies only
where a vessel is under arrest at the time of a second arrest or where
the vessel has been released or a threatened arrest avoided by the giving
of bail or other security. He submits that the article has no impact on
a vessel which is not under arrest and in respect of which no bail or
other security has been posted and is in existence. It struck me during
the argument that the English text was not entirely clear. The French
text, which the concluding words of the Convention show to be equally
authentic, was obtained and provides as follows:
Un navire ne peut être saisi et caution ou garantie ne sera donné, plus
d'une fois dans la juridiction d'on ou plusieurs des Etats Contractants,
pour la même créance et par le même Demandeur; et si un navire est
saisi dans une des dites juridictions et une caution ou une garantie a
été donnée, soit pour obtenir la mainlevée de la saisie, soit pour éviter
celle-ci, toute saisie ultérieure de ce navire, ou de n'importe quel autre
navire, appartenant au même propriétaire, par le Demandeur et pour
la même créance maritime, sera levée et le navire sera libéré par le
Tribunal ou toute autre juridiction compétente du dit Etat, a moins
que le Demandeur ne prouve, a la satisfaction du Tribunal ou de toute
autre Autorité Judiciaire compétente, que la garantie ou la caution a été
définitivement libérée avant que la saisie subséquente n'ait été pratiquée
ou qu'il n'y ait une autre raison valable pour la maintenir.
In my judgment the French text strongly supports Mr Matthews'
submission. It makes clear that art 3(3) is concerned with the case
where security has been provided for the release or to avoid the arrest
of a vessel and not otherwise. That is I think clear from the use of the
expression "et une caution", which is to be contrasted with the words "or
bail or other security" in the English text. The French text is I think to be
preferred on that point because it makes more sense of the concluding
words of the paragraph. It appears to me that if art 3(3) had been
intended to prohibit a subsequent arrest in circumstances in which a
vessel had been released from her first arrest pursuant to an order of the
Court it would have been drafted in very different terms. Mr Justice Sheen
appears to have taken the same view in The Silver Athens (No 2), [1986]
2 Lloyd's Rep 583.
In these circumstances I have reached the conclusion that, even if it is
part of English law, art 3(3) of the Arrest Convention has no application to
the facts of this case. I shall however indicate briefly below the conclusion
which I would reach on the facts if it were held that that view were wrong.
(2) Recognition
Section 2 of the Civil Jurisdiction and Judgments Act, 1982 provides that
the Brussels Convention shall have the force of law. Article 26 of the
Brussels Convention provides that a judgment given in a Contracting
State shall be recognized in the other Contracting States without
any special procedure being required. It is plain from art 25 that for
the purposes of the Convention a judgment includes an interlocutory
judgment or order. Mr Howard submits that the Court is bound to
recognize the judgment or order of the Court in Holland and to order
the release of the security in this action. Mr Matthews submits, on the
other hand, that the Convention has no application by reason of the
arbitration exception in art 1.4. He further submits that there is in any
event nothing in the order made by the Judge in Holland to prevent the
arrest of the vessel in England or to require the release of the security
subsequently given. It is not necessary to consider the scope of the
arbitration exception in the instant case because I have reached the firm
conclusion that Mr Matthews' second submission is correct.
On Mar 19 the plaintiffs applied to the District Court in Rotterdam for
a pre-judgment arrest in order to secure their claim, which they made
clear that they would pursue by arbitration in London pursuant to cl 44 of
the charter-party. On Mar 20 the application was granted and the vessel
was arrested. She was at that time within the jurisdiction of the Court in
Rotterdam. The owners subsequently applied to the Court for an order
releasing the vessel. After a hearing, to which I shall refer further below
and which involved a consideration of the merits of the charterers' claim,
the President of the District Court in Rotterdam made an order lifting the
pre-judgment arrest of the vessel.
Mr Howard submits that the meaning and effect of that order was that
the vessel was not only to be released from arrest in Holland but also that
she was not to be arrested anywhere in the world thereafter. I am unable
to accept that submission. I can see nothing in either the reasons given
by the Judge or in the order which he made to support that conclusion.
On the contrary it is, in my judgment, plain that he was considering only
whether to order the release of the vessel from arrest in the proceedings
in Holland. It seems to me to be almost inconceivable that he intended
that his order should have any effect in any jurisdiction other than his
own. By way of comparison, if this Court were to order the release of a
vessel which had been arrested in an action in rem in England, such an
order would likewise have no effect outside the jurisdiction of the Court. I
am confident that the same is true in Holland.
(3) Common law
Mr Howard submits that the Court has power to order the release of
a vessel or of security given to avoid or secure such a release if the
maintenance of the arrest or security would be vexatious or oppressive
or otherwise an abuse of the process of the Court. As I understand it,
Mr Matthews accepts that the Court has power to set aside an arrest or
security on such grounds but he submits that a plaintiff who satisfies
the relevant criteria in the Supreme Court Act, 1981 and the relevant
provisions of the RSC, O 75, r 5 has a right to arrest and that the Court
will only set aside an arrest or security on the grounds of vexation,
oppression or abuse of process where security has already been provided
by or on behalf of the defendants.
I accept the submission that, in general, where a plaintiff satisfies both
the statutory criteria and the provisions of the rules of Court he has a
right of arrest: The Varna, [1993] 2 Lloyd's Rep 253. There are however
cases in which the Court has refused to permit an arrest or a second
arrest where bail has been provided, both before and after judgment: see
eg The Kalamazoo, (1851) 15 Jur 885, The Wild Ranger, (1863) Br & Lush
84, The Christiansborg, (1885) 10 PD 141, per Lord Esher, MR at pp 150
to 151, The Joannis Vatis (No 2), (1922) 10 Ll L Rep 756; [1922] P 213,
The Point Breeze, (1928) 30 Ll L Rep 229; [1928] P 135 and The Alletta,
[1974] 1 Lloyd's Rep 40. Part of the reasons for those decisions was
that bail represents or is a substitute for the ship. There are, however,
cases in which an arrest has been permitted in such circumstances
before judgment: see eg The Hero, (1865) Br & Lush 447 (where the
plaintiffs made a mistake as to the amount of bail originally sought and
obtained), and Westminster Bank Ltd v West of England Steamship
Owners' Protection Indemnity Association Ltd, (1933) 46 Ll L Rep 101
at pp 104 to 105 (where Mr Justice Roche suggested that the question
of bail may be reopened if there are questions as to the solvency of the
security). I say nothing about the position after judgment since it may be
necessary to reconsider the decision in The Alletta at a future date: cf The
Freedom, (1871) LR 3 Ad & E 495 at p 499.
I should add in parentheses that the Court will adopt the same approach
where the security given is not bail but, as is the almost universal practice
now, contractual security, although subject of course to the terms of the
particular contract.
The principle underlying all the cases is that where bail or other security
is given and not released it would be vexatious or oppressive to permit
an arrest or a second arrest. So, for example, in The Christiansborg Lord
Esher, MR said at pp 150 to 151:
If bail, therefore, be given in one court, and when the action is instituted
in the other, bail is to be given again, I think that that could not be
allowed, if the party who sues in the second court insists on preserving
the bail in both courts.
I think it would be vexatious in fact to call upon the owner of the ship in
respect of the same cause of action to give bail in the two courts at the
same time. In such a case the party who objects to the action proceeding
in the second court has satisfied to a certain extent the burden of proof,
which lies upon him, and has shown that it would be vexatious to allow,
without terms, the matter to go on in a second court upon that ground.
In The Arctic Star, (unreported), which was decided by the Court of
Appeal on Feb 5, 1985, Sir John Donaldson, MR said:
The basis of the appeal is, as I understand it, that prima facie it is wrong
to arrest a ship twice in respect of the same claim, because, as Dr
Lushington put it in the early cases, starting with The Kalamazoo, the
bail, or its equivalent nowadays in the form of a guarantee, represents
the ship, and, once that has been put up, the ship should be free to go
about her lawful occasions free from any further interruptions by arrest
in respect of the same claim. That principle is undoubtedly correct, albeit
that nowadays it is viewed in the light of whether it is oppressive and
vexatious to rearrest.
In the same case Lord Justice Lloyd said that the general rule was:
... that, once a vessel has been arrested and released on bail (whether
in this jurisdiction or in any other jurisdiction) this court will not normally
permit a second arrest, the reason being, as stated by my Lord, that the
bail is said to represent the ship. But that rule is not without exceptions.
The justification for the rule is, and always has been, the need to avoid
oppression and unfairness.
The Court of Appeal approved a second arrest in the particular somewhat
unusual circumstances of that case.
Mr Matthews submits that it follows from the passage in the judgment of
Lord Esher quoted above that if the plaintiff does not insist upon bail in
both Courts there is no reason why he should not arrest a second time.
However, I do not think that Lord Esher was considering the case where a
vessel has been arrested in one jurisdiction and released by order of the
Court and then subsequently arrested in another jurisdiction in support of
the same cause of action.
I have been referred to only two cases which were not concerned in some
way with bail or other security. The first is the decision of Mr Justice
Sheen in The Silver Athens (No 2), [1986] 2 Lloyd's Rep 583. The history
of that action was briefly as follows. The plaintiff charterers claimed
damages against the owners of Silver Athens in respect of any sum which
they might have to pay to owners of cargo. In 1984 the plaintiffs had
arrested Silver Athens and security had been provided. The purpose of the
arrest had been to obtain security for an arbitration award because the
charter-party contained a London arbitration clause. However at that time
s 26 of the Civil Jurisdiction and Judgments Act, 1982 had not come into
force and, on application by the defendants, Mr Justice Sheen had ordered
that the action be stayed and that the warrant of arrest and security be
set aside.
By Apr 25, 1986 s 26 of the 1982 Act had come into force and on that
day the plaintiffs issued a second writ in a second action in rem against
Silver Athens indorsed with the same claim as the earlier writ and the
vessel was arrested in that action. The defendants applied inter alia for
a declaration that the issue and service of the second writ was an abuse
of the process of the Court. In The Silver Athens (No 1), [1986] 2 Lloyd's
Rep 580 Mr Justice Sheen held that it was indeed an abuse of process to
issue a second writ and to arrest the vessel again while the first action
remained in existence, especially in the circumstances in which that action
was stayed. He struck out the writ, set aside the warrant of arrest and
ordered the release of the vessel. That decision shows clearly that the
Court has power to make appropriate orders in cases of abuse of process.
The plaintiffs subsequently applied for the stay in the 1984 action to be
lifted and for the issue of a warrant of arrest in that action. Mr Justice
Sheen granted that application. He held in The Silver Athens (No 2) that
the question whether a party has a right to arrest a vessel more than
once did not arise because, he said (at p 584), with regard to his earlier
order in 1984, that the warrant of arrest be set aside and the security
released:
... as from the time when those orders were executed the parties were
in the position that they would have been in if the ship had not been
arrested. The principle that when a ship is once released upon bail she
is altogether released from that action and thereafter the bail represents
the ship does not apply when the arrest has been set aside and the bail
released.
Mr Justice Sheen then referred to art 3(3) of the Arrest Convention and s
21(8) of the 1981 Act and concluded:
It was recognized in the Arrest Convention that a ship might be rearrested
if the bail or other security has been released before the subsequent
arrest. There is nothing in the Supreme Court Act 1981 which prevents a
second arrest if the first arrest has been set aside. The first arrest must
thereafter be treated as a nullity.
That reasoning gives support to Mr Matthews' submission. It certainly
shows that there is no principle that a person cannot arrest a vessel
which has previously been released by order of the Court. I am not quite
sure what Mr Justice Sheen meant by saying that the earlier arrest was
a nullity, since in my judgment the fact that there has been an earlier
arrest and the circumstances in which the vessel has been released may
be relevant to the question whether the second arrest is an abuse of the
process of the Court. That is I think clear from Mr Justice Sheen's own
earlier decision to set aside the 1986 writ and arrest on the ground of
abuse of process.
The question in any case is whether the second arrest is an abuse of
process; see eg the second case to which I referred earlier, namely
The Kherson, [1992] 2 Lloyd's Rep 261, per Mr Justice Sheen at p 268,
although that case does not itself advance the debate to any significant
extent. I do not think that the mere fact that a plaintiff has arrested
a vessel which has previously been released by order of this Court or
another Court of competent jurisdiction will amount to an abuse of the
process of the Court. All will depend upon the circumstances. So, for
example if a plaintiff were to seek to arrest a vessel in respect of the
same claim in one jurisdiction after another it might well be an abuse of
process to permit an arrest here on the ground that to do so would be
oppressive and vexatious and thus an abuse of the process.
The question for decision is whether the arrest of V. is vexatious or
oppressive having regard to the fact that the Dutch Court ordered her
release after a hearing on the merits of the claim. I turn therefore to
consider the facts. I shall also consider at the same time whether there
would be good cause to permit an arrest if (contrary to my view) art 3(3)
of the Arrest Convention has any application.
(4) The facts
Mr Matthews submits that, whatever the position was or appeared to be
when the matter was before the Court in Rotterdam, it is now clear that
the plaintiffs have a good arguable case on the facts and that they should
now be permitted to retain security for their claim because otherwise
they may not be able to satisfy an arbitration award since the owners
have already shown the lengths to which they are prepared to go to
avoid discharging their liabilities. Mr Howard accepts, I think, that on
the material at present available the plaintiffs have an arguable case
but he maintains the owners' position that there is something suspicious
about the claim and in any event submits that the plaintiffs had every
opportunity to put the facts fully before the Court in Rotterdam. He says
that if they failed to do so they have only themselves to blame and that it
would be oppressive for the vessel to be arrested a second time.
The plaintiffs' claim as initially advanced was that as a result of the
owners' breach of the charter-party they had suffered loss because they
were unable to perform a sale contract dated Jan 25, 1996 between
themselves as sellers and D. International Inc ("D.") as buyers. It is now
put somewhat differently because the plaintiffs were able to resurrect the
contract with D.. The contract was for the sale of 33,000 tonnes of steel
scrap plus or minus 10 per cent in sellers' option delivery ciffo Masan. It
provided that P. were to charter a vessel equipped with cranes or derricks.
By an addendum dated Mar 1 the shipment date was extended to a latest
sailing date of Mar 29. There are now available documents which appear
on their face to show that on about Mar 1 D. agreed to accept a gearless
vessel on the basis of a reduction of US$3 per tonne. Those documents
were not produced when the matter was before the Court in Rotterdam.
Indeed no documents were produced on this point and (as appears below)
it is clear that, not surprisingly, the Judge was suspicious of the plaintiffs'
claim.
The vessel was fixed on Mar 6. As stated in my earlier judgment notice
of readiness was to be given at the loadport. By cl 7 the plaintiffs had an
option to cancel if the vessel was not ready to load on or before Mar 17.
By cl 17 the vessel's class was described as NKK and by cll 17 and 49 she
was to be "considered gearless for this trade". Clause 58 provided:
On completion of drydock, Owners warrant that all appropriate certificates
of seaworthiness will be in order and Charterers have the right to counter-
verify same.
At the time of the fixture the vessel was in drydock. Thereafter the
owners gave various dates upon which the vessel would be leaving
drydock and ready to load. On Mar 14, Mr S. of P. met Mr E. of the owners
and says that he was assured that all was well, but on the same day
P.'s agents WALA were apparently told by the drydock company that
the vessel would leave the dock on Mar 15 but that class had left some
recommendations which might mean that the vessel would not be ready
until Mar 17. They had also been told by the port authorities that the
vessel had been detained by port state control, although P. were assured
that the detention would be lifted. The vessel was inspected on behalf of
P. on the Mar 15. A notice of readiness was tendered on that day and she
left drydock, but her certificates of class were not on board. The plaintiffs'
surveyor reported that the class certificates were not yet issued pending
completion of special survey and that owners' representative had said that
the special survey would be completed on or about Mar 20.
Mr S. says that he was very concerned about the position because the
vessel was not in class and he was worried about the prospect of losing P
& I cover. He thought that it was not commercially sensible to load cargo
before the vessel had her class certificates. The plaintiffs say that a vessel
which is not in class is not seaworthy, that it follows that the certificates
of seaworthiness referred to in cl 58 must include class certificates and
that the owners were in breach of the clause because those certificates
were not in order when the vessel left the drydock on Mar 15. Nor, they
say, was she ready to load at that time. They also say that at that time
she was not in class with NKK and that it is at least possible (if not
probable) that her own P & I cover would be at risk.
At some stage, according to Mr S., he was informed that there was no
electrical power to supply the pumps to pump ballast out of No 4 hold
and that the auxiliary generators were under repair. On Mar 18 the
owners said that they would retender notice of readiness on Mar 20,
but P. decided that they could not be confident that the vessel would
be ready to load within a reasonable time and on that day they sent a
telex purporting to cancel the charter-party and/or to accept the owners'
alleged repudiatory breaches as bringing the contract to an end.
There is plenty of scope for dispute as to whether the plaintiffs' claim will
succeed on the merits. The owners say that they were not in breach of
the charter-party, that the vessel was ready to load and that she would
have had all her class certificates in time. They further say that cl 58
does not refer to certificates of class. They also point to a very curious
and unsatisfactory feature of the plaintiffs' case at the time, namely
that they obscured part of a document from D. when they sent it to the
owners, apparently in order fraudulently to inflate their claim. Moreover,
as indicated at the end of my earlier judgment, they say that they failed
to take reasonable steps to mitigate their loss. However, all these are
matters for the arbitrators. For present purposes it is sufficient to say
that the plaintiffs have a good arguable case on the merits. I turn to the
proceedings in Rotterdam.
(5) The Dutch proceedings
On Mar 19 the plaintiffs filed a written application for the arrest of the
vessel in Rotterdam. The purpose of the application was to obtain security
for their claim in an arbitration in London. As is customary, no supporting
documents were submitted and the application was granted on Mar 20.
The vessel was arrested later on that day. Mr Van Leeuwen was instructed
on behalf of the owners on Mar 27 and on Mar 28 he notified the plaintiffs'
Dutch lawyers, Messrs Loeff Claeys Verbeke, that he would challenge the
arrest if necessary. On Apr 3 he notified the Court and Messrs Verbeke
that he wanted to challenge the arrest by a procedure which I understand
is called a kort geding. He indicted that the ground of the objection would
be that the claim was ill-founded because the vessel was ready to load on
Mar 15.
A kort geding is, as I understand it, a procedure whereby an arrest
can be challenged on the merits of the claim. It involves a summary
consideration by the Court of the merits of the claim. An appeal lies as
of right from a decision on such an application but notice of appeal must
be given within 14 days. The decision on the merits is provisional in the
sense that it does not bind any Court which subsequently determines
the issues between the parties at a trial. Both parties are entitled to put
evidence before the Court and are entitled to rely upon written and oral
submissions. Both parties exercised those rights.
On Apr 5 Mr Van Leeuwen notified Messrs Verbeke that he would serve
a statement of claim setting out the owners' objections in the following
week and asked for evidence that D. had cancelled the contract with P..
On Apr 9 it was learned that the hearing could take place on Apr 12.
Messrs Verbeke were informed of the date and indicated that they would
appear, provided that the statement of claim was served on them by noon
on Apr 10 and that the documents were served on the morning of Apr 11.
As I understand it, a tight timetable of this kind is not unusual in this kind
of case.
Mr Van Leeuwen received the documents supporting P.'s alleged claim
on Apr 10. He complains with some justification that this was somewhat
late given the fact that he had requested them some two weeks' earlier.
In any event he served the owners' statement of claim and a number
of documents, which included not only the charterparty but a survey
report, contemporary exchanges and various statements including those
of the master and representatives of the owners. He also filed written
submissions. The thrust of the owners' case as put before the Court was
that the plaintiffs' case had no substance and that the reason for the
cancellation was that P. had chartered the wrong vessel. That was (they
said) because by cl 49 of the charter-party she was to be considered
gearless, whereas under the sale contract with D. P. were obliged to
deliver the cargo to Masan, where there are no discharge facilities, so that
cargo must be delivered in a ship which can discharge her own cargo.
They also relied upon the term of the sale contract which provided that
the vessel used must have discharging gear. They asserted that in these
circumstances P. had to find an excuse for not loading cargo on the vessel
because she would not be permitted to enter the discharge port.
Mr Van Leeuwen advanced a number of other arguments, including the
submission that cl 58 was not concerned with class certificates and that
the vessel was both seaworthy and ready to load at the material time.
He also relied upon an opinion of Mr James Turner on English law. That
opinion too inter alia asserted that it was reasonably to be inferred from
the documents that the true reason why the plaintiffs purported to cancel
the charter-party was that she was gearless.
In response P. produced a number of documents, some of which
overlapped with the documents produced by the owners, and two opinions
on English law. Messrs Verbeke also relied upon written submissions.
However, the only document which they produced from D. was the alleged
cancellation of the sale contract dated Mar 26. They did not produce any
material which suggested that that contract had been varied to permit
delivery on a gearless vessel. Nor did they seek an adjournment in order
to enable them to do so. On Friday Apr 12 oral submissions were made
to the Court by Mr Van Leeuwen on behalf of the owners and by Mrs Slis
on behalf of P.. After the hearing the Judge suggested that the parties
try to agree an exchange of security. In the meantime he reserved his
judgment.
There were then exchanges between the parties' Dutch lawyers and
some further documents were produced, but no agreement could be
reached and the Judge was informed. Up to this time no further document
had been produced from D. asserting any variation of the contract.
However, over the week-end P. produced a single document dated Mar 4
which purported to evidence a variation, but (as indicated in my earlier
judgment) it is a document about which the owners have expressed
suspicions. Unfortunately for them the plaintiffs did not produce the
documentation which they have now produced and which appears on
its face both to be genuine and to support their case that D. agreed a
variation of the contract to permit delivery in a gearless vessel, subject to
a reduction in the price, although in the final analysis whether that is so
or not will be a matter for the arbitrators.
The Judge delivered his judgment on Apr 15. He decided that the arrest
should be lifted. He held that an arrest must be lifted if it is summarily
shown that the arrest is ill-founded. He then considered the facts and
the parties' respective cases in some detail. He observed that P. had
abandoned a point on the number of holds which was untenable. He
expressed a preliminary view upon the construction of cll 7 and 58 and
gave a number of grounds for his decision, but it seems to me to be
reasonably clear from the judgment that he was significantly influenced
by the fact (as it had been put to him) that the vessel was gearless
whereas the sale contract required a vessel with gears. He put it thus:
It therefore at first sight would seem that the defendant has cancelled
the charter on the ground of physical absence of class certificates on 17th
March only "pour besoin de la cause" and that the defendant wished to
be rid of the contract because with this Vessel the defendant could not
comply with its contractual obligations vis-a-vis D..
I accept Mr Howard's submission that the plaintiffs only have themselves
to blame for that conclusion since they took no steps to obtain an
adjournment to enable them to put more evidence before the Court.
It is said on behalf of the plaintiffs that this point was only taken at the
last minute and that the Court in Rotterdam never grants an adjournment
in such circumstances. It is correct that the point was taken only shortly
before the hearing, but the explanation for that is that the plaintiffs did
not produce relevant documents until very late. As to the possibility
of an adjournment, I accept the evidence of Mr Van Leeuwen that (as
one would expect) the Court has power to grant an adjournment and
that the Court will grant an adjournment in an appropriate case. While
I accept Mr Matthews' point that an appeal might well have been only
academic because the judgment ordering the release was declared to
be enforceable notwithstanding an appeal so that the plaintiffs cannot
be blamed for not appealing, it seems to me that (as stated above) the
plaintiffs have only themselves to blame for the inference drawn by the
Judge. I think that I am right in saying that they did not even try to put
the document of Mar 4 before him, even though they had it before he
delivered his judgment.
There has been some discussion between the experts on Dutch law as to
whether it would now be possible to arrest the vessel again in Holland. It
may well be that it would not, but the question is whether it would now be
oppressive or vexatious to allow the security obtained as a result of the
plaintiffs' arrest in England to stand. It is not clear whether the Judge's
decision would have been different if the documents now available had
been put before him, but, whatever the answer to that question, I have
reached the conclusion that, subject to one condition, it would not be
oppressive or vexatious to allow the security to stand.
While I accept the submission that in general it is incumbent upon a party
to put all relevant evidence before a Court on an application to arrest
a vessel, the "gearless" point was taken at a late stage and it appears
to have had a significant effect upon the approach of the Judge. I do
not think that that is surprising, even though it may be said that it was
not strictly relevant to any of the issues on the merits. The result of the
proceedings in Rotterdam was satisfactory from the owners' point of view
because, not only was the vessel released, but also they subsequently
sought and obtained security for their claim for damages for wrongful
arrest.
As indicated in my earlier judgment, once the vessel had left Holland, the
owners went to considerable lengths to prevent the plaintiffs obtaining
security for their claim. In these circumstances Mr Matthews submits that
if the plaintiffs are not permitted to retain the security, any arbitration
award in their favour is likely to be worthless. In these circumstances
he submits that justice now requires that the security be retained. He
submits that the owners are secured against any loss as a result of the
arrest in Holland, that on any view there are significant mitigating factors
with regard to the plaintiffs' failure to put the whole story before the
Court in Holland and that, given that it is now clear that they have at least
a good arguable case on the merits it would be harsh to order the release
of security which may be the plaintiffs' only means of satisfying an award.
Subject to one point I accept those submissions. I have reached the
conclusion that it would not be oppressive to permit the plaintiffs to retain
the security provided that they in turn provide security for any loss which
the owners prove that they have suffered as a result of arresting the
vessel in England if their claim fails before the arbitrators. I recognize that
such counter-security is not required in the ordinary case of an arrest, but
this case is unusual. As I understand it, if the arrest had been maintained
in Holland and the plaintiffs' claim in the arbitration failed, the owners
would be entitled to recover from the plaintiffs any loss caused by the
arrest without having to prove mala fides or crassa negligentia (to use the
old expressions). They would also have been able to obtain security for
that claim.
In my judgment the plaintiffs must bear their share of the responsibility
for the fact that the arrest was not maintained in Holland. In these
circumstances it appears to me that on the facts of this case the position
here should be the same as it would have been in Holland if the arrest
had been maintained and that it would be oppressive to permit the
plaintiffs to retain the security for their claim if to do so would put them
in a better position than they would have been in Holland. On the other
hand, the maintenance of the security will not be oppressive if appropriate
counter-security is given.
I should add in parentheses that I would have reached the same
conclusion if I had held that art 3(3) of the Arrest Convention applied and
the test were whether there was good cause to permit an arrest.
It follows that, provided that suitable counter-security is given in a
form which can be further discussed hereafter, the motion fails on the
grounds which I am now considering and must be dismissed. I am not
sure whether there remain yet further grounds of the owners' application
which have not yet been determined but which remain live.