Aggeliki Charis Compania Maritima S.A. v Pagnan S.p.A. (The Angelic Grace)

JurisdictionEngland & Wales
Judgment Date17 May 1994
Judgment citation (vLex)[1994] EWCA Civ J0517-10
CourtCourt of Appeal (Civil Division)
Docket NumberQBCMF 93/1650/B
Date17 May 1994
Aggeliki Charis Compania Maritima SA
Pagnan SpA
"Angelic Grace"

[1994] EWCA Civ J0517-10

(Mr. Justice Rix)

Before: Lord Justice Neill Lord Justice Leggatt Lord Justice Millett

QBCMF 93/1650/B




MR. P SIMON QC and MISS S LEE (Instructed by Messrs. Middleton Potts, London EC1A 7LD) appeared on behalf of the Appellant

MR. P GROSS QC and MR. A BAKER (Instructed by Holman Fenwick & Willan, London City EC3) appeared on behalf of the Respondent


Tuesday, 17 May 1994


The Defendant Charterers, Pagnan SpA, appeal against the order of Rix J dated 22 October 1993 made in favour of the Plaintiff owners, Aggeliki Charis Compania Maritima SA. By his Order, the Judge (1) declared that the Owners and Charterers are entitled and obliged to refer certain claims and cross-claims between them to arbitration under the amended Centrocon Arbitration Clause in a voyage charter in Synacomex form dated London 2nd October 1992 relating to the vessel "Angelic Grace"; and (2) granted an injunction restraining the Charterers from pursuing against the owners in the Court of Venice the claims declared to be arbitrable.


The Charterers submissions before us were (1) that the claim before the Italian Court is not a claim which falls within the Arbitration Clause in the charter-party; and (2) that even if it can be so characterised, the Court should not have granted an injunction, the effect of which, it is said, was to preempt the decision of the Italian Court as to its own jurisdiction.


The Charter was a voyage charter. The circumstances in which the dispute came about are conveniently summarised by the Judge whose judgment is now reported at [1994] 1 Lloyd's Rep 168. At page 170 he said:

"The charter-party was for the carriage of grain from Rio Grande to two safe ports on the Italian Adriatic. In the event the charterers nominated Chioggia as a discharge port and thereby became entitled under a special 'Chioggia Lightening Clause' to use Chioggia roads for lightening lighterage operations. The charterers called for discharge into Clodia, an unpowered open 'floating elevator' which they owned. The two vessels were moored alongside one another for the purpose of the discharging operation. During deteriorating weather conditions in December, 1992 the master of the Angelic Grace deemed it prudent to move her position, with Clodia still moored alongside. During the manoeuvre the mooring lines connecting the two vessels either parted or were released on the advice of the master of Clodia, and as a result contact occurred between the two vessels, damaging both of them."


It should be said that bank guarantees have been given on behalf of both parties. That given on behalf of the owners is dated 23 December 1992 and was for the purpose of securing payment of damages awarded by the Italian Court. That given on behalf of the Charterers was dated the following day, and secured payment of damages awarded in arbitration proceedings in London.


In the course of the trial it seems that the owners offered to provide security in relation to the arbitration proceedings equivalent to what the Charterers had obtained in relation to the Italian proceedings.


The arbitration proceedings were begun on 27 January 1993. The amended Centrocon arbitration clause provided, so far as material, that:

"All disputes from time to time arising out of this contract shall … be referred to the arbitrament of two Arbitrators carrying on business in London who shall be members of the Baltic and engaged in the shipping and/or grain trades …"


It was on 9 February 1993 that the Charterers began proceedings in the Court of Venice. It is those proceedings which the Owners say is brought in breach of the arbitration clause and to which the injunction ordered by the Judge applies. That, it is common ground, is a claim in tort as a matter of English law. It is said to arise, according to the Charterers, on account of the negligent conduct of the Master of the "Angelic Grace" in manoeuvring his vessel in the circumstances which the Judge recounted in the passage I have read from his judgment.


The question in a nutshell is whether the relevant claims and cross-claims arise out of the contract. It is common ground that the question must be answered in the light of the "Playa Larga" [1983] 2 Lloyd's Rep 171, in which this Court upheld the dictum of Mustill J that a tortious claim does "arise out of" a contract containing an arbitration clause if there is a sufficiently close connection between the tortious claim and a claim under the contract. In order that there should be a sufficiently close connection, as the Judge said, the Claimant must show either that the resolution of the contractual issue is necessary for a decision on the tortious claim, or, that the contractual and tortious disputes are so closely knitted together on the facts that an agreement to arbitrate on one can properly be construed as covering the other.


The Respondent's case is that the Judge's approach exactly accorded with that dictum. At page 172 of the report of his judgment, Rix J remarked that:

"There was in truth, little, if anything, between the parties as to the governing principles or the relevant authorities."


He then referred to the case of Ashville Investments Ltd. v. Elmer Contractors Ltd. [1989] QB 488, for comments by Balcombe and Bingham LJJ, sufficiently summarised in the words of the latter, who said at page 517E:

"I would be very slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings."


Relied on before the Judge and also in this Court by Mr. Simon QC for the Charterers, was a passage from the judgment of May LJ in the same case who said at page 494B:

"In seeking to construe a clause in a contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is driven to the conclusion that that clause is ambiguous, that it has two possible meanings. In those circumstances the Court has to prefer one above the other in accordance with settled principles."


May LJ went on to remark that that was a well-recognised principle of construction, not the consequence of adopting any particular approach to the question of construction, save, as he said:

"… to ascertain the true intention of the parties and the correct meaning of the words used."


Also cited by Rix J was the pithy comment of Hoffmann LJ in Harbour Assurance Co. (UK) Ltd. v. Kansa General International Insurance Co. Ltd. [1993] 1 Lloyd's Rep 455 at 470, where he said:

"The presumption [meaning a presumption in favour of what he called "one-stop adjudication"] merely reassures one that the natural meaning of the words produce a sensible and business-like result."


The Judge observed that:

"It was common ground between the parties that an appropriate clause could cover a claim in tort if there is a sufficiently close connection between a contractual and tortious claim",


citing the Playa Larga.


The Judge referred also to a recent decision of Steyn J in The Ermoupolis [1990] 1 Lloyd's Rep 160 at page 163 when he said:

"Clearly the matters to be proved, and therefore the potential issues, greatly overlap. That such closely related claims should be subject to different forms of dispute resolution, arbitration and litigation, possibly in different jurisdictions, would, in my view, hold no attraction for the reasonable businessman versed in the business of shipping."


Rix J summarised his conclusion on this topic by saying at page 174:

"Applying these principles and following these authorities, I have no hesitation in holding that the so-called 'collision claims' in the present case raised disputes which are within the arbitration clause. To some extent the claims in contract and in tort are true alternatives (for example the charterers' counterclaim). To some extent they may not be true alternatives, but they closely overlap (as in the owners' claims for breach of the warranty of safety and for fault in collision). In any event all claims and cross-claims arise out of the same incident, the identical set of facts which have to be investigated by the arbitrators. To the extent that the charterers cross-claim in negligence, their claim cannot be adjudicated without considering the charter-party terms, not only the exceptions clause, but perhaps also cl. 33, which states that lightening and/or lighterage, if any, is to be at receivers' risk. The parties plainly contemplated that a collision or other accident of navigation could give rise to a charter-party dispute: see not only cl. 19, but also the Both to Blame Collision clause. Moreover, the discharging operation which gave rise to all these claims was an integral part of the contractual adventure."


Power is lent to that conclusion by the case since decided in this court of Continental Bank NA v. Aeakos Compania Naviera SA and others [1994] 1 WLR 588. Those were proceedings in which a stay was sought in relation to a loan agreement requiring the borrowers to submit to the jurisdiction of the English Courts. One issue raised was whether the English Courts had exclusive jurisdiction over disputes concerning the agreement, and the Court was also called upon to determine whether an injunction should be available to restrain the borrowers' action in the...

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