Anton Durbeck GmbH v Den Norske Bank ASA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Christopher Clarke J. |
| Judgment Date | 11 November 2005 |
| Date | 11 November 2005 |
| Court | Queen's Bench Division (Commercial Court) |
[2005] EWHC 2497.
Queen's Bench Division (Commercial Court).
Christopher Clarke J.
Nigel Meeson QC (instructed by Swinnerton Moore) for the claimant.
Luke Parsons QC and Nichola Warrender (instructed by Stephenson Harwood) for the defendant.
The following cases were referred to in the judgment:
Brown v TannerELR (1868) LR 3 Ch App 597.
Castillero (11 December 2000, Panamanian Court of Appeal)
Centro Latino Americano de Commercio Exterior SA v Owners of the Kommunar (The Kommunar) (No. 3)UNK [1997] 2 Ll Rep 22.
Cintia Cristina Corro Batista v Prudencia Ramos Peralta (26 July 2002, Panamanian Court of Appeal)
Collins v Lamport (1864) 11 LT 497.
De Mattos v GibsonENR (1859) 4 De G & J 276.
Den Norske Bank ASA v Acemex Management Co Ltd [2003] 2 CLC 910.
Downsview Nominees Ltd v First City Corp LtdELR [1993] AC 295.
Edwin Hill and Partners v First National Finance CorpWLR [1989] 1 WLR 225.
Evangelismos, TheENR (1858) 12 Moo PC 352.
Gillespie Bros & Co Ltd v Iraqi Ministry of Defence (The Angel Bell)UNK [1979] 2 Ll Rep 491.
Heather Bell, TheELR [1901] P 272.
Jindal Iron and Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (The Jordan II) [2004] 2 CLC 1172.
Johnson v Royal MailELR (1867) LR 3 CP 38.
Keith v BurrowsELR (1877) 2 App Cas 636.
Law Guarantee & Trust Society v Russian Bank for Foreign TradeELR [1905] 1 KB 815.
Manor, TheELR [1907] P 339.
Myrto, TheUNK [1977] 2 Ll Rep 243.
Rivera v Jimenez (11 September 1985, Panamanian Court of Appeal).
Silven Properties Ltd v Royal Bank of Scotland plcUNK [2003] EWCA Civ 1409.
Vallejo v WheelerENR (1774) 1 Cowp 143; 98 ER 1012.
Yorkshire Bank plc v HallWLR [1999] 1 WLR 1713.
Shipping — Arrest — Applicable law — After history of default mortgagee bank arrested vessel in Panama carrying claimant's cargo of bananas — Vessel had no P & I cover, bananas could not be transhipped or sold and were lost — Claimant sought damages from bank for wrongful interference with bill of lading contracts — Applicable law was that of Panama — Panamanian law gave bill of lading holder whose cargo was lost or damaged on account of arrest a right to sue if arrest made in bad faith or with intention to harm bill of lading holder — Under English law mortgagee not entitled to interfere with bill of lading contract if security not impaired — Bank not to be criticised for arresting vessel when it did or for maintaining arrest — No intention to harm claimant under Panamanian law — Bank's security would have been impaired if vessel had been allowed to sail uninsured — Private International Law (Miscellaneous Provisions) Act 1995, s. 11, 12.
This was a claim by a consignee of a cargo of bananas against the bank which arrested in Panama the vessel carrying the claimant's cargo of bananas bound for Hamburg.
As a result of the vessel's detention the bananas deteriorated. The Panamanian court ordered a sale of the vessel and the cargo was, by order of the court, discharged overboard at sea and was totally lost. The claimant's agreed loss was 2,396,213.88 euros. At the time of the arrest the vessel had no P & I cover, transhipment of the bananas was not feasible and there was no market for them in Panama. The vessel had been sold by public auction.
The claimant sought to recover damages in respect of the loss of its cargo from the bank on the ground that it had wrongfully interfered with the performance of the bill of lading contracts pursuant to which the bananas were being carried.
The issues for determination were whether the law of Panama or of England applied for the purpose of deciding whether or not the arrest and its continuance were improper and whether the arrest was wrongful applying the relevant law.
Held, dismissing the claim:
1. The applicable law was that of Panama. For the purposes of s. 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995 the most significant elements of the events constituting the alleged tort occurred in Panama since that was the place where the vessel was arrested and detained and where the cargo became a total loss. The further elements on which the claimant relied were markedly less significant than those connecting the case with Panama and did not call for the application of a law other than that of Panama. If s. 11(2)(b) applied to an arrest which led to damage to property, the subsection provided for the place where the property was damaged i.e. Panama to be the country whose law was applicable under the general rule. The reference in s. 11(2)(b) to “damage to property” was not intended to apply to cases of wrongful interference with a contract. In such a case the contract was not “damaged” by such interference, although its due performance was prevented. Nor was the chose in action derived from the contract impaired. The connecting factors relied on by the claimant did not make it substantially more appropriate that the lawfulness of the arrest should be judged by the law of the vessel's registration, namely the law of Cyprus, which was accepted to be the same as that of England, as opposed to the law of Panama. The critical events — arrest and loss of the cargo — happened in Panama, where the bank availed itself of a judicial procedure which, in the result, caused loss to the claimant. The law pursuant to which that procedure was put in force by the bank should also determine whether the bank misused its right to invoke it. Those factors established a close connection with Panama.
2. Under Panamanian law at the time of the arrest the bank as mortgagee was entitled as against their mortgagor, the owner of the vessel, to arrest the vessel because of the default of the borrowers under the loan agreement. Panamanian law gave a bill of lading holder whose cargo was damaged or lost on account of a valid arrest of the carrying vessel a right to sue if the arrest, albeit legitimate as between the arrestor and the ship, was carried out in bad faith or with the deliberate intention of harming the bill of lading holder. The fact that an arrest would be likely to cause or, at any rate, risk causing damage to cargo was not sufficient.
3. Under English law the mortgagee was not entitled, by exercising his rights under the mortgage, to interfere with the performance of the contract of carriage, unless his security was impaired. (The MyrtoUNK[1977] 2 Ll Rep 243applied.)
4. The bank was not to be criticised from arresting the vessel when it did. There had been a long history of default. There was no realistic sign of immediate payment of any substantial portion of the debt or restoration of P & I cover. The alternative would have been to allow the vessel to sail on to Hamburg, without P & I cover. There was no breach of any duty to the claimant. (Den norske Bank ASA v Acemex Management Co Ltd[2003] 2 CLC 910considered.)
5. The bank was not to be criticised for maintaining the arrest. The vessel remained without P & I cover. The bank indicated in correspondence with the interested parties that it was prepared to release the vessel against the provision of suitable security and the reinstatement of P & I cover but nothing was proffered initially and, then, when an acceptable sum was suggested, agreement could not be reached on the terms.
6. Bad faith was not alleged. Nor did the facts begin to support an inference that the bank intended to harm the claimant or even that it was recklessly indifferent to whether it did so or not. It was entitled to look to its own interests and to take advantage of the security to which it was lawfully entitled, even if that prejudiced the claimant, to which it owed no duty of care. In those circumstances the claimant had no claim against the bank under Panamanian law.
7. As a matter of English law the security of the bank would have been impaired if the vessel had been allowed to sail uninsured to Hamburg.
Christopher Clarke J:
1. In this case a bank arrested in Panama a vessel carrying the claimant's cargo of bananas. As a result of the vessel's detention the bananas deteriorated so that they had to be discharged into the sea and were totally lost. The claimant's agreed loss is 2,396,213.88 euros. The facts of the case are unusual in that at the time of the arrest the vessel had no P & I cover; transhipment of the bananas was not feasible and there was no market for them in Panama. The question for decision is whether the claimant is entitled to recover damages in respect of their loss from the bank on the ground that it wrongfully interfered with the performance of the bill of lading contracts pursuant to which the bananas were being carried.
2. The claimant — Anton Durbeck GmbH — was the consignee of the cargo. The bananas were shipped in Ecuador for carriage to Hamburg via the Panama Canal upon the “Tropical Reefer”.
3. The defendant — DnB Nor Bank ASA — is a Norwegian bank (“the Bank”). It used to be called Den Norske Bank ASA.
4. Three vessels feature in this case. The first is the “Blue Reefer” owned by Nexus Management Co Ltd (“Nexus Management”). The second is the “Spring Reefer” owned by Blue Nexus Shipping Company (“Blue Nexus”). These two companies are registered in the Bahamas. The third is the “Tropical Reefer” owned by Palmetto Shipping Company Limited (“Palmetto”), a Cypriot company. The ultimate beneficial owner of these three vessels was a Cuban corporation — Asociacion de Navieras de Cuba (“Antares”). Antares was the parent company of the three ship owning companies and was itself owned by the Cuban Ministry of Fishing. The managers of the vessels were Nexus Reefer — until February 2000 — and then Naviera Friomar (“Friomar”), both of which are Cuban.
5. By a Loan Facility Agreement of 1st December 1997 (“the first loan”) the Bank agreed to make available to Nexus Management, Blue Nexus and Palmetto (“the borrowers”) US $6,000,000. It...
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