Aratra Potato Company Ltd v Egyptian Navigation Company (El Amria)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE BRANDON,SIR STANLEY REES |
| Judgment Date | 15 May 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0515-5 |
| Docket Number | 81/0196 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 May 1981 |
[1981] EWCA Civ J0515-5
Lord Justice Stephenson
Lord Justice Brandon
and
Sir Stanley Rees
81/0196
1979 Folio 326
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
ADMIRALTY action in rem against:
The Ship "El Amria"
Royal Courts of Justice
MR. ANTHONY J.S. COLEMAN AND MR. STEVEN M. GEE (instructed by Messrs Holman Fenwick & Willan, solicitors, London) appeared on behalf of the Appellants (Defendants).
MR. JONATHAN H. MANCE and MR. JONATHAN GRISMAN (instructed by Messrs Richards Butler & Company, solicitors, London) appeared on behalf of the Respondents (Plaintiffs).
(Reserved)
I will ask Lord Justice Brandon to give the first judgment.
This is an appeal from an order made by Mr. Justice Sheen in the Admiralty Court on 10th October 1979 by which he dismissed an application by the defendant shipowners in a cargo damage action for a stay of the action on the ground that the bills of lading under which the cargo was carried contained a foreign jurisdiction clause.
The "El Amria", against which the action is brought in rem, is an Egyptian ship owned and operated by the Egyptian Navigation Company of Alexandria. On 26th March 1979 she began loading at Alexandria a cargo of Egyptian spring crop King Edward VII potatoes in bags for carriage to a port in the United Kingdom to be nominated later. She completed loading a total of 53,777 bags on 1st April and left Alexandria, after loading some further cargo of a different kind, on 4th April.
Three bills of lading were issued in respect of the potatoes so loaded. These were in the standard form entitled "Liner Bill of Lading" in use by the defendants, the Egyptian Navigation Company. In two of the bills of lading, covering 9,500 and 26,500 bags respectively, the shipper was named as Fathy Ibrahim El Zayat. In the third bill of lading covering 17,777 bags, the shipper was named as Abdalla Nana. Both these shippers were Egyptian.
The bills of lading provided for consignment to order and for notification to be given to the Aratra Potato Company Limited at 534—536 Market Towers, New Covent Garden, Nine Elms Lane, London SW8. They also contained on their face the typed words "liner in free out", the effect of which was to make the shipowners responsible for loading and the receivers responsible for discharging.
On their reverse side the bills of lading contained, among numerous other printed clauses, a clause paramount (clause 2) incorporating the Hague Rules, and a jurisdiction clause (clause 3) which was in these terms:
"Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply except as provided elsewhere herein."
The principal place of business of the Egyptian Navigation Company is Alexandria and the effect of this clause was, therefore, two-fold: first, that all disputes arising under the three bills of lading should be decided in Egypt; and, secondly, that such disputes should be decided (subject to certain exceptions which are not material) in accordance with Egyptian Law. It appears clear that, if disputes under the bills of lading fall to be decided in Egypt, the appropriate court for deciding them would be the Commercial Court of Alexandria.
After the "El Amria" had left Alexandria, Liverpool was nominated as her port of discharge in the United Kingdom. In accordance with that nomination she proceeded to Liverpool, where she arrived on 16th April, and began discharging her cargo of potatoes on the morning of 17th April. The Mersey Docks and Harbour Company carried out the discharge under a contract made between them and the Aratra Potato Company Limited.
On discharge of the potatoes it soon became apparent that some or all of them were in a seriously deteriorated condition. A cargo surveyor, Mr. Hugh Lyon of Seaburdock Services Ltd., was appointed to survey the cargo on behalf of cargo interests, and two surveyors, Mr. John Knott and Mr. Peter Smith of Brookes Bell & Co., were appointed by the Protection and Indemnity Association in which the "El Amria" was entered to do the same on behalf of the shipowners. Two agronomists, Dr. Anna Snowdon for cargo interests and Mr. Twiss for the shipowners, were also appointed to inspect the cargo and report on its condition and the causes of it.
For reasons which are in dispute the process of discharging the potatoes took an unusually long time, discharge only being completed on or about 1st May.
Meanwhile, on 26th April, solicitors acting for cargo interests issued the writ in the present action. That action, as indicated earlier, was brought in rem against the "El Amria", which was immediately arrested in it. Two plaintiffs were named in the writ; first, the Aratra Potato Company Limited, claiming primarily as endorsees of the bills of lading; and, secondly, Morello International Limited, claiming as buyers from Aratra Potato Company Limited. The defendants were described as the owners of the ship "El Amria", who are and were, as indicated earlier, the Egyptian Navigation Company. The writ was served on 30th April and a conditional appearance was entered on 1st May.
At some time after 1st May the defendant shipowners issued a notice of motion seeking an order staying all further proceedings in the action on the ground of the foreign jurisdiction clause contained in the bills of lading. Various affidavits were filed on either side and the motion was heard by Mr. Justice Sheen on 30th and 31st July. Judgment was reserved and given on 10th October.
Meanwhile, on 27th July, the two plaintiffs in the action against the shipowners had issued a further writ in personam against the Mersey Docks and Harbour Company, claiming against them damages for delay in discharging the cargo of potatoes. The main reason for this being done was that the shipowners, through their Protection and Indemnity Association, had alleged that any deterioration in the cargo which had occurred had been caused, not by any fault of the ship, but by delay in discharge.
The defendant shipowners issued a notice of appeal against Mr. Justice Sheen's order on 15th November 1979 and the plaintiff cargo owners issued a respondent's notice on 17th December 1979. The notice of appeal was amended on 24th March 1981 and the appeal was finally heard by this court on 30th and 31st March and 1st and 2nd April 1981.
During the unfortunately long interval of nearly 18 months between the making of Mr. Justice Sheen's order and the hearing of this appeal against it, certain material developments had taken place. First, there had been pleadings in the action by the cargo owners against the shipowners in which the appeal arises, consisting of a statement of claim served on 24th October 1980, a defence served on 13th January 1981, and further and better particulars of the statement of claim served on 26th March 1981. Secondly, there had been progress, albeit extremely leisurely progress, in the action by the cargo owners against the Mersey Docks and Harbour Company, in that an appearance had been entered on 23rd July 1980 and a statement of claim served on 26th March 1981.
The result of these developments is that this court is more fully informed about the issues in both actions than the learned judge was at the time when the case was before him.
The reasoning by which the learned judge arrived at his decision to refuse a stay can be summarised shortly.
He directed himself, correctly, at p.3 B—C of the transcript of his judgment which is before us, that the court will generally enforce an exclusive jurisdiction agreement, and that the plaintiffs had to show strong reasons why it should not do so. In this connection he referred, at p.3 C—D, to four authorities: The Fehmarn (1957) 1 Ll.L.R. 511 and, on appeal, (1957) 2 Ll.L.R. 551; The Eleftheria (1970) p.94; The Makjefell (1975) 1 Ll.L.R. 528 and, on appeal (1976) 2 Ll.L.R.29; and The Adolf Warski (1976) 1 Ll.L.R. 107 and, on appeal, (1976) 2 Ll.L.R. 241.
He went on to find that there were two main reasons and two subsidiary reasons put forward by the plaintiffs which, taken together, justified the refusal of a stay in this particular case.
The two main reasons were (1) that, if one looked to see with what country the disputes in the action were most closely concerned, that country was England rather than Egypt (see p.3 H); and (2) that all the experts who had examined the cargo on or after discharge on behalf of either side (one surveyor and one agronomist for the plaintiffs, and two surveyors and one agronomist for the defendants) were English, and the bulk of the factual evidence with regard to the manner of stowage, and the speed or slowness of discharge, was to be found in England (see p.4 C—H).
The two subsidiary reasons were (3) that the plaintiffs had, as a result of the defendants' allegation about slowness of discharge, begun a separate action against the Mersey Docks and Harbour Company, and that it would be a matter of great convenience to have both actions tried together (see p.4 B); and (4) that the form of procedure used by the Commercial Court of Alexandria would not, for various reasons, lead to the same sort of full and thorough investigation into the merits of the case which would be carried out if the action was tried in the Admiralty Court in England (see p.5 F—H).
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