Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg A.G.
| Jurisdiction | England & Wales |
| Judge | The Master of the Rolls,Lord Justice Megaw,Lord Justice Scarman |
| Judgment Date | 19 March 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0319-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 March 1974 |
Appeal by defendants from order of Mr. Justice Talbot on 17th February, 1974.
[1974] EWCA Civ J0319-1
The Master of the Rolls (Lord Denning),
Lord Justice Megaw and
Lord Justice Scarman.
In The Supreme Court of Judicature
Court of Appeal
Mr. ANTHONY LINCOLN, Q.C., and Mr. STANLEY BRODIE (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Appellant Defendants.
Mr. CONRAD DEHN, Q.C., and Mr. PETER SCOTT (instructed by Messrs. Slaughter and May) appeared on behalf of the Respondent
Plaintiffs.
We grant leave and proceed to hear the appeal.
We are here concerned with a new point about the recognition of foreign judgments. An English company brought an action against a German company in the German Courts: but that action failed. It was dismissed by the German Court. The English company now seeks to bring another action for the same cause in England. The question is whether it can do so. The German company invokes the maxim which prevails in both systems of law: Nemo debet bis vexari pro eadem causa.
The English company is Black-Clawson International Ltd. It is an English subsidiary of an American parent company. The German company is Papierwerke A.G. or its predecessor. In 1961 the English company agreed to supply the German company with machines for a paper factory in Germany. In order to pay the price, the German company accepted 20 bills of exchange, each for £48,406 payable at Barclays Bank, London. They were clearly English bills, governed by English law. The 20 bills were so drawn that two bills matured every half-year over five years. The English company supplied the machinery. The German company paid a number of the bills as they fell due. But the German company then complained that the machinery was defective and that there were delays in deliveries. They stopped payment of the bills. In 1965 the dispute was referred to arbitration sitting in Zurich. Unfortunately that arbitration has taken an interminable time. It is not yet concluded in 1974, and may not be concluded for some years yet. Now the English company seek payment of the bills. They sue on two bills which fell due as long ago as 1st September, 1966, At once, therefore, the question arises whether they are barred by lapse of time. And here is the crux of the case:- in England, an action on a bill of exchange can be brought within sixyears of the time when it fell due. But in Germany it must be brought within three years. Furthermore, in England the law of limitation has been held to affect the procedure by which a claim is enforced, and not the substance of the obligation itself; and, accordingly, the time limit is that presented by the lex fori, see Huber v. Steiner (1835) 2 Bing. N.C. 202; whereas in Germany and most continental countries the law of limitation is held to go to the substance of the obligation, and accordingly the time limit is that prescribed by the proper law of the contract, see Cheshire's Private International Law, 8th edition, page 665.
After that introduction, I turn to the particular facts. On 1st September, 1966, two bills of exchange accepted by the German company fell due for payment to the English company at Barclays Bank, London. Each was for £48,406. They were duly presented for payment, but they were dishonoured and thereupon were duly protested for non-payment.
On 24th August, 1972, the English company issued proceedings in Germany against the German company. It issued those proceedings in the Provincial Court of Munich, claiming £96,812, the amount of the two bills, plus interest and costs. The German company resided in Germany and had its assets there. It did not; reside in England. It had no assets here. It would probably not submit to jurisdiction of the English Courts. So, naturally enough, the English company sought to get judgment in Germany. The English company realised, however, that those proceedings might be barred by the three-year limitation prevailing in Germany. In order to protect themselves, they took parallel proceedings in England. On 29th August, 1972 (just within the six years) the English company applied for leave to issue a writ in the High Court in London, claiming against the German company on the same two bills £96,812-00, plus interest and costs. On the same day — 29thAugust, 1972 — the English company were granted leave to issue the writ, and to serve notice of the writ out of the Jurisdiction, on the German company. On the same day — 29th August, 1972 — the English company issued the writ, but they did not at that time give notice of it to the German company. They had one year in which to do it. They took advantage of that year to do nothing in the English proceedings. But, meanwhile, they took active steps in the German proceedings so as to get judgment there, if they could.
On 30th November, 1972, the Provincial Court of Munich gave their decision. They dismissed the claim of the English company on the bills. They did so on the ground that it was barred by the three-years limitation which prevailed in German law. We have before us the grounds of the decision translated into English. I am not at all confident that I have understood it rightly, but the reasoning would appear to be as follows:- The bills were payable in London and the substantive obligations under them were to be determined according to English law. Now English law says that a period of limitation for bills is not part of the substantive law, but is only procedure. It does not take away the right to payment, but only bars the remedy. Being matter of procedure, it is governed by the lex fori. The German Courts applied that English law. They held that the remedy in Germany was subject to the German period of limitation, which is three years. Accordingly, the Provincial Court of Munich dismissed the claim.
The English company has appealed from that decision to the Bavarian Supreme Court. The English company argue that, according to German law, a period of limitation belongs to the substantive law and not to procedure. The German Court should, therefore, apply the English law, including the six years limitation. We do not know the result of the appeal, but it is expected shortly.
Now I return to the English proceedings. As I said, the English company issued the writ in England on 29th August, 1972. They had a year in which to serve notice of it on the German company. When the year was nearly up, on 24th August, 1973, they did serve notice of it on the German company. The German company did not enter an appearance. They applied to set aside the English proceedings. They did so on the ground that the English company had already sued the German company in Germany on these very two bills: and that action had been dismissed. So the English company should not be allowed to sue on the bills in England. The Master and the Judge refused to set the English proceedings aside. They did so on the authority of Harris v. Quine (1869) L.R. 4 Q.B. 653, which appeared to be directly in point.
Before us, however, the German company took a new point. They said that England and Germany entered into a convention on 14th July, 1960, which provided for the reciprocal enforcement of judgments: and that, by reason of the Foreign Judgments (Reciprocal Enforcement) Act, 1933, the judgment of the Munich Court is conclusive of the cause of action on the bills.
The material provisions are contained in section 8 of the 1933 Act. Section 8(1) deals with "cause of action estoppel". Under our English law, if one party brings an action against another for a particular cause and judgment is gives upon it — whether for him or against him — there is a strict rule of law that he cannot bring another action against the same party for the same cause, see Thoday v. Thoday (1964) P. at page 197 by Lord Justice Diplook; Fidelitas Shipping Co. v. V/O Exportcleb (1966) 1 Q.B. at page 640. The effect of section 8(1), as I see it, is to make a judgment of a German Court likewise binding on an English Court in respect of the same cause of action. Take ajudgment given by a superior Court in Germany, which is final and conclusive in Germany as between the parties thereto. There may, or may not, be an appeal pending in Germany to a higher Court there, see section 1(2)(3). Nevertheless, it is a judgment which comes within the provisions of section 8(1) which says that the judgment "shall be recognised in any Court in the United Kingdom as conclusive between the parties thereto in all proceedings founded on the same cause of action and may be relied upon by way of defence or counterclaim in any such proceedings."
Mr. Dehn, Q.C., submitted that that provision applies only to a judgment in favour of a plaintiff, and not to a judgment in favour of a defendant. This submission was effectively answered by Mr. Lincoln, Q.C. He drew attention to the words: "may be relied upon by way of defence". Those words are appropriate to meet this very case where the plaintiff has brought proceedings in this country founded on the same cause of action, the defendant may rely on the judgment as conclusive "by way of defence". I see no content for those words except to avail a defendant.
Mr. Dehn, Q.C., next submitted that the section, in saying that the judgment was to be recognised as "conclusive between the parties thereto" meant only that it was to be conclusive as to the matters adjudicated upon, and not as to other matters. This submission, too, was effectively answered by Mr. Lincoln, Q.C. He drew attention to the difference between section 8(1) and section 8(3). Section 8(1) says that the judgment is "conclusive between the parties". Section 8(3) say's that it is "conclusive of any matter of law or fact...
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