Detlev von Appen GmbH v Voest Alpine Intertrading GmbH [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Morison J. |
| Judgment Date | 10 May 1996 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 May 1996 |
Queen's Bench Division (Commercial Court)
Morison J.
Richard Siberry QC and Luke Parsons (instructed by Holman Fenwick & Willan) for the plaintiffs.
Belinda Bucknall QC and Robert Thomas (instructed by Clyde & Co) for the defendants.
The following cases were referred to in the judgment:
Aggeliki Charts Compania Maritima SA v Pagnan SpA (“The Angelic Grace”)UNK [1995] 1 Ll Rep 87.
AKP Sovcomflot v Far Eastern Shipping Co Ltd (unreported, 20 July 1995).
Continental Bank NA v Aeakos Compania Nayiera SAWLR [1994] 1 WLR 588.
Cottage Club Estates Ltd v Woodside Estates Co Amersham LtdELR [1928] 2 KB 463.
Court Line Ltd v Aktiebolaget Getaverken (“The Halcyon the Great”)UNK [1984] 1 Ll Rep 283.
DR Insurance Co v Central National Insurance Co [1996] CLC 64.
DSQ Property Co Ltd v Lotus Cars (unreported, 27 June 1990, CA).
Excess Insurance Co Ltd v Astra SA Insurance and Reinsurance Co [1995] LRLR 464.
Finnish Marine Insurance Co Ltd v Protective National Insurance CoELR [1990] 1 QB 1078.
Gulf Bank KSC v Mitsubishi Heavy Industries LtdUNK [1994] 1 Ll Rep 323.
London Steamship Owners Mutual Insurance Association Ltd v Bombay Trading Co Ltd (“The Felicie”)UNK [1990] 2 Ll Rep 21.
Mercedes Benz AG v LeiduckELR [1996] 1 AC 284; [1995] CLC 1090.
Metallund Rohstoff AG v Donaldson Lufkin & Jenrette IncELR [1990] 1 QB 391.
Montedipe SpA v JTP-RO Jugotanker (“The Jordan Nicolov”)UNK [1990] 2 Ll Rep 11.
Padre Island, The (No. 1)UNK [1984] 2 Ll Rep 408.
Padre Island, The (No. 2)UNK [1987] 2 Ll Rep 529; [1990] 2 Ll Rep 191.
Parker v Schuller [1901] 17 TLR 299.
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami IranELR [1994] 1 AC 438.
Société Nationale Industrielle Aerospatiale v Lee Kui JakELR [1987] 1 AC 871.
Toepfer (Alfred C) International GmbH v Molino Boschi SRL [1996] CLC 738.
Tracomin SA v Sudan Oil Seeds Co Ltd (No. 1)WLR [1983] 1 WLR 1026.
Waterhouse v ReidELR [1938] 1 KB 743.
Jurisdiction — Arbitration — Subrogation — Leave to serve out — Anti-suit injunction — Vessel carrying steel and cotton caught fire at sea — Limitation action by shipowners to distribute monies rateably to claimants — Steel interests did not participate — Insurers of steel cargo brought action in Brazil — Charterers defended action in Brazil before seeking anti-suit injunction in UK — Whether charterers entitled to leave to serve writ against insurers out of jurisdiction — Whether insurers' subrogated rights subject to arbitration clause in sub-charterparty — Whether charterers deprived of relief by delay — Rules of the Supreme Court, O.11.
These were two applications, the first to discharge an ex parte order for leave to serve a writ out of the jurisdiction and the second, if the first failed, for an anti-suit injunction. The applications were made in proceedings for relief under s. 27 of the Arbitration Act 1950 and an action for an anti-suit injunction each commenced by the same plaintiffs against different defendants.
The plaintiffs (“DVA”) chartered a vessel, the Jay Bola, on a time charter on 21 June 1991. On the same date DVA sub-chartered the vessel on a voyage charter to Voest for a voyage from Sao Sebastiao, Brazil to Bangkok, Thailand, with a cargo of steel reinforcing bars shipped in July 1991. The head and sub-charters each contained a binding London arbitration clause governed by English law. Two bills of lading were issued at Sao Sebastiao in respect of the steel cargo. At Voest's request in August 1991 replacement bills of lading were issued in Hamburg. A cargo of cotton was loaded in Paranagua, Brazil. On 23 August 1991, while the vessel was in the Indian Ocean, a fire broke out. The cargoes were damaged. The vessel was towed to Singapore and the cargoes transhipped.
Following various proceedings between the parties, in February 1993 the owners of the vessel commenced a limitation action in the Admiralty Court. Having paid into court over £2.25m to constitute a limitation fund, all further proceedings against them arising out of the fire should be stayed and the monies rateably distributed amongst the claimants. DVA acknowledged service of those proceedings. The steel interests did not participate. The insurers indemnified Voest and by subrogation stood in Voest's shoes.
Voest's insurers, an Austrian company, launched their own proceedings in their own name against the shipowner and DVA in Brazil asserting that the court had jurisdiction under the Sao Sebastiao bills. If the insurers succeeded against DVA in Brazil the steel interests would obtain more compensation than under English law since the shipowners and charterers were not able to limit their liability under Brazilian law.
DVA filed a defence in the Brazilian court, challenged the jurisdiction and sought a declaration that the Sao Sebastiao bills were invalid. The court rejected both applications in February 1994. DVA appealed, and in December 1994 applied to the English court for an anti-suit injunction against Voest and their insurers. Meanwhile in June 1993, more than 15 months after the final discharge of the cargo, DVA appointed an arbitrator seeking a declaration that all claims by Voest or their insurers arising out of the fire were time-barred, that the Brazilian proceedings were maintained in breach of the arbitration clause of the sub-charterparty and damages for breach. On 15 December 1994 DVA was granted leave ex parte to serve a writ claiming an anti-suit injunction and damages out of the jurisdiction in respect of claims against Voest and their insurers.
Held, refusing to set aside leave to serve out and granting DVA an anti-suit injunction:
1. Subrogated rights to sue derived from the transferred rights under the contract and were governed by that contract. The position under subrogation was the same as that of a statutory transferee or an assignee under the Law of Property Act 1925.
2. The effect of subrogation was to transfer Voest's rights to make claims under the sub-charterparty to their insurers. Those rights were limited by the terms of the sub-charter and were accordingly subject to the arbitration clause.
3. The claim by DVA to enforce the arbitration clause against the insurers fell naturally and easily into the language and spirit of O.11. DVA was therefore entitled to leave to serve the writ out of the jurisdiction.
4. DVA had a good arguable case against the insurers but no claim against Voest. The delay in bringing UK proceedings did not deprive DVA of the relief to which they would otherwise have been entitled against the insurers. However, by pursuing proceedings in Brazil they had caused the insurers to incur unnecessary costs and were therefore entitled to injunctive relief only if they undertook to pay all the insurers' costs of the Brazilian proceedings incurred after February 1994.
5. The insurers were seeking to avoid the limitation provisions inherent in the contractual choice of English law and English arbitration. Since damages were an inadequate remedy, DVA was granted an anti-suit injunction to give effect to the binding arbitration clause in the sub-charterparty.
Morison J: There are two sets of proceedings. The first in time are proceedings commenced by originating summons, in which the plaintiffs [whom I shall call “DVA”] sought, inter alia, relief under s. 27 of the Arbitration Act 1950 against Voest Alpine Intertrading GmbH (whom I shall call “Voest”). The second is an action commenced by writ, in which DVA seek an anti-suit injunction against Voest, as second defendant, and Wiener Allianz Versicherungs AG, an Austrian insurance company (whom I shall call “the insurers”), as first defendant. The plaintiffs sought, and obtained from Potter J on 15 December 1994, leave to serve the writ out of the jurisdiction. Voest and the insurers have issued a summons under RSC, O. 12, r. 8, seeking to discharge the order made by Potter J. If that summons fails, then DVA ask me to decide, in accordance with the order of Phillips J. made by consent and dated 28 March 1995, whether or not they should be granted the injunctive relief claimed. DVA were also asking that the relief in their originating summons be determined, although, by consent, that matter was stood over until after my judgment on the defendants” and plaintiffs” applications in the action. There are, thus, two matters which fall for determination:
1. An application by the defendants to set aside the order made, ex parte, by Potter J under RSC, O. 11, r. 1;
2. If that application is unsuccessful, an application by DVA for injunctive relief.
I shall state, first, the relevant and somewhat complicated background facts.
Armstel Shipping Corporation (“Armstel”), the owners of a vessel, Jay Bola, chartered it to the plaintiffs, DVA, pursuant to a time charter, for a time charter trip from South America to the Far East. By a voyage charter of the same date, 21 June 1991, DVA sub-chartered the vessel to Voest, for a voyage from San Sebastiao, Brazil, to Bangkok, Thailand, with a part cargo of 10,000 metric tonnes of steel reinforcing bars. In July 1991, pursuant to the two charters, some 10,316 mt of bars were shipped.
The head and sub-charters each contained an arbitration clause in these terms:
“It is mutually agreed that should any dispute arise between owners and charterers, the matter in dispute shall be referred to three persons in London for arbitration…The arbitrators shall be shipping men in daily operation or chartering practice. Any claim must be made in writing and claimant's arbitrator to be appointed within 15 months after final discharge and where this is not complied with the claim shall be deemed waived and absolutely barred. English law to apply.”
Two bills of lading (the “Sao Sebastiao bills”) were issued at the load port in respect of the steel cargo, naming Arbi Trading SA as shippers and Voest as...
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