Glencore International AG v Exter Shipping Ltd [QBD (Comm)]

JurisdictionEngland & Wales
JudgeMoore-Bick J,Sir Andrew Morritt V-C,Robert Walker,Rix L JJ
Judgment Date18 April 2002
Date18 April 2002
CourtQueen's Bench Division (Commercial Court)

Queen's Bench Division (Commercial Court);

Court of Appeal (Civil Division).

Moore-Bick J; Sir Andrew Morritt V-C, Robert Walker and Rix L JJ.

Glencore International AG
and
Exter Shipping Ltd & Ors.

Iain Milligan QC (Alistair Schaff QC in the High Court) and Richard Southern (instructed by Clyde & Co) for the respondent.

Peregrine Simon QC (Steven Gee QC in the High Court) and Rachel Toney (instructed by Holmes Hardingham) for the appellant.

The following cases were referred to in the High Court judgment:

Aggeliki Charis Compania Maritima SA v Pagnan SpA (“The Angelic Grace”)UNK [1995] 1 Ll Rep 87.

Airbus Industrie GIE v Patel [1998] CLC 702; [1999] 1 AC 119.

Balkanbank v Taher (No. 3) [1995] CLC 136; [1995] 1 WLR 1067.

Barrow v Bankside Members' Agency Ltd [1996] CLC 413; [1996] 1 WLR 257.

Davis v HedgesELR (1871) LR 6 QB 687.

Derby & Co v LarssonWLR [1976] 1 WLR 202.

Ebert v VenvilELR [2000] Ch 484.

Glencore International AG v Metro Trading International Inc [2001] CLC 1732.

Henderson v HendersonENR (1843) 3 Hare 100.

Hoppe v TitmanWLR [1996] 1 WLR 841.

Metal Trade Corp Ltd v Kate Shipping Co LtdWLR [1990] 1 WLR 115.

Republic of Liberia v Gulf Oceanic IncUNK [1985] 1 Ll Rep 539.

Societe Nationale Industrielle Aerospatiale v Lee Kui JakELR [1987] 1 AC 871.

South Carolina Insurance Co v Assurantie Maatshappij “De Zeven Provincien” NVELR [1987] 1 AC 24.

Yat Tung Investment Co Ltd v Dao Heng Bank LtdELR [1975] AC 581.

The following additional cases were referred to in the judgment of Rix LJ:

Carter v FeyELR [1894] 2 Ch 541.

Des Salles d'Epinoix v Des Salles d'EpinoixWLR [1967] 1 WLR 553.

Donohue v Armco Inc [2002] CLC 440.

Eras EIL Actions, TheUNK [1995] 1 Ll Rep 64.

Ernst & Young (a firm) v Butte Mining plcWLR [1996] 1 WLR 1605.

Henderson v HendersonENR (1843) 3 Hare 100.

Hispanica de Petroles SA v Vencedora Oceanica Navegacion SA (“The Kapetan Markos”)UNK [1986] 1 Ll Rep 211.

Holland v LeslieELR [1894] 2 QB 346.

Turner v Grovit [2002] CLC 463; [2002] 1 WLR 107.

Waterhouse v ReidELR [1938] 1 KB 743.

Shipping — Conflict of laws — Anti-suit injunction — Managed litigation — Shipowners issued English proceedings claiming unpaid hire and bunkers — Claimant intervened in proceedings — Proceedings subsumed in managed Metro litigation — Claimant sought injunction to restrain proceedings by shipowners in US — Whether court had jurisdiction to grant anti-suit injunction — Whether court should grant anti-suit injunction.

This was an appeal by shipowners from Moore-Bick J's decision to grant an anti-suit injunction restraining pursuit of US proceeding by them.

The appellants were the owners of vessels employed on several occasions in carrying cargoes of fuel oil to and from a floating storage and blending facility operated by Metro International Trading Inc (“Metro”) off Fujairah. In 1998 Metro collapsed and it was discovered that the stocks held by Metro fell far short of the amounts which had been consigned to it by oil traders such as the respondent, “Glencore”. An order was made by the Commercial Court for receivers to get in and sell the remaining oil and hold the proceeds for the oil traders and other competing claimants. At the time of Metro's collapse the appellants' vessels were in the course of performing time charters for Metro as charterer. The shipowners and others, including Glencore, issued proceedings in England and the litigation became managed litigation. The shipowners' proceedings were against Metro for unpaid hire and bunker charges. Glencore intervened in those proceedings on the basis that the oil cargoes carried on the vessels belonged to Glencore. The shipowners pleaded that Metro had authority from Glencore to dispose of the oil to third parties. Glencore arrested one vessel in England and three others in Singapore in support of its claims against the shipowners for conversion of the oil cargoes. The owners defended and counterclaimed in those proceedings. The proceedings were litigated in Singapore since the shipowners declined to transfer the security in those proceedings to London. Rix J directed that the Metro litigation should be disposed of in phases each dealing with a limited group of issues. In the first phase of the Metro litigation the court decided issues of proper law and the passing of property (see [2001] CLC 1732) and in the second phase considered the relationship between Glencore and Metro. Just before the judgment in phase 2 was delivered the shipowners commenced proceedings against Glencore in Georgia, USA, alleging among other things wrongful arrest of the ships. In the phase 2 judgment in the Metro litigation the court held that Metro had no authority to sell or deliver to third parties oil in which Glencore retained title. Glencore then applied for an anti-suit injunction to restrain the shipowners' Georgia proceedings. The shipowners obtained leave to discontinue their counterclaims in the Singapore proceedings and served notices of discontinuance in their English proceedings. The shipowners argued that the English court lacked jurisdiction because the claims which the shipowners sought to pursue in Georgia no longer formed part of the proceedings between themselves and Glencore in England. Moore-Bick J granted an anti-suit injunction holding that the shipowners by bringing proceedings in England against Metro had submitted to the jurisdiction of the court for the purposes of a counterclaim being made against them by Glencore which had been given leave to intervene in those proceedings. Further the court had an inherent jurisdiction in managed litigation to prevent the management of such litigation being undermined. The claims raised by the shipowners properly formed part of the issues which would or should have been determined at some stage in the Metro litigation. To the extent that the issues raised in the US proceedings should have been raised in phase 2, the proceedings were an abuse. The commencement and pursuit of the US proceedings was therefore vexatious and an abuse of process. The shipowners appealed.

Held dismissing the appeal:

1. By claiming and counterclaiming in England the shipowners had submitted to the jurisdiction of the English court. They were therefore subject to all the incidents of litigation including being amenable to a counterclaim. The shipowners had submitted to the jurisdiction in proceedings to which Glencore was a party since it had been joined as an intervener. That litigation had been subsumed in the Metro litigation. ( Derby & Co v LarssonWLR [1976] 1 WLR 202; Republic of Liberia v Gulf Oceanic IncUNK[1985] 1 Lloyd's Rep 539 and Balkanbank v Taher (No. 3)[1995] CLC 136; [1995] 1 WLR 1067applied.)

2. It was impossible to say that the litigation which Glencore sought to protect by preventing the Georgia proceedings was in some way distinct from the litigation in which the shipowners had participated and in respect of which they had submitted to the jurisdiction. The discontinued counterclaims were only discontinued after the application for injunctive relief had been made and the discontinuances remained subject to challenge by Glencore. There was therefore territorial, in personam jurisdiction to grant the anti-suit injunction sought by Glencore.

3. The application for such an injunction did not have to be made by formal claim or counterclaim but could be made merely by application in the existing proceedings.

4. There was a clear need to protect the English proceedings. England was the appropriate forum. Pursuing the Georgia claims was unconscionable because no legitimate reason for them had been shown. No prejudice had been suggested if they were restrained. The judge was right to grant the injunction as a matter of discretion.

HIGH COURT JUDGMENT
(8 November 2001)
Moore-Bick J: Background

1. This matter comes before the court by way of an application by Glencore International AG (“Glencore”) for an injunction restraining four shipowning companies, Exter Shipping Ltd, Stanley Shipping Ltd, Wyndham Shipping Ltd and Crest Shipping Ltd from pursuing proceedings against it in the US District Court for the Northern District of Georgia. The respondents are the owners respectively of the vessels Shoko, Cherry, Addax and Epic, each of which was employed on several occasions in carrying cargoes of fuel oil to and from a floating storage facility operated by Metro Trading International Inc (“MTI”) off Fujairah for some years prior to its collapse in February 1998.

2. The present application is made in what has become known as “the Metro litigation”. A general description of the litigation and the circumstances which gave rise to it may be found in my judgment in phase 1 which is now reported at [2001] CLC 1732. I need not repeat that description in full here, but it is necessary for the purposes of this application to refer to certain specific aspects in order to set the issues in context.

3. At the time of its collapse in February 1998 MTI was holding stocks of oil in the floating storage facility at Fujairah. In addition, some cargoes of fuel oil shipped by MTI at Fujairah were at sea en route to their final destinations and substantial quantities of bunkers which had been supplied to vessels by MTI from the stocks at Fujairah for their own consumption remained unpaid for. Glencore immediately asserted title both to the stocks of oil remaining in the floating storage and also to oil on vessels still at sea and brought proceedings, mostly in this country but also in Singapore and elsewhere, in which it sought to recover the oil and, where appropriate, damages for wrongful interference with its goods.

4. Since MTI was known to be insolvent, it is not surprising that other parties who had had dealings with MTI in connection with the operation of the floating storage, particularly other oil companies which had delivered products to MTI for storage and various banks which...

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