Griffin Underwriting Ltd v Ion G. Varouxakis
| Jurisdiction | England & Wales |
| Judge | Mr Justice Males |
| Judgment Date | 28 November 2018 |
| Neutral Citation | [2018] EWHC 3259 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000107 |
| Date | 28 November 2018 |
[2018] EWHC 3259 (Comm)
Mr Justice Males
Case No: CL-2017-000107
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Sarll (instructed by Thomas Cooper International) for the Defendant
Philippa Hopkins QC (instructed by Bryan Cave Leighton Paisner LLP) for the Claimant
Hearing date: 20 th November 2018
Approved Judgment
Introduction
The defendant, Mr Ion Varouxakis, who is domiciled in Greece, is sued for inducing breaches of contract by companies under his control and of which he is or was the sole director. Jurisdiction over him is sought to be established pursuant to Article 7(2) of the Recast Brussels Regulation, which provides that:
“A person domiciled in a Member State may be sued in another Member State: …
(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.”
Article 7(2) enables a claimant to sue in the courts for the place where it has suffered damage even if the event which gave rise to the damage occurred elsewhere. The claimant insurance company (“Griffin”) contends that as a result of the defendant's conduct it has lost the right to claim general average contributions which were payable and would have been paid in London, so that the damage it has suffered was suffered in this jurisdiction.
The defendant disputes this analysis, contending that the damage in question was suffered either in the place where the underlying contract was broken or alternatively in Guernsey where Griffin is domiciled and where it would ultimately have received any general average payments. Alternatively he contends that Griffin's claim is a “matter relating to insurance” within the meaning of Section 3 of Chapter II of the Regulation so that, in accordance with Article 14, he can only be sued in the courts of Greece where he is domiciled. On one or both of these grounds he seeks an order that court has no jurisdiction to try the claim against him.
Griffin contends that this application is out of time, with the consequence that the defendant must be treated as having accepted that the court has jurisdiction (see CPR 11(5)). The defendant disputes this, but if necessary seeks relief from sanctions and an extension of time.
Accordingly there are three issues to be determined:
(1) Is the defendant's application in time?
(2) Should there be relief from sanctions?
(3) Does the court have jurisdiction?
In my view this is the logical order in which to address the issues. Before doing so, however, I must describe the circumstances in which the claim comes to be made and the chronology of the proceedings.
The facts
For the purpose of this application there was no dispute as to the essential facts, which can be summarised as follows.
Griffin, a Guernsey company, insured Adventure Five S.A. (“the shipowner”), then the owner of the m.v. “FREE GODDESS”, under a policy of kidnap and ransom insurance for a 30-day round trip voyage which involved passing through the Gulf of Aden.
In February 2012, while carrying a cargo of rolled steel coils from Egypt to Thailand pursuant to bills of lading issued on 20 and 26 January 2012, the vessel was seized by pirates in the Arabian Sea and taken to Somalia. As a result Griffin paid out just under US $6.5 million under the policy, including sums by way of ransom payments, and the vessel was eventually released and made her way to Salalah, Oman, arriving there in October 2012. General average was declared. In the ordinary course, the shipowner would have had claims for general average contributions against the holders of the bills of lading and average guarantees would have been issued by the insurers of the cargo prior to its delivery to the bill of lading holders at the discharge port. Griffin would have been subrogated to those claims.
In February 2013, while the vessel was at Salalah, a Settlement Agreement was concluded between Griffin, the shipowner and the manager of the vessel, a Marshall Islands company. The Settlement Agreement was subject to English law and jurisdiction. Its express terms included the following:
“1. The Insurers are now subrogated to all and any rights and remedies of the Owners in respect of the entitlement of the Owners (individually or collectively) to pursue, recover and secure all or any part of the Settlement and other monies previously paid by the Insurers on Owners' behalf (“Final Settlement”) from third parties whether in general average, at common law or pursuant to contract or otherwise, and including the rights and entitlement of the Owners (individually or collectively) to an indemnity under any policy of insurance other than the Policy in respect of their inability to recover the Final Settlement, or any part thereof, by reason of a breach of the contract of carriage (“Third Party Recoveries”). …
4. Owners and Managers hereby undertake to account to Insurers for any and all amounts that Owners may recover pursuant to Third Party Recoveries and hereby authorise the appointed Average Adjuster to hold any such funds received from third parties to the order of Insurers in respect of the Final Settlement. …
6. The Owners and Managers undertake to furnish Insurers with any and all assistance that Insurers may reasonably require of them when exercising rights and remedies in relation to Third Party Recoveries including but not limited to: … (iii) ensuring that full and adequate general average security is obtained from all interests before/upon arrival at the port of discharge. Owners shall where necessary exercise at Owners' expense a possessory lien over the cargo and/or take such steps as may reasonably be necessary to obtain adequate general average security to the satisfaction of Insurers. Owners reserve the right to claim any expenses reasonably incurred in doing this from Insurers under the relevant policy and/or in general average …”
Griffin contends that there were also implied terms of the Settlement Agreement to the effect that the shipowner and the manager (1) would not take any steps that would render performance of the bill of lading contracts impossible and (2) would ensure that the bill of lading contracts were performed or would at least use their best endeavours to ensure that they were performed.
It is Griffin's case that the shipowner committed breaches of the Settlement Agreement and that it was induced to do so by the defendant. The defendant, Mr Ion Varouxakis, is a Greek national and is or was the sole director of the shipowner. He is, according to Griffin, the individual who directs and controls the activities of both the shipowner and the manager, and the Freeseas Group of which they form part. For the purpose of this application that can be taken as correct. He signed the Settlement Agreement on behalf of both the shipowner and the manager.
At the time of the conclusion of the Settlement Agreement, all parties were operating on the basis that the bill of lading contracts were still in existence and capable of being performed and that they would be performed. It was envisaged that the vessel would be repaired and would proceed to Thailand to discharge the cargo, in accordance with the shipowner's obligations under those contracts (cf. Kulukundis v Norwich Union Fire Insurance Society [1937] 1 KB 1 at 16). However, that is not what happened.
Instead the vessel remained in Salalah, with the cargo insurers on board and the crew unpaid and in increasing distress. Monies were advanced by Griffin and by the vessel's hull insurers for repairs to be to be carried out, but they seem not to have been used for that purpose.
Unknown to Griffin, the bill of lading holders commenced arbitrations in London against the shipowner under the bills of lading on 28 March 2014, seeking orders for delivery up of the cargo in Thailand.
On 11 April 2014 Mr. Varouxakis wrote to the cargo interests in the following terms:
“We have taken the decision to cut our loses [ sic] and close the book on Free Goddess. I regret that this may become a total loss for your cargo, but it is impossible for us to keep throwing good money after bad money…”
On 18 August 2014 the arbitral tribunal issued awards ordering the shipowner “forthwith [to] cause the [vessel] to proceed to Bangkok, Thailand and there deliver the contractual cargo in accordance with the bill[s] of lading”.
However, the vessel remained where she was in Salalah, with the cargo and crew still on board.
On 7 April 2015 the bill of lading holders applied in the arbitrations for an order for delivery up of the cargo at Salalah. The shipowner resisted that application, stating that the vessel was or would shortly be ready to sail for Thailand.
In May 2015 the vessel was sold by the owner, with Mr Varouxakis signing the bill of sale, to a new entity. It was renamed “FIGARO” and bareboat chartered back to another company in the Freeseas group. This had the effect of destroying the shipowner's possessory lien over the cargo for general average.
On 5 October 2015 the arbitral tribunal issued further awards, this time ordering the shipowner to deliver the cargo to the bill of lading holders in Oman. The shipowner did not comply with these awards either. The crew, by now in such distress that they were reliant on humanitarian aid from the port authorities, remained on the vessel, as did the cargo.
The crew was eventually repatriated in February 2017. On 28 March 2017, the arbitral tribunal issued yet further awards, requiring the shipowner to deliver up the cargo within 42 days. The bill of lading holders applied for these awards to be converted into judgments of...
To continue reading
Request your trial
-
Manek and Others v 360 One Wam Ltd and Others
...27 The Claimants contended in answer that the application of Article 4(1) was complex (citing Griffin Underwriting Ltd v Varouxakis [2019] 1 W.L.R. 2529 (Males J) at [76]) and that in the present case its application provided for a number of possible answers of which India was the least li......
-
Excotek Ltd v City Air Express Ltd ((in Liquidation))
...any such agreement must be notified to the court in writing, with reasons. Males J stated in Griffin Underwriting v Varouxakis [2019] 1 WLR 2529 that: “It is not open to the parties to agree an indefinite extension of time without notifying the court. To hold that the moratorium was effect......