Kuwait Oil Company (K.S.C.) v Idemitsu Tankers KK. (Hida Maru)

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE WATKINS,LORD JUSTICE O'CONNOR
Judgment Date26 March 1981
Judgment citation (vLex)[1981] EWCA Civ J0326-5
Docket Number81/0220
CourtCourt of Appeal (Civil Division)
Date26 March 1981

[1981] EWCA Civ J0326-5

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION (COMMERCIAL COURT)

(MR. JUSTICE NEILL)

Royal Courts of Justice.

Before:

The Master of The Rolls

(Lord Denning)

Lord Justice Watkins and

Lord Justice O'connor

81/0220

1980 K. No. 672

Kuwait Oil Company (K.S.C.)
Plaintiffs (Respondents)
and
Idemitsu Tanker Kk
Defendants (Appellants)

MR. R. BUCKLEY. Q.C. and MR. D. STEELE (instructed by Messrs.Coward Chance) appeared on behalf of the Plaintiffs (Respondents).

MR. R. YORKE. Q.C. and MISS B. BUCKNALL (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Defendants (Appellants).

1

THE MASTER OF THE ROLLS
2

On the 22nd December, 1977 a huge Japanese tanker called the "Hida Maru" was approaching Kuwait. She was going in to load a cargo of crude oil. She was being brought in by the pilot and was moving towards the berth at Sea Island—a little way off Kuwait. At 1445 hours (2.45 p.m.) on that afternoon the master was asked to sign, and did sign, two forms of contract, both of which were with the Kuwait port authority (Kuwait Oil Company).

3

One contract was called "Conditions of Use of the Company's Terminal Facilities". That was a printed form in the English language. Under it, the vessel bore the risk of any damage done to the port installations whilst coming into berth.

4

The other contract was called "Employment of Tugs". It was a printed form in English. Under it, the risk of damage was to be borne by the ship which was employing the tug: and not by the tug owner.

5

The Kuwait Oil Company presented those two contracts to the master to sign. He signed them. Each contained important clauses.

6

The "Conditions of Use" contract contained this clause:

7

"These conditions shall be construed according to the law of England, and if so required by the Company the vessel and her Owners shall submit to the jurisdiction of the English courts".

8

The "Employment of Tugs" contract contained this clause:

9

"These conditions shall be interpreted according to, and shall be governed by English law, and any dispute arising in any way whatsoever out of these conditions shall be settled in London by a single arbitrator agreed upon by the parties".

10

The documents were signed. The vessel moved in. Three-quarters of an hour later she was moving alongside (about 1535 hours). Then the trouble occurred. The pilot was giving orders to the tug master by VHF. There was interference on the radio. The orders were misunderstood. The pilot ordered the tug master to "Pull off". The tug master interpreted the order as "Push in". So the tug pushed the "Hida Maru" into the berth and into the installation there. The vessel collided with the northern breasting dolphin: and caused enormous damage. It has been assessed at one million Kuwaiti dinars. That is about $1,500,000.

11

The Kuwait Oil Company went to the court in Kuwait and applied to arrest the ship in rem. The ship was released after guarantees were given. On release she loaded her cargo of crude oil.

12

Naturally enough, the Kuwait Oil Company at once, in December 1977, started an action in the courts in Kuwait. They claimed that the master was responsible for the pilot: and he had been negligent in the navigation and management of the vessel. They brought proceedings in the Kuwaiti courts against the Japanese shipowners in delict—or, as we would call it, in tort. The court had an expert who investigated the matter. He made a report which went fully into the circumstances. The expert found that the order by the pilot was inaudible due to interference caused by other persons, radio calls, and radio communications between other ships. The court intimated—on the expert's report—that the ship was not liable in delict. That was in November 1978.

13

On the 14th December, 1978 the Kuwait Oil Company amended their pleadings in Kuwaiti court. They retained the claim in delict. But they added a claim in contract. This was based on the "Conditions of Use" under which the ship would be liable for any damage to the port installation however caused. They also claimed in contract on the "Employment of Tugs" contract under which the ship was liable for the negligence of the tug. Long submission were put to the Kuwaiti court. Not orally, as in this country: but very ably by way of written briefs. As a result, the Kuwaiti court, in March 1980, held that the Japanese shipowners were not liable in tort. The court held also that the claim in contract was not within the jurisdiction of the court. It was contrary to their rules of joinder of action. The claim in contract could not be joined to the claim in tort. Furthermore, there was no jurisdiction in regard to the claim under the "Employment of Tugs" contract, because the parties had agreed that it should be submitted to arbitration in London. The Kuwait Oil Company have lodged an appeal to the Kuwaiti Court of Appeal. It is still pending.

14

In view of these difficulties in Kuwait, the Kuwait Oil Company took advice in London. They decided to drop the proceedings in Kuwait and start proceedings in the High Court here. They relied on the "Conditions of Use" which said:

15

"These conditions shall be construed according to the law of England, and if so required by the Company the vessel and her Owners shall submit to the jurisdiction of the English courts".

16

So they started proceedings in the High Court here. They had to get leave to serve out of the jurisdiction on the Japanese owners in Tokyo. In the course of doing so, I am sorry to say that they made a mistake. They did it innocently. In the affidavit they just set out the bald outline of the "Conditions of Use" and the damage to the installations. They said it was governed by English law. The affidavit was not full enough. The solicitor ought to have told the court all about the proceedings in Kuwait: and the stage they had reached. When the Japanese owners saw this affidavit, they applied to set aside the writ. They first submitted that the case did not come within order 14 because the affidavit had not been full and frank as it ought to have been.

17

On this point the best statement of the law is in the case of Macaulay (Tweeds) Ltd. v. Independent Harris Tweed Producers Ltd. (1961) Reports of Patent Gases 184. Mr. Justice Cross (as he then was—afterwards Lord Cross of Chelsea) said at page 194:

18

"The question as I see it is essentially one of degree. The negligence may be so serious as to justify the court in discharging the order even though it is satisfied that the deponent had no intention to deceive the court. On the other hand, if the judge is satisfied that there was no intention to deceive and the mis-statement is not...

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    ...disputing the claim on its merits. Further, if full facts had been before the Judge, he would have given leave. Kuwait Oil Co (KSC) v Idemitsu Tankers KK (The Hida Maru) [1981] 2 Lloyd's Rep. 510 applied. 4. The respondent has already obtained judgment against the appellant in the Paris ......
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