Magellan Spirit Aps v Vitol Sa "magellan Spirit"

Hearing dates: 16 + 17 February 2016

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Introduction

The claimant in this case (whom I shall call the "Owner") is the owner of the vessel "Magellan Spirit". The defendant ("VSA") is a Swiss trading company which is part of the Vitol Group. The Owner has applied for an anti-suit injunction to restrain VSA from suing the Owner in Nigeria on the ground that the parties have agreed to refer the dispute to the jurisdiction of the High Court in London. VSA denies that there is such an agreement and has cross-applied for a declaration that the English court has no jurisdiction to try the Owner's claim in this action.

The background

The background, briefly summarised, is that VSA entered into a long-term contract to supply liquefied natural gas ("LNG") to the Korea Midland Power Company ("KOMIPO"). Under that contract delivery was ex-ship, South Korea. To perform the contract VSA therefore needed to purchase LNG cargoes and arrange for their carriage to South Korea. To perform such carriage the "Magellan Spirit" was chartered under a three year time charter dated 1 July 2012. The charterer was named as Mansel Limited, a Bermudan company in the Vitol Group. The time charter was expressly governed by English law and provided for disputes arising under it to be referred to the jurisdiction of the High Court in London.

The vessel was delivered under the charter on 19 September 2013. Seven voyages were performed without mishap. For the eighth voyage the vessel loaded a cargo of LNG at Bonny in Nigeria. On 5 January 2015, when leaving port, the vessel became grounded on a mud bank. She was refloated on 22 January and was ready to continue her voyage on 28 January 2015. However, VSA has alleged that, because of the delay, the cargo could not be used to fulfil VSA's obligations under its contract with KOMIPO and was sold at a substantial loss. The charter subsequently came to a premature end when Mansel tendered notice of redelivery of the vessel on 28 March 2015, asserting a contractual right of termination based on the length of time for which the vessel had allegedly been off hire. The Owner disputed the validity of the termination and treated the redelivery of the vessel as a repudiation of the charter which it accepted as bringing the charter to an end.

On 28 May 2015 VSA obtained an order from a court in Portugal for the arrest of the vessel to obtain security for a prospective claim against the Owner arising out of the grounding of the vessel at Bonny. Such security was provided by the vessel's P & I Club on 29 May 2015. At that time the Owner was informed that VSA had issued proceedings against it in Nigeria. VSA was subsequently granted leave by the Nigerian court to serve those proceedings out of the jurisdiction on the Owner in Denmark, and service was effected on 2 July 2015. VSA's claim in the Nigerian proceedings is based on a contract of carriage between VSA and the Owner said to be evidenced by the bill of lading issued at Bonny on 5 January 2015. In its statement of claim VSA claims that the Owner is liable for the consequences of the grounding under the Hamburg Rules, which apply in Nigeria, and that it has suffered loss and damage amounting to some US$15.7m. It is this action in Nigeria which the Owner is seeking to stop VSA from pursuing by applying to this court for an injunction.

On 14 July 2015 the Owner commenced proceedings in this court against Mansel under the time charter. In those proceedings the Owner is claiming damages for the alleged repudiation of the charter together with unpaid hire. The total sum claimed is around US$55m.

Finally, the Owner commenced this action on 21 December 2015 and on the same day issued the application for an interim injunction which is now before the court.

The law

There is no disagreement about the legal principles which govern the Owner's application for an anti-suit injunction and VSA's challenge to the court's jurisdiction. Taking the latter first, under the Lugano Convention VSA must be sued in Switzerland, where it is domiciled, unless the parties have made an agreement conferring jurisdiction on the English Court which satisfies the requirements of Article 23 of the Convention. Article 23(1) provides:

"If the parties, one or more of whom is domiciled in a member state, have agreed that a court or the courts of a member state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing; …"

The meaning of Article 23 is determined by European law, and not by domestic English law: Powell Duffryn plc v Wolfgang Petereit ( Case C-214/89) [1992] ECR I-1745. In interpreting Article 23 (and the equivalent provisions of the Brussels Convention and Regulation) the Court of Justice has emphasised that the policy of the legislation requires the existence of the requisite agreement between the parties to be "clearly and precisely demonstrated": see e.g. Coreck Maritime GmbH v Handelsveem BV ( Case C-387/98) [2000] ECR I-9337, 9371, para 13.

Where the issue of jurisdiction arises, as it invariably does, at the outset of proceedings, it is desirable to resolve the issue speedily and without the procedural complication, cost and delay that would be involved in a trial. As stated by Lord Rodger, giving the judgment of the Privy Council in Bols Distilleries BV v Superior Yacht Services Ltd [2006] UKPC 45, [2007] 1 WLR 12, para 23, the test to be applied where Article 23 of the Lugano Convention is relied on to establish jurisdiction in England is the following:

"the claimants must show that they have a much better argument than the defendants that, on the material available at present, the requirements of form in Article 23(1) are met and that it can be established, clearly and precisely, that the clause conferring jurisdiction on the court was the subject of consensus between the parties."

The phrase "a much better argument" has its origin in the judgment of Waller LJ in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at 555 (although the Canada Trust case did not involve a jurisdiction agreement). The inclusion of the word "much" has been subjected to trenchant criticism by Professor Adrian Briggs, who commented in a recent published lecture:

"One only has to ask 'how much better is much better?' to see the point. It surely cannot be right that a judge can be expected to say that although the claimant appears to have the better of the argument on jurisdiction, because he does not have 'much the better of the argument' the English court will not exercise jurisdiction in a case in which, as far as the judge can presently see, the English court does have jurisdiction and the courts of another Member State do not." 1

In JSC Aeroflot-Russian Airlines v Berezovsky [2013] EWCA Civ 784, [2013] 2 Lloyd's Rep 242, para 50, Aikens LJ (with whom the other members of the Court of Appeal agreed) observed that "[t]oo much emphasis on the word 'much' would simply lead to the error of imposing too high a standard of proof on the party wishing to establish the Article 23 jurisdiction" and that "[t]he only point of the word is to emphasise the fact that if the two arguments are equal, then the party asserting the Article 23 jurisdiction will not succeed". Since the latter point is already achieved by the word 'better', it follows that the word 'much' adds nothing to the formulation of the test, whilst giving rise to the risk of error identified by Aikens LJ and Professor Briggs. I would therefore respectfully follow the recommendation of the Court of Appeal in the Aeroflot case that this qualifier should be "allowed to slip from view". 2

If the English court has jurisdiction in this case, the next question is whether there is a contract between VSA and the Owner of which VSA is in breach in suing the Owner in Nigeria. Although this is an interim application, it is common ground that it will in practice be decisive of the action and that in these circumstances the court should approach the matter, not by assessing the balance of convenience if there is a serious issue to be tried, but by judging as best it can on the material available which party has the better case on the merits. In other words, the standard of proof to be applied is similar to that applicable to the question of Article 23 jurisdiction.

If the court concludes that the applicant for an anti-suit injunction (in this case the Owner) has the better case, then — applying the principles established in The "Angelic Grace" [1995] 1 Lloyd's Rep 87 and subsequent cases — the court will normally grant an injunction; but, as always where a party seeks equitable relief, the remedy is discretionary. A relevant consideration in exercising the court's...