Neste Chemicals SA and Others (Plaintiff/Appellant) v DK Line SA and Another
| Jurisdiction | England & Wales |
| Judge | Steyn,Peter Gibson L JJ,Sir Tasker Watkins |
| Judgment Date | 25 March 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0325-4 |
| Date | 25 March 1994 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No. QBADI 93/0287/B |
[1994] EWCA Civ J0325-4
IN THE SUPREME COURT OF JUDICATURE,
COURT OF APPEAL (CIVIL DIVISION)
Appeal of Plaintiff from Order of Mr. Justice Sheen
Before: Lord Justice Steyn Lord Justice Peter Gibson and Sir Tasker Watkins
No. QBADI 93/0287/B
MR. D. KENDRICK (instructed by Messrs. Clyde & Co., 51 Eastcheap, London EC3M 1JP) appeared on behalf of the Plaintiff/Appellant.
MR. T. YOUNG (instructed by Messrs. Jackson Parton, 8 Crosby Square, London EC3A 6AQ) appeared on behalf of the Defendant/Respondent.
Friday 25th March 1994.
A narrow but important question of law arises on this appeal. Article 21 of the Brussels Convention of 1968, as amended, which is Schedule 1 to the Civil Jurisdiction and Judgments Act 1982, provides as follows:
"Where proceedings involving the same cause of action and between the same parties are brought in courts of different Contracting States, any court other than the court first seised shall of its own motion decline jurisdiction in favour of that court. A court which would be required to decline jurisdiction may stay its proceedings if the jurisdiction of the other court is contested."
In a case where leave had to be sought under Order XI to serve a defendant out of the jurisdiction the question arises when the High Court became "seised": Was it when leave was granted to serve out of the jurisdiction? Or was it when pursuant to that leave the defendant was served?
The contextual scene can summarized briefly. The Defendants, a Panamanian company, were the registered owners of the "Sargasso". On 10 May 1991, and at Sines, Portugal, under three bills of lading 2000 tonnes of propylene was shipped on board the vessel for carriage to Antwerp. On 14 May the vessel arrived at Antwerp. Some of the cargo was found to be contaminated. The vessel then proceeded to Finland where the bulk of her cargo was discharged. On 1 June the Plaintiffs, representing various cargo interests ("the cargo owners"), caused the vessel to be arrested at Rotterdam solely for the purpose of obtaining security for the claim of the cargo owners. In the usual way the shipowners obtained the release of the vessel by a letter of guarantee given by a P and I Club.
The cargo owners commenced legal proceedings in England and in Holland. On 13 May 1992 the shipowners caused a writ not for service out of the jurisdiction to be issued. On 20 May 1992 the cargo owners applied to the English Admiralty Registrar for leave to issue a concurrent writ in personam to serve out of the jurisdiction and for leave to serve that writ on the shipowners in Japan. The Admiralty Registrar granted the application. On 22 May a concurrent writ was issued. On 17 July 1992 the writ was served in London upon the shipowners' solicitors, who acknowledged service subject to the shipowners' right to challenge the jurisdiction of the English court.
Since the shipowners had refused to confirm that they would not challenge the jurisdiction of the English court the cargo owners commenced substantive proceedings before the District Court of Rotterdam to preserve the validity of the letter of guarantee in the event that the English Court might ultimately decline jurisdiction for some reason. On 4 June 1992 the cargo owners issued a writ of summons in the District Court of Rotterdam. They served the writ on the same day. The writ contained an unusual endorsement: it stated that the claim was advanced in Rotterdam only in so far as the English court might decline jurisdiction and that it was subject to the English proceedings and without prejudice to the jurisdiction of the English courts.
The shipowners applied to set aside or stay the English proceedings on the basis that pursuant to Article 21 of the Brussels Convention, the District Court of Rotterdam was first seised of the dispute between the parties and the High Court was therefore bound to decline jurisdiction.
On 20 January 1993 the matter came before Sheen J in chambers. There were two issues before him:
(a)Did the English court become seised of the action on 20 May 1992 (when leave to serve out of the jurisdiction was granted) or on 17 July 1992 (when service was effected)?
(b)Did the Dutch court become seised of the action between the same parties on 4 June 1992, the date of service of the writ of summons, despite the expressed "provisional" nature of the proceedings?
Sheen J gave judgment in open court. As to issue (a) Sheen J held as a matter of law that the English court did not become seised of the action between the parties until 17 July. As to issue (b), it was common ground that the issue had to be determined in accordance with Dutch law. There was contradictory expert evidence on the point by Dutch lawyers. Sheen J decided this issue in favour of the shipowners. In other words, he decided that the Dutch court became seised of the action on 4 June 1992. Accordingly, Sheen J held that the Dutch court was first seised and that the English court was bound to decline jurisdiction.
On appeal the cargo owners do not challenge the finding of the learned Judge that the Dutch court became seised on 4 June 1992. The only issue on this appeal is whether the English court was seised at an earlier date. That issue depends on a question of law, namely whether the Judge should have held that the English court in fact became seised of the proceedings on 22 May 1992, by which date leave to serve out of the jurisdiction had been granted, and a concurrent writ had been issued pursuant to that leave.
The analysis of the problem must start with the language of Article 21. The Brussels Convention does not contain the traditional English discretionary principle of lis alibi pendens. As between the courts of two Contracting States having jurisdiction under the scheme of the Convention, a rule dependent on strict chronological priority was adopted. Commentators have variously described the rule as rigid, mechanical and crude. So it is. On the other hand, the framers of the Convention wanted to avoid the uncertainties and disputes inherent in a discretionary principle of lis alibi pendens. Their preference was for what Lord Justice Bingham, now the Master of the Rolls, in Dresser U.K. Limited v Falcongate Freight Management Limited [1992] QB 502, at 514, described as a simple "tie-break rule". In other words, the framers of the Convention put their faith in the simplicity, certainty and predicability of a rule of chronological priority. That principle in their view best served the objective of avoiding as far as possible inconsistent judgments, and the non-recognition of a judgment on the ground that it is irreconcilable with the judgment given by a court of another Contracting State. It promoted the free circulation of readily enforceable judgments.
That brings me to the critical question of the point of time when a court should be considered as seised of the proceedings. Theoretically, it would have been possible to provide for an independent Convention criterion. Recognizing the diversity of procedural systems in Contracting States, the European Court of Justice did not adopt this technique. In Zelger v Salinitri No 2 [Case 129/83] [1984] ECR 2397, the European Court of Justice ruled (at 2408):
"It may properly be inferred from Article 21, read as a whole, that a court's obligation to decline jurisdiction in favour of another court only comes into existence if it is established that proceedings have been definitively brought before a court in another State involving the same cause of action and between the same parties. Beyond that, Article 21 gives no indication of the nature of the procedural formalities which must be taken into account for the purposes of considering whether or not to recognize the existence of such an effect. In particular, it gives no indication as to the answer to the question whether a lis pendens comes into being upon the receipt by a court of an application or upon service or notification of that application on or to the party concerned.
Since the object of the Convention is not to unify those formalities, which are closely linked to the organization of judicial procedure in the various States, the question as to the moment at which the conditions for definitive seisin for the purposes of Article 21 are met must be appraised and resolved, in the case of each court, according to the rules of its own national law. That method allows each court to establish with a sufficient degree of certainty, by reference to its own national law, as regards itself, and by reference to the national law of any other court which has been seised, as regards that court, the order of priority in time of several actions brought within the conditions laid down by the Convention." (My emphasis)
The only guidance offered by the European Court of Justice is that in order to be seised proceedings must be "definitively" brought before a court. Taking account of this general proposition, the question of seisin in this context must be decided in accordance with the national procedural laws of Contracting States. But the European Court of Justice considered that the objective must be a national solution "of a sufficient degree of certainty". Subject to these general propositions we must turn to English procedural law in order to determine at what point of time an English court is seised of the proceedings. That is by no means a straightforward task since the word "seised" (the word used in Article 21) and the words "definitively brought before a court" (as "seised" was interpreted in Zelger v...
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