Owners of the Vasso v Owners of Cargo Lately Laden on Board the Vasso (aka The Vasso) (aka The Andria) (Vasso)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROBERT GOFF |
| Judgment Date | 19 December 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J1219-1 |
| Docket Number | 83/0520 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 1983 |
[1983] EWCA Civ J1219-1
Lord Justice Waller
Lord Justice Slade
Lord Justice Robert Goff
83/0520
1979 Folie 775
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMIRALTY COURT (MR JUSTICE SHEEN)
Royal Courts of Justice,
MR T. CHARLTON (for MR R. BUCKLEY Q.C., and MISS H. HEILBRON) (instructed by Clyde & Co.) appeared on behalf of the Appellants.
MR JULIAN FLAUX (instructed by Messrs. Richard Butler & Co.) appeared on behalf of the Respondents.
There is before the Court an appeal by the Appellants from an order by Mr Justice Sheen, under which he ordered that a letter of undertaking given by the United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Ltd. (which I shall refer to as "the Club"), which had been given in order to procure the release of the ship "Vasso" from arrest by the Appellants, should be discharged.
The "Vasso" was formerly called the "Andria". The Appellants have a claim against the Respondents for damage suffered by goods carried on board the "Andria", then in the ownership of the Respondents, under a bill of lading dated 1st February 1979. The goods in question consisted of a cargo of calcium ammonium nitrate in bulk, carried from Lisbon to Antwerp in February 1979; the Appellants allege that during the voyage the cargo was water-damaged or contaminated by rust and pieces of wood. The ship was a chartered ship, and the charterparty contained an arbitration clause. After the Appellants' claim was made, there was a dispute whether the arbitration clause was incorporated into the bill of lading, the Appellants contending that it was and the Respondents that it was not; as a result of recent authority, it is now common ground that it was not so incorporated.
However, it was necessary for the Appellants to protect their position, having regard to the one year time limit in the Hague Rules which applied to the bill of lading contract. So the Appellants' solicitors caused proceedings to be commence' within that period against the Respondents in Greece and also in this country; there were two writs issued in this country, one in an action in rem in the Admiralty Court and the other in an ordinary action in personam in the Commercial Court. The writ in the Admiralty action was issued on 28th September 1979. A year later it was renewed.
Negotiations took place between the solicitors acting for the parties in this country with a view to entering into an ad hoc arbitrat on agreement. The negotiations were contained (primarily at least) in letters and telexes passing between the solicitors. Agreement was reached on 24th April 1981; the agreement to arbitrate was expressed to be subject to the Appellants discontinuing their proceedings in Greece, which they did. There was no term requiring discontinuance of the proceedings in this country, of which the Respondents knew nothing because neither of the writs had been served. Nor was the ad hoc arbitration agreement made conditional upon the provision of security by the Respondents to secure payment of any award made against them. The parties then appointed their arbitrators. On 3rd July 1981, the Appellants' solicitors wrote to the Respondents' solicitors proposing an order for directions in the normal form. So the arbitration was being actively pursued, in the usual way.
Meanwhile, in about July 1981, the Respondents had sold the "Andria" to other shipowners. She was renamed the "Vasso". In August 1981, under her new ownership, she entered English waters; she was due to call at Ipswich in late August. The Appellants had been keeping a watch on her movements, through Lloyds' intelligence department. It appeared to them that they had an opportunity of obtaining security for their claim, by serving the Admiralty writ on the ship and arresting her.
For the Appellants, security for the claim was important. The Respondents were a one-ship company; if they sold the ship, they could well dispose of the proceeds and so be unable to meet the Appellants' claim. The Appellants' solicitors had enquired of the Respondents' solicitors, in October 1980, whether, if there was to be an agreement to arbitrate in London, the Respondents would put up security; but they received no response to this enquiry. As we have recorded, the ad hoc arbitration agreement was not made conditional upon the provision of security by the Respondents. So there was no security for any award made in the arbitration. Then, in July 1981, the Respondents disposed of their only asset, the ship. To the Appellants it must-have appeared, in August, that the arrest of the ship at Ipswich provided their only chance of ensuring that an arbitration award against the Respondents would be of any value. The mere fact that the Respondents had sold the ship was not of itself a bar to serving the Admiralty writ on her and arresting her because, since the Appellants had prudently issued the Admiralty writ while the ship was in the Respondents' ownership, and had subsequently renewed it, the Admiralty Court's jurisdiction could be invoked by an action in rem against the ship which was, when the action was brought (i.e. when the writ was issued), beneficially owned as respects all the shares in her by the Respondents (see Section 3(4) of the Administration of Justice Act 1956).
On 27th August 1981, the Appellants' solicitors sent a telex message to the Respondents' solicitors. They referred to their enquiry about security in October 1980, and continued: "It has come to our attention that the vessel (now the 'Vasso') is currently at Ipswich and our clients have instructed us to renew our request for security. We must therefore request your confirmation by 4 pm today that the Club are prepared to provide their undertaking in standard Clyde/Miller wording in the amount of DM 330,000 plus interest and costs. Failing which our instructions are to seek arrest of the vessel. By way of explanation we should add that an in rem writ was issued in 1979 and subsequently renewed and that in support of application for security we would rely on the decision in the 'Rena K', (1978) 1 Lloyds Rep. 345".
On the following day, the Respondents' solicitors replied by telex as follows: "Thanks your telex yesterday contents of which noted. We have taken our clients' instructions and comment as follows:—1. Our clients have disposed of the beneficial interest which they had in the above vessel and have no interest at all in the 'Vasso' to which you refer in your telex. 2. The Club does not have an entry for the 'Vasso' and is therefore not in a position to put up security. 3. We note that a writ was issued in 1979. Since then, our respective clients have agreed that the matters in issue between them should be referred to arbitration in London, and our clients do not accept that you are entitled to take any action against any asset of theirs".
So, on that day, the Appellants' solicitors took steps to arrest the "Vasso" at Ipswich. An affidavit was sworn on the same day to lead the warrant of arrest. It was in the normal form; but it made no mention of the fact that the parties had in April 1981, after the claim had arisen, entered into an ad hoc arbitration agreement, or that that arbitration was being actively pursued.
On the following day, 29th August, a warrant for the arrest having been issued, the writ was served on the "Vasso" at Ipswich and she was arrested.
As a result of the arrest of the ship, steps were taken to secure her release from arrest by means óf a P. and I. Club undertaking. These negotiations appear to have taken place at first on the telephone, between the parties' solicitors. Then, on 1st September, the Respondents' solicitors telexed the Appellants' solicitors as follows: "We refer to our telcon this morning in which we asked for your confirmation that, if a letter of undertaking was to be given by our clients' P and I Club in respect of the claim you mention in your telex of 27th August, you would agree to the incorporation into the said letter of undertaking a provision to the effect that such undertaking would be discharged and cancelled if the English High Court of Justice was to stay the present proceedings unconditionally. Please may we have your confirmation of this so that we may obtain our clients' further instructions".
The Appellants' solicitors replied by telex on the same day as follows: "Thank you for your telex this morning. Our clients will accept security without prejudice to your right to apply to High Court of Justice for a stay of proceedings and for an order that the said security should be released. We suggest that you send us a draft amendment to the standard Clydes/Millera undertaking".
On the next day, 2nd September, the Club furnished its written undertaking to the Appellants' solicitors. It provided that "in consideration of your consenting to the release from arrest and/or refraining from taking action resulting in the arrest of the 'VASSO'…we hereby undertake to pay to your solicitors on your behalf on demand such sums as may be awarded to you in arbitration in London or on appeal therefrom or as may be agreed to be recoverable" from the Respondents in respect of the Appellants' claim, interest and costs, up to a maximum of DM 500,000. The guarantee contained the following express term: "We undertake that we will, within 14 days of the receipt from you or your solicitors of a request so to do, instruct solicitors to accept on behalf of Berenice service of proceedings brought by you in the English High Court of Justice and to enter appearance thereto, without prejudice, however, to...
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