Royal Boskalis Westminster N.v v Mountain
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STUART-SMITH,LORD JUSTICE PILL,LORD JUSTICE PHILLIPS |
| Judgment Date | 28 February 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0228-18 |
| Docket Number | QBCMF 96/02345/B |
| Court | Court of Appeal (Civil Division) |
| Date | 28 February 1997 |
[1997] EWCA Civ J0228-18
Lord Justice Stuart-Smith
Lord Justice Pill
Lord Justice Phillips
QBCMF 96/02345/B
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR JUSTICE RIX)
Royal Courts of Justice
Strand
London W2A 2LL
MR CHRISTOPHER CLARKE QC, MR ALISTAIR SCHAFF and MR DAVID BAILEY (instructed by Messrs Clyde & Co, London EC3M 1JP) appeared on behalf of the Appellants (Defendants).
MR RICHARD AIKENS QC, MR STEPHEN HOFFMEYER and MISS SIOBHAN HEALY (instructed by Messrs Hill Taylor Dickinson) appeared on behalf of the Respondents (Plaintiffs).
This is an appeal from the judgment of Rix J given on 18 December 1995 on preliminary questions of liability.
The action arises out of a claim on War Risks underwriters by the Plaintiffs, which are 5 Dutch companies who owned and operated a dredging fleet. Two of the Plaintiffs, Boskalis International BV (the Third Plaintiffs) and Volker Stevin Dredging BV (the Fifth Plaintiffs) formed a Joint Venture. Together they contracted with an arm of the Iraqi Ministry of Transport and Communications, the General Establishment of Iraqi Ports ("GEIP"), on 28 October 1989 to undertake extensive dredging works at the port of Umm Quasr, which is very close to the Iraqi-Kuwait border. The contract ("the Dredging Contract") was governed by Iraqi law. It also provided for arbitration in Paris in default of acceptance by the Engineer of the Plaintiff's claims to additional payment. The dredging fleet was insured against war risks with the Defendant Trevor Rex Mountain and other following underwriters. The insurance contracts were governed by English law. The insurance contracts were all in similar form and it was agreed at the trial that the Royal Boskalis Westminster NV policy ("the Policy") could be taken as the paradigm.
The dredging work was still being performed when Iraq invaded Kuwait on 2 August 1990. The work was due to be completed by the end of September 1990. At first the Plaintiffs tried to obtain agreement from GEIP that the dredging work should be suspended. GEIP would not agree and insisted that the work should continue, claiming that conditions at Umm Quasr remained normal. Although other contractors abandoned work being done in Iraq after the invasion, the Plaintiffs decided to try and complete the Dredging Contract. But completion was delayed by the invasion and the UN sanctions against Iraq that followed on 6 August 1990. On 16 September 1990 the Iraqi High Command resolved to promulgate Law No. 57. This took effect from 24 September 1990, but the law purported to have retrospective effect to 6 August 1990, the date when UN sanctions were imposed on Iraq. Article 7 of Law No. 57 said that all the assets of the companies of those countries which had enacted sanctions legislation against Iraq "shall be seized".
The practical effect of this Law was that there had to be negotiations between the Plaintiffs and the Iraqi government about the basis on which the dredging fleet would be demobilised and released. The terms on which the Iraqis would be prepared to permit demobilisation were (in the Judge's phrase) "progressively ratcheted up". On the Plaintiffs' side the negotiations were carried out by Mr. H.B. Huisman, who was then the Project Manager, of the Plaintiffs, Boksalis International BV. He was present in Iraq throughout the period August-December 1990. On 6 December 1990 a "Finalisation Agreement" between the Joint Venture and the Ministry was signed at a public ceremony in Baghdad. The Iraqi's price of permitting demobilisation of the dredging fleet and its personnel was (1) the abandonment of all claims that the Joint Venture might have under the Dredging Contract (which the Joint Venture claimed were about Dutch Fl. 84 million); and (2) the payment into accounts of the Central Bank of Jordan held in Swiss and Austrian banks, of Dutch Fl. 24,250,000. This sum was what remained of a deposit of Dutch Fl. 36,267,506.57 placed by the GEIP in an account at the Amsterdam—Rotterdam Bank (The Bank) in Holland pursuant to a letter of credit opened by the GEIP as security for payments to be made by the GEIP to the Joint Venture under the Dredging Contract. Pursuant to the Finalisation Agreement GEIP provided the Joint Venture with a "so called final payment certificate" addressed to the Bank directing the release of this sum to the Joint Venture, and the release of the Joint Venture's performance bond. The final payment certificate certified that the outstanding balance was due to the Joint Venture in respect of final payments for the dredging works. It was signed by Mr. Huisman and by Mr. Mahmoud, the Engineer. The Joint Venture presented the final payment certificate to the Bank on 7 December 1990. Also on that day the Joint Venture requested the Bank to deal with the total sum of some Dutch Fl. 36 million in the following way: two sums of some Dutch Fl. 6 million each were to be transferred to the bank accounts of each of the Joint Venture companies. These represented the amount in fact due to the Joint Venture companies for completion of the dredging works. The balance of approximately Dutch Fl. 24.25 million was to be transferred to an account of one of the Joint Venture companies, Royal Volker Stevin, at another bank, HBU-Bank in Rotterdam; it was this latter sum of Dutch Fl. 24.25 million which the Joint Venture had agreed to transfer to the Central Bank of Jordan pursuant to the Finalisation Agreement. The money was then transferred to GEIP in Iraq.
Following the implementation of the Finalisation Agreement the dredging fleet and the Joint Venture's personnel were able to leave Iraq safely. Mr. Huisman was subsequently honoured by the Queen of the Netherlands for his part in successfully extricating the Joint Venture personnel from Iraq. When the Finalisation Agreement had been signed on 6 December 1990, Mr. Huisman had been threatened by the Iraqi Secret Service. The threats were to the effect that the Security Officers would kill him if he disclosed the existence or contents of the Finalisation Agreement. In response to these threats Mr. Huisman destroyed all copies. But a fax of the final draft in its unsigned form survived in Holland and was accepted at the trial as a copy of the Finalisation Agreement itself.
It is unnecessary to trace the history of the claims. By their pleadings the Plaintiffs advanced two main claims. The first was that there was a constructive total loss and they claimed the insured value of the vessels on that basis. The Judge rejected this claim and there is no appeal. Secondly the Plaintiffs claimed to recover under the "sue and labour" clause in the policy the value of their claims for extra payment under the Dredging Contract which they had waived or relinquished under the Finalisation Agreement. The Judge upheld this claim and has subsequently assessed the amount of the claim, though the final figure has still not been calculated. The Defendant now appeals from this holding.
Mr. Clarke QC on behalf of the Defendant submits that the appeal raises a number of issues, all of which should be answered in his favour.
1. Can the entering into of an agreement providing for the renunciation or waiver of claims amount to the incurring of a sue and labour charge?
2. What is the legal relevance to the claim under the sue and labour clause of the effectiveness or enforceability of the waiver of claims? In particular if the waiver is unenforceable have the Plaintiffs sustained any expenses or charge for which they can claim under the sue and labour clause?
3. A. Does the fact that the waiver of claims was obtained by duress:
(i) Render it unenforceable in an arbitration of such claims in Paris on the grounds that it is contrary to French public policy? Or
(ii) So affect the waiver that an English Court will consider it contrary to English public policy and unenforceable, whatever the position may be in French law?
B. Does the fact that the repayments of Dutch Fl. 24,250,000 was illegal by Dutch laws and the repayment of Dutch Fl. 12,000,000 (being part of the Dutch Fl. 24,250,000 channelled through the Swiss Bank) was illegal by Swiss law
(i) Render the waiver unenforceable in a Paris arbitration; or
(ii) So affect the waiver that an English Court will consider it contrary to public policy and unenforceable, whatever the position is in French law?
4. Is the Plaintiff's claim to recover in respect of the waiver of claims irrecoverable on grounds of illegality at common law ( ex turpi causa non oritur actio) or under S41 or S78 of the Marine Insurance Act 1906 (The Act).
5. Was the maximum effective loss (or ransom) suffered by the Plaintiffs the value of the balance of Dutch Fl. 24.25 million security which was reimbursed to the Iraqis, alternatively should the value of claims waived be assessed by reference to the chance that they represented the maximum effective loss?
6. By way of cross appeal was Rix J correct in apportioning the sue and labour "expenses" as to 50% incurred for the purpose of avoiding or minimising the insured loss of the fleet (and thus recoverable) and as to 50% incurred for the purpose of avoiding or minimising the continued uninsured detention of personnel (and thus irrecoverable).
A further issue in relation to misrepresentation and non-disclosure was not argued in this Court in the light of the Court's decision in ( Manifest Shipping -v- Uni-Polaris Shipping unreported 20 December 1996). Both sides reserved their position on this...
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