Shipowners' Mutual Protection and Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat Ve Ticaret as
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 11 February 2015 |
| Neutral Citation | [2015] EWHC 258 (Comm) |
| Docket Number | Case No: 2014 FOLIO 871 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 February 2015 |
[2015] EWHC 258 (Comm)
Mr. Justice Teare
Case No: 2014 FOLIO 871
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Chirag Karia QC (instructed by Holman Fenwick Willan LLP) for the Claimant
David Lewis QC and Oliver Caplin (instructed by Clyde & Co LLP) for the Defendant
Hearing dates: 26 and 27 January 2015
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.
This is the application of the Claimant, a P&I Club, for an order continuing the anti-suit injunction issued by Cooke J. on 18 July 2014 restraining the Respondents, the time charterers of the vessel YUSUF CEPNIOGLU, from commencing or continuing proceedings in Turkey against the Club.
On 8 March 2014 the vessel, which was operating on a liner service between Turkey and North Africa, grounded on the Greek island of Mykonos. Salvage services were rendered but the vessel was a total loss. At the time of the grounding the vessel was laden with 207 containers. The cargo was being carried pursuant to 74 bills of lading issued by the time charterers. The proper law and jurisdiction of the bills is Turkey. Cargo claims have been notified to both the owners and charterers of the vessel. They are both Turkish companies. The charterers have commenced arbitration proceedings in London against the owners pursuant to the terms of the time charter.
The owner of the vessel is a member of the Club. The owner therefore has insurance against third party claims pursuant to the terms of its Club cover. Those terms provide for London arbitration and for the Club only to be liable if the owner has paid the claims against it ("the pay to be paid" clause).
In May 2014 the charterers commenced proceedings in Turkey (the "precautionary" proceedings) in which they sought to attach the Club's assets in Turkey up to a value of US$13.5m as security for a claim pursuant to a Turkish statute which gives the charterers a right of direct action against the Club. It is these proceedings, and the intended "substantive" proceedings in support of the right of direct action, which are the subject of the anti-suit injunction.
The debate before this court has concerned two matters; first, whether this court has jurisdiction to serve proceedings out of the jurisdiction on the charterers in Turkey and, second, if so, whether there are sufficient grounds to justify the grant of an anti-suit injunction. However, relevant to both matters is the "characterisation" of the right of direct action under Turkish law and I shall therefore deal first with that question.
The question is what is the substance of the claim? Is it in substance a claim to enforce the contract between the Club and its member, or is it in substance a claim to enforce an independent right of recovery? It is common ground that this involves a consideration of the nature of the right as a matter of Turkish law but that the question of characterisation is a question for the English court applying English conflicts of laws principles; see Hamblen J. in The London Steam Ship Owners Mutual Insurance Association v The Kingdom of Spain and another [2014] 1 Lloyd's Rep. 309 (also known as the Prestige No.2) at paragraphs 51 and 52.
Turkish law
The relevant provisions of Turkish law are to be found in the Turkish Insurance Contract Law of 2012 (the "TCC"). It was in force before the relevant Club cover and charterparty were agreed. Part B deals with liability insurance and provides as follows:
"Article 1473
(1) Under a liability insurance contract, the insurer shall pay to the victim compensation up to the amount stipulated in the insurance contract, for the liability of the insured due to an event that occurred, unless otherwise agreed, during the contract period, even if the loss materialised after that period.
(2) If the insurance is taken out for the liability related to the enterprise of the insured, this insurance shall cover, unless otherwise agreed, the liability of the representatives, administrators, auditors and also the employees of the insured. In that case, the insurance shall be deemed taken out in favour of those persons.
……….
Article 1478
The victim may claim its loss up to the insured sum directly from the insurer provided that the claim is brought within the prescription period applicable to the insurance contract.
Article 1479
The insurer may request information from the victim for determining the cause and the extent of the loss. The victim must provide all of the documents that can reasonably be provided…….."
Article 1483
Subject to the provisions of other legislation, insurers shall not refrain from granting cover for compulsory insurances in the insurance classes in which they are active.
Article 1484
(1) In case the insurer is totally or partially discharged of its obligation of performance towards the insured, its obligation of performance as against the victim shall remain effective up to the sum insured under the compulsory insurance.
(2) The termination of the insurance relationship shall become effective after one month following the notification by the insurer to the competent authorities that the contract has expired or is to expire.
…….
It is apparent from both articles 1473 and 1478 that Turkish law confers upon "the victim" a right to sue the liability insurer. Such a right is not given by the liability insurance contract because only the insured can sue under that contract. However, there is obviously a close connection between the victim's right and the insured's right under the contract because the limit of the insurer's liability to the victim is the limit under the contract and any claim by the victim must be brought within the time period allowed by the contract.
In The Prestige No.2 at paragraph 87 Hamblen J. said that in deciding whether the direct action right is "in substance" a claim to enforce the contract or a claim to enforce an independent right of recovery what is likely to matter most is the content of the right rather than the derivation of the right. "It is the content of the right which will be the most telling guide to what "in substance" the right is." It was not suggested that this was other than a correct approach.
Mr. Karia QC made the following submissions as to the content of the right of direct action under Turkish law. First, he submitted that the contractual definition of insured perils applied. In support of this submission he referred to article 1473 which obliged the insurer to pay to the victim compensation "for the liability of the insured due to an event that occurred". He said that this must mean the insured's liability which is covered by the insurer. Consistently with this, article 1479 requires the victim to provide information as to the cause of the loss. Second, both article 1473 and article 1478 limited the victim's right of recovery to the limit set out in the insurance contract. Third, article 1473 enabled the victim to recover in respect of an event which occurred "during the contract period". That must be a reference to the provision in the contract insurance as to when an insured event must occur. The reference in article 1473 to "unless otherwise agreed" is a further reference to the agreement between the insurer and the insured. Fourth, the victim is bound by any time bar in the contract between the insurer and the insured as article 1478 makes plain.
Mr. Lewis QC on behalf of the charterers did not accept that the Club's liability to the victim was dependent upon the cause of the loss being an insured peril as set out in the terms of the Club cover. He submitted that the phrase "for the liability of the insured due to an event that occurred" in article 1473 referred to the liability of the insured to the victim and that the obligation of the victim in article 1479 to provide information and documents relating to the cause and extent of the loss was to enable the Club to confirm that the insured was liable to the victim. When counsel was asked what were the insured perils on which the victim could rely when making his direct action claim against the Club he submitted that the perils were those typically insured by a P&I Club.
The identification of the insured perils on which the victim can rely was not expressly dealt with by Ms. Hatay, one of two Turkish lawyers who gave written evidence on behalf of the Club. But at paragraph 10 of her statement dated 18 July 2014 she said:
"There is also no guidance in the TCC as to what provisions, exceptions, limitations, defences etc. the liability insurer exposed to a direct action by a third party can rely on and whether it can only rely on defences available to the insured against the third party or on all of the provisions of the insurance contract. On my view of the correct construction of Article 1478, a liability insurer is only liable to the extent of the policy terms and limits it had concluded with the insured, and construing the article in wider terms would place the insurer in a contractual position it never intended or agreed to be."
Ms. Selek, the Turkish lawyer who gave written evidence on behalf of the charterers, also did not deal expressly with the question of what were the relevant insured perils as between the Club and the victim in her witness statement dated 8 December 2014.
Ms. Peksen, the other Turkish lawyer who gave evidence on behalf of the Club (in circumstances where Ms. Hatay had left the relevant firm of lawyers)...
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