Sovfracht (v/O) v Van Udens Scheepvaart en Agentuur Maatschappij (N.v.Gebr.)
| Jurisdiction | UK Non-devolved |
| Judge | The Lord Chancellor,Lord Atkin,Lord Thankerton,Lord Wright,Lord Porter |
| Judgment Date | 03 December 1942 |
| Judgment citation (vLex) | [1942] UKHL J1203-1 |
| Court | House of Lords |
| Docket Number | Case No. 165 |
| Date | 03 December 1942 |
[1942] UKHL J1203-1
House of Lords
Lord Chancellor
Lord Atkin
Lord Thankerton
Lord Wright
Lord Porter
After hearing Counsel, as well on Friday the 24th, as on Monday the 27th, Tuesday the 28th, Wednesday the 29th and Thursday the 30th, days of July last, upon the Petition and Appeal of V/O Sovfracht, of Moscow, U.S.S.R., praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 5th of November 1941, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of N. V. Gebr Van Udens Scheepvaart en Agentuur Maatschappij, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 5th day of November 1941, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Order of the Master in Chambers, of the 4th day of July 1941, be, and the same is hereby, Discharged: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The Respondents are a ship-owning Company incorporated before the war under the law of the Kingdom of the Netherlands, with their principal place of business at Rotterdam. By a charter-party dated August 11th, 1939, the Respondents chartered one of their vessels to the Appellants, who are a Russian company; disputes arose between the parties and the Respondents sought arbitration under a clause in the charter-party which provided for arbitration in London. During the month of April, 1940, each party appointed an Arbitrator. Before the matter could proceed further, the German invasion of the Netherlands took place and by the second week of May, 1940, that country, including Rotterdam, was completely occupied by the enemy and has ever since been entirely under enemy control. In these circumstances, the Appellants and their Arbitrator refused to proceed with the Arbitration on the ground that the Respondents had become enemies and ultimately on June 24th, 1941, the Respondents took out a summons asking for the appointment of an Umpire. Master Ball, after hearing argument from both sides, made the Order, and this Order was confirmed by the Judge in Chambers, Mr. Justice Asquith, who gave to the present Appellants leave to appeal to the Court of Appeal. The Court of Appeal (Lord Greene, M.R., Goddard and du Parcq, L.J J.) dismissed the Appeal and affirmed the view that the Respondents were not in the position of alien enemies at Common Law and thus still enjoyed the right to resort to the King's Courts.
This is the principal question to be decided in the present appeal. A subsidiary question as to the validity of the retainer of the solicitors for the Respondents becomes irrelevant if the appeal on the main point were to succeed.
On the main question, it is, of course, common ground that an "alien enemy" cannot sue in the King's Courts or otherwise take up the position of an actor in British litigation, save under royal licence. An alien enemy, in this connection, does not mean a subject of a State at war with this country, but a person, of whatever nationality, who is carrying on business in, or is voluntarily resident in, the enemy's country. Porter v. Freudenberg [1915] 1 K.B. 857, at p. 869.
That case was the decision of a specially constituted Court of Appeal at the beginning of the last war. It confirmed the view which was taken by our Courts during the Napoleonic wars, e.g., in the King's Bench in O'Mealey v. Wilson (1808) 1 Camp. 482, where Lord Ellenborough C.J. said, at p. 483, "If a British subject resides in an enemy's country without being detained as a prisoner of war, he is precluded from suing here", and by the Court of Common Pleas in McConnell v. Hector (1802) 3 Bos. & P. 113 at p. 114, when the Court declined to support a commission of bankruptcy granted at the suit of three partners, all British subjects, on the ground that two of them resided and traded at an enemy port. (The port was the Dutch port of Flushing, described as "a port belonging to the enemies of this country"�the relevant date is not given, but, as Professor McNair points out in a learned article on the "Procedural Capacity of Alien Enemies" in the Law Quarterly Review of April last, the time was probably during the period when Holland under a franco- phil puppet government was at war with Great Britain.) In that case Alvanley L.C.J. said:
"I do not wish to hear it argued that a person who lives and carries on trade under the protection and for the benefit of an hostile State, and who is so far a merchant settled in that State that his goods would be liable to confiscation in a Court of prize, is yet to be considered as entitled to sue as an English subject in an English Court of justice." This decision was approved by this House in Rodriguez v. Speyer Brothers [1919] A.C. 59, when Lord Finlay L.C. said of it, "All that was decided by the Court was that enemy character results from residence in the enemy country, and there is no doubt as to the correctness of this propostion."
There can be no doubt that the Respondent company must be treated as "resident" in Rotterdam. Their commercial domicil was there, and there is no indication that it has changed. The case must be dealt with as though they were an individual subject of the Queen of Holland living there. I share to the full the feeling of distaste, expressed by the Master of the Rolls, at the idea that loyal Dutch subjects, who have suffered so cruelly at the hands of a brutal enemy and whose fellow countrymen are none the less maintaining from this country all the resistance they can to the invaders of their native land, should be regarded by English law, for any purpose, as alien enemies. But for the purposes of the statute law prohibiting trading with the enemy, they would plainly be so regarded, for "enemy territory" is defined, by s. 15 (1) of the Act, so as to include "any area which is in occupation of a Power with whom His Majesty is at war". Here, however, we are concerned with the Common law. Even a British subject, if voluntarily resident in enemy territory, would be treated at Common law as unable to sue, (See, for example, Lord Parker's speech in the Daimler case [1916] 2 A.C. 307 at p. 339), for the denial of persona standi in judicio does not turn on allegiance, but on locality. The question is, therefore, simply whether residence in territory which has been invaded and is forcibly occupied by the enemy disqualifies (apart from royal licence) from bringing or pursuing a suit in the King's courts.
I have had the advantage of perusing the opinions prepared by my noble and learned friends Lord Wright and Lord Porter, in which most of the relevant earlier decisions, both in this country and in the United States, are collected and analytically examined, and this relieves me from lengthening my own opinion by attempting any elaborate citation of authorities. To the cases cited by my noble and learned friends, I will add a reference to a Scottish decision given during the last War� Gebruder van Uden v. Burrell [1916] S.C. 39. There the Court of Session (Lord President Strathclyde, Lord Skerrington and Lord Anderson) held that a Dutch firm (I do not know whether the firm was the precursor of the Respondent Company, but the name is the same and it was a firm of steamship owners in Rotterdam), which was an enemy within the meaning of the Trading with the Enemy Act, 1914, because the partners also carried on business in Germany, could be defeated as pursuers by the plea of alien enemy.
My own conclusions, deduced from the authorities, are in general accord with those of Lord Wright and Lord Porter, and may be summarised as follows:�
1. The test of "enemy character" is fundamentally the same, so far as areas occupied by an enemy Power are concerned, whether the question arises over a claim to sue in our Courts, or over issues raised in a Court of Prize, or over a charge of trading with the enemy at Common law.
2. The test is an objective test, turning on the relation of the enemy Power to the territory where the individual voluntarily resides or the company is commercially domiciled or controlled: it is not a question of nationality or of patriotic sentiment.
3. If the enemy Power invades and forcibly occupies territory outside his own boundaries, residence in that territory may disqualify from bringing or maintaining suit in the King's Courts in the like manner as residence in the enemy Power's own territory would. The same applies to a company commercially domiciled or controlled in occupied territory.
4. But this is not always or absolutely so. It depends on the nature of the occupation and on the facts of each case. If as a result of the occupation the enemy is provisionally in effective control of an area at the material time, and is exercising some kind of government or...
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