Steamship Mutual Underwriting Association (Bermuda) Ltd v Sulpicio Lines Inc.

JurisdictionEngland & Wales
JudgeMR JUSTICE WALKER
Judgment Date04 April 2008
Neutral Citation[2008] EWHC 914 (Comm)
CourtQueen's Bench Division (Commercial Court)
Date04 April 2008
Docket NumberCase No: 2007 Folio 1308

[2008] EWHC 914 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

The Honourable Mr Justice Walker

Case No: 2007 Folio 1308

Between:
Steamship Mutual Underwriting Association
(Bermuda) Limited
Claimant
and
Sulpicio Lines Inc
Defendant

Mr R Bright QC and Miss J Sutherland appeared on behalf of the Claimant

The Defendant did not attend and was not represented

Approved Judgment

Friday, 4th April 2008

MR JUSTICE WALKER
1

This is an application for declaratory and injunctive relief. The claimant, which I shall refer to as “the Club”, is a mutual protection and indemnity insurer. The defendant, which I shall refer to as “Sulpicio”, was for many years a member of the Club. Sulpicio has brought a claim against the Club before the Makati City Regional Trial Court in the Philippines. The Club says that Sulpicio's claim cannot be brought other than by way of arbitration in London.

2

Mr Robert Bright QC and Miss Jessica Sutherland appear today on behalf of the Club. There is no appearance on behalf of Sulpicio. As I shall explain, however, I am satisfied that Sulpicio has had proper notice of today's hearing. In accordance with the duties of advocates where one side only has attended before the court, the legal team for the Club has drawn my attention to such points as appear to them to be points which might reasonably be advanced on behalf of Sulpicio. That has been done both orally and in a skeleton argument lodged in support of the Club's application. In this judgment I shall make reference to headings and contentions that are found in that skeleton argument. I stress that I have applied my own independent judgment in considering all points raised by the Club and in endeavouring to ascertain what answer might be made to those points by Sulpicio.

The background to the Club's application

3

Sulpicio is a Filipino company which operates a fleet of ferries and general cargo vessels. Its vessels were entered with the club on an annual basis. In June 2004, during the Club's 2004/05 year of cover, the vessel “Princess of the Pacific” ran aground and was subsequently declared a constructive total loss. In July 2005, during the Club's 2005/06 year of cover (which began on 20 February 2005) another vessel, “Princess of the World” suffered a serious fire and was also declared a constructive total loss.

4

After investigating those incidents, the Club declined cover for the claims arising out of the fire on board the “Princess of the World”. It also terminated the entry of all Sulpicio's vessels with effect from 1 December 2005. Both these actions were said to be justified because there had been material breaches of the rules of the Club.

5

I have, in the material before me, a copy of the certificate of entry and acceptance in relation to Sulpicio's vessels for the 2005/06 year of cover. On its face, the certificate states that there has been an acceptance by the Club of Sulpicio's proposal for entering the relevant ships in class 1, protection and indemnity in accordance with “… the Rules from time to time in force…”. As I shall explain later, the Rules were sent to members and it is those Rules which are said by the Club to have been broken by Sulpicio. The stance taken by the Club has led to disputes between it and Sulpicio, including a dispute as to whether the Club is liable to cover Sulpicio for such sums as Sulpicio may have to pay to third parties as a result of the fire on board the “Princess of the World”.

6

The claim by Sulpicio against the Club was lodged in the Makati City Regional Trial Court on 12 July 2007. In summary, the claim involves two main assertions. The first main assertion is that the Club is obliged to “honour, recognise and effectuate” the contract for P&I insurance for the vessel M/V “Princess of the World” and to cover all P&I claims arising thereunder. The second is that the Club has “committed fraud” in terminating cover in respect of the “Princess of the World” and the other vessels in Sulpicio's fleet and that Sulpicio is entitled to “moral damages”.

7

An amended complaint by Sulpicio in those proceedings specifically identifies in paragraph 7 the contract between Sulpicio and the Club in the certificate of entry that I have quoted earlier in this judgment.

8

On 31 July 2007, the Club lodged a motion in the Makati City Regional Trial Court to dismiss Sulpicio's claim or to refer it to arbitration in London. In lodging that motion, the Club has made it clear that it does not submit to the jurisdiction of the Filipino court. The hearing of the Club's motion has not yet occurred.

The arbitration proceedings

9

On 31 July 2007 the Club commenced arbitration proceedings in London, appointing Mr Gavin Kealey QC as its arbitrator and calling upon Sulpicio to appoint its own arbitrator. Sulpicio did not do so. The result was that Mr Kealey was appointed as sole arbitrator pursuant to section 17 of the Arbitration Act 1996 (“the 1996 Act”). The Club's claim submissions in the arbitration were served on Sulpicio by email on 1 April this year.

The application in this court

10

The present application was begun by an arbitration claim form dated 29 August 2007. On 12 September 2007, the Club sought and obtained permission to serve the claim form out of the jurisdiction in the Philippines. It proved difficult to effect service by standard means and the Club therefore sought permission to effect service by alternative methods. Permission was granted by an order of Cooke J dated 16 Jan 2008. That order also extended the period for serving the claim form. The order permitted service by four alternative methods. One such method was by hand delivery to Sulpicio's office building. I am satisfied from the evidence before me that this was effected on 31 January 2008 by Mr Mungandayao, an attorney of Del Rosario and Del Rosario.

11

Paragraph 2 of the order of Cooke J provided that “in these circumstances service would be deemed effective two days later”. It follows that under the procedural rules of this court, Sulpicio was served on 2 February 2008. Sulpicio then had 21 days in which to acknowledge service under paragraph 3 of Cooke J's order. Sulpicio has not acknowledged service. It ought to have acknowledged service no later than 23 February this year; over a month has now elapsed without any action being taken by Sulpicio to file its acknowledgement of service here.

The order dated 19 March 2008 for interim anti-suit relief

12

On 18 March 2008 Sulpicio was informed by fax and email that an urgent application would be made in this court the following day. It was explained that urgency arose from a concern that the Makati City Trial Court might determine a motion by Sulpicio in the Easter vacation. Despite notice being given in this way, Sulpicio took no part in the application which was made by the Club the following day. The application was granted by Field J. His order, dated 19 March 2008, restrained Sulpicio from pursuing proceedings in the Philippines and elsewhere until after “the return date” or until further order of the court.

13

Field J's order stipulated that the return date was today, 4 April 2008, and that what should happen on the return date was a “further hearing in respect of this order and in respect of the claimant's claim…”. I am satisfied that it was apparent from Field J's order that if Sulpicio wished to oppose the grant of the relief sought in the Club's arbitration claim form, then it would need to arrange to make representations to this court for the purposes of the hearing today.

14

The order of Field J was sent to Mr Carlos Go, the Executive Vice President and Chief Executive Officer of Sulpicio, by fax and email. Sealed orders were sent to Sulpicio and its attorney, Mr Inting but courier on 20 March 2008. The copy sent to Mr Inting, Sulpicio's attorney, was not, however, delivered to him. The courier company was told that he was no longer to be found at the address 415 San Fernando Street, Binondo, Manila. However, that is the address given for Mr Inting in the documents filed by Sulpicio in the proceedings in the Makati City Trial Court.

15

Those methods of notification of the order were all methods permitted by the order itself. I am satisfied that Sulpicio has had ample notice of the Club's arbitration claim form, of the order made by Field J and of the fact that the Club would be seeking further relief from the court today.

Questions as to this Court's extraterritorial jurisdiction

16

Sulpicio has not been served within England and Wales. This court has jurisdiction to grant orders against Sulpicio only if the Civil Procedure Rules permit the arbitration claim form to be served out of the jurisdiction. As indicated earlier in this judgment, orders permitting service out of the jurisdiction were made on 12 September 2007 and 16 January 2008.

17

There were two main bases on which the Club said that extraterritorial jurisdiction arose. The first was that the claim fell within...

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