The Deichland

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE NEILL,LORD JUSTICE STUART-SMITH,SIR DENYS BUCKLEY
Judgment Date20 April 1989
Judgment citation (vLex)[1989] EWCA Civ J0420-6
Docket Number89/0389

[1989] EWCA Civ J0420-6

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMIRALTY COURT

(Mr. Justice Sheen)

Royal Courts of Justice

Before:

Lord Justice Neill

Lord Justice Stuart-Smith

and

Sir Denys Buckley

89/0389

Between:
The Owners of the Cargo Lately Laden on Board the Ship "Deichland"
Respondents (Plaintiffs)
and
The Owners And/Or Demise Charterers of the Ship "Deichland"
Appellants (Defendants)

MR. R. J. P. AIKENS, Q. C. and MR. J. MALINS (instructed by Messrs Clyde & Co.) appeared on behalf of the Respondents/Plaintiffs.

MR. C. PRIDAY (instructed by Messrs Ingledew Brown Bennison & Garrett) appeared on behalf of the Appellants/Defendants.

LORD JUSTICE NEILL
1

This is an appeal by Deich navigation SA (Deich) from an order of Sheen J. dated 19th July 1988 whereby he dismissed their motion brought pursuant to RSC Order 12 Rule 8(1) and (3) (a) to contest the jurisdiction of the High Court. Certain consequential relief was also sought.

2

Deich contended that the action should have been brought in the Federal Republic of Germany where, it was alleged, they were domiciled. Reliance was placed on the Civil Jurisdiction Judgments Act 1982 (the Act of 1982) and in particular on Article 2 of the 1968 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the 1968 Convention), which is set out in Schedule 1 to the Act of 1982.

3

The writ in the action was issued from the Admiralty Registry of the High Court on 30th January 1987. The action was described in the writ as an "Admiralty action in rem against the ship Deichland". The plaintiffs were named as "the Owners of cargo lately laden onboard the ship 'Deichland'". The defendants were named as "the Owners and/or Demise Charterers of the ship 'Deichland'". In 1986 and at the date of the issue of the writ Deich were the demise charterers of the ship, which has now been renamed "Baracuda".

4

It is clear that the writ followed the form prescribed in RSC Order 75 Rule 3(1) and in Form No. 1 in Appendix B to the Rules. The claim was stated to be "for damages for breach of contract and/or duty in and about the loading, handling, custody, care and discharge of the plaintiffs' cargo and the carriage thereof on board the defendants ship 'Deichland' in the year 1986".

5

It is common ground that unless the Deich can invoke the provisions of the Act of 1982 and the 1968 Convention the High Court has jurisdiction to try this action in rem. The Admiralty jurisdiction of the High Court is set out in s.20 of the Supreme Court Act 1981 (the Act of 1981). By s.20(1)(a) and (2)(g) and (h) this jurisdiction includes jurisdiction to hear and determine "any claim for loss of or damage to goods carried in a ship" and "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship".

6

The mode of exercise of the Admiralty jurisdiction is prescribed in s.21 of the Act of 1981. S. 21(4) provides:

"In the case of any such claim as is mentioned in s.20 (2 He) to (r), where—

  • (a) the claim arises in connection with a ship; and

  • (b) the person who would be liable on the claim in an action in personam ('the relevant person') was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship,

an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brought in the High Court against—

  • (i) that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise: or

  • (ii) any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it."

7

It is not necessary to refer to any of the other provisions of s.21 save to notice that the present claim could also have been brought against the defendants by way of an action in personam: see s.21(1).;

8

The facts giving rise to this action can be stated quite shortly.

9

In January 1986 a cargo of steel coils was loaded on the vessel for carriage from Glasgow to La Spezia in Italy. At that time the disponent owners of the vessel were Deich who were the demise charterers for a period of two years (30 days less charterers option) under a bare boat charter dated 6th May 1985. The plaintiffs contend that when the steel coils were delivered at La Spezia on or about 1st February 1986 they were found to be wet-stained and rusted. In the action the plaintiffs are seeking to recover damages in respect of the loss which they allege they have suffered.

10

The writ in rem was issued on 30th January 1987. On 23rd November 1987 a trainee legal executive in the employment of the plaintiffs' solicitors served the writ upon the vessel at Erith Deep wharf at Erith in Kent by affixing the original writ on the window near the ship's bridge for a short time and then, upon removing the original writ, leaving the sealed service copy in its place, accompanied by an appropriate form of Acknowledgement of Service.

11

By that date, however, the demise, charter of the ship had ended, the ownership of the ship had changed and the ship had been renamed.

12

When the writ in rem was served on the ship the ship was not arrested. On 27th November 1987, however, Deich's P and I club in Hamburg sent the plaintiffs a letter in the following terms:

"In consideration of your refraining from arresting the MV 'Baracuda' ex 'Deichland' or any other vessel in the same ownership, associated ownership or management for the purpose of founding jurisdiction and/or obtaining security in any part of the world in respect of the above mentioned claim against Deich Navigation SA, bareboat charterers of the above named ship at the material time concerning damage to cargo, we the undersigned P and I club, hereby guarantee to pay to your solicitors on your behalf such sums as may be adjudged or found due to you by any competent court or tribunal or as may be agreed between the parties in respect of the said claim provided always that our liability hereunder shall not exceed the sum of £54,000 plus interest and costs, providing always in the event that the shipowners can establish before the competent court their right to limit their liability pursuant to any applicable convention or legislation, such lesser sum as may represent the vessel's limit of liability."

13

On 27th June 1988 Deich issued their notice of motion seeking, inter alia, a declaration that the court had no jurisdiction over the defendants in respect of the subject matter of the claim.

14

The motion was heard by Sheen J. on 30th June and 1st July 1988. He gave judgment on 19th July 1988 dismissing the motion with costs but gave leave to appeal to this court. The decision is now reported in [1988] 2 Lloyds L.R.454.

15

Before the judge Deich contended, as they have contended in this court, that they are domiciled in Germany and therefore the matter should be tried in Germany in accordance with Article 2 of the 1968 Convention. The judge rejected this contention on the basis that the 1968 Convention did not apply to an Admiralty action in rem while it remained solely in rem. At. p.458 he said this:

"This action is an action in rem and remains solely in rem until the demise charterers submit to the jurisdiction of this Court. Insofar as they wish on this motion to contest the jurisdiction of the Court they can only contest the jurisdiction in rem. On this motion they have not sought to do so. The ground of the application is 'the defendants are domiciled in The Federal Republic of Germany'. But while the action is solely in rem there are no 'defendants', despite the wording of the writ. The demise charterers must decide whether they will submit to the jurisdiction of this Court or allow the action in rem to proceed by default."

16

The issues on the appeal

17

The issues which fall to be decided on this appeal can be stated as follows:

  • (1) Whether the 1968 Convention has any application at all to an Admiralty action in rem while it remains solely in rem.

  • (2) If the 1968 Convention applies to the action, whether, for the purposes of Article 2 of the 1968 Convention, Deich are domiciled in Germany (as they contend) or in Panama (as the plaintiffs contend).

  • (3) If the 1968 Convention applies to the action and Deich are domiciled in Germany for the purposes of Article 2, whether nevertheless the High Court has jurisdiction by reason of the combined effect of Article 57 of the 1968 Convention, s.9 of the Act of 1982 and the provisions of the 1952 International Convention for Unification of Certain Rules relating to the Arrest of Sea-going Ships (the 1952 Convention).

18

I propose to deal first with issue (1) which is the only aspect of the matter on which the learned judge expressed a conclusion in his judgment.

19

At the beginning of his submissions in this court counsel for the plaintiffs did not seek to support the judge's reasons for his decision, but later he changed his position and contended strongly that the judge was right. I make no criticism whatever of this change in stance. Clearly the point merits the most careful consideration.

20

ISSUE 1

21

The case for Deich on this issue is based on Article 2 of the 1968 Convention which, so far as is material, is in the following terms:

"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State."

22

Deich claim to be domiciled in the Federal Republic of Germany and contend that they...

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