The Guiseppe di Vittorio
| Jurisdiction | England & Wales |
| Judge | Evans L.J.,Aldous L.J.,Waller L.J. |
| Judgment Date | 29 October 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J1029-14 |
| Docket Number | LTA 97/6842/B |
| Court | Court of Appeal (Civil Division) |
| Date | 29 October 1997 |
[1997] EWCA Civ J1029-14
Lord Justice Evans
Lord Justice Aldous
Lord Justice Waller
LTA 97/6842/B
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
Royal Courts of Justice
MR. C. MacDONALD Q.C. and MR. J. TURNER appeared on behalf of the Applicant/Defendant.
MR. L. PARSONS appeared on behalf of the Respondent/Plaintiff.
A large fleet of cargo vessels is operated world-wide by Blasco (Black Sea Shipping Co.). One of these is "Guiseppe di Vittorio". She is lying under arrest in Newport at the suit of the plaintiffs. They claim the price due to them for bunkers supplied to the vessel at Suez in July 1996 and at Singapore in December 1996.
The Republic of Ukraine has intervened, claiming that it is the owner of the vessel and that the arrest provisions of the Supreme Court Act 1981 do not justify the arrest; consequently, the vessel should be released. This application was made by Summons dated 2 May 1997. The plaintiffs meanwhile had applied on 25 April for an order for appraisal and sale of the vessel pendente lite.
Both applications came before the Admiralty judge, Clarke J., in July. In his judgment dated 15 July 1997 he identified four issues, namely:-
"(1) Was BLASCO the beneficial owner of the vessel as respects all the shares therein on 2nd April 1997?
(2) If not, was BLASCO the charterer of the vessel under a charter by demise?
(3) Would the republic be liable in personam?" (judgment p.4), and
(4) State immunity (judgment p. 40).
He held against the Republic (1) that BLASCO was the beneficial owner, as required by the Act, at the date of arrest ; (2) alternatively, that BLASCO was demise charterer for the purposes of the Act; (3) that the Republic was liable in personam for the sums due under the bunker contracts entered into by BLASCO; and (4) that the objection based on state immunity (the Republic admittedly is an independent State) failed.
The Republic now appeals on each of the four issues.
The judge's order for appraisal and sale was dated the 15th July. Leave to appeal was granted by the Court of Appeal (Simon Brown and Phillips L.J.J.) on 5th September and a stay of execution pending determination of the appeal by another division of the Court (Nourse and Evans L.J.J.) on 16th September. The hearing of the appeal was expedited, because the vessel remains under arrest and has a declining value which may be insufficient to satisfy the plaintiffs' claims after providing for the costs and expenses of maintaining the arrest. Neither the Republic nor BLASCO has provided security for her value, and there is no obligation upon either of them to do so. If the plaintiffs are correct, then the vessel should be appraised and sold forthwith, the proceeds remaining in Court for the benefit of the plaintiffs and other claimants. If the Republic's submissions are accepted, then the consequences will be either that the vessel is released forthwith or, if the arrest was justified but state immunity applies, then she will remain under arrest but the Court has no power to order her sale.
The statutory provisions
Sections 20 and 21 of the Supreme Court Act 1981 (derived from the Administration of Justice Act 1956) give effect to the Brussels Conventions of 1952. The plaintiffs' claim for the price of bunkers comes within section 20(2)(m) ("any claim in respect of goods or materials supplied to a ship for her operation or maintenance"). This does not give rise to a maritime lien under English admiralty law (though it does, for example, in the U.S.A.) but the plaintiffs have the statutory right of arrest given by section 21(4). This provides:-
"In the case of any such claim as is mentioned in section 20(2)(e) 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 of 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."
These provisions make it necessary to decide, first, who was the person who became liable on the claim in an action in personam? The plaintiffs say that that person was Blasco, or alternatively, if the Republic was the beneficial owner of the vessel, which they dispute, that the Republic itself was so liable. [In either case, the requirement of section 21(4)(b) was satisfied: Blasco, if not, the owner, was "in possession of or in control of, the ship", a factual test which is satisfied whether or not Blasco can properly be regarded as a "charterer" also].
The further requirement of section 21(4), if the ship is the one in respect of which the claim has arisen, is that the person liable shall be, "at the time when the action is brought" (2 April 1997), "either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise".
If the Republic is the person liable and was at 2 April 1997, the beneficial owner of the ship, then this further requirement is satisfied. But the plaintiffs' primary allegation is that Blasco was the beneficial owner or alternatively "the charterer under a charter by demise", hence the first two issues in the judge's formulation, quoted above.
(1) Blasco the beneficial owner?
The Constitution of the Republic as an independent sovereign state dates from 1991 when it ceased to be a member of the U.S.S.R. The arrangements under which Blasco operates its fleet of State-owned vessels were largely inherited from the U.S.S.R. Blasco is a State Enterprise currently regulated by its Charter (or Statute) registered on 23 March 1995. This provides that Blasco is a State Enterprise "based on state ownership and is subordinate to the Ministry of Transport of Ukraine", located in Odessa (Art. 1.2) and established "with the aim of satisfying the requirement of social production and population (sic) for transportation by sea transport" (Art. 2.1). It is established as a "legal entity" (Art. 3.1), and is "responsible for its own obligations within the limit of property belonging to it in accordance with current legislation" and not responsible for obligations of the State or of the Ministry of Transport (Art. 3.5). It has "the right to conclude agreements, assume property and personal rights and bear responsibilities" (Art. 3.6), and provisions regarding its property are contained in Art. 4:-
"4.2 The property of the Company is in state ownership and is assigned to it under rights of full state control. In exercising the right of full economic management [self-accounting] the Company is to manage, use and dispose of the said property of its own initiative, carrying out any activities with it which do not contravene legislation and the said Charter.
4.3 Sources of formation of the Company's property are:
—property handed over to it by organs of state management:
………
4.4 Transfer of ownership of production resource which are in state ownership and assigned to the Company is to take place by agreement with the Ministry under the procedure laid down by current legislation. Resources that are received as a result of transfer of the ownership of that property are to be directed exclusively to investment by the company and are owned by the state."
Other relevant provisions are:-
"5.2 Obligations of the Company
5.2.1 In working out the strategy for its economic activities the Company must take into account …. state orders …."
"6.1 The company shall be managed by the President.
6.3 [The President is given wide powers to act on behalf of the Company without a Power of Attorney and to issue Powers of Attorney to others, and]
"The Ministry shall not interfere already with the business activity of the Company".
These arrangements were considered by this Court in The Nazym Khikmet [1996] 2 Lloyd's Rep. 362 on the basis of evidence, including expert evidence, produced by the plaintiffs in that action and by the Republic, which intervened in order to secure the release from arrest of a sister ship, Zorinsk, both vessels being members of the Blasco fleet. The application succeeded before the Admiralty judge, Clarke J., and his decision was upheld by this Court, Sir Thomas Bingham M.R. presiding. The issue was whether Blasco was the beneficial owner of Zorinsk within section 21(4) of the Act. The issue arose because it was accepted that Blasco was the person liable in an action in personam for the claim for cargo damage sustained on board 'Nazym Khikmet'. Therefore, to justify the arrest, the plaintiffs had to show that Blasco was the beneficial owner of 'Zorinsk' under the sister-ship provisions of section 21(4)(ii).
The Court held that Blasco was not. It is unnecessary to quote the conclusions in full because they are not challenged on this appeal. The plaintiffs accept that 'Guiseppe di Vittorio' was held by Blasco on the same terms as 'Zorinsk', until events occurred which are referred to below, and that subject to those later events:-
"…. BLASCO was at no time what English law would...
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