The Tuyuti
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ACKNER,LORD JUSTICE ROBERT GOFF |
| Judgment Date | 06 April 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0406-3 |
| Docket Number | 84/0146 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 April 1984 |
[1984] EWCA Civ J0406-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
(CIVIL DIVISION)
(On Appeal from Mr. Justice Sheen)
Admiralty Court.
Royal Courts of Justice
Lord Justice Ackner
and
Lord Justice Robert Goff
84/0146
Admiralty action in Rem against the Ship "Tuyuti"
MR. R. AIKENS (instructed by Messrs Clyde & Co.) appeared on behalf of the Appellants (Plaintiffs).
MR. N. TEARE (instructed by Messrs Ince & Co.) appeared on behalf of the Defendants (Respondents).
(As Revised)
I will ask Lord Justice Goff to give the first judgment.
There is before the court a renewed application by the plaintiffs for leave to appeal from an order by Mr. Justice Sheen dated 20th March 1984 under which, on the defendants' application, he stayed all further proceedings in the action pursuant to section 1 of the Arbitration Act 1975 and further ordered that there be a stay of execution of the warrant of arrest issued in the action until further order. He refused leave to appeal.
For reasons, which I shall explain in a moment, the plaintiffs' application for leave to appeal against the order of a stay under section 1 of the Arbitration Act 1975 is restricted to one limited point. It is against the order staying the execution of the warrant of arrest that their application is primarily directed. They appeared before Lord Justice Ackner a day or two ago and he then adjourned the matter for consideration by this court. We heard submissions yesterday, for which we are much indebted, and we decided to give judgment immediately because the relevant vessel is due to enter the jurisdiction of the court in the next few days, and so the question whether the warrant of arrest should be subject to a stay of execution has assumed some urgency.
The matter arises as follows. The plaintiffs were the owners of cargo shipped on the defendants' ship "TUYUTI" (which I shall refer to as "the vessel") at Montevideo, in Uraguay, in December 1982. I shall refer to the plaintiffs as "the cargo owners" and to the defendants as "the shipowners". The cargo was a general cargo. We are concerned in the present case with a quantity of wool shipped under 38 bills of lading destined for Liverpool, and a quantity of screws loaded in two containers shipped under a single bill of lading, destined for Rotterdam. The cargo owners claim that the wool, part of which was off-loaded in Spain and the remainder discharged at Rotterdam, was discharged in a damaged condition, and that this damage was due to the unseaworthiness of the vessel, arising from the state of the hatch covers and the adjacent stowage in the holds of other cargo which was spontaneously combustable. The containers of screws were lost overboard in a storm.
The cargo owners claim in respect of the damage to the wool amounts to about $450,000 U.S. and for the loss of the screws to about $40,000 U.S. Each of the bills of lading under which the wool was shipped was in the same form and contained a clause paramount (clause 2) and a so-called jurisdiction clause (clause 3) which provided that the bill of lading should be governed by English law and included a London Arbitration Clause. The bill of lading under which the screws were shipped contained no arbitration clause, but contained an exclusive jurisdiction clause under which disputes were to be referred to a court in the country where the carrier had his principal place of business, which was Uraguay, and that the proper law of the contract was the law of Uraguay.
The wool cargo was discharged in January 1983. The one year time limit, with extensions, was due to expire on 17th February 1984. On 31st January 1984 the cargo owners issued their writ in the action, and on the same day the cargo owners solicitors obtained a warrant for the arrest of the vessel. She has not yet come within the jurisdiction of the Admiralty Court, and so the writ has not been served, nor has the vessel been arrested. However, solicitors acting on behalf of the shipowners discovered that the writ had been issued. They then voluntarily filed an acknowledgment of service on behalf of the shipowners, although no writ had been served. Their purpose in so doing I shall explain in a moment.
On 17th February 1984, in order to protect the time position having regard to the arbitration clause in the wool bills of lading, the cargo owners' solicitors nominated an arbitrator. The appointment was expressed to be both in respect of the wool bills of laiding and the screws bill of lading, and was also expressed to be without prejudice to, inter alia, cargo claimant's rights to arrest any of the owners' vessels. On 27th February the shipowners' solicitor responded, nominating an arbitrator both under the wool bills of lading and under the screws bill of lading.
On 2nd March the shipowners issued a notice of motion, asking for a stay of proceedings. This was served on 13th March. Argument took place before Mr. Justice Sheen on 20th-23rd March and, as I have recorded, he delivered his judgment on 29th March. The shipowners applied for a stay of proceedings under section b of the Arbitration Act 1975 and, if necessary, an order setting aside the warrant of arrest. It is common ground between the parties that the wool bills of lading contained a non-domestic arbitration agreement, to which section 1 of the Act of 1975 applied. The screws bill of lading contained no such agreement. Even so, by virtue of the nomination of the parties' arbitrators, there has come into existence an ad hoc arbitration agreement in respect of the dispute which has arisen under the screws bill of lading, though there is a dispute as to whether section 1 of the Act of 1975 applies in the circumstances of the present case.
It will, I think, be helpful if at this stage I set out the provisions of section 1(1) and 1(2) of the Act of 1975:
"Staying Court proceedings where party proves Arbitration Agreement:
(1) If any party to an arbitration agreement to which this section applies or any person claiming through or under him, commences any legal proceedings in any court against any other party to the agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to the proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings; and the court, unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.
(2) This section applies to any arbitration agreement which is not a domestic arbitration agreement; and neither section 4(1) of the Arbitration Act 1950 nor section 4 of the Arbitration Act (Northern Ireland) 1937 shall apply to an arbitration agreement to which section applies……"
I need not refer to subsections (3) and (4).
The shipowners application for a stay was made under that section. I must now explain the purpose of the shipowners in entering a voluntary acknowledgment of service. This was to make what has been called a "pre-emptive strike". Their purpose was to put themselves in a position to make an application for a stay of proceedings under section 1 of the Act of 1975 before their vessel arrived within the jurisdiction of the court, so that they could obtain an order which would effectively freeze the warrant of arrest before the vessel was arrested. For the cargo owners Mr. Aikens has conceded, rightly in my opinion, that the effect of the Rules of the Supreme Court (in particular Order 20, Rule 10, Order 10, Rule 1(5) and Order 75, rules 1,3 and (8)) is that the shipowners did by this step put themselves in the position of defendants to an action in personam in which proceedings are deemed to have been served, and so they did, by acknowledging service, enable themselves to make an application under section 1 of the Act of 1975.
Moreover, if the decision of the learned judge is right, the shipowners' pre emptive strike has been successful. Before the judge the following issues arose. The first issue was whether he should grant a mandatory stay of the proceedings. As to that, Mr. Aiken submitted to the judge, first, that no stay should be granted in respect of the claim under the wool bills of lading because on the evidence the shipowners were in such financial difficulty that they were unable to satisfy any arbitration award which might be made against them, with the effect that the arbitration agreement was incapable of being performed within those words in section 1 of the Act of 1975; and second that, as regards the screws bill of lading, section 1 of the Act of 1975 was not applicable because proceedings were commenced before the parties entered into the ad hoc arbitration agreement. The judge rejected the first of these submissions and Mr. Aikens has not sought to pursue the point before this court. The judge also rejected the second submission on the grounds that on the form of endorsement on this particular writ it was not possible to distinguish the claim of one plaintiff from the claim of another. So the result was that the judge granted a stay of proceedings in respect of all claims under section 1 of the Act of 1975.
He then proceeded to consider the position as regards the warrant of arrest. The judge rejected an argument of the shipowners...
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