Vitol Energy (Bermuda) Ltd v Pisco Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | HIRST L.J. |
| Judgment Date | 21 January 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0121-7 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 January 1998 |
[1998] EWCA Civ J0121-7
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Lord Justice Hirst
Lord Justice Robert Walker
Mr. Justice harman
MR. J. GRUDER (instructed by Messrs Ince & Co., London, EC3) appeared on behalf of the Appellant/Plaintiff.
MR. V. FLYNN (instructed by Messrs Holman, Fenwick & Willan, London, EC3) appeared on behalf of the Respondent/Defendant.
Introduction
This case raises a question of principle concerning the construction of RSC Order 6 rule 8(1) prior to its recent amendment which came into force on 16 December 1996, namely whether the rules required not only that a writ be served out of the jurisdiction within six months of its issue but also that leave to serve out be obtained within four months of the date of issue of the writ.
The point has been considered at first instance in the Commercial Court in a number of cases which, at any rate in the view of Moore-Bick J in the present case, are not altogether easy to reconcile.
The appellants are two associated companies Vitol Energy (Bermuda) and Vitol SA, whom I shall refer to in future collectively as Vitol, and who were respectively the charterer and the endorsee under the bill of lading issued under the charterparty dated 21 December 1994 of the vessel "Cross II" belonging to the respondent Pisco Shipping Co. Limited (Pisco) whose registered office is in Cyprus. Vitol's claim is for losses incurred by them as a result of alleged breaches by Pisco of it obligations under the charterparty and also under the bill of lading. The bill of lading contained an express English law and English jurisdiction clause; it also incorporated the Hague rules as enacted in the Carriage of Goods by Sea Act 1924, and was therefore subject to the one year time limit contained in Article III rule 6.
The cause of action arose on 28 January 1995, so the limitation period expired a year later on 28 January 1996. The writ was issued on 19 January 1996, (i.e. just within the limitation period); and was marked "not for service out of the jurisdiction", on the footing that Pisco was based abroad but leave to serve out had not been obtained.
Just under four months later, on 17 May 1996 Vitol sought an extension of the validity of the writ and leave to serve a concurrent writ out of the jurisdiction, and the application was supported by an affidavit by Miss Joanne Barton, an assistant solicitor employed by Messrs. Ince and Co., but the application was refused by Waller J. under Order 11 rule 4, on purely technical grounds, viz non-compliance with the requirement for a statement that the deponent believed the plaintiff had a good cause of action.
Just after the expiry of four months Vitol presented a second application dated 23 May 1996 supported by an affidavit of Mr. Denys Hickey which remedied the defect in the first affidavit, and on 6 June 1996 Vitol was granted leave by Waller J. to serve a concurrent writ out of the jurisdiction and also an extension of the writ's validity for a period of two months.
The writ was served on Pisco in Cyprus on 6 July 1996, i.e. after four months but within six months of its issue.
On 22 November 1996 Moore-Bick J ordered that Waller J's order dated 6 June 1996 should be set aside, and it is against this order that Vitol presently appeal with the leave of Saville L.J. as he then was.
The appeal turns entirely on the resolution of the point of principle which the judge decided against Vitol. The judge then proceeded to refuse the consequential application for an extension of the validity of the writ in the exercise of his discretion, and this part of his decision is not challenged should Vitol fail on the main point.
It should also be noted that there was a parallel application raising similar issues in relation to a writ issued by Vitol against Pisco in the Admiralty Court, which was refused by the judge and is not now under appeal.
RSC Order 6 rule 8
This rule in its form prior to its December 1996 amendment provided so far as relevant as follows:-
"8. (1) For the purposes of service, a writ (other than a concurrent writ) is valid in the first instance-
(a) if an Admiralty writ in rem, for 12 months;
(b) where leave to serve the writ out of the jurisdiction is required under Order 11 or Order 75, rule 4, for 6 months,
(c) in any other case, for 4 months beginning with the date of its issue.
(1A) A concurrent writ is valid in the first instance for the period of validity of the original writ which is unexpired at the date of issue of the concurrent writ."
This formulation of the rule originated from a recommendation of the Civil Justice Review, and superseded the previous regime, which laid down a 12 month period of validity across the board.
The amendment as originally framed ( S.I. 1989 No.2427 which came into force on 4 June 1990) omitted the present sub-paragraph (a), relating to Admiralty actions, which was inserted later.
Unfortunately, this formulation had caused difficulties in Order 11 cases, as the present appeal and the other cases cited in this judgment demonstrate, and this is no doubt why the Rules Committee proposed the 1996 amendment quoted later in this judgment.
The Question at Issue.
The appeal turns essentially on the proper construction of sub-rule (b) above, both intrinsically and also having regard to the terms of RSC Order 6 rule 6(1) which provides as follows:-
"6. (1) One or more concurrent writs may, at the request of the plaintiff, be issued at the time when the original writ is issued or at any time thereafter before the original writ ceases to be valid."
In his judgment the judge concentrated on two very recent decisions in the Commercial Court to which I shall have to return in more detail later.
In Dong Wha Enterprise Co. Ltd. v. Crownson Shipping Ltd. [1995] 1 Lloyds Rep. 113, the original writ had been issued "not for service out of the jurisdiction", and an order granting leave to issue a concurrent writ for service out of the jurisdiction had been made just within the four month period after its issue. Mance J. concluded in effect that what matters for the purpose of sub-rule (b) is whether circumstances exist or have arisen where leave to serve out of the jurisdiction is required as a matter of practicality; and that in consequence the validity of the original writ extends for a period of six months once it is shown by obtaining leave to serve out that such is the case.
In Arab Business Consortium International Finance and Investment Co. v. Banque Franco Tunisienne [1996] 1 Lloyds Rep. 485 Waller J. had to consider a case where the leave to issue a concurrent writ for service out of the jurisdiction was only granted after the four months had elapsed from the issue of the original writ. He distinguished the Dong case primarily by reference to Order 6 rule 6(1), holding that the plaintiff had no right to issue a concurrent writ for service out of the jurisdiction (and therefore no right to apply for leave to issue or serve such a writ) unless the original writ is still valid. Since in his view, a writ marked "not for service out of the jurisdiction", ceased to be valid four months after its issue, it was no longer possible to issue a concurrent writ.
Moore-B ick J. held that the logic of Mance J.'s analysis in the Dong case "might suggest that the requirement under sub rule (b) could be demonstrated just as well after as before the end of the four month period", and that if that analysis was correct, obtaining leave to serve out does not extend the validity of the original writ, but only establishes that its original period of validity is six months rather than four months, so that a concurrent writ can be issued without any extension, properly so called, of the original period of validity. As a result, he concluded, as already noted, that he did not find it altogether easy to reconcile the two decisions. However, he decided that the correct course was for him to follow both decisions on what he regarded as difficult questions, noting that Mr. Geoffrey Gruder Q.C. on behalf of Vitol reserved the right to challenge either or both of them if the matter went to appeal.
Before us Mr. Gruder put his case on two alternative grounds viz:-
(1) That the writ was self-evidently one for which leave was required under sub-rule (b) to effect service out of the jurisdiction, and was therefore valid in the first instance for six months; or
(2) That, following the Dong case, the making of the application on 19 May 1996 (within the 4 month period), alternatively the actual grant of leave to serve a concurrent writ out of the jurisdiction on 6 June 1996, was a practical demonstration of the fact that leave to serve the writ out of the jurisdiction was required under sub-rule (b), and that consequently the period of validity of the writ was six months.
It was of course intrinsic in these submissions that the Arab Business case was wrongly decided.
Mr. Vernon Flynn on behalf of Pisco submitted that the answer to the problem was simple and clear, namely that on a proper construction of Order 6 rule 8(1) in the light of Order 6 rule 6(1), leave to serve a concurrent writ out of the jurisdiction must be obtained within four months of the issue of the original writ, which, until or unless leave to serve a concurrent writ is sought and granted, is only valid for service for four months, having regard to endorsement "not for service out...
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