Vitol Energy (Bermuda) Ltd v Pisco Shipping Company Ltd

JurisdictionEngland & Wales
JudgeHirst,Robert Walker L JJ,Harman J
Judgment Date21 January 1998
CourtCourt of Appeal (Civil Division)
Date21 January 1998

Court of Appeal (Civil Division).

Hirst and Robert Walker L JJ and Harman J.

Vitol Energy (Bermuda) Ltd & Anor
and
Pisco Shipping Co Ltd

Jeffrey Gruder QC (instructed by Ince & Co) for the plaintiffs.

Vernon Flynn (instructed by Holman Fenwick & Willan) for the defendant.

The following cases were referred to in the judgment:

Arab Business Consortium International Finance and Investment Co v Banque Franco-TunisienneUNK [1996] 1 Ll Rep 485; [1997] 1 Ll Rep 531 (CA).

Dong Wha Enterprise Co Ltd v Crownson Shipping LtdUNK [1995] 1 Ll Rep 113.

Fremont Insurance Co Ltd v Fremont Indemnity Co [1997] CLC 1428.

Jay Bola, TheUNK [1992] 2 Ll Rep 62.

Nova Scotia, TheUNK [1993] 1 Ll Rep 154.

Service out of jurisdiction — Validity of writ — Whether leave to serve out of the jurisdiction to be obtained within four months of issue of writ — Rules of the Supreme Court, 0. 6, r. 8.

This was an appeal from a decision of Moore-Bick J raising a question on the construction of RSC, 0. 6, r. 8 prior to its amendment on 16 December 1996. Order 6, r. 8 provided (until amended on 16 December 1996) that a writ was valid, where leave to serve out of the jurisdiction was required, for six months (r. 8(1)(b)), otherwise for four months (r. 8(1)(c)). After amendment 0. 6, r. 8(1A) provided that where a writ was issued not for service out of the jurisdiction, a concurrent writ for service out issued within four months would be valid for six months from the date of issue of the original writ.

The plaintiffs were the charterers and the endorsee under a bill of lading incorporating the one year time limit contained in art. III, r. 6 of the Hague Rules. Their cause of action arose on 28 January 1995 and time therefore expired on 28 January 1996. The writ was issued on 19 January 1996 marked “not for service out of the jurisdiction” on the basis that the defendant shipowner's registered office was in Cyprus and leave to serve out of the jurisdiction had not been obtained. On 17 May 1996 (within the four month period of validity in 0. 6, r. 8) the plaintiffs sought an extension of the validity of the writ and leave to serve a concurrent writ out of the jurisdiction. That application was refused because the affidavit in support was defective but a second application dated 23 May 1996 (outside the four month period) was granted by Waller J on 6 June. The writ was served on the defendant in Cyprus on 6 July, within six months of the issue of the writ.

Moore-Bick J set aside the order of Waller J. He considered the decision of Mance J in Dong Wha Enterprise Co Ltd v Crownson Shipping LtdUNK [1995] 1 Ll Rep 113, where an order granting leave to issue a concurrent writ for service out of the jurisdiction had been made just within the four month period, to the effect that the validity of the original writ extended for a period of six months once it was shown by obtaining leave to serve out that the writ was within r. 8(1)(b). However he followed the decision of Waller J inArab Business Consortium International Finance and Investment Co v Banque Franco-TunisienneUNK[1996] 1 Ll Rep 485that a writ marked “not for service out of the jurisdiction” fell within r. 8(1)(c) and ceased to be valid four months after its issue. The plaintiffs appealed.

Held, allowing the appeal:

1. Order 6, r. 8 (before amendment on 16 December 1996) did not require leave to serve out of the jurisdiction to be obtained within four months of the date of issue of the writ. The endorsement ‘not for service out of the jurisdiction’ did not hallmark the original writ as one confined within the scope of r. 8(1)(c), and consequently having no more than four months validity. The question whether or not a writ had six months' validity depended on whether leave to serve out was required. It was premature to seek to determine at the outset whether leave would be required. The critical test was whether it could be demonstrated under r. 8(1)(b) that leave to serve out was required as a matter of practicability, irrespective of the endorsement and at any time prior to the expiry of the six month period. In this case the application on 17 May (within the four month period) demonstrated that such leave was so required, as did the actual grant of leave, albeit outside the four month period. ( Arab Business Consortium International Finance and Investment Co v Banque Franco-TunisienneUNK [1996] 1 Ll Rep 485 overruled, Dong Wha Enterprise Co Ltd v Crownson Shipping LtdUNK[1995] 1 Ll Rep 113approved.)

2. Both sides relied on the 1996 amendment of the rule, but the proper approach in the circumstances was to construe the old rule on its own merits without regard to the amendment.

JUDGMENT

Hirst LJ:

Introduction

This case raises a question of principle concerning the construction of RSC, 0. 6, r. 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 Ltd (“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 its 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 art. III, r. 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 Ince and Co, but the application was refused by Waller J under 0. 11, r. 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 LJ.

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, 0. 6, r. 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–

  1. (a) if an Admiralty writ in rem, for 12 months;

  2. (b) where leave to serve the writ out of the jurisdiction is required under Order 11 or Order 75, Rule 4, for 6 months,

  3. (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 (SI 1989/2427, which came into force on 4 June 1990) omitted the present subr. (a), relating to Admiralty actions, which was inserted later.

Unfortunately, this formulation had caused difficulties in 0. 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 subr. (b) above, both intrinsically and also having...

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