West of England Shipowners Mutual Insurance Association v Cristal Ltd
| Jurisdiction | England & Wales |
| Judge | Pill L JJ.,Waite,Neill |
| Judgment Date | 19 October 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J1019-3 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBCMF 95/0382/B |
| Date | 19 October 1995 |
[1995] EWCA Civ J1019-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Mr. Justice Waller
Before: Lord Justice Neill Lord Justice Waite Lord Justice Pill
QBCMF 95/0382/B
Mr. Peter Gross Q.c. And Christopher Hancock (instructed By Ince & Co, Knollys House, 11 Byward St, London, Ec3r 5en) Appeared On Behalf of The Appellant
Mr. Adrian Hamilton Q.c. And Jonathan Gilman Q.c. And Mr. Vernon Flynn (instructed By Holman Fenwick And Willan, Marlow House, Lloyd's Ave, London, Ec3n 3a1) Appeared On Behalf Of The Respondent.
NEILL L.J.
Introduction.
The plaintiff in these proceedings is the West of England Ship Owners Mutual Insurance Association (the club). The club claims compensation under an international agreement known as the Cristal Contract, which in broad terms and subject to a number of conditions entitles specified claimants to recover compensation in respect of damage from oil pollution sustained either by the claimant or by a third party to whom the claimant has paid compensation. The compensation is paid out of the Cristal Fund which is intended to be a fund of last resort to which recourse may be had only where compensation from other sources is not available or has proved to be insufficient. Compensation from the Cristal Fund can be claimed only where the oil which caused the pollution was owned by a party to the Cristal Contract.
The Cristal Contract is a contract between Cristal Limited and a large number of companies throughout the world who are engaged in the oil industry. Companies who become parties to the Cristal Contract are known as Oil Company Parties and as parties undertake to become members of Cristal Limited and to contribute to the Cristal Fund. Cristal Limited, which is a Bermudian company, administers the Cristal Contract and the Cristal Fund. Cristal is an acronym for "The Contract Regarding a Supplement to Tanker Liability for Oil Pollution".
The Cristal Contract stipulates that claims are to be brought within a specified time limit. In these proceedings Cristal Limited assert inter alia that the relevant claims by the club were not brought within the time limit and that they (Cristal Limited) have exclusive jurisdiction to determine whether or not a time limit has expired.
In the course of the proceedings Colman J. made an order for the trial of certain preliminary issues relating to the time limit. These issues were tried by Waller J. in January 1995. He gave judgment on 1 February 1995 whereby he held that any determination by Cristal Limited as to whether or not a claim had been made in time could be reviewed by an English Court. In dealing with the questions posed in the preliminary issues he held that the court's power of review was unrestricted and that findings of fact as well as conclusions of law could be challenged. The judgment is now reported — [1995] 1 Lloyds LR 560.
Cristal Limited have now appealed. In order to consider the appeal it is necessary to start by making some reference to the origins of the Cristal Contract and to a number of its terms.
The Origins of the Cristal Contract.
The stranding of the Inverpool in the Ribble estuary in December 1950 and the subsequent damage to the foreshore at Southport caused by the discharge of oil from the stranded tanker exposed some of the problems facing a claimant who had suffered damage from pollution caused by oil and who wished to bring proceedings against s ship owner: see Esso Petroleum Co. Ltd. v. Southport Corporation [1956] AC 218. The Inverpool, however, was only a small tanker of about 680 tons gross. Later disasters were more serious and these culminated in the grounding of the Torrey Canyon off the coast of England in 1967. It became clear that an international regime to cover liability in such cases was required.
In 1969 the International Convention on Civil Liability for Oil Pollution Damage (which I shall call the Liability Convention) was agreed in Brussels. The Liability Convention entered into force in 1975. Following the conclusion of the conference that adopted the Liability Convention, however, concern was expressed that the monetary limits imposed by it might lead to potential claimants being unable to obtain full compensation. It was also felt that the Liability Convention might place too great a burden on ship-owners and that oil importers also should make some contribution. Accordingly in 1971 a further conference was convened which adopted the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (the Fund Convention).
The provisions of the Liability Convention were implemented in the United Kingdom by the Merchant Shipping (Oil Pollution) Act 1971. The Fund Convention was implemented by the Merchant Shipping Act 1974. As at 18 October 1995 the Liability Convention had been ratified by 91 States and the Fund Convention by 66 States.
The Liability Convention introduced a new regime of strict liability in place of liability based on fault. A ship owner is only exempted from liability in a few specified cases, including an act of war or a grave natural disaster or damage wholly caused by sabotage by a third party. The Liability Convention also introduced higher limits of compensation than existed hitherto, and a system of compulsory insurance. Furthermore, victims are allowed to bring legal actions directly against insurers.
The main function of the Fund Convention is to provide supplementary compensation to those who cannot obtain full compensation under the Liability Convention. In addition the Fund Convention contains provisions to indemnify a ship owner for a portion of his liability under the Liability Convention. The Fund Convention is financed by the oil industry.
In the meantime, however, and in anticipation of the Liability Convention and the Fund Convention and their subsequent adoption and implementation, the oil industry itself had introduced a scheme to provide for compensation for the costs of cleaning up oil from oil spills and for damage caused by oil pollution. In 1969 an agreement known as TOVALOP (Tanker Owners' Voluntary Agreement Concerning Liability for Oil Pollution) was made. In 1971 TOVALOP was supplemented by the Cristal Contract. At the time these agreements were made it was not thought that they would be long lasting. In fact, however, due in part to the slow rate of ratification of the Conventions, the agreements remain in place and have been substantially amended.
The Cristal Contract.
Information about the Cristal Contract is set out in the Memorandum of Explanation published by Cristal Limited. As, however, it is necessary to refer in some detail to the Cristal Contract I can omit any further reference to the Memorandum.
I can therefore turn at once to the relevant clauses in the Cristal Contract, which is in the form dated 20 February 1987.
It is recorded in the Preamble to the Cristal Contract that the parties to it are Cristal Limited and various oil companies and, that the purpose of the Contract is (a) to provide compensation to persons who have sustained pollution damage and who have been unable to recover adequate compensation, and (b) to reimburse oil company parties for their contributions to the Fund established under Article 2 of the Fund Convention.
The Cristal Contract contains eleven clauses. I can turn first to some of the provisions in clause IV; at this stage it is sufficient to refer to the following:
" Compensation and Payments
(A) If an incident does not cause pollution damage in a jurisdiction where the provisions of the Fund Convention are in force, but irrespective as to whether the provisions of the Liability Convention or any applicable domestic law are in force, Cristal shall, subject to the conditions and in the amounts set forth in paragraphs (D) and (E) of this clause IV, compensate any person who
(i) sustains pollution damage or
(ii) incurs costs in taking threat removal measures.
(B) If an incident causes pollution damage in a jurisdiction where the provisions of both the Liability Convention and the Fund Convention are in force Cristal shall, subject to the conditions and in the amounts set forth in paragraphs (D) and (E) of this clause IV:
(1) pay an oil company party, an amount equal to the contribution assessed by the Fund or made to the Fund by such oil company party under Article 10 of the Fund Convention, with respect to the amount that the Fund intends to pay or did pay as compensation as a result of an incident; and,
(2) compensate any person who (i) sustains pollution damage or (ii) incurs costs in taking threat removal measures and who would otherwise remain uncompensated.
(C) For the purposes of paragraphs (A) and (B) of this clause (IV), pollution damage shall include amounts paid by a person to compensate another person for pollution damage.
………………………"
I come next to clauses VII and VIII. Clause VII contains provisions relating to the Cristal Fund to which contributions are made by each oil company party to the Contract.
Clause VIII, which imposes time limits for claims, is in the following terms:
" Notice of Claim.
No liability shall arise under clause IV(A) or (B) (2) unless written notice of claim is received by Cristal within two (2) years of the date of the incident giving rise thereto. In the case of a payment to be made under clause IV (B)(1) no liability shall arise...
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