Yangtze Navigation (Asia) Company Ltd v TPT Shipping Ltd

Hearing dates: 3 and 4 July 2024

This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Wednesday 18 September 2024.

Introduction.

This is an application made under CPR Part 11 by the Second Defendant (“ Forests”) and the Third to Fifth Defendants (“ the Exporters”) to set aside service of the claim form issued against them by the Claimants (“ Owners”).

The action concerns claims by the Owners under three letters of indemnity (“ LOIs”) which were provided in the absence of bills of lading relating to New Zealand logs bound for India, whose allegedly lawful holders subsequently made misdelivery claims against the Owners and made various ship arrests in support.

The Owners' claims relate to three shipments in late 2019 and early 2020 carried onboard the Owners' vessels pursuant to three charterparties (“ the Charters”).

The LOIs were in the Club-recommended form, were expressly subject to English law and contained the usual London jurisdiction clause requiring each and every person liable under the indemnity to submit to the jurisdiction of the High Court.

Claims under the LOIs were made against their nominal giver, the First Defendant (“ Shipping”), which was placed into voluntary administration on 20 October 2020 and is now in liquidation.

The underlying claim by the Owners is that Shipping was the agent for one or more of the other Defendants, who are now alleged to be liable as principals to the LOIs. Those other Defendants now challenge the jurisdiction of the English court to determine the Owners' claims. It is common ground that the central question is whether, as the Defendants allege, there is no sufficiently good arguable case that they were indeed principals to the LOIs.

There is also an issue as to whether the Owners have lost any right they had to sue these Defendants by reason of pursuing Shipping, under the doctrine of merger or election.

The legal tests in relation to service outside the jurisdiction.

Mr Young KC, who appeared for the Owners, very helpfully made clear at the beginning of the hearing that he was only in fact relying on Part 6.33 of the CPR. I am grateful for that helpful clarification.

Part 6.33 provides as follows:

“ Service of the claim form where the permission of the court is not required – out of the United Kingdom

6.33…

2B) The claimant may serve the claim form on a defendant outside the United Kingdom where, for each claim made against the defendant to be served and included in the claim form—

(a) the court has power to determine that claim under the 2005 Hague Convention and the defendant is a party to an exclusive choice of court agreement conferring jurisdiction on that court within the meaning of Article 3 of the 2005 Hague Convention;

(b) a contract contains a term to the effect that the court shall have jurisdiction to determine that claim; or

(c) the claim is in respect of a contract falling within sub-paragraph (b).”

Part 11 provides that the Defendant may apply to set aside service of the claim form if the relevant jurisdictional gateway is not satisfied.

The relevant legal principles were common ground between the parties.

I start with the leading decision of the House of Lords in Seaconsar v Bank Markazi [1994] 1 AC 438. The headnote to that decision records the following holding:

“Held, allowing the appeal, that in considering whether the jurisdiction of the court had been sufficiently established under one or more of the paragraphs of R.S.C., Ord. 11, r. 1(1) the standard of proof was that of the good arguable case; but that in respect of the merits of the plaintiff's claim under rules 1(1) and 4 it was sufficient for the plaintiff to establish that there was a serious issue to be tried in that there was a substantial question of fact or law or both arising on the facts disclosed by the affidavits that the plaintiff bona fide desired to have tried; that the plaintiffs' asserted cause of action gave rise to serious issues to be tried; and that, no question arising as to the jurisdiction of the court, they should have leave to serve the proceedings out of the jurisdiction”.

More recently, in relation to the approach to the establishment of the jurisdictional gateway and the approach to whether the Claimant had established a good arguable case in this regard, it was agreed that on a jurisdictional application such as this one, the correct approach was that adumbrated in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV and ors [2019] EWCA Civ 10. In that case, the Court of Appeal said the following:

“70. An opportunity to clarify the test arose in Goldman Sachs. Lord Sumption (giving a judgment with which Lord Hodge, Lady Black, Lord Lloyd-Jones and Lord Mance agreed), essentially repeated his formulation in Brownlie. To the extent that there was disagreement in Brownlie about the reformulation of the Canada Trust test the Supreme Court has now spoken with a single voice and the route forward lies with that reformulation. In paragraph [9] Lord Sumption stated:

“9. This is, accordingly, a case in which the fact on which jurisdiction depends is also likely to be decisive of the action itself if it proceeds. For the purpose of determining an issue about jurisdiction, the traditional test has been whether the claimant had “the better of the argument” on the facts going to jurisdiction. In Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192, para 7, this court reformulated the effect of that test as follows:

“… (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”

It is common ground that the test must be satisfied on the evidence relating to the position as at the date when the proceedings were commenced.”

71. Any dispute about whether the three-limbed test is obiter has accordingly now vanished. The test has been endorsed by a unanimous Supreme Court. But the Court has not gone further than in Brownlie and has not expressly explained how the test works in practice nor as to what is meant by “plausible” nor how it relates to “good arguable case” nor how the various limbs interact with the relative test in Canada Trust.

G. How to apply the three-limbed test in Goldman Sachs

72. Notwithstanding, when one stands back in order to determine what was sought to be achieved and when one takes into account pre-existing case law which was not in question in Brownlie and in Goldman Sachs, it is in my view possible to make sense of the new, reformulated, test.

Limb (i)

73. It is in my view clear that, at least in part, the Supreme Court confirmed the relative test in Canada Trust. This is plain from the express endorsement of that test in Brownlie and nothing in Goldman Sachs detracts from that analysis but on the contrary operates upon the basis that Brownlie was correct. The reference to “a plausible evidential basis” in limb (i) is hence a reference to an evidential basis showing that the Claimant has the better argument. It is perhaps relevant that in the Court of Appeal in Brownlie Arden LJ expressly linked the formulation of Lord Justice Waller in Canada Trust with a concept of relative plausibility (ibid paragraph [23]). The use of “plausibility” as a guiding relative principle in Brownlie and in Goldman Sachs was not therefore a novelty plucked from a jurisprudential void.

74. What is the correct name for the test? In Aspen Underwriting Ltd v. Kairos Shipping Limited [2017] EWHC 1904 (Comm), on appeal [2018] EWCA Civ 2590 (“ Aspen”), the Court of Appeal construed Brownlie as endorsing the “good arguable case” test which boiled down to who had (relatively) the better of the argument (ibid paragraph [34]). Aspen was however heard before the judgment in Goldman Sachs was handed down, and, even though it was handed down afterwards, it does not take account of that judgment. It is notable that in Goldman Sachs the Court does not use the terminology of “good arguable case” save in respect of limb (iii) where it is combined with plausibility. In limb (i) – which is the basic test – the test is plausibility alone. Yet it is true (as the Court of Appeal accepted in Aspen) that in the Supreme Court judgments the Court was seeking to restructure the good arguable case test. In my view, provided it is acknowledged that labels do not matter, and form is not allowed to prevail over...