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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bouygues Offshore SA v Caspian Shipping Company & Ors [1998] EWCA Civ 1077 (24 June 1998)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1998/1077.html
Cite as: [1998] EWCA Civ 1077

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IN THE SUPREME COURT OF JUDICATURE QBADF 97/0838/3
IN THE COURT OF APPEAL (CIVIL DIVISION) QBADF 97/0839/3
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION Royal Courts of Justice
ADMIRALTY COURT The Strand
London WC2

Friday 24th June, 1998
B e f o r e:

LORD JUSTICE EVANS
LORD JUSTICE MUMMERY
SIR JOHN KNOX

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BOUYGUES OFFSHORE SA
Plaintiff
- v -

CASPIAN SHIPPING COMPANY
First Defendant
CASPIAN BASIN SPECIALISED EMERGENCY SALVAGE ADMINISTRATION
Second Defendant
THE REPUBLIC OF AZERBAIJAN
Third Defendant
CASPIAN BASIN SHIPPING EMERGENCY SALVAGE
SHAREHOLDERS COMPANY
Fourth Defendant
UTISOL TRANSPORT CONTRACTORS LIMITED
Fifth Defendant
-and-

TRANSNET LIMITED (Trading as Portnet)
First Third Party
BUREAU VERITAS
Second Third Party
- - - - - -
(Handed down Transcript of Smith Bernal Reporting Ltd
180 Fleet Street, London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
- - - - - -
MR N TEARE QC and MR S GAULT (Instructed by Messrs Clyde & Co., Guildford, Surrey GU1 4HA) appeared on behalf of the Plaintiff (Bouygues)

MR S TOMLINSON QC and MR R SOUTHERN (Instructed by Messrs Middleton Potts, London EC1A 7LD) appeared on behalf of the First Third Party (Portnet)

MR A GLENNIE QC and MISS C AMBROSE (Instructed by Messrs Thomas Cooper & Stibbard, London EC3A 2DJ) appeared on behalf of the Fifth Defendant (Utisol)

MR N HAMBLEN QC (Instructed by Messrs Edwin Coe, London EC2A 3TH) appeared on behalf of the Second & Fourth Defendants (Caspian)

- - - - - -

J U D G M E N T
(As approved by the Court )
- - - - - -
©Crown Copyright

LORD JUSTICE EVANS:

1. These are applications for leave to appeal against orders made by three judges in the Commercial Court, Clarke J., Colman J. and Timothy Walker J. Their orders were all concerned with questions as to the exercise of the jurisdiction of the English Court in a case where all or most of the relevant events took place in South Africa. There are also appeals against two final orders in the form of limitation decrees made by Rix J. in proceedings commenced by the two respondents, who were the owners and time charterers of the ocean going tug ´TIGR', respectively

2. We heard submissions from leading counsel for each of the four parties, which were directed to issues raised by the appeals for which leave is sought. Although it was not conceded by the respondents that leave to appeal should be given, it is clear in my view that substantial issues are raised and that leave should be given, together with the necessary extension of time as regards the judgment of Clarke J. in 1996. This enables us to consider the issues in the context of appeals rather than applications for leave to appeal.

3. On 26 June 1994 the barge ´Bos 400' was under tow from Pointe Noire in the Congo to Capetown. The tow line parted in stormy conditions as the vessels were approaching Capetown and the barge was driven ashore onto the rocks at Oude Schip, a little to the south. The barge became a total loss.

4. The barge was registered in France and owned by a French company, Bouygues Offshore S.A. ("Bouygues). The tug "Tigr" was registered in Azerbaijan. Her owners who are Russian or Azerbaijani are known as Caspian, and she was time-chartered to Ultisol transport Contractors Ltd. ("Ultisol"). She was managed by a Dutch company, Marine Management Group BV ("Marine Management") based in Holland. The towage contract was made between Ultisol and Bouygues and was dated 26 May 1994.

5. Bouygues claims damages from Ultisol (towage contractors) and from Caspian (owners) and also from the Cape Town harbour authority, known as Portnet. The latter is alleged to have been negligent in permitting the tug and tow to approach the shore in the prevailing conditions.

6. The procedural history is complicated and the issues raised by the interlocutory appeals are procedural and concerned with the jurisdiction of the Court. Four years after the casualty, no appreciable progress has been made towards resolving the substantive issues, either in South Africa or here. In order to prevent these legal issues from acquiring a life of their own, it is helpful to begin with a summary of what the litigation is about. I recognise that, even though the issues are procedural and therefore ancillary, they may nevertheless be decisive of or affect the parties' substantive rights.

7. Four parties have emerged as the protagonists. Bouygues has suffered the loss of its barge and associated expense which make its total claim, we are told, in excess of £50 million. Bouygues alleges that the master and crew of the tug were negligent in their handling of the tow and the tug and that Caspian, the shipowners, are vicariously liable for their fault. They also allege that Caspian through their managers in Holland misrepresented the capacity of the tug to them, causing them to employ the tug under their towage contract with Ultisol and thus to suffer the losses which they have suffered in consequence of doing so. Similar misrepresentations were made to them, they allege, by Ultisol also, and these are relied upon not only as founding a claim for damages against Ultisol but also as grounds for rescinding the towage contract which they say they were induced to enter into. If the contract is not rescinded, then in general terms Ultisol is or may be exempted from liability for the loss of the barge. Bouygues also claims that the harbour authorities were negligent in causing or permitting the tug and tow to come so close to the shore in the prevailing weather conditions and that Portnet is liable to them in delict or tort.

8. Claims by Bouygues against Ultisol are subject to the terms of the towage contract, unless the contract is rescinded as Bouygues says that it should be. As a general statement of procedural rights which exist in both England and South Africa, each of the defendants to a claim in tort is entitled to recover a contribution towards or even an indemnity against their liability from any other defendant who likewise is liable to Bouygues in tort Finally, Caspian as shipowner and Ultisol as time-charterers are entitled to limit their liabilities under English and South African law, but the statutory provisions are different in the two countries. In England which adopts the 1976 Convention the limit is higher but more difficult for Bouygues to break. In South Africa where the 1957 Convention still applies the lower limit only operates if the defendant shipowner or time-charterer proves that the tug was operated without actual fault or privity on their part or for which they are responsible. English law is regarded as more favourable for Caspian and Ultisol in the present case, which implies that they will find the latter difficult to prove.

9. There is no link with England in any of this apart from the towage contract which is governed by English law and which requires the parties to the contract to submit to the exclusive jurisdiction of the English Courts. That clause exerts a powerful and all but irresistible pressure on both Bouygues and Ultisol to bring their disputes to England. But the English Court has a discretion to decide whether or not the litigation should proceed here, or whether the clause should be enforced by injunction preventing one of the parties from bringing proceedings elsewhere.

10. The terms of the towage contract, so far as relevant, are set out in the judgment of Clarke J. [1996] 2 Ll.R. 140, including clause 25, the exclusive jurisdiction clause, which need not be quoted here (see p.144).

The present situation

11. South Africa Jurisdiction was founded by the arrest of the tug and her bunkers there, in respect of their claims against Ultisol and Caspian, both by Bouygues and, for a contribution or indemnity, by Portnet. Bouygues is unable to proceed with its claim against Ultisol because of the anti-suit injunction ordered by Clarke J. in the first of the English judgments now under appeal. Bouygues has commenced separate proceedings against Portnet, and the Supreme Court of Appeal has now upheld Portnet's right to join Ultisol and Caspian as third parties in these proceedings (case AC 102/95 ref. 214/97). The judgment of Scott JA contains a lucid account of the history of the ´spate of litigation' which has taken place in the two countries.

12. The courts of South Africa, therefore, have jurisdiction over all the issues which arise between all four of the principal parties, and they have confirmed that they will exercise this jurisdiction to the extent that they are called upon to do so. Bouygues is restrained by the (English) anti-suit injunction from proceeding with its claims against Ultisol, but the issue of Ultisol's liabilities in tort or delict, if any, towards Bouygues will arise for decision in the third party proceedings brought against it by Portnet, unless Bouygues' claim against Portnet fails.

13. England All four parties are liable or potentially liable to the jurisdiction of the English Courts. Bouygues, because Ultisol can insist upon compliance with clause 25 of the towage contract, the exclusive jurisdiction clause. Caspian and Portnet, because they can be joined as additional defendants or as third parties to an action brought by Bouygues against Ultisol. There are limits, however, to the power of the English Court to avoid litigation here being a duplication of proceedings in South Africa. Bouygues can be and is restrained from proceeding against Ultisol there, but not against the other parties ; nor can those others be restrained from proceeding against Bouygues to the extent that the South African Courts permit them to do so.

14. Limitation From the commercial viewpoint, this is the central issue. England is substantially the more attractive venue both for Ultisol and for Caspian. They issued limitation proceedings and Rix J. has made declarations in their favour, rejecting Bouygues' application to have the proceedings stayed (the substantive judgments now under appeal). Whilst the decree will be effective as regards all proceedings in this country, if his judgment is upheld, it must be for the South African courts to decide whether the same limits of liability will be recognised there. As regards Ultisol, Bouygues has offered an undertaking that it will not seek to enforce any judgment which it may obtain against Ultisol in South africa (if Clarke J's injunction is lifted) except against the limitation fund duly established here. But no such undertaking is offered as regards Caspian and it follows from this that Caspian remains exposed to the risk that it will be unable to limit its liability under South African law and that the South African courts will not recognise or enforce the English decree.

15. A further possibility is that Bouygues will obtain judgment against Portnet for a sum in excess of the limit, and Portnet will recover a contribution or indemnity from Ultisol which is greater than the English limit, unless that limit is recognised by the South African Court.

16. It is clear, therefore, that to an extent which is bound to be speculative, because the facts have not been established and the South African courts have not pronounced on the limitation aspect, both Ultisol and Caspian will derive a substantial benefit, as regards limitation of liability, if a trial on the merits takes place in England.

Discretion

17. The Spiliada principles which are applied in cases where there was no prior agreement regarding jurisdiction here overlap the corresponding principles applied where such an agreement does exist and the agreement as to jurisdiction is sought to be enforced.

18. Clarke J. was correct in my view to recognise that "the risk of multiplicity of proceedings and any consequent risk of inconsistent decisions on the same facts is a potentially important factor" though he added, again correctly, that each case must depend on its own facts ([1996] 2 Ll.R. at 149). He held that an injunction should be granted for what were, as I read his judgment, essentially three reasons. First, Bouygues could avoid the potential conflict by bringing all its claims in England. Secondly, its claims against Ultisol and Caspian were "intimately connected and should be tried in the same forum" (p.150) and Caspian appeared to have "strong grounds for seeking an order either here or in South Africa that Bouygues should proceed against it here too" (p.149). That of course is what Caspian has wanted ever since English jurisdiction became available to it. Thirdly, the "Portnet factor" (p.150) although of considerable weight was "not sufficient to lead to the conclusion that Bouygues should not be held to its contract" (I add, with Ultisol)(p.152). He reached this conclusion "on the evidence at present before the Court" (p.152). He noted that the Portnet factor includes both the inconvenience to Portnet of having to contest proceedings in England, coupled with the fact that South African is the natural and appropriate forum for determining those issues, which arose exclusively in South African territory, and also the similar considerations which arise in relation to the contribution and indemnity proceedings between Ultisol, Caspian and Portnet (p.152),

19. He envisaged therefore that the disadvantage of multiple proceedings and the risk of conflicting decisions could be minimised, if not avoided altogether, by Bouygues itself, which could bring Caspian (willingly) and Portnet (probably unwillingly) to England, and if Bouygues chose not to do this, then that was not a sufficient reason for not holding Bouygues to performance of its contract with Ultisol.

20. Bouygues and Ultisol were the only two parties who appeared before Clarke J. It is unsurprising that the issue between them was presented entirely in contractual terms, and although the interests or likely interests of Caspian and Portnet were taken into account as fully as the evidence permitted him to do so, he did not purport to exercise any discretion or apply Spiliada principles in relation to them. Spiliada itself was not cited to him and is not referred to in his judgment, and he recognised that the interests of Caspian and Portnet would have to be considered separately, if and when they arose for decision (pages 149 and 150).

21. When those issues did arise, Caspian's attempt to have the South African proceedings against it halted failed (Morison, J. [1997] 2 Ll.R. 485 against which there is no appeal) and the Court's discretion as regards Portnet had to be exercised on the basis that Bouygues was prevented by the injunction from proceeding against Ultisol in South Africa (Colman J. [1997] 2 Ll.R 493).
All four parties were represented at the hearing before Colman J. and in my judgment he was right to suggest that Bouygues should seek leave to discharge or to appeal out of time against the injunction.

22. Similarly, all parties were represented before Timothy Walker J. when he refused to discharge the injunction on the grounds that there had been no significant change of circumstances since it was granted and that Caspian would be deprived of a "legitimate advantage" (the language of Spiliada although the judgment itself was not cited) if it was unable to limit its liability in accordance with the English decree.

Evidence and witnesses

23. Under this heading I include the convenience of factual witnesses, the need to instruct lawyers in one jurisdiction rather than or in addition to those instructed in another, the availability and convenience of expert witnesses, and the general expense and inconvenience for a party of having to attend to proceedings in a jurisdiction other than its own. These factors, it seems to me, are of some weight so far as Portnet is concerned, but not for the other three parties. None of them is based either in England or South Africa. Professional representation and expert witnesses are equally available to them in both countries. Factual witnesses in the case of Caspian and Ultisol include some who are situated "in Europe" rather than in England, and it is suggested that the English venue is more convenient for them. I do not think that this is an important factor in litigation of this sort.

Natural and appropriate forum

24. It has variously been observed that South Africa rather than England is the "natural forum" (per Colman J. at 506 and King DJP) and the "centre of gravity" of the case (per Morison J. at 491 and Comrie J. p.18), and King DJP added that "the clear preponderance of connecting factors, constitute this court the appropriate and convenient forum for the hearing of the pending action" (p.11). These expressions of view are not challenged by Angus Glennie Q.C. on behalf of Ultisol, and in my judgment they cannot be gainsaid. That is not to say that proceedings in England are inconvenient or wholly inappropriate, and this factor which predominates in the absence of any prior agreement as to jurisdiction ( Spiliada) nevertheless is of subsidiary even negligible importance when one party claims to enforce an exclusive jurisdiction clause.

Overall assessment

25. In a situation where all four parties are involved in South African proceedings in which the same issues arise, apart from Caspian's and Ultisol's right to limit their liability under English law, it seems obvious that the disadvantages of multiplicity and the risks of inconsistent findings are present and that Bouygues ought not to be restrained from pursuing its claims against Ultisol there. Those claims are more than intimately linked with the issues that arise between Bouygues and the other parties and between those parties among themselves ; they arise out of the same primary facts.

26.But, on analysis, it probably remains true that the initiative rests with Bouygues, at least so far as Ultisol and Caspian are concerned. If it was to withdraw its claims against them in South Africa, then all matters between them could be litigated here. But this leaves Portnet out of account. It cannot so readily be assumed that Bouygues could disengage from its South African proceedings against Portnet which is Portnet's preferred jurisdiction and the natural and appropriate forum, between Bouygues and Portnet, in any event. But if this is assumed, then the disadvantages for Portnet of being compelled to take part in English proceedings becomes a factor of considerable weight.

27. In my judgment, two questions arise, one a matter of principle. First, should the Court, when deciding whether or not to enforce the exclusive jurisdiction clause by means of an injunction which prevents Bouygues from continuing with its proceedings against Ultisol in South Africa, take into account the effects of such an injunction on persons who are not parties or entitled to enforce the contract containing the jurisdiction clause, Portnet and Caspian here, but who are both necessary and proper parties to the litigation wherever it is held? In my judgment, the clear answer to this question is ´yes'. Clarke J. did so in his judgment and the contrary has not been argued before us. The relevance of the potential effects on third parties has been recognised in other authorities, including The El Amria [1981] 2 Ll.R.119 and Citi-March Ltd v. Neptune Orient Liners [1996] 1 W.L.R. 1367. These are referred to in Mr Edwin Peel's comprehensive article on Exclusive Jurisdiction Agreements [1998] LMCLQ 145 at 199, to which I am indebted.

28. What weight should be given to Bouygues' possibly restricted ability to withdraw from the South African proceedings and litigate solely in England, if it chooses to do so? It seems to me that two matters should be borne in mind. The first is that Bouygues owes its contractual obligations to Ultisol only. It owes none as regards choice of jurisdiction either to Caspian or Portnet. This factor therefore is irrelevant so far as they are concerned. Secondly, the South African Courts' jurisdiction in respect of both Caspian and Ultisol was properly founded there on the presence and arrest of the tug and her bunkers. If Bouygues is required to discontinue its proceedings there, it is being forced to relinquish a right which although not contractual nevertheless is established as a matter of law.

29. The second question is limitation. The accidents of litigation have enabled Caspian and Ultisol to obtain limitation decrees here (Bouygues began English proceedings in order to safeguard itself against possible defences under the limitation (time-bar) clause : it accepted service of the limitation proceedings, understandably, at a time when it was subject to the injunction not to pursue its claims against Ultisol elsewhere). They do have "established rights" (per Timothy Walker J.) which prima facie they are entitled to retain. Any detriment to Ultisol from losing them is limited by the undertakings offered by Bouygues to which I have referred. Even as regards Caspian this factor should not, in my judgment, be given undue weight. The question is not whether its rights under English law will be questioned, rather that the South African Courts may not give effect to them, holding that South African limits apply. But South Africa is the natural forum for the hearing of the dispute, England (as between Caspian and Bouygues) had no connection with it, and Caspian's vessel was arrested in South Africa where the casualty and the relevant events took place, apart from the alleged representations which were made and received elsewhere. In short, Caspian has obtained rights under English law which, if they are not recognised and enforced in South Africa, can be regarded as having been obtained adventitiously and ´on the back of' the injunction obtained by Ultisol with which these appeals are primarily concerned. For these reasons, and taking account of the position of all four parties so far as I am able to do so, notwithstanding the near-conclusive effect of the exclusive jurisdiction clause as between Bouygues and Ultisol, I would hold that no injunction should be granted, or if properly granted should now be discharged, in the circumstances of the present case.

The appeals

30. I agree entirely with the judgment of Sir John Knox and that, for the reasons he gives, the judgment of Clarke J. was undermined by later events and Colman J.'s judgment depended on the premise that the injunction ordered by Clarke J. would remain in place. This also has the effect of making it unnecessary to decide the merits of the appeal against Timothy Walker J.'s judgment even though he also held that, if he did have jurisdiction to consider the matter afresh, he would not have discharged the injunction. The reasons I have given above for holding that no injunction should be ordered suffice to show why I would differ from Timothy Walker J.'s analysis ([1997] 2 Ll.R at 538) and from his view that Bouygues' offer of an indemnity against the consequences of its breach of clause 25, if the proceedings against Ultisol are continued in South Africa, was not relevant to the grant of an injunction against them.

Limitation Decrees

31. Here too I agree entirely with Sir John Knox's judgment. With regard to the construction of Art. 2(1)(a), it seems clear to me that the words "or in direct connection with the operation of the ship or with salvage operations" were added to "occurring on board" in order to take account of factual situations such as arose in The Tojo Maru [1972] A.C. 242 and that they refer to loss of life etc. rather than to "claims".

Conclusion

32. I therefore would extend the time for appealing against the order made by Clarke J., grant leave to appeal against his orders and those of Colman J. and Timothy Walker J. and allow the appeals for the reasons given above. The appeals against the orders of Rix J. in the limitation actions should be dismissed.



LORD JUSTICE MUMMERY: I agree with both judgments and with the orders proposed by Evans L.J.

SIR JOHN KNOX:

I propose to refer to the parties represented before us as “Bouygues”, “Ultisol”, “Caspian” and “Portnet” respectively. It will be convenient to deal with the five applications for leave to appeal against the Orders made by Clarke J., Timothy Walker J. and Colman J. before dealing with the appeals against the Orders made by Rix J. which raise somewhat different issues.

The applications for leave to appeal

Two broad issues emerged in the course of the complex but admirably succinct arguments addressed to us upon the five applications for leave to appeal and the appeals, if leave was granted. Those issues were as follows:-

(1) Is an appellate court, in dealing with appeals from consecutive interlocutory decisions at first instance which have cumulatively resulted in four separate parties of differing domiciles being involved in complex litigation in two jurisdictions, entitled to take a global approach to those appeals or is it bound to treat each appeal on its own separate merits?

(2) What is the effect (if any) of the involvement in the litigation of a third party, itself quite unaffected by an exclusive jurisdiction clause, upon the rights of other parties which are contractually bound by the exclusive jurisdiction clause? In particular should the court’s usual attitude of looking to see whether there is any good reason or strong cause why a party thus contractually bound should not be held to its bargain, be modified through the involvement in the litigation of a party not so bound?

I would answer the first issue by saying that the appellate court can and should look at the global situation in dealing with the several appeals, principally because that is by far the preferable method of solving what are essentially interlocutory and procedural problems. The piece-meal approach, which Mr Glennie for Ultisol invited us to adopt, however much it may lead to a decision which, taken in isolation, can be justified, cannot be allowed to produce a result which departs from what the court perceives to be the overall preferable result. It is not necessary to pursue this aspect in greater detail because, for reasons which will appear, I have reached a conclusion which seems to me to be preferable both on the piece-meal and the global approach.

The appeal against Clarke J’s order of 1st March 1996

It will be convenient to start with the application for leave to appeal and appeal from Clarke J’s order dated 1st March 1996 granting an injunction restraining Bouygues from continuing its proceedings against Ultisol in South Africa. I see no problem in granting leave to appeal notwithstanding the facts, first, that at the time when Clarke J. made his decision Bouygues had no material upon which to appeal and decided therefore not to appeal and, secondly that there was a lapse of over a year before leave to appeal was sought as a result of what Colman J. said, admittedly obiter, in the course of his judgment on 26th March 1997. My reasons are, first, that the appeal is clearly arguable, secondly, the delay is largely explicable on the ground that the basis for the appeal arose gradually and progressively after Clarke J’s decision and, thirdly, a closely similar issue arises in the application for leave to appeal from Timothy Walker J’s decision not to lift the injunction granted by Clarke J. and there is no doubt but that that latter application for leave was in time. No useful purpose would be served by stifling an appeal through refusing leave to appeal out of time when the same basic question is to be raised in another appeal which is itself not out of time and where both are argued at the same time by all parties concerned before this court.

An important feature of Clarke J’s order is that it was in all essentials of an interlocutory nature. I say this for the following reasons. First, the Order itself gave liberty to apply and I interpret that as liberty to apply to vary or discharge the order should circumstances arise justifying such an application. It is not in my view a liberty to apply to work out the consequences of the order made, such for instance as may be given in an administration action or an order for specific performance of a contract for the sale of land.

Secondly, Clarke J. in giving judgment made it clear that his decision was based on the evidence then available, the clear inference being that there was a possibility of matters thereafter occurring which would have a material bearing on the continuation of the injunction he granted. Thus he qualified his basic conclusion that Bouygues should be held to its contract in the exclusive jurisdiction clause by the words “(at least on the present evidence)”.

Similarly, Clarke J. said in relation to the possibility of Bouygues joining Portnet as a defendant to English liability proceedings and Portnet applying to set aside leave to join it to such proceedings “That situation would have to be faced if it arose”. That in my view was a reference to what would need to be done in relation to the issue which Clarke J. was then addressing, should there be an anti-suit injunction, and not the rather jejune observation that Mr Glennie attributed to Clarke J., namely, that the court, to which an application to set aside leave to serve Portnet out of the jurisdiction was made, would have to deal with that application.

The principles regarding an appellate court’s functions regarding interlocutory injunctions were stated by Lord Diplock in Hadmor Productions v Hamilton [1983] 1 AC 191 at 220 as follows:

“An interlocutory injunction is a discretionary relief and the discretion whether or not to grant it is vested in the High Court judge by whom the application for it is heard. Upon an appeal from the judge’s grant or refusal of an interlocutory injunction the function of an appellate court, whether it be the Court of Appeal or your Lordships’ House, is not to exercise an independent discretion of its own. It must defer to the judge’s exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge’s exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it.”

......

“The right approach by an appellate court is to examine the fresh evidence in order to see to what extent, if any, the facts disclosed by it invalidate the reasons given by the judge for his decision.”


This passage establishes what might at first sight seem rather surprising, namely that events occurring after the grant of an interlocutory injunction are capable of leading to the injunction being set aside on appeal. What has to be shown is that the events, which are necessarily contained in additional evidence not before the judge at first instance, have invalidated the reasons given by that judge for the exercise of his discretion. One method of testing this is to see whether the judge would or might probably have made a different order had he been able to predict accurately that which lay in the future when he made his order. What makes the appeal from Clarke J’s order somewhat complex is that he foresaw the possibility of the relevant future events. They were the possibility of Bouygues effectively prosecuting an action against Caspian in England for the loss of its barge BOS 400 and the possibility of Portnet becoming involved as an important party to the litigation regarding the liability for that loss. It is one thing to foresee a future possibility when making an interlocutory order and leave it to be dealt with if and when it happens and quite another thing to make such an interlocutory order on the basis that it is the correct order whether or not the future uncertain event occurs. One highly significant issue on the appeal from Clarke J’s order was which of the two approaches was the one adopted by Clarke J. regarding the two possibilities mentioned above.

Mr Teare for Bouygues submitted that Clarke J. regarded it as probable that Bouygues would for one reason or another bring liability proceedings against Caspian in England in respect of the loss its barge BOS 400 and that this affected his approach to Ultisol’s application for an anti-suit injunction. Secondly, he submitted that Clarke J. regarded it as uncertain whether claims by and against Portnet would proceed in England or South Africa or perhaps in both jurisdictions. In effect Mr Teare submitted Clarke J. side-stepped that possibility and did not deal with it because it was an uncertain future event. Mr Glennie on the other hand, whose argument Mr Hamblen adopted on this issue, submitted that Clarke J. not only contemplated the possibility of Caspian being sued by Bouygues in South Africa and that Portnet would be involved in such proceedings but exercised his discretion, whether to grant the anti-suit injunction to Ultisol, notwithstanding and in the light of these possibilities. In effect therefore on Mr Glennie’s view of the matter there was no change of circumstance in the rejection shortly after Clarke J’s decision by Morison J. of Caspian’s application for an anti-suit injunction against Bouygues nor in Portnet’s involvement in South African proceedings against Bouygues, Ultisol and Caspian. For my part I have no doubt that Mr Teare’s analysis of Clarke J’s judgment is to be preferred. Clarke J’s decision was made before Morison J. refused Caspian’s application for an anti-suit injunction against Bouygues parallel to that granted by Clarke J. to Ultisol and, to put it at its lowest, this decision by Morison J., from which leave to appeal was sought and refused, upset the prospect which Clarke J. contemplated of Bouygues being held to its bargain in clause 25 of Towcon, the English exclusive jurisdiction clause. It also undermined the anticipation that Bouygues would take what Clarke J. described as the “sensible” course of asserting its claims to damages against Caspian in England. Had Bouygues had an injunction granted against it by Morison J. at Caspian’s suit it would have been sensible to prosecute both liability actions against Ultisol and Caspian in the same jurisdiction to avoid the risk of inconsistent decisions in different jurisdictions and the field of choice left open to Bouygues would have been so narrow as virtually to dictate such a step. But once the injunction was refused to Caspian in my view it ceased to be appropriate to regard the prosecution of Bouygues’ liability claim against Caspian in England as sensible. Bouygues had a very strong commercial interest in seeking to obtain a judgment on liability against Caspian liable to limitation (if at all) under the South African regime on the lines of the 1957 Convention on limitation of liability of ship owners rather than under the 1976 Convention which England applies because of the much lower test for avoiding the limit altogether under the 1957 Convention. It would be unrealistic to expect Bouygues not to pursue such a strong commercial interest if at all possible, although there might be obstacles in its path in the shape of its contractual obligations to Ultisol under clause 25 of Towcon. It is for the court to assess in all the relevant circumstances what jurisdictional solution is appropriate rather than to rely upon one or other of the contending parties to do what appears to be sensible.

That raises the other major issue mentioned above, the effect of Portnet’s clear involvement in proceedings in South Africa on important issues of liability and contribution, with the result that the puzzle which the court is required to solve is no longer, as it was before Clarke J., a dispute between Bouygues and Ultisol with repercussions upon Caspian and possible but doubtful repercussions on Portnet but a dispute involving all four parties with clear repercussions upon all four of them. In these latter circumstances I consider that the involvement of the third party Portnet which is not affected by the choice of English law in Towcon, even through the Himalaya clause, as Caspian claims to be, clearly is a factor which has to be set in the scales. Clarke J. did indeed expressly say that what he called the Portnet factor gave him the greatest cause for concern.

In my view the combination of two factors since Clarke J. gave his decision to grant Ultisol the injunction against Bouygues proceeding with its action in South Africa have invalidated Clarke J’s reasons for so doing. Those factors are as follows:

(1) The refusal by Morison J. of an anti-suit injunction to Caspian against Bouygues has radically altered the possibilities of avoiding multiplicity of proceedings with its attendant risk of conflicting decisions. Whereas when Clarke J. gave his decision the possibility which he discerned of a sensible course of conduct by Bouygues was one of all liability issues being decided in England, now the only jurisdiction in which that can be achieved is in South Africa. That is a highly significant change which cuts across Clarke J’s reasoning.

(2) The removal of uncertainties, which existed when Clarke J. granted the injunction, regarding the serious involvement of Portnet in South African proceedings greatly strengthens the Portnet factor as an argument against enforcing the exclusive jurisdiction clause against Bouygues at the suit of Ultisol. It constitutes a special countervailing factor to use Steyn L.J’s phrase in Continental Bank N.A. v Aeakos Compania Naviera S.A. [1994] 1 WLR 588 at 598 and makes it possible to reach the conclusion that there is indeed a good reason for not holding Bouygues to its contractual obligations towards Ultisol.

For these reasons I am of the view that, since Clarke J’s reasoning has been undermined, this court can and should exercise its discretion on the question whether the liability proceedings between Bouygues and Ultisol should be allowed to proceed in South Africa. I believe they should for the following reasons. First and foremost, South Africa is the natural forum for the resolution of the factual disputes regarding liability. Secondly, this is the only way in which to minimise, if not avoid altogether, the risk of inconsistent decisions in different jurisdictions. Thirdly, the argument, which, if taken in isolation is a strong one, that Bouygues should be held to its contractual bargain with Ultisol, is counter-balanced by the fact that Portnet is not subject to any such contractual obligation and cannot therefore be affected by the argument successfully advanced before Clarke J. against Bouygues that it would not be just for it to rely upon arguments regarding multiplicity of proceedings when it could if it chose to do so avoid that multiplicity by suing Caspian and Portnet as well as Ultisol in England.

The principal argument in favour of retaining the injunction restraining Bouygues’ South African proceedings against Ultisol resides in its contractual right to the English limitation regime which it has indeed successfully established before Rix J. This argument largely loses its force in the face of the contractual right to sue in South Africa for breach of the exclusive jurisdiction clause 25 in the Towcon agreement between Bouygues and Ultisol coupled with the undertaking proffered by Bouygues to this court and which should in my view be accepted that if all its claims are subject to limitation Bouygues will enforce any judgment which it obtains against Ultisol in South Africa only against the limitation fund which has been constituted by Ultisol in England. In these circumstances it does not seem to me that Ultisol’s limitation rights, important though they are, can possibly outweigh the other considerations in favour of not continuing the injunction granted by Clarke J. against Bouygues.

I would therefore allow the appeal from Clarke J’s order.

This makes it unnecessary to deal in detail with Timothy Walker J’s refusal to discharge the injunction granted by Clarke J. It also makes it possible to deal quite shortly with the applications for leave to appeal against Colman J’s refusal to set aside the leaves given to Ultisol and Caspian to serve third party notices on Portnet in the English liability proceedings and the applications for leave to appeal against Timothy Walker J’s refusal to stay the English liability proceedings which were originally brought by Bouygues against Ultisol and Caspian as a precautionary measure to avoid being out of time in bringing proceedings should the South African proceedings against those parties not be continued.

So far as Colman J’s refusals to set aside the joinder of Portnet as a third party are concerned, it suffices in my view to say that his decision was founded upon the existence of Clarke J’s injunction against Bouygues’ South African action against Ultisol. Once that is removed, it is to my mind clear that the arguments against exercising discretion to allow the foreigner to be joined as a third party in proceedings in this country become very strong and would have prevailed before Colman J. The multiplicity of proceedings which it was hoped by Colman J. to avoid, would be made far more likely to occur if Portnet were kept as a third party to Bouygues’ English action against Ultisol and Caspian.

The stay of Bouygues’ English action against Ultisol is not resisted if the appeal against Clarke J’s injunction against Bouygues proceeding with its South African action is successful. In the circumstances it is not necessary to consider that further. The stay of Bouygues’ English action against Caspian was still resisted before us even if the appeal against the injunction against prosecuting Bouygues’ South African action succeeds. However the reality is that it is foreseeably the South African proceedings brought by Bouygues that will continue and this court is not in a position to prevent there being substantial proceedings in South Africa, notably those involving Portnet and Caspian, even were it minded to do so. The stay which Bouygues seeks will therefore reduce rather than increase the multiplicity of proceedings. In any event the whole substratum of Caspian’s attempt to ensure that proceedings against it are confined so far as possible to England was undermined when Morison J. refused to grant Caspian an injunction against Bouygues continuing its South African action against Caspian. The differences between the English and South African rules regarding contribution are not in my view of significant weight compared with the great disadvantages in having both an English and a South African action being actively prosecuted regarding Caspian’s liability to Bouygues. So far as Caspian’s entitlement to limitation of liability is concerned it has Rix J’s order and the issue whether that can and should have effect in South Africa is something which should properly be decided by the South African court.

I would therefore allow the appeals against the orders of Colman J. and Timothy Walker J.

Limitation Decrees

I turn now to the appeals from the orders made by Rix J. on 30th April 1997 when he refused to stay Ultisol’s and Caspian’s actions to limit their liability (if any) and granted declarations that their maximum liability (if any) was limited to £521,538.72 plus interest. Bouygues appeals from these orders. Three issues were helpfully identified as arising on the appeal as they did before Rix J. They are as follows:

(1) Whether there is a jurisdictional bar to the grant of a limitation decree unless liability has been established or admitted.

(2) Whether the claim for misrepresentation pleaded by Bouygues in its action against Ultisol and Caspian is a claim subject to limitation.

(3) Whether there should have been granted a stay of Ultisol’s and Caspian’s limitation actions in favour of limitation actions in South Africa.

The jurisdiction point

It was submitted that a limitation decree assumes that there is a liability to be limited both as a matter of language and logic. The appeal to logic suggests that it would be illogical to grant a limitation decree unless and until liability was established. That would be to confuse hypothesis with fallacy. I can see no logical obstacle to the making of an order on a hypothetical basis. Of course if the hypothesis turns out to be falsified by the event the hypothetical order will have been of no ultimate relevance but that does not mean that it may not be of practical utility. There are many examples to be found in the settled practice of the court of interlocutory orders being made upon a hypothetical and provisional basis. Points of law under R.S.C. O.14A, issues as to limitation in the wide sense of a defence based on lapse of time under Limitation Acts, applications to strike out pleadings or parts of pleadings all are conducted on assumed facts. I see no possible logical objection to the court having a discretion to decide an issue of maximum liability before deciding whether there is any liability. Just as there are well-recognised dangers in embarking upon an examination of the law on the basis of assumed and unproven facts, there may well be dangers in some cases in embarking upon an examination of limitation of liability before the existence of the liability is conclusively proved but that merely goes to how such a discretion should be exercised.

It was common ground that neither Merchant Shipping Act 1995 s. 185 nor the 1976 Convention which is scheduled to that Act and is thereby introduced into English law in terms provides a solution to this issue. Equally no authority was cited in this century which decides the point. Rix J. examined the 19th century cases notably Hill v Audus (1855) 1 K.&J. 263 and James v London and South Western Railway Co (1872) L.R. 7 Ex. 187 and in particular the dictum of Kelly C.B. in the latter case, upon which Mr Teare relied before us, that the function of the Court of Chancery under the Merchant Shipping Act, 1854, s. 514 was “merely to determine and distribute the amount of liability; and unless such liability is placed beyond dispute in some irrevocable way before decree no jurisdiction is conferred at all”. Rix J. concluded that this dictum of Kelly C.B., and a similar one by the Chief Baron regarding the jurisdiction of the Court of Admiralty in relation to limitation decrees, was rooted in the detail of the statutory jurisdictions granted variously to the courts of Chancery and Admiralty under the Merchant Shipping Act, 1854, and the Court of Admiralty Act, 1861. Mr Teare joined issue with this view and submitted that what Kelly C.B. said, which Mr Teare accepted was indeed obiter and not binding upon us, was a statement of the proposition, which is still valid today, that issues of limitation and of liability are separate. In my view both those views are correct and I see no inconsistency between them. Kelly C.B. was dealing with the limited jurisdictions conferred upon the courts of Chancery and Admiralty and whether his dictum was strictly correct in relation to those jurisdictions is no longer of significance. There are, as Rix J. mentioned in his detailed examination of the subject, dicta which point the opposite way to Kelly C.B’s view. In any event the older cases were not what Mr Teare principally relied upon in support of his argument that the court has no jurisdiction to grant a limitation decree before liability is established by admission or finding. His principal argument was founded upon the 1976 Convention itself and in particular Art. 13 thereof, which by the first two paragraphs provides for two things. First, there is a bar against any person, who has made a claim against a limitation fund constituted under Art. 11, exercising any right in respect of such a claim against any other assets of a person by or on behalf of whom the fund has been constituted. Secondly, there is provision made for the release of any arrested ship or other property belonging to such a last mentioned person, after a limitation fund has been constituted. Both those provisions in favour of persons by whom or on whose behalf a limitation fund has been constituted, are qualified by Art. 13.3 which reads:

“The rules of paragraphs 1 and 2 shall apply only if the claimant may bring a claim against the limitation fund before the Court administering that fund and the fund is actually available and freely transferable in respect of that claim.”

Much reliance was placed by Mr Teare upon an argument, not advanced before Rix J. and therefore not dealt with by him, based upon the decision of this court in Polish Steam Ship Co. v Atlantic Maritime Co. [1985] 1 Q.B. 41 and in particular the judgment of Eveleigh L.J. The issue there was whether a shipowner, who had constituted a limitation fund well in advance of the making of a limitation decree and had included in the payment in which constituted the fund, not only the capital limitation figure, but also simple interest upon that figure, was entitled to the interest which the interest element of the payment in had earned. It was common ground that the claimants to the fund were entitled to the capital and to simple interest upon it down to the date of the limitation decree and it was common ground that all interest as well as the original capital after the limitation decree belonged to the claimants. What was in issue was the considerable amount, given the large sum of interest originally paid in and the period which elapsed between the payment in and the limitation decree, of compound, as opposed to simple, interest. In relation to that issue an argument was advanced that a shipowner who constituted a limitation fund parted with it once and for all and had no further claim in respect of interest, whether simple or compound, which it later earned. The Convention in question was the 1957 Convention and not the 1976 Convention now in force in the United Kingdom but Art. 5 of the 1957 Convention contained a similar turn of phrase to Art. 13.3 of the 1976 Convention set out above in making the provision for release of arrested ships operate when “a shipowner is entitled to limit his liability ... and ... if it is established that the shipowner has already given satisfactory bail or security in a sum equal to the full limit of his liability under this Convention and that the bail ... so given is actually available for the benefit of the claimant in accordance with his rights”. Eveleigh L.J. at p. 53 said “There may be many claimants. It could be that a limitation action has begun in this country, and there has been a payment into court but the defendants (who may not include the arresting party) dispute the right to limit. It could not in such a case be said that the money in court was “available” for the benefit of the arresting party”.

The argument of Mr Teare, if I understood it rightly, was that the Polish SS decision shows that a limitation fund when constituted is not “actually available” within the meaning of Art. 13.3 until the limitation decree is granted. It is the clear intention of the 1976 Convention that a shipowner who has constituted a limitation fund should be entitled to obtain the release of any vessel that has been arrested and the bar on other actions against him. But, if it were open to a shipowner to obtain a limitation decree before liability was admitted or established, the bars contained in Art. 13.3 and the release of the shipowner’s arrested vessel would not be available even though a limitation decree had been obtained. Therefore the scheme of the 1976 Convention requires liability to be admitted or established before a limitation decree is granted. It does not seem to me that this conclusion follows from the earlier steps in the argument. What does appear from the Polish SS case , if authority is needed for the proposition, is that until both liability is established and a limitation decree granted, the mechanism in the 1976 Convention for protecting shipowners entitled to limit their liability thereunder does not become operational. There is nothing extraordinary in this. No one suggests that a shipowner gets the benefit of the bar on other actions and the release of arrested ships provided for by Article 13.1 and 13.2 until a limitation decree has been granted but it is common practice to constitute the limitation fund well before that decree. So there is, so to speak, a hold-up in the availability of the remedies to shipowners pending the grant of the limitation decree. I am unable to see that there is any fatal infringement of the scheme of the 1976 Convention if there is a further hold-up of the availability of those remedies during such period (if any) as elapses between the grant of the limitation decree and the establishment by admission or determination of the shipowner’s liability. That further delay would be the price the shipowner paid for continuing to contest liability. I therefore see no basis upon which this argument, which was not put to Rix J., should be treated as undermining his decision on this first point.

I need not rehearse in detail the other arguments which Rix J., rightly in my view, relied upon in support of his conclusion. They included the specific provision in Art. 1.7 that “the act of invoking limitation of liability shall not constitute an admission of liability” which shows that a limitation action can properly be started before liability is established and the scheme of the Rules of Court which make it mandatory for a limitation decree to be granted within a very short time frame if there appears to be no defence to the limitation claim. In my view Rix J. was plainly right in his conclusion on this issue and the new argument to the contrary is no more persuasive than were the ones which he rejected.

Is the misrepresentation claim within the 1976 Convention?

The argument advanced to the contrary was in my view based upon a misconstruction of Art. 2.1.(a) of the Convention. That reads so far as relevant as follows:

“... the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

(a) claims in respect of loss of life or personal injury or loss of or damage to property ... occurring on board or in direct connection with the operation of the ship or with salvage operations and consequential loss resulting therefrom.”


It was submitted that for limitation to be available two elements had to be present:

(a) the claims must be in respect of loss of life or personal injury or loss of or damage to property and

(b) the claims must be in direct connection with the operation of the ship.

The second of these seems to me to involve a disregard of the clear grammatical structure of the sentence which in my view requires the phrase “in direct connection with the operation of the ship “to govern the words “loss of life or personal injury or loss of or damage to property” and not the word “claims”. Were it otherwise the word “claims” would also govern “occurring on board” and a claim occurring on board ship would be an eccentricity that should not lightly be ascribed to the authors of and subscribers to the 1976 Convention. The loss or damage that is relied upon in the action by Bouygues against Caspian and Ultisol is particularised in nine sub-paragraphs of para. 52 of the Statement of Claim. It is the same loss which is claimed in the various negligence claims made against Caspian. It is also the same loss that is claimed in misrepresentation, negligence and breach of contract claims against Ultisol. The loss thus pleaded is in each case one which, if established as pleaded, in my view clearly occurred in direct connection with the operation of the tug TIGR and so far as the claims in negligence is concerned the contrary is not contended.

Finally on this issue the parenthesis in the opening phrase in Art 2.1 “Whatever the basis of liability may be” points to the irrelevance of the particular cause of action pleaded and supports the grammatical analysis which I have sought to make above to the effect that it is the loss or damage, and not the claim, that has to be found to occur in direct connection with the operation of the ship. This makes irrelevant the distinction which Mr Teare sought to draw between the way the ship was operated and the way in which the various defendants conducted their several businesses. Here again my conclusion is that Rix J’s decision on this issue was plainly correct.

Should the limitation actions be stayed?

This question has to be approached from a different standpoint to that which faced Rix J. because of the reversal of the grant by Clarke J. of the injunction against Bouygues continuing its South African action against Ultisol and the striking out of the third party notices against Portnet. It is now clear, as it was not before Rix J., that the liability issues will be decided in South African proceedings. On that basis Mr Teare submitted in relation to Caspian that the Spiliada principles of forum non conveniens indicated that the limitation proceedings should also more suitably be tried in South Africa in the interests of all parties and in the ends of justice. So far as Ultisol was concerned Mr Teare accepted that since Ultisol can assert in South Africa its claim to damages for breach of the exclusive jurisdiction clause 25 in Towcon and so it can in that way give effect to its contractual right to limit its liability in accordance with English law under the 1976 Convention if it has such a right, no useful purpose would be served by staying the limitation action against Ultisol. However that concession is not made in relation to Caspian which was not a party to Towcon and has no contractual claim under cl. 25 of Towcon.

As matters stand it is not clear what the South African court’s attitude will be to a claim by Caspian to limit its liability by reference to English law and the 1976 Convention. It is therefore doubtful whether the decree which Caspian obtained from Rix J. will be of any practical significance to Caspian. Mr Teare submitted that that was a reason for not allowing such a decree to stand and that the claim to it should have been stayed. That is a two edged argument for if it is right that the decree which Caspian obtained will be of no significance in South Africa it is not easy to see why the decree should be undone. Secondly, it was contended by Mr Hamblen on behalf of Caspian that the English limitation decree was one which Caspian had valid reasons for wanting to obtain, notably that there was a pleaded reliance by Caspian through the Himalaya clause in Towcon on English limitation rules and that if Ultisol was a claimant the English limitation decree might be highly relevant.

I would accept that neither of the two authorities primarily relied upon against Bouygues on this issue, the Volvox Hollandia [1988] 2 Ll.L.R. 360 or the Falstria [1988] 1 Ll.L.R. 495, is conclusive because neither involved a contest between two jurisdictions which were governed effectively by different limitation conventions. In the Volvox Hollandia , the two jurisdictions involved, England and the Netherlands, both were subject at the time to the 1957 Convention. Whereas in the Falstria although different conventions applied in England and Denmark, the limitation under the relevant convention in Denmark was in excess of the claim so that Danish limitation limits were irrelevant. Neither case is therefore conclusive on this issue but the Volvox Hollandia in particular serves to emphasise, what Mr Teare did not dispute, that the right to limit is a quite separate issue from the issue of liability and that it is the shipowner who has the right to apply to limit. This right is one which he can not be compelled to exercise nor can he properly be prevented from exercising his right by the device of claimants seeking a negative declaration of non-entitlement to limit. Putting those important features, plus the fact that there never was any issue to be decided on limitation, into the scales, I am persuaded that Rix J. reached a conclusion which remains correct although the background against which he made his decision was different from that which now obtains.

For these reasons I would dismiss the appeals against Rix J’s orders.

ORDER: Appeals against the orders of Rix J dismissed. Costs of the appeal: the plaintiffs to have their costs as asked, and Portnet to have their costs as asked as regards the costs below. Bouygues to have their costs of the proceedings before Coleman J and Timothy Walker J as asked, but the order of Clarke J to remain undisturbed. Liberty to apply. Leave to appeal to the House of Lords refused.


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