#5044 - Tatry - Conflict of Laws BCL

Tatry (1994)

Facts

In September 1988 a cargo of soya bean oil belonging to a number of owners (hereinafter "the cargo owners") was carried in bulk aboard the vessel Tatry, belonging to a Polish shipping company, Zegluga Polska Spolka Alceyjna - referred to in the order for reference as "the shipowners". The voyage was from Brazil to Rotterdam for part of the cargo and to Hamburg for the rest. The cargo owners complained to the shipowners that in the course of the voyage the cargo was contaminated with diesel or other hydrocarbons.

There were three separate groups of cargo owners who all sued separately.

Proceedings by Ship-owners: The shipowners brought an action before the Arrondissementsrechtbank (District Court), Rotterdam against Groups 1 and 3, with the exception of Phibro, seeking a declaration that they were not liable or not fully liable for the alleged contamination.

Proceedings by Cargo-owners: After an unsuccessful attempt to arrest the Tatry in Hamburg, Group 3 brought an action in rem (hereinafter "Folio 2006") before the High Court of Justice, Queens' s Bench Division, Admiralty Court, against the Tatry and another ship, the Maciej Rataj, whose owners are the same as the owners of the Tatry.

The action instituted by the Cargo owners before English Courts claimed damages for breach of contract while the action in Rotterdam by the shipowners was for a declaratory relief.

Questions

Interpretation of “same parties”

For the purposes of the application of Article 21 of the Brussels Convention 1968 (as amended), where proceedings are brought in a Contracting State which involve the same cause of action as prior proceedings brought in another Contracting State, must the courts of the Contracting State second seised decline jurisdiction

(a) only where there is a complete identity of parties between the two sets of proceedings or

(b) only where all the parties to the proceedings in the courts of the Contracting State second seised are also parties to the proceedings in the courts of the Contracting State first seised or

(c) whenever at least one of the plaintiffs and one of the defendants to the proceedings before the courts of the Contracting State second seised are also parties to the proceedings in the courts of the Contracting State first seised or

(d) whenever the parties in the two sets of proceedings are substantially the same?

Interpretation of “same cause of action”

In relation to the carriage of goods by sea in circumstances where goods are discharged in an allegedly damaged condition, does a claim brought by the cargo owners in a Contracting State in respect of such alleged damage in an action which was commenced in rem against either the carrying vessel or a sister ship thereof pursuant to the United Kingdom' s admiralty jurisdiction involve the same parties and the same cause of action for the purposes of Article 21 of the Brussels Convention 1968 (as amended) as in personam proceedings previously brought in another Contracting State by the ship owner against the cargo owners in respect of such alleged damage if the shipowner acknowledges service and procures the release from arrest of the vessel upon provision of security and thereafter

(a) the admiralty action continues both in rem and in personam or

(b) the admiralty action continues only in personam?

Proceedings for “declaration” and “enforcement”

In relation to the carriage of goods by sea in circumstances where goods are discharged in an allegedly damaged condition, if

(i) the shipowner commences proceedings in a Contracting State which involve a claim for a declaration of non-liability to cargo interests in respect of such alleged damage and

(ii) the cargo claimants subsequently commence the proceedings in another Contracting State in which they claim damages against the shipowner for negligence and/or breach of contract and/or duty in respect of such alleged damage to their cargo,

do the latter proceedings involve the same cause of action as the former proceedings for the purposes of Article 21 of the 1968 Brussels Convention (as amended) so that the courts of the latter Contracting State must decline jurisdiction pursuant to Article 21?

Meaning of “related actions”

For the purposes of Article 22 of the Brussels Convention 1968 (as amended):

(a) Does the third paragraph of Article 22 provide an exclusive definition of 'related proceedings?'

(b) In order for the courts of a Contracting State to decline jurisdiction or to stay their proceedings under Article 22, is it necessary for there to be a risk that if the two sets of proceedings are heard and determined separately, this might lead to legal consequences which are mutually exclusive?

(c) If proceedings are brought in one Contracting State in respect of a claim by one group of cargo owners against a shipowner for damage to their portion of a bulk cargo carried under specified contracts of carriage and if separate proceedings are brought in another Contracting State against the same shipowner based on essentially similar issues of fact and law but by a different cargo owner for damage to its portion of the same bulk cargo carried under separate contracts of carriage on the same terms, do these proceedings, if heard and determined separately, involve the risk of giving rise to legal consequences which are mutually exclusive or are they otherwise related actions for the purposes of Article 22?

Holding

Interpretation of “same parties”

Moreover, as the Advocate General noted in his Opinion (paragraph 14), it follows by implication from that judgment that the question whether the parties are the same cannot depend on the procedural position of each of them in the two actions, and that the plaintiff in the first action may be the defendant in the second.

In the light of the wording of Article 21 of the Convention and the objective set out above, that article must be understood as requiring, as a condition of the obligation of the second court seised to decline jurisdiction, that the parties to the two actions be identical.

Consequently, where some of the parties are the same as the parties to an action which has already been started, Article 21 requires the second court seised to decline jurisdiction only to the extent to which the parties to the proceedings pending before it are also parties to the action previously started before the court of another Contracting State it does not prevent the proceedings from continuing between the other parties.

Admittedly, that interpretation of Article 21 involves fragmenting the proceedings. However, Article 22 mitigates that disadvantage. That article allows the second court seised to stay proceedings or to decline jurisdiction on the ground that the actions are related, if the conditions there set out are satisfied.

Lis Pendens – “Cause of action” and “object”

It should be noted at the outset that the English version of Article 21 does not expressly distinguish between the concepts of "object" and "cause" of action. That language version must however be construed in the same manner as the majority of the other language versions in which that distinction is made (see the judgment in Gubisch Maschinenfabrik v Palumbo, cited above, paragraph 14).

For the purposes of Article 21 of the Convention, the "cause of action" comprises the facts and the rule of law relied on as the basis of the action.

Consequently, an action for a declaration of non-liability, such as that brought in the main proceedings in this case by the shipowners, and another action, such as that brought subsequently by the cargo owners on the basis of shipping contracts which are separate but in identical terms, concerning the same cargo transported in bulk and damaged in the same circumstances, have the same cause of action.

The "object of the action" for the purposes of Article 21 means the end the action has in view.

As to liability, the second action has the same object as the first, since the issue of liability is central to both actions. The fact that the plaintiff' s pleadings are couched in negative terms in the first action whereas in the second action they are couched in positive terms by the defendant, who has become plaintiff, does not make the object of the dispute different.

As to damages, the pleas in the second action are the natural consequence of those relating to the finding of liability and thus do not alter the principal object of the action. Furthermore, the fact that a party seeks a declaration that he is not liable for loss implies that he disputes any obligation to pay damages.

In those circumstances, the answer to the fifth question is that, on a proper construction of Article 21 of the Convention, an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.

Lis Pendens between In rem and in personam actions

In Article 21 of the Convention, the terms "same cause of action" and "between the same parties" have an independent meaning (see Gubisch Maschinenfabrik v Palumbo, cited above, paragraph 11). They must therefore be interpreted...