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OUTER HOUSE, COURT OF SESSION
[2007] CSOH 57
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P68/07
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OPINION OF LORD EMSLIE
in the Petition of
F G HAWKES
(WESTERN) LIMITED
Petitioners;
against
SZIPT LIMITED, (JIANGSU
METALS AND MINERALS IMPORT AND EXPORT GROUP)
Respondents:
________________
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Petitioners: Howie, Q.C.;
Maclay Murray & Spens
Respondents: D E L Johnston; Brodies, LLP
21 March 2007
Introduction
[1] In
these proceedings the respondents, a Chinese company, seek recall of certain
arrestments which this court authorised in the petitioners' favour on 11 January 2007 by virtue of
section 27 of the Civil Jurisdiction and Judgments Act 1982. That section permits a range of interim protective measures to be
obtained in Scotland
on the dependence of claims pursued in qualifying litigation abroad, and in
this case the disputed arrestments are ancillary to proceedings raised by the
petitioners against the respondents in the courts of France. There the petitioners claim sums approaching
US $2,000,000 in name of freight for the recent carriage by sea of two
consignments of plywood from China
to the UK, and
they do so as assignees of the French owners of the ship in which the plywood
was carried.
[2] Originally
the petitioners, a company based in Wales,
purchased the plywood from a different Chinese company, Jiangsu Sainty
Pro-Trading Company Limited (hereinafter referred to as "JS"). In that connection the petitioners chartered
the vessel by which the plywood was to be carried, but at the same time Bills
of Lading in respect of the cargo were issued by the shipowners to JS as
shippers. Certain disputes then emerged
between the petitioners and JS regarding the quality of the plywood. These are now to be resolved by arbitration
in China, but
following their emergence the plywood was sold on by JS to the respondents
before the ship arrived in UK
waters. The respondents are now holders
of the original Bills of Lading endorsed in blank, and as such holders claim
entitlement to the discharge and delivery of the plywood in Glasgow
where the ship docked. However, no
freight has yet been paid by anyone in that connection. As matters have developed, therefore, the
petitioners as charterers of the vessel have incurred costs in connection with
the voyage from China
to the UK, but
no longer have any apparent right to the cargo itself. On the other hand, the respondents bear to
have acquired title to the cargo from JS, without either of these companies
having paid anything towards the cost of carriage.
[3] Since
the plywood arrived in Glasgow, the
petitioners have made several different attempts to assert or secure such
rights as they may have. On 1 December 2006 they commenced
an action of damages against JS and the respondents, alleging breach of
contract and fraud, and arresting the plywood both to found jurisdiction in Scotland
and on the dependence of the claim.
After sundry procedure these arrestments were of consent recalled on 6 December 2006, and that action
thereupon came to an end. The
petitioners then sought to assert a lien over the plywood, purporting to
instruct the shipowners that it must not be discharged from the vessel except
upon receipt of the outstanding freight. JS and the respondents promptly raised
proceedings in this court against the shipowners and the petitioners, seeking
declarator of ownership of the cargo coupled with interim possession and interdict.
On 7 December 2006 these proceedings were settled on formal undertakings
being given that neither of the defenders, nor their agents, servants or anyone
on their behalf, would assert a lien over or otherwise seek to interfere with
the discharge of the cargo. The plywood
was thereupon discharged from the ship, and is now held by agents for the
respondents in a warehouse in Glasgow. Taken in conjunction with the French
proceedings, the present petition represents the petitioners' third attempt to
protect or secure such rights as they may have.
[4] On
11 January 2007 the
petitioners' motion for warrant to arrest the plywood in Glasgow
on the dependence of their assigned French claim was granted ex parte. In asking the court to recall the arrestments
laid on pursuant to that warrant, the respondents' primary contention is that the
petitioners cannot demonstrate a sufficient prima
facie case on the merits of the assigned claim for freight which they are
pursuing in the French courts. Since the
decision of an Extra Division in Advocate
General for Scotland v Taylor 2004 S.C.339, it has been necessary
for applicants for such warrants to demonstrate a prima facie case on the merits of their substantive claim. In Gillespie v Toondale Limited 2005 CSIH 92, another Extra Division took the
opportunity of underlining the high standard which must be attained in order to
set up the necessary prima facie
case. In delivering the opinion of the court,
Lady Cosgrove (at paragraph 13) expressed agreement with certain
earlier observations of Lord Drummond Young in Barry D Trentham Ltd v Lawfield
Investments Ltd 2002 S.C.401, to the effect that nothing less than a "good
arguable case" would suffice, and that that might be difficult to identify in
the face of an apparently substantial defence.
Her Ladyship then went on to say:
"....it is in our
opinion necessary for the court at the stage of a motion for recall to consider
the pleadings as a whole, both the pursuer's averments and the defence stated,
and the submissions made by both counsel to determine whether, in all the
circumstances, inhibition is appropriate on the basis of the existence of a prima facie case. We also agree that the prima facie test is a substantial hurdle for the pursuer to
surmount. It is not sufficient for him
to advance a colourable case. Grant of
judicial security and the serious interference with the defenders' property
warrants the application of a higher test.
Where, as in the present case, the defence amounts to a denial of the
existence of an oral contract of the nature averred by the pursuer, the court ought
only to grant diligence if the pursuer's averments are both cogent and
convincing. Our law now recognises the
potential for harm through unwarranted diligence and for abuse based on a
pretended or imagined debt. The ease
with which a superficially valid summons can be presented is self-evident. The safeguard now imposed is the requirement
of judicial assessment of the validity or otherwise of the pursuer's
claim. It is for the pursuer to
demonstrate good cause for the remedy he seeks".
Submissions for the respondents
[5] In
submitting that the applicable test or hurdle had not been surmounted in the
present case, counsel for the respondents recognised that since the merits of
the French action raised issues of French law, and also since the parties here
held conflicting affidavits from apparently reputable French lawyers in that
regard, it would not be possible for this court to reach any definitive
conclusions on these matters at this stage.
Nevertheless, it was submitted, the petitioners plainly faced severe
difficulties in bringing home their claim, and in particular in overcoming the
substantial lines of defence which were available to the respondents. It was legitimate and important for the court
to take these difficulties into account for present purposes, and in counsel's
submission the court should conclude, either
that the petitioners had not made out a prima
facie case sufficiently strong to meet the test desiderated in Gillespie, or at least that the evident precariousness of the petitioners'
claim should weigh heavily in favour of the respondents on an assessment of the
balance of convenience.
[6] The
main problem areas to which counsel drew attention in this context may be
briefly summarised as follows:
(i) Since there was no evidence that JS had
directly submitted themselves to the special jurisdiction clause in either of
the relevant Bills of Lading at the time of issue, it was at the very least
unclear whether the French courts had jurisdiction to entertain the
petitioners' assigned claim for freight.
The only signature for JS appeared to have been adhibited at the time
when the Bills of Lading were later endorsed and, according to the affidavits
lodged on the respondents' behalf (productions 7/20 and 7/26), this was in
French law insufficient.
(ii) Having received full payment of the hire
due by the petitioners under the charterparty, there was no obvious basis on
which the cedent French shipowners could be thought to have a valid claim for
freight against the respondents or anyone else.
The point was clearly made at paragraphs 13ff. of the affidavit No.
7/20 of process, and in counsel's submission it was inconceivable that the
shipowners could now maintain a claim for freight over and above the hire which
they had already received. According to
counsel the same services were involved, and it would amount to unjustified
enrichment if the shipowners could claim payment twice over.
(iii) In the course of November and December
2006, the petitioners (or their agents) had on several occasions laid claim to
having already paid the freight in question.
Such claims were first made by Alani Shipping GmbH, a firm of agents and
brokers based in Germany. At this time they held themselves out as agents for inter alios the petitioners, but in the
same context claimed to have been the charterers of the vessel and thus the
carriers for the voyage. In mid-November
2006, responding to these claims, JS very fairly offered to reimburse the
freight upon proof that it had indeed been paid. When it then turned out - as was now a matter
of admission - that the petitioners had paid only the hire due under the
charterparty and that no payment of freight had ever been made, JS promptly
withdrew their offer on 2 December
2006. By that stage,
however, the petitioners had repeated the claim regarding payment of freight in
condescendence 9 of the summons in their first Scottish action. For present purposes, according to counsel,
it was highly significant that these claims had turned out to be unfounded, as
indeed had the petitioners' averments of fraud in that first action against JS
and the respondents.
(iv) It was also significant that the
petitioners' attempt to arrest the plywood in early December 2006 had been
abandoned of consent, and that immediately thereafter the petitioners and the
shipowners had illegitimately tried to assert a lien over the goods which they
had then been forced to withdraw. It was
a reasonable inference that in abandoning any claim to a lien the petitioners
and the shipowners recognised that they had no true claim for outstanding
freight at all.
(v) Various purported freight invoices had
been issued in recent months, but none of these was consistent with the
petitioners' French claim as assignees of the shipowners. One such invoice, founded on in the French
proceedings, was issued on 30 November 2006 by Alani Shipping GmbH, but (a) at that time Alani bore to be acting
"for and on behalf of carriers Messrs Alani Shipping Co Ltd" (which company did
not appear to exist), and (b) the invoice was sent to JS in China. On 11
January 2007, a reminder was sent to JS by "Alani Shipping UK, as
agents and brokers only". On the same
date a further invoice was issued by the petitioners to the respondents, long
after the date on which the French proceedings were commenced. In the absence of an appropriate invoice, it
was said, the assigned claim in the French action could not be maintained.
(vi) There was no evidence as to what other
freight had been paid by third parties to the shipowners or to the petitioners
as charterers of the vessel, and thus no way of telling whether, and if so to
what extent, either party might be out of pocket. Had relevant Bills of Lading been issued by
the petitioners as charterers it was conceded that they would have had a valid
claim for freight, but this course had not been taken. It was illogical for the shipowners now to
have a claim for freight where, initially at least, the petitioners as
charterers were shipping their own cargo.
(vii) The claim advanced in the French
proceedings appeared not to be based on ordinary market rates.
[7] In
the whole circumstances, it was said, there had to be serious doubts as to the
validity of the petitioners' assigned French claim, and it could not be said
that the requirement for a "good arguable case" had been satisfied. While it was no doubt true that the
respondents held the original Bills of Lading, as endorsed, and founded on them
in seeking delivery and release of the plywood, it had to be borne in mind that
Bills of Lading were in most instances merely evidence of underlying contract, as
opposed to being contractual documents in their own right:- cf. Cho Yang Shipping Co Ltd v Coral (UK) Ltd 1997 2 Lloyd's LR
641. The question here was not who held
the Bills of Lading, but whether the petitioners could establish a valid claim
for the payment of freight. The present
proceedings were an oppressive attempt by the petitioners to circumvent their
own failure to issue charterers' Bills in this case. They were also an oppressive attempt to
circumvent the Chinese arbitration proceedings which would determine the
petitioners' primary dispute with JS regarding the quality of the plywood.
[8] The
petitioners' arrestments were also bad because the present petition had not
been served or called within the strict statutory time limits laid down by
section 17 of the Debtors (Scotland)
Act 1838. That Act was designed to
protect parties faced with arrestments on the dependence of Scottish
proceedings, and there was no reason in principle why the same protection
should not be available where, under section 27 of the Act of 1982,
arrestments were authorised on the dependence of proceedings abroad. Since fresh arrestments had here been laid on
at intervals of around 20 days, it seemed that the petitioners and their
advisors recognised that section 17 of the 1838 Act did, or might,
apply.
[9] Finally,
so far as the balance of convenience was concerned, the respondents were
incurring significant costs due to the continuing detention of the plywood, and
had been hampered in their attempts to sell it on to third parties. It would moreover be wrong to sterilise the
plywood for what could be as long as one year while the French proceedings
moved towards a determination at first instance. Bearing in mind also the weakness of the
petitioners' substantive claim, the balance of convenience should be held to
favour the respondents.
[10] For all of these reasons, counsel for the respondents invited
me to recall the disputed arrestments and thereby allow his clients
unrestricted access to the plywood which they owned.
The petitioners' response
[11] In response, senior counsel for the petitioners maintained that
his clients had a strong prima facie
case on the merits of their assigned claim for freight, that such defences as
the respondents had advanced were ill-founded, and that in any event the
balance of convenience was strongly in favour of the petitioners where, apart
from the plywood, JS and the respondents had no known assets in the western hemisphere
and satisfactory redress in China could not be assured. For these reasons the respondents' motion for
recall of the arrestments should be refused.
[12] As regards the background circumstances on which counsel for
the respondents had relied, these were largely irrelevant. While the petitioners were in dispute with JS
regarding the quality of the plywood, the present proceedings concerned only
the assigned claim for freight which was being asserted in France. It was now a matter of admission that,
despite erroneous claims in the past, no freight relative to the plywood had
ever been paid. The French shipowners,
by whom the relevant Bills of Lading were issued, had a clear entitlement to
freight, and that entitlement was unaffected by the fact that, no doubt for
practical reasons, they and the petitioners had chosen not to assert a lien in
early December 2006. The invoices and
other communications involving Alani were confusing and contradictory, to the
extent that this court should accord them little or no significance. Alani were at all times acting as agents, and
not as principals, and had done nothing capable of depriving the French
shipowners of their substantive claim to freight. If that claim validly existed, it did not
matter whether, or at what date, or in whose name, invoices had been
issued. Similarly, the fortunes of the
petitioners' earlier action in Scotland
had no legitimate bearing on the validity of the present proceedings. Even if that earlier action had proceeded on
a wrong basis, that did not prevent the petitioners from asserting a valid
claim now. If the shipowners were
entitled to claim payment of freight, then notwithstanding any past errors or
confusion the present proceedings could not be regarded as oppressive in any way. The broad issue here was whether it was
equitable for the respondents to take the cargo without any freight being paid
by themselves or by JS. Significantly,
the respondents conceded a liability to pay freight if the petitioners had
issued charterers' Bills in their own right, or if the petitioners had
themselves paid freight, and against that background the defence which they now
advanced against the claim of the cedent shipowners appeared artificial.
[13] Section 27 of the 1982 Act provided for certain interim remedies in clear terms. It was accepted that the granting of such
remedies must now be justified along the lines discussed in Taylor and Gillespie, with the onus
being on an applicant to make out a sufficient prima facie case. There was
perhaps a tension between the views of the two Extra Divisions but, even taking
the relevant test at its highest, applicants like the petitioners did not have
to establish a likelihood of success in their claim. Measurable, or arguable, prospects were sufficient,
and it was in the end a matter of degree whether a stated defence appeared
strong enough to overcome any prima facie
entitlement which might otherwise be acknowledged in the applicant's
favour. In a given case, the parties'
prospects might appear to be evenly balanced, and a good arguable defence might
then co-exist with a good arguable claim.
A complication arose in a case like the present where the court could
not definitively resolve a dispute involving foreign law, but even here it was
ultimately for the court to assess the situation as best it could. It was perhaps only where a defence seemed
likely to succeed that the prima facie
merits of the initial claim might be judged inadequate. Accordingly, the underlying plausibility of
the substantive claim which the petitioners sought to assert, supported by
affidavits from a reputable French lawyer, should be held to satisfy the test
laid down in Taylor and Gillespie notwithstanding the fact that the respondents
held competing affidavits supportive of their own position.
[14] On the jurisdiction issue, it was submitted that the rules of
international comity did not permit the courts of one country to review the
jurisdiction of the courts of another.
This was clear from the decision of the European Court of Justice in Turner v Grovit 2005 1 A.C.101 (esp. at paragraphs 20-28), and from the
earlier opinion of Hirst J. in Overseas
Union Insurance Limited and Others v New
Hampshire Insurance Co 1992 1 Lloyd's LR 204. According to counsel, this court was thereby
precluded from considering the jurisdiction issue which the respondents had
sought to raise. Failing that, all that
could be said was that a live issue arose on jurisdiction which this court
could not determine at the present time.
Each party's position was supported by reputable affidavits, and it
could not be said that the prima facie
strength of the petitioners' contentions was any less than that of the
respondents. The affidavits relied on by
the petitioners cited apparently supportive case law, and also suggested
reasons why the views of the respondents' principal expert were unsound. Accordingly, the petitioners' prima facie case could not be disturbed
on jurisdictional grounds.
[15] Turning to the substantive merits of the claim for freight, the
respondents' attack was based on an obvious fallacy. The contracts of charterparty and
affreightment were separate and distinct, and had been entered into by the
shipowners with different parties for different purposes. It was therefore illogical for the
respondents to submit, as they did, that receipt of hire under the charterparty
somehow precluded any recovery of freight.
It was also illogical for the respondents to found on the Bills of
Lading for discharge and release of the cargo while at the same time denying
the existence of any financial obligation in return. Since these were owners' Bills, the cedent
shipowners were legally entitled to claim freight from the "merchants" as
therein defined. That term included the
shippers and receivers of the relevant goods, as also the consignors and
consignees, the holders of Bills of Lading, the carrier of the cargo and any
person entitled to possession thereof.
JS and the respondents both fell squarely within these categories, and
since they relied on the Bills of Lading they could not simply walk away from
liability for the payment of freight.
The weakness of their position was demonstrated by the concession that
freight would have been payable if charterers' Bills had been issued by the
petitioners themselves, and by JS's offer to reimburse such freight as the
petitioners might already have paid.
[16] Put simply, the shipowners were entitled to freight for the
carriage of the plywood, irrespective of the existence of the charterparty, and
the assignation had now carried the benefits of the contract of carriage to the
petitioners. In a UK
context, it was well established that shipowners who had already received hire
under a charterparty could nonetheless still recover freight from third parties
under separate contracts. There might be
an implied obligation to account for some or all of such freight to the
charterer, but in a question with the third parties the shipowners' rights were
clear. These principles were discussed
in Carver on Bills of Lading, 2nd ed., esp.at paragraphs
4-046/7 read together with the supporting footnotes. Similarly, under sections 2 and 3 of the
Carriage of Goods by Sea Act 1992, any party claiming rights by virtue of Bills
of Lading or other shipping documents automatically incurred corresponding
liabilities which would include a liability for freight. In the context of international carriage by
sea, which was generally regulated by rules of universal application, it was
more than likely that the petitioners' claim would be upheld in the French
courts along similar lines. For present
purposes, moreover, the petitioners could rely on the usual presumption, in the
absence of proof to the contrary, that foreign law was identical to Scots law
in a given context. For all of these
reasons, the existence of the charterparty, and of any payment thereunder, were
irrelevant considerations. The cedent
shipowners, and hence the petitioners, had a good claim for freight against JS
and the respondents, and the latter had failed to show otherwise.
[17 ] While in many cases Bills of Lading might only be evidence of an
underlying contractual relationship, that clearly would not be the case where
they passed through the hands of successive endorsees. In a question with such holders in due
course, the Bills would often be the only evidence of the rights and
obligations of parties. This was
affirmed by the Privy Council in George
Kallis (Manufacturers) Ltd v Success
Insurance Ltd 1985 2 Lloyd's LR 8 where, at page 11, Lord Roskill
said:
"...the only
contracts of affreightment to which the buyers were parties were those
contained in or evidenced by the Bills of Lading. The buyers were the endorsees of the Bills of
Lading and as stated in Scrutton on Charterparties (19th ed. (1984)
p.55):
'....The Bill of
Lading ...in hands of an endorsee is the only evidence'".
[18] As regards the balance of convenience, it was accepted that the
French action might not be resolved in the course of this calendar year. Nevertheless, the factors favouring the petitioners
were still much stronger than those favouring the respondents. It was not clear how far the respondents had
gone in negotiating resale contracts for the plywood, whereas there was no
doubt that recall of the arrestments would leave the petitioners with no worthwhile
means of working out their remedy against either of the Chinese companies. Despite JS's apparent willingness to
reimburse pre-paid freight in the past, the two companies now pointedly
declined to make any offer of payment or security.
[19] For all of these reasons, the prima facie merits of the petitioners' position, which were
accepted by the Lord Ordinary on 11 January
2007, had not been disturbed.
The petitioners had a good claim for freight, especially against the
respondents as owners of the cargo and holders of the endorsed Bills of Lading,
and it would be wrong for this court to recall the arrestments, and deprive the
petitioners of essential security, where such a decision would be irretrievable
and would probably render any French decree unenforceable. JS and the respondents could readily obtain
release of the plywood by tendering alternative security of some kind, but
while they chose not to do so the arrestments should remain in place.
[20] Turning finally to the respondents' argument based on section
17 of the Debtors (Scotland)
Act 1838, senior counsel submitted that that statutory provision was clearly
disapplied in this case by its own terms.
It was expressly directed towards arrestments used in connection with
Scotish summonses which would call in court, and the second time limit could
not operate in any other context. It
could not sensibly be read as applicable to a petition under section 27 of the
1982 Act, which would not call and was ancillary to proceedings in a foreign
court. Section 27 was a special
provision in its own right, and it was significant that no equivalent time
limit had been enacted at that time. In
any event, the second time limit in section17 of the 1838 Act was incompatible
with modern notice periods where writs had to be served abroad.
Discussion
[21] In approaching this matter I begin by identifying what seems to
me to be the essential situation of each of the principal dramatis personae. The petitioners, as I understand it, were the
original purchasers of the plywood, but have now lost any right of ownership to
the respondents following the emergence of the dispute with JS. They were also time charterers of the French
vessel in which the plywood was shipped from China
to the UK, paying
hire to the French shipowners in that connection. For their part, the shipowners not only
entered into the charterparty with the petitioners, but also entered into contracts
of carriage with regard to the plywood, as evidenced by the Bills of Lading
which were issued to JS as shippers. In
normal course such contracts of carriage would be expected to involve the
payment of freight. JS were the original
sellers and shippers of the plywood, and the party in whose favour the relevant
Bills of Lading were issued by the shipowners.
They had no interest in the charterparty, and judging by some of the
correspondence produced may have had no knowledge of its existence. The respondents, finally, are now the owners
of the plywood pursuant to contracts concluded with JS in late
November 2006. They also became the
holders of the original Bills of Lading, endorsed in blank, and have relied on
these Bills in demanding the discharge and delivery of the cargo in Glasgow.
[22] Interestingly, the contracts by which the respondents purchased
the plywood from JS (productions 7/3-3 and 4) specifically identify the Bills
of Lading in Clause 9, and there provide that "...The Buyer will take the
delivery by the original B/L with Seller's assistance". Furthermore, Clause 4 of each contract
provides that:
"The goods are
transported (to the UK)
by the Seller and the freight and charges incurred before Buyer's taking
delivery pre-paid by the Seller. The
Buyer shall pay the Seller for the abovementioned pre-paid freight and charges
45 days after the Buyer's taking delivery".
These arrangements thus proceeded
on the footing that the Bills of Lading would be the controlling documents, and
that a liability for freight and charges undeniably arose. Of further significance in this context are
in my view (i) the respondents' concession that freight would have been due to
the petitioners if they had issued charterers' bills on their own account, and
(ii) the apparent willingness of JS in November 2006 to reimburse freight to
the petitioners upon proof of payment.
[23] Against that general background, it is arguably difficult to
see why freight should not be due to the shipowners, as the various produced
documents envisage, or why the respondents as holders of the original Bills of
Lading should now be entitled to uplift the cargo without them or JS having
paid anything towards the cost of carriage.
This is not a trivial matter, for the disputed freight amounts to nearly
US $2,000,000. It is also arguably
hard to see why the existence of a charterparty of which JS may have been
unaware, and in which they had no interest, should somehow nullify rights and
obligations arising under contracts of carriage to which JS, and through them
the respondents, are parties. However,
recognising that broad general considerations of this kind cannot be regarded
as determinative for present purposes, I now move on to a detailed examination
of the particular facts and issues which lie at the heart of the parties'
dispute.
[24] In the leading case of Taylor, the Extra
Division affirmed the requirement for a judicial act in connection with the
granting of warrants for diligence, and (at paragraph 34) said:
"We have in mind
that the applicant for a warrant or for letters of inhibition need only
establish a prima facie case on the
merits of the action. The necessity for
diligence need not be demonstrated although it may no doubt assist the grant if
it is...."
In the later case of Gillespie, I do not understand the other
Extra Division to have intended to depart from Taylor and set
up a new and higher test of their own.
The better view, as it seems to me, is that in Gillespie the court was simply concerned to explain the earlier
decision, and in particular to emphasise the need for a "good arguable case" in
order to satisfy the relevant test. The court
was there also concerned with the effect of an apparently substantial defence,
making it clear (through the quoted words of Lord Drummond Young in the earlier
case of Trentham) that:
"The existence
of a defence may cast doubt on the pursuers' prospects of success in the
action. If the doubt is sufficiently
substantial, it may not be reasonable to grant judicial security in respect of
the pursuers' claim".
As pointed out at paragraph 13
of the opinion of the court, the mischief to be avoided was "...the potential for
harm through unwarranted diligence and for abuse based on a pretended or
imagined debt". But although hostile to
diligence on a summons which was only superficially valid, the court confirmed
that even in the face of a positive defence diligence might still be granted
"...if the pursuers' averments are both cogent and convincing".
[25] On no view of these observations can the court in my opinion be
understood as laying down any supposed principle that the existence of some
positive defence necessarily precludes the granting of diligence. Clearly the greater the apparent strength of
a defence, and the more it appears to be vouched or supported by documentary or
other evidence, the more difficult it may be to hold that the claimant
nevertheless has an arguable prima facie
case. But the assessment will always be
one of fact and degree, and in my view senior counsel for the petitioners was
well-founded in submitting that, in a given case, the contentions of the parties
may be evenly matched, with prima facie
arguability being established on either side.
The pursuers' position must no doubt be scrutinised with extra care
where a positive defence is advanced, but in the end the question for the court
remains whether a good arguable case has been made out. I am inclined to think that in his remarks in
the Trentham case about the effect of
"...an apparently substantial defence", Lord Drummond Young may have
had in mind the sort of defence which, on an assessment of all of the
information available to the court, seemed likely to prevail.
[21] With these considerations in mind, I turn to the necessary
appraisal of the French proceedings and of the competing affidavits which have
been produced on either side. Clearly I
cannot reach any definitive conclusion on issues which involve French law, nor
am I in a position to judge whether the approach of one French legal expert
will in the end be preferred by the court at Le Havre
to that of another. Nevertheless this court
cannot properly exercise its discretion under section 27 of the 1982 Act
without making the best assessment it can of the respective strength of the
parties' contentions. In that context,
as it seems to me, I can and must take full account of the significant disputes
which are focused in the various affidavits, especially on the issues of
jurisdiction and alleged double recovery.
On the other hand, I cannot close my eyes to the fact that the French
litigation has only just been commenced, with the result that the primary focus
for present purposes must be on its underlying merits rather than on any
potentially remediable deficiency in current pleadings or evidence. Furthermore, in my view, I am entitled to
take account of any obvious strength or weakness in the arguments advanced on
one side or the other, and to consider how far, and with what conviction, each
side appears able to respond to material points put forward by the other. For instance, if one expert plainly had no
credible answer to a vouched proposition advanced against him, that might
significantly diminish, or even negate, the prima
facie validity of his clients' case.
[27] Against
that background I have reached the clear conclusion that, despite the
challenges which are raised in the affidavits by Maîtres Simon and Pincemin
(productions 7/20 and 7/26), the petitioners must still be regarded as
having a "good arguable case" along the lines supported in the affidavits of
their expert Maître Taÿ Pamart (productions 6/4 and 6/10). On the validity of the cedent shipowners'
claim for freight, I do not think that any convincing ground has been advanced
as to why, in the peculiar circumstances of this case, JS and the respondents
should be held to have no prima facie
financial liability at all. Maître Simon's
approach on this point does not strike me as being obviously more logical or persuasive
than that of Maître Taÿ Pamart, and in that context I note the firmness of the
vouched rebuttal which is contained in the latter's affidavit dated
27 February 2007. Moreover, Maître
Simon's views appear to involve certain apparently questionable assertions of
fact, especially on the petitioners'
alleged status as "consignees" and/or "receivers" of the plywood.
[28] The
disputed jurisdiction point is perhaps harder to assess, since it appears to
involve a technical feature of French law which, as described by Maître Simon,
depends on the correctness and applicability of certain recent judicial
decisions. Again, however, I am
impressed with the firmness of the vouched rebuttal contained in Maître Taÿ
Pamart's second affidavit. According to
him, there is no concept of "stare
decisis" under French law, with the result that Maître Simon's cases may
not be followed by the court at Le Havre. More significantly, however, he identifies a
recent decision of the Cour de Cassation which in his view confirms that, in an
international contract, a special jurisdiction clause forms part of its
"economy" and is therefore binding without explicit acceptance. As against that, I note the wide range of
circumstances in which even Maître Simon concedes that the necessary acceptance
may be inferred, and also the latter's apparent failure in that context to
notice JS's signature and stamp on the reverse of the Bills of Lading. Further, as regards the views expressed by
Maître Pincemin in his affidavit, these would appear to involve drawing
some apparently narrow and technical distinctions, while at the same time (a) identifying
another decision of the Cour de Cassation which seems to confirm that any
necessary special acceptance of a clause may be implied, and (b) acknowledging
that clauses falling within the "economy" of a contract do not under French law
require special acceptance at all.
[29] In the
foregoing circumstances, while I am in no position to judge which of the competing approaches will in the end prevail,
and recognise that any attempt in that direction would be illegitimate, I am
satisfied on a careful appraisal of the available materials that the
petitioners must still be regarded as having a "good arguable case", and that
the respondents' challenges appear insufficiently cogent or convincing to
warrant any different conclusion. Even
if, at best for the respondents, the competing arguments were adjudged equally
plausible, that would not in my view be sufficient to negate the existence of a
"good arguable case" on the petitioners' side.
[30] It is
thus unnecessary for me to reach a concluded view on the petitioners' radical
argument to the effect that this court could not competently embark upon any
review of the jurisdiction of a foreign court.
However, had it been necessary for me to do so, I would have rejected
that argument as unsound. The cases of Turner and Overseas Union Insurance were in my view concerned with direct or
indirect interference with the jurisdiction of foreign courts, and are
therefore distinguishable in present circumstances where no such interference
is in prospect. In any event, I do not
see how this court could properly exercise its discretion under section 27
of the 1982 Act unless any doubt or dispute as to the jurisdiction of the
relevant foreign court could be considered and taken into account.
[31] I have
reached the foregoing conclusions without reference to what might have been the
likely outcome if the parties' dispute had been litigated under the law of Scotland. It is no doubt true that, as senior counsel
for the petitioners reminded me, the general law of a foreign country will,
failing averment and proof to the contrary, be presumed to be the same as our
own. Here, however, both parties proceed
on the footing that French law, and French law alone, is relevantly in issue,
and I have therefore approached matters on that basis. As against that, section 27(2)(c) of the
1982 Act seems to me to require this court to consider a further issue in the
event of the petitioners' prima facie prospects
abroad being sufficiently established, namely whether the disputed warrant for
arrestment "... could competently have been granted in equivalent proceedings
before a Scottish court". I do not think
that this necessarily requires an assumption that Scots law, as opposed to some
applicable foreign law, would apply, but if and to the extent that the position
under Scots law were thought to be relevant I would have little hesitation in
holding that the petitioners had a "good arguable case" in that context
also. In particular, I believe that the
cedent shipowners would have a strong claim for freight against JS and the
respondents under Scots law, notwithstanding the existence of the charterparty,
and furthermore that no material difficulty would arise under Scots law
regarding the applicability of the special jurisdiction clause in the Bills of
Lading.
[32] Turning
to the peripheral arguments advanced on the respondents' behalf, I am unable to
accept that they have any substance. First, on the merits of the claim for
freight, I do not consider that much significance can be attached to the
activities of Alani Shipping GmbH who at all material times seem to have been
acting as agents on behalf of the carriers and others. In my view the errors and discrepancies in their invoices and
correspondence do not go so far as to undermine the prima facie validity of the cedent shipowners' claim to
freight. By comparison with the
essential validity of that claim, I would regard the timing and terms of mere
invoices as secondary considerations. In
an extreme situation, I suppose, problems in these areas might be so serious as
to cast real doubt on the primary entitlement, but I am not persuaded that that
is the case here. Second, I do not think that the respondents' position is much
advanced by the erroneous claims made by Alani and the petitioners in November
and December 2006 to the effect that the freight had already been paid. A similar error appears to arise in the sale
contracts between JS and the respondents, and in any event it is now accepted
that no such payment has been made. That
is therefore simply part of the background against which the prima facie validity of the cedent
shipowners' claim now falls to be judged.
Third, I do not consider that
the respondents gain much from consideration of the petitioners' earlier
actings. It is true that the petitioners
raised and abandoned a different action in December 2006, and thereafter claimed
and abandoned a right of lien which might possibly have been open to them. These actings have caused me to scrutinise
the petitioners' present position with particular care, but in the end I am not
satisfied that they go far enough to disturb the prima facie validity of the assigned claim which they now seek to
pursue. Where the reasons for these
prior actings are not formally before the court, I am not prepared to hold that
the only possible inference to be drawn from the formal undertakings given on 7 January 2007 is that both the petitioners and the cedent
shipowners recognised that no valid claim for freight existed.
[33] Fourth, with reference to the dispute
between the petitioners and JS as to the quality of the plywood, and as to
their respective rights and obligations under the original sale contract, I
regard that as entirely separate from the present dispute which concerns the
entitlement of the cedent shipowners to the payment of freight. I therefore reject the suggestion by counsel
for the respondents that, in some way, these present proceedings are an
oppressive attempt to circumvent the Chinese arbitration by which the other
dispute is (of consent) to be determined.
And fifth, it is in my view
difficult to see why the prima facie
validity of the cedent shipowners' claim to freight should in any way be
affected by extraneous considerations as to its quantification, or as to the
gains or losses which various parties may ultimately have made. In particular, any enquiry into the question
whether the petitioners ended up out of pocket on the voyage seems to me to be
irrelevant to the prima facie validity
of their current assigned claim. Similarly,
in the context of a claim pursued as assignees only, it is in my view idle for the respondents to criticise
the petitioners for failing to issue charterers' Bills on their own
account.
[34] In my
opinion the respondents' argument based on section 17 of the Debtors (Scotland) Act 1838, and their
submissions on the balance of convenience, must also be rejected. As it seems to me, senior counsel for the
petitioners was well founded in his contention that, since the statutory
provision of 1838 applies expressly to domestic summonses which call in court,
it cannot sensibly be held to apply to petitions under section 27 of the
1982 Act which (a) do not call in court, and (b) are ancillary to proceedings
in other jurisdictions. It would have
been open to Parliament to impose some equivalent time limit when enacting
section 27 of the modern statute, but that was not done, and in my
judgment the terms of section 17 of the 1838 Act are self-evidently
incapable of being applied in present circumstances.
[35] As
regards the balance of convenience, while I acknowledge that the continued
detention of the plywood is likely to create commercial problems for the
respondents, it seems to me that to loose the arrestments at this stage would
unjustifiably expose the petitioners to the risk of serious harm if they
succeeded in their French claim but were left with no accessible means of
enforcing it. I am therefore not
persuaded that the balance of convenience favours the respondents' motion for
recall. It is, of course, true to say
that consideration of the balance of convenience forms no part of the
requirements laid down by the Inner House for the grant of diligence in either Taylor or Gillespie discussed above.
However, in the context of a motion for recall, and especially where questions
of nimiety and oppression are raised, it seems to me that submissions focused
by reference to the balance of convenience may legitimately be entertained by
the court.
Decision
[36] For all
of these reasons, I hold that the respondents' attack on the petitioners'
arrestments fails, and that their motion for recall must therefore be refused.
