England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Rolls Building 7 Rolls Buildings Fetter Lane, London
		28th March 2014

MR. STEPHEN HOFMEYR QC:

1. This is the defendants' application pursuant to CPR Part 11 for orders that (1) the defendants' application contesting the jurisdiction of this court is granted; (2) the service of the claim form on the defendanst is set aside, and (3) the claimant's claim is dismissed.

Parties

2. The claimant is a Turkish company that provides tugboat, pilotage and mooring boat services to vessels entering various ports in Turkey.
3. The first defendant is the registered owner and the second defendant the demise charterer of the vessel CONTI CARTAGENA to which I will refer as "The Vessel".

The claim

4. In the Claim Form the claimant alleges four things: (1) On or about 5th August the first and/or the second defendant entered into a contract with the claimant for the provision of services in the Yalova Port; (2) the contract incorporated the UK Standard Conditions for Towage and Other Services (Revised 1986); (3) the vessel suffered damage whilst in port, and (4) the defendants are seeking to recover damages from the claimant.
5. None of these facts is denied.
6. In these proceedings the claimant claims a declaration of non-liability against the first and/or second defendant "in respect of all claims arising under or related to the contract and/or services".

The procedural history

7. The Claim Form in this matter was issued on 13th September 2013 and marked "not for service out of the jurisdiction".
8. The N510 form which accompanied the Claim Form indicated that the Claim Form was being served out of the jurisdiction without permission of the court on the basis that the first defendant was a party to an agreement conferring jurisdiction to which Article 23 of the Judgment Regulation applies.
9. Not only the first but also the second defendant filed an acknowledgement of service on 25th October 2013 indicating that it intended to defend all of the claim and that it intended to contest the court's jurisdiction.

The application

10. On 27th November 2013 both defendants issued the application which is before me today.
11. In support of the application they served witness statements of Selin Atakan and Colin Ferris dated 26th and 27th November 2013 respectively. Mr. Atakan is an Associate Attorney at Cavus and Coskunsu, a law firm of Istanbul, and is registered to the Istanbul Bar Association. Mr. Ferris is a solicitor of the Senior Courts of England and Wales and a partner in the firm Keats Ferris, the defendants' solicitors.
12. The application focused on a pilotage bill signed after the event by the Master on behalf of the defendants. The contention advanced was that the pilotage bill could not be used to establish English jurisdiction.
13. After the claimant had made it clear that it was not relying on the pilotage bill but on the terms of the booking note dated 5th August 2012 to establish jurisdiction, the focus of the application changed to the booking note.

The facts

14. The defendants' version of the facts is as follows.

a. On or about 7th August 2012 the vessel was at the Besiktas Shipyard in Turkey having works performed on her.

b. She was scheduled to be shifted to a floating dry dock.

c. To this end she engaged tug and pilotage assistance.

d. At 1300 hours two pilots boarded the vessel and two tugs were attached, one astern and one at the vessel's bow.

e. During the course of the shifting operation the vessel collided with the floating dry dock and with another vessel, the CLIPPER TENACIOUS.

15. The defendants believe that the incident was caused by the negligence of the claimant. As a consequence on 1st August 2013 the Master of the vessel "on behalf of the owners" commenced proceedings before the Istanbul courts against the claimant seeking to recover the loss and damage the defendants had incurred as a result of the incident.
16. The claimant has sought to challenge the jurisdiction of the Istanbul courts on the basis that:

a. the contract was contained in and/or evidenced by a pilotage bill signed by the Master on 7th August ("the Pilotage Bill");

b. the pilotage bill expressly stated that –

"Pilotage, towage and mooring boat services are under UK Standard Conditions for Towage and Other Services (Revised 1986)"

and

c. the UK Standard Conditions for Towage and Other Services (Revised 1986) contain an exclusive English jurisdiction clause.

17. The Turkish proceedings are still in existence, although I am told that they have been stayed pending the outcome of this application.
18. I am told that it is the arguments being run in the Turkish court which caused the defendants to assume in the English proceedings that the claimant was relying on the Pilotage Bill in order to found jurisdiction. It is now clear and accepted by the defendants that the claimant places reliance on the Booking Note in order to found jurisdiction in England and Wales.

The Booking Note

19. The booking note was signed on 5th August 2012. It is in Turkish.
20. A translation of part of the face of the booking note reads as follows:

"We request pilotage, towage and mooring services for the vessel detailed above which is under our ownership/agency … ." Then I omit a section.

"Pursuant to our request we undertake and agree to the application of the provisions of the service tariff applied by our company and all instructions and regulations issued by the port and docks, to the application of the United Kingdom Standard Towage Conditions (Revised 1986) to pay [relevant] companies such pilotage, towage and mooring fees as may accrue to them, and [we agree] that if the due and payable invoice debts with respect to the various services are not paid, our request for services shall be suspended and shall not be complied with, that after the invoice for the service referred to in this letter of request has been issued we may not change the said invoice address, and [we agree also] that the Courts and Enforcement offices of Istanbul shall be competent in the resolution of disputes between the parties."

21. It is therefore apparent that the Booking Note contains the relevant defendants' agreement to the application of the UK Standard Conditions for Towage and Other Services (Revised 1986). These conditions include at clause 9 an exclusive English jurisdiction clause in respect of all matters, save for the obtaining of security wherever assets can be found. The clause provides as follows, and I quote:

"9(a). The agreement between the Tugowner and the Hirer is and shall be governed by English law and the Tugowner and the Hirer hereby accept, subject to the proviso contained in subclause (b) hereof, the exclusive jurisdiction of the English courts ...

(b) No suit shall be brought in any jurisdiction other than that provided in subclause (a) hereof, save that either the Tugowner or the Hirer shall have the option to bring proceedings in rem to obtain the arrest of or other similar remedy against any vessel or property owned by the other party hereto in any jurisdiction where such vessel or property may be found."

22. The Booking Note also contains the agreement of the relevant defendant, that "the Courts and Enforcement offices of Istanbul shall be competent in the resolution of disputes between the parties".

The Claimant's case on jurisdiction

23. The claimant alleges that the English courts have jurisdiction over the present proceedings by virtue of the fact that the Booking Note expressly incorporates the terms of the Towage Conditions.
24. In addition, whilst the claimant accepts that the Booking Note on its face contains an Istanbul jurisdiction clause, it alleges that:

a. on the true construction of the Booking Note the Istanbul jurisdiction clause only applies to claims by the claimant to recover unpaid pilotage, towage and mooring fees, and in any event

b. the Istanbul jurisdiction clause is a non-exclusive jurisdiction clause.

The Defendants' case on jurisdiction

25. For a time it appeared that the claimant was being put to proof of two facts. First, that it is a party to the Booking Note; and, secondly, that the Booking Note was signed by Transinter Geni Acenteligi, the defendants' local agents. However, before me and for the purposes of this application only, these are no longer in issue.
26. The defendants' case can be summarised in four propositions.

a. First, it submits that on its true construction the Istanbul jurisdiction clause on the face of the Booking Note applies to all disputes between the parties.

b. Second, if the Istanbul jurisdiction clause applies to all disputes between the parties, the English jurisdiction clause contained in the towage conditions was not incorporated in the Booking Note. In support of this contention the defendants place reliance on the principle that where clauses incorporated by reference into a written agreement conflict with the express terms of the written agreement, then the terms of the written agreement will prevail.

c. Third, alternatively, if on its true construction the Booking Note contains two jurisdiction clauses, the clauses must be read together such that, once one of the parties elects to submit a particular dispute to a particular court, there is no longer any right for the other party to submit the same dispute to the other court.

d. Finally, the defendants contend that, without the permission of the court, the claimant had no right to serve the claim form out of the jurisdiction on the second defendant.

27. I now turn to consider the issues between the parties, but before I do so it seems that some ground clearing would be appropriate.

The burden and standard of proof

28. The first matter I deal with is the burden and standard of proof.
29. In cases where the challenge is against service out of the jurisdiction the general burden of proof is upon the claimant to establish the necessary elements of its case, and the case that supports that is Canada Trust v. Stolzenberg (No. 2) [1998] 1 WLR 547 (the relevant passages being approved by the House of Lords at [2002] 1 AC 1).
30. Where jurisdiction under the Judgments Regulation is challenged, it is sufficient for the claimant to demonstrate a good arguable case at the English courts have jurisdiction on some basis under the Judgment sRegulation: again Canada Trust v. Stolzenberg. Where contrary arguments are being weighed by the court "good arguable case" reflects that one side has a much better argument on the material available. As Waller LJ said in the Canada Trust case: "it is a concept which the phrase reflects on which it is important to concentrate, i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory post-process imposes that factors exist which allow the court to take jurisdiction".
31. In reaching my conclusions I have applied these tests. For the avoidance of doubt let me make it clear that I am not making any concluding findings on the merits of any issue.

Parties to the Booking Note

32. The second matter by way of ground clearing concerns the parties to the Booking Note.
33. Nothing appears to turn on the identity of the parties to the Booking Note. It is common ground that the claimant is a party to the Booking Note. It is also common ground that at least one of the defendants is a party to the BookingnNote. Further, it appears to be accepted by the defendants that there is a good arguable case against each of the defendants that it is a party to the Booking Note.

Conclusions

34. I come now to my conclusions. In my view, the first defendant's application founders at the first hurdle. On the question of the true construction of the booking note the claimant has much the better argument.

a. The jurisdiction provision upon which the defendants place reliance must be read in context. The structure of the booking note is as follows.

i. First, it records the owner's request for services for the vessel:

"We request pilotage, towage and mooring services for the vessel detailed above which is under our ownership/agency …."

ii. Then it records the undertakings and agreements given by the ship owner pursuant to that request.

iii. These are in two parts.

The first part which contains the three undertakings reads as follows:

"We undertake and agree to the application of the provisions of the service tariff applied by our company and all instructions and regulations issued by the port and docks, to the application of the

United Kingdom Standard Towage Conditions (Revised 1986), to pay relevant companies such pilotage, towage and mooring fees as may accrue to them, and … ."

1. The rest of the paragraph, which relates solely to invoice debts, makes up the second part, which reads as follows:

"[we agree] that if the due and payable invoice debts with respect to the various services are not paid, our request for services shall be suspended and shall not be complied with, that after the invoice for the service referred to in this letter of request has been issued, we may not change the said invoice address and [we agree also] that the Courts and Enforcement offices of Istanbul shall be competent in the resolution of disputes between the parties."

b. Read in context it is readily apparent that the ship owner's agreement on jurisdiction relates solely to its obligation to pay fees which have become due for services rendered. As such, it can be seen to do no more than carve out an exception to the exclusive English jurisdiction clause in the Booking Note allowing the claimant to sue in Istanbul for unpaid fees.

This conclusion, it seems to me, is entirely consistent with the cases to which Mr. Smith referred me in his written skeleton argument on the principle that where clauses incorporated by reference into a written agreement conflict with the express terms of the written agreement, the terms of the written agreement prevail. The conclusion is also consistent with the decision of Longmore J. in the case to which I was referred which is Metalfer Corporation v. Pan Ocean [1998]  2 Lloyds Rep. beginning at page 632, the particular passages to which I was referred being those on page 637.

c. The fact that a jurisdiction provision upon which the defendants place reliance does not purport to be an exclusive jurisdiction clause provides further support for this conclusion. I should say in passing that the suggestion made on behalf of the defendants that the Istanbul jurisdiction clause is an exclusive jurisdiction clause is, with respect, in my view, wholly without merit.

35. It follows from this analysis that the claimant also has much the better argument on the question of whether the Booking Note incorporated the English jurisdiction clause. It is my view, in any event, that it is quite inappropriate to consider the first and second issues independently and consecutively. It seems to me that the first and second questions both go to the true construction of the Booking Note and should be considered together.
36. Next, the defendants argue that if on its true construction the Booking Note contains two jurisdiction clauses, the clauses must be read together such that, once one of the parties elects to submit a particular dispute to a particular court, there is no longer any right for the other party to submit the same dispute to the other court. This argument must also fail in the light of what I consider to be the much better argument on the true construction of the Booking Note. Once one appreciates that there is no overlap between the type of disputes which may be submitted to the Courts and Enforcement offices of Istanbul and those which must be submitted to the exclusive jurisdiction of the English court, no issue of coexistence arises.
37. The remaining issue is whether permission was required to serve the Ccaim Form on the second defendant.
38. The second defendant's contention can be stated shortly.

a. The claimant declared that it was entitled to serve the Claim Form on the defendants without the permission of the court on the basis that the defendants were party to a jurisdiction agreement falling within Article 23 of the Judgment Regulation.

b. As between the claimant and the second defendant, Article 23 was not satisfied as neither party was or is domiciled in an EU State.

c. It follows that the claimant had no right to serve the claim form out of the jurisdiction on the second defendant without permission of the court.

39. In my view, this contention is flawed. The first stage of the contention is not made out on the facts. The service out of the jurisdiction form, form N510, was prepared in relation to the first defendant only and not the second defendant, and it is wrong to suggest, as the second defendant does, that the claimant declared that it was entitled to serve the claim form on the second defendant without permission of the court on the basis that the second defendant was a party to a jurisdiction agreement falling within Article 23 of the Judgment Regulation.
40. As I understand the position based on the material before me, the Claim Form was never served on the second defendant. What actually happened is that, in advance of service of the Claim Form, the second defendant acknowledged service of the Claim Form. The second defendant did not, by filing an acknowledgement of service, lose any right which it had to dispute the court's jurisdiction (see CPR Part 11 sub-para. 3). However, by filing an acknowledgement of service in advance of actual or purported service, it seems to me that the second defendant waived the need for service of the Claim Form on it.
41. I should add that if the second defendant's contentions were sound I would have had no hesitation in extending the validity of the Claim Form and giving the claimant permission to serve the Claim Form out of the jurisdiction on the second defendant. It seems to me that if the second defendant had not chosen to acknowledge service of the Claim Form it is likely that the claimant, during the validity of the Claim Form, would have sought and been granted permission to serve the Claim Form out of the jurisdiction on the second defendant.
42. It seems to me that in relation to the second defendant there can be no serious argument but that England is the appropriate forum for the resolution of disputes between the claimant and the second defendant. The contract between them on the construction, which, in my view, is much the better of the two being suggested, contains an exclusive jurisdiction clause referring disputes to the English courts. Further, the contract is governed by English law. Thirdly, the disputes which will arise between the claimant and the second defendant will in any event arise in the proceedings which I have no reason to believe will not continue in the Commercial Court and be resolved here. For those reasons if it were necessary for me to express a view on the matter, I would have had no hesitation in coming to the conclusion that England was the appropriate forum for resolution of the disputes between the claimant and the second defendant.
43. In the circumstances, I dismiss the defendants' applications and will hear submissions on costs.
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