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OUTER HOUSE, COURT OF SESSION

[2007] CSOH 57

P68/07

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:

________________

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, 2^nd 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 (19^th 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.