United Kingdom House of Lords Decisions

This was the procedural theory which subsequently became dominant. The historical analysis in The Dictator has been criticised: Wiswall, The Development of Admiralty Jurisdiction and Practice since 1800, 1970, Chapter 6. On the other hand the foremost historian of Admiralty history has supported it: Select Pleas in the Court of Admiralty, ed., by R.E. Marsden for the Selden Society, 1894, 1xx1--1xx11. The Dictator was followed and endorsed by the Court of Appeal in The Gemma [1899] P 285. It is true that a few years later, in The Burns [1907] P 137, at 149, Fletcher Moulton L.J. appeared in effect to be repudiating the procedural theory by saying that "the action in rem is an action against the ship" and by acknowledging only that "the action indirectly affects them (the owners)": 149. That observation was made on a point of statutory construction and did not reflect the reasoning of the majority. The reasoning in the The Dictator prevailed. In The Tervaete [1922] P. 259, Scrutton L.J. said that it was established that an action in rem was not based upon the wrongdoing of the ship personified as an offender but was a means of bringing the owner of the ship to meet this personal liability by seizing his property: 270. Atkin L.J. expressed a similar view: at 274. See also The Jupiter [1924] P. 236. In The Cristina [1938] A.C. 485 the House of Lords unambiguously rejected the personification theory, and adopted the realist view that in an action in rem the owners were the defendants.

      This historical account of the evolution of the procedural theory must be qualified. Thomas; op cit, at 7 (n. 40) and 8 (n. 48) has pointed out that the procedural theory does not explain why a maritime lien may be enforced against a bona fide purchaser and that it is not entirely consistent with the fact that certain maritime liens accrue independently of personal liability of the ship owner. These may be regarded as distant echoes of the personification theory. But this case is not concerned with maritime liens. That is a separate and complex subject which I put to one side.

      Given this general historical perspective, counsel for the plaintiffs acknowledged that the procedural theory became dominant but argued that it tells us nothing about the answer to the question before the House. He said that the procedural theory is a neutral fact. That is unrealistic. The procedural theory stripped away the form and revealed that in substance the owners were parties to the action in rem.

The sovereign immunity cases

      The reality that an action in rem is an action against the owner of the ship is supported by the line of sovereign immunity cases. I will refer only to the most significant cases. In The Parlement Belge (1880) 5 PD 197 the Court of Appeal held that an action in rem indirectly impleaded a sovereign who was the owner of the vessel served because his property was affected by the judgment of the court. In this century the courts have gone further and held that a sovereign whose ship is served in an action in rem is in fact directly impleaded as a defendant. This appears clearly from the judgments of Lord Atkin (at 491), Lord Thankerton (at 493), Lord Macmillan (at 498) and Lord Wright (at 505) in The Cristina [1938] A.C. 455. A perusal of those judgments show clearly that the reasoning of the House of Lords depended in the first place not on principles of international law but on an analysis of the development of the action in rem in English law. Because the sovereign was held to be directly impleaded the principle of sovereign immunity was then applied. The decision of the House of Lords in The Arantzazu Mendi [1939] A.C. 256 was to the same effect. The proposition that the foreign sovereign is directly impleaded as a defendant by service on his vessel is therefore conclusively established. That proposition must carry with it the legal consequence that the sovereign is a party to the action in rem.

Further developments

      Confining myself to the more important decisions only, there are other decisions of high authority for the proposition that the true defendant in a duly constituted action rem are the owners of the ship. In The August 8 [1982] 2 A.C. 450, Lord Brandon of Oakbrook, a former Admiralty judge, explained (at p. 456A-B).

 "By the law of England, once a defendant in an Admiralty action in rem has entered an appearance in such action, he has submitted himself personally to the jurisdiction of the English Admiralty Court, and the result of that is that, from then on, the action continues against him not only as an action in rem but also as an action in personam." (My emphasis)

More importantly, in The Deichland [1990] 1 Q.B. 361 the Court of Appeal held that the owner of a vessel which is served with proceedings in rem is "sued" for the purpose of Article 2 of Schedule 1 of the Civil Jurisdiction and Judgments Act 1982. The essential basis of the decision is to be found in the observation of Sir Denys Buckley that "In reality, distinguished from formal aspects, the instant action is, in my judgment, as much a suit against Deich as would be an action in personam.":389F. This reasoning was based on a perception of the true nature of an action in rem in English law. It is a view that I share.

The decision of the European Court of Justice in The Maciej Rataj

      In The Maciej Rataj [1995] 1 Lloyd's Rep 302 the European Court of Justice had to consider the applicability of Article 21 of the Brussels Convention (Schedule 1 to the Civil Jurisdiction and Judgment Act 1982) to actions in rem and in personam. Article 21 provides:

"Where proceedings involving the same cause of action and between the same parties are brought in the Courts of different Contracting States, any court other than the court first seised shall of its own motion decline jurisdiction in favour of that court."

The European Court held that an action in rem and an action in personam involve the same cause of action, the same object and the same parties: paragraphs 47 and 48. The Advocate General observed (at par 19 of his Opinion):

"No importance must therefore be attached to the fact that the proceedings in question may possibly be a different nature under the civil procedural law of one or other of the states concerned what is important is whether or not the substantive issues which the court is called upon are the same."

Counsel for the plaintiffs has emphasized that, unlike Article 21, section 34 of the Act of 1982 is a provision of domestic origin designed to address a problem of domestic law. That is true. On the other hand, a comparison of Article 21 and section 34 reveal a striking similarity in language. In drafting section 34 the draftsman must have taken Article 21 as a model. In these circumstances it would be curious if one were to arrive at a decision on "the same parties" in respect of section 34 which diverges from that which applies to Article 21. This consideration reinforces the view that I take on a consideration of the nature of an action in rem judged from the perspective of domestic English law.

The purpose of section 34

      The function of section 34 was to overcome the anomaly created by the fact that the doctrine of merger did not apply in the case of foreign, i.e. non-English, judgments: Republic of India v. Indian Steamship Co. supra, at 423E per Lord Goff of Chieveley. The rationale of the bar against proceedings caught by section 34 is that it is unjust to permit the same issue to be litigated afresh between the same parties: at 422H, per Lord Goff of Chieveley. Given this legislative objective, it would in my view be wrong to permit an action in rem to proceed despite a foreign judgment in personam obtained on the same cause of action. The purpose of section 34 militates in favour of the bar created by it applying to the action in rem. That seems to me to be a factor weighing strongly against the arguments of the plaintiffs.

The Nordglimt

      Clarke J. relied on the judgment of Hobhouse J. in The Nordglimt. Hobhouse J. had to consider whether in the context of Article 21 a Belgian action in personam against owners was between "the same parties" as an Admiralty action in rem. Hobhouse J. held that at the date of its commencement an action in rem was not between the same parties as an action in personam. That was always a very narrow view. Given the decision of the European Court of Justice in The Tatry [1995] E.C.R. I-5439 the decision in The Nordglimt is no longer good law. But Clarke J. relied on The Nordglimt for its exposition of the nature of an action in rem. Hobhouse J. in turn founded his decision on the observations of Fletcher Moulton L.J. in The Burns [1907] P 137 encapsulated by the statement that "the action in rem is an action against the ship itself." In the light of the development of the action in rem after the Judicature Acts that proposition can no longer be accepted. It has been overtaken by the developments which I have described in this century, notably the analysis in the sovereign immunity cases. Those decisions were apparently not cited to Hobhouse J. and he did not mention them. His analysis can no longer be supported.
 

The anomaly

      Counsel for the plaintiffs relied on a suggested anomaly which may arise if section 34 is held to bar the present action. That anomaly was identified by Staughton L.J. He observed (at 23, col. 1):

 "It is well established since the time of Dr. Lushington that a plaintiff who has an unsatisfied judgment in personam can proceed by an action in rem. (Presumably there would be no advantage in doing so unless there had been a change in ownership of the vessel; otherwise the plaintiff could employ ordinary methods of execution . . . .) Similarly a plaintiff who has proceeded in rem, recovered judgment against the vessel, and is left with it only partially satisfied, may start a second action in personam. Those two propositions emerge from The John & Mary, (1859) Swab. 471, Nelson v. Couch, (1863) 15 C.B.N.S. 100, The Cella, (1888) 13 PD 82, The Joannis Vatis (No. 2), [1922] P. 213, The Rena K, [1978] 1 Lloyd's Rep. 545; [1979] Q.B. 377."

Staughton J. continued (at 23, Col. 2):

  "Can it be that by s. 34 Parliament has, in a case where the first of two actions is brought in a foreign Court (but not if it was brought in England and Wales or Northern Ireland), abolished the well-established rule that a judgment in personam is no bar to an action in rem and vice versa? If so, it is hard to see the rhyme or reason of it."

Nevertheless, Staughton L.J. held that section 34 must have been intended to prevent the same cause of action being tried twice over between those who are, in reality, the same parties.

      Counsel were agreed that the rule to which Staughton L.J. referred was established in cases involving maritime liens. The House was not referred to authority extending the rule beyond maritime liens. It is an ancient and strange rule which I would not wish to extend beyond the limits laid down by authority. To that extent the scope of any anomaly is less than may have been apparent in the Court of Appeal. But counsel for the owners argued that the anomaly disappears on a proper construction of section 21 (4) of the Act of 1981. The argument runs as follows: In cases of maritime liens the Admiralty Court's jurisdiction does not necessarily depend on the personal liability of the owner: see section 21(3) of the Act of 1981. On the other hand, in cases falling within section 21(4), such as the present case, proof of personal liability of the owner is essential. In order to succeed in the Admiralty action in rem the plaintiffs must prove the personal liability of the owners: per Clarke J, at 355, col. 2. In the case of an unsatisfied foreign or domestic judgment in personam, further action in personam between the same parties is barred. That leaves the possibility of a foreign or domestic judgment in personam and a subsequent action in rem in the Admiralty court. But in subsequent action in rem the plaintiffs would be unable to establish the personal liability of the owners. For these reasons counsel for the owners argued that the anomaly disappears in fact. It is, however, not merely a defensive point. If it is correct it affords an independent reason why the plaintiffs cannot succeed in the pending action in rem. This point was not remitted by the House to be decided by Clarke J. He did not do so. It was not put before the Court of Appeal. In these circumstances I propose to express no view on it. Finally, I must point out that there is an argument that the old rule has simply been abolished by section 34: see Briggs and Rees, Civil Jurisdiction and Judgments, 2nd ed., 359. Since this point has not been explored in argument, I will express no final view on it. If any anomaly exists, it is quite insufficient to displace the compelling arguments in favour of the applicability of section 34 in the present case.

Was the pending action "brought" within the meaning of section 34?

      That brings me to a discrete point. When the English action in rem was launched no judgment in personam in Cochin had yet been obtained. In these circumstances Clarke J. held that the bar in section 34 is, in any event, inapplicable: at 356, col.1. This is a short point. Counsel for the plaintiffs argued that the action in rem in the Admiralty Court was merely continued, and not "brought" within the meaning of section 34 after the judgment in Cochin. This issue turns on the meaning of the word "brought" in section 34. I consider that where proceedings are continued one can quite naturally describe those proceedings as brought. That construction also gives a sensible and purposive meaning to section 34. I am reinforced in this view by the fact that in an analogous context, viz Article 28 of the Warsaw Convention, the Court of Appeal interpreted the word "brought" as embracing the initiation and pursuit of the proceedings: Milor S.R.L. and Others v. British Airways PLC [1996] Q.B. 702. I would therefore reject the argument of plaintiffs on this point.

Conclusion on the action in rem point.

      The role of fictions in the development of the law has been likened to the use of scaffolding in the construction of a building. The scaffolding is necessary but after the building has been erected scaffolding serves only to obscure the building. Fortunately, the scaffolding can usually be removed with ease: Lon L. Fuller, Legal Fictions, 1967, 70. The idea that a ship can be a defendant in legal proceedings was always a fiction. But before the Judicature Acts this fiction helped to defend and enlarge Admiralty jurisdiction in the form of an action in rem. With the passing of the Judicature Acts that purpose was effectively spent. That made possible the procedural changes which I have described. The fiction was discarded.

      It is now possible to say that for the purposes of section 34 an action in rem is an action against the owners from the moment that the Admiralty Court is seized with jurisdiction. The jurisdiction of the Admiralty Court is invoked by the service of a writ, or where a writ is deemed to be served, as a result of the acknowledgement of the issue of the writ by the defendant before service: The Banco [1971] P. 137. From that moment the owners are parties to the proceedings in rem.

      Subject to the plea of estoppel, section 34 is therefore a bar to the action in rem.

The Law

      The plaintiffs rely in the alternative on estoppel by convention and estoppel by acquiescence to defeat the applicability of the bar created by section 34. A general review of the requirement of these estoppels is not necessary. It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: The August Leonhardt [1985] 2 Lloyd's Rep. 28; The Vistafjord [1988] 2 Lloyd's Rep. 343; Treitel, Law of Contracts, 9th ed., at 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention.

      So far there was no disagreement about the law. But it was argued for the plaintiffs that Staughton L.J. had held in the Court of Appeal that a concluded agreement was a requirement of an estoppel by convention. That argument was based on the observation by Lord Justice Staughton that "it is essential that the assumption be agreed for there to be an estoppel": 20, col. 2. At first glance that observation seems to be bear out the argument entirely. But earlier Lord Justice Staughton had referred to an "agreement or something very close to it": 20, col.1. Reading the observations in context I do not accept that the Court of Appeal misdirected itself on this point.

      That brings me to estoppel by acquiescence. The parties were agreed that the test for the existence of this kind of estoppel is to be found in the dissenting speech of Lord Wilberforce in Moorgate Mercantile Co. Ltd. v. Twitchings [1977] A.C. 890. Lord Wilberforce said that the question is ". . . whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the'acquirer' of the property, would expect the 'owner' acting honestly and responsibly, if he claimed any title to the property, to take steps to make that claim known . . . .": at 903. Making due allowance for the proprietary context in which Lord Wilberforce spoke, the observation is helpful as indicating the general principle underlying estoppel by acquiescence.

      The question was debated whether estoppel by convention and estoppel by acquiescence are but aspects of one overarching principle. I do not underestimate the importance in the continuing development of the law of the search for simplicity. I also accept that at a high level of abstraction such an overarching principle could be formulated. But Mr. Rokison Q.C., for the owners, persuaded me that to restate the law in terms of an overarching principle might tend to blur the necessarily separate requirements, and distinct terrain of application, of the two kinds of estoppel. (In passing I would pay tribute to the argument of Mr. Rokison, presented with his customary flair in his last case in the House of Lords.)

Estoppel by convention: The facts

      Clarke J. set out the primary facts and his inferences in detail. Staughton L.J. summarised the facts and the findings of the judge in his judgment. It is unnecessary for me to cover the same ground. Instead I deal with the matter quite shortly. Clarke J. found established a manifestation of consent to the basis upon which the proceedings in Cochin were proceeding, namely that it was limited to the shortage claim and the larger claim could proceed elsewhere: at 346, col.1. It is, however, not enough to show that the owners by their conduct manifested that they knew that the larger claim would be put forward in other proceedings. It is true that the common assumption does not have to extend specifically to the bar under section 34. But in order to establish an estoppel by convention the plaintiffs had to prove that the owners evinced by their conduct that they were content that the taking of a judgment in Cochin would not prejudice the resolution of other proceedings on their merits, that is, that in future proceedings no plea or defence on the basis of a judgment in Cochin would be raised whatever the outcome of the proceedings in Cochin.

      Once this distinction is kept in mind it is clear that there was insufficient evidence to warrant a finding that an estoppel by convention was established. Ultimately, on appeal to the House of Lords, counsel for the plaintiffs relied on two aspects of the evidence. The first was a telephone conversation on 14 August 1989 between Captain Singh of the Steamship Mutual Association (representing the owners) and Mr. Wilson of Clyde & Co. (the plaintiffs' solicitors). Mr. Wilson was unaware of any Indian proceedings. Captain Singh mentioned that there were two sets of proceedings pending in India, viz proceedings for particular average loss in Cochin and proceedings in Calcutta for general average loss. Mr. Wilson asked for an extension of time to serve a writ in England. Captain Singh refused this request. Captain Singh was left with the impression that Clyde & Co. would issue a writ in the Admiralty Court. Contrary to the owners' case the judge found that Captain Singh did not mention that English jurisdiction would be contested, or, if he did so, that it was done in a way not calculated to impress itself on Mr. Wilson. This evidence shows merely that the plaintiffs' solicitors informed the owners that there would be English proceedings. It falls markedly short of establishing a common assumption, manifested by the exchanges between the parties, that no plea arising from the fact of a judgment would be taken in the English proceedings.

      In the second place the plaintiffs relied on the way in which the proceedings in Cochin were conducted. The plaintiff made clear in the Plaint that the claim was confined to the short delivery of a small quantity of cargo. The Plaint recited that the plaintiffs had notified the owners of a large claim in respect of an "alleged total loss of entire consignment." In his judgment the judge pointed out that the claim before him was only in respect of the small claim in respect of short delivery. He noted that the plaintiffs appeared to have a further and much larger claim. That is the extent of the relevant evidence. The statements by the advocates admitted in evidence do not reveal that anything more of significance was said by either side about the basis on which the claim was being conducted. All that can be inferred from the conduct of the proceedings in Cochin is that there was a larger claim which would be pursued elsewhere. The evidence does not begin to show that the defendants evinced an attitude that they were content that judgment should be given in Cochin, and that whatever the outcome of the proceedings in Cochin they would not raise a plea or defence elsewhere on the basis of the fact of a judgment in Cochin. There was no evidence to warrant such a finding.

      The distinction that I have drawn about the facta probanda of an estoppel by convention in the present case may not have been squarely placed in argument before the judge. It was crucial. The judge did not therefore approach his findings of fact in the way which I have outlined. In any event, there was insufficient evidence before him to justify findings of estoppel by convention of the type which I have described. In these circumstances the Court of Appeal were entitled to conclude that no estoppel by convention was established.

Estoppel by acquiescence: The facts

      It is overwhelmingly probable, as both sides accepted, that until after the judgment in Cochin was handed down neither side gave any thought to the implications of that judgment on any further proceedings. Both sides were in ignorance of the potential consequences of a judgment in Cochin. There were no special circumstances which could even arguably have required the owners to put the plaintiffs on their guard as to the risk flowing from the taking of a judgment in Cochin. The owners also did nothing by conduct or silence which could have led the plaintiffs to think that the plaintiffs could safely take a judgment in Cochin without any risk of a plea or defence in any further proceedings.

      Clarke J. said that the owners are "estopped either by convention or by acquiescence (if that is different"): 346, Col.1. So far as the judge rested his judgment on estoppel by acquiescence, I am satisfied that the separate requirements of this kind of estoppel were not satisfied. In my judgment the Court of Appeal was entitled to reverse Clarke J. on this point.

      In view of my conclusion that section 34 is applicable, and not defeated by estoppel, it is unnecessary to express any view on the separate issue whether the principle in Henderson v. Henderson applies.

      Acknowledging my indebtedness to the judgment of Staughton L.J., I conclude that for the reasons I have given the appeal ought to be dismissed.

LORD HOFFMANN

My Lords,

      I have had the advantage of reading in draft the speech of my noble and learned friend Lord Steyn. For the reasons which he gives, I agree that the appeal should be dismissed.

LORD COOKE OF THORNDON

My Lords,

      I have had the advantage of reading in draft the speech of my noble and learned friend Lord Steyn and for the reasons given by him I too would dismiss the appeal.

LORD HOPE OF CRAIGHEAD

My Lords,

      I have had the advantage of reading in draft the speech which has been prepared by my noble and learned friend, Lord Steyn. I agree with it, and for the reasons which he has given I also would dismiss the appeal.