RIX J: These proceedings concern a typical cargo claim arising out of allegations of wetting damage to steel coils carried on a voyage from Newport in Wales to Anzio and La Spezia in Italy on the vessel S. M. in December, 1996. Four different consignees are the plaintiffs, the defendants are the owners or demise charterers of the vessel, the cargo concerned was carried under 13 separate bills of lading, and the alleged damage amounts to some #62,000.
The plaintiff consignees are Italian, the defendant owners are Dutch. The question before me is whether, for the purpose of the Brussels Convention, 1968, the plaintiffs must sue the defendants in Holland, where they are domiciled, or may obtain jurisdiction here in England on the basis of art 5(1).
This question is part of a more complex series of jurisdictional issues which have arisen out of the provision of security to the plaintiffs on behalf of the owners, a subsequent arrest of the vessel in England in October, 1998, and a further arrest here in April, 1999. The plaintiffs' primary case is that they have successfully arrested the vessel not once, but, in order to meet objections by the owners, twice, in an English action in rem, and that they have therefore established jurisdiction here under art 7 of the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Ships, 1952 (the "Arrest Convention"). It is common ground that if the English Court has jurisdiction to determine the case on the merits within art 7 of the Arrest Convention, then, by reason of art 57 of the Brussels Convention which gives precedence to other Conventions on jurisdiction, the owners must defend the case here. However, the owners contend that the plaintiffs cannot bring themselves within art 7 of the Arrest Convention and must therefore fail to sustain jurisdiction in England unless they can bring themselves within art 5(1) of the Brussels Convention. This judgment is exclusively concerned with art 5(1), for, without prejudice to the position under the Arrest Convention (or otherwise, for the plaintiffs also rely on arts 17 and 18 of the Brussels Convention), the parties have limited their submissions in the first instance to art 5(1).
So far as Counsel have been able to determine, there is no authority either in England or in the European Court of Justice which decides how art 5(1) operates in the context of a bill of lading cargo claim. This may well demonstrate that most such cases are brought within the Arrest Convention. Potentially, however, this is a point of considerable importance.
A person domiciled in a Contracting State may, in another Contracting State, be sued:
(1) in matters relating to a contract, in the courts for the place of performance of the obligation in question...
I will also have to refer to art 5(3), which continues:
(3) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred...
The basic rule of the Brussels Convention, of course, is that persons domiciled in a Contracting State must be sued in the Courts of that state (art 2). I remind myself, as Lord Goff of Chieveley put the matter in Kleinwort Benson Ltd v Glasgow City Council, [1999] 1 AC 153 at p 167B, when considering the judgment of the European Court in Kalfelis v Bankhaus Schroder Munchmeyer Hengst and Co, (Case 189/87), [1988] ECR 556, that
--... the court stressed (see paragraph 19) that the "special jurisdictions" in articles 5 and 6 must be interpreted restrictively; and further stressed (see paragraph 20) that, while disadvantages may arise from different aspects of the same dispute being adjudicated upon by different courts, the plaintiff is always entitled to bring his action in its entirety before the courts of the defendant's domicile.
The basic principles relating to the invocation of the special jurisdiction in art 5(1) are by now well established: see in general Kleinwort Benson v Glasgow at pp 163-166. In particular, the "obligation in question"
--... cannot be interpreted as referring to any obligation whatsoever arising under the contract in question, but is rather that which corresponds to the contractual right on which the plaintiff's action is based.
see Custom Made Commercial Ltd v Stawa Metallbau GmbH, (Case
C-288/92), [1994] ECR I-2913, 2957 (par 23), reaffirming Ets A de Bloos Sprl v Societe en commandite par actions Bouyer, (Case 14/76), [1976] ECR 1497. Thus, in Shenavai v Kreischer, (Case 266/85), [1987] ECR 239 the European Court declined to apply generally a doctrine that had been applied to contracts of employment, that it is the obligation which characterizes the contract that is the obligation in question. Instead the European Court returned to the reasoning in de Bloos and added:
Admittedly, the above rule does not afford a solution in the particular case of a dispute concerned with a number of obligations arising under the same contract and forming the basis of the proceedings commenced by the plaintiff. However, in such a case the court before which the matter
is brought will, when determining whether it has jurisdiction, be guided by the maxim accessorium sequitur principale; in other words, where various obligations are at issue, it will be the principal obligation which will determine its jurisdiction...
These principles were emphasized and applied in the House of Lords in a case concerning a charter-party, Union Transport Plc v Continental Lines SA [1992] 1 Lloyd's Rep 229; [1992] 1 WLR 15. The charter-party there was not for a specific vessel but for a vessel to be nominated: the ship-owner refused to nominate, and as a result no vessel ever
proceeded to the loading port. It was held that the obligation in question was the obligation to nominate, which fell to be performed in London, not the obligation to proceed to and present at the loading port in Florida. The reason given was that nomination was an essential preliminary to the identification of any particular vessel upon which the obligation might then fall to proceed to the loading point. It mattered not that the obligation to nominate preceded in time the accessory obligation of sending that vessel for loading: the critical matter was that it was "the more fundamental obligation". It was also the "principal ground of complaint" or "real ground of complaint" (per Lord Goff at p 234, col 1; p 22G and p 234, col 2; p 23B) and in no sense an allegation contrived for the purpose of founding jurisdiction. The contrary argument, that there was good sense in choosing the obligation to proceed to the loading port as that would reflect the rationale of art 5(1) which was based on the presumption that there would be a particularly close relationship between the dispute and the Court given special jurisdiction, was rejected on the ground that this was straying back to the test of the characteristic obligation of the contract, which had been rejected by the European Court. As Lord Goff concluded (at p 234, col 2; p 23E):
... For the defendants were, I felt, in reality seeking to persuade your Lordships to look for the obligations which characterized the contract as a contract for the carriage of goods by sea, rather than for the principal obligation in question and the place where that obligation was performed. It was common ground before me that art 5(1) could be properly invoked in that the plaintiffs' claim was "in matters relating to a contract".
Although the traditional form of pleading a cargo claim in England, followed in this case, embraces not only contract, but also bailment and tort there was no attempt on the part of the owners to submit that a different approach should be taken to the plaintiffs' various causes of action: they were content to take their stand on the question of the "obligation in question".
The bills of lading concerned are in the simple "Congenbill" form. Thus the front of each bill states -- "FOR CONDITIONS OF CARRIAGE SEE
OVERLEAF". Overleaf, the first clause incorporates the conditions of any charter-party "dated as overleaf", ie on the front of the bills, but no charter-party was so dated. The second clause is a general paramount clause which in this case, as is common ground, incorporated the Hague-Visby Rules (the "rules"). The only other part of the bill referred to by either party was the standard wording on the front of the bill to the effect
--Shipped at the Port of Loading in apparent good order and condition on board the Ocean Vessel for carriage to the Port of Discharge or so near thereunto as she may safely get the goods specified above. Weight, measure, quality, quantity, condition, contents and value unknown.
On behalf of the plaintiffs Mr David Bailey submitted that the principal obligation in question was the obligation under art III, r 1 of the rules that:
The carrier shall be bound before and at the beginning of the voyage to exercise due diligence... to make the ship seaworthy and the holds fit and safe for the cargo's reception, carriage and preservation. In this case, he continued, that obligation fell to be performed at the port of loading, Newport. There was therefore jurisdiction in the Courts of England and Wales. In as much as there was also an obligation under art III, r 2 of the rules to carry and care for and discharge the cargo, those were ancillary obligations. If, however, any of those, eg the obligation to discharge the cargo in good order and condition, was to be regarded as a principal obligation too, then, the plaintiffs should have an option to choose jurisdiction in the place where either principal obligation fell to be performed.
On behalf of the owners, on the other hand, Mr Timothy Hill submitted that the obligation or principal obligation in question was the duty to deliver the goods carried under the bills of lading in the like good order and condition as when shipped. That was, he said, the fundamental obligation of these, as of any, contracts of carriage by sea, as was
demonstrated by the language of the "Shipped... in apparent good order" clause on the face of the bills. It was also the obligation mentioned
first and foremost in the plaintiffs' statement of claim. Thirdly, it made good sense to have a single, clear, simple, rule which could be applied in every case of a bill of lading contract, that a special jurisdiction could be founded at the Courts for the port of discharge. That would tend to enable consignees to sue in their own jurisdiction, which would make good sense as an alternative to the jurisdiction of the domicile of the shipowner mandated by art 2.
Mr Hill sought to support his third submission by reference to the recent case of Reunion Europeenne SA v Spliethoff's Bevrachtings Kantoor BV, [1999] CLC 282. In that case a consignment of pears was shipped from Australia to Rotterdam, with on-carriage by road to France, where it was delivered to the consignee (Brambi). On arrival in France, the pears were found to be damaged. The bill of lading was issued by an Australian company, RCC. The sea carriage was in fact performed by Dutch shipowners, Spliethoff's. The consignee's insurers sued both RCC and the Dutch shipowners in France. The tribunal de commerce allowed jurisdiction against RCC, but declined it against Spliethoff's on the ground that art 5(1) permitted suit in Rotterdam, not France. The Paris Cour d'Appel confirmed that judgment. The Court de Cassation referred the matter to the European Court. The European Court, however, held that there was no contract freely entered into between the consignee and the actual sea carrier, and therefore that the matter did not come within art 5(1) at all. It did not discuss in any way what might have been its view of the matter if it had found a suitable contractual relationship to exist. Mr Hill accepted that for present purposes the judgment of the European Court was neutral, but nevertheless relied on the decisions of the French Courts at the level of the tribunal de commerce and the Cour d'Appel. However, apart from the fact that the relevant obligation was there
viewed as one to be performed at Rotterdam, he was not able to say what the reasoning of the French Courts was. There may have been common ground that the relevant place of performance was at destination, and dispute only as to whether that destination should be regarded as the ultimate destination of the whole carriage in France or merely that at the end of the sea carriage in Rotterdam. I can therefore derive no assistance from that case.
Mr Hill's support for a single, simple rule in favour of the discharge port as being the place of performance of the obligation in question seems to me to be an attempt to find the place of performance of an obligation which is characteristic of the contract, and therefore to suffer from the same error as that referred to by Lord Goff in Union Transport v Continental Lines. In other words, Mr Hill's rule ignores the requirement of the cases in the European Court that the obligation in question must reflect "the contractual right on which the plaintiff's action is based". In any event, it is in my judgment an error to characterize a damage to cargo claim under a bill of lading incorporating the Hague-Visby (or Hague) Rules as one based on an obligation to discharge goods in the same good order and condition as when loaded. That is to reflect the language of bailment. The fundamental obligation under a Hague or Hague Visby Rules contract of carriage, however, is not the obligation to keep and return (subject to proof that any loss or damage has occurred without fault), but the obligation to exercise due diligence.
It follows, as it seems to me, that everything will depend on the nature of the bill of lading holder's claim. If the shipowner has misdelivered the goods at destination, then the place of performance of the obligation in question may well be at the port of discharge. If the ship is seaworthy, but the alleged failure of due diligence is some lack of care during the voyage, eg a failure to tighten the lashing as needed, or to
maintain reefer temperatures at the appropriate level, then the place of performance of the obligation in question, viz the obligation to carry and care for the goods with due diligence, may well have occurred on the high seas, in which case there will be no special jurisdiction within art 5(1) and the matter must rest with art 2. If, however, the fundamental matter of complaint is that the shipowner never provided a seaworthy vessel, then the place of performance of the obligation of question would seem to me to be at the port of loading.
Mr Hill submits that there may be breach of the obligation under art III, r 1, to exercise due diligence to make the ship seaworthy, but no damage: the failure of due diligence only becomes relevant at discharge if damage has occurred. This seems to me to mistake the issues of breach and damage. There must be many situations where the contractual breach is of an obligation which falls to be performed at one place, whereas the damage consequential on that breach takes place at another place -- or, with luck, never takes place at all.
Mr Hill's point about the plaintiffs' statement of claim also proceeds, to my mind, from the same confusion between the position under a contract of carriage incorporating the Hague or Hague-Visby Rules and the classical form of an English pleading which wraps up bailment, tort and contract in one plea. Thus under par 5 of that pleading the plaintiffs allege that the shipowners were
--... under a duty--... as carriers by sea for reward and/or as bailees--... and/ or under the contracts of carriage... to take reasonable care of the said cargoes and to deliver the same in the same order and condition as they were in when shipped.
Even in that paragraph, however, the pleader states the first duty as being "to take reasonable care of the said cargoes" and only then proceeds to the obligation of delivery. Moreover, when the pleader turns specifically to the allegation in contract and pleads the Hague-Visby Rules, although he chooses to begin with art III, r 2, it is plain that the gravamen of the complaint, having recited the damage found at discharge, is that contained in particular (3) under par 8, namely that --... the hatch covers to the holds in which the Anzio cargo and/or Spezia cargo were carried were not watertight and/or were not properly battened
down during or at the commencement of the voyage to Anzio and/or Spezia thereby allowing seawater to enter the holds.
That leads naturally to the complaint under art III, r 1 that the
shipowners failed to exercise due diligence to provide a seaworthy ship or holds fit for the cargo.
If, therefore, looking at the pleadings, I had to say what the "principal or substantial failure" or "principal" or "real ground of complaint" was (to pick up the language used in Union Transport v Continental Lines), or, in the language of art 5(1) itself, what the "obligation in question" upon which the plaintiffs' claim was based was, I should say it was the failure to use due diligence to provide a seaworthy ship. Everything else is subordinate or accessory.
Mr Bailey submitted, if necessary, that there could be two principal obligations in question. In this connection he referred me to what Lord Justice Lloyd said in the Court of Appeal in Union Transport Plc v Continental Lines SA, [1991] 2 Lloyd's Rep 48 in an obiter passage at pp 51-52. The question there was left open, and the House of Lords did not comment on it. I see no need in this case to take the matter further. I would merely comment that Lord Justice Lloyd there seems to have thought that where different principal obligations point to different jurisdictions, the litigation may become fragmented. Mr Bailey submitted that that would not be necessary, if the claimant could choose the
Courts of the place of performance of either principal obligation. In this connection he pointed to the option which the claimant has in connection with art 5(3) of the Brussels Convention, to proceed either in the Courts for the place where the damage occurred or in the Courts for the place of the event which gave rise to the damage: Handelswekerij GJ Bier BV v Mines de Potasse d'Alsace SA (Case 21/76), [1976] ECR 1735. This is an interesting submission, but its consideration should in my judgment await another day.
In conclusion, therefore, I am satisfied that the obligation in question in this case was the obligation to exercise due diligence to provide a seaworthy ship at the commencement of the voyage, and that the plaintiffs were entitled on that ground, failing any other ground based on art 7 of the Arrest Convention or otherwise, to found jurisdiction in England.
