Supremes give permission to appeal in big passage planning case.

On 30 July the Supreme Court gave permission to appeal in The CMA CGM Libra – an important case on the boundary between crew negligence and unseaworthiness under the Hague Rules. At first instance, and in the Court of Appeal, matters went against the owners and the master’s failure to correct the passage plan before setting out from a port in China had the result of making the vessel unseaworthy and the owners in breach of art. III(1) of the Hague Rules.

The limits of bill of lading holder liabilities to the carrier. Paying for stevedores doesn’t necessarily mean you are liable for delay in discharge.

In Sea Master Shipping Inc v Arab Bank (Switzerland) Ltd [2020] EWHC 2030 (Comm), HH Judge Pelling QC presided over an interesting case regarding the implied discharge obligations, under bills of lading, of receivers and banks. Parcels of soya bean meal were discharged in Lebanon in February 2017 under two switch bills which incorporated the terms of a voyage charter. The voyage charter provided for ‘charterer’ to pay demurrage, but recovery from charterers was stymied by the fact of their insolvency. So what about the bill of lading holder/s?  Clearly there was no obligation on the bill of lading holder to pay demurrage (see The Miramar), and the tribunal found accordingly. Owners advanced an alternative claim based on two implied terms, that the Bank and/or the Receivers would: take all necessary steps to enable the cargo to be discharged and delivered within a reasonable time; and/or discharge the cargo within a reasonable time. The tribunal found against owners on this and the implied terms claim was the subject of an appeal.

HH Judge Pelling QC agreed with owners that the first issue to be resolved was whether, as a matter of construction of clauses 10 and 11 of the Voyage Charter, the “Charterers/Receivers” were responsible for performing the task of discharging the cargo from the vessel. Clause 10 stated that “…Cargo is to be discharged free of expense to the Vessel…”.  Clause 11 provided “…Stevedores at discharging ports are to be appointed and paid for by the Charterers/Receivers”. He concluded that although charterers/receivers were to pay for discharging the cargo, that did not mean that they were responsible for discharging. This was made clear by the additional words of cl. 11: “In all cases, stevedores shall be deemed to be the servants of the Owners and shall work under the supervision of the Master.” These words made it clear that control of the exercise remained with the master on behalf of the owner, the default position at common law. This was further confirmed by cl.46 of the incorporated charter, which provided that:

“Stevedore’s damages, if any to be settled directly between owners and stevedores but charterers to assist Owners at their utmost. Master to notify, if possible, these damages in writing latest 48 hours after occurrence to Stevedores but Owners to remain ultimately responsible to settle same with the stevedores.”

This made sense only in the context of the appointment of stevedores by the receiver or charterer where the Owner remained responsible for discharge.

Turning to the second implied term – to discharge the cargo within a reasonable time – argued for by owners, the Judge concluded that the carriage contract did not lack commercial or practical coherence without such an implied Term. As between the Owner and the Charterer, the Owner chose to accept the risk of Charterer’s insolvency. To imply the Second Implied Term would be to imply a term that contradicted the express terms of the relevant agreement, the effect of which was, as found by the Tribunal, that “… demurrage should be payable by Agribusiness, not by the Bank or the Receivers”.

The Judge then rejected owners’ first suggested implied term – to take all necessary steps to enable the cargo to be discharged and delivered within a reasonable time. Owners contended at least implicitly that delivery was a collaborative process, and sought to imply the term relying on the principle summarised by Lord Blackburn in Mackay v. Dick (1881) 6 App. Cas. 251 at 263:

“I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances.”

However, neither delivery nor discharge depended on collaboration. Delay in claiming delivery within a reasonable time would lead to the consequences set out by Males J in The Bao Yue [2015] EWHC 2288 (Comm) [2016] 1 Lloyds Rep 320:

“It has been established for many years that if the bill of lading holder does not claim delivery within a reasonable time, the master may land and warehouse the cargo; that in some circumstances it may be his duty to do so; and that as a correlative right, the shipowner is entitled to charge the cargo owner with expenses properly incurred in so doing …[49] ”

The only collaborative element under this contract of carriage was the receiver’s obligation to appoint stevedores by operation of clause 11. However that did not make the implication of the the suggested implied term necessary or reasonable because (a) the express obligation to appoint was absolute in its terms and (b) there was an express agreed contractual mechanism contained in clause 20 of the Voyage Charter terms that applied in the event that discharge is delayed by the failure by the defendants to appoint stevedores. Even if there were an absolute obligation on the receivers to make a berth available, that did not lead to implying such a wide ranging general term. Such a duty would require only a very narrowly expressed implied term that required the receivers to make a berth available and it seems probable that a failure to do so would be subject to the demurrage machinery within the Contract of Carriage, although no decision was necessary on this issue.

Accordingly, owners’ appeal was dismissed.

The creditor in the looking glass. ‘Reflective loss’ principle confined to shareholder claims.

 

In July 2013 Marex Financial Ltd (“Marex”), obtained judgment for over US$5.5 million, plus costs of£1.65 million against various companies. Subsequently, one Mr Sevilleja allegedly procured the offshore transfer of over US$9.5 million from the Companies’ London accounts into his personal control and by the end of August 2013, the Companies’ assets were just US$4,329.48, such that Marex could not receive payment of its judgment debt and costs. The Companies were then placed into liquidation in the BVI with alleged debts in excess of US$30m.

Marex claimed damages from Mr Sevilleja in tort for (1) inducing or procuring the violation of its rights under the July 2013 judgment and orders, and (2) intentionally causing it to suffer loss by unlawful means. The Court of Appeal had found that the claims were barred by the rule against recovery of ‘reflective loss’ in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, noted here https://iistl.blog/2018/06/26/midsummer-blues-if-youre-a-judgment-creditor/ This laid down a rule of company law that a diminution in the value of a shareholding or in distributions to shareholders, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, is not in the eyes of the law damage which is separate and distinct from the damage suffered by the company, and is therefore not recoverable.. The Supreme Court in Sevilleja (Respondent) v Marex Financial Ltd (Appellant) [2020] UKSC 31, has now overturned that decision.

The majority concluded that the rule did not apply to claims brought by creditors of the company. Lord Reed concluded that the rule in Prudential seemed to be expanded in Johnson v Gore Wood & Co [2002] 2 AC 1, in which Lord Millett treated the “reflective loss” principle as a wider principle of the law of damages, based on the avoidance of double recovery. After reviewing subsequent cases, Lord Reed concluded that it was necessary to distinguish

“(1) cases where claims are brought by a shareholder in respect of loss which he has suffered in that capacity, in the form of a diminution in share value or in distributions, which is the consequence of loss sustained by the company, in respect of which the company has a cause of action against the same wrongdoer, and (2) cases where claims are brought, whether by a shareholder or by anyone else, in respect of loss which does not fall within that description, but where the company has a right of action in respect of substantially the same loss” [80].

Case one is barred by the rule in Prudential, regardless of whether the company recovers its loss in full, but in case two recovery is permissible in principle, although it may be necessary to avoid double recovery. The rule in Prudential did not apply to Marex, which was a creditor of the Companies, not a shareholder.

The minority also decided in favour of Marex but took a different view of the effect of Prudential. Lord Sales stated that the case did not lay down a rule that would exclude a shareholder’s recovery where, factually, the loss was different from that of the company.  The governing principle was avoidance of double recovery, as was the view of the Law Lords in Johnson (contrary to the view expressed by Lord Reed).

Although there was necessarily a relationship between a company’s loss and the reduction in share values that it causes, “the loss suffered by the shareholder is not the same as the loss suffered by the company” and there is no one-to-one correspondence between the two [132].” A shareholder ought not to be prevented from pursuing a valid personal cause of action; double recovery can be prevented by other means Even if the Prudential principle were accepted, it should not be extended to cover a case involving loss suffered by a creditor of the company.

 

Intransigent defendants: Prestige 4.0

Most parties who lose English court cases or arbitrations give in (relatively) gracefully. In the long and ongoing Prestige saga, however (already well documented in this blog: see here, here, here, and here), the French and Spanish governments have chosen to fight tooth and nail, something that is always apt to give rise to interesting legal points. Last Friday’s episode before Butcher J (SS Mutual v Spain [2020] EWHC 1920 (Comm)) was no exception, though in the event nothing particularly novel in the way of law emerged.

To recap, nearly twenty years ago the laden tanker Prestige sank off northern Spain, grievously polluting the French and Spanish coasts. Steamship Mutual, the vessel’s P&I Club, accepted that it might be potentially liable to direct suit up to the CLC limit, but pointed out that its cover was governed by English law, contained a “pay to be paid” clause and required arbitration in London. Nothing daunted, the French and Spanish governments came in as parties civiles when the owners and master were prosecuted in Spain, and claimed their full losses. The Club meanwhile protected its position by obtaining declaratory arbitration awards in England against both governments that all claims against it had to be arbitrated here; for good measure it then successfully transmuted these awards into High Court judgments under s.66 of the 1996 Arbitration Act (see The Prestige (No 2) [2013] EWHC 3188 (Comm). These decisions the French and Spanish governments blithely ignored, however; instead they took proceedings in Spain to execute the judgments they had obtained there.

In the present litigation, the Club’s claim (slightly simplified) was against both governments for damages for continuing the Spanish proceedings, based either on breach of the arbitration agreement, or in the alternative on failure to act in accordance with the s.66 judgments. The object, unsurprisingly, was to establish an equal and opposite liability to meet any claim asserted by the governments under their judgments in the Spanish proceedings.

The Club sought service out on the French and Spanish governments: the latter resisted, arguing that they were entitled to state immunity, and that in any case the court had no jurisdiction.

On the state immunity point, the Club succeeded in defeating the governments’ arguments. The proceedings for breach of the arbitration agreement were covered by the exception in s.9 of the State Immunity Act 1978 as actions “related to” an arbitration agreement binding on the governments. Importantly, Butcher J regarded it as unimportant that the proceedings did not relate to the substantive matter agreed to be arbitrated, and that the governments might be bound not by direct agreement but only in equity on the basis that they were third parties asserting rights arising from a contract containing an arbitration clause.

The proceedings on the judgments, by contrast, were not “related to” the arbitration agreement under s.9: understandably so, since they were based on failure to give effect to a judgment, the connection to arbitration being merely a background issue. But no matter: they were covered by another exception, that in s.3(1)(a), on the basis that the breach alleged – suing in the teeth of an English judgment that they had no right to do so – was undoubtedly a “commercial transaction” as defined by that section.

The judge declined to decide on a further argument now moot: namely, whether suing abroad in breach of an English arbitration agreement was a breach of a contractual obligation to be performed in England within the exception contained in s.3(1)(b) of the 1978 Act. But the betting, in the view of this blog, must be that that exception would have been inapplicable: there is a big and entirely logical difference between a duty not to do something other than in England, and an obligation actually to do (or omit to do) something in England, which is what s.3(1)(b) requires.

State immunity disposed of, did the court have jurisdiction over these two governments? Here the holding was yes, but only partly. The claim based on the s.66 judgments was, it was held, subject not only to the Brussels I Recast Regulation but to its very restrictive insurance provisions dealing with claims against injured parties (even, note, where the claims were being brought, as some were in the case of Spain, under rights of subrogation). Since the governments of France and Spain were ex hypothesi not domiciled in England, but in their respective realms, there could be no jurisdiction against them.

On the other hand, the claims based on the obligations stemming from the arbitration award were, it was held, within the arbitration exception to Brussels I, and thus outside it and subject to the national rules in CPR, PD6B. The only serious question, given that the arbitration gateway under PD6B 3.1(10) or the “contract governed by English law” gateway under PD6B 3.1(6)(c) pretty clearly applied, was whether there was a serious issue to be tried as to liability in damages. Here Butcher J had no doubt that there was, even if the governments were not directly party to the agreements and the awards had been technically merely declaratory of the Club’s rights. It followed that service out should be allowed in respect of the award claims.

Further than this his Lordship did not go, for the very good reason that he had no need to. But in our view the better position is that indeed there would in principle be liability under the award claims. If, as is now clear, an injunction is available on equitable grounds to prevent suit in the teeth of an arbitration clause by a third party despite the lack of any direct agreement by the latter, there seems no reason why there should not also be an ability to an award of damages, if only under Lord Cairns’s Act (now the Senior Courts Act 1981, s.50). Further, there seems no reason why there should not be a an implied obligation not to ignore even a declaratory award by suing in circumstances where it has declared suit barred.

For final answers to these questions we shall have to await another decision. Such a decision might even indeed come in the present proceedings, if the intransigence of the French and Spanish governments continues.

One other point to note. The UK may be finally extricating itself from the toils of the EU at the end of this year. But that won’t mark the end of this saga. Nor indeed will it mark the end of the Brussels regime on jurisdiction, since the smart money is on Brussels I being replaced with the Lugano Convention, which is in fairly similar terms. You can’t throw away your EU law notes quite yet.

Fear of Damage and the CMR

 

A recent decision from the court in Amsterdam, ECLI:NL:RBAMS:2019:10104, published 21 February 2020, is a reminder of two salient differences between the liability structure of the international road carriage convention, the CMR, and that under the sea carriage conventions: as regards what constitutes ‘damage’; as regards express contractual provisions varying the scheme of the convention.

Danone, were the shipper of dairy products from Germany to France. When the goods arrived in France it was found that the seal on the container had been broken and Danone destroyed the goods and claimed their full value and the cost of their destruction. The framework contract stipulated that Danone was entitled to destroy all goods in the case that the presence of persons in the trailer was suspected, and could invoice the full value of the goods plus destruction costs. The court decided that ‘damage’ in the CMR meant a substantial physical change in the state of the goods. The fact that the seal had been broken, which allegedly caused a decrease in the market value and marketability of the goods, was not characterised as ‘damage’ within the meaning of the CMR. Recovery of economic loss under CMR is restricted to the items referred to in art.23(4) “the carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods”. By contrast, with carriage of goods by sea under the Hague Rules, a claim can subsist in relation to pure economic loss, such as the value of sound cargo destroyed due to fear of contamination by proximity to damaged cargo (The Ocean Victory Ltd. [1982] 2 Lloyd’s Rep. 88.).

Danone were also unsuccessful in referring to the specific provisions in their framework contract, due to art.41 of the CMR, because because they increased the mandatory liability of the carrier under the CMR.  Article 41 renders null and void derogations of CMR, whether for the benefit of the carrier or the sender. By contrast, art III(8) of the Hague Rules has only a one way effect in rendering null and void provisions which are for the benefit of the carrier, with art V preserving the effect of contractual provisions that benefit the shipper.

 

 

 

An odd decision over contribution, but no need to worry.

As they used to say as often as they could in the Hitch-Hiker’s Guide to the Galaxy, “Don’t panic!”

What rules govern contribution proceedings between tortfeasors? In Roberts v SSAFA [2020] EWCA Civ 926 a little boy, presumably a service child, was injured in hospital in Germany owing to SSAFA’s negligence. SSAFA claimed contribution from the MoD, alleging they were concurrently liable. The MoD said, correctly, that German law applied to the contribution proceedings and under German law they were out of time. SSAFA said yes, but then struck a remarkably nationalistic note. The English Civil Liability (Contribution) Act 1978, it argued, ought to apply to all proceedings in the English court even if the liability would otherwise be governed by foreign law: and since that said the claim against the MoD wasn’t statute-barred that was an end of it.

One decision directly in point, Arab Monetary Fund v Hashim [1994] CLY 3555, supported SSAFA; the law professors, by contrast, broadly supported the MoD. The Court of Appeal, after a lengthy analysis of the 1978 Act, came down on the side of SSAFA: on a proper interpretation the Act it, and its scheme of liability, were meant to apply to any proceedings brought here, full stop.

To put things neutrally, this blog would have been with the law professors. The decision will hardly do much for comity; nor does the result make much sense as part of a sensible scheme of private international law, since where it applies it is an open invitation to come and do some socially-distanced forum-shopping in England.

But, as we said at the beginning, don’t panic. The parties’ names in this case might well have been not Roberts and SSAFA but Jarndyce and Jarndyce: the events took place as long ago as 2000 (!). Since 2009 we have had a more sensible rule about contribution in Art.10 of Rome II, which essentially subjects contribution claims to the law governing the main tort. In just about every case you come across these days, barring outliers like this one, it will apply. Whatever else you may think of the EU, Rome I and Rome II are much better provisions than the common law rules they replaced; and even better than that, it seems a racing certainty they will they will continue serenely on post-Brexit. So litigation lawyers can pour that large gin and tonic with a clear conscience this evening.

Careful who you sell that ship to!

Safety in ship recycling has been a priority of the EU for more than seven years. Under EU Regulation 1257/2013, in force since 2018, there is a complex system of EU approval of ship recycling facilities, it being illegal to send an EU-registered ship for recycling to an unapproved facility (meaning as often as not a not-very-deserted beach in India or Bangladesh, where she is broken up essentially by hand). This Regulation is to be retained EU law post-Brexit, though from the end of this year it will be significantly narrowed, in that it will only apply to UK-registered vessels (i.e. pretty few).

But quite a lot of ship recycling is outside the regulation. A case in point was the Maran Centaurus, a vessel previously in the news as the victim of a high-profile Somali hijacking in 2009 that led to payment of a then-record ransom of about $7 million. Owned by Greek interests, at the end of her life she was reflagged to Palau and sold to a buyer for demolition, who in turn resold her to a beachside Bangladeshi concern. During demolition a worker operating in very dangerous conditions was killed. His widow rightly concluded that the demolishers were not worth powder and shot. She instead sued the owner’s managing agents, a UK company who acting under the owners’ instructions had arranged the sale, alleging that it should have been foreseeable that unless they took steps to ensure that the vessel ended up in the hands of responsible breakers she would be broken up — as she was — without any serious regard for worker safety. The agents denied fault and applied for a strikeout, on the basis that a seller of a ship owed no duty in respect of dangerous practices that might later occur in relation to her. This was not, they said, a case of damage caused by hazardous materials aboard the vessel injuring a worker: there was nothing more here than a sale indirectly to a person likely to have a less than satisfactory attitude to industrial safety.

This writer has quite a lot of sympathy for this view. But in Begum v Maran (UK) Ltd [2020] EWHC 1846 (QB) Jay J declined a strikeout, regarding it as highly arguable that, despite the vessel herself not being unusually hazardous, this was a case where the defendants had created a foreseeable risk of harm and as such potentially owed a duty of care to the worker concerned.

Note that this is not a holding that there was a duty of care: merely that the argument that there was one wasn’t a non-starter. Nevertheless, it should worry shipowners everywhere (and cause them to check on their insurance coverage). It might even extend further: for example, what of a shipowner who sells (or bareboat charters) a vessel to an operator known to have a dodgy safety record: the logic of the Maran case seems to apply here too, and if it is followed we cannot rule out liability in the seller or owner.

Admittedly the if might be a biggish one. We said that we had sympathy for the defendant’s argument. The chances are that this case will now settle so we won’t ever get a final answer here. But the defendants’ case is strong. The case for making owners responsible for policing the safety records of disponees is by no means obvious, any mote than it is obvious that in selling my car I should have to take care lest the buyer is a known drink driver. It may well be worth fighting this issue again if, as seems highly likely, it comes back to the English courts in another case.

The Alien Tort Statute on its deathbed? SCOTUS grants certiorari in two aiding and abetting cases.

The US Judiciary Act of 1789, 28 U. S. C. §1350. which is now known as the Alien Tort Statute, provides: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of of the law of nations or a treaty of the United States.” For nearly forty years it has been used as the gateway to bring suits in the US District Courts against individuals and corporations based on alleged violations of norms of international law.

The Supreme Court has three times considered the scope of the ATS: in Sosa in 2004 when it decided that the norms of the ‘law of nations’ had to be as well established as the three such norms in existince when the ATS was passed in 1789 (piracy, offences against ambassadors, violations of safe conducts); in Kiobel in 2013 when it decided that the ATS was subject to the presumption against extra-territorial application of US standards and; in Jesner v Arab Bank in 2018, when it decided that foreign corporations could not be subject to liability under the ATS. But what about US corporate defendants?

It now seems that there is a chance of killing off the ATS altogether, although ATS type claims could still be brought in the future as tort claims in the state or federal courts. On 2 July the US Supreme Court granted certiorari to hear appeals in two Alien Tort Statute decisions, involving claims against Nestle and Cargill alleging aiding and abetting forced labour by farmers in Côte d’Ivoire from whom they bought cocoa.

The questions presented, each of which is the subject of a circuit conflict, are:

  1. Whether a defendant is subject to suit under the ATS for aiding and abetting another person’s alleged violation of the law of nations based on allegations that the defendant intended to pursue a legitimate business objective while knowing (but not intending) that the objective could be advanced by the other person’s violation of international law.
  2. Whether the “focus” test of Morrison v. National Australian Bank, Ltd., 561 U.S. 247, 248 (2010), governs whether a proposed application of the ATS would be impermissibly extraterritorial under Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013).
  3. Whether there is a well-defined international-law consensus that corporations are subject to liability for violations of the law of nations.

The third question is particularly interesting in that this is the same issue as came before the Supreme Court of Canada in the strike out decision in Nevsun v Araya in its decision at the end of February 2020. Almost all the material on this issue derives from the decisions of US federal courts in ATS cases. As they say, “If you want to know about customary international law, ask an American lawyer.” – and you will get no definite answer on this one.

Are your bunkers ‘necessaries’? Not if you are carrying them as cargo says US Fifth Circuit.

The Commercial Instruments and Maritime Liens Act (“CIMLA”), 46 U.S.C. §§ 31301–31343, provides that a person may obtain a maritime lien against a vessel by providing it with “necessaries.” In Martin Energy L.L.C v Bourbon Petrel MV, yet another case involving the OWB collapse, the Fifth Circuit has considered the issue of  “necessaries” in a claim by the physical bunker supplier against support vessels that took on bunkers as cargo, for refuelling seismic survey vessels off the Louisiana coast.

The District Court had found that the supplier had a maritime lien over the supply vessels. The court reasoned that two of the support vessels, served as “floating gas stations” for the seismic Vessels and that the fuel was “necessary” for the support Vessels to perform this function. Similarly, the court reasoned the fuel was “necessary” for the third support Vessel, to function as an “offshore supply vessel,” transporting fuel, equipment, and personnel to the Seismic Vessels.

The Fifth Circuit has reversed that finding. Fuel may be “necessary” to a vessel if it fuels the vessel. But the fuel transported by the support vessels was for refuelling other vessels and was not “necessary” to the support vessels.

Delay and discretion with the anti-suit injunction.

 

The anti-suit injunction is a discretionary remedy. Even when the foreign proceedings are clearly in breach of a High Court jurisdiction clause or a London arbitration clause, you may not get your remedy. The principle reason for the court not issuing the ASI is delay in applying for the remedy and allowing the foreign proceedings to become advanced. Issues of justice and comity coincide here, but what length of delay will incline the court not to grant you the ASI you have set your heart on?

This was the issue in the recent Commercial Court decision of Henshaw J in Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil SA [2020] EWHC 1223 (Comm) (15 May 2020). A cargo claim arose out of a collision, brought by cargo insurers, Chubb. In March 2016 Chubb started arbitration in London against the owners Fair Wind under the owners’ bill which incorporated a London arbitration clause. In November Chubb commenced proceedings in Brazil against Mizuho the vessel managers, Daiichi, the time charterer, and Noble Resources, an associated company of the voyage charterer, who had Resources used vessel to perform a shipment under a COA with CSN Handel, claiming US$2.7m.

In August 2017 owners and Mizuho issued an arbitration claim form in the Commercial Court seeking an ASI against Chubb in respect of the Brazilian proceedings against Mizuho, and in October Knowles J granted the ASI Mizuho in Brazil. A month later Daiichi’s obtained from Chubb an undertaking mirroring the order of Knowles J. On 26 June 2019 the Brazilian Superior Court of Justice finally rejected Chubb’s amendment claim.

Time charterers, Daiichi, and Chubb then jointly requested a stay of Brazilian proceedings for six months, “ without prejudice to any of their rights (including, in relation to the defendants, the right to challenge the Brazilian court’s jurisdiction, in view of the arbitration clause contained in the Bills of Lading and Charter Party”. In March 2020 Chubb filed substantive defences to the defence and jurisdiction challenges of Noble Resources and then of Daiichi, claiming that the bill of lading arbitration clauses did not apply to them as the subrogated insurer. This was a clear breach of the undertakings previously given to Noble Resources and to Daiichi.  A Court order in Brazil of 23 April 2020 gave Daiichi and Noble Resources until 25 May 2020 to respond to Chubb’s latest submissions.

The principles relevant to delay were set out by Bryan J in Qingdao Huiquan Shipping Co v Shanghai Dong He Xin Industry Group Co Ltd [2018] EWHC 3009 (Comm); [2019] 1 Lloyd’s Rep. 520.

“(1) There is no rule as to what will constitute excessive delay in absolute terms. The court will need to assess all the facts of the particular case: see Essar Shipping Ltd v Bank of China Ltd (The Kishore) [2016] 1 Lloyd’s Rep 427 at paras 51 to 52 per Walker J.

(2) The question of delay and the question of comity are linked. The touchstone is likely to be the extent to which delay in applying for anti-suit relief has materially increased the perceived interference with the process of the foreign court or led to a waste of its time or resources: see Ecobank Transnational Inc v Tanoh [2016] 1 Lloyd’s Rep 360 at paras 129 to 135 per Christopher Clarke LJ; The Kishore at para 43; and see also Sea Powerful II Special Maritime Enterprises (ENE) v Bank of China Ltd [2017] 1 HKC 153 at para 21 per Kwan JA.

(3) When considering whether there has been unacceptable delay a relevant consideration is the time at which the applicant’s legal rights had become sufficiently clear to justify applying for anti-suit relief: see, for example, Sabbagh v Khoury [2018] EWHC 1330 (Comm) at paras 33 to 36 per Robin Knowles J.”[29]

Here the relevant period of delay did not start until Chubb’s change of tack in the Brazilian proceedings. Chubb was, from June 2019 until March 2020 actively co-operating with Daiichi to defer any further substantive proceedings in Brazil, and thus could reasonably be regarded by Daiichi as neither breaching nor threatening to breach the Undertaking. Daiichi and Noble Resources were not, in any substantive sense, actively engaging in the proceedings in Brazilian but rather, with Chubb’s express and active support, seeking to defer them. Such positive steps as were taken were taken only out of necessity or on a precautionary basis. It must have been clear to Chubb at all material times that such steps did not indicate that Daiichi or Noble Resources were content to allow the Brazilian court to decide the jurisdiction issues and, if relevant, the merits. Any legal expenses incurred by Chubb in this period would have been limited. This case was not one where a party who simply allows foreign proceedings to take their course, subject to making a jurisdiction challenge, when faced with a claim brought in breach of a jurisdiction or arbitration agreement. There had been no material delay by Daiichi following the revival of Chubb’s position in the Brazilian proceedings.

Nor did considerations of comity towards the Brazilian court weigh against the grant of such relief. Chubb argued that proceedings were now at an advanced stage, with a risk of judgment on the merits very soon, so to grant an anti-suit injunction would in effect be to ‘snatch the pen’ from the Brazilian judge’s hand. However, since June 2019 the only step taken in relation to the substantive merits has been the precautionary filing of Noble Resources’ defence in September 2019 and Chubb’s reply of 2 March 2020. The Brazilian court had not yet assumed jurisdiction over any of the defendants and it could not be said that it was poised to pass judgment on the merits. Although time which elapses during a jurisdiction challenge in the foreign court is still relevant when considering delay, it did not follow, however, that the mere making of a jurisdiction challenge in the foreign court made any subsequent anti-suit injunction inconsistent with considerations of comity. This was not a case of the ‘two bites of the cherry’ strategy of awaiting the foreign court’s outcome before seeking an anti-suit injunction.

A mandatory injunction was ordered as it was necessary to require Chubb to discontinue otherwise there would now be a real risk that the Brazilian court would proceed to judgment on the merits at some stage after 25 May. Daiichi, to whom the undertaking had been given, wished the injunction to extend to proceedings against Noble Resources, because it feared that otherwise Noble Resources would seek to pass any liability ‘up the line’ to Daiichi. Daiichi had shown a sufficient interest in enforcing the injunction as regards claims against Noble Resources. It was not unlikely that some form of contractual arrangement existed under which Noble Resources could pass up to Noble Chartering, and hence to Daiichi, any liabilities which as between owners and charterers would fall on owners.