Law Report: Ship arrested to secure claim: The Anna H - Court of Appeal (Lord Justice Glidewell, Lord Justice Hoffmann and Lord Justice Hobhouse), 27 July 1994.

The Admiralty Court had jurisdiction to hear a claim 'in rem' against a ship whose owners were German domiciled, notwithstanding the rule in article 2 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Brussels, 1968, that 'persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state', since by article 57 that rule was specifically made subject to the earlier rule, in article 2 of the International Convention Relating to the Arrest of Seagoing Ships, Brussels, 1952, that 'a ship flying the flag of one of the contracting states may be arrested in the jurisdiction of any of the contracting states in respect of any maritime claim'.

Moreover, the fact that the plaintiff's motive in arresting the ship was not solely to provide security for his claim did not prevent the arrest constituting 'the detention of a ship by judicial process to secure a maritime claim' within the meaning of art 1(2) of that Convention, so long as that was its legal effect.

The Court of Appeal dismissed an appeal by the defendants, the German-domiciled owners and demise charterers of the ship Anna H, against the dismissal by Mr Justice Clarke ((1994) 1 LLoyd's Rep 287) of their application to set aside a claim in rem brought by the plaintiffs, owners of cargo lately laden on her board. The ship was arrested while in this country and then released on bail following a dispute over damaged cargo.

Luke Parsons (Dabelstein & Passehl) for the defendants; Jonathan Hirst QC, and Dominic Kendrick (Clyde & Co) for the plaintiffs.

LORD JUSTICE HOBHOUSE said that in The Diechland (1991) 1 QB 361, the Court of Appeal held that an admiralty action in rem was, without more, capable of infringing art 2 of the 1968 Judgments Convention, but indicated that where a vessel had been arrested in accordance with the 1952 Arrest Convention the Admiralty Court would have jurisdiction by virtue of art 57 of the Judgments Convention, which provided:

'(1) . . . this Convention shall not affect any conventions to which the contracting states are or will be parties and which, in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments'.

'(2) With a view to its uniform interpretation, paragraph (1) shall be applied in the following manner: (a) This Convention shall not prevent a court of a contracting state which is a party to a convention on a particular matter from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in a contracting state which is not a party to that convention'.

The defendants argued that The Diechland should not be followed here. They said the arrest of their ship at the plaintiffs' instance was not 'to secure' any claim within the meaning of art 1(2) of the Arrest Convention; they did not need to arrest her to obtain security; they arrested her to found jurisdiction.

They also contended that the Judgments Convention should be construed as giving effect to an over-riding policy, and the Arrest Convention should be read as subject to and qualified by that policy.

But it was held in The Nordglimt (1988) QB 183 and The Po (1991) 2 Lloyd's Rep 206, that the two Conventions were to be read together: their relationship was of the special to the general. Where special provision was made in the Arrest Conventioin, it should govern: where no special provision was made, the general provisions of the Judgments Convention applied. Within its scope, the Arrest Convention governed the jurisdiction of the Admiralty Court and prevailed over the provisions of the Judgments Convention. It was clearly intended that the jurisdiction available under the Arrest Convention should be preserved and apply even though the shipowner might be domiciled in another member state.

But art 57 only preserved the jurisdiction of the Admiralty Court in rem, not in personam. The judgment in an action in rem was solely as against the res (the ship) or any bail substituted therefore; it created no rights enforceable in personam (eg against her owners).

On the authority of The Diechland, the action in rem could not be sustained without the arrest, and without the arrest, the plaintiffs had no action and no right to any security: the arrest was a necessary step in their obtaining security. The judge rightly rejected the defendants' argument.

LORD JUSTICE HOFFMANN gave a concurring judgment. It was not disputed that the ground on which the arrest warrant was issued was that the plaintiffs had brought an action in rem asserting a maritime claim, and that when arrested, the ship became security for that claim. The security may have been superabundant, but was security none the less.

The Arrest Convention required only that the legal consequences of judicial detention of the ship should be that it became security for a maritime claim, not that the plaintiff's commercial motive must be to obtain security.

The purpose of the Arrest Convention was to harmonise the laws of the contracting state as to the kinds of claim which could form the basis of an arrest, and the words 'to secure a maritime claim' were part of the scheme to prevent the use of arrest for securing others kinds of claim.

LORD JUSTICE GLIDEWELL agreed.