Marine Trade Consulting GmbH v The OwnerS of the ship "Kareliya"
[1997] FCA 253
•21 MARCH 1997
CATCHWORDS
INJUNCTIONS - jurisdiction to grant an "anti-suit injunction" compelling party to cease proceedings in foreign forum - principles governing exercise of jurisdiction - Court will not make order depriving party of a legitimate advantage available in the foreign forum - whether a legitimate advantage had been taken in circumstances in which the party seeking relief in the foreign forum could benefit there from a legal doctrine which was not available in this forum and where that party was at some forensic disadvantage in the proceedings in this forum.
Admiralty Act 1988 - para 4(3)(m), sub-s 17(b), sub-s 21(1)
Admiralty Rules - r 52
Stern v National Australia Bank (1996) 34 IPR 565
Societe Nationale Industrielle Aerospatiale v Lee Kui Jack [1987] 1 AC 871
MARINE TRADE CONSULTING GmbH -v- THE OWNERS OF THE SHIP "KARELIYA"
No. NG 665 of 1996
CORAM: FOSTER J
DATE: 21 MARCH 1997
PLACE: SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 665 of 1996
)
GENERAL DIVISION IN ADMIRALTY )
BETWEEN:MARINE TRADE CONSULTING GmbH
Plaintiff
AND:THE OWNERS OF THE SHIP "KARELIYA"
Defendant
JUDGE MAKING ORDERS: FOSTER J
DATE: 21 MARCH 1997
PLACE: SYDNEY
MINUTE OF ORDERS
THE COURT ORDERS THAT:
1.The Notice of Motion be dismissed.
2.The defendant pay the plaintiff's costs.
3.The parties have liberty to apply on seven day's notice in respect of the width of the order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 665 of 1996
)
GENERAL DIVISION IN ADMIRALTY )
BETWEEN:MARINE TRADE CONSULTING GmbH
Plaintiff
AND:THE OWNERS OF THE SHIP "KARELIYA"
Defendant
CORAM: FOSTER J
DATE: 21 MARCH 1997
PLACE: SYDNEY
REASONS FOR JUDGMENT
(Extempore)
HIS HONOUR: This is a Notice of Motion brought in proceedings NG 665 of 1996 by Globus, which has been described as a Ukrainian private enterprise, and Maddock Trading Incorporated ("Maddock"), apparently a corporate entity in Monrovia, Liberia. Globus and Maddock seek orders in the nature of an anti-suit injunction against the plaintiffs in the proceedings, Marine Trading Consulting GmbH ("MTC"). Globus is described as the bareboat charterer of the vessel ("the Kareliya") and Maddock as its owner. MTC is a corporate entity which provides managerial services for ship operators.
The Kareliya has been detained since 17 March this year in the port of Noumea pursuant to an order obtained by MTC from the President of the Tribunal Mixte of Noumea for its arrest in respect of a debt worth in excess of five million Deutschmarks allegedly owing to MTC. The vessel is under charter to CTC Package Holidays Pty Limited ("CTC Holidays") for use as a cruise ship. It has approximately 275 passengers aboard who embarked for a cruising holiday. The next port of call after Noumea was to be Sydney where the passengers would disembark. The vessel is currently prevented from making a return voyage. It is also scheduled to leave Sydney later today on another cruise for which some 500 passengers have bookings. There is obviously considerable disruption and inconvenience resulting from the vessel's current detention in Noumea. There is, however, no suggestion that the seizure and detention is otherwise than completely lawful and regular in accordance with the French law applicable in Noumea. Under the detention order the release of the Kareliya can be obtained by the lodging of a bank guarantee "issued by a French bank of the first rank". Apparently, no such guarantee has been lodged.
By their Notice of Motion Globus and Maddock seek the following orders:
"(1)The Plaintiff forthwith take all steps necessary to cause the ship `Kareliya' to be released from any seizure or arrest effected pursuant to the order issued on 14 March 1997, a copy of which is annexed hereto and marked `A' and further pending further order of this Court take no steps to cause the seizure or arrest of the said ship, other than in this Court.
(2)Such other order as this honourable Court may see fit."
The relevant background to the matter may be shortly stated. The debtor, MTC, claims to be owed a significant sum of money by a corporate entity known as the Black Sea Shipping Company of Odessa ("BLASCO") in respect of services of a managerial nature performed by it for that entity. It instituted a general maritime claim within the meaning of para 4(3)(m) of the Admiralty Act 1988 ("the Act"). There has been no assertion made that the debt is not in fact owing.
In August 1996 MTC issued a writ in rem in the admiralty jurisdiction of this Court and sought to arrest the Kareliya, then in the port of Sydney. The vessel was arrested by warrant on 30 August 1996. Globus entered an appearance to the writ. In initial proceedings in relation to the matter Globus described itself as the owner of the vessel. It sought the release of the vessel from arrest under r 52 of the Admiralty Rules. This application was heard by Tamberlin J. At the hearing Globus described itself as the bareboat charterer of the Kareliya. There was no appearance in the proceedings before Tamberlin J of any entity claiming to be the owner of the vessel.
After hearing the matter his Honour released the vessel from its arrest on that day and later gave his reasons for so doing. From a reading of his Honour's judgment it clearly appears that he was not satisfied that the requirements of sub-s 17(b) of the Act had been made out by the plaintiff. The plaintiff had failed to prove, as it was required to do by that sub-section, that the alleged debtor, BLASCO, was the owner of the vessel when the proceedings were commenced. On the basis of the evidence then before him, his Honour was satisfied that Maddock was the owner by virtue of a Bill of Sale executed on 10 July 1995 transferring all the shares in the ship from BLASCO to Maddock for the price of $US12 million. There was also a bareboat charter executed by Maddock as owner and Globus as charterer dated 12 January 1996 and a signed contract of Time Charter between Globus and CTC London, which appears to be the parent company of CTC Holidays. That charter was for the period from 12 January 1996 to the end of September 1996.
It may be noted, however, that there was before his Honour evidence which tended to show that BLASCO, despite these transactions, had retained a proprietary interest in the vessel. This matter has been referred to in argument. There is no need to set it out here. However, his Honour's findings on this topic were as follows (at 19):
"While there is evidence of a general and circumstantial nature to indicate that there may be links between the vessel and BLASCO, I do not consider that the evidence discloses that as at 15 August 1996 BLASCO had any ownership interest in the vessel beneficial or otherwise.
The evidence leads me to the conclusion that the owner is Maddock Trading Co Limited with a bareboat
charter to Globus, which in turn has entered into a Time Charter Contract with CTC."
An appeal against his Honour's interlocutory order was brought by leave to a full court of this Court. At this stage Maddock entered an appearance as owner in the proceedings. An application to adduce fresh evidence on the part of the plaintiff was refused and the appeal was dismissed.
On 7 March 1997 MTC filed a Notice of Motion returnable before Tamberlin J on 12 March seeking that leave be granted to re-arrest the ship pursuant to s 21 of the Act. On 12 March 1997 Globus and Maddock moved the Court to set aside the writ in rem and for the dismissal or permanent stay of the proceedings. On that date MTC obtained an adjournment of the Notice of Motion brought by Globus and Maddock and was ordered to pay costs. Further directions were given in respect of the Notice of Motion brought by MTC and that matter was set down for further directions on 8 May 1997. That is the current state of proceedings in this Court and this was the position when the ship was seized in Noumea on 17 March.
It appears from evidence before me, which I accept, that the proceedings for seizure in Noumea were instigated by overseas lawyers on behalf of MTC and that MTC's Sydney solicitors have had no significant role in them and indeed were not aware of them on 12 March.
The claim by Globus and Maddock for the orders sought in the Notice of Motion is based upon equitable principles relating to anti-suit injunctions. Broadly it is asserted that MTC's resort to the foreign court in Noumea was in the circumstances vexatious and oppressive and unconscionable. It was also said to amount to an abuse of process. These considerations, it was submitted, should lead to my making the mandatory orders sought in the Notice of Motion. At first it was put that they should be made on a final basis, later it appears to have been accepted that they might also be made on an interlocutory basis.
The arrest has already taken place but orders are sought that, in effect, would require that MTC take steps to cause the arrest to be vacated in the Noumean court. I have been referred to a number of authorities. I do not propose to recount them all in these short reasons given in fairly urgent circumstances.
The principles relating to anti-suit injunctions have been clearly summarised, if I may say so with respect, in the judgment of Tamberlin J in Stern v National Australia Bank (1996) 34 IPR 565 at 572 where his Honour, after referring to the leading authority of Societe Nationale Industrielle Aerospatiale v Lee Kui Jack [1987] 1 AC 871, said that that case established the following principles:
"(1)The jurisdiction to grant an anti-suit injunction is to be exercised when the `ends of justice require it'.
(2)Where the court decides to grant an injunction restraining proceedings in a foreign court, its order is directed not against the foreign court but against the parties proceeding or threatening to proceed.
(3)An injunction will only be issued restraining a party who is amenable to the jurisdiction of the court, against whom an injunction will be an effective remedy.
(4)Since such an order indirectly affects the foreign court, the jurisdiction is one which must be exercised with caution.
(5)One important purpose of the injunction is to protect the jurisdiction of the local court.
(6)The court will only restrain the plaintiff from pursuing the foreign proceedings if the pursuit of such proceedings is regarded as vexatious or oppressive. The notions of vexation and oppression should not be restricted by definitions.
(7)There is no presumption that a multiplicity of proceedings is in itself vexatious, or that proceedings are vexatious, merely because they are brought in an inconvenient place."
His Honour also referred, at the same page, to a passage from Aerospatiale, at page 896, where in their Lordships' advice it was said that:
"... since the court is concerned with the ends of justice, that account must be taken not only of injustice to the defendant if the plaintiff is allowed to pursue the foreign proceedings, but also of injustice to the plaintiff if he is not allowed to do so. So the court will not grant an injunction if, by doing so, it will deprive the plaintiff of advantages in the foreign forum of which it would be unjust to deprive him."
On this aspect of the case reference should also be made to a passage appearing at page 894 of the advice in Aerospatiale where reference is made with approval to an early judgment of Jessel MR, in which the Master of the Rolls said, in relation to the bringing of two actions, one in a foreign country and one locally, that it is not vexatious to bring an action in each country where there are substantial reasons of benefit to the plaintiff.
It is easy to see, as indeed the 19th Century cases show, why in many instances this is so. For example, there may be assets available for execution in a foreign country or another party may only be amenable to the jurisdiction of the courts of the foreign country. A significant feature of the present case should now be mentioned. The case sought to be brought in this Court for leave to re-arrest is to be based upon evidence not before Tamberlin J. It is to be found in the affidavit of Heinz‑Herbert Hey, a director of MTC, which was read in these proceedings. If accepted, it could arguably lead to a finding that the Bill of Sale between BLASCO and Maddock was in fact a sham and that BLASCO has remained at all relevant times the beneficial owner of the vessel.
It could also lead to a finding that Globus and Maddock knowingly misled Tamberlin J on this significant issue. It is clear that this evidence has been placed before the court in Noumea. It must be noted that so far as the proceedings before this Court are concerned, there has been no opportunity to answer this material. It is, however, prima facie of considerable cogency and in my view cannot be ignored
in relation to the exercise of discretion as to the granting of the injunctive relief sought.
The main thrust of the argument on behalf of Globus and Maddock is that the relevant vexation and oppression has been committed by MTC by its taking the proceedings in Noumea suddenly and without notice in circumstances where it was at the same time participating in the orderly disposal of proceedings in this Court dealing with the same subject matter. It is emphasised that the vessel was on a regular cruising schedule which was to bring it back to Australia at regular intervals in the future and place it within the jurisdiction of this Court. Accordingly, the taking of proceedings in Noumea could properly be characterised, it was said, as a pre-emptive strike designed to inflict major inconvenience and embarrassment upon Globus, Maddock, and CTC Holidays with a view to forcing one or all of them to enter into security for release of the vessel from arrest. It was submitted that the steps taken should be seen as being in the nature of blackmail. Emphasis was also laid upon the inconvenience to the passengers, the disruption of their travel plans, and also upon the disruption of the cruising timetable of the Kareliya. Reference was made to the likelihood of Globus and Maddock being sued by CTC Holidays for breach of contract and of claims being brought by the passengers. In these circumstances it was submitted that the Court should find that the taking of the Noumea proceedings by MTC were relevantly oppressive and vexatious to Globus and Maddock and a culpable interference with the jurisdiction of this Court. Accordingly, it was submitted, an injunction, either final or interlocutory, should be granted.
In relation to interlocutory relief, no offer of an undertaking as to damages was made. It was resisted until the hearing was nearly completed. It was then offered on behalf of CTC Holidays, as well as Globus and Maddock. On the evidence I am not persuaded as to the financial capacity of these organisations to fulfil an undertaking in circumstances where damages might be of very significant size. As to the inconvenience caused to passengers, regrettable as this undoubtedly is, it is submitted by MTC that as cruise ships are not immune from arrest under maritime law there will necessarily be disturbance to passengers. It cannot operate as a legal bar to an arrest which is otherwise justified. I consider this submission to be correct.
The substantial question for decision, as I see it, is whether MTC has taken unconscionable advantage of the presence of the vessel in the port of Noumea to institute proceedings under the French law for its seizure. Involved in this question is the consideration whether those proceedings are for practical purposes the same as those currently awaiting hearing in this court with the result that no legitimate advantage was provided to MTC by taking the Noumea proceedings. Was it unconscionable for it to have subjected the applicants to such disruption and inconvenience when it could have had the matter determined here in an orderly and reasonable way without inflicting those consequences upon them?
It is submitted by counsel for the applicants that the French proceedings are equivalent to those in this court and that no justifiable advantage has accrued to MTC. Both proceedings are based upon an alleged debt and are, so it is submitted, directed to the arrest of the vessel as security for the debt. It is submitted that an anti-suit injunction does not require that the parties be the same in each jurisdiction or that the form of the proceedings be the same. The Court should look to the substance of the matter in determining whether there is relevant equivalence between the proceedings.
Whilst it may be accepted that these submissions are broadly correct it is still important, in my view, to examine the nature and form of the proceedings in each jurisdiction to determine whether or not proper juridical advantage accrues to the party bringing the proceedings in the foreign forum. Counsel for MTC submits that there are in fact significant differences between the two proceedings. I shall make reference to these submissions in the course of considering the nature of the proceedings as disclosed by the evidence.
I have already indicated the course of proceedings in this Court and the current position of those proceedings. The effect of those proceedings from the point of view of MTC, in its counsel's submission, is that it has currently failed to invoke the jurisdiction of this Court. It has sought to establish that its alleged debtor, BLASCO, was the owner of the vessel Kareliya at the time of commencement of the action in rem against the vessel, as required by sub-s 17(b) of the Act, and it has simply failed to do so at first instance and on appeal. On appeal it sought to introduce fresh evidence. This apparently was similar to the evidence it now has adduced bearing upon whether the relevant Bill of Sale between BLASCO and Maddock was a sham. The Full Court refused leave to introduce this evidence and expressed the view (at 6-7) that:
"... the evidence would be in no way decisive of the issues raised on the appeal and in any event it is clear that evidence about the structure of Maddock Trading Inc, to the same effect as the evidence provided by the share certificates, was available to the appellants at the time of the hearing before Tamberlin J."
It is not entirely clear to me whether the evidence thus rejected in the Full Court was in every way the same as the evidence that has been placed before me. Obviously it had certain similarities as the reference to the share certificates indicates. It is of course possible that it has not been presented in the same cogent form as in the affidavit of Mr Hey currently before me. MTC is consequently in the position in this Court of resisting an application that its proceedings be finally dismissed and of seeking an order on its own behalf under sub-s 21(1) of the Act for leave to re-arrest the vessel. It will seek that order primarily on the
basis of the fresh evidence which is of the nature of the evidence rejected in the Full Court. I have heard argument on the effect of s 21. I do not need to refer to it in detail. Counsel have the benefit of their submissions. I am satisfied that the orders sought would by no means be made as of course because MTC must establish "some other sufficient reason" within the meaning of the section. This might involve some difficulty in view of the course of the proceedings to date.
It is clear that the section was introduced to deal primarily with situations where an earlier arrest had been made foloowed by the release of the vessel upon the provision of security or the giving of an appropriate undertaking and the security or undertaking in the event proving unsatisfactory or inadequate. In such circumstances the vessel which had been freed from arrest might be re-arrested. It appears that the phrase "for some other sufficient reason" was introduced into the section to avoid the disadvantage of "a loss of flexibility, including the danger of not anticipating all possible circumstances in which re-arrest should be permitted". It was thought better to "leave the court with a discretion whether to permit rearrest (and to confer the power to impose conditions on the right to rearrest) while specifying the most important of the grounds upon which re-arrest is likely to be permitted" (Australian Law Reform Commission, Report number 33, page 163).
The question of re-arrest most frequently arises in circumstances where there has been an arrest followed by provision of security and the release of the vessel and then some defect occurring in relation to the security. In the present case Sheppard J allowed the release of the vessel on the basis that it would return to Sydney and that leave to re-arrest it was given by consent. There has been no consent to the re-arrest of the vessel offered in these proceedings and no security has been proffered. Indeed, the proceedings in relation to the re-arrest are contested.
MTC is therefore in the position that it must seek a purely discretionary order from the Court for the re-arrest of the vessel in Sydney in circumstances where there can be no certainty that such an order would be made. Whilst I am not necessarily persuaded that what has occurred in this Court up to the present amounts merely to the resolution of the question of jurisdiction, I am satisfied that MTC is currently in a situation of some forensic disadvantage in relation to its action in rem.
Counsel for MTC submits that his client is in a far more advantageous position in its action in Noumea. Insofar as French law has permitted the seizure of the ship this is obviously so. He also puts that the proceedings are relevantly different from the proceedings in this Court. In this he is supported by expert evidence as to French law. In the first place the proceedings in Noumea are against BLASCO, not Globus or Maddock. This is not a critical consideration but it is of significance. The proceedings are not in rem against the vessel itself. The expert evidence, which I accept, states that the "nature of the arrest of the Kareliya by the French court of Noumea is that of a conservatory arrest. The proceedings commenced by the plaintiff in Noumea to arrest the ship are not proceedings in rem. The proceedings are against BLASCO as defendant, as owner of the Kareliya. The conservatory arrest is similar to a Mareva injunction."
I have been provided with a translation of the relevant documents used in the ex parte proceedings in Noumea. The main document is headed "Request for Seizure for Purposes of Restraint". It contains a full statement of the claim alleged against BLASCO and the basis upon which seizure of the vessel is sought. It is lengthy, it is in evidence, and I shall not set it out in these reasons. I shall, however, refer to the following passage which follows upon reference to the evidence as to the sham nature of the sale of the vessel by BLASCO to Maddock. It reads:
"The documents produced for purposes of discussion and in particular the abovementioned letter by WATSON FARLEY therefore clearly show that BLASCO holds the full amount of the shares to the bearer of the MADDOCK COMPANY.
BLASCO, a debtor to MTC, therefore fully controls MADDOCK, the owner of the vessel KARELIYA.
MADDOCK therefore, the current owner of the vessel KARELIYA is clearly a fictitious company linked by a community of interest to BLASCO, from the moment
onwards that all the shares in MADDOCK are owned by BLASCO.
The vessel KARELIYA is still operated by CTC which is, to an extent of 100%, a branch of BLASCO.
MADDOCK TRADING COMPANY which is no more than a fictitious company controlled in its entirety by the Ukrainian State, has entered into a charter contract on 12 January 1996 with a company called GLOBUS which has its head office in ODESSA in the UKRAINE."
There follows further exposition of the asserted link between BLASCO, Globus, Maddock and CTC. The reference to a "community of interest" relates to a doctrine of French law which seems clearly to confer an advantage on MTC not present in the current proceedings in Australia. This is referred to in the expert evidence as follows:
"The foundation of the Plaintiff's arrest of Kareliya in Noumea is Article 29 of the Decree of 27 October 1967 which provides, inter alia, that a vessel may be arrested when a creditor has a prima facie claim against the debtor and the debtor has in [sic] interest in the relevant vessel. Decisions of the French Cour Cessation [sic] applying Article 29 allow a French Court to arrest a vessel in France or French Territories when it is owned by a fictitious company linked by a `community of interest' with the debtor."
The doctrine of community of interest has been developed by the French courts and allows the arrest of a vessel belonging to a registered owner which is linked by a community of commercial interest with the debtor. I am quite satisfied that the proceedings in Noumea conferred advantages on MTC which are currently lacking in respect of its proceedings in this Court. I am also satisfied that it was in all the circumstances not unreasonable, let alone unconscionable, for it to utilise those advantages.
I do not accept the submission, which was not in any event fully articulated, that there had been an improper interference with the procedures of this Court. There would appear to be no impediment to their being stayed pending the disposition of the foreign proceedings. However, I express no concluded view as to that matter.
I am satisfied in all the circumstances that no sufficient equity has been demonstrated to ground the granting of the injunction sought on either a final or an interlocutory basis. In those circumstances I dismiss this Motion with costs and grant liberty to apply on seven day's notice in respect of the width of the order as to costs.
I certify that this and the preceding sixteen (16) pages are a true copy of the reasons for judgment herein of the Honourable Justice M. L. Foster.
Associate:
Date: 21 MARCH 1997
A P P E A R A N C E S
COUNSEL FOR THE PLAINTIFF (respondent on Notice of Motion):
A.W. STREET SC
with B.W. LARKIN
INSTRUCTED BY: PHILLIPS FOX
COUNSEL FOR THE DEFENDANT (applicant on Notice of Motion):
N.C. HUTLEY SC
with DR A BELL
INSTRUCTED BY: EBSWORTH & EBSWORTH
DATE OF HEARING: 18, 19 & 20 MARCH 1997
DATE OF JUDGMENT: 21 MARCH 1997
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