Factual and Procedural Background
These two appeals concern Part 20 claims for contribution brought by the third party, Fortum, against the appellants and a fourth party, Saudi Aramco, who are defendants in two related actions. The underlying actions arise from two shipments of propane carried on the vessel "Baltic Flame" in April and November 1993. Saudi Aramco was the shipper and original party to the Bills of Lading for both cargoes, which were shipped from Yanbu, Saudi Arabia.
Both cargoes were initially tested and found to be "on specification", but upon arrival at their intended discharge ports, they failed copper strip corrosion tests. This resulted in the cargoes being redirected and sold at a discount by the plaintiffs, Petrobras, who are the lawful holders of the Bills of Lading and plaintiffs in each action. The shipowners, Mellitus, defendants in the actions, suffered losses due to delays, expenses at discharge ports, and costs in cleaning the vessel's tanks.
Petrobras claimed against Mellitus alleging contamination during the voyage and liability for demurrage. Mellitus counterclaimed against Petrobras, alleging contamination at shipment and liability under the Bills of Lading for loading dangerous cargo, seeking tank cleaning costs. Mellitus further issued Third Party/Part 20 proceedings against Fortum, the vessel's time-charterer, claiming indemnity/damages related to any liability Mellitus might have to Petrobras and the tank cleaning costs. Additionally, Mellitus issued Third Party/Part 20 proceedings against Saudi Aramco, claiming damages on a similar basis to its counterclaim against Petrobras.
The Bills of Lading incorporated charterparty terms including arbitration clauses providing for London arbitration under English law. Accordingly, Mellitus’ Part 20 proceedings against Saudi Aramco were stayed pending arbitration.
Fortum obtained permission to serve its own Part 20 claims on Saudi Aramco out of the jurisdiction, asserting Saudi Aramco was a necessary or proper party under RSC Order 11 rule 1(1)(c) because any liability of Fortum under its time-charter would give rise to Saudi Aramco’s liability under the Bills of Lading, entitling Fortum to claim contribution under the Civil Liability (Contribution) Act 1978.
Saudi Aramco applied to set aside Fortum's Part 20 claims and service out of jurisdiction on grounds that they were not a proper party and that the court should exercise discretion against jurisdiction, emphasizing the arbitration agreement and the lack of a contribution remedy under Saudi Arabian law.
Legal Issues Presented
- Whether Saudi Aramco is a "necessary or proper party" to Fortum's Part 20 claims for contribution under RSC Order 11 rule 1(1)(c) and CPR 6.20(3).
- Whether the English court should exercise its discretion to permit service of Fortum’s contribution claims on Saudi Aramco out of the jurisdiction, considering the arbitration agreement and forum conveniens principles.
- The effect of the Civil Liability (Contribution) Act 1978 on jurisdiction and joinder of foreign parties who may not be directly liable or subject to contribution claims in their domicile jurisdiction.
- The interplay between the arbitration clause between Mellitus and Saudi Aramco and Fortum’s claim for contribution against Saudi Aramco in English court proceedings.
Arguments of the Parties
Appellant's Arguments (Saudi Aramco)
- The exercise of jurisdiction under RSC Order 11 is "exorbitant" and should be exercised with care, especially when the cause of action lacks connection to England.
- The power to join necessary or proper parties should be exercised with special caution to avoid inappropriate joinder of foreign parties.
- Joinder of Saudi Aramco circumvents the arbitration agreement and normal jurisdictional rules, potentially adjudicating primary liability in an inappropriate forum.
- Saudi Aramco agreed to arbitration with Mellitus, and Fortum should not be allowed to join Saudi Aramco in English court proceedings for a contingent contribution claim.
- Saudi Arabian law does not recognize a right of contribution, so Fortum's claim would fail there, but that does not justify English jurisdiction.
- The judge erred by treating the unavailability of contribution proceedings in Saudi Arabia as a "special factor" justifying jurisdiction without proper balancing of all relevant factors.
Appellee's Arguments (Fortum)
- The absence of a contribution remedy in Saudi Arabia is a decisive factor justifying service on Saudi Aramco in England to avoid defeating Fortum’s right to contribution under the 1978 Act.
- Joinder of Saudi Aramco is appropriate as it is a proper party under CPR 6.20(3), with a good arguable claim and no suggestion of bad faith or forum non conveniens.
- Litigational convenience and the avoidance of multiplicity of proceedings and inconsistent decisions support the exercise of jurisdiction.
- The arbitration agreement between Mellitus and Saudi Aramco should not preclude Fortum’s contribution claim in English courts, as Fortum is not party to that arbitration.
- English law governs Saudi Aramco’s liabilities under the contracts, and by engaging in international trade with English law contracts, Saudi Aramco contemplated potential English court liability.
- The court should exercise discretion by weighing all factors without elevating any single consideration to a "trump card" status.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Amin Rasheed v Kuwait Insurers [1984] AC 50 |
Exercise of exorbitant jurisdiction under RSC Order 11 |
Confirmed that jurisdiction under Order 11 is exorbitant and must be exercised with care. |
| Multinational Gas & Petrochemical Co. v Multinational Gas & Petrochemical Services Ltd [1983] Ch. 258 |
Need for special care in joinder of foreign parties under Order 11 |
Supported the court's cautious approach to joining foreign parties under Order 11 rule 1(1)(c). |
| The Brabo [1949] AC 326 |
Jurisdiction and discretion in joinder of parties |
Referenced for the principle that the court should exercise discretion carefully in joinder cases. |
| Spiliada Maritime v Cansulex [1987] AC 460 |
Forum conveniens principles |
Applied to assess whether England was the appropriate forum for the claim. |
| The Eras EIL Actions [1992] 1 Lloyd's Rep 570 |
Available forums and forum conveniens in service out of jurisdiction |
Used to illustrate that an available forum is not rendered unavailable simply because a claim might fail there. |
| The Kapetan Georgis [1988] 1 Lloyd's Rep 352 |
Litigational convenience and joinder of third parties for contribution claims |
Supported the importance of a single trial with all effective parties present. |
| The Goldean Mariner [1989] 2 Lloyd's Rep 390 |
Litigational convenience outweighing other considerations |
Emphasized the importance of the English forum being the only jurisdiction where all parties could be sued. |
| The Berge Sisar [1997] 1 Lloyd's Rep 635 |
Joinder of foreign parties under Order 11 for contribution claims |
Held that a genuine claim for contribution justifies joinder despite inconvenient forum or arbitration agreements. |
| RA Lister & Co Ltd v EG Thomson (Shipping) Ltd No2 (The Benarty) [1987] 1 WLR 1614 |
Nature of liability for contribution under the 1978 Act |
Confirmed that liability need not be presently enforceable but must have the character of liability at the time of damage. |
| Massey v Haynes [1881] 21 QBD 330 |
Joinder of foreign parties where liability depends on one investigation |
Supported the principle that foreign parties can be joined if liability depends on a common investigation. |
| Mohammed v Bank of Kuwait of Middle East [1996] 1 WLR 1483 |
Consideration of local time bars in forum conveniens |
Referenced regarding the importance of local limitations in deciding forum. |
Court's Reasoning and Analysis
The court carefully analyzed the jurisdictional basis for joining Saudi Aramco as a necessary or proper party under RSC Order 11 rule 1(1)(c) and CPR 6.20(3). It acknowledged the "exorbitant" nature of the jurisdiction and the need for caution, especially when the foreign party is subject to arbitration agreements and the claim involves contingent liability for contribution under the 1978 Act.
The court accepted that there was a good arguable case against Saudi Aramco and that the issues between the parties were closely connected, involving the same damage and factual matrix. It recognized that the arbitration stay between Mellitus and Saudi Aramco did not preclude Fortum’s claim for contribution, which is a separate cause of action not subject to arbitration.
The judge identified a "special factor" justifying jurisdiction: the absence of a contribution remedy in Saudi Arabia. This meant that if Saudi Aramco were not joined in England, Fortum’s claim for contribution would be defeated, as it could not be pursued effectively in Saudi Arabia.
The court rejected the appellants' submission that Mellitus’ arbitration rights against Saudi Aramco made Fortum’s claim unnecessary or that Saudi Arabia was an adequate forum, emphasizing practical justice and litigational convenience. It held that the right to contribution under the 1978 Act is territorial but applies unequivocally to proceedings in England, and that the court’s discretion should weigh all factors, including the need to avoid multiplicity and inconsistent decisions.
The court further reasoned that Saudi Aramco, by engaging in international trade and agreeing to contracts governed by English law, could not reasonably expect to avoid potential English court jurisdiction. The court found no error in the judge’s exercise of discretion or his consideration of the "special factor" as decisive but properly balanced with other considerations.
Holding and Implications
The court DISMISSED the appeal, affirming the decision of Longmore J to refuse to set aside Fortum's Part 20 claims and service on Saudi Aramco out of the jurisdiction.
The immediate effect is that Saudi Aramco remains a party to the contribution claims in the English proceedings, allowing Fortum to pursue its claim for contribution under the Civil Liability (Contribution) Act 1978. The decision underscores the court’s willingness to exercise jurisdiction over foreign parties in contribution claims where the remedy is unavailable in the foreign jurisdiction, balancing arbitration agreements against the need for practical justice and litigational convenience.
No new legal precedent was established beyond the application of established principles regarding jurisdiction, joinder, and contribution claims under English law.