Andrew Weir Shipping Ltd v Wartsila UK Ltd & Anor

There are three applications for determination by the Court in this action where the claimants AWSL, who were bareboat chartered Owners of the ship “Baltic Eider” claim against the Second Defendants (WFI), a Finnish company which designed and manufactured the engines for the vessel and the First Defendants (WUK), an English registered company which supplies spare parts, service engineers and technical data to Owners of those engines in this country. The Baltic Eider had two Wartsila 46 engines installed when the vessel was built by Hyundai in 1989 and which were subject to a three-year guarantee for which WFI was responsible. In 1993 WFI updated the engines to the latest specification and various field tests were carried out by WFI on those engines by specific agreement with AWSL, as part of a voluntary research and development programme.

On 5^th August 2001, a serious fire occurred in the Port engine. It is AWSL’s case that this originated at unit 4 of the Port engine and resulted from the loosening of an erosion plug on the fuel injection pump of that unit which occurred because a copper (as opposed to a steel) washer was used under the head of the erosion plug, because the manual supplied for use with the engine specified a torque setting that was insufficient and because no locking device was provided for use with the erosion plug. AWSL contends that WFI and WUK were or should have been well aware of this, because of previous experience on a similar engine, the Wartsila 32, where they had issued advice or warnings to customers. No such advice or warnings were given to Wartsila 46 Owners. The sum claimed is in excess of $5M.

The claim form was issued and served in June 2003 upon WUK and upon WFI in Finland. Particulars of claim have also been served, a draft amended version of the Particulars of Claim has been produced and WUK have provided a draft Defence. The first application is WFI’s challenge to the jurisdiction of the Court to hear the claim against it on the basis that it is domiciled in Finland and is therefore entitled to insist on being sued there under Article 2 of Council Regulation 44/2001. WFI maintains that, because there is no real issue that AWSL may reasonably ask the Court to try on its claims against WUK, there is no basis for bringing WFI into the jurisdiction under Article 6(1). WFI also maintains that there is no other basis, whether under Article 5 or otherwise whereby it can be brought into the jurisdiction. The second application is that of WUK which has applied for reverse Summary Judgment under Part 24 on the basis that AWSL has no realistic prospect of success in pursuing it. The third application is an application by AWSL for permission to amend its Particulars of Claim which is opposed on the basis that the new pleas also have no realistic prospect of success.

In practice therefore, the main issue between the parties is whether or not the claim, whether as originally formulated or as subsequently formulated has any realistic prospect of success against WUK, although other issues arise in relation to WFI’s jurisdictional challenge should it succeed on this point.

The following undisputed facts are relied on by AWSL:-

The following facts are relied on by WUK (and WFI):-

In its draft Re-Amended Particulars of Claim, AWSL makes a series of allegations against WFI and WUK without, in many instances, drawing any distinction between the two. WUK makes much of this, pointing out that it was not the designer or manufacturer of the engines and that it did not itself produce the technical information which was circulated to engine Owners. It denies any special relationship of any kind beyond the usual arms length relationship of a spare parts supplier and supplier of service engineers, contending that there is no basis for the tortious duties alleged by AWSL. Furthermore it maintains there is no basis for any alleged breach of contractual duty. On the basis of the undisputed facts and the current state of the law which, it says, is well settled, there is no case to be made against it and the only reason for its presence in this action is to enable AWSL to seek to bring WFI within the jurisdiction on the basis of Article 6 of the Convention. The case against it must be scrutinised carefully, in particular because of the jurisdictional implications for WFI, whereupon it will be seen, according to WUK, that there is no seriously arguable case against it.

In paragraph 11 of its proposed Statement of Case, AWSL alleges a special relationship between itself and both WUK and WFI. A series of factors are relied on in this context, including the nature of relationships between ship owners and their engine builders who continue to monitor the progress of those engines and provide for the Owners. Reliance is placed upon the provision of spare parts, the cooperation in research and development, the reliance of AWSL upon WUK and WFI for technical assistance in the shape of technical bulletins and updating information. It is pleaded that numerous contracts were entered into with WUK and WFI for the sale and supply of spare parts for the engines and their associated fuel injection pumps and for the supply of services by the personal attendance of Wartsila service engineers to the vessel for servicing and/or maintenance and/or repair of the Wartsila 46 engines and associated parts, including the fuel injection pumps. In paragraphs 12 – 14 AWSL alleges that its reliance was reasonably foreseeable in relation to information, recommended alterations to the engine or associated parts and warnings of any matters which might affect the safe operation of these items or might present a hazard to property or life. It is alleged that WUK and WFI assumed direct responsibility to AWSL to give such advice, information and warning as a result of their relationship and that this was fair, just and reasonable. The duties alleged are threefold:

In support of these allegations AWSL also alleges that WFI and WUK knew by 1995 at the latest that the use of copper washers on erosion plugs on Wartsila 32 engines was inappropriate and hazardous, that the torque setting recommended was insufficient, that the position which obtained on Wartsila 32 engines applied equally to Wartsila 46 engines and that the spare parts kits for fuel injection pumps on Wartsila 46 engines did not contain all the parts necessary for their servicing and overhaul because they did not contain steel washers and were therefore inappropriate and hazardous in themselves. Reliance was placed upon the 1995 Warning Bulletin and the 1999 Warning Bulletin already referred to earlier in this Judgment. It is said that the changes recommended to Owners of the Wartsila 32 fuel injection pumps should also have been recommended to Owners of the Wartsila 46 engines and that had this occurred the casualty in 2001 would not have happened. AWSL points to the change from copper to steel washers made by WFI in September 1990 and by L’Orange the pump manufacturers in 1992 for the Wartsila 46 engine but the absence of any information given to the engine Owners of this.

In addition to the tortious pleas in paragraph 14 of the proposed Statement of Case, paragraph 19 sets out a separate tortious duty to take reasonable steps to warn about the matters referred to.

Put shortly, WUK’s case is that there was never any supply of copper washers by WFI, let alone by WUK, and that none of the parts ever supplied were hazardous in themselves. The crux of AWSL’s case, in its allegation of breach of tortious duty, as well as the breaches of contract to which reference is made later, lies in the alleged duty to advise, instruct or warn about the use of copper washers, appropriate torque and securing mechanisms. These it was said simply cannot arise for a non-manufacturer in the absence of a special relationship.

So far as the contractual claims are concerned, these appear to rest on three different types of contract. The first type is the Supply Contract which is referred to in paragraph 20 of AWSL’s projected Statement of Case in which it is alleged that both WUK and WFI supplied copper washers for use in the fuel injection pumps. WUK and WFI maintain that this is unsustainable because no such copper washers were ever supplied. The second type of contract referred to is in paragraph 20A where reference is made to the Servicing Contract - a contract of sale and/or contract for services between AWSL and WUK and/or WFI under which service engineers employed by WUK and/or WFI supplied the copper washer, alternatively utilised and installed it, alternatively reused it, alternatively left it on board for future utilisation in the course of work undertaken on board by them as part of the Servicing Contract. Once again WUK and WFI say that there was no supply of any copper washer by them and that it is entirely speculative to suggest that there had been some reuse by their service engineers of a copper washer which was provided by Hyundai with the original fuel pumps, which at that time did have copper washers. WFI had supplied Hyundai with fuel pumps and the vessel had left Hyundai’s yard with 15 fitted and 7 spare fuel pumps where the washers were copper, which are not always changed when the erosion plug is changed but may be annealed and reused. WUK and WFI suggest that the evidence shows that there was total replacement of the fuel pumps at various stages by WFI with steel washers and that it cannot be established that they bear any responsibility for the copper washer finding its way on to the erosion plug of the number 4 port engine where the fire occurred.

The third type of contract referred to is set out in paragraph 22A of AWSL’s projected Statement of Case and is referred to as the Overhaul Spare Parts Contract. 6 of these are alleged between 17^th February 1998 and 12^th September 2000 under which WUK agreed to sell and supply to AWSL spare parts kits for pump overhaul which supposedly contained the parts necessary for proper servicing and overhaul of the fuel injection pumps but which failed to include erosion plugs or steel washers. This was to be contrasted with the spare parts kits for Wartsila 32 L’Orange and Wartsila 20 Bosch fuel injection pumps which did include such items. Once again WUK and WFI maintain that there was nothing wrong with the spare parts kits which were supplied and that this case cannot get off the ground.

In the context of the Supply Contracts, the Servicing Contracts and the Overhaul Spare Parts Contracts, AWSL allege implied term – that the supplies were of satisfactory quality, fit for purpose, safe, reasonably fit for the particular purpose for which it was known they were required and that the supplier would in each case exercise reasonable skill and care in and about any associated services relating to supply, including but not limited to the supply of information and/or advice and/or instructions in relation to the use and operation of the parts or kit supplied. Furthermore it was alleged that it was an implied terms of the Overhaul Spare Parts Contracts that each kit contained everything necessary for the proper servicing and overhaul of the fuel injection pumps and that all necessary and appropriate instructions for the use of the kit had been provided.

Quite apart from these implied terms, AWSL allege that the fourth and fifth Overhaul Spare Parts Contracts were governed by their own standard conditions of purchase.

It can be seen from the draft pleading that the focus of the claim as originally put was on the tortious claims and that the Servicing Contract claim and the Overhaul Spare Parts Contract claim are new additions. Both the tortious duties alleged and the implied contractual duties however centre on the alleged failure to give appropriate advice, instructions or warning relating to the use of copper washers and appropriate torque.

The breaches alleged then consist of failure to give warnings and failure to give instructions and advice and failure to take reasonable care to provide such warnings, instructions or advice (see paragraphs 23, 26, 27, 28 and 28A) as well as failure to provide washers and spare parts kits that were of satisfactory quality, safe and fit for purpose.

CPR Part 24.2 provides that the Court may give Summary Judgment against a claimant on the whole of a claim or on a particular issue if it considers that the claimant has no realistic prospect of succeeding on the claim or issue and there is no other compelling reason why the case or issue should be disposed of at trial. I was referred to Swain v Hillman [2001] 1 AER 91, Three Rivers DC v Bank of England [2001] 2 AER 513 and to ED & F Man Liquid Products Limited v Patel [2003] EWCA Civ. 472. A real prospect of succeeding on a claim must carry some degree of conviction and represent more than a fanciful prospect. The Court is not to conduct a mini trial but does not have to accept without analysis everything said by a party in his statements to the Court. If there is no real substance in factual assertions made or there is no room in law for the claim to succeed on the basis of the facts alleged, the Court should take the step of disposing of the matter on a summary basis so as to save the cost and delay of trying an issue the outcome of which is inevitable.

Where there are complex factual issues to be resolved, it is likely that a case cannot be appropriately disposed of under part 24. Where there are significant disputes of fact between the parties which go to the existence and scope of an alleged duty of care, the summary disposal of an action is again inappropriate. Moreover if there is an area of law which is uncertain and developing such as the extension of a situation in which a duty of care may be found, as compared with existing authorities, it is once again inappropriate for the Court to make decisions on the basis of a set of facts which has not been fully determined, even if the parties are prepared to agree some undisputed facts or to proceed on the basis of certain assumptions of facts.

It is common ground between the parties for the purpose of the Part 24 application that a copper washer was in place at the time of the fire on one of the no 4 P fuel pump erosion plugs. The Particulars of Claim, supported by a Statement of Truth, plead that the claimant has only ever used genuine Wartsila parts on the engine and fuel injection pumps, all being supplied by or purchased from Wartsila Group companies, including WUK and WFI. The Schedule compiled by the parties shows six agreed occasions where the parties’ records show the supply of washers between 1991 and 2001, six occasions when AWSL alleges there must have been additional washer changes and three other occasions when AWSL suggest that such changes may have taken place. There is dispute about all of these additional occasions save for two such events, in July 1995 and February 1996 where WFI and WUK accept that all the washers and pump elements must have been changed. The occasions where WUK were involved are however limited, being 13^th October 1993, 5^th March 1996 and 7^th March 2001 where, in each case, WUK supplied washers for the chief engineer of the vessel and was not involved in their installation. Only the last of those occasions would give rise to a claim which was not time barred in contract, as a matter of English law, but the documents clearly show that this delivery involved the supply of steel washers.

The evidence from WFI and WUK is that every erosion plug washer sold or supplied, if any were provided free of charge by WFI and WUK, was made of steel and that neither WFI or WUK has ever held a stock of copper washers as spare parts from 1990 onwards. WFI and WUK say that the Schedule is comprehensive and that the disclosure given by the parties is complete or as full as it will ever be. Thus the Court can be confident that there never was any supply of copper washers by WFI or WUK and there is no realistic prospect that AWSL could succeed on this allegation at trial.

In answer to this, AWSL suggest that the evidential picture is less than satisfactory and that pending disclosure, assertions made on behalf of WFI and WUK cannot be taken at face value. What was originally put forward as a complete record has been amended as a result of further investigation (now constituting the Schedule to which I have referred) and there are disputed matters as between Mr Jewson and Mr Brunila in relation to the occasions when washers would have been changed. In Mr Brunila’s second statement at paragraph 17 he states that it is not necessary to change washers on each of the occasions when erosion plugs are changed because existing fitted washers could be cleaned and checked for cavitation and distortion and reused, following annealing if required. Equally, he would expect that on each occasion when erosion plugs were to be checked, new washers would be taken on board and those would be used whilst any old washers, if in good condition, might be retained and put in the ship stores for future use (absent any warning that they were not to be so used).

Whilst it is therefore possible that copper washers which were originally on the vessel may have been reused or put to one side in the stores for future use and subsequently utilised, on the material before the Court it is hard to see how AWSL can have any realistic prospect of succeeding in establishing the plea in paragraph 20 of its Statement of Case where it alleges that it agreed to buy and WUK and/or WFI agreed to sell and supply and did sell and supply copper washers for use in the vessel’s fuel injection pumps, including the washer which was actually used on pump 4P on the vessel.

AWSL concedes that the allegation is speculative in that it cannot point to any supply of copper washers to it by WUK (or indeed by WFI). Nonetheless, Mr Bernard Eder QC for AWSL contends that the Court should not accept the evidence of WUK and WFI at face value.

AWSL argues that it has indirect evidence of the use of copper washers on a vessel with a Wartsila 46 engine which was built either in 1994 or 2001, which means that copper washers were still being supplied by WFI after 1990 or by L’Orange (the pump manufacturers) after 1992, contrary to the evidence given by WFI and WUK. There is evidence in the form of a statement from AWSL’s expert, without clear identification of the ship in question, which refers to the Chief Engineer of that vessel saying that copper washers were in use with erosion plugs on that vessel in 2000-2001. There is also evidence of a letter from WFI to L’Orange in April 1993 complaining of the continued use of copper washers on a pump which appears to be a smaller version of the usual pump used on the Wartsila 32 engine. This evidence and the evidence of the expert of finding copper washers in store on the Lagan Viking in 2003 (of different dimensions to those specified for the erosion plugs) does not assist AWSL in showing that any copper washers were supplied to the Baltic Eider by the Wartsila companies at any time, let alone at a time when no limitation problems arise.

There are, in my judgment therefore no realistic prospects of success for AWSL in this claim against either WUK or WFI and, given the fullness of disclosure given I can see no reason why this claim should go to trial.

The position under paragraph 20A of the projected Statement of Case is different for WUK and WFI. This plea is a new plea introduced in January 2004 for which permission is sought. There are a limited number of possibilities which would account for the presence of the washer on the erosion plug in question. Since AWSL only purchased Wartsila parts, if WFI and WUK did not sell AWSL a copper washer, it could only have been installed out of the original stock on board the vessel on delivery by Hyundai, taken from stores or reused when work was being done by either WFI service engineers or the ship’s own crew.

The plea however is of a contract with WFI or WUK for the supply of services, but no particulars are given of the contract. Objection is taken on the basis of the form of the plea and the inadequate particulars of the Servicing Contracts but the Schedule to which I have made reference shows that WFI carried out a number of operations on the fuel pumps at various stages and that, in particular, in January 1998 there is the possibility of work done by WFI on both engines which could account for the presence of the critical washer, without any question of time bar arising. Moreover, questions of foreign limitation periods could conceivably be relevant in relation to contracts with WFI where Finnish limitation periods of 10 years may apply.

There is however simply no evidence of any contract with WUK for servicing involving the fuel pumps. That is sufficient to conclude this issue, in my judgment. Moreover, although AWSL rely on Mr Brunila’s statement that WUK engineers sometimes accompanied WFI engineers on the vessel in the context of the R &D work, which did concern four projects relating to fuel pump elements which may well have involved removal of the erosion plugs and the washers, reports of these visits were sent to AWSL, which named the engineers present. None have been produced which show the presence of WUK engineers on board the vessel for the purpose of work on the fuel pumps and although it might well be expected that the vessel’s log books would record the names of visiting engineers, AWSL have not adduced any such evidence to support their case that WUK personnel, as opposed to WFI personnel, worked on the pumps. The evidence currently shows that WUK never supplied service engineers who did any work on the fuel pumps at all so that it cannot be said that WUK could have supplied the washer, utilised it, installed it, reused it or left it on board for future utilisation in the course of work undertaken on board the vessel, whether under a WFI contract or a WUK contract with AWSL.

If best particulars are given of the contracts with WFI by reference to the servicing visits by WFI personnel in accordance with the Schedule, as AWSL have undertaken to do, the pleading deficiency will be met as against WFI, whilst the evidence makes out a good arguable case under this paragraph in relation to WFI and its service engineers.

There is thus an inferential case to be made against WFI and its service engineers under the Servicing Contract but I cannot see that AWSL has a real prospect of succeeding in showing that WUK could be liable under any such contract for the reasons given. Once again, although there is some disclosure to come, I can see no reason why this claim should go to trial.

As it happens, because of the other issues between the parties, there will be full disclosure of all matters relating to the servicing by WFI engineers and WUK engineers in any event, should these proceedings continue, so that, if material should subsequently emerge to support the case currently made against WUK in this respect, it could then properly be pleaded. The Court would be astute to make a special Order of discovery should any dispute arise in this respect, given the history of the matter, if there remains a case against these parties under the other heads of claim.

Together with the pleas in paragraphs 20 and 20A, the pleas in paragraph 22 of the Particulars of Claim also all fall as against WUK, including the plea that it would exercise reasonable skill and care in relation to information, advice and instructions to be supplied as to the use and operation of the washers since this attaches to a contract for sale and/or services where the critical washer was allegedly supplied or handled by WUK. The same point however rears its head in relation to the Overhaul Spare Parts Contracts, to which I now turn.

This is a new plea which AWSL wishes to bring in by way of amendment. Each of the contracts alleged falls within the six year period preceding the issuing of the claim form in this action so that no question of limitation arises. This plea is made against WUK alone and it is common ground that WUK made such contracts and delivered the spare parts kits referred to.

There was an Operations and Maintenance Manual on board the ship which informed the engineers that they should change the erosion plugs when overhauling the pump at 16,000 hours. There was also a spare parts manual on board. The kits were listed in the spare parts manual as part number 165178 (“spare parts for pump overhaul”) comprising nine listed items with their descriptions. Those nine items did not include the erosion plug or its washer. The same manual did however at the immediately previous page, identify the washer and erosion plug by their separate part numbers so that, WUK contends, any engineer on board who read the two manuals together would see, when overhauling a fuel pump that he had to change the erosion plug after 16,000 hours of operation, that the spare parts kit did not include that and this part had to be separately ordered. When using the spare parts manual to identify the erosion plug to be ordered, he would see the adjacent sealing ring with its part number and he could then order one.

Even if this is so, I do not see however how this makes AWSL’s allegations unarguable or shows that AWSL has no realistic prospect of success on this plea. The plea is that it was an implied term, arising in part from its description, that the spare parts kit contained all the parts necessary for proper servicing and overhaul of the fuel injection pumps on the vessel and that all necessary and appropriate instructions for the use of the kit had been provided. The Operations Manual and the Spare parts book described these items as “Sealing set for pumps overhaul” or as “Sealing set for injection pump”, even if the terms of the orders described them differently. Regardless of the inability of the packages themselves to achieve what they may have described themselves as achieving, if, in or with these packages, there was a failure to give proper instructions and to refer to the need to use steel washers or increase the torque as part of the necessary overhaul, then, unless the implied term is one which cannot be sustained in law or fact, there is a case for breach upon which AWSL does have a realistic prospect of success. I did not understand there to be an outright attack on the implication of this term and in my judgment, any challenge would not be susceptible of determination on a summary basis as extrinsic evidence would have to be investigated to ascertain the perceived function and use of these kits.

WUK says that it has no responsibility for the contents of the manuals and the instructions given but the fact remains that it supplied the spare parts kits so that, if an inadequacy of instructions with those kits gives rise to a breach of contract, it would be liable in respect of it.

WUK rightly say that there can be no complaint about the actual contents of the kits themselves since it is not suggested that any of the parts therein were defective per se. It is suggested that, given the qualification of the ships’ engineers and the contents of the manuals, an alleged breach of the implied terms alone is unarguable or insufficiently arguable to satisfy the Part 24 test. Whilst it was accepted that it would be a breach of section 14 of the Sale of Goods Act to supply an item which was hazardous in itself or could be hazardous when combined with another item, without giving adequate instructions in relation to the danger – (see Vacwell v BDH Chemicals [1971] 1 QB 88) it was said that no authority had gone so far as to suggest that where the goods supplied were sound in themselves, the absence of instructions with regards to the use of other goods could make the item supplied unsafe and amount to a breach of the contract terms implied by the Statute. In reality, AWSL’s complaint was the inadequacy of manuals and instructions issued by WFI and it was argued that it would be wrong to characterise that complaint as involving unsafety in the supply of goods which were not dangerous in themselves without an appropriate warning. The position was, it was said, that AWSL were trying to get round the difficulty of establishing a duty of care on WUK, when the real complaint was against WFI who had failed to issue a bulletin giving a warning for Wartsila 46 engines in the same manner as it had for Wartsila 32 engines.

AWSL referred to a number of authorities where the absence of warnings as to the use of the product supplied constituted a breach of the Sale of Goods Act but none where the use of the item itself would not give rise to danger per se, but where the danger arose from the failure to warn of the inadequacy of other elements which were required for use with the items supplied. It was said that the statements of principle in those authorities were wide enough to cover the alleged position here, where the spare parts kit was put forward as a comprehensive package of what was required, when further items were needed, including a steel washer. Reference was made to Benjamin – The Sale of Goods Act 6^th Edition at paragraph 11-051 which includes the following:-

“…. It had been said before the reforms of 1994 (though in a speech dissenting on the general point in connection with which the words were uttered) that a potentially dangerous article might be unmerchantable if not accompanied by appropriate instructions as to use. This seems correct, and indeed there can presumably be goods, not dangerous, which are unusable, or not efficiently usable, without adequate instructions, and so not up to the present requirement of satisfactory quality, unless such instructions are supplied or available. The specific reference to safety in the new formulation makes this clear. …….”

This issue falls into exactly that area of developing law which the Court should not decide on a Part 24 basis. AWSL’s allegation is that the spare parts kits were inadequate because they were described as “spare parts for pump overhaul” but were not sufficient for such an overhaul since they failed to include erosion plugs and steel washers. This meant that the spare parts kit could be used in conjunction with erosion plugs and with copper washers remaining on board from the original supply by Hyundai, without any warning being given in this respect. Whilst there may be no authority on all fours with this situation, in my judgment it cannot be said that AWSL have no real prospect of success in arguing this point and in contending that there is a breach of contract in supplying the kits, as so described, in as much as they are said to be of unsatisfactory quality, not fit for the purposes supplied and unsafe, by reason of the inadequate instructions given. Moreover, an implied term is alleged that WUK would exercise reasonable skill and care relating to the supply of such kits including the giving of advice or instructions about its use and that there was an implied term that the kit contained all the parts necessary for proper servicing and overhaul with such necessary instructions. These points are not capable of being struck out at this stage as having no realistic prospect of success and the claim on this basis must therefore be allowed to go forward with permission to amend being granted.

I should add that WUK contends that the contracts are governed by its own standard terms and conditions which have exclusions of liability. There is an issue between the parties as to the governing terms for the last two such contracts and an issue about the applicability of the Unfair Contract Terms Act. WUK rightly conceded that the latter issue was not one which was susceptible of determination on a Part 24 basis involving, as it does, an investigation into the reasonableness of the terms in the light of the various factors set out in the statute. Moreover, in my judgment there is also an issue as to the governing terms for the last two contracts for supplies of the spare parts kits.

In my judgment, much the same point arises on the claim in tort as arises in relation to the implied terms alleged in the Overhaul Spare Parts Contracts. Whilst Mr King, for WUK and WIF, contends that sufficient disclosure has been given for all the relevant facts to be known so that there could be no change in the essential position at trial and that on these facts there is no authority which supports AWSL’s case of liability against WUK, there can be no doubt that the issues of law are not straightforward, that the cases show movement on an incremental basis and that there is room for further development. Moreover, notwithstanding all that WUK says, the existence of a duty depends on a fact sensitive inquiry as to the nature of the relationship between AWSL and WUK which cannot be determined on the basis of the “undisputed facts” which I have set out earlier in this Judgment.

WUK contends that, as matter of law, there can be no duty to advise, instruct or inform in the absence of a special relationship or special assumption of responsibility. The law is reluctant to impose a positive duty to speak or warn and a liability for an omission to do so. I was referred to the decision of the House of Lords in Stovin v Wise [1996] AC 923 and the speech of Lord Hoffman at pages 943E to 944H in this respect. It is one thing for the law to say that a person who undertakes some activity shall take reasonable care not to cause damage to others but it is another thing for the law to require that a person who is doing nothing in particular shall take steps to prevent another from suffering harm from the acts of third parties but there may be a duty where a person has undertaken to do so or induced a person to rely upon one doing so. Thus in WUK’s submissions it is necessary for a special relationship to exist for a liability to devolve upon WUK by the assumption by it of responsibility to instruct, advise or warn and by the reliance of AWSL upon that. Reference was made to The Rebecca Elaine, [1999] 2 Lloyd’s Report 1, a decision of the Court of Appeal and in particular the Judgment of Lord Justice Tuckey at paragraphs 18 – 26. That decision involved a claim against a manufacturer of engines in a fishing boat for economic loss when the pistons failed, not one for physical damage as in the present case (with added economic loss). Nonetheless it was said that the positive duty of the kind alleged required a similar situation to that described by Tuckey LJ at paragraph 26 in relation to a manufacturer who would be under a duty of care to avoid economic loss “if he assumes responsibility to his customers in a situation which is akin to contract”.

In reliance upon Clerk & Lindsell Law of Tort, at paragraphs 9–11 and 9-12, it was said that AWSL could not establish a duty of care on a non-manufacturer to warn, even though it was accepted there was physical damage and not just economic loss. Moreover, it was said that there was no evidence of any reliance on WUK as opposed to WFI and that it would not be fair, just and reasonable to impose liability on WUK since it was not the manufacturer or designer and the remedy existed against WFI in any event.

When regard is had to the dealings between the parties, it was said that there was no evidence to show a special relationship of proximity between AWSL and WUK inasmuch as:-

In these circumstances, it is said that AWSL can present no evidence that it relied upon WUK to originate technical advice as opposed to passing on advice from WFI which it duly did. Moreover it is said that AWSL will never be able to prove any fact showing that WUK knew or ought to have known of any supposed threat presented by erosion plug washers whether copper or otherwise.

In addition, WUK points to factors which, it says, show a lack of a special relationship of proximity and show that AWSL, as would be expected, looked to the manufacturer and designer of the engines for technical advice and assistance rather than to the network company in the United Kingdom. A number of other factors are relied on in paragraph 24 of WUK’s skeleton argument but these appeared to me to take the matter no further. The essential problem with these issues and arguments is that they are not susceptible of determination upon a Part 24 basis. Whilst it can be argued that the relationship between AWSL and WUK involved no more than the ordering of spare parts, the conclusion of spare parts contracts, the spare parts bonus agreements and the Overhaul Spare Parts Contracts, the Contracts for Servicing and the passing on of information from WFI, that is not an argument which can be concluded in WUK’s favour at this stage of the proceedings. AWSL can say that it relied upon Wartsila, in its various emanations, to give the necessary technical advice, instructions and warnings relating to the products which it supplied, those products being supplied both by WFI and WUK. The distinction which is drawn between WFI and WUK is not one which AWSL would necessarily have in mind in looking to the Wartsila Group to fulfil its responsibilities. When the UK company is put forward as the network company in the UK with whom AWSL is to deal, it may well be entitled to look to that company as well as WFI in relation to the matters of which complaint is raised. It simply is not possible to determine questions of special relationship, assumption of responsibility, reliance, foreseeability, fairness, justice and reasonableness or causation at this point.

The evidence adduced by AWSL included expert evidence to the effect that any Wartsila engineer with knowledge of the problems which had been encountered on the Wartsila 32 engines and the recommended practice for those engines, including the use of steel washers, increased torque and securing wire on the erosion plug would have appreciated the likelihood of the same problems arising on the Wartsila 46 engine. Real questions arise as to the actual knowledge of WUK personnel about the increased torque specified by L’Orange in October/December 1995 to 350 NM, sent in a drawing to WFI, quite apart from the issue of the copper washers. The 1995 and 1999 Warning Bulletins of which WUK was aware also constitute some evidence that WUK should have been and may actually have been aware of the potential problem on Wartsila 46 engines as AWSL allege.

In Mr Jewson’s witness statements, evidence appears of the marketing of the Wartsila Group as a global service network where each of the global service engineers is capable of providing a full range of technical information to its customers. AWSL’s understanding is said to be that the Wartsila local service network allocated to it would be able to provide information on all technical queries and that its expertise was in no way limited to the contents of the Operation Manuals, Spare Parts Catalogues and Service Bulletins issued by WFI and circulated by WUK. Whilst it appears that until 1998 Mr Cole of AWSL dealt primarily with Mr Brunila it is not possible to say that in that period and more particularly in the period thereafter the Court can conclude today that AWSL placed no reliance upon WUK’s expertise and functions.

On 7^th December 2001, following the casualty, a warning letter was issued to Wartsila 46 engine Owners (although not supplied to AWSL until 5^th April 2002 by WUK). This warning letter included the following;

i)

“Never use a sealing ring made in copper”.

ii)

“Make sure that the plugs are properly tightened with a torque of 350 NM plus/minus 5NM.”

iii)

That a locking wire was being introduced and could be used on existing pumps.

This subsequent warning supports AWSL’s case against both WFI and WUK, both in relation to the copper washers and the torque where the Operation & Maintenance Manual still provided for 200 NM plus/minus 5NM to be applied to the erosion plug at the time of the incident. Mr Jewson in his first witness statement draws attention to the special position of engineers provided by engine manufacturers and distributors in relation to the safety requirements for the engines manufactured and supplied whether those engineers emanate from the manufacturer itself or from its locally incorporated company set up to deal with its customers. The engine Owner looks to the Group, however structured, for technical and safety advice and warnings in relation to the operation of the engines.

The basis of AWSL’s case in tort against WUK is that, by reason of the relationship between them, WUK assumed responsibility to warn AWSL of the danger of erosion plugs coming loose by reason of the use of copper washers, inadequate torque and inadequate securing mechanisms on the plugs. It is noticeable that the focus of WUK’s application as formulated was directed to the supply of the copper washer on the basis that this is foundational to the tortious duty alleged. Thus the grounds for WUK’s application for Summary Judgment are expressed as follows:-

“because

(1)

the Claimant has no real prospect of succeeding on its claim against the First Defendant, given that

(a)

the First Defendant only supplied steel sealing rings to the Claimant, not copper sealing rings as alleged by the Claimant;

(b)

the First Defendant cannot therefore be in breach of any contract with the Claimant;

(c)

the First Defendant owed no duty to the Claimant as a consequence of the supply of a copper sealing ring;

(d)

there was no special relationship between the Claimant and the First Defendant pursuant to which the First Defendant owed a duty the Claimant to advise or warn about any danger associated with the use of a copper sealing ring.”

WUK thus fails adequately to take account of the fact that the allegations relating to the supply of copper washers, only form the subject matter of one of AWSL’s pleas, and that there are independent allegations of breach of duty that are causative of the loss and which are of equal (if not greater) importance.

Since there is clear physical damage to the ship, there can be no doubt about the arguability of the claim against the manufacturers WFI and it was not suggested otherwise. The principles giving rise to liability of the manufacturer of a product, in owing a duty of care to the end user in respect of physical damage as originally formulated in Donoghue v Stevenson [1932] AC 562 have been applied to retailers and distributors of a product who have been held to be under a duty to take reasonable care to warn end users of potential dangers of which they were aware or should have been aware. See by way of example Watson v. Buckley, Osborne, Garret & Co Ltd [1940] 1 All ER 174; Kubach v. Hollands [1937] 3 All ER 907; Holmes v. Ashford [1950] 2 All ER 76; Andrews v. Hopkinson [1957] 1 QB 229, Fisher v Harrods Ltd [1966] 1 Lloyd’s Rep. 500. Furthermore the courts have recognised that the vendor of a product can be under a duty to warn purchasers of its potential dangers. In Clarke v. Army and Navy Co-operative Society Ltd [1903] 1 KB 155 the Court of Appeal decided that the vendor of a tin containing disinfectant powder, who knew that it was likely to cause danger to a person opening it unless special care was taken, was under a duty to warn the purchaser of the danger. Collins MR said (at page 164):

Such a duty extends to the situation where the potential danger is discovered by the supplier after the time of supply, (see E.Hobbs (Farms) Ltd v. Baxenden Chemicals Co Ltd [1992] 1 Lloyd's Rep 54.)

Additionally, there is a well established category of liability for “installers, assemblers and repairers.” Such liabilities are summarised in the Product Liability & Safety Encyclopaedia, Butterworths, at III/33 paragraph [79]:

WUK is not simply a supplier of parts but is part of the same Group as the manufacturer WFI and passed on technical advice. Its position is therefore closer to that of the manufacturer than a mere distributor, supplier or vendor of goods. They shared at least one common Director during the period when the 1999 warning was given.

The incremental approach which the Court adopts to the imposition to a duty of care is shown in Caparo Industries Plc v Dickman [1990] 2 AC 605 and more recently by Phillips LJ (as he then was) in Reeman v Department of Transport [1997] PNLR 618 at page 625. AWSL maintains that there is no need for any extension of principle to cover the existing situation but that if there is an extension, it is a small one. Either way, the full factual situation and the exact nature of the relationship between AWSL and WUK and WFI has to be comprehensively explored.

If regard is had to the threefold test of foreseeability, proximity and fairness, the nature of the relationship between AWSL and WUK over a period of years is crucial. The fact that AWSL forms part of a limited and defined category of Wartsila 46 engine users is of significance as is WUK’s particular position and the functions in which it is engaged. The way in which it marketed itself is also of importance in that connection. If regard is had to “assumption of responsibility” as per Henderson v Merrett Syndicates Limited [1995] 2 AC 145 and the objective test as to such assumption, investigation is needed into things said or done by WUK in its dealings with AWSL and what crossed the line between them – see Williams v Natural Life Foods Limited [1998] 1 WLR 830. In the more limited context of economic loss, two categories of case in which a special relationship is imposed were identified in White v Jones [1995] 2 AC 207 including the situation where “the defendant has voluntarily answered a question or tendered skilled advice or services in circumstances where he knows or ought to know that an identified plaintiff will rely on his answers or advice……. This special relationship is created by the defendant assuming to act in the manner by involving himself in the plaintiff’s affairs or by choosing to speak. If he does so assume to act or speak he is said to have assumed responsibility for carrying through the matter he has entered into.”

This is not a case of economic loss but is a case where it is alleged that there is a positive duty to speak rather than a case where it is alleged that something has been said which was inaccurate. The special relationship appropriate for economic loss may represent the same type of relationship which is required for the imposition of a duty to speak but for this, the full factual situation must be determined.

Whilst therefore the claim may involve an extension of existing principles, although AWSL maintains that it does not, it cannot be said that AWSL has no realistic prospects of success on the tortious claims against both WFI and WUK, though it may be easier to establish these matters as against WFI. Whilst AWSL’s primary dealings concerning the engines may have been with WFI, particularly in the period prior to 1998, as WUK maintains, the idea that any reliance was exclusively upon WFI and not upon WUK is not one which can be established without a full investigation of the facts.

I conclude therefore that AWSL does have realistic prospects of success in its claims against WUK in tort and in relation to the Overhaul Spare Parts Contracts and that these represent proper issues to be tried between them but that in respect of the Supply Contract and the Servicing Contract, it does not have such prospects and there are therefore no real issues to be tried between them. I proceed to determine the implications of this upon the Court’s jurisdiction over WFI.

WFI’s seat is Finland and therefore unless jurisdiction exists under Articles 5 or 6 of the Convention, it must be sued in the Finnish Courts under Article 2. Article 5 provides for a person domiciled in a member state to be sued in another member state in contract and tort cases in the circumstances there set out, including, in relation to tort, the Courts of the place where the harmful event occurred or may occur. AWSL relied primarily however upon Article 6 which provides as follows:-

“A person domiciled in a Member State may also be sued:

i)

where he is one of a number of defendants, in the Courts for the place where any one of them is domiciled.

As a result of the decision in Kalfelis v Bankhaus Schroder [1988] ECR 5565, Article 6(1) requires the claims against the defendants to be so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

It is accepted by WFI that if there is a claim in tort against WUK which is a “valid claim”, a “real claim”, a “proper claim” or a “good arguable claim” as set out in TheRewia [1991] 2 Lloyd’s Reports 235, the claim in tort against WFI is so closely connected to the claim against WUK that it satisfies the terms of Article 6(1).

It is not however accepted by WFI that if there is a claim against WUK in tort which passes the Part 24 threshold, it also passes the test to be a “valid claim”, a “real claim”, a “proper claim”, a “good arguable claim” or a claim which the party in question “may reasonably ask the Court to try” for the purpose of founding jurisdiction against WFI but I find that the case made by AWSL against WUK does satisfy all of these criteria and the Part 24 test, if there is any difference between any of them, for the reasons given earlier in this Judgment.

Recent decisions in this country have recommended a broad approach to the determination of the risk of irreconcilable decisions including inconsistent findings of fact or law but issues arise out of the decision of the European Court in Reunion Europeene SA v Splietthoff’s Bevarachtingskantoor BV [1998] ECR 1-6511. The point raised by paragraph 50 of the judgment in the Reunion decision is that claims in contract and tort are not sufficiently connected to fall within Article 6(1), so that the existence of a proper claim in tort against WUK does not found jurisdiction for a claim in contract against WFI. Here, I have held that there is a proper claim against WUK in contract as well as in tort, namely under the Overhaul Spare Parts Contract but this is a different contract from those upon which AWSL seeks to pursue WFI, namely the Supply Contract and the Servicing Contract, where I have found that there is no proper case to be made against WUK.

It is in my judgment clear, nonetheless, that the claim under the Servicing Contract against WFI and the claim under the Overhaul Spare Parts Contract against WUK are closely connected with one another as well as with the tort claim against WUK and WFI. It is also clear in my judgment that there would be a risk of irreconcilable decisions if separate proceedings took place in relation to them. Self-evidently, there would be a risk of irreconcilable judgments on the causation of the fire and the impact of a copper washer, 200 NM of torque and the absence of a securing wire. There could also be inconsistencies in findings as to the provenance of the copper washer. In my judgment therefore the problem raised in Reunion does not arise because there are “valid claims” against WUK in both contract and tort which are sufficient to found jurisdiction against WFI in contract and tort, albeit that the contract claims are based upon different contracts.

If I had to make any decision about the application of Article 6(1) to a situation where there was only a “valid claim” against WUK in tort and AWSL wished also to pursue contract claims against WFI, I would accept the reasoning of the Irish Court in Daly v Irish Group Travel Limited [2003] ILPr 38. I do not consider that paragraph 50 of the European Court’s Judgment in Reunion can be treated as laying down a broad principle in all cases properly falling under Article 6(1) since the Court did not so say and the factual situation in that case involved a primary defendant which was not domiciled in a Convention country, but over which the national Court assumed jurisdiction by virtue of its national jurisdictional rules.

I am not technically bound by the European Court decision (see Vaughan & Robertson- Law of the European Union section 2 paragraph 360) and the only part of the ruling which is even arguably binding is the answer given to the questions posed by the national court (See References to the European Court 2^nd Edition -Anderson & Demetriou 2003 at pp 334-339), although that has to be understood by reference to the reasoning given by the Court. I do not consider that paragraph 50 is part of the necessary reasoning of the Court for paragraph 3 of the dispositive rulings, in answer to the fourth question posed. In my judgment, Briggs & Rees in Civil Jurisdiction and Judgments Third Edition at page 175 are right in saying that if the intention was to lay down a general principle applicable to Article 6.1, it is simply wrong. I am reinforced in these conclusions by the broad based approach to the question of the risk of irreconcilable decisions taken in Watson v First Choice Holidays [2001] 2 Lloyd’s Rep 339 and Bank of Tokyo-Mitsubishi Ltd v Baskan Gida [2004] EWHC 945 (Ch).

It was argued that I was bound by the decision of the Court of Appeal in Watson where the Court of Appeal said that it could not ignore the decision in Reunion and referred the matter to the ECJ for clarification, rather than dismissing the appeal. As the matter was withdrawn from the ECJ before any decision was made it is said that I should treat myself as bound by Reunion as that is what the Court of Appeal appears to have done. I do not consider this to be right. The Court refused to make a decision, preferring to refer the matter to the ECJ, whilst considering the decision unjustifiable – see paragraphs 37-39. I am not bound by their decision to refer nor by the Reunion decision and would, if necessary hold that there is so close a connection that it is expedient to hear and determine the outstanding claims together to avoid the risk of irreconcilable judgments and that the characterisation of the claim as contractual or tortious is only one element to be taken into account in assessing that connection.

I do not, in these circumstances need to decide whether Article 5 has any application to the tort claim. I do not therefore determine whether England was the place of performance of any contractual obligation or the place where the harmful event occurred for the purpose of that Article, being either the place where the damage occurred or the place of the event which gave rise to the damage and was at the origin of the damage.

For the reasons given above, WUK’s Part 24 application succeeds in relation to the claim under the Supply Contract and the Servicing Contract but fails in respect of the tort claim and the claim under the Overhaul Spare Parts Contracts. Equally, WFI’s jurisdiction application fails, save in respect of the Supply Contract where there is no issue to be tried between it and AWSL, nor between AWSL and WUK. AWSL’s application for permission to amend succeeds in respect of the Overhaul Spare Parts Contracts against WUK and in respect of the Servicing Contract as against WFI, but fails in the latter respect against WUK.

It appears to me that the Order for costs should reflect the relative success and failures of the parties in their applications. The gravamen of the claim, as WFI and WUK recognised in argument, always lay in the tortious claim for failure to instruct, advise or warn as set out in paragraphs 11-19 of the Particulars of Claim. This tortious claim was framed against both WFI and WUK. In addition there was originally a Supply Contract claim against both WUK and WFI to which was added by proposed amendment, the Servicing Contract claim and the Overhaul Spare Parts Contracts claim. WUK has failed in its application to have the whole claim against it dismissed and in its objection to the Overhaul Spare Parts Contracts amendments against it. WFI has correspondingly failed in its challenge to this Court’s jurisdiction, whilst AWSL has succeeded in maintaining its claims, save for the originally pleaded Supply Contract claim and the proposed amended claim against WUK on the Servicing Contract. The right order therefore appears to me to be one in which AWSL receives a substantial proportion but not all of its costs of these applications but I make no final Order on this without hearing the parties’ submissions.

It would also be appropriate for directions to be given about the future conduct of this action and it is to be hoped that the parties will come before the Court with a suggested Order which is agreed between them.