Starlight Shipping Company v Allianz Marine & Aviation Versicherungs AG & Ors

Starlight Shipping Company (“Starlight”) sued its insurers by proceedings in the Commercial Court, 2006 Folio No 815, issued on 15 August 2006 (“the original action”), arising out of the loss of the vessel Alexandros T on 3 May 2006. The first four Defendants are known as the Company Market Insurers (“CMI”) and the Fifth to Seventh Defendants as the Lloyds Market Insurers (“LMI”). In each relevant policy, there was an exclusive jurisdiction clause providing for English law and the jurisdiction of the courts of England and Wales, which is why Starlight commenced and continued its claims here. Liability was denied, and vigorously contested. Overseas Marine Enterprises Inc (“OME”) were identified in the policies as Managers. Ince & Co acted for Starlight in the proceedings, and Hill Dickinson LLP, then Hill Taylor Dickinson, (whom, together with their partners and employees, all being “Intended Defendants” in the original action, I shall call “HD”) acted for the Defendant Insurers.

The loss of the Alexandros T involved considerable loss of life, and the proceedings were made the more fraught both for that reason and because the denial of liability was based in substantial part upon allegations of unseaworthiness, to which Starlight and/or OME were alleged to be privy, and failure properly to report and repair damage to the vessel in accordance with Class Rules. In the course of the preparation for the proceedings, a number of specific allegations were made and pursued by Starlight, and Ince and Co on its behalf, falling into two general categories:

The allegations were made even before the issuing of the proceedings by the Claimant. They were referred to with some particularity in Ince & Co’s letter to HD of 18 July 2006. Complaints were made about attempted covert contacts with the Claimant’s crew, and, in particular, an unspecified “instance of serious misconduct by one of the underwriters”. As for the malicious rumours (described as “malicious scuttlebutt”), this was described and complained of, together with its alleged effect on the market. Further reference was made in Ince & Co’s letter of 20 October 2006 to the underwriters “behaving in a reckless and irresponsible fashion in making … an allegation when they have no evidence to substantiate what they allege”. It appears that those representing Starlight obtained a sworn affidavit dated 8 January 2007 from Mr Miranda and another member of the crew, a Mr Paulino, alleging that they were given money and offered more, in return for the giving of what they regarded as untrue evidence. A Request for Further Information was served on 24 October 2007 by Starlight in the proceedings, asking probing questions about payments made, inter alia, to Mr Miranda, and as to the circumstances of approaches to the witnesses, which led to a response, dated 19 November 2007. The allegations came fully out into the open in a witness statement of Mr Nicholas Shepherd of Ince & Co, on Starlight’s behalf, dated 7 December 2007, served just prior to a Pre-Trial Review on 14 December 2007. Mr Shepherd referred (in paragraph 6) to Mr Miranda as being the apparent source of the very serious allegations which the Defendant Insurers were making, as had now become clear after exchange of witness statements, and Mr Shepherd addresses this in terms “so that the Court has some idea of what the Claimant will in due course say with regard to the boson’s veracity”: he exhibits the joint affidavit of Mr Miranda and Mr Paulino of 9 January 2007, to which I have referred.

He referred both to that affidavit and to other affidavits from crew members dealing with alleged approaches made to them by a Mr Bernardo, on the Defendants’ behalf, and suggests that “Mr Bernardo appears effectively to have been attempting to solicit untruthful evidence from those to whom approaches were made to say that the Vessel was unseaworthy”. Counsel for Starlight, Mr Brenton QC, specifically stated to Tomlinson J at the Pre-Trial Review on 14 December 2007, as recorded by the transcript (referring to Mr Shepherd’s fifth witness statement, which the judge had read), that Mr Bernardo had “approached a number of survivors and sought to persuade them to give false evidence in return for financial inducements”.

This position is summarised by Mr Crampton of Lax & Co, the new solicitors acting for the purpose of these proceedings for Starlight, in his witness statement for the purposes of the applications before me, namely:

“5.

In their defence to the claim, the Underwriters alleged that the vessel was unseaworthy, that Starlight knew that the vessel was unseaworthy and that Starlight had in place an illegal practice, by which they refused to notify Class and the flag state authority of the vessel about defects to their vessels. These allegations were based on false evidence, which the Underwriters had obtained from the bosun, Aljess Miranda …

…

13.

In their responses to the Request for Further Information, the Hull Insurers provide details of payments totalling US$25,100.00 and €14,864.39 made by them to Mr Miranda in connection with the provision of his evidence. Throughout the English Court proceedings, Starlight vehemently denied and disputed the allegations made by Mr Miranda in the witness statements and affidavit listed above. Starlight have always maintained that Mr Miranda’s accusations relating to the condition of the Vessel and the conduct of the Starlight are completely untrue and a fabrication; and that the payments made by the Hull Insurers to Mr Miranda had the effect of motivating Mr Miranda to intentionally make … false accusations.”

As to the second series of matters by reference to consequential loss and damage, at the same PTR, Mr Shepherd put in his sixth witness statement to support an application to amend the pleadings, to add what were called the “Additional Sums Claims”, which he describes. The proposed amendment alleged that “the Claimant has sustained and claims loss and damage over and beyond the measure of the indemnity to which it is entitled under the Policy”. In what was described as the best information which Starlight was presently able to provide, it was pleaded that, had the Defendants complied with their obligations to indemnify in accordance with the terms of the policy, Starlight would have purchased a replacement vessel, and had thus lost between US$ 45m and US$ 47.7m by way of increased capital cost and chartering losses of US$ 31,373,800.

Tomlinson J declined leave to introduce this further claim, concluding that he and the Court of Appeal were bound by the decision of Sprung v Royal Insurance UK Ltd [1992] 1 Lloyd’s I & R Rep 111 CA (itself following an earlier decision of the Commercial Court by Hirst J in The Italia Express No 2 [1992] 2 Lloyd’s Rep 281). Tomlinson J consequently refused permission on the basis that, in the light of English law, Starlight had no cause of action in respect of the additional claims which it sought to pursue. He also, as a matter of case management discretion, declined the amendment, but he was quite plain as to the law.

In the event, the day before the hearing before Tomlinson J, LMI had entered into a Settlement Agreement with Starlight and OME dated 13 December 2007 in full and final settlement: I shall set out the terms of that agreement below. It was a term of the Settlement Agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between the Claimant and the LMI Defendants was made on 20 December 2007, such that:

“UPON The Claimant and the Fifth, Sixth and Seventh Defendants agreeing terms and by consent IT IS ORDERED THAT

Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter. ”

A similar Settlement Agreement was then entered into in full and final settlement between Starlight and OME and the CMI Defendants, dated 3 January 2008, and pursuant to that agreement there was, by consent, a Tomlin Order entered, dated 7 January 2008, in materially the same terms, save that, whereas the other order was backdated to 14 December 2007 (the date of the hearing before Tomlinson J), this Tomlin Order had immediate effect.

I set out now the material parts of the two agreements. In each case the Assured was defined as being “[OME] and Starlight … as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T”:

The CMI Agreement:

“1.

Each Underwriter agrees to pay on or before 18 January 2008 … their due proportions of the sum of US$ 16m … being 100% of their due proportions of the sum insured being 50% of the US$ 32m … without interest or costs.

2.

The Assured and Claimant agree to accept the EURO equivalent of each Underwriter’s due proportion of US$ 16m … in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of “Alexandros T”, including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved [this latter aspect does not arise and I shall leave it out in my recital of the rest of the agreement and of the LMI agreement].

3.

The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assured’s or the Claimant’s associated companies or organisations or any mortgagee in relation to the loss of “Alexandros T” or under Policy No 302/CF 00220Z …

6.

This agreement is subject to English law and the exclusive jurisdiction of the High Court in London.”

2.

The LMI Agreement:

“2.

The underwriters … agree to pay on or before 24 December 2007 … the sum of US$8M … being 100% of their due proportions of the sum insured being 25% of US$ 32m … without interest or costs …

3.

The Assured and Claimant agree to accept the EURO equivalent of US$8M … in full and final settlement of all and any claims it may have under Policy No … against the Underwriters signing below in relation to the loss of “Alexandros T”…

4.

The Assured and Claimant agree to indemnify the underwriters signing below against any claim that might be brought against them by any of the Assured’s or the Claimant’s associated companies or organisations or by any mortgagee in relation to the loss of “Alexandros T” or under policy No …

5.

This agreement is subject to English law and the jurisdiction of the High Court of London.”

In April 2011 (more than three years later) nine sets of Greek proceedings, in materially identical form, were issued by Starlight, by OME, by their co-Assureds and by individual officers of those companies, against the LMI and CMI Defendants, some of their employees or underwriters, and HD, and some of their partners or employees. The claims are for compensation for loss of hire and loss of opportunity by Starlight totalling approximately US$ 150m and for pecuniary compensation due to moral damage amounting to €1m, and similarly substantial claims by the other Claimants in respect of alleged acts, unlawful and in breach of good faith, all done for the alleged purpose of avoiding the performance by the Defendants of their legal obligations. The setting for all the claims is by reference to Articles of the Greek Civil and Criminal Code: however the factual allegations are entirely familiar and include:

There is then a substantial section of the Greek pleadings relating to the financial consequences of the failure by the Defendants to comply with their obligations under the policy and the way in which they allegedly handled the investigations. But what has been described before Tomlinson J as the loss of the opportunity to buy and charter one vessel has now become the loss of such opportunity in relation to three vessels: hence doubling the pecuniary loss now sought.

In apparent recognition of the problem raised by the fact that such claims were ruled out as a matter of English law by Tomlinson J, Mr Crampton, in paragraph 27 of his witness statement, has explained that the claims made in respect of the three vessels are advanced in two ways in the Greek pleadings, the first being that, as a result of the underwriters’ intention to avoid payment of the insurance indemnity, eventually resulting in late payment of the policy proceeds, the Claimant missed the opportunity to use the policy proceeds to invest in the three vessels, and, secondly, that, as an alleged result of the Defendants’ actions in acquiring the false evidence of Mr Miranda, his clients were not able to insure the vessels and without insurance they would not have been able to trade them and could not purchase them. He states that his clients would “amend their pleadings prior to the hearing of the disputes in Greece so as to clarify this head of claim, such that no claim is made in respect of the late payment of the policy proceeds”. The expert evidence from the Claimant is that it is not possible to amend the pleadings in the Greek courts, but, treating the proposed draft amendment, which he exhibits, as a clarification, it does not seem to me that it in any way cures the defect, if defect there was, and it is said that the insurance of the three potential new vessels was rendered impossible, since all the London insurers refused to quote for the vessels because of the refusal of the Defendant underwriters to quote for them and because of the defamatory accusations spread as to the unseaworthiness of the Alexandros T. All the allegations arise out of the alleged manner in which the Defendants handled the Claimant’s claim in respect of the Alexandros T, and, even though the consequences and the consequential losses have expanded, and the claim for moral damages has been included, and although it seems that the Claimant now relies on an expanded affidavit of Mr Miranda, which is exhibited, the allegations, even though put into a context of Greek law, are materially identical to those made prior to the Settlement Agreement.

Proceedings have been brought in this country as follows:

Although there are consequently a number of proceedings and a number of applications, the thrust of the argument before me has been as follows. Michael Swainston QC and Tony Singla, for the CMI Defendants, and Steven Gee QC and Tom Whitehead, for the LMI Defendants, contend that the bringing of the various Greek proceedings is in breach of the Settlement Agreements, and/or, insofar as brought by the co-Assured, who fall within the definition of associated companies or organisations, is covered by the indemnity in both Settlement Agreements; and further is in breach of the exclusive jurisdiction clauses in the insurance policies and in the Settlement Agreements. James Drake QC and Emma Hilliard, on behalf of Starlight and OME and the other co-Assured who are claimants in the Greek proceedings, both resist those contentions and, by a very late cross-application of their own, seek a stay of any further proceedings in the original action, and of the two fresh actions brought by LMI, by reference to Article 28 of EU Regulation 44/2001 (“the Judgment Regulation”). No injunction is sought by the CMI or LMI Defendants to restrain the Greek proceedings, so there is no contravention of the principle established by Turner v Grovit [2004] ECR I-3565 in that regard.

I shall deal first with the issue which, it is common ground, falls to be considered at English law (being the governing law of the insurance policies and of the Settlement Agreements), namely whether, on a proper construction of the Settlement Agreements and the jurisdiction clauses, the claims now sought to be brought in the Greek proceedings

The two Settlement Agreements are in materially identical terms, as set out in paragraph 10 above. Mr Drake submits that they are to be construed so as not to prevent the bringing of the Greek proceedings. He relies on the following:

I am wholly persuaded by the submissions of the Defendants to the contrary, which appear to me to be unanswerable:

It is common ground that there were exclusive jurisdiction clauses in the insurance policies. It is also not in dispute that the clause in the CMI Settlement Agreement is an exclusive jurisdiction clause. Although it is not determinative of these applications, for reasons that will appear, I need to deal with the issue as to whether the jurisdiction clause in the LMI Settlement Agreement should be construed similarly.

On its face, as Mr Drake points out, the word “exclusive” is not used. However, Mr Gee submits that it nevertheless should be so construed. He refers to a number of authorities in which a jurisdiction clause not expressed to be exclusive has been so construed. He refers to Briggs & Rees: Civil Jurisdiction and Judgments (5^th Ed) at 4.45:

“Where the agreement is to be construed according to English law [such as in this case], there has been a noticeable judicial tendency to resolve any ambiguity in the construction of the parties’ agreement in favour of seeing it as one giving exclusive jurisdiction to the nominated court. It is unnecessary that the agreement actually contain the word “exclusive” in order to have this effect, but if the nominated court would have had jurisdiction in any event, without reference to the agreement, a court may wish to attribute some further effect to the agreement, which will tend to lead in turn to its being seen as exclusive.”

I have been referred by Mr Gee to Sohio Supply Co v Gatoil (USA) Inc [1989] 1 Lloyd’s Law Rep 588 CA and to Svendborg v Wansa [1997] 2 Lloyd’s Law Rep 183, the latter a case in which, despite an express mention of exclusive jurisdiction in the first part of the clause, it was unsuccessfully argued that there was therefore no implication that the second part of the clause also provided for exclusive jurisdiction. In Sohio, at 591, the Court of Appeal approved the then passage in Dicey & Morris, which still survives today at 12-092:

“Where the agreement is governed by English law, and in the absence of explanation to the contrary, the court may conclude that if a nominated court would have had jurisdiction by right in the absence of the agreement, the agreement would be idle unless it conferred exclusive jurisdiction on the nominated court.”

In Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 Lloyd’s Rep 505 CA, Steyn LJ, after referring to Sohio, said “it would be a surrender to formalism to require a jurisdiction claim to provide in express terms that the chosen Court is to be the exclusive forum”. Article 23 of the Judgment Regulation itself (to which I refer below) provides that a jurisdiction clause “shall be exclusive unless the parties have agreed otherwise”.

I am satisfied that this – which Dicey & Morris at 12-092 refers to as a “principle of interpretation” – applies in this case. In the absence of any argument that the word exclusive was for some reason – not explained or enunciated – deliberately left out, I am satisfied that, both by reference to the context, and to the fact that the provision would otherwise be idle, that the parties did mean to and intend exclusive jurisdiction. I am influenced in particular by the fact that:

I now turn to the central question on the application, by reference to those Tomlin Orders, namely whether the CMI and LMI Defendants are, pursuant to their primary application before me, entitled to the relief they seek, by way of, as they assert, carrying into effect the terms agreed in the Settlement Agreements.

Mr Drake submits that the Defendants are not entitled to proceed summarily, and without issuing fresh proceedings, in respect of the relief they now seek. He relies wholly on the decision of the Court of Appeal, reported, it seems, in The Independent on 21 December 1987, in Hollingsworth v Humphrey [1987] CAT 1244. An application to enforce a compromise contained in the schedule to a Tomlin order made in 1978 was brought in 1985, by a motion seeking an order that the stay of proceedings be lifted and the claimant be at liberty to proceed to trial; alternatively that the terms of the compromise, being in respect of a binding contract for the sale of a house, be carried into effect, with an enquiry as to the loss or damage which the claimant would have suffered by reason of the defendant’s failure to effect the sale of the property. Mervyn Davies J refused to lift the stay, by reference to the principle in Cooper v Williams [1963] 2 QB 567, requiring good grounds to be shown. It was apparent that there had been what was described as “extraordinary inertia on Mrs Hollingsworth’s side. For more than 6½ years no step was taken to enforce the terms of compromise.”

The basis of the claim for lifting the stay appears to have been that the claimant wished to regard the contract as repudiated. However, Mervyn Davies J did make an order for an assessment of damages for breach of contract. The Court of Appeal dismissed the appeal against the refusal to lift the stay. However, so far as the claim for damages for breach of contract is concerned, Fox LJ, giving the only substantive decision of the Court, allowed the appeal, concluding (on page 5):

“The position, it seems to me, was that [the claimant] asserted a cause of action and gave that up in consideration of the provisions of the Tomlin order. Included in the provisions was that the agreement that the action should be stayed except for the purpose of enforcement of the term. If [the claimant] alleges a breach of the terms and subsequent damage to her, it seems to me that her proper course is to sue for damages in a separate action … [I]t was not open to the judge to make an award of damages upon an application to enforce the terms of compromise. It seems to me that, under the terms of the Tomlin order, the only jurisdiction which he had in this action was to make an order for the purpose of carrying into effect the terms of compromise. An award of damages is not carrying the terms into effect. It is granting a remedy for breach of contract. In my view, any claim by [the claimant] for breach of contract must be pursued in a separate action.”

Mr Swainston and Mr Gee criticise such conclusion by the Court of Appeal, but, in any event, contend that they are in a position to distinguish it, upon a number of grounds, to which I will refer. So far as their criticism is concerned, they note the subsequent decision of Morritt VC, which Mr Drake submits to be wrong, such that I should not follow it if I were tempted to do so, in Bargain Pages v Midland Independent Newspapers [2003] EWHC 1887 Ch. In that case, Morritt VC concluded that the CPR, and the Overriding Objective enshrined in and underlying the CPR, entitled him to conclude that Fox LJ’s judgment was given against the background of the RSC, not the CPR, and was inconsistent with the regime introduced by the CPR (paragraph 43) such that (paragraph 44) he did not consider that Hollingsworth “would preclude an order for an enquiry as to damages sustained … in consequence of a breach of the terms of the” settlement agreement contained in the Tomlin order before him.

I am again firmly persuaded by the submissions of Counsel for the Defendants. I approach the question first on the basis that Hollingsworth is correct and I am bound by it, notwithstanding Bargain Pages:

If necessary, I would accept the fallback submissions of Mr Swainston and Mr Gee as follows:

In those circumstances, I do not need to consider the alternative and fallback case for Mr Swainston that I should lift the stay in order to allow the relief claimed by way of enforcement of the Settlement Agreement to achieve the result sought. By reference to Cooper v Williams, there has to be good reason to lift a stay. On the face of it, if I were really prevented by Hollingsworth from permitting the Tomlin Orders to be enforced upon one or other of the grounds set out above, I would have wished to conclude that there were good reasons to lift the stay, but, on the other hand, it seems to me, that I would then be bound, if I had concluded I was bound, by Hollingsworth, in which, as referred to in paragraph 26 above, such an alternative proposition was rejected by the Court of Appeal on the facts of that case. I see no need to lift the stay when the availability of enforcement of the terms of the Tomlin Orders without doing so is so plain.

In those circumstances I am entirely satisfied that, subject to the question of any stay sought by Mr Drake, I can and should determine the issues summarily.

For the reasons set out above, I conclude that, at English law, which, it is common ground, is the law which I must apply, the bringing of the Greek claims is a breach of the Settlement Agreements. It is also a breach of the jurisdiction clauses contained in the Settlement Agreements (and for that matter in the insurance policies): the jurisdiction clauses are plainly wide enough to cover the disputes in the English and the Greek proceedings: see e.g. Continental Bank referred to in paragraph 22 above and DSM in paragraph 23(i) above.

As I have stated in paragraph 15 above, the Defendants do not seek, and would not be entitled, to enjoin the Greek proceedings. The Greek court will now need to proceed to consider those Greek proceedings, but, on the face of it, and at English law, this Court is plainly first seised of the matters in issue, both in that they were raised in these proceedings prior to the Settlement Agreements, and now by virtue of their falling within the ambit of the Settlement Agreements, and consequently within the Tomlin Orders, made in these proceedings.

There is no doubt that this action continues in existence and to have effect notwithstanding the stay (see Rofa Sport Management AG v DHL International (UK) Ltd [1989] 1 WLR 902 and Briggs & Rees at 2.236). The steps now taken to enforce the Tomlin Orders are not in any way enlarging the original action, but are taken in pursuance of it, and permitted by the Orders, as I have concluded. Even if it were enlarging the proceedings, that would plainly not be, as is contended by Mr Drake, a subversion of the effect of the Convention, as was concluded in a very different situation in Knauf UK GmbH v British Gypsum Ltd [2002] 1 Lloyd’s Law Rep 199, but would rather be consistent with the principle that all issues should be tried in one court, being the court first seised of the dispute, as recommended by the Advocate General in The Tatry [1999] 2 WLR 181 at 186G-H and 188G-H, exemplified in Masri v Consolidated Contractors International (UK) Ltd (No 3) [2009] QB 503 CA, where steps were taken after judgment in the original action, and as explained by Rix LJ in Stribog Ltd v FKI Engineering Ltd [2011] 2 Lloyds Law Rep 387, at paragraphs 115 and 128.

The damages sought are in effect in respect of the loss and damage which the CMI and LMI Defendants have already incurred in dealing with and defending the Greek proceedings, and of course the indemnity sought is for the sums incurred in respect of such proceedings brought by others than Starlight and OME, but falling within the category covered by the indemnity. There is, I am satisfied, no jurisdictional restriction upon the making of an order for such damages or for such indemnity: see Ellerman Lines Ltd v Read [1928] 2 KB 144 CA, Union Discount Co v Zoller [2002] 1 WLR 1517 CA, CMA CGM SA v Hyundai Mipo Dockyard Co Ltd [2009] 1 Lloyd’s Law Rep 213, and Briggs & Rees at 5.59 and Briggs: Agreements on Jurisdiction and Choice of Law at pp301-302.

The draft orders that were put before the Court by the CMI and LMI Defendants were considered in some detail. I am satisfied that the English court is entitled to pronounce its conclusions and grant remedies as sought, provided that none of them prevents access to the Greek court by way of injunction. It will be a matter for the Greek court to address, in the light of the conclusion of this Court, whether the English courts do indeed have exclusive jurisdiction in respect of the matters before me, pursuant to Article 23 of the Judgments Regulation (“Prorogation of Jurisdiction”), and whether it has jurisdiction; and further whether it can and should recognise declaratory and other relief granted by this Court, which I have concluded to be the court first seised, just as the English court recognised declaratory relief given by the Spanish court as the court first seised in The Wadi Sudr [2010] 1 Lloyd’s Law Rep 193 CA. In the light of my conclusions above, and subject always to Mr Drake’s application for a stay pursuant to Article 28, to which I will come below, there was, in fact, little dispute as to the terms of the relief sought. I deal with only two specific matters.

Mr Drake did not contest Mr Gee’s case that I could, if I so decided, ‘fortify’ the indemnity. The relevant indemnity clauses are, as Mr Gee persuasively argued in his skeleton argument, examples of an indemnity which is in part in respect of loss already incurred, but in part quia timet. Rix LJ made plain, in Rowland v Gulfpac Ltd [1999] Lloyd’s Law Rep (Banking) 86 at 97-98, that the court has an equitable jurisdiction to grant quia timet relief to a party with the benefit of an indemnity before loss has occurred, and that there is an equitable right to create and preserve a fund to protect the party to be indemnified. Because no injunction can be sought, it is possible that the Greek proceedings will be continued, at least until a decision by the Greek court, and, in the absence of mandatory relief to prevent the proceedings (such as would have been justifiable by reference to Ascherson v Tredegar Dry Dock & Wharf Co Ltd [1909] 2 Ch 401, Re Anderson-Berry [1928] Ch 290 and The Messiniaki Tolmi (No 2) [1982] QB 1248 CA), the mandatory injunction to require a fund to be set up, from which indemnification can be made, is still plainly similarly justifiable.

As Mr Gee puts it, the constitution of such a fund within the jurisdiction, in London, will ensure that the LMI Defendants are held harmless, and are not required to use their own funds to discharge liabilities falling within the ambit of the contract of indemnity. He refers to the “cloud” hanging over the Defendants, referred to by HHJ Chambers QC in Papamichaels v National Westminster Bank plc [2002] 1 Lloyd’s Law Rep 332, where an injunction was considered to be justified “in order to prevent the jurisdiction of the court from being stultified” (para 88). The creation of a fund is simply a modern exemplar of the court’s jurisdiction to make any interlocutory order reasonably asked as ancillary to the administration of justice, which long antedated the invention of the freezing order, as illustrated in Smith v Peters [1875] LR 20 Eq 511. Mr Swainston associated himself with Mr Gee’s arguments, and I agree that it is appropriate that there should be such an order, in respect of both sets of Defendants, with liberty to restore before me to consider the issues both of damages to date and of indemnities for the future, including the establishment of an appropriate fund.

The other item of relief sought with which I must deal specifically is in respect of the application by both sets of Defendants that I should declare that, by order of Tomlinson J, dated 14 December 2007, “it was determined that, under English law as the governing law of the policy, the claimant has no claim against the [respective] defendants for damages for late payment of the claim made by the claimant under the policy in respect of the loss of the Alexandros T”.

I have already recited, in paragraph 7 above, that Tomlinson J made such a decision. It is obviously important, in that a very substantial part of the claims made for actual financial losses in the Greek proceedings is said to arise (or, as a result of the proposed ‘clarification’ of the pleadings, arise in part) by reference to the alleged failure by the Defendants to make payment in accordance with their obligations (until payment in accordance with the Settlement Agreements). Mr Drake made a point that the decision of Tomlinson J was made, so far as the LMI Defendants are concerned, one day after the LMI settlement agreement, but (i) the proceedings were still in effect at that stage, the Tomlin Order not imposing a stay until six days later and (ii) when the Tomlin Order was imposed, it was backdated, but backdated not to 13 December, the date of the settlement, but to 14 December, the date of Tomlinson J’s decision.

In any event, the decision by Tomlinson J was made at a hearing when Starlight was represented by leading Counsel, put forward the arguments, and they failed.

Accordingly, it is material both to the contention that the claims now made in the Greek proceedings were already made in the original proceedings in this court and consequently were, as I have concluded, covered by the Settlement Agreements, but it is also relevant to the fact that those claims were, in such proceedings, made and resolved by a decision of the English court that, at English law, they could not be brought. Consequently, as to the relief sought by the Defendants before me, it is correct that Tomlinson J so determined, and if the Greek court wishes to know the answer to the question as to whether the claims are sustainable at English law, it can see the decision of Tomlinson J, as further explained in this judgment. I do not however see any point in making a declaration as to what Tomlinson J decided. It is supererogatory to declare what has already been declared.

Such application was very late. Applications were issued by Starlight, OME and the co-Assured on 24 and 28 November, the latter being the very date on which the hearing before me commenced. As set out in paragraph 14(i) above, OME, having been joined as a Part 20 Defendant in the original action, had actually put in both an Acknowledgment of Service and a Defence (in terms to which I will refer below), which Mr Gee submits prevents OME, in any event, from challenging the jurisdiction by way of Article 28. He refers to Midland Resources Ltd v Gonvarri Industrial SA [2002] I.L.Pr 8, Montrose Investments v Orion Nominees [2002] I.L.Pr 21, The Burns-Anderson Independent Network plc v Wheeler [2005] I.L.Pr 38 and Briggs & Rees at pp567-8.

However this is all the more significant in relation to the stay application made in relation to actions 702 and 1043, to which I shall refer below. As to the original action, 815, where I have concluded that the Defendants are entitled, without lifting the stay, to enforce the terms of the Tomlin Order, it is quite plain that this Court is first seised (indeed I would also have been so satisfied had I considered it appropriate to lift the stay). There is thus no jurisdiction in this Court, as the court first seised, to grant a stay in respect of the relief sought in the original action, since Article 28 expressly provides that “Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings”, this Court, being the court first seised, cannot stay its proceedings. I am therefore satisfied that there is nothing to prevent my making the order sought in the original action in respect of these Settlement Agreements, upon the basis of my conclusion that those Settlement Agreements both preclude the bringing of the claims now sought to be brought in the Greek court and trigger the enforcement of the Indemnity. The decision falls to be made both by this Court and at English law, and I so make it, within the original action. In any event, Article 23 provides that:

“If the parties, one or more of whom is domiciled in a Member State, have agreed that … the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship [so that] those courts have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.”

As to Actions 702 and 1043, referred to in paragraphs 14(ii) and (iii) above, the Defendants to those actions, Starlight, OME and the co-Assured, have put in Acknowledgments of Service. Not only have they not made, until just prior to this hearing, any application for a stay pursuant to Article 28, but they are out of time to do so – Mr Gee refers to the authorities set out in paragraph 43 above – and, in any event, have submitted to the jurisdiction by serving Defences which do not contain a challenge to the jurisdiction of the English court to determine the two actions. There is, rather, a substantive defence on the merits contained in the Defences (identical to that of OME as Part 20 Defendant in the original action as referred to in paragraph 43 above), by way of an assertion that:

“The claims in the Greek Proceedings fall outside the jurisdiction clause in the policy and the jurisdiction clause in the Settlement Agreement. It is respectfully denied therefore that the High Court of Justice of England and Wales has jurisdiction to determine the claims in the Greek Proceedings.”

This is not a challenge to the jurisdiction of the English court, but a substantive defence to the claim of breach of the exclusive jurisdiction clause.

Action 1043 in fact only addresses the exclusive jurisdiction clauses, because the co-Assured are not parties to the Settlement Agreements, and I am satisfied, for the reasons set out above, and on a summary basis, that:

I am satisfied that, although in the case of these two actions the English court is not first seised, the stay applications must fail. First, they are out of time and inconsistent with the submission to the jurisdiction that has already occurred by virtue of the Acknowledgments of Service and the Defences. Further and in any event, I would refuse a stay by reference to the provisions of Article 23, and the prorogation of English jurisdiction by virtue of the exclusive jurisdiction clauses (in the case of Action 702) in the Policies and in the LMI Settlement Agreement, and (in the case of 1043) in the Policies.

For the same reason, in Action 702, I grant summary relief under Part 24 to what is in fact the same effect as the relief sought and granted in the original action, and in the case of Action 1043, I grant, pursuant to Part 24, because I am satisfied there is no defence, the declaratory and other relief to the effect that the co-Assured is in breach of the relevant policy and the exclusive jurisdiction clause contained in it, by commencing and continuing with the Greek claims.

Accordingly, I find for the LMI and CMI Defendants in respect of all the relief they seek against Starlight, OME and the co-Assured, save in respect of their applications in respect of the Order of Tomlinson J (discussed in paragraphs 39 to 42 above), and reject the cross-applications.

HD, the Intended Defendants, wish to be joined to the original action as defendants pursuant to CPR 19.2(2)(b), which reads:

“The court may order a person to be added as a new party if –

…

(b)

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

If joined, HD will in due course wish to assert that they are entitled to the benefit of the Settlement Agreements and/or that it is an abuse at English law for Starlight and OME to have brought or to bring proceedings against them. The original action led to the Settlement Agreements, which caused the proceedings to be stayed, and I have already concluded above that those Settlement Agreements are subject to English law and the exclusive jurisdiction of the English courts. HD wish to submit, within the original action, that the effect of the Settlement Agreements, and of the Tomlin Orders staying the proceedings save for the purpose of putting the Settlement Agreements into effect, is that Starlight and OME cannot now pursue them, at any rate in Greece.

Mr Drake submits that this is an overt attempt by HD to subvert the Judgment Regulation, by seeking to inveigle themselves into the original action after its effective termination, so that they are then able to assert in the Greek proceedings that the Greek court is second seised, whereas, if they were to issue fresh proceedings in this Court, it would be apparent that the Greek court was first seised and the English court second seised, which they submit is the reality.

Mr Bailey submits that:

There appears to me to be no doubt as to the jurisdiction to grant, and the appropriateness in this case of granting, an application under Part 19.2(2)(b), so far as English procedural law is concerned, on the facts of this case. Mr Bailey refers to Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services Ltd [2008] EWHC 520, where Field J said (at paragraph 44) that it was not necessary to show that any existing party was able to bring a claim against the party sought to be joined. This was approved in the Court of Appeal at [2009] EWCA Civ 354, and followed in Shetty v Al Rushaid Petroleum Investment Co [2011] EWHC 1640. What was necessary was simply to satisfy the requirements of Part 19.2 above, namely that (i) there was an issue involving the new party and an existing party (ii) connected to the matters in dispute in the proceedings and (iii) it is desirable to add the new party so that the court can resolve that issue. There is clear authority, in The Selby Paradigm [2004] 2 Lloyd’s Law Rep 714 and Prescott v Dunwoody Sports Marketing [2007] EWCA Civ 461 (particularly at paragraph 23) that the court has power under CPR 19.2 in relation to joinder even after judgment: a fortiori after a stay which, as I have concluded above, permits the bringing and determination of proceedings to carry a settlement agreement into effect – see similarly in Rofa Sport, referred to in paragraph 33 above, where the court had jurisdiction to add a party under RSC 15(6)(2) to an action which had been stayed.

Mr Bailey relies upon a number of factors in respect of the issues of connectedness and desirability:

I would find it difficult to contest these submissions, and in his skeleton argument Mr Drake put forward the following submissions, which do not amount to a satisfactory answer.

The fundamental objection which Mr Drake puts forward is however not by reference to what might otherwise be appropriate by way of a domestic applicability of Part 19, it is his case that, as in Knauf, the overt purpose of HD is to subvert the Judgment Regulation, and anticipate the result in Greece, by converting HD’s claim into proceedings of which the English Court, instead of being second seised if brought by fresh action, would now be first seised.

Mr Bailey, while relying upon the contentions which I have already summarised in paragraph 55 above, sought to meet this allegation as to motivation. He drew my attention to Alan Barton v Golden Sun Holidays [2007] EWHC B6 QB, in which, in relation to a Part 20 application, Wyn Williams J pointed (in paragraphs 25-26) to a decision of the European Court relating to Article 6(2) of the Convention (GIE Reunion Europénne v The Zurich Espania [2005] ECR I-40), in which the European Court stated (at paragraph 33) that “Article 6(2) of the Convention does not require the existence of any connection other than that which is sufficient to establish that the choice of forum does not amount to an abuse”. However insofar as such is relevant, Mr Bailey submitted that it could not possibly be said that the choice of an English forum in this case could be an abuse, when it was, as he submitted, the most natural forum for the resolution of the issues between the parties. But, more relevantly, he drew my attention to Shetty (referred to in paragraph 54 above), in which the learned Judge, Mr Pymont QC, concluded that the application under Part 19.2(2)(b) was not flawed, if otherwise justified, by reference to the motive for its application. He said (at paragraph 23):

“If (as I have decided) the joinder of ARPD is desirable to enable the court to resolve the issue in the Employment Action against Mr Shetty, the fact that joinder will also enable ARPD to bring claims against Mr Caplis and Mr Wight cannot make joinder undesirable or otherwise disentitle the Applicants from having recourse to CPR r 19.2(2)(b).”

I found the arguments evenly balanced, but I was finally convinced by the submission of Mr Bailey in reply. He pointed out that, but for the breach of the exclusive jurisdiction clauses, which I have found to be established, any further claims against the CMI and LMI Defendants (and, if HD be right, their privies) by Starlight, OME and the co-Assured would and should have been (if permissible at all) in this jurisdiction. The assertion of subversion by HD of the Regulation is in fact to turn the Regulation on its head, in the light of Article 23. In those circumstances I am and remain simply of the view that the provisions of CPR Part 19.2(2)(b) have been made out, and that permission should be given to HD to be added as new parties to the original action.