Stolt Kestrel BV v Sener Petrol Denizcilik Ticaret AS; CDE S.A. v Sure Wind Marine Ltd [15.10.15]

Court of Appeal provides clarification as to the limitation period for collision claims and the procedure for admiralty claims.

Background

Section 190(3) Merchant Shipping Act 1995 (MSA) imposes a two-year time limit for bringing claims against owners or ships in relation to collision claims. The court has powers under s.190(5) MSA to extend time in accordance with any rules of court and, under s.190(6) MSA, where there has not been an opportunity to arrest the vessel.

Collision claims may be pursued in rem, against a ship, or in personam, against the owners or bareboat charterers of the ship. An action in rem enables a ship (the res) to be arrested to compel the provision of security or sold by the Admiralty Court to satisfy the claims against the ship. It provides the court with jurisdiction to deal with the res upon arrest or, following an acknowledgment of service, it enables the court to exercise jurisdiction in personam over the person who has acknowledged service. Separate claim forms are required to institute proceedings in rem (Form ADM1) and in personam (Form ADM1A). In rem claim forms are valid for service for an initial period of 12 months, not the usual four.

The Stolt Kestrel

Following a collision in October 2010, the owners of the Stolt Kestrel commenced proceedings in the Admiralty Court in October 2012, shortly before the two-year time limit applied by s.190(3) MSA. They did so on an in rem claim form (ADM1A). In December 2013 the Claimants issued an in personam claim form and applied for an order under s.190(6) MSA or s.190(5) MSA extending time for issue.

At first instance, Mr Justice Hamblen found as follows:

  • Section 190(6) MSA only applied to proceedings in rem and thus a mandatory extension was not available for the in personam claim.
  • As regards the application under s.190(5) MSA, the Claimants had not established a good reason for not issuing an in personam claim form. Thus the first limb of the two-stage test established by The Al Tabith had not been satisfied. It was therefore unnecessary to consider the balance of hardship between the parties, which would have been the second stage of the test.

The Claimants appealed on grounds including the following:

  • The mandatory extension of time under s.190(6) MSA applies to in personam as well as in rem proceedings.
  • The commencement of proceedings in rem protected time for the purpose of bringing proceedings in personam, by analogy with the reasoning of Mr Justice Hobhouse in The Nordglimt [1987].
  • The Al Tabith had been wrongly decided by the Court of Appeal, and the test was simply one-stage, based on the interests of justice (by analogy with Part 7.6 of the Civil Procedure Rules); alternatively Hamblen J had erred in applying the two-stage test for the discretionary extension of time under s.190(5) MSA.

SB Seaguard

The Stolt Kestrel appeal was heard together with an application by yacht owners for permission to appeal against the refusal of the Admiralty Registrar to extend time under s.190(5) MSA for issue of proceedings against the owners of a support vessel, SB Seaguard. No proceedings had been issued within the two-year time limit. Settlement discussions had been ongoing.

Decision

The Court of Appeal dismissed the appeal and the application, finding as follows:

  • The rationale for the mandatory extension under s.190(6) MSA is that the claimant has not had a reasonable opportunity to arrest the vessel. That has no relevance to a failure to commence proceedings in personam.
  • Stolt Kestrel’s reliance upon The Nordglimt was misplaced. That case concerned a time bar provision (Article III Rule 6 of the Hague-Visby Rules) which extinguishes the claim itself, whereas s.190(3) MSA bars the remedy while leaving the claim in existence. The two-year time limit in s.190(3) MSA applies to the proceedings being brought. In this case the relevant proceedings were the in personam claim. Those were not the same as the proceedings in rem.
  • The two-stage test laid down in The Al Tabith was good law and had been properly applied. Neither Stolt Kestrel not CDE S.A. had established a good reason for failing to issue a claim form.

Implications

Commentators had argued that Lord Steyn’s speech in The Indian Grace (No. 2)[1998] laid down a general principle that in rem proceedings become in personam actions against the owners as soon as the Admiralty Court was seised of jurisdiction. However, in The Stolt Kestrel Lord Justice Tomlinson considered that the application of the decision in The Indian Grace (No. 2) is strictly limited to s.34 Civil Jurisdiction and Judgments Act 1982. The decision confirms there can be no such thing as a hybrid claim form covering both in rem and in personam claims.

The Court of Appeal in The Al Tabith [1995] held that the following matters cannot constitute good reason:

  • Carelessness or mistake by the claimant or its lawyers.
  • The defendant has no defence.
  • Negotiations are ongoing.
  • The defendant was equally oblivious of the expiry of the limitation period and carried on negotiating.

Like London buses, similar issues often come before the courts in bunches. The Admiralty Court in The Styliani Z [28.10.15] allowed an appeal from the Admiralty Registrar, who had refused to extend time for service of a claim form in a cargo claim. The Claimants’ lawyers intended to issue an in rem claim form (on form ADM1) but inadvertently used the ADM1A form. This was served after the expiry of the four months permitted for service of a claim form in personam but within the 12 months permitted for service of a claim form in rem. The Court held that issuing within time using the wrong form was a procedural error which could be corrected.