The Owners of the Ship “AL KHATTIYA” -v- The Owners and/or Demise Charterers of the Ship “JAG LAADKI” [2018] EWHC 389 (Admlty)

The Admiralty Court in this case considered an application by the owners of the “JAG LAADKI” (the defendants) to stay the English proceedings brought by the owners of the “AL KHATTIYA” (the claimants) on forum non conveniens grounds and to set aside an anti-suit injunction.

This case has already appeared in our January edition when we considered the defendants’ application for early disclosure of certain information considered necessary in the English proceedings in order to calculate the claimants’ losses.

Factual background

On 23 February 2017, the defendants’ oil tanker, the “JAG LAADKI”, collided with the claimants’ LNG carrier, the “AL KHATTIYA”, at high speed, in a designated Fujairah anchorage, while the latter was lying stationary taking on supplies. The “AL KHATTIYA” sustained significant damages and proceeded to Qatar where it was repaired. In March 2017, the claimants, a Marshall Islands company operating in Qatar and wholly owned by Qatari interests, commenced proceedings in the English courts and claimed approximately US $30 million in damages. They founded jurisdiction for their claim against the owners of the “JAG LAADKI” in England as of right by serving the in rem claim form on the “JAG POOJA”, another vessel owned by the defendants at Milford Haven on 22 March.

In April 2017, the defendants brought two sets of proceedings in the UAE claiming damages from the owners of the “AL KHATTIYA” and a declaration of non-liability. One of the reasons why the defendants brought the action in the UAE was the lower tonnage limitation regime compared to the UK. Accordingly, they sought to contest the quantum of the damages recoverable from them by establishing that their liability was limited to US $14.7 million pursuant to the unamended 1976 Limitation Convention (whereas the limit in the UK was around US$ 3.5 million pursuant to the 1976 Limitation Convention as amended by the 1996 Protocol). Shortly afterwards, the claimants applied to the English court for an interim anti-suit injunction seeking to discontinue the defendants’ UAE liability action on the grounds that it was vexatious and oppressive. Knowles J granted the injunction and the defendants subsequently admitted liability for the collision and withdrew the UAE liability action in Fujairah. However, they proceeded to issue the current applications seeking to set aside the anti-suit injunction and to stay the English proceedings brought by the owners of the “AL KHATTIYA” on forum non conveniens grounds.

Legal issues

The first issue Mr Justice Bryan was asked to consider was whether there is a forum where the claim can be tried more suitably than in England, for the interests of the parties and the ends of justice. The judge considered the applicable principles established in the leading case of The Spiliada [1987] A.C. 460 and proceeded to examine the factors connecting the claim to England and to Fujairah, seeking to identify the forum with which the claim has its most real and substantial connection. He rejected the defendants’ argument that the jurisdiction in which a tort has been committed is ‘by far the most significant factor in determining the natural forum’ and suggested that this was likely to be a ‘starting point’.

In his judgment, Mr Justice Bryan considered in detail The Albaforth [1984] 2 Lloyd’s Rep 91 and the line of cases deriving from it but concluded that the mere fact that the collision took place in Fujairah waters did not render it the appropriate forum for the trial. The judge also dismissed the defendants’ argument that the claim was governed by UAE law and commented that they failed to establish that ‘UAE law is materially different from English law in any way that is likely to be material’ on the facts of this case. The court placed emphasis on a variety of other factors which pointed to England as the natural forum. These factors included the nationality of the witnesses and experts, the language of the relevant documentation and the location of the P&I clubs that represented both parties. However, he rejected the claimants’ argument that they would not receive a fair trial in Fujairah due to the diplomatic dispute between the UAE and Qatar.

In light of the defendants’ admission of liability and taking into account that the claimants founded jurisdiction in this court as of right, the judge dismissed the defendants’ application for a stay on forum non conveniens grounds. He found that the owners of the “JAG LAADKI” failed to establish that Fujairah was a more appropriate forum than England and ordered judgment be entered against them, with damages to be assessed, with a reference to the Admiralty Registrar to assess quantum.

The second issue Mr Justice Bryan was asked to determine was the defendants’ application to set aside the anti-suit injunction. The judge had no difficulty in deciding that the defendants were acting vexatiously and oppressively in commencing the UAE liability action. He held that it was not properly arguable that the defendants were entitled to the relief sought and it should have been evident to anyone, including the defendants, that they were 100% liable for the collision. In fact, he commented that even if the English court was not the natural forum for the claim itself, it was sufficient if it was the natural forum for deciding whether the claim was vexatious, following the decision of Thomas J in Shell International Petroleum Co -v- Coral Oil Co Ltd [1999] 2 Lloyd’s Rep 606. The UAE proceedings were characterised as self-evidently hopeless and of no legitimate purpose; hence the defendants’ application was dismissed.

Comment

Claims triggered by the collision of ships are likely to be connected to more than one forum. This case serves as a reminder that all relevant connecting factors and how they affect the interests of the parties and the ends of justice should be taken into account when determining the appropriate forum for the trial of an action. By arresting a vessel very promptly after the collision the owners of “AL KHATTIYA” established English jurisdiction as of right and before any other proceedings had been issued, emphasising the importance of taking prompt action.

This article originally appeared in the May 2018 edition of shipping case digest. Other articles include:

Seatrade Group N.V -v- Hakan Agro D.M.C.C The “ACONCAGUA BAY” [2018] EWHC 654 (Comm)

Jiangsu Shagang Group Co Ltd -v- Loki Owning Company Ltd [2018] EWHC 330 (Comm)

Exportadora de Sal S.A de C.V -v- Corretaje Maritimo Sud-America no Inc. [2018] EWHC 224 (Comm)