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1976 Limitation Convention And Jurisdiction Agreements

10th Jun 2021

Enemalta Plc v Standard Club Asia Ltd [2021] EWHC 1215 (Comm)

On 23 December 2019, Malta suffered a nationwide power outage found to be caused by damage to the Claimant’s underwater High Voltage Alternating Current (HVAC) connector cable in the Sicily Channel. The Claimant claims that the damage was caused by the vessel DI MATTEO (“the Vessel”), whose registered owners (“the Owners”) are domiciled in Singapore. The Vessel was entered with the Defendant P&I Club (“the Club”).

On 3 January 2020, the Club provided security to the Claimant by way of a Letter of Undertaking (“the LOU”) in the approximate sum of €21.5 million, which is broadly equivalent to the maximum tonnage-related limitation figure prescribed under the 1996 Protocol to the Convention on Limitation for Marine Claims 1976 (“the 1996 Protocol”). The LOU is expressed to be subject to English law and to the exclusive jurisdiction of the English High Court of Justice. The LOU was not provided to secure the release of an arrested vessel or other property.

The Owners commenced proceedings in Singapore in order to establish a limitation fund for the purposes of limiting their liability to a lower value calculable by reference to the Convention on Limitation for Marine Claims 1976 (“the 1976 Convention”), namely €5.77 million. In the Singapore proceedings, the Owners applied for an order that upon the establishment of the limitation fund any existing security given by or on behalf of Owners, including the LOU, shall be released pursuant to article 13(2) of the Limitation Convention.

The Claimant subsequently issued proceedings in England seeking declarations that disputes as to the validity of the LOU are to be determined solely in England applying English law, that the LOU is and remains a valid and binding contract, that should the Club wish to dispute the continuing validity of the LOU, it must do so solely by bringing proceedings in England, that any contrary proceedings brought by or at the behest of the Club would constitute a breach of the LOU, and that any contrary declaration made by the Singapore Court will not affect the validity of the LOU.

The Club contested the jurisdiction of the English Court, arguing that the Singapore Court has sole and exclusive jurisdiction to make an order for the release of the LOU under Article 13(2) of the 1976 Convention and that the Singaporean Court is the proper and more convenient forum for determining whether an Order should be made under Article 13(2) as it is the forum in control of the limitation proceedings.

HH Judge Pelling QC dismissed the Club’s application to contest jurisdiction. First, it was held that the Court could not decline jurisdiction on forum non conveniens grounds, because the Court had to give effect to the English jurisdiction agreement pursuant to article 25 of the Brussels Regulation Recast.

Second, having regard to the decision of Colman, J in The ICL Vikraman [2004] 1 Lloyd’s Rep 21, it was held that the Singapore Court did not have the sole and exclusive jurisdiction to make an order under Article 13.2 of the 1976 Convention, because it is better than seriously arguable that the LOU is not a security within the jurisdiction of the Singapore Court.  No vessel or other property was attached within the jurisdiction of any State Party to the 1976 Convention, nor was the security given to obtain the release of a vessel or other property attached within the jurisdiction of any State Party to the 1976 Convention. Physically, the LOU is located in Malta, which is not a State Party to the 1976 Convention to the extent that physical location is relevant. In addition, it is probable that English law would treat the letter of undertaking as being located in England because that is the State that, by agreement between the parties, has been given exclusive jurisdiction in relation to it (following the decision in SAS Institute Inc v World Programming Limited [2020] EWCA Civ 599, para. 59-61). Accordingly, the Singapore Court has no jurisdiction to order the release of the LOU, if that is what ultimately happens, because the LOU is not a security that is within the jurisdiction of a State Party to the 1976 Convention: England is a party to the 1996 Protocol, not the 1976 Convention.

Further, the Court held that there is no principled reason why the English Court would not have exclusive jurisdiction in relation to this dispute, because the exclusive jurisdiction agreement governs all disputes between the parties concerning the LOU (Fiona Trust & Holding Corporation v Primalov [2008] 1 Lloyd’s Rep 254).

Peter MacDonald Eggers QC (instructed by DAC Beachcroft) appeared on behalf of the successful Claimant.

Please view the judgment here.