The plaintiffs were 99 Ethiopian consignees of goods carried on the Alexandros P in 1981 and 1982 from four North European ports - Rotterdam (Netherlands), Antwerp (Belgium), Hull (UK), and Uddevalla (Sweden) - to ports in Ethiopia and Somalia. The vessel was owned by the first defendants, a Greek company, and was time chartered to the second defendants, who were an Ethiopian company. The majority of the bills of lading, representing about half of the total value of the cargo, were issued in Hull and the remainder were issued in the other North European ports. Clause 30 of the conditions of carriage contained on the reverse of the bills provides:

Jurisdiction. All actions under this contract of carriage shall be brought before the Ethiopian courts of competent jurisdiction, and no other court shall have jurisdiction with regard to any such action unless the owner appeals to another jurisdiction or voluntarily submits thereto.

Clause 29 provides:

… in so far as anything has not been dealt with by the provisions of this bill of lading, the law of the Empire of Ethiopia shall apply.

Clause 2(b) provides:

Hague Rules. The Hague Rules contained in the international convention for the unification of certain rules relating to bills of lading dated Brussels 25 August 1924 as enacted in the country of shipment shall apply to the contract. When no such enactment is in force in the country of shipment, corresponding legislation of the country of shipment shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said convention shall apply.

While en route the vessel allegedly encountered problems with its main engine and machinery which entailed salvage services being rendered. The salvage arbitration between the salvors, consignees, shipowners, and charterers was settled by a payment made by all parties to the salvors. The consignees claimed to recover their share of the payment to the salvors by way of damages for breach of contract and/or duty against the defendants on the ground of the unseaworthiness of the vessel. They also alleged some cargo damage.

In March 1982, when the vessel was being repaired, the consignees' solicitors sought security for their claims. The shipowners' insurers undertook to pay the consignees' claims up to a certain limit, and also undertook that they would, within 14 days of the receipt from the consignees' solicitors of a request to do so, instruct solicitors to accept on behalf of the shipowners service of proceedings brought by the consignees in the English High Court and to enter an acknowledgment of service thereto. They also agreed to submit to the jurisdiction of the English courts for the purpose of any process for the enforcement of their undertaking. The Ethiopian Commercial Bank, on behalf of the charterers, provided a bank guarantee and also undertook on behalf of the charterers to instruct solicitors to accept service of proceedings in the High Court, but that undertaking was expressly subject to the charterers' right to apply to set aside the writ or service of the writ upon them.

The writ was subsequently issued in 1984 marked 'Not for service out of the jurisdiction'. It was served on the solicitors instructed to accept service by the shipowners. Subsequently, the charterers' solicitors indicated that they had instructions to accept service of proceedings but that their acceptance of proceedings was without prejudice to the charterers' right to apply to set aside the proceedings, and for a stay of the proceedings.

The charterers applied to set aside the writ under the Rules of the Supreme Court (RSC) O 12 r 8.

The first issue was whether there was a power to serve the writ in this case out of the jurisdiction under RSC O 11 r 1(1)(j). If so, the second issue was whether the case was a proper one for service out of the jurisdiction within the meaning of O 11 r 4(2) such that the Court's discretion to do so should be exercised. The parties accepted that the burden lay upon the consignees to show that the requirements for both issues were met.

The first issue concerned whether an action brought against a defendant out of the jurisdiction who has agreed to submit to the jurisdiction and has authorised an agent to accept service within it before the writ against the defendant was issued is an action 'properly brought against a person duly served within the jurisdiction' within the meaning of RSC O 11 r 1(1)(j). The consignees argued that RA Lister & Co Ltd v EG Thomson (Shipping) Ltd (The Benarty) [1983] 1 Lloyd's Rep 361 (CA) was binding and had identical facts which showed that the action in this case was properly brought. The charterers argued that The Benarty was, among other things, merely persuasive and wrongly decided.

As to the second issue, the charterers argued that the case was not a proper one for service out, due to the foreign exclusive jurisdiction clause. The charterers argued that 'owner' in cl 30 meant the 'carrier' (ie the charterers). In any event, the action had little connection with the UK, and much with Ethiopia. The charterers relied upon cl 29's choice of law. They pointed out that all 99 consignees were Ethiopian, that their subrogated insurers were Ethiopian, that the charterers were Ethiopian and that the goods were carried to Ethiopia. The only connection with England, the bills of lading issued in Hull, was slender and in a sense accidental.

The consignees argued that this was a proper case. The consignees did not suggest that the formal connection with England was significant. They instead argued that the transaction was not wholly devoid of English connections, in that the negotiation of general average and other security took place in London. Their main argument focused on the otherwise inevitable two sets of proceedings which would not only be unnecessarily costly, but which would create the risk of inconsistent decisions. The consignees' evidence was that the action against the shipowners would proceed in any event, so there would be two sets of proceedings.

Held: Application allowed.

Service of the writ is set aside because the case is not a proper one for service out of the jurisdiction under O 11 r 4(2).

As to the first issue, the Court has the power to give leave to serve the writ out of the jurisdiction upon the charterers under RSC O 11 r 1(1)(j). The action has been properly brought against a person duly served within the jurisdiction: The Benarty. The Court was bound by The Benarty. Even if not, The Benarty should be followed. The Benarty is not clearly wrong. It was not made per incuriam. Had The Benarty decision not existed, deciding whether the action has been properly brought would be very difficult, and the Court would have concluded, with considerable hesitation, that the Court lacked such power.

As to the second issue, the Court should not exercise its power to allow service out of the jurisdiction. The Court rejected the charterers' argument on the exclusive jurisdiction clause. '[O]wner' in cl 30 means what it says. Since the shipowners have voluntarily submitted to the jurisdiction, cl 30 no longer has any application as between the consignees and the charterers. If cl 30 was an effective exclusive jurisdiction clause, cl 30 would not be struck down by the application of the principle in The Hollandia [1983] 1 AC 565 (The Hollandia) (CMI597). If the charterers were able to rely upon an exclusive jurisdiction clause, the Court would without any hesitation whatsoever refuse to give leave to serve out of the jurisdiction. Without such a clause, the balance is less unequal, but it does not tip sufficiently far in the consignees' favour to show that the case is a proper one for service out of the jurisdiction.

The charterers argued that had cl 30 applied between the consignees and the charterers, cl 30 was to be struck down by application of the principle in The Hollandia ie that the effect of art 3.8 of the Hague-Visby Rules (H-VR), contained in Sch 2 to the Carriage of Goods by Sea Act 1971 (UK), is to render null, void and of no effect cl 30 because its effect would have been to subject the dispute to a jurisdiction under whose substantive law a lower maximum limit of carrier's liability would have been determined than that prescribed in art 4.5 of the H-VR, since in the present case the package limitation figure contained in the bills of lading yields a lower figure than that produced by the H-VR.

The issue was whether the H-VR would be applied in Ethiopia, so as to have such an effect. The consignees' initial evidence was that of an Ethiopian lawyer stating that 'Ethiopia is not signatory to Hague Convention Rules. Thus, Ethiopian courts do not apply the [H-VR] as such'. The charterers' evidence was that the Ethiopian courts would have regard to the incorporation of the Hague Rules or H-VR in a contract of carriage even though Ethiopia is not a party to the Conventions and has not ratified them. If a bill of lading refers to the Hague Rules or to the H-VR, the courts will apply the Rules. Subsequently, the consignees put in supplementary evidence from their Ethiopian lawyers in which they said that they 'were not certain' that an Ethiopian court would apply the Hague Rules. The charterers' Ethiopian lawyer said that he 'could fairly presume' that Ethiopian courts would give due regard to the Hague Rules or H-VR so long as the parties incorporate them in the contract, yet stated that he was unable to decide 'whether or not the Ethiopian court ought to apply the higher package limitation of the statutory enactment as opposed to clause 24 of the bill of lading'.

Overall, the Court was unable to conclude that the consignees have established, on the balance of probability, that as a matter of domestic law the courts of Ethiopia would not apply the provisions of the Rules if they were properly incorporated into a contract.

The consignees did not ask the Court to reject the charterers' argument that cl 2(b) would have the effect of incorporating the H-VR into the contract constituted by the bills of lading as a matter of contract. Accordingly, were the question to be relevant, which it would have been had it been decided that cl 30 was an effective exclusive jurisdiction clause in this case, cl 30 would not be struck down by the application of the principle in The Hollandia.

The considerations for deciding whether the case is a proper one for service out of the jurisdiction are conveniently stated in Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 (HL) 72:

In considering this question the court must take into account the nature of the dispute, the legal and practical issues involved, such questions as local knowledge, availability of witnesses and their evidence and expense.

In this case, this can be done upon the basis that there was no exclusive jurisdiction clause.

This case is not a proper one for service out. As to the risk of inconsistent decisions, there is no evidence which suggests that there is any greater risk of inconsistent findings in this action, if it is severed, than in any other similar case. In almost every case in which there is power to order service out of the jurisdiction under O 11 r 1(1)(j), there will be common issues affecting defendants or proposed defendants which, if tried in separate actions, might be decided differently. It would not only be inconvenient but in some cases perhaps disastrous for different decisions to be reached; but the exercise of the jurisdiction under O 11 is an exorbitant jurisdiction. As to the other implications of a multiplicity of proceedings, in particular the incurring of unnecessary costs, this should not be taken in the consignees' favour to any great extent. They have chosen to issue their proceedings against both defendants in this country. There is no evidence that the shipowners would not have consented to some other jurisdiction. As for witnesses, Ethiopia would be more convenient for some witnesses, but England would be more convenient for some expert witnesses already instructed.