The defendants were the Compania Naviera Vascongada. On 19 February 1918, their Arraiz collided with the San Jacinto in New York Harbour, USA. On 1 July 1918, the defendants commenced proceedings in rem against the San Jacinto in the District Court for the Southern District of New York. On 2 February 1921, the United States Shipping Board (the Board), owners of the San Jacinto by demise, filed a cross libel in rem and in personam, claiming for the damage sustained by the San Jacinto in consequence of the collision. On 18 February 1921, the Board demanded security for their cross libel. On 19 March 1921, an order was made staying the action of the owners of the Arraiz until security was given in the cross-action, and for some considerable time both actions continued in existence. The precise terms of this order were unclear. Parties expected that the matter would be tried in the State of New York due to the place of the collision. Nothing was done by either of the parties for some time. On 17 August 1923, an uncontested order was made discontinuing the defendants' action in New York. The Board's cross libel, however, subsisted.

Meanwhile, in the UK, the Board had on 16 April 1924 obtained an order ex parte to extend time for commencing proceedings against the Arraiz, which was arrested on 21 June 1924 in the UK. The defendants applied for the writ to be set aside because the action was time-barred under the Maritime Conventions Act 1911 (UK) (the MCA).

The defendants argued that, as the Board had ample opportunity to arrest the Arraiz either in US or UK ports during the two-year MCA limitation period, there should be no extension of time.

The Board argued that the crucial date for consideration was 17 August 1923, when the defendants' New York proceedings were discontinued. The Board claimed that thereafter it had no reasonable opportunity of arresting the Arraiz until 21 June 1924.

The issue was whether the Board should be given leave to maintain an action against the defendants even though six years had elapsed since the collision.

Held: Application dismissed.

The ex parte order is confirmed.

The action would clearly be out of time at common law but for the MCA. The question was whether the Board have shown special grounds for leave to maintain the action. This case does not fall within the compulsory words of the proviso to s 8 of the MCA, but falls, if at all, within the discretionary part of the proviso.

The defendants argued that US case law had made it clear that they could not sustain an action successfully against the Board in respect of a ship which was in private ownership but under bareboat charter to the Board. Nevertheless, the Court pointed out that their action was alive until 17 August 1923. The Board acted reasonably up to that date in keeping alive their cross-action against the defendants. The Board had the hope that the defendants' action for their larger claim could mean that the defendants might be expected to bring their action forward and, as a preliminary and necessary step for further prosecuting it, would give security to the Board.

Thus, the time up to August 1923 is fully accounted for, and up to that period both parties contemplated that the litigation would be carried through in the New York. The Board was justified in not proceeding in this Court until after 17 August 1923.

After that the Board did not do anything until April 1924. In the interval, the Arraiz was twice in the UK: first in Plymouth from 6-14 November, then in Barry from 16-22 November; and then again for 16 days in Newport in March 1924.

Had the Board applied earlier in September 1923 for leave, the Court would have granted their request without hesitation because parties had litigated their dispute for so long in the US, which gave the Board the impression that the whole matter would be litigated there, up to the point when the defendants discontinued their action.

The fact that the Board failed to notice that the Arraiz was in the UK on these two occasions ought not to deprive them of the leave that the Court should have given them if they had applied in September 1923. The time, although long, is accounted for. Leave ought to be given.

The defendants also argued that regard ought to be given to the fact that between the date of the collision and some date towards the end of 1920, the Arraiz was on various occasion in ports in the US and that the Arraiz was in 1918 twice in New York, and on other occasions up to October 1920, in other US States. That is a very relevant matter if proceeding upon the compulsory portion of the proviso and, indeed, would prevent the Court from acting under it, but the discretionary part of the proviso alters the position. The fact that the Board did not arrest the ship in 1918 in the US is not a reason for refusing them leave, especially when the Arraiz was last in New York in 1918. It may well be that the representatives of the Board, without any breach of duty on their part, did not become aware of the Arraiz being in other US States than the State which the owners had elected as their forum, on various occasions down to October 1920.

As for the arguments on lis alibi pendens, this is a matter relevant to the court's exercise of discretion. But in this case a motion to stay this action on the ground of lis alibi pendens would fail had it been made. Although there were proceedings in New York, there has been no arrest and no bail. None of these hardships, which are grounds for staying an action on the ground of lis alibi pendens, were inflicted on the defendants. The Board have no res to seize in the USA. With the arrest of the Arraiz here, the defendants will not be troubled by the Board's action in New York and could apply for dismissal of the same.

[For the defendants' unsuccessful appeal, see The Arraiz (1924) 19 Ll L Rep 382 (CA) (CMI2654).]