This was an appeal against the decision of the District Court of Nicosia on 19 December 1987, by which the lawsuit of the plaintiff for recourse under its marine insurance contract for the damage or loss suffered during the carriage of goods was rejected due to lack of jurisdiction.

Held: Appeal allowed with costs.

The issue at hand is essentially the following: does the Court have jurisdiction to deal with the dispute that has arisen between the parties and that concerns the implementation of a maritime insurance contract under which the defendant indemnified the plaintiff for damage suffered due to predetermined risks during the transport of their goods from Limassol to Libya on the Diana, which belongs to third parties?

The Full District Court of Nicosia ruled that the issue in question fell within the exclusive jurisdiction of the Maritime Court of the Supreme Court under s 19(a) of the Law on Courts 1960 (Law 14/60) and consequently dismissed the lawsuit. The Court held that the subject-matter of the action was a dispute subject to the jurisdiction of the Maritime Court as defined by s 1(1) of the Administration of Justice Act 1956 (UK) (the Act), which determines the first instance jurisdiction of the Maritime Court of the Supreme Court. In particular, the transferable right was deemed to fall under the jurisdiction of the Maritime Court, based on the provisions of ss 1(1)(g) and (h) of the Act. If disputes relating to the exclusive jurisdiction of the Supreme Court under s 19(a) of Law 14/60 are outside the limits of the jurisdiction of the Full District Court, as defined in s 22(1) of the same Law, the District Court could not assume or exercise jurisdiction, a finding which rendered the action dismissable.

The well-formulated decision of the Court of first instance examined the divergent views as to the nature of the maritime insurance contract and its relation to the matters which determine the jurisdiction of the Maritime Court under ss 1(1)(g) and (h) of the Act, and Cypriot and English case law that tends to shed light on the interpretation of the relevant provisions and their scope.

The Court below concluded, as a matter of grammatical interpretation of the Act, that the subject matter of the action fell within the jurisdiction of the Maritime Court. It also found that no authority bound or justified the Court to deviate from the normal interpretation of the text, which applied to the facts of the case and lead to the conclusion that the issue in question constituted both a claim for loss or damage to goods transported on a ship, as well as a claim arising from an agreement relating to the carriage of goods by ship.

Although the jurisdiction of the Maritime Court of the Supreme Court in relation to maritime insurance contracts has not been directly examined in any previous judgment of the Supreme Court, at least two of its judgments indirectly support the position, as explained in the judgment, that disputes in this category fall within the jurisdiction of the Maritime Court. The first is the judgment of the Court in Iosifidi Photos Photiades & Co v General Insurance Co 'Helvetia' Ltd (CMI676), in which the Court had heard an action on the subject matter of a dispute similar to the dispute which is the subject of the proceedings before us, without either the parties or the Court itself having any reservations about the Court's ability to hear the dispute.

The other is the decision in E Philippou v Compass Insurance, in relation to a preliminary ruling regarding the disclosure of a lien in a Maritime Court case. Even in that case, the issue of the jurisdiction that we are examining today was not discussed. What was judged was whether the plaintiffs' claim was related to one or more of the risks for which insurance had been provided. In Philippou It was pointed out that the jurisdiction of the Court is determined on the basis of the objective nature of the facts which constitute the irrevocable right which in this case also constituted, as the Court of first instance rightly ruled, the framework for determining the jurisdiction of the District Court.

The other Cypriot decision referred to is the decision of the Court of Appeal in the case of Joannou & Paraskevaides v Jeropoulos. That decision does not resolve the issue either. It is mainly related to the determination of a contract for the carriage of goods by sea.

The only decision of a Cypriot Court that directly concerns the issue we are called to decide in this appeal is the decision of Judge Artemidis in the exercise of the first instance jurisdiction of the Maritime Court of the Supreme Court in Avgerinos Master Shipping Co Ltd v Pancyprian Insurance Company Ltd, subsequent to the decision of the Nicosia District Court which is the subject of this appeal. In Avgerinos the Court concluded that the decision of the Judicial Committee of the House of Lords in Gatoil v Arkwright-Boston Insurance is decisive in the interpretation of ss 1(1)(g) and (h) and the ability to invoke these provisions in relation to rights arising from marine insurance contracts. Based on the principles deriving from the Gatoil judgment, it was held that claims arising out of maritime insurance contracts for insurance against risks in the carriage of goods by ship do not fall within the jurisdiction of the Maritime Court but the civil jurisdiction of the District Court.

The Court of first instance reached a different conclusion as to the extent of the principle derived from Gatoil, which it distinguished from the present action on account of the difference between the issues in the two cases. In Gatoil, the issue at stake was the recovery of premiums due under a marine insurance agreement, while in this case compensation was claimed for the insurer's failure to provide the agreed collateral against risks which were provided for and manifested during the carriage of goods by ship. The Court also distinguished the judgment of a Scottish Court of first instance in The Aifanourios in which an action was brought before the Admiralty Court for claims under a marine insurance contract. The Court ruled that the provisions of Scottish law corresponding to the provisions of ss 1(1)(g) and (h) did not make the Admiralty Court competent to settle the dispute. Although it was recognised in the Scottish judgment that the relevant provisions of the law could be interpreted as a matter of interpretation to include such claims in the jurisdiction of the Admiralty Court, such an interpretation was not justified in view of the purpose of the law in relation to maritime disputes in the regulation of the transport of goods by ship or on a ship while the marine insurance contract is only indirectly related to their transport. The main purpose of the maritime insurance contract is the convenience and protection of the owner and not the regulation of the terms and conditions of carriage of goods by ship, which is an issue between the cargo owners and the carriers.

The Court of first instance concluded that no other judgments of the English courts mentioned in the judgment justified the exclusion of the jurisdiction of the Maritime Court in disputes arising from a maritime insurance contract in respect of carriage of goods. Finally, it was pointed out that that fact that in England claims based on maritime insurance agreements are dealt with in the Commercial Court and not the Admiralty Court, which is also part of the High Court, is not decisive as to the jurisdiction provided for in ss 1(1)(g) and (h), since all branches of the Court have uniform jurisdiction, and the division of cases for judicial purposes constitutes an internal classification measure.

We will now define the Gatoil framework and the range of principles that emerge from the decisions made. It was decided that the specific claim (premiums for the issuance of a marine insurance contract) was outside the limits of the jurisdiction of the Admiralty Court provided by ss 1(1)(g) and (h) for three separate reasons, which relate to the nature and content of the marine insurance contract and the correlation of its object with the operation of the ship. These reasons are: (a) the nature of the claim and the head of jurisdiction that identifies it must be directly and not indirectly or remotely related to the carriage of the goods by ship. The term 'relating to' in s 1(1)(h) indicates as a necessary condition for the exercise of jurisdiction the existence of a coherent link between the claim and that of the carriage of goods by ship or damage to the ship; (b) the existence of a direct relationship between the claim and the operation of the ship as a condition for the inclusion of a claim in the jurisdiction of the Admiralty Court is also supported by the historical background of the jurisdiction as shown by the case law; (c) the aims and objectives of the legislation also justify the exclusion of claims based on marine insurance contracts from the limits of the jurisdiction provided for in ss 1(1)(g) and (h). The Act aimed at the incorporation into domestic law of the provisions of the Arrest Convention 1952. The Convention aimed at the common delimitation of the jurisdiction of the Admiralty Court and the introduction of similar treatments, mainly the arrest of a ship, for its effective exercise. That finding in relation to the text of the Act justified recourse to the travaux préparatoires of the Convention which reflects the intentions of the parties for its purposes. Their examination reveals that the express intention of the parties to the treaty was to exclude from the jurisdiction of an Admiralty Court disputes arising out of or in connection with maritime insurance agreements. Four of the five members of the Judicial Committee found that the recourse to the preparatory works of the Arrest Convention 1952 was justified, while the fifth member limited himself to the other reasons given for the interpretation given to the crucial ss 1(1)(g) and (h).

It is worth noting that claims under ss 1(1)(g) and (h) may also be brought against the ship (in rem jurisdiction) with all the consequential consequences: a finding that also indicates the link that must exist between the claim and the operation of the ship.

The question is whether there are reasons that justify the distinction of Gatoil from the case at hand. The answer depends to a large extent on the function of the principles set out in the particular features of the subject-matter in that case. Examining the decision leaves no doubt that the answer to this question is that the determination in Gatoil is linked to, and was a consequence of, the broader issue of the existence of an Admiralty Court jurisdiction to resolve disputes arising from marine insurance contracts. It was decided for the reasons that have been summarised that disputes of this category are outside the limits of the jurisdiction of the Admiralty Court and this dispute was resolved within the framework of this finding as a natural consequence of the application of the general principle we have pointed out. In the subsequent decision of Antonis P Lemos explaining the results of Gatoil, it was emphasised that while the term 'arising out of' in s 1(1)(h) needs a broad interpretation, the opposite is true in the case of 'relating to the carriage of goods in a ship'.

Therefore, if the interpretation of ss 1(1)(g) and (h) is accepted, and the Gatoil approach to the matter in general, there is no scope for correlating the principles adopted with the specific difference or their distinction from the appeal before us. Of course, decisions of the English courts are not binding on the Cypriot courts in the sense of the principle of binding precedent, which makes the decisions of the higher courts binding on courts that are at a lower level in the hierarchy of courts. However, they are of convincing importance which in this case is augmented in view of the fact that the object of the interpretation is the same, ie the relevant provisions of ss 1(1)(g) and (h).

The finding that the legislation governing the jurisdiction of the Admiralty Court was intended to incorporate an international Convention with the aim of establishing the uniform jurisdiction of the Admiralty Court is an additional reason for the uniform interpretation of its provisions, provided that it does not conflict with their wording in domestic law.

For the reasons provided in Gatoil, the wording of ss 1(1)(g) and (h) does not specify their interpretation as the Court of first instance held. Evidence of the jurisdiction of a Maritime Court requires a direct relationship between the claim and the carriage of the goods by ship, which is lacking in the case of claims based on maritime insurance contracts, which have as their object not the regulation of the carriage of goods but protection of the owner against risks that may arise during transport. The carriage of goods by ship is a similar reason for the contract, of secondary importance, subject to the control of third parties, the carriers.