In January 1986, the plaintiffs' cargo was loaded on the Deichland for carriage from Glasgow, Scotland, to La Spezia, Italy. The disponent owner of the vessel was Deich Navigation SA (Deich) who had demise chartered the vessel for two-year period. The plaintiffs alleged that their cargo was delivered damaged at La Spezia around February 1986 and sued.

The writ in rem was issued on January 1987. Deich was then the demise charterer of the vessel. The action was described in the writ as an 'Admiralty action in rem against the ship Deichland'. The plaintiffs were named as 'the owners of cargo lately laden on board the ship Deichland'. The defendants were named as 'the owners and/or demise charterers of the ship Deichland'.

It was undisputed that the Court had jurisdiction unless Deich could invoke the provisions of the Civil Jurisdiction and Judgments Act 1982 (UK) (the CJJA) and the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the 1968 Convention) found in Sch 1 to the CJJA. Section 20 of the Supreme Court Act 1981 (the Act) sets out the Admiralty jurisdiction of the Court. This jurisdiction includes jurisdiction to hear and determine 'any claim for loss of or damage to goods carried in a ship' and 'any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship'.

The present claim was brought by way of an action in rem: s 21(4) of the Act. The plaintiffs did not bring their claim by way of an action in personam despite having the option to do so: s 21(1) of the Act. The writ was served on the vessel in November 1987 at Erith, UK, but the vessel was not arrested. By then, the demise charter of the vessel had ended, its ownership had changed, and the vessel had been renamed the Baracuda. Deich's P&I club sent the plaintiffs a letter of undertaking to prevent arrest. In June 1988, Deich applied for a declaration that the Court had no jurisdiction. Deich argued that it was domiciled in Germany and therefore the matter should be tried there in accordance with art 2 of the 1968 Convention.

At first instance, Sheen J dismissed the application on the basis that the 1968 Convention did not apply to an admiralty action in rem while it remained solely in rem: The Deichland [1988] 2 Lloyd's Rep 454, 458. The issues on appeal were:

(1) whether the 1968 Convention applies to an admiralty action while it remains solely in rem;

(2) if the 1968 Convention applies, and whether for the purposes of art 2 of the 1968 Convention Deich is domiciled in Germany;

(3) if the 1968 Convention applies and Deich is domiciled in Germany for the purposes of art 2, whether nevertheless the Court has jurisdiction by reason of the combined effect of art 57 of the 1968 Convention, s 9 of the CJJA, and the provisions of the Arrest Convention 1952.

Held: Appeal allowed.

As to issue (1), the plaintiffs argued that, while the action remains solely an action in rem, Deich is not a defendant and art 2 of the 1968 Convention is thus inapplicable. The plaintiffs argued that an action in rem is an action against the vessel itself: The August 8 [1983] 2 AC 450 (PC). Unless and until an appearance is entered, the claim is against the vessel alone, and Deich is not a relevant defendant although so described in the writ. If the plaintiffs were right, this creates the startling result that a defendant cannot contest the jurisdiction of the English court in an action in rem. If the defendant acknowledges service it submits to the jurisdiction; if the defendant does not, the action must go undefended and by default. This is a curious result, not contemplated either by the 1968 Convention (art 18) or the Rules of the Supreme Court (O 12 r 8). The plaintiffs' argument must be rejected.

Both the UK and Germany are parties to the Arrest Convention 1952. The Conventionachieved an important compromise between English law and the law of other European countries as to the circumstances in which a ship might be arrested. English law had hitherto restricted the right to arrest a ship to cases where a 'maritime' claim was made. The power of arrest then did not extend to other ships in the same ownership as the ship concerned with the claim: The Beldis [1936] P 51 (CA). In some European countries, the power of arrest could be exercised in respect of any claim, whether maritime or non-maritime, and against any ship in the same ownership. The Convention reached a solution which restricted the power of arrest to 'maritime claims' as defined in art 1.1. In substance the Convention adopted the approach of English law. The Convention was concluded for the purpose of determining by agreement between the contracting States certain uniform rules of law relating to the arrest of sea-going ships. It reached a compromise solution whereby the power to arrest was confined to maritime claims as understood in English law, but that the power was extended, in accordance with the law of some European countries, to include a right to arrest a vessel in the same ownership.

It is sufficient to observe: (a) that the manner in which admiralty jurisdiction could be invoked by an action in rem was extended as a result of this Convention; (b) that specific attention was drawn in the course of the negotiations leading up to the Convention to the existence and nature of an admiralty action in rem; and (c) that it has been held that if the meaning of the Administration of Justice Act 1956 (the 1956 Act) is not clear the Court may look at the terms of the Arrest Convention 1952 to assist in the construction of the 1956 Act: The Banco [1971] P 137 (PDA, CA).

Both the CJJA and the 1968 Convention have the force of law in the UK: CJJA, s 2(1). Article 2 of the 1968 Convention provides:

Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State. Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

Article 3 provides:

Persons domiciled in a Contracting State may be sued in the courts of another Contracting State only by virtue of the rules set out in Sections 2 to 6 of this Title. …

On the proper construction of arts 2 and 3 of the 1968 Convention, Deich is being 'sued' in these proceedings, even though the proceedings are solely in rem. In reality, it is Deich who is interested in contesting liability, and against whom the plaintiffs would wish to proceed in personam if an appearance is entered. Deich is liable to be adversely affected by the result of the proceedings. At English law an admiralty action in rem has special characteristics, although these characteristics were modified by the 1956 Act in line with the Arrest Convention 1952. Rules relating to such actions and governing the rights of a plaintiff to levy execution are not considered to affect the substance of the matter when the Court is faced with an international Convention designed to regulate the international jurisdiction of national courts like the 1968 Convention.

As to issue (2), Deich was found to be domiciled in Federal Republic of Germany.

As to issue (3), the plaintiffs argued that the High Court in England can exercise jurisdiction by virtue of art 57 of the 1968 Convention when read in conjunction with art 7 of the Arrest Convention 1952 and s 9 of the CJJA. Article 57 of the 1968 Convention is in these terms:

This Convention shall not affect any conventions to which the contracting states are or will be parties and which, in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. …

Thus the 1968 Convention does not affect any jurisdiction given to the Court under the Arrest Convention 1952. Section 9 of the CJJA provides:

(1) The provisions of Title VII of the 1968 Convention (relationship between that convention and other conventions to which contracting states are or may become parties) shall have effect in relation to —

(a) any statutory provision, whenever passed or made, implementing any such other convention in the United Kingdom; and

(b) any rule of law so far as it has the effect of so implementing any such other convention,

as they have effect in relation to that other convention itself.

Despite the plaintiffs' argument to the contrary, the jurisdiction given by art 7 of the Arrest Convention 1952 should be confined to cases where an arrest has actually been effected. The plaintiffs argued that, although the word 'arrest' was used in art 7, the Court nevertheless had jurisdiction because the usual undertaking had been given by a P&I club to prevent arrest, and because the Court had jurisdiction to try the matter under the 1956 Act which was passed to implement the Arrest Convention 1952. The plaintiffs also relied on the common practice whereby ships are not actually arrested but some security or undertaking is furnished to prevent an arrest.

Neill LJ relied upon the following reasons to reject the plaintiffs' argument:

First, the Arrest Convention 1952 was only concluded after long and detailed negotiations had taken place and the final wording represented a compromise. One must be very careful before accepting that the word 'arrest' in art 7 can include a process which falls short of an actual arrest.

Second, 'arrest' is defined in art 1.2 of the Convention as meaning the 'detention of a ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment'. 'Maritime claim' is defined in art 1.1.

Third, in arts 3.3 and 6 of the Convention respectively, reference is made to 'bail or other security' given or furnished 'to avoid a threatened arrest' or to 'prevent the arrest'. There are no comparable words in art 7.

Fourth, paras 122 and 123 of the Report by Professor Dr Peter Schlosser on the Convention of 9 October 1978 on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice [1979] OJ C59/71 (Schlosser Report) commented on the wording of art 5.7 of the 1968 Convention relating to jurisdiction in connection with the arrest of salvaged cargo or freight. Professor Schlosser explained that art 5.7.b of the 1968 Convention introduced an extension of jurisdiction not expressly modelled on the Arrest Convention 1952. This is consistent with the view that art 7 did not confer jurisdiction where bail or other security was given to avoid arrest.

Fifth, it is undisputed that if it were not for the 1968 Convention, the Court would have jurisdiction to try this action. However, as the jurisdiction given by art 7 of the Arrest Convention 1952 is governed by the word 'arrest' it is not permissible for the purpose of applying s 9 of the CJJA to treat any part of the Court's jurisdiction other than the 'arrest' jurisdiction as being based on a statutory provision implementing the Convention.

Stuart-Smith LJ noted that arts 1, 2, 3 and 57 of the 1968 Convention were clearly intended to apply to actions in rem, and observed that if the plaintiffs were determined to litigate in this Court they can easily secure this; either they arrest the ship, or they secure express agreement by the defendant owner or demise charterer to submit to the jurisdiction of the Court to avoid arrest, while obtaining security. The plaintiffs here did neither.

Article 5.7 of the 1968 Convention makes the same distinction between arrest and security being given to avoid arrest: Schlosser Report para 123. Also, it is clear from the travaux préparatoires that the question was raised whether the jurisdiction should be extended to cases where security was given to avoid arrest, and this idea was rejected.

The plaintiffs further argued that the jurisdiction for proceedings in rem is founded upon statutory provisions which were enacted to implement the Arrest Convention 1952: The Eschersheim [1976] 1 WLR 430 (HL) 434. It is undisputed that an action in personam (s 21(1) of the Act) would now undoubtedly be subject to the provisions of the 1968 Convention and triable only in the German courts. The present in rem claim falls within s 20(2)(g) of the Act, being a claim for loss of or damage to goods carried in a ship: s 21(4) of the Act. Fundamental to the plaintiffs' argument on this point is s 9(1) of the CJJA. There is a need for s 9(1) of the CJJA so far as the Arrest Convention 1952 is concerned, because the Convention was not adopted as such as the law of this country, eg by incorporating the Convention in a Schedule to the Act, as was done with the 1968 Convention and the CJJA, but by implementing it in domestic legislation. The plaintiffs argued that since legislation did implement the Arrest Convention 1952, everything enacted in the relevant sections, including s 21 of the Act, is now the law of this country by virtue of s 9(1) of the CJJA.

The plaintiffs' further argument must be rejected. First, jurisdiction which is not within the express terms of art 7 of the Arrest Convention 1952, and is expressly outside the provisions of arts 1, 2, and 3 of the 1968 Convention, cannot creep in by the back door. Secondly, according to s 9 of the CJJA, statutory provisions are only to be given effect so far as they implement the Arrest Convention 1952, and not otherwise. Thirdly, much of the jurisdiction given by s 21 of the Act is affected by the 1968 Convention: eg admiralty actions in personam and actions in rem in relation to aircraft: ss 21(1) and 21(3) of the Act. An action in rem relating to a ship should be similarly affected save to the extent that it is preserved by the 1968 Convention or the Arrest Convention 1952. As such, jurisdiction is not afforded to the English court by art 57 of the 1968 Convention or by s 9(1) of the CJJA, except in the case of an arrest.

Sir Denys Buckley noted that the Arrest Convention 1952 does not apply here, because the Deichland was not arrested. Accordingly, art 57 of the 1968 Convention is irrelevant. When the UK acceded to the 1968 Convention it was a party to the Arrest Convention 1952, which regulates the arrest of ships in the jurisdictions of contracting States and the furnishing of bail and other forms of security in respect of certain maritime claims including any claim arising out of loss or damage to goods carried in any ship. Article 7 of the Arrest Convention 1952 provides that courts of the country in which a ship is arrested shall have jurisdiction to determine the case on its merits.