The Cristina, a ship belonging to the appellants and registered at the Port of Bilbao, was lying in the Port of Cardiff. After its departure from Spain, but before arriving in Cardiff, the Spanish Government made a decree requisitioning all ships registered at the Port of Bilbao. As a result, the Spanish consul at Cardiff, acting on the instruction of the Spanish Government, boarded the ship, requisitioned it, dismissed the master, and replaced him with a master under the authority of the Spanish Government. The appellants issued a writ in rem claiming sole ownership of the ship and seeking to have possession of it. The Spanish Government, as respondents, entered a conditional appearance, stating that they were owners or interested parties. They also gave notice of motion seeking an order to set aside the writ and arrest. The respondents claimed that they had requisitioned all ships registered at the Port of Bilbao and, therefore, were entitled to the possession of the Cristina, and consequently, they were impleaded by the proceedings.

The trial Court and the Court of Appeal considered themselves bound by previous precedents and declined jurisdiction on the ground that the Republic of Spain, being a foreign sovereign state, was asserting a possessory interest in the Cristina and did not consent to the jurisdiction of the Court.

Held: Appeal dismissed.

Lord Atkin: The respondents' case to set the writ and arrest aside is based on two accepted principles of international law engrafted into domestic law:

1) That courts will not implead a foreign sovereign, meaning 'they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages; and
2) That they will not, by their process, irrespective of whether the sovereign is a party to the proceedings or not, seize or detain property which is his or of which he is in possession or control'.

In all cases where a writ in rem is utilised, the practice is that when a defendant has appeared, the claim is against the defendant personally. Where persons are not cited as defendants in the writ but as persons claiming an interest, and they appear, they do so as defendants. And when they cannot appear to protect their interest unless they appear as defendants, they are impleaded. Therefore, since it was proven that the Government of Spain had, in fact, taken possession of the ship, the plaintiffs were directly and intentionally impleading the Spanish Government. The writ which was issued constituted as defendants the ship itself and all persons claiming an interest in it. The plaintiffs knew that apart from themselves, the Government of Spain were the only persons interested in the Cristina.

In respect of the second principle, it is a well-established principle that courts will not arrest a ship under the control of a sovereign by reason of requisition. Lord Atkins, quoting The Gagara [1919] P 95, held that this principle applied equally to ships which were in the actual possession of a foreign sovereign, and therefore the arrest could not be maintained.

Lord Thankerton: Agreed that the Spanish Government was impleaded and intended to be impleaded. Furthermore, he stated that the doctrine of immunity of the property of a sovereign state being used for public purposes includes cases where the property was under the control of a foreign sovereign or in the actual possession of a foreign sovereign.

Lord Macmillan: Agreed that the Spanish Government would be impleaded if a Spanish ship, which was requisitioned for public purposes and lying in a British port not subject to the possession of the British Government, was allowed to proceed in English courts.

Lord Wright: Stated that the rule that an independent sovereign may not be directly or indirectly impleaded in English courts without subjecting itself to such process is a well-settled principle, see Mighell v Sultan of Johre [1894] 1 QB 149 which was an action in personam. The case of The Parlement Belge 5 PD 197 further found that a sovereign may be impleaded by an action in rem as much as by an action in personam, because a court in seizing and selling the property of a foreign sovereign would be making that independent sovereign subject to its jurisdiction. The foreign sovereign would either have to sacrifice its property or its independence. This, it was held, would be indirectly impleading the sovereign. Lord Wright found that the reasoning in The Parlement Belge was corroborated by the nature of the modern writ in rem which by 'its express terms commands the defendants to appear or let judgment go by default. They are given the clear alternative of either submitting to the jurisdiction or losing possession.' Consequently, he concluded that the foreign sovereign is directly, rather than indirectly, impleaded by the writ in rem in this case because the Spanish government would be liable in personam if it appeared to defend the claim.

The appellants, however argued, that the Spanish Government had no property (ownership) in the Cristina and thus could not rely on this international law principle. It was held that the rule is not limited to ownership, but may also apply to cases where a government has a lesser interest, which may not even be proprietary nor possessory.

The appellants also argued that this case was distinct from The Parlement Belge as the vessel, in that case, was employed primarily for carrying mails, with the carriage of passengers being subsidiary. In contrast, the Cristina was a private merchant vessel employed in ordinary trading and in the carriage of commercial cargoes. In response, Lord Wright held that the requisition of the Cristina by the decree made by the Spanish Government 'sufficiently brought it within the description of public property of the State destined to public use'. Although the immunity was initially recognised in regard to armed ships of war, the privilege is attached to the immunity of the sovereign and not anything peculiar to the warship. The times have changed, and the principle must be adapted to new conditions. Berizzi Brothers Co v SS Pesaro (1925) 271 US 562 and later Young v Scotia [1903] AC 501, The Porto Alexandre [1920] P 30 and The Jupiter [1924] P 236 all represent cases that illustrate the evolution of the principle of immunity, extending to government ships used for the public purpose of 'advancing the trade of its people or providing revenue for its treasury'.

Lord Wright, however, acknowledged that this evolution unjustifiably created the result that governments may use vessels for commercial trading, competing with private shipowners, and yet escape liability for damage and salvage claims. The International Convention for the Unification of Certain Rules concerning the Immunity of State-owned Ships 1926 purported to provide that ships owned or operated by States were to be subject to the same rules of liability as privately owned vessels; ships of war, State-owned yachts, and various other vessels owned or operated by a State on Government and non-commercial service were excepted. There was power for a State to suspend the operation of the Convention in time of war. Great Britain, along with the majority of modern States, signed the Convention, but has not yet ratified it or enacted any legislation to bring it into effect. But even if the provisions of the Convention were made law here, it is not clear that it would affect the position in the present case, because its effect is apparently limited to claims in respect of the operation of such ships or in respect of the carriage of cargoes in them. Thus it would affect claims in rem for collision damage or for salvage or for cargo damage, but maybe not claims for possession such as in this case.

Lord Maugham: Concurred with the ratio of The Parlement Belge that the principle of the immunity of a sovereign applied to ships of war belonging to a foreign government, as well as to public ships of a foreign government. A ship that has been the subject of a requisitioning decree, whether it was built for pleasure or profit, is intended to be devoted to public use. On the facts, the Cristina was intended to be used for public purposes, as the Spanish Government was engaged in a civil war. On the matter of whether the immunity should be extended to State-owned commercial vessels, Lord Maugham thought that 'if Governments or corporations formed by them choose to navigate and trade as shipowners, they ought to submit to the same legal remedies and actions as any other shipowner'. The Conference of London 1922, the Conference of Gothenburg 1923, the Genoa Conference 1925, and the Brussels Conference 1926, all reflected this view.