A cargo of barley was loaded onto the Nordkap at Antwerp (Belgium) destined for Jeddah (Saudi Arabia). On arrival in Jeddah, the receivers complained of damage to the goods amounting to USD 15,000. Two bills of lading were issued in respect of the cargo, both incorporating the Hague-Visby Rules. As a result, Al Mustaneer Trading Establishment of Jeddah and Pearl Assurance plc (the Jeddah plaintiffs) initiated legal action on 8 January 1985 in Antwerp against Nordtramp IS of Copenhagen and Seaboard Shipping Co Ltd as defendants, seeking compensation for the damaged cargo. Notably, the plaintiffs did not secure any financial guarantee for their claim from the defendants.

On 16 April 1987, an action in rem was brought against the Nordglimt, a sister ship of the Nordkap, in England. A warrant of arrest was subsequently issued, leading to the arrest of the Nordglimt. The plaintiffs in this action were the Jeddah plaintiffs and M/S Advanced Commodity Marketing Establishment of Liechtenstein. Security was put up for the release of the Nordglimt. However, the defendants applied for an order to have the plaintiffs' action struck out, along with all subsequent proceedings and the warrant of arrest, on two primary grounds. First, they argued that the plaintiffs' claim was time-barred under art 3.6 of the Hague-Visby Rules. Second, they claimed that the plaintiffs had failed to disclose all material facts honestly and fully in their application for the warrant of arrest. Each of these grounds arose out of the inter-relation of proceedings which were begun in Antwerp and the present proceedings in rem.

Held: Application dismissed with costs.

In answering the first question, the Court referred to the case of Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101. In that case, Roskill J found that in English courts, when the plaintiffs bring an action and the defendant pleads limitation, the court's duty is to determine whether the action before the court, and not some other action, has been instituted within the relevant period of time. The Court held that Roskill J’s finding indicated his acceptance that art 3.6 had a procedural character. However, the Court mentioned that the House of Lords in Aries Tanker Corporation v Total Transport Ltd [1977] 1 WLR 185 (CMI2194) had held that art 3.6 was substantive and not procedural. It does not merely bar the cargo owners' remedy, but discharges the carrier's liability. This time bar is of a special kind, extinguishing the claim itself, unlike art 7 of the Collision Convention 1910, which bars the remedy while leaving the claim intact.

The Court referred to Hispanica de Petroleos SA v Vencedora Oceania Navigacion SA (The Kapetan Markos) [1986] 1 Lloyd's Rep 211, and agreed with Parker J's test for art 3.6. According to this test, the shipowner must establish two things: first, the goods were carried under a contract of carriage by sea; and second, the suit to establish liability under the Rules concerning the loss of or damage to the goods carried under the contract was brought within a year. Therefore, the cargo owner must take action within the year, sufficient to prevent the carrier's liability from being discharged at the end of that year.

The Court then considered the question of what event would satisfy the criterion 'suit is brought' under art 3.6. The Court held that 'suit is brought' meant that the suit was brought by the person properly entitled to do so. An action brought by someone who was not entitled to bring it would not prevent the carrier from being discharged from liability. Hence, if there are multiple proceedings, the plaintiff in the previous proceedings must be the same as the plaintiff in the subsequent proceedings, unless the second plaintiff is an assignee of the first. The Court also found that 'suit is brought' meant that an action before an incompetent court would not suffice. It noted that the Belgian Court was competent.

The Court therefore noted that in almost all cases, the answer to whether a carrier was discharged from liability would be determined by reference to the suit in which liability is ultimately decided. However, this did not provide an answer to the present case because the proceedings in Belgium were competent and brought in time by a party with a title to sue. Consequently, the carrier was not discharged from liability, and the liability, which was the subject matter of the present action in England, continued to exist upon the true construction of the bill of lading. The Court held that the carrier could not rely on art 3.6.

The defendants also argued that the proceedings pending in Belgium involved the same cause of action, between the same parties. Therefore, the English court should, of its own motion, decline jurisdiction in favor of the Belgian Court and should set aside the writ and warrant of arrest. This argument was based on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the 1968 Convention), to which the United Kingdom and Belgium were contracting parties. The Court noted that the right to arrest maritime property was defined by the Arrest Convention 1952. Belgium and the United Kingdom are signatories and have ratified the Convention. However, the United Kingdom has not given the Convention the force of law in English municipal law. It has only given effect to certain provisions of the Arrest Convention 1952 through domestic legislation.

The domestic legislation giving effect to the Arrest Convention 1952 is the Supreme Court Act 1981, specifically ss 20 and 21. The Court noted that the present claim was properly brought under the Act because the claim was for loss of or damage to goods carried in a ship; the claim arose in connection with a ship (the Nordkap); and the person who would be liable in an action in personam (Nordtramp IS) was the owner of that ship when the action arose. Moreover, the ship against which the present action in rem was brought (the Nordglimt) was, at the time this action was brought, fully owned by Nordtramp IS, which was in line with the Arrest Convention 1952.

Furthermore, the Court referred to art 7 of the Convention, which provides:

(1) The Courts of the country in which the arrest was made shall have jurisdiction to determine the case upon its merits if the domestic law of the country in which the arrest is made gives jurisdiction to such Courts ...

(2) If the Court within whose jurisdiction the ship was arrested has not jurisdiction to decide upon the merits, the bail or other security given in accordance with article 5 to procure the release of the ship shall specifically provide that it is given as security for the satisfaction of any judgment which may eventually be pronounced by a Court having jurisdiction so to decide; and the Court or other appropriate judicial authority of the country in which the claimant shall bring an action before a Court having such jurisdiction.

Articles 7.3 and 7.4 apply to cases covered by arbitration or jurisdiction clauses and allow courts to release security in the event that the foreign proceedings are not brought within the time stipulated. The Court noted that art 7 was not formally part of English law, but s 26 of the Civil Jurisdiction and Judgments Act 1982 (UK) contained a similar, but not identical, provision.

The Arrest Convention 1952 primarily applies to ships flying the flag of one of the contracting States, as stated in arts 2 and 8.1. However, the Court also pointed out that art 8.2 permits the arrest of a ship flying the flag of a non-contracting State in the jurisdiction of any contracting State in respect of any of the maritime claims listed in art 1 or any other claim for which the law of the contracting State permits arrest.

The relationship of Conventions such as the Arrest Convention 1952 to the 1968 Convention is that of the special to the general. Where the special Convention contains special provisions, it shall govern, and in the absence of such provisions, the general provisions of the 1968 Convention shall apply. Therefore, the 1952 Convention and the 1968 Convention must be read together. The issue of lis pendens or the matter of a 'related action' can be resolved by referring to the 1968 Convention, since the Arrest Convention does not specifically deal with lis pendens. The Court noted that the generally accepted principle in admiralty law internationally, and under the Arrest Convention, was that vessels cannot, in general, be arrested more than once in respect of the same claim as reflected in art 3.3 of the Arrest Convention. Art 7.2 of the Arrest Convention indirectly deals with the problem of concurrent proceedings in more than one jurisdiction or tribunal. It states that a vessel may be arrested in a country that does not have jurisdiction to decide on the merits of the case between the relevant parties. The arrest shall not be invalid, and subject to safeguards. The security obtained by the arrest shall remain available to satisfy any judgment that results from a determination of the dispute on the merits by a court having the jurisdiction to decide. The Court held that it would follow the provisions of the Arrest Convention because they were preserved by the 1968 Convention. Therefore, it found that it was appropriate to arrest a vessel in one jurisdiction in support of a determination of the merits of a dispute by a court of competent jurisdiction in another contracting State and to provide security for the satisfaction of the judgment given by that court.

Next, the Court considered the nature of an action in rem. It referred to art 1.2 of the Arrest Convention 1952 which defines the term 'arrest'. It explained that an action in rem is an action solely against the res, unless and until anyone appears to defend the action. Judgment in such a case would be given against the res and would be enforceable against the world in respect of the rights in the res, but it does not create any rights that are enforceable in personam. An action in rem may be defended by anyone with a legitimate interest, such as the owner of the res or anyone with a different interest not amounting to ownership. The Arrest Convention makes it clear that an action in rem is not a form of execution. If an action in rem is still be available to a claimant after an in personam judgment which does not provide full monetary satisfaction, it would be even more open to the claimant to commence an action in rem while an action in personam is pending and has not yet proceeded to judgment. Therefore, the Court held that the action in rem was not related to the foreign action in personam for the purposes of art 21 of the 1968 Convention. This conclusion aligns with the internationally recognised nature of ship arrest proceedings.

Finally, the defendants argued that the wording of art 21 of the 1968 Convention, stating that the Court 'shall of its own motion decline jurisdiction', meant that the Court must be deemed to have never possessed jurisdiction. The Court disagreed with this interpretation with reference to the interpretation of art 7.2 of the Arrest Convention. It held that this article implicitly authorises maintenance of ship arrest even though the Court within whose jurisdiction the ship has been arrested has no jurisdiction to decide on the merits. Considering the inter-relation of the 1968 Convention and the Arrest Convention, article 21 should not be interpreted in a way that deprives the Arrest Convention of one of its consequences. If the opposite view were adopted, then, logically, art 21 of the 1968 Convention would have to be treated as having the effect of requiring the discharge of any security given under art 5 of the Arrest Convention, which would directly contradict art 7 of the Arrest Convention.