In 1986, the plaintiffs' cargo of sugar was carried from Antwerp, Belgium, to Freetown, Sierra Leone, on the defendants' ship Sylt under a bill of lading. Given that the defendants' principal place of business was in Germany, disputes were to be resolved by German law in Germany under cl 3 of the bill. The defendants were also domiciled in Germany, which was a Contracting State for the purposes of the 1968 Convention on Jurisdiction in Civil and Commercial Matters (the 1968 Convention).

The plaintiffs were based in Freetown. In 1987, they commenced an action in personam in Freetown against the defendants in this action and Gambia National Line for their cargo claim. In 1989, the plaintiffs obtained judgment (the Sierra Leone judgment), against which the defendants appealed. That appeal was still pending.

In 1986, the Sylt was arrested in the Netherlands to secure the plaintiffs' claim. The defendants provided a bank guarantee for NLG 700,000. In 1989, the Rotterdam District Court in the Netherlands granted permission to arrest the ship for additional security amounting to NLG 300,000, following which a second guarantee was provided. Subsequently, the Rotterdam Court of Appeal ordered further additional security of NLG 830,000.

Following the Sierra Leone judgment, this action was commenced by writ in rem in England to obtain that further additional security. The Sylt was arrested and released against a P&I club's bail bond, whereby the club (Steamship Mutual Underwriting Association (Bermuda) Ltd) submitted to the English jurisdiction and consented that:

If the defendants do not pay what may be adjudged against them in this action … execution may issue against them for the amount unpaid or an amount of [NLG] 830,000, whichever is the less.

The plaintiffs applied to stay its own action under the Court's inherent jurisdiction and for an order under s 26 of the Civil Jurisdiction and Judgments Act 1982 (the Act). The plaintiffs also applied for an order pursuant to s 26(1)(a) of the Act that the bail bond stands as security answerable to any judgment given by the Courts of Sierra Leone, provided the judgment is enforceable in England and Wales. The plaintiffs subsequently modified their application after recognising some difficulties with it. The plaintiffs' application for a stay is now made under 'inherent jurisdiction' and not on their previous ground that the dispute should be submitted to the determination of the courts of Sierra Leone. The plaintiffs have refrained from stating any ground upon which a stay might be granted. Section 26 of the Act provides:

(1) Where in England and Wales or Northern Ireland a Court stays or dismisses Admiralty proceedings on the ground that the dispute in question should be submitted to arbitration or to the determination of the Courts of another part of the United Kingdom or of an overseas country, the Court may, if in those proceedings property has been arrested or bail or other security has been given to prevent or obtain release from arrest -

(a) order that the property arrested be retained as security for the satisfaction of any award or judgment which -

(i) is given in respect of the dispute in the arbitration or legal proceedings in favour of which those proceedings are stayed or dismissed; and

(ii) is enforceable in England and Wales or, as the case may be, in Northern Ireland; or

(b) order that the stay or dismissal of those proceedings be conditional on the provision of equivalent security for the satisfaction of any such award or judgment.

(2) Where a court makes an order under subsection (1), it may attach such conditions to the order as it thinks fit, in particular conditions with respect to the institution or prosecution of the relevant arbitration or legal proceedings.

(3) Subject to any provision made by rules of court and to any necessary modifications, the same law and practice shall apply in relation to property retained in pursuance of an order made by a court under subsection (1) as would apply if it were held for the purposes of proceedings in that court.

Held: Application dismissed.

A plaintiff may in principle apply to stay its own action: A-G v Arthur Anderson and Co (CA, 30 March 1988). The Court can grant a stay if it is appropriate in the interest of justice.

Section 26 had its origins in art 7.2 of the International Convention relating to the Arrest of Seagoing Ships 1952 (the Arrest Convention), which dealt with the situation which arises when the Court, within whose jurisdiction a ship has been arrested, has no jurisdiction to decide the merits of the case. Section 26 makes provision for the case in which, after a plaintiff has issued a writ in rem and arrested the ship, ship interests successfully apply for a stay of proceedings in favour of arbitration or foreign litigation. The grounds upon which the dispute should be submitted for foreign litigation may be: (1) a foreign jurisdiction agreement; or (2) that the defendant is domiciled in a Contracting State of the European Economic Community and must be sued in the Courts of that State; or (3) if the defendant is not domiciled in a Contracting State, that a foreign Court is a clearly more appropriate forum. In such cases a stay may be granted upon appropriate terms as to the retention or provision of security. As the security was, or must be, provided by the defendant, who makes the application for a stay, there is no difficulty in enforcing the appropriate order.

Under s 26(1)(a), the Court may order that the property arrested be retained as security for the satisfaction of any judgment which is given in the legal proceedings in favour of which the action is stayed.

The plaintiffs' application for an order pursuant to s 26(1)(a) of the Act cannot be granted merely because the Court 'thinks fit' to stay this action on the application of the plaintiffs. That is insufficient. The power to make an order under ss 26(1)(a) or 26(1)(b) is conferred upon the Court only 'where … a Court stays or dismisses Admiralty proceedings on the ground [stated in that sub-section]'. In this case the only relevant ground might have been that the dispute should be decided by a foreign Court.

The plaintiffs' omission of stating the ground(s) for staying proceedings thwarts their application because the powers of the Court given by s 26 do not arise. Due to the jurisdiction agreement in cl 3 of the bill, the Court has no jurisdiction to stay this action in favour of the courts of Sierra Leone: 1968 Convention arts 2, 17; The Deichland [1990] 1 QB 361 (CA) (CMI2233).

Section 26(1)(b) empowers the Court to make the stay of proceedings conditional upon the provision of equivalent security for the satisfaction of a judgment which is given in the legal proceedings in favour of which this action is stayed. Section 26(1)(b) is only appropriate if the application for a stay is made by the defendant, because an order under s 26(1)(b) makes the stay conditional on the provision of equivalent security by the defendant.

The Court gave some further reasons for dismissing the application.

If a plaintiff commences in this Court an action in rem, which should have been brought in another forum, it is the defendants who have the choice whether to submit to the jurisdiction of this Court or to apply for a stay. If the action remains in this Court the plaintiff has its security. If, on the defendant's application, a stay is granted, s 26 of the Act comes into play and the Court may make an order which gives the plaintiff identical security. A stay, even if granted, would be problematic because the Court appears to have no power to order the P&I club to give security for a judgment given by the Courts of Sierra Leone.

This action has been brought to obtain satisfaction of the in personam Sierra Leone judgment. If an action in rem is an action between the same parties as an action in personam, then s 34 of the Act impedes the plaintiffs. If the Sierra Leone judgment is not enforceable in England, s 26(1)(a) of the Act is inapplicable. If that judgment is enforceable in England this action ought to be struck out. The plaintiffs cannot, after judgment, bring proceedings again as plaintiff on the same claim against the same defendant. Although the plaintiffs might contend that an action in rem is not an action between the same parties (The Nordglimt [1988] 1 QB 183, 201 (CMI2230)), The Deichland [1990] 1 QB 361 (CA) (The Deichland) has taken the opposite view. Even if The Deichland was incorrect, the plaintiffs will face the problem of whether the judgment obtained in Sierra Leone is enforceable in England.

If an action in rem does not involve the same parties, then this action in rem has been brought to enforce a foreign judgment in personam, which is impermissible: Supreme Court Act 1981 ss 20 and 21; Arrest Convention art 1.2; The City of Mecca (1881) 6 PD 106 (CA).

Even if the Court had power under s 26 of the Act, the Court would have refused to stay proceedings for the following reasons: (1) the plaintiffs have obtained security for their claim in this action; (2) the defendants might have a more favourable limitation of liability in England as compared to the Sierra Leone judgment; (3) if the Sierra Leone judgment is enforceable in England the plaintiffs can apply to the Court to enforce it.